Filed 9/21/16 Williams v. Rossi CA2/4

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

CAROLYN WILLIAMS 

STALLWORTH,

 Plaintiff and Appellant,

v.

PATSY J. ROSSI, 

 Defendant and Respondent.

 B261438

 (Los Angeles County

 Super. Ct. No. BC453214)

APPEAL from a judgment of the Superior Court of Los Angeles County, 

Michelle R. Rosenblatt, Judge. Affirmed.

Law Offices of George E. Omoko and George E. Omoko for Plaintiff and 

Appellant.

John Clark Brown, Jr. for Defendant and Respondent.
2

Appellant Carolyn Williams Stallworth brought suit against respondent 

Patsy J. Rossi, and others, seeking to quiet title to property on 5th Avenue in 

Inglewood and to cancel a deed of trust assigned to respondent which permitted 

him to foreclose on the property. The trial court granted summary adjudication on 

the cancellation cause of action, finding it barred by the statute of limitations. 

After a bench trial, the court ruled for respondent on the quiet title claim, finding it

subject to waiver and estoppel, and further finding that respondent was a bona fide 

purchaser for value. We affirm.1

FACTUAL AND PROCEDURAL BACKGROUND

A. Background Facts2

In 2006, appellant owned four real properties.

3

 In addition, she had been 

awarded in a divorce settlement the property at issue in this litigation -- a house on 

5th Avenue in Inglewood, then in the name of her ex-husband, Fred Stallworth.

4

 

Appellant applied to Waldman Financial Group for a loan.5 Waldman informed 

 

1 As explained below, we take issue with some of the trial court’s factual and legal 

rulings, but follow the established rule that an appealed judgment or order correct on any 

theory will be affirmed regardless of the trial court’s reasoning. (Hoover v. American 

Income Life Ins. Co. (2012) 206 Cal.App.4th 1193, 1201.)

2

The background facts are derived from the trial court’s findings set forth in its 

detailed statement of decision and from evidence presented at trial. Except as specified 

below, the essential facts are not in dispute.

3

The properties consisted of a house on 113th Street and three vacant lots. At trial, 

appellant testified the vacant land was worth approximately $65,000. 

4 At the time, appellant had lived in the house on the 5th Avenue property for more 

than 30 years. Appellant quitclaimed the property to her ex-husband in 2003. 

5 Waldman Financial Group and its owner Michael Waldman will be referred to 

jointly herein as “Waldman.” In 2005, appellant had borrowed approximately $40,000 

from Waldman using the 113th Street property as security, and used the funds to pay off 

a preexisting lien on that property. In addition, she had taken out multiple other loans 

(Fn. continued on next page.)
3

her that the amount she wanted to borrow required putting up the 5th Avenue 

property as security. Waldman prepared loan documents and a deed of trust

covering the 5th Avenue property. On June 15, 2006, appellant signed these 

documents.6 Waldman represented that if Fred did not transfer the property to 

appellant within three days the agreement would be “void,” and that he would not 

record the deed of trust. Fred did not transfer the property to appellant within that 

time frame. Nonetheless, on July 10, 2006, Waldman recorded the deed of trust 

for the 5th Avenue property. On August 1, Waldman told appellant to come pick 

up a check, and disbursed approximately $100,000 to appellant. Subsequently, 

appellant received the balance of the proceeds.

7

After the loan documents covering the 5th Avenue property were executed, 

respondent’s sister, Leslie Day, who worked for Waldman, approached respondent

about purchasing the note and deed of trust. Day had seen a title report, and was 

aware that appellant was not on the title to the 5th Avenue property.8 In August 

 

secured by her properties over the years. The court specifically found that appellant “was 

experienced with obtaining loans against her properties”; that she “understood that deeds 

of trust secure the notes”; and that she understood that to obtain a loan from a mortgage 

company, the loan must be secured by real property. 

6

The deed of trust was in favor of NXT Equities, Incorporated (NXT), an affiliate 

of Waldman. It stated that it secured a $200,000 “[r]evolving [l]oan [a]greement” or line 

of credit. “Waldman Financial” was the named trustee. On July 3, 2006, appellant 

executed deeds of trust in favor of NXT on her three vacant lots. 

7

There is no dispute that fees appellant had agreed to pay were taken out of the 

amount initially disbursed to appellant. 

