FUERTE v. AIG FEDERAL SAVINGS BANK No. B217834.
GLORIA FUERTE, Plaintiff and Appellant, v. AIG FEDERAL SAVINGS BANK, Defendant and Respondent.
Court of Appeals of California, Second District, Division Four.
Filed August 26, 2010.
Hershorin & Henry, Lori C. Hershorin and Christina Yu for Defendant and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
WILLHITE, Acting P. J.
Plaintiff Gloria Fuerte lost a motion for summary judgment brought by defendant AIG Federal Savings Bank relating to Fuerte's quiet title claim alleged against AIG and another defendant. The trial court ruled that title could not be quieted as to AIG's deed of trust that encumbered the property at issue, finding the undisputed facts established that AIG was a bona fide encumbrancer without notice of Fuerte's claims. When AIG did not timely submit a proposed judgment before the first day of trial and did not appear at trial, Fuerte and the other defendant presented to the trial court (a different judge than the judge who granted AIG's summary judgment motion) a stipulated order that purportedly quieted title to Fuerte, without any mention of AIG's deed of trust. The judge, who did not realize that the stipulated order would have the effect of overruling the prior judge's ruling and who did not intend to overrule that ruling, signed the stipulated order. AIG, which was not served with the stipulated order, did not know the contents of that order until the original judge signed AIG's belated proposed summary judgment and Fuerte moved to vacate that judgment. AIG then moved to amend the stipulated order to conform it to the court's summary judgment ruling. The original judge (who granted AIG summary judgment) denied Fuerte's motion and the subsequent judge (who signed the stipulated order) granted AIG's motion. Fuerte appeals from those orders. We affirm.
In 2005, Fuerte became a victim of a large-scale fraudulent scheme perpetrated against more than 100 homeowners who were in default on their home loans. As part of the scheme, certain of the defendants in this case (who are not involved in this appeal) contacted the homeowners and convinced them that they (the defendants) could help the homeowners avoid forfeiture of their homes. The defendants told the victims, including Fuerte, that their home loans could be refinanced using an "investor" or "co-signer" with good credit, who would help the victims qualify for new loans. The defendants would find "straw buyers" to whom the homeowners would transfer title to their homes. The straw buyers would then obtain home loans from commercial lenders and instruct the lenders to wire the loan proceeds to accounts controlled by the defendants, who would disburse a small amount (if any) of the proceeds to the homeowner and keep the remainder for themselves.
Fuerte, who was delinquent in her monthly mortgage payments (she had an outstanding balance of $4,486.19), was approached as part of this scheme by one of the defendants in May 2005. She was told that she would need to transfer title to her home to Jonathan Kim (one of the defendants), so the defendants could obtain the funds needed to cure the default, but that title would be retransferred to her as soon as she was able to clean up her credit. Although Fuerte signed various documents, including a grant deed to Kim, she claims she never intended to sell her house and was not aware that the documents purported to constitute a sale. Kim obtained a $281,000 loan from Wilmington Finance, a division of AIG Federal Savings Bank, secured by a deed of trust on Fuerte's home. This loan constituted the entire equity of the home. Fuerte did not receive any consideration from the purported sale.
Fuerte filed a lawsuit against all of the participants in the fraudulent scheme, as well as Wilmington Finance (hereafter AIG) and Bank of the West.
