Lin v. Coronado ( 2014 )

Filed 11/17/14
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
HELEN LIN, B248848
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. EC058565)
v.
MIREYA B. CORONADO et al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of the County of Los Angeles,
Donna F. Goldstein, Judge. Affirmed.
Kaladjian Law Office, Hrair Kaladjian for Plaintiff and Appellant.
Anderson, McPharlin & Conners, Jesse S. Hernandez, Vanessa H. Widener for
Defendants and Respondents.
INTRODUCTION
Plaintiff Helen Lin (Lin) appeals from a judgment entered on an order sustaining a
demurrer without leave to amend in favor of defendant Mireya B. Coronado (Coronado).
In her operative first amended complaint, Lin alleges she “pooled” her $150,000 with
$100,000 provided by River Forest Financial LLC (River Forest) and Elevation
Investments LLC (Elevation) “in partnership for the purchase” of a residential property
(the property) at a foreclosure auction for the purchase price of $250,000.
The original version of the trustee’s deed for the property specified that River
Forest had a 75 percent interest in the property and Elevation had a 25 percent ownership
interest, but Lin was named on that version of the deed as a grantee without any stated
percentage interest in the property. Lin alleges that the trustee’s deed that was executed
and recorded omitted Lin’s name, which had been included in the unrecorded, original
trustee’s deed; River Forest subsequently quitclaimed the property to Elevation; and
without Lin’s knowledge, Elevation then sold the property to Coronado. Lin claims that
the alteration of the original deed renders it void, giving a transferee such as Coronado no
interest in the property. As a result, Lin, in her cause of action against Coronado, seeks
to quiet title to the property.
In affirming, we hold that the alteration of the deed to omit Lin’s name was not
material because the original version of the deed showed she had no interest in the
property. Thus, Coronado, as a purchaser, has title to the property.
BACKGROUND
Lin filed a first amended complaint against Coronado, Elevation, and Cal-Western
Reconveyance Corporation (Cal-Western).1 The trial court sustained a demurrer without
1
River Forest and Gene Kucherov, a general partner of Elevation, were added as
doe defendants.
2
leave to amend as to the quiet title cause of action against Coronado, and a judgment in
favor of Coronado was entered.
Lin alleges in her first amended complaint as follows: Lin obtained a cashier’s
check for $150,000 that she “pooled” with $100,000 provided by River Forest and
Elevation “in partnership” to purchase the property at a foreclosure auction. A
“declaration of trustee’s sale confirmed her Purchase Money investment in the Subject
Property,” and Cal-Western, the trustee for the property, accepted her cashier’s check and
endorsed it. A trustee’s deed prior to recording was sent to Kucherov. That deed
provided “Cal-Western Reconveyance Corporation (herein called trustee) does hereby
grant and convey, but without covenant or warranty, express or implied to RIVER
FOREST FINANCIAL LLC 75%, ELEVATION INVESTMENTS 25% HELEN LIN.”
The altered trustee’s deed that was executed and recorded stated, “CAL-WESTERN
RECONVEYANCE CORPORATION (herein called trustee) does hereby grant and
convey, but without covenant or warranty, express or implied, to RIVER FOREST
FINANCIAL LLC 75%, ELEVATION INVESTMENTS 25% (herein called Grantee)”—
thus omitting Lin’s name. The trustee’s deed was returned to River Forest. Lin did not
know about her omission from the trustee’s deed. River Forest then, without Lin’s
knowledge, executed and recorded a quitclaim deed in the property in favor of Elevation.
Elevation then sold the property to Coronado. Several years later Cal-Western provided
Lin with documents concerning the foreclosure sale. Those documents consisted of a
Declaration of Trustee’s Sale (which Kucherov signed as a witness) that specified that the
highest bid for the property was $250,000, and that the property vested in “River Forest
Financial LLC 75%, Elevation Investments 25% Helen Lin.”