8 Day testified at her deposition, that she was informed by another Waldman 

employee, Bryan Tran, that appellant had been awarded the property in a divorce 

proceeding and would be on the title by the time the loan was funded. Day did not 

investigate further. Tran denied having such a conversation with Day, and at trial, Day 

could not remember asking Tran about title. The court found both Day and Tran not 

credible as witnesses. It found that Day was respondent’s agent, and that she was aware 

(Fn. continued on next page.)
4

2006, Waldman transferred the note and deed of trust to respondent, who wired 

$200,000 to purchase the loan.

9

 

In October 2006, appellant received a statement from Waldman indicating 

she had an outstanding loan secured by the 5th Avenue property. She questioned

Waldman about the claim, but made payments from 2006 to 2007 to avoid losing 

the property. That same month, appellant learned that Waldman had recorded the 

deed of trust on the 5th Avenue property. 

Throughout 2007, Heather Primo, Waldman/NXT’s controller, spoke to 

appellant about delinquent payments on the loan. Primo testified that appellant 

never denied owing the funds, never said the trust deed for the 5th Avenue 

property was to have been destroyed, and never suggested the loan was to have 

been secured by different properties. 

In June 2007, a notice of default was recorded against the 5th Avenue 

property. Appellant paid nearly $14,000 to reinstate the loan, and the default was 

rescinded. In August 2007, appellant received and recorded a deed from Fred, 

transferring the 5th Avenue property to her. In October 2007, a second default 

notice was recorded. That same month, appellant filed bankruptcy, listing the 5th 

Avenue property on her schedule D, and indicating that approximately $200,000 

was owed to NXT.

10

 After the bankruptcy was dismissed, she attempted to 

 

that appellant was not the title owner of the 5th Avenue property when respondent 

purchased the note and deed of trust. It imputed Day’s knowledge to respondent. 

9 Day contributed some of the funds.

10 In the bankruptcy proceeding, appellant represented that secured claims against 

the 5th Avenue property totaled approximately $485,000, including the $200,000 owed 

NXT, approximately $221,000 owed to the Small Business Administration (SBA) and 

approximately $38,000 owed to Wells Fargo. The bankruptcy filings included her 

agreement to make regular monthly payments to the holders of the three liens if the 

bankruptcy court confirmed her plan. 
5

refinance the Waldman loan, but was unsuccessful.11 

On May 8, 2008, a trustee’s sale was held by Reliable Trust Deed Services 

(Reliable). Respondent purchased title to the property by making a full credit bid 

of the debt owed by appellant ($231,859). That same month, he and Day paid 

more than $46,000 to Wells Fargo and its trustee to prevent the bank from 

foreclosing. They also began making payments to the SBA to keep that loan 

current, and made repairs to the property. Respondent filed an unlawful detainer 

action in July 2008 that resulted in appellant’s removal from the property in 

January 2009. 

B. The Complaint

In January 2011, appellant filed the underlying action for cancellation of 

deed and quiet title. She named respondent, Waldman, NXT, Reliable, and others,

seeking cancellation of deeds pertaining to the 5th Avenue property, including the 

deed of trust and the trustee’s deed issued after the foreclosure, and to quiet title to 

the property. The complaint alleged that Waldman told appellant she could borrow 

$200,000 on the 5th Avenue property. When appellant signed the loan documents 

on June 15, 2006, including the deed of trust, Waldman told her that the documents

would be “kept in abeyance” and not recorded until her ex-husband Fred executed 

a deed transferring the property, and that if Fred did not sign within three days, 

“the loan documents would become void . . . .” A few weeks later, appellant told 

Waldman that Fred had refused to sign the deed. Appellant alleged that thereafter 

she and Waldman entered into a different loan transaction involving the three 

 

11

 During this period, appellant executed two additional deeds of trust purporting to 

transfer percentages of the 5th Avenue property to a trust and another lender.
6

vacant lots, and she believed that the funds she received from Waldman were the 

result of a loan secured by the three lots. 

The complaint stated that in October 2006, appellant received a statement in 

the mail and realized that Waldman claimed she owed money on the 5th Avenue 

property. When she asked Waldman to explain, Waldman told her to make 

payments or she would lose the property, and that if she made payments for six 

months, she would be able to refinance. Appellant made payments for a few

months. After Fred transferred the property to her, Reliable issued a notice of 

trustee’s sale, which resulted in transfer of title to respondent and appellant’s 

eviction. 