Shortly before trial was scheduled to begin, AIG moved for summary judgment or summary adjudication that title be quieted in AIG's deed of trust on the ground that AIG was a bona fide encumbrancer, having paid valuable consideration in good faith and without notice of Fuerte's claim to the subject property. The trial court (Judge Steven Blades presiding) granted AIG's motion. In a 14-page, detailed minute order, Judge Blades noted that Fuerte failed to dispute most of AIG's facts, and that the undisputed facts showed that (1) AIG loaned Kim $281,600, secured by a first deed of trust encumbrancing the property; (2) AIG received documentation showing that Fuerte was selling the property to Kim and Kim would be occupying the property as his primary residence; and (3) AIG did not know that the sale of the property to Kim was part of a fraudulent scheme. The court observed that when a deed is signed by a grantor, with knowledge that it will convey title to another, but the grantor is induced to sign by fraudulent misrepresentations, the deed is voidable but not void, and it can be enforced by a bona fide purchaser or encumbrancer who paid valuable consideration and had no notice of the fraud. (Citing Fallon v. Triangle Management Services, Inc. (1985)
On November 26, 2008 — the day before Thanksgiving Day, and the last court day before trial was set to begin — the parties (including AIG) appeared before Judge Blades on an ex parte application by Kim for an order shortening time to hear a motion to reconsider the order granting summary judgment to AIG. Apparently (the ex parte papers are not in the appellate record), Kim sought reconsideration because AIG's summary judgment caused some impediment to settlement of Fuerte's claims against Kim. The court denied Kim's application due to procedural defects. The final status conference followed the court's ruling on Kim's ex parte application. The court asked whether everyone was ready for trial (which, the court told the parties, would be conducted before a different judge), then turned to AIG's counsel and said, "You're out, right?" Counsel agreed that AIG was out, but Fuerte's counsel noted that AIG still had a cross-complaint on file. AIG's counsel, who was new to the case, stated that she needed to look at it, but that it most likely would be dismissed. The court told her she needed to file the dismissal "first thing Monday morning" (the next court day) "or show up for trial on the cross-complaint." Counsel did neither; although she signed a request for dismissal on the next court date — December 1, 2008 — the request was not received by the court until December 2, 2008, due to a miscommunication with her staff.
On December 1, 2008, the case was assigned to Judge Dan T. Oki for trial.
After sorting through the status of the co-conspirator defendants (i.e., not AIG or Bank of the West), the court asked Kim's attorney if there was anything else the court should know about the case. Kim's counsel told the court he believed they could settle the case as to Kim if they could have another hour or two. The court turned to Fuerte's counsel, who stated there were "several other issues. There are two cross-complaints on file here, one by [AIG]. They have been granted a summary judgment as a good faith encumbrancer without notice, and that — that motion was granted by Judge Blades. But they still have a cross-complaint. Their counsel tells me they're filing a dismissal as to their cross-complaint, but I haven't seen it yet." The court noted that AIG had not appeared for trial, and Fuerte's counsel said that AIG's counsel told him during the previous court appearance a few days earlier that she would be filing a dismissal. After dismissing the cross-complaint filed by other defendants, the court granted a recess to allow Kim and Fuerte to discuss possible settlement.
Fuerte, Kim, and their counsel returned to the court a short time later, and Fuerte's counsel announced, "We have a stipulation, a settlement for Mr. Kim and Mrs. Fuerte. I've presented the court a signed stipulation that deals with the title to the property and the acknowledgment that it was fraudulently obtained, such that we can go back to the county assessor and get them to assess it back to its original assessment because it was never a valid — valid transfer, and we would ask that the court would sign that." Counsel also noted that the stipulation also included a judgment against Kim in the amount of $200,000. After ascertaining that Fuerte and Kim understood the agreement and agreed to be bound by it, the court approved the stipulation and signed the order.
The stipulated order, signed by Judge Oki on December 1, 2008, stated that the grant deed Fuerte signed to transfer the property to Kim "was and is VOID, ab initio, and never conveyed any right, title or interest in and to said real property" and "that all rights, title and interests to said real property are QUIETED to GLORIA FUERTE, as her sole and separate property, as of 7-28-2005." AIG was not served with notice of entry of the stipulated order.
Unaware of the stipulated order, on December 4, 2008, AIG served on Fuerte and the other defendants a proposed judgment in favor of AIG. The proposed judgment, which was drafted for Judge Blades's signature and noted on the caption page that the case was assigned to Judge Blades for all purposes (even though the case was then before Judge Oki for trial), was submitted to the court the next day, December 5. There is no indication that the proposed judgment was provided to Judge Oki. Three days later, after conducting a court trial, Judge Oki entered the court's "Findings and Judgment After Trial." Those findings and judgment, which do not mention AIG or the quiet title cause of action, awards a total judgment in favor of Fuerte and against the other defendants in the amount of $6,666,383, plus $1,000,000 in punitive damages against certain defendants.
In January 2009, AIG's counsel contacted the court about the proposed judgment AIG had submitted in December 2008, to which no objections had been made. The clerk told her she was unable to locate the proposed order, and suggested that AIG re-submit it. Counsel did so on February 2, 2009, and once again served it on all parties. There were no objections to the proposed judgment, which Judge Blades signed on February 25, 2009. AIG served notice of entry of the judgment on all parties on March 3, 2009.