In the quiet title cause of action against Coronado, Lin alleged that “her name was
erased off of the Trustee’s Deed” that was then recorded. Lin’s allegations in a fraud
cause of action against Elevation, Kucherov, and River Forest—not against Coronado—
were not incorporated into the quiet title cause of action against Coronado. In that fraud
cause of action, Lin alleged that Elevation, Kucherov, and River Forest knew that Lin
was a partner in the purchase of the property and caused to be provided to her a
3
“Declaration of Trustee’s Sale” at the time of the sale that represented to Lin she was a
co-purchaser, although the document shows her receiving no percentage of the property,
and that River Forest, Kucherov, and Elevation, without Lin’s knowledge, “erased or
caused to be erased” her name off of the trustee’s deed prior to its recording. Lin did not
allege any facts in her first amended complaint suggesting Coronado was not a bona fide
purchaser for value of the property. Lin’s quiet title claim against Coronado is based on
the invalidity of the deed because of the alteration and is not based on alleged other acts
of the other defendants to deprive Lin of her share of the property and its proceeds.
There were other causes of action against defendants other than Coronado.
Coronado filed a demurrer and motion to strike as to the first amended complaint.
Coronado asserted in her demurrer that Lin never had any recorded interest in the
property, Coronado was a bona fide purchaser for value, and the claim arising out of an
allegedly altered deed was barred by “the statute of limitations.” (Civ. Code, § 1207.)
Lin responded that Coronado never held legal title to the property because her deed was
forged or altered before recording and was therefore void, Lin’s interest did not have to
be recorded, and Civil Code section 1207 related to notice to subsequent purchasers—not
to a prior purchaser such as Lin.
The trial court overruled the demurrer and granted the motion to strike the prayer
for attorney fees. Several months later, the trial court on its own motion determined to
reconsider its ruling on Coronado’s demurrer and requested further briefing on several
questions. In one of its questions, the trial court stated, in effect, that it assumed that
Coronado was a bona fide purchaser for value. The parties filed further briefs. Lin did
not question or argue that Coronado was not a bona fide purchaser for value, but rather
argued that the deed was void. After a hearing,2 the trial court sustained Coronado’s
2
There is no transcript of the hearing. Both parties agree that in this case, in which
the appeal is from the sustaining of a demurrer, a reporter’s transcript or agreed on settled
statement is not necessary. (See Chodos v. Cole (2012) 210 Cal.App.4th 692, 699.) The
decision not to grant leave to amend may require a reporter’s transcript or an agreed or
settlement statement. (See Maria P. v. Riles (1987) 43 Cal.3d 1281, 1295-1296.) In any
event, we determine that Lin cannot amend.
4
demurrer without leave to amend, and judgment was entered in favor of Coronado.3 Lin
timely appealed the judgment in favor of Coronado.
DISCUSSION
A. Standard of Review
On appeal from a judgment after an order sustaining a demurrer, our standard of
review is de novo. We exercise our independent judgment about whether, as a matter of
law, the complaint states facts sufficient to state a cause of action. (McCall v. PacifiCare
of Cal., Inc. (2001) 25 Cal.4th 412, 415; Stearn v. County of San Bernardino (2009) 170
Cal.App.4th 434, 439-440.) We view a demurrer as admitting all material facts properly
pleaded but not contentions, deductions, or conclusions of fact or law. (Zelig v. County
of Los Angeles (2002) 27 Cal.4th 1112, 1126.) When the demurrer is sustained without
leave to amend, we determine whether there is a reasonable possibility that the defect can
be cured by amendment. If it can, we reverse on the ground that the trial court abused its
discretion. (City of Dinuba v. County of Tulare (2007) 41 Cal.4th 859, 865; Blank v.
Kirwan (1985) 39 Cal.3d 311, 318.) If a complaint is insufficient on any ground set forth
in the demurrer, we uphold the order sustaining the demurrer even if that ground was not
the ground relied upon by the trial court. (Stearn v. County of San Bernardino, supra,
170 Cal.App.4th at p. 440.) If there are sufficient facts pled or that can be inferred
reasonably to state a cause of action under any theory, the demurrer must be overruled.
(Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525.)
3
There have been proceedings against other defendants not relevant to this appeal.
By stipulation, Cal-Western is bound by the trial court’s ruling relating to the deed of
trust and Trustee’s Deed Upon Sale, but will not be subject to any monetary award.
5
B. Quiet Title
1. Contentions
On appeal, Lin relies upon an alleged alteration of the original version of the
trustee’s deed, arguing that the recorded deed is void and therefore could not have
provided good title, even to a bona fide purchaser for value. Coronado argues that even if
prior to recording, Lin’s name was removed from the original trustee’s deed, which
removal appears to have occurred, that original deed showed River Forest and Elevation
with a 100 percent interest in the property and no interest for Lin. Thus, River Forest and
Elevation had 100 percent of the ownership of the property, and ultimately Elevation had
100 percent ownership of the property, which it sold to Coronado.
Lin argues that the trustee accepted her cashier’s check and endorsed it. She
contends, in essence, that because the deed was forged or altered before recordation, it
was void ab initio and any subsequent deed, such as the one to Coronado, would not
provide protection to one who is a bona fide purchaser for value. Lin suggests that she
was still referred to on the trustee’s deed before alteration as a cotenant, albeit with no
indication of the percentage of her ownership. She further argues that if there is an
ambiguity in the trustee’s deed, that is a matter that should not be resolved by a demurrer.
In the trial court, she said the 75/25 percent split was only as to the interests of River
Forest and Elevation and not as to the 100 percent of the property; she asserted her
interest in the property matched the $150,000 she contributed as part of the $250,000
purchase price. She therefore contends that the trial court should have reformed the
trustee’s deed, even though she had not sought reformation in the first amended
complaint. She did, however, argue before the trial court that there should be a
reformation of the deed.
Lin’s claim is that her “partners” took her money, invested it in the property, and
failed to make her a co-owner of the property or pay her the proceeds of the sale.
According to Coronado, although even if there was a breach of an obligation or duty by
Lin’s partners, Lin never had any title or legal interest in the property.
6
Lin does not allege that Coronado did not acquire her interest in the property in
good faith, for fair value, and with no notice of a prior interest, which factors would make
Coronado a bona fide purchaser for value. (See 5 Miller & Starr, Cal. Real Estate (3d ed.
2011) § 11:50, p. 11-170 (Miller & Starr.) As such, according to Coronado, her legal
interest or title that is recorded takes priority over any equitable interest in the property
that Lin might have. (Id. at p. 11-173.) Lin argues for the first time on appeal that
because she did not allege Coronado was a bona fide purchaser for value, the trial court
improperly assumed that Coronado was such a bona fide purchaser for value.
2. Analysis
Authorities indicate that when a deed is altered or changed by someone other than
the grantor before it is delivered or recorded, and the alteration is without the grantor’s
knowledge or consent, the deed is void and no title vests in the grantee or subsequent
purchasers, even bona fide purchasers for value; and if the deed is altered after delivery
by the grantee before recordation, the deed is void and conveys no title to the grantee.
(See 3 Miller & Starr, supra, § 8:53, p. 8-145; Montgomery v. Bank of America (1948) 85
Cal.App.2d 559, 563.)4 Lin alleges the deed was altered before recording.
Lin, in the third cause of action for quiet title against Coronado, does not allege
precisely who altered the deed—even though in other causes of actions she alleges that
Kucherov, Elevation, and River Forest did so. The identity of the one altering the deed
may be significant. (See, e.g., Osterberg v. Osterberg (1945) 68 Cal.App.2d 254, 261;
see also 3 Miller & Starr, supra, § 8:53, pp. 8-146 to 8-147; 5 Miller & Starr, supra,
§ 11:72, p. 11-227.) One reasonably can infer that the grantor did not alter the deed
because attached to Lin’s first amended complaint is correspondence provided by the
grantor, Cal-Western, which correspondence indicates that Cal-Western transmitted the
4
“[A]n altered document is a defect in the record title insured by most standard
policies because typically there are no exclusions or exceptions in the policy for altered
documents.” (3 Miller & Starr, supra, § 7:54, p. 7-160).