The cancellation cause of action alleged that Waldman and respondent 

“fraudulently obtained [appellant’s] interest in [the 5th Avenue property] by 

surreptitiously obtaining a purported transfer that [appellant] did not authorize and 

was unaware of at the time that title to [the property] was in Fred Stallworth’s 

name.” It also alleged that respondent and Reliable “failed to comply with statute” 

before conducting the foreclosure sale.12 The quiet title cause of action alleged that 

Waldman, respondent and various other defendants “claim some right, title, estate, 

lien, or interest in and to 5th Avenue” based on a “void deed.” 

C. Respondent’s Motion For Summary Judgment

In April 2013, respondent moved for summary judgment. He contended that 

judgment should be granted on appellant’s claims for cancellation and quiet title on 

 

12 The complaint did not specify how respondent and Reliable “failed to comply with 

statute”; nor did it suggest that the alleged illegality was Reliable’s failure to be 

appointed trustee of record prior to conducting the foreclosure sale. To the contrary, the 

complaint specifically alleged that respondent “substituted [Reliable as] a new trustee” 

after learning of Fred’s transfer of title to appellant, and that “[a]s [of] September 11, 

2007, [Reliable] had become the ‘duly appointed Trustee’ of the deed of trust . . . .” 
7

the ground that he was a bona fide purchaser for value unaware of the 

representations made to appellant by Waldman when he purchased the deed of 

trust, specifically the promise that the loan agreement would be void if appellant’s 

ex-husband Fred failed to transfer the 5th Avenue property to her. Respondent 

further contended that both claims were time barred. Finally, respondent 

contended that the causes of action for cancellation and quiet title were barred by 

principles of res judicata as a result of the unlawful detainer proceeding. 

Appellant disputed that respondent was a bona fide purchaser, and 

contended that in any event, the trust deed was void because she had never validly 

delivered it to Waldman. She asserted the claims were not time-barred, first,

because the deed of trust was void and could be cancelled at any time; second, 

because the five-year statute of limitations of Code of Civil Procedure section 318 

applied; and third, because the statute of limitations did not begin to run until 

respondent filed the unlawful detainer action in 2008. She contended that the 

unlawful detainer action could not bar claims unrelated to the conduct of the 

trustee’s sale. 

The trial court granted summary adjudication on the cancellation cause of 

action, finding that it was based on fraud and concluding that the three-year statute 

of limitations set forth in Code of Civil Procedure section 338, subdivision (d), 

governing actions for relief on the ground of fraud or mistake, applied.

13

 The trial 

court denied summary adjudication on the quiet title cause of action, finding 

respondent had failed to establish as a matter of undisputed fact that he was a bona 

 

13 The court also determined that appellant’s separate claim for fraud and 

misrepresentation was time barred under Code of Civil Procedure section 338, 

subdivision (d). Appellant does not seek to revive this claim.
8

fide purchaser, the elements of res judicata, or that the statute of limitations had 

run.

D. Court’s Findings After Trial

After a bench trial at which the evidence established the facts outlined

above, the court found in favor of respondent on the claim for quiet title, 

concluding that the claim was precluded by waiver and estoppel.14 In this regard, 

the court found that appellant received a loan from Waldman, made payments, did 

not bring any legal challenge to the debt, did not seek to cancel any recorded 

instrument, and did not file an adversary proceeding in the bankruptcy court to set 

aside the debt. The court further found that respondent had been injured by 

appellant’s delay, in that he expended funds to pay off Wells Fargo’s senior debt 

and to make repairs to the property. The court also concluded that appellant was a 

bona fide purchaser for value.

The court made a number of specific factual findings of significance to this 

appeal. It found that appellant had received the $200,000 in loan funds described 

in the deed of trust. It found that respondent had paid approximately $200,000 to 

Waldman to obtain assignment of the note and deed of trust. Although the court 

found that respondent was, or should have been, aware through his agent Day that 

the property was not in appellant’s name at the time of the assignment, it did not 

find he was aware of any promises made to appellant by Waldman. The court

further found that there had been no valid delivery of the deed of trust on June 15, 

 

14 The court found that the statute of limitations did not bar the claim, applying the 

five-year statute of limitations contained in Code of Civil Procedure section 318. 
9

2006 because “the intention of the parties was to transfer title at a later time if a 

certain condition were to occur within three days.” This appeal followed.15

DISCUSSION

A. Substantial Evidence Supported The Trial Court’s Finding That 

Appellant received The Loan Proceeds

Appellant disputes that substantial evidence supported her receipt of the 

$200,000 in loan proceeds described in the deed of trust and in the billing 

statements sent to her. Heather Primo, the controller for Waldman and NXT, 

testified that she specifically remembered writing the check to appellant for the 

initial draw of $98,000, and an additional check for the remaining amount. Primo 

also authenticated a borrower’s statement for January 2007, which indicated the 

full $200,000 had been advanced as of that date. When the loan went into default, 