On March 19, 2009, Fuerte filed a motion, purportedly under Code of Civil Procedure
AIG opposed Fuerte's motion, arguing that neither section 664 nor section 1908 provides authority for vacating the summary judgment, and that the stipulated order was not a judgment and was not res judicata as to the summary judgment. AIG also argued that the motion, which Fuerte noticed to be heard before Judge Oki, should be heard by Judge Blades, the same judge who entered the summary judgment.
Before the scheduled hearing on the motion, Judge Oki and Judge Blades conferred, and determined that the motion should be heard by Judge Blades because the case had been assigned to Judge Oki only for trial. Judge Blades continued the hearing to May 12, 2009.
Before that rescheduled hearing, AIG filed a motion to vacate or amend the stipulated order, which AIG's attorneys claimed they first saw when it was attached as an exhibit to Fuerte's motion to vacate AIG's summary judgment. AIG argued that the stipulated order should be vacated or set aside because (1) it improperly attempts to resolve a quiet title claim without an evidentiary hearing regarding the claims of all the defendants — including AIG — in violation of section 764.010; (2) it was procured by fraud in that it was presented to the trial court without AIG's knowledge, and it declares that the grant deed to Kim was void, despite Judge Blades's ruling that the deed was only voidable, not void; and (3) it could not be binding on AIG because AIG was not a party to the stipulation. Alternatively, AIG argued that the stipulated order should be corrected, under section 473, subdivision (d), to conform to the ruling granting AIG's motion for summary judgment.
In opposition, Fuerte argued that she did not engage in any improper procedure because at the time the stipulated order was entered on the first day of trial there was no judgment in favor of AIG, and AIG chose not to appear for the first day of trial even though it was still a party (because there was no judgment and AIG's cross-complaint had not yet been dismissed). Fuerte also argued the stipulated order was not procured by fraud, because AIG had notice of the trial but chose not to appear, Fuerte's counsel informed Judge Oki that AIG's summary judgment motion had been granted, and the trial court retained inherent authority to change its decision on the summary judgment motion because no judgment had been entered. Finally, Fuerte argued that AIG was not entitled to relief under section 473 because the stipulated order was not the result of clerical error or AIG's attorney's excusable neglect.
Shortly after Fuerte filed her opposition to AIG's motion, Judge Blades issued his ruling on Fuerte's motion to vacate the summary judgment. Judge Blades denied Fuerte's motion in an eight-page minute order. Judge Blades observed that "[t]he transcript of the 12/1/08 hearing [during which the stipulated order was entered] shows that, while [Fuerte's counsel] informed Judge Oki that AIG had been granted summary judgment by Judge Blades [citation], there is no indication in the transcript that [counsel] informed Judge Oki that [Fuerte] sought to set aside or vacate the summary judgment order. This Court has been informed by Judge Oki that he was not aware that [Fuerte] was seeking to set aside or vacate Judge Blades' 11/3/08 order granting AIG's motion for summary judgment. Thus, while [counsel] advised Judge Oki of the existence of the order granting AIG summary judgment, he did not advise Judge Oki that the Stipulation and Order presented to him on 12/1/08 was intended to vacate the 11/3/08 summary judgment order. The Court finds that it was incumbent upon [counsel] to advise Judge Oki that the stipulated order was intended to set aside AIG's summary judgment. . . . [¶] [C]ounsel[']s claims that (1) he was not obligated to provide notice to AIG, and (2) AIG waived the right to object to the [stipulated] order because it failed to appear at trial are without merit." After denying Fuerte's motion, Judge Blades noted that "[i]f AIG intends to challenge the order and/or judgment signed by Judge Oki, it may raise that issue directly before Judge Oki."