7
deed that included Lin’s name to Elevation and to the mortgage company for
reconveyance, and that Cal-Western apparently did not have or transmit the altered deed.
Coronado contends Lin cannot prevail because any recorded document with a
“defect, omission, or informality in the execution” “imparts notice of its contents to
subsequent purchasers” as altered one year after such recording. (Civ. Code, § 1207.)
Miller & Starr states, “Any defect in title resulting from the alteration of a recorded
document is ‘cured’ and the instrument imparts constructive notice as altered one year
after it has been recorded.” (5 Miller & Starr, supra, § 11:72, p. 11-227.) Lin asserts
Civil Code section 1207 does not bar a claim by someone like her who is not the
purchaser, but rather an alleged prior owner.5
Regardless of who altered the deed and whether or not Civil Code section 1207
applies, Lin cannot state a cause of action to quiet title because the alleged alteration of
the deed was, as a matter of law, not material. A prominent treatise states, “The early
common law . . . was that any alteration, however insignificant, after a deed had been
executed and delivered, rendered the instrument void. Now, however, except apparently
in two states and except as otherwise provided by statute, the modern rule is that the only
alterations which will affect the validity of an instrument are those which are material;
that is, alterations which change the legal effect of the instrument.” (III American Law of
Property (1974) § 12.85, p. 365, fns. omitted; see Bumb v. Bennett (1958) 51 Cal.2d 294,
303; Lee v. Lee (2009) 175 Cal.App.4th 1553, 1557; see also 30 Williston on Contracts
(4th ed. 2004) § 75:20, p. 69, § 75:30, p. 111; 1 Patton and Palomar on Land Titles (3d
ed. 2013) § 83, pp. 269-272; 3 Schwing, Cal. Affirmative Defenses (2014 ed.) § 66.5, pp.
5
An invalid document does not become valid because of recording. “The purpose
of recording is to impart constructive notice and to protect innocent purchasers and
encumbrancers of property by giving notice of potential limitations on title. Recording
itself does not grant an interest in property, and a void document ‘derives no validity
from the mere fact it is recorded.’” (5 Miller & Starr, supra, § 11:8, pp. 11-52 to 11-53,
fn. omitted.)
8
441-4446; 4 Tiffany, The Law of Real Property (3d ed. 1975) § 989, p. 176; Walsh v.
Hunt (1898) 120 Cal. 46, 53.) Such immaterial changes include “any change necessary
to make an instrument conform to the intention of the parties and to correct a clerical
mistake in the drafting.” (III American Law of Property, supra, § 12.85, p. 366.)7 “The
test for determining the materiality of an alteration is not whether the liability of either of
the parties is increased or decreased or reduced as a result but whether the instrument has
the same legal effect after the alteration as it had before.” (30 Williston on Contracts,
supra, § 75:23, p. 83; see also Patton and Palomar on Land Titles, supra, § 83, p. 271
[“An alteration is material if it changes the legal affect [sic] of the instrument or the rights
and liabilities of the parties”]; Bumb v. Bennett, supra, 51 Cal.2d at pp. 303-304
[alteration “with a view to increase the benefit which he may take under it”].)
Lin alleges that her “sole identification of the Subject Property and her reliance of
confirmation of her purchase investment was based on the Declaration of Sale.” That
“declaration” specifies that River Forest was obtaining a 75 percent interest in the
property, Elevation was obtaining a 25 percent interest in the property, and Lin was
identified with no percentage interest in the property.