Primo contacted appellant telephonically nearly every week. Appellant said she 

was trying to refinance, but never stated or indicated she owed a lesser amount 

than indicated on the statements. Moreover, when appellant filed her bankruptcy 

petition, she attached a schedule indicating she owed an obligation of 

approximately $200,000 under the NXT deed of trust. This action provided further 

 

15 Appellant contends the trial court erred in granting summary adjudication on the 

cancellation claim on the ground the statute of limitations had run. (Cf. Salazar v. 

Thomas (2015) 236 Cal.App.4th 467, 476-481, 482 [statute of limitations for quiet title 

action does not run against a party as long as he or she is in exclusive and undisputed 

possession of the land, and notices of default from a lender are “not sufficient to dispute 

or disturb plaintiffs’ possession”], with Ankoanda v. Walker-Smith (1996) 44 Cal.App.4th 

610, 616-618 [once landlord learned tenant was not going to reconvey disputed portion of 

property, her possession was no longer “‘exclusive and undisputed,’” and statute of 

limitations commenced running].) Because we affirm the trial court’s ruling that 

appellant’s claims were precluded by the doctrines of waiver and estoppel and further 

find that respondent’s status as a bona fide purchaser protected his title from appellant’s 

claims, we need not address whether the statute of limitations barred either claim. 
10

evidentiary support for the trial court’s finding. (See In re Standfield (Bankr. 

N.D.Ill. 1993) 152 B.R. 528, 531 [information in verified schedules and statements 

filed by debtors may be deemed evidentiary admissions].) The evidence was 

sufficient to establish that appellant received the loan proceeds. 

B. The Trust Deed Executed By Appellant Was Not Void

“A deed is a written instrument conveying or transferring the title to real 

property.” (Estate of Stephens (2002) 28 Cal.4th 665, 671-672.) It takes effect 

when signed by the grantor and unconditionally delivered to the grantee. (Civ. 

Code, §§ 1056, 1091.)16 In the absence of such delivery a deed is void. (3 Miller 

& Starr, Cal. Real Estate (4th ed. 2015) Deeds and Descriptions, § 8:41, p. 8-116; 

Reina v. Erassarret (1949) 90 Cal.App.2d 418, 426-427; see Luna v. Brownell

(2010) 185 Cal.App.4th 668, 673.)17 “The rules applicable to a delivery of a deed 

are well settled. In addition to physical delivery, and an acceptance by the grantee, 

to constitute a valid delivery there must exist a mutual intention on the part of the 

parties, and particularly on the part of the grantor, to pass title to the property 

immediately. In other words, to be a valid delivery, the instrument must be meant 

by the grantor to be presently operative as a deed, that is, there must be the intent 

 

16 Although the instrument executed by appellant was a deed of trust, the parties do 

not dispute that the principles governing grant deeds are equally applicable here. (See 

Wutzke v. Bill Reid Painting Service, Inc. (1984) 151 Cal.App.3d 36, 43 [“The fact that a 

deed of trust conveys a more limited interest in property than a grant deed [citation] does 

not mean that forged documents involving that interest should be treated differently than 

documents involving other interests”].)

17 Forged deeds also are void and of no legal effect, as are deeds executed under a 

misunderstanding of the nature of the document being signed. (Schiavon v. Arnaudo 

Brothers (2000) 84 Cal.App.4th 374, 378; Fallon v. Triangle Management Services, Inc. 

(1985) 169 Cal.App.3d 1103, 1106; Erickson v. Bohne (1955) 130 Cal.App.2d 553, 555-

556.) Here, there is no dispute that appellant executed the trust deed and that she was 

aware of its nature and purpose when she signed it.
11

on the part of the grantor to divest himself presently of the title.” (Henneberry v. 

Henneberry (1958) 164 Cal.App.2d 125, 129.) 

Here, the court found the intention of the parties on June 15, 2006 was to 

transfer title at a later time, hence, there was no delivery. Whether or not the 

parties had the required intent, and whether there has been a legal delivery of the 

deed sufficient to transfer the title to the grantee, “are questions of fact to be 

determined from all of the circumstances surrounding the transaction.” (3 Miller & 

Starr, supra, Deeds and Descriptions, § 8:42, p. 120; accord, Henneberry v. 