Two weeks later, AIG's motion to vacate or amend the stipulated order was heard before Judge Oki. After listening to Fuerte's counsel's arguments, Judge Oki stated, "Before I let [AIG's counsel] respond, let me just make a record myself, since this matter appears headed to the Court of Appeal by one party or another." Judge Oki then explained how the case ended up before him on the first day of trial, and that that was the first time he saw the file, which was why he asked Fuerte's counsel "to just give me a summary of where the litigation was at, which parties were or were not involved in it, which operative pleadings were still to be tried beyond the complaint, et cetera. [¶] And it was in that context of my trying to get familiar with the case that without question [Fuerte's counsel] did say that AIG had had a motion for summary judgment granted, that there was a finding by Judge Blades that they were a good faith encumbrancer. [¶] Unfortunately, that kind of went in one of my ears and out the other because I was just still trying to sort out which parties remained and which parties would be involved in the trial I had been assigned."
Judge Oki noted that after Fuerte's counsel summarized the case for him, the attorneys for Kim and Fuerte asked for some time to try to negotiate a settlement, which he granted, and that those negotiations "did result in a stipulation for judgment that I accepted. [¶] The difficulty was the fact that I did not appreciate, myself, the fact that the stipulated judgment between Ms. Fuerte and defendant Jonathan Kim would have the effect of overruling, if you will, at least Judge Blades' ruling on AIG's prior motion for summary judgment." Although Judge Oki remarked that Fuerte might be correct that Judge Blades could have changed his ruling on the summary judgment motion because no judgment had been signed at that time, he pointed out that "since I am a colleague of Judge Blades on the Superior Court and not on the Court of Appeal, I had no authority to overrule Judge Blades' prior ruling." He concluded that he "would not have approved the stipulation between Jonathan Kim and Gloria Fuerte had I realized at the time it would have had the effect of overruling [Judge Blades's] granting of the summary judgment in favor of AIG."
After considering the arguments of counsel, Judge Oki granted AIG's motion and ordered that the stipulated order be amended to conform to the order granting summary judgment in favor of AIG — i.e., making clear that the grant deed was declared void only as between Fuerte and Kim, and that title is quieted to Fuerte as her sole and separate property but subject to a deed of trust in favor of AIG.
On appeal, Fuerte argues that (1) the trial court erred by denying her motion to vacate the summary judgment because Judge Blades's ruling granting AIG's summary judgment motion was not a judgment, the stipulated order was a valid judgment quieting title, and therefore the summary judgment was void; (2) the amendment of the stipulated order is void because it incorporates the findings of the void summary judgment; (3) the trial court could not amend the stipulated order to delete or add terms that Fuerte and Kim had not agreed to; and (4) the trial court did not have authority to amend the stipulated order because it was a final judgment.
A. The Trial Court Was Authorized To Amend The Stipulated Order
Fuerte contends the trial court lacked authority to amend the stipulated order because none of the statutory bases AIG cited — section 473, subdivisions (d) and (b), and section 663 — apply. She is incorrect.
"It is not open to question that a court has the inherent power to correct clerical errors in its records so as to make these records reflect the true facts." (In re Candelario (1970)
The Supreme Court has cautioned that clerical error "is to be distinguished from judicial error which cannot be corrected by amendment. The distinction between clerical error and judicial error is `whether the error was made in rendering the judgment, or in recording the judgment rendered.'" (In re Candelario, supra, 3 Cal.3d at p. 705.) This distinction "does not depend so much on the person making it as it does on whether it was the deliberate result of judicial reasoning and determination." (Estate of Doane, supra, 62 Cal.2d at p. 71.) And, "[i]n determining whether an error is clerical or judicial, great weight should be placed on the declaration of the judge as to his intention in signing the order." (Id., citing Bastajian, supra, 19 Cal.2d at p. 215.)
The Bastajian case is instructive as to whether the error in this case was clerical or judicial. In Bastajian, the plaintiff brought a lawsuit against the defendants to quiet title to real property, based upon plaintiff's claim that two trust deeds and a conveyance to defendants were obtained by fraud and undue influence and that the consideration was inadequate. The case was tried and submitted to the court, and a minute entry was made stating, "Cause heretofore tried and submitted, the court now orders judgment for defendants." (Bastajian, supra, 19 Cal.2d at p. 210.) Defense counsel, who got sick and died a few months later, failed to submit findings of fact and conclusions of law. Almost a year later, plaintiff's counsel submitted findings of fact and conclusions of law and a judgment, which were signed and filed by the trial court. The judgment plaintiff submitted and the court signed, however, stated that the trust deeds were valid in every respect and the property was subject to them, but the conveyance of the property from plaintiff to defendants was invalid as claimed in the complaint; and that if the sums payable under the trust deeds were not paid in six months, plaintiff would no longer have any interest in the property. (Id. at pp. 210-211.)
