Case Number: VC063219    Hearing Date: September 04, 2014    Dept: SEC

FEDERAL NATIONAL MORTGAGE ASSOC. v. LAND INVESTMENTS_01
CASE NO,: VC063219
HEARING: 09/04/14

#5
TENTATIVE ORDER

Plaintiff/cross-defendant FEDERAL NATIONAL MORTGAGE ASSOCIATION’s (“Fannie Mae”) motion for summary adjudication is GRANTED as to the 1st cause
of action for cancellation of instruments; otherwise DENIED. C.C.P. § 437c.

Plaintiff FANNIE MAE seeks summary adjudication of its causes of action for cancellation of instruments (1st), declaratory relief (2nd) and quiet title (3rd) as alleged in the complaint, and of the declaratory relief causes of action alleged in the cross-complaint filed by defendant/cross-complainant MILLENIUM PROPERTIES, INC. and cross-complainants Panma Properties, LLC and Frank Regi.

The facts set forth in the moving papers are undisputed. Plaintiff was the record owner of the subject real property as a result of a Trustee’s Deed Upon Sale, which was recorded in September 2012. Motion, Exh. 1(a). On September 25, 2012, a Grant Deed from plaintiff to Land Investments_01 was recorded. Exh. 1(b). That Grant Deed was not authorized by plaintiff, and it appears that the signature of the title company’s agent was forged, as was the notary attached thereto. Decl. of Sandra Young, Lorna Maria Normandy; Exh. 2(a), 3.

The property was purportedly transferred from Land Investments to defendant Millenium by means of a Grant Deed recorded in February 2013. RJN, Exh. A. The title was later encumbered by a Deed of Trust executed by Millenium in favor of Funding Resources, Inc. and Panma Properties, Inc. RJN, Exh. B.

By way of its complaint, plaintiff seeks an order cancelling the Land Investments Grant Deed and every instrument which followed. It contends that the Grant Deed is a forgery and thus void as a matter of law. See Wutzke v. Bill Reid Painting Service, Inc. (1984) 151 Cal.App.3d 36. That contention also supports the declaratory relief and quiet title causes of action. Plaintiff seeks a declaration that its title is superior to any of the defendants and that title should be quieted in its name as the sole owner.

After answering the complaint, defendant Millenium filed a cross-complaint for declaratory relief, seeking a judicial declaration that it lacked notice of the alleged forgery and that it took the property free and clear of plaintiff’s claim. Panma Properties and Frank Regi’s subsequent Deeds of Trust are the subject of the remaining two counts of the declaratory relief claim alleged in the cross-complaint.

In support of its motion, plaintiff argues that the Grant Deed was fraudulent, and thus subject to cancellation. C.C. § 3412; Schiavon v. Arnaudo Bros. (2000) 84 Cal.App.4th 374. Its right to title is superior to that of defendant because a forged document is a legal nullity and thus cannot provide the basis for superior title as against the original grantor. Wutzke, supra; Firato v. Tuttle (1957) 48 Cal.2d 136.
The fact that defendants/cross-complainants had no knowledge of the forgery is not legally significant because the Grant Deed by which defendant purportedly obtained the property cannot confer good title.

In opposition to the motion, defendant acknowledges that the evidence thusfar tends to prove that plaintiff was defrauded of its title. It disputes plaintiff’s alleged entitlement to the property free and clear of cross-complainants’ rights. Cross-complainants proffer evidence of certain improvements that were made on the property and which resulted in a substantial increase in equity. See Decl. of Greg Falvo, Jerry Britton. They argue that they are entitled to at least a lien on the property for the cost of the improvements. A court sitting in equity may impose a lien, as it determines appropriate, in order to avoid the unjust enrichment of a party. See, e.g. Jones v. Sacramento Sav. & Loan Ass’n (1967) 248 Cal.App.2d 522.

Plaintiff objects to defendant’s request for equity because it contends the issues are outside the scope of the pleadings, and thus improperly raised to defeat summary judgment. See Laabs v. City of Victorville (2008) 163 Cal.App.4th 1242.
In a quiet title action, the Court has jurisdiction to hear and determine all issues necessary to do equity. Even where a defendant does not file a cross-complaint to seek affirmative relief, pleading a general request for relief “as may be just” in an answer sufficiently puts the cause at issue to allow equitable determination of title in defendant’s favor. See Vanderkous v. Conley (2010) 188 Cal.App.4th 111, 119-120. Defendant included such language in its answer and properly raised factual issues to defeat the subject motion. Prayer, ¶3.

In sum, the Court finds that plaintiff has established, through undisputed evidence, that the Grant Deed was forged. It is entitled to summary adjudication of the 1st cause of action for cancellation of instruments.

The motion for summary adjudication of the remaining causes of action in the complaint, and the declaratory relief causes of action in the cross-complaint is denied. There exists an actual, present controversy with respect to the parties’ rights in the subject property. The equities must be weighed upon presentation of evidence.