Henneberry, supra, 164 Cal.App.2d at p. 129.) “If there is any evidence to sustain 

the conclusion of the trial court, it will not be disturbed on appeal. However, an 

appellate court will reverse a trial court when there is not substantial evidence to 

support the conclusion of the trial court.” (3 Miller & Starr, supra, § 8:42, p. 8-

121; accord, Knudson v. Adams (1934) 137 Cal.App. 261, 268 [“[T]he trial court’s 

determination that the grantor did not intend to divest herself of title is not 

conclusive upon a reviewing court if there is no conflict in the evidence and if it 

unmistakably indicates the existence of an intention to part with title”].) Our 

review of the record convinces us that the court’s “no delivery” finding is not 

supported by substantial evidence. 

When the grantee has been given physical possession of a duly executed

deed, there is a presumption of valid delivery. (Luna v. Brownell, supra, 185 

Cal.App.4th at p. 673; In re Estate of Pieper (1964) 224 Cal.App.2d 670, 685; 12 

Witkin, Summary of Cal. Law (10th ed. 2005) Real Property, § 295, p. 352.) In 

addition, “[r]ecordation is prima facie evidence of delivery.” (Witkin, supra, Real 

Property, § 295, p. 352; accord, Henneberry v. Henneberry, supra, 164 Cal.App.2d 

at pp. 129-130.) Indeed, “[r]ecordation coupled with manual delivery raises a 

strong presumption, which can be overthrown only by very clear proof.” (Witkin, 

supra, § 295, p. 352.)
12

The clear proof necessary to overcome the presumption of valid delivery 

was absent from the record here. It was undisputed that appellant, a 

businesswoman, was well-versed in the procedures surrounding real property 

secured loans. She had obtained many such loans in the past, and had executed 

multiple deeds of trust. When she approached Waldman for a loan, she was not the 

record owner of the 5th Avenue property. However, she held a valid legal interest 

in the property, having been awarded it in her divorce decree, and fully anticipated 

obtaining record title. She testified that Waldman called her to come sign some 

papers “to see if we can get you the [$200,000] loan,” and she agreed. When she 

arrived, paperwork for a loan on the 5th Avenue property, including a deed of trust, 

were placed before her. She signed them and left them with Waldman. To support 

her contention that she lacked intent to transfer, she testified that after she signed,

Waldman said: “[I]n three days [the executed documents] will be void if Fred 

doesn’t transfer the deed back to your name.” This was an expression of 

Waldman’s intent, not appellant’s. Appellant expressed no intent other than to 

create a deed of trust on a property in which, by virtue of the family court order,

she held a legal interest in exchange for a substantial loan. Moreover, a party’s

intent with respect to delivery may be determined from his or her statements and 

actions subsequent to the time the deed is signed. (Osborn v. Osborn (1954) 42 

Cal.2d 358, 363-364; 3 Miller & Starr, supra, Deeds and Descriptions, § 8:42.) 

After executing the deed of trust, appellant took the $200,000 in loan funds offered 

by Waldman. By no later than October 2006, she learned the deed of trust had 

been recorded, but never sought to rescind the loan agreement. She discussed the 

overdue payments with Waldman/NXT’s controller on numerous occasions 

without ever suggesting that use of the 5th Avenue property to secure the loan was 

inappropriate. She paid to remove the June 2007 notice of default. She filed for 

bankruptcy and listed the deed of trust as a $200,000 secured obligation, without 
13

indicating she disputed it. Indeed, she promised to make regular payments on the 

loan should the bankruptcy court approve her plan. In short, nothing in the 

evidence suggested appellant did not intend to immediately convey an interest in 

the property when she executed and delivered the trust deed to Waldman on June 

15, 2006. The court’s contrary finding was not supported by substantial evidence.

While it is true that Waldman expressed the intent to delay acceptance of the 

deed (see Reina v. Erassarret, supra, 90 Cal.App.2d at p. 426 [assent of grantee is 

necessary in order to make a delivery effective and deed operative], a deed may 

become operative by later acts of the parties. (See Marlenee v. Brown (1943) 21 

Cal.2d 668, 679 [“[A]lthough a deed in the hands of a grantee may be ineffective 

because unaccompanied by the intention of the grantor that it should be legally 

effective, it may subsequently be made operative by the grantor’s recognition of 

the title as being in the grantee. [Citation.] Although such recognition is usually 

termed a ‘ratification’ of delivery, a more accurate statement would be that the 

recognition of title in the grantee is, in itself, a delivery by the grantor, that is, an 

expression of intention by him that the instrument, which has already passed into 

the grantee’s hands, should effect the transfer of title”].) Waldman signaled his 

acceptance of the grant by funding the loan, recording the deed of trust, and 

assigning the note and deed of trust to respondent. In short, while Waldman’s June 

15 statement may have indicated a lack of present intent to accept the transfer of 

title as the trial court found, his later actions compel the conclusion that he 

accepted the title transferred to him and the deed of trust was not void. 

C. The Condition That The Record Title Be In Appellant’s Name Was For 

The Benefit Of The Lender And Its Assignees

We have concluded the deed of trust was not void. We further conclude it 

was not voidable by appellant. Appellant essentially asserts that because Waldman 
14

conditioned the loan on her ex-husband’s transferring record title to her, she held

the option of deciding whether to waive that condition or rescind the entire 

agreement. We disagree. “It is well settled a contracting party may waive 

conditions placed in a contract solely for that party’s benefit.” (Sabo v. Fasano

(1984) 154 Cal.App.3d 502, 505; see, e.g., WYDA Associates v. Merner (1996) 42 

Cal.App.4th 1702, 1714 [contingency that buyer of real property will obtain 

acceptable financing is for the benefit of the buyer and waivable only by the buyer; 

contingency that buyer obtain such financing within certain period of time is for 

the benefit of the seller and waivable only by the seller]; FDIC v. LSI Appraisal, 

LLC (C.D. Cal., April 25, 2012, No. SACV 11-0706 DOC (ANx)) [2012 U.S. Dist. 

LEXIS 58008, p. *4] [condition stating bank was not obligated to purchase 

services of appraiser unless written contract was executed was for benefit of the 

bank, and could not be raised by appraiser as a defense to bank’s breach of oral 

contract action].) 

The practice of ensuring that record title is in the name of the borrower prior 

to funding a loan benefits the lender, not the borrower. When Waldman decided to 

go ahead with the loan, title to the 5th Avenue property was still in Fred’s name

notwithstanding the family court order awarding it to appellant. But Waldman 

could rationally have decided to fund the loan in the expectation that the property 

would be transferred to appellant, as it eventually was. Waldman’s decision to go 

ahead with the loan despite the unfulfilled condition placed his company and the 

investor at risk. It did no harm to appellant, who received the $200,000 loan on the 

agreed terms without providing the agreed security. Accordingly, appellant had no 

basis to rescind the deed of trust.
15

D. Appellant Waived Any Right She May Have Had To Contest The 

Validity Of The Trust Deed

Even were we persuaded that the contingency concerning title to the 

property was intended by Waldman to induce appellant to execute the deed of 

trust, we would agree with the trial court that appellant waived her right to rescind.

“[A] party who has been fraudulently induced into a conveyance can waive 

his right to rescind, if, after full discovery of the fraud, the party takes steps to 

affirm the transaction.” (Channell v. Anthony (1976) 58 Cal.App.3d 290, 304.) 

“‘The waiver may be either express, based on the words of the waiving party, or 

implied, based on conduct indicating an intent to relinquish the right.’” (Old 

Republic Ins. Co. v. FSR Brokerage, Inc. (2000) 80 Cal.App.4th 666, 678; accord, 

Gaunt v. Prudential Ins. Co. (1967) 255 Cal.App.2d 18, 23 [“‘A waiver may occur 

(1) by an intentional relinquishment or (2) as “the result of an act which, according 

to its natural import, is so inconsistent with an intent to enforce the right as to 

induce a reasonable belief that such right has been relinquished”’”].) “‘Whether or 

not a person has ratified a voidable contract, or elected to affirm it rather than to 

rescind it, depends primarily on his intention, and this is shown by his declarations, 

his acts, or his conduct . . . .’” (Bank of America v. Lamb Finance Co. (1956) 145 

Cal.App.2d 702, 719.) Generally, a party seeking to avoid a contract must 

“provide the other party to the agreement with ‘“prompt notice”’” and an “‘“offer 

to restore the consideration received.”’” (Village Northridge Homeowners Assn. v. 

State Farm Fire & Casualty Co. (2010) 50 Cal.4th 913, 921; see Civil Code, 

§ 1693 [relief based on rescission will not be denied because of delay in giving 

notice or delay in tendering restoration “unless such delay has been substantially 

prejudicial to the other party,” and court may make granting relief conditional on 

“tender of restoration”].) Whether the right to rescind has been waived is a 
16

question of fact for the trier of fact to pass upon. (Bank of America v. Lamb 

Finance Co., supra, 145 Cal.App.2d at p. 719.)