The defendants, through substituted counsel, filed a motion to vacate the findings and judgment on the ground they did not conform to the true judgment rendered by the court. The trial court granted the motion and directed defendants to prepare findings of fact and conclusions of law and judgment in accordance with the decision the court had announced following trial. In its order vacating the findings and judgment, the court stated that it "`intended to pronounce and did pronounce judgment in this action in favor of the defendants upon all of the issues presented, and decreed, among other things, that the deed conveying the premises involved in this action to the defendants Brown was valid and in force and effect and conveyed good title to them, while said Findings of Fact and Conclusions of Law and said Judgment inadvertently and erroneously contained findings against said defendants and in favor of the plaintiff, and inadvertently and erroneously decreed that said deed be set aside, which was not the judgment of this court; that said Findings of Fact and Conclusions of Law and said Judgment were signed by this court inadvertently and by mistake, and did not express the intent of this court nor the true judgment rendered herein, and that the signing of the same by said court constituted a clerical mistake.'" (Bastajian, supra, 19 Cal.2d at pp. 211-212.)
The Supreme Court held that the trial court had the power to set aside the judgment because the trial court's error in signing the judgment was a clerical, rather than judicial, error. (Bastajian, supra, 19 Cal.2d at p. 214.) The Supreme Court stressed that the trial court's statement that the findings and judgment it signed did not conform to the true judgment rendered, in that the court intended to pronounce judgment in favor of the defendants, "cannot be wholly disregarded nor lightly brushed aside. It was a declaration of a fact that was concealed in the mind of the judge, and no one was in a better position than he to state his true intent. He may have failed to read the findings and judgment before signing them. He may have supposed they were in favor of defendants. His declaration may be construed to so indicate." (Ibid.) The Supreme Court also observed that the record supported the trial court's declaration that the judgment had been signed by mistake, because the minute entry made shortly after trial stated that judgment was ordered for defendants. The Supreme Court noted that "[w]hile that minute entry was not the decision or judgment of the court and the opinion thereby expressed was not binding upon the court [citations], it must be true that it is evidence of the intent of the court as to the decision, findings of fact and conclusion of law, he intended to ultimately make. It may be inferred therefrom that his intent was the same when he in fact did sign findings, and as those findings were contrary to the intention so expressed, the signing thereof was a clerical error." (Id. at p. 215.)
In a similar vein is Martin v. Ray (1946) 74 Cal.App.2d 922. In that case, the plaintiffs filed an action against three defendants — a married couple and a company. After a court trial, the court filed a memorandum of opinion, the last paragraph of which stated that judgment was in favor of the plaintiffs against the couple in the amount of $1,000 and a mandatory injunction commanding the couple to remove an obstruction from certain real property, and against the company in the amount of $10; the memorandum of opinion also stated that damages against the company "`should be nominal and set at $10.00.'" (Id. at p. 923.) The plaintiffs' counsel prepared findings of fact, conclusions of law, and judgment, which were signed and filed by the court. The plaintiffs' submission included a three-paragraph judgment. The first two paragraphs set forth the mandatory injunction, which was directed at the couple by name. The last paragraph stated that "`plaintiffs have and recover of and from defendants herein, and each of them, the sum of one thousand dollars ($1,000.00).'" (Id. at p. 924.)
The company defendant moved for a nunc pro tunc order amending the judgment by inserting in the third paragraph the names of the couple after the word "from" and before "defendants herein." (Martin v. Ray, supra, 74 Cal.App.2d at pp. 924-925.) The trial court granted the motion and amended the judgment to state that plaintiffs would recover $1,000 from each of the couple defendants and $10 from the company defendant. (Id. at pp. 925-926.)
The plaintiffs appealed, and the court of appeal affirmed, finding the nunc pro tunc order merely corrected a clerical error. The appellate court acknowledged that, as the plaintiffs argued, "the judge was not required to make his formal judgment in accordance with the memorandum [of opinion] which he had filed." (Martin v. Ray, supra, 74 Cal.App.2d at p. 927.) But the court observed that there was nothing in record, "other than the fact that the judge signed the formal judgment submitted to him, to indicate that the judge had changed his decision from that stated in his memorandum." (Id. at p. 927.) The appellate court concluded: "The comprehensive memorandum of opinion, which had been signed and filed prior to the signing of the formal judgment, indicates that the amendment was not an afterthought or an attempt to correct a judicial error. A court has the power to correct its judgment to make it speak the court's true and intended decision, even though the misprision in the original judgment was that of the court. [Citation.] The amendment herein was a correction of a clerical error, and said amendment was made properly." (Id. at p. 928.)
In the present case, Judge Blades made findings and rendered judgment in favor of AIG in a comprehensive minute order. Although the findings and rulings made in that minute order were not timely reduced to a formal judgment, both Judge Blades and Judge Oki made clear on the record that neither judge intended to change that ruling. Thus, Judge Oki's signing of the stipulated order, which included language that was contrary to Judge Blades's ruling granting AIG summary judgment, was clerical error that Judge Oki had the power to correct. (Bastajian, supra, 19 Cal.2d at p. 215; Martin v. Ray, supra, 74 Cal.App.2d at p. 928.)
B. The Amendments Did Not Materially Alter Any Agreed-Upon Terms That Fuerte And Kim Had The Power To Include In Their Stipulation
Fuerte argues that her agreement with Kim, which led to the entry of the stipulated order, depended upon an agreed term without which she would not have agreed to settlement: that title be quieted as of the day before she signed the grant deed and Kim executed the deed of trust. She contends that the trial court had no jurisdiction to alter that term that she and Kim had agreed upon, by amending the stipulated judgment.
In support of her contention, Fuerte cites to authorities that have little to do with the facts of the present case. Those authorities involved trial courts attempting to enforce a settlement despite the absence of an enforceable agreement between the parties (see Weddington Productions, Inc. v. Flick (1998)
Fuerte does not point to any authority, however, under which she and Kim had the power to agree on findings concerning another party's rights, particularly when those findings would overrule the trial court's prior ruling. In fact, they had no such power. (See, e.g., Robinson v. Sacramento City etc. Sch. Dist. (1966)
C. The Amended Stipulated Order Is Not Void
Fuerte argues that the amended stipulated order is void because it incorporates the findings of the summary judgment, which Fuerte contends is void. We disagree. Even if we were to find that Judge Blades did not have jurisdiction to enter the summary judgment when he did (and we do not so find, see discussion, post), Fuerte's argument fails because she misconstrues the facts. The amendments to the stipulated order were not dependent upon the summary judgment itself, but were instead based upon Judge Blades's ruling granting AIG summary judgment. There is no question that Judge Blades had jurisdiction to enter the order granting summary judgment at the time he did so.
D. The Summary Judgment Is Not Void
Finally, Fuerte contends that the summary judgment is void because by the time it was entered, the stipulated order had been entered quieting title of the property in Fuerte, and therefore Judge Blades no longer had jurisdiction to quiet title with regard to AIG's deed of trust. As we have discussed, to the extent the stipulated order purported to quiet title in Fuerte without noting the validity of AIG's deed of trust, its entry was the result of clerical error. Having conferred with Judge Oki to confirm that Judge Oki did not, by signing the stipulated order, intend to overrule Judge Blades's prior ruling that AIG's deed of trust was enforceable against the property, Judge Blades properly signed and entered the summary judgment in accordance with his prior ruling.
E. Costs on Appeal
In their briefs on appeal, each side points to the other side's counsel in assessing blame for the current state of affairs. This appeal could have been avoided if AIG's counsel had timely filed a proposed judgment after AIG prevailed on its summary judgment motion and followed up to ensure it was entered before trial, or if AIG's counsel had appeared on the first day of trial, given that no judgment had yet been entered, nor had AIG's cross-complaint been dismissed. That being said, Fuerte's counsel tried to take advantage of AIG's tardiness and the fact that this very complex case was assigned to a new judge for trial, by presenting a stipulated order to Judge Oki without informing him of its effect on Judge Blades's prior ruling. For these reasons, we conclude that the parties should bear their own costs on appeal.
The order denying Fuerte's motion to vacate the summary judgment and the order granting AIG's motion and amending the stipulated order are affirmed. The parties shall bear their own costs on appeal.
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