As the original deed and the Declaration of Trustee’s Sale show, Lin had a no
percentage interest in the property. Therefore, leaving her name off the recorded deed to
reflect that fact had no legal effect. Thus, the alteration was not sufficiently material to
render the deed void.8 Accordingly, Coronado, a transferee of the 100 percent interest in
6
Generally, “[w]hether a particular alteration is material is a question of fact . . . .”
(3 Schwing, Cal. Affirmative Defenses, supra, § 66:5, p. 444.)
7
Notwithstanding the state of the law, the authority comments that this is a
“dangerous method of reformation” that “usually leaves open the debatable question as to
whether the alteration makes the instrument conform to the intention of all parties or
merely to that of the one who makes the change.” (III American Law of Property, supra,
§ 12.85, p. 366.)
8
The alteration of the original deed after delivery by someone other than a grantee
would not divest the grantees of their rights in the property. (See 3 Miller & Starr, supra,
§ 8:53, p. 8-146.)
9
the property held by Elevation after River Forest’s quitclaim of the property to Elevation,
has legal title to the property. Based on the allegations of the first amended complaint,
Lin has not stated sufficient facts to constitute a quiet title action.
Lin now contends that she should have the opportunity to reform the deed to
reflect her interest. She might be able to do this if the deed were void. (See 3 Miller &
Starr, supra, § 8:53, p. 8-145.) But Lin has not specifically contended she could reform
the deed if it were not void. Moreover, Civil Code section 3399 provides for reformation
“so far as it can be done without prejudice to rights acquired by third persons in good
faith and for value.” (See Baines v. Zuieback (1948) 84 Cal.App.2d 483, 491.) There is
no allegation that Coronado did not purchase the property in good faith and for value.
Thus, it does not appear that reformation is now available to Lin. Because the alteration
was, as a matter of law, not material, and Lin cannot now reform the deed in order to
quiet title, she cannot amend the first amended complaint to state a cause of action to
quiet title on that basis. Lin has not proposed any other ground on which she would
amend the first amended complaint.
Lin asserts that the trial court improperly assumed that Coronado was a bona fide
purchaser for value. It does appear that the burden is on the purchaser to establish that
he, she, or it is a bona fide purchaser for value as against a prior party who claims a legal,
as opposed to an equitable, interest in a property. (See 5 Miller & Starr, supra, § 11:51,
p. 11-179; Bell v. Pleasant (1904) 145 Cal. 410, 412-414; First Fidelity Thrift & Loan
Assn. v. Alliance Bank (1998) 60 Cal.App.4th 1433, 1442; Hodges v. Lochhead (1963)
217 Cal.App.2d 199, 203-204.)9 Lin never questioned before the trial court its
assumption that Coronado was a good faith purchaser for value. We do not have to deal
with Lin’s argument concerning the question of the trial court’s assumption because Lin’s
claim is not based on whether Coronado was a bona fide purchaser for value, but rather is
9
Coronado asserts that Lin is claiming equitable title. Whether equitable title is
even a sufficient basis for a quiet title action is a complicated subject (see 5 Witkin, Cal.
Procedure (5th ed. 2008) Pleading, § 667, p. 93), but that issue was not raised in the trial
court or on appeal by the parties.
10
based on the deed being void. Coronado’s status is irrelevant because if the deed were
void, it would be void as to a bona fide purchaser for value. We conclude it was not void.
Lin’s alleged entitlement to her share of the proceeds from the sale of the property
to Coronado is the subject of her claims against her “partners,” who allegedly took her
money to invest in the property, but failed to ensure that she had a recordable interest in
the property or a legal interest in the proceeds from the sale of the property.
DISPOSITION
The judgment is affirmed. Coronado is awarded her costs on appeal.
CERTIFIED FOR PUBLICATION
MOSK, Acting P. J.
We concur:
KRIEGLER, J.
GOODMAN, J.

Judge of the Superior Court of the County of Los Angeles, assigned by the Chief
Justice pursuant to article VI, section 6 of the California Constitution.
11