Appellant did not immediately seek to rescind the loan agreement when 

Waldman told her to come in and pick up a check, claiming to have been unaware 

when she first received loan funds that the loan was secured by the deed of trust on 

the 5th Avenue property or that it had been recorded. However, she became aware 

of these facts in October 2006, a few months afterward, when she received a 

statement from Waldman and learned the trust deed had been recorded. She did 

not seek to rescind the allegedly fraudulent loan transaction. Instead, she made 

loan payments and attempted to find new financing. She did not claim to have 

been defrauded or demand the contract be rescinded when discussing payments 

with Waldman/NXT’s controller. The first time the loan went into default, she 

cured it. The next time, she petitioned for bankruptcy, listing the deed of trust and 

the $200,000 loan as an outstanding obligation without attempting to dispute it in 

the bankruptcy court. She represented to the bankruptcy court she would make 

regular payments if the court confirmed her plan. Her actions led respondent to 

believe the deed of trust was valid and to take costly steps to protect his interest in 

the property. Appellant stood silent as respondent not only undertook the expense 

of foreclosure, but also paid off one senior lien, brought another current, and made 

repairs to the property. She did not raise her claim of having been fraudulently 

induced to enter into the loan agreement until nearly five years after she entered 

into it and nearly three years after the foreclosure. On these facts, the court’s 

finding that appellant was precluded from reclaiming title to the 5th Avenue 

property by waiver was amply supported by the evidence.
17

E. Respondent’s Status As A Bona Fide Purchaser For Value Precludes 

Appellant From Rescinding The Trust Deed

Having concluded that the promise on which appellant seeks to rely to 

cancel the deed of trust was a contingency for the benefit of the lender and its 

assignees, and that to the extent appellant relied on this promise in executing the 

loan documents, she waived any right to rescind by her actions in the years that 

followed, we nonetheless address whether respondent was a bona fide purchaser 

for value (BFP). We conclude that the trial court’s finding that respondent was a 

BFP is supported by substantial evidence and that respondent’s BFP status

provides a separate ground for affirming the decision. 

As discussed, the deed of trust was not void. Where a deed of trust is not 

void, but merely voidable, it may be relied on and enforced by a BFP. (Schiavon v. 

Arnaudo Brothers, supra, 84 Cal.App.4th at p. 378; Fallon v. Triangle 

Management Services, Inc., supra, 169 Cal.App.3d at p. 1106.) It is a wellestablished principle of law that “‘a bona fide purchaser is not chargeable with the 

fraud of his predecessors and takes a title purged of any anterior fraud affecting it 

and free from any equities existing between the original parties. [Citations.]’” 

(Melendrez v. D & I Investment, Inc. (2005) 127 Cal.App.4th 1238, 1256-1257.) 

“[I]t is an equally well-established principle of law that any purchaser of real 

property acquires the property subject to prior interests of which he or she has 

actual or constructive notice.” (In re Marriage of Cloney (2001) 91 Cal.App.4th 

429, 437.) A BFP has constructive notice of “those matters that could be located 

by a diligent title search.” (Dyer v. Martinez (2007) 147 Cal.App.4th 1240, 1243.)
18

The trial court found that respondent paid value -- $200,000 for the note and 

deed of trust.18 When respondent transferred the funds to Waldman, he had notice,

through the knowledge of his agent Day, that Fred Stallworth, appellant’s exhusband, held title to the property. This may have precluded him from contesting 

an interest asserted by Fred but had no bearing on the claim raised in this lawsuit --

that Waldman defrauded appellant by inducing her to execute the deed of trust on 

false pretenses. There was no evidence that he was aware of that claim until 

January 2011, when appellant filed her complaint. Accordingly, he took title free 

and clear of that claim. Although appellant did not hold title to the property when 

she executed the deed of trust, respondent was entitled to the benefit of Civil Code 

section 2930, which provides: “Title acquired by the mortgagor subsequent to the 

execution of the mortgage, inures to the mortgagee as security for the debt in like 

manner as if acquired before the execution.” As explained in Perego v. Seltzer

(1968) 260 Cal.App.2d 825, 829: “This code section is fully applicable to trust 

deeds [citation], and it is well settled that a trust deed creates a valid lien on real 

property to secure a debt for which it is executed, even though the trustor has no 

title to the property at the time of the execution of the instrument, provided he 

subsequently acquires title thereto during the life of the deed of trust.” 

In short, although appellant acquired title after executing the deed of trust, 

because she did so prior to the May 2008 trustee’s sale, under Civil Code section 

2930, her acquisition of title inured to respondent’s benefit, and allowed him to 

 

18 Appellant makes an unconvincing attempt to contest that finding by pointing to 

such “discrepancies” in the evidence as respondent’s stating at one point that he paid 

$200,000 and at another that he paid $199,000. Minor discrepancies in the evidence do 

not present a basis for this court to overturn the trial court’s findings. (People v. Young

(2005) 34 Cal.4th 1149, 1181.) “Any contradictions . . . or other weakness in the 

witness’s testimony are matters to be explored on cross-examination and argued to the 

trier of fact.” (People v. Robertson (1989) 48 Cal.3d 18, 44.)
19

foreclose on the deed of trust as if appellant owned title to the 5th Avenue property 

when she executed it.19 

F. Appellant Is Estopped From Contesting the Validity Of The Trust Deed

The trial court found that regardless of whether the deed of trust was void, 

appellant’s claim for quiet title was precluded by the doctrine of estoppel. 

Although we affirm the trial court’s decision on the multiple grounds discussed 

above, we address this ruling. 

“‘[E]stoppel is applicable where the conduct of one side has induced the 

other to take such a position that it would be injured if the first should be permitted 

to repudiate its acts.’” (DRG/Beverly Hills, Ltd. v. Chopstix Dim Sum Cafe & 

Takeout III, Ltd. (1994) 30 Cal.App.4th 54, 59.) The doctrine “‘is founded on 

concepts of equity and fair dealing. It provides that a person may not deny the 

existence of a state of facts if he intentionally led another to believe a particular 

circumstance to be true and to rely upon such belief to his detriment.’” (Oakland 

Raiders v. Oakland-Alameda County Coliseum, Inc. (2006) 144 Cal.App.4th 1175, 

1189.) “The traditional elements of estoppel are: ‘“(1) the party to be estopped 

must be apprised of the facts; (2) he must intend that his conduct shall be acted 

upon, or must so act that the party asserting the estoppel had a right to believe it 

was so intended; (3) the other party must be ignorant of the true state of facts; and 

(4) he must rely upon the conduct to his injury.”’” (Ibid.) The doctrine of estoppel 

has been codified in Evidence Code section 623, which provides: “Whenever a 

 

19 In her reply brief, appellant contends respondent did not plead Civil Code section 

2930 as an affirmative defense and therefore forfeited reliance on that statute. Appellant 

cites no authority for the proposition that a party seeking to rely on this provision must 

plead it as an affirmative defense, and we are aware of none. We note that respondent 

affirmatively pled as a defense that he was a BFP. 
20

party has, by his own statement or conduct, intentionally and deliberately led 

another to believe a particular thing true and to act upon such belief, he is not, in 

any litigation arising out of such statement or conduct, permitted to contradict it.” 

(See also Civ. Code, § 3543 [“Where one of two innocent persons must suffer by 

the act of a third, he, by whose negligence it happened, must be the sufferer”].)

Even where a deed is void, a grantor may be estopped from cancelling it or 

reversing a conveyance if he or she unreasonably delays in undertaking steps to do 

so and the delay causes harm to an innocent party. (Baillarge v. Clark (1904) 145 

Cal. 589, 592-594 [where deed transferring title from wife to husband was void for 

nondelivery, wife was estopped to assert a claim to title where she was informed of 

husband’s transfer to innocent purchaser within 10 days, but did and said nothing 

while transferee improved the property]; Green v. MacAdam (1959) 175 

Cal.App.2d 481, 486 [“‘An innocent purchaser taking a void instrument can . . .

find protection in the doctrine of estoppel, where circumstances are presented 

which establish negligence or some other misconduct by the other party, which 

contributed to the loss’”]; Crittenden v. McCloud (1951) 106 Cal.App.2d 42, 48-49

[both grantor whose name had been forged on deed by his wife and his transferee 

estopped from cancelling deed where grantor said nothing to wife’s grantee when 

asked when the couple was moving out, received some of the cash proceeds of 

wife’s sale, participated in purchasing a new property with proceeds of wife’s sale, 

and remained silent for a lengthy period as wife’s grantee expended funds to 

improve the property]; Merry v. Garibaldi (1941) 48 Cal.App.2d 397, 401 [owner 

of premises estopped to cