Plaintiffs owned a commercial property and have used it for their own businesses and also have had tenants that have paid them rent. In January of 2005 a deed of trust, and absolute assignment of rents which were signed in December of 2004, were recorded in the Kern County Recorders office. The deed of trust listed two parcels of real estate as collateral; the Brundage Property which is the property in question and another parcel located on California Avenue in Bakersfield.
The debt secured by the deed of trust was executed as a promissory note dated December 13, 2004 for $350,000 which was for the purchase of the California Avenue Property. Both documents were made by the Plaintiffs, but the Plaintiffs alleged that the names and signatures on the forms were forged, and Mr. Salazar believed the forging to have been done by their son Jaime Salazar.
Trial Court Decision
This appeal action brings up the question of if an application of the statute of limitations to a quiet title action that attempts to have a deed of trust declared void as a forgery would be correct. The trial court granted a summary judgment for the defendant beneficiaries for asserting the affirmative defenses of the statute of limitations, waiver of the forgery claim, unclean hands, ratification, and laches. It was granted on the three-year limitations period in Code of Civil Procedure section 338(d) but did not cover the affirmative defenses. The trial court came to the conclusion that the notices of default sent by lender to the plaintiffs in 2005 began the statute of limitations period and the limitations period had expired three years after and this was much before the quiet title action had been filed in early 2012.
On the appeal, the Plaintiffs rely on the rule that a statute of limitations does not bar an action to quiet title by an owner in undisturbed possession of their land and that basically, the fact that the deed of trust documents had forged signatures on them and that the notices of default basically relied on these forged documents which was the make them invalid. The notices of default under an invalid or forged deed of trust provide notice of a cloud on the plaintiffs’ property title, but did not dispute or disturb the plaintiffs’ possession of the property and hence the statute of limitations does not bar their quiet title action. Secondly, in regards to the affirmative defenses of waiver, unclean hands, ratification, and laches, the separate statements for each defense do not set forth all of the material facts necessary and hence fail. In conclusion the trial courts decision was reversed.
This case raises important issues when determining statute of limitations. A statute of limitations provides the time frame for a person to bring an action. Once the statute of limitations expires, the person cannot file an action against another even if there is liability. Please contact Attorney Anthony Marinaccio at 818-839-5220 for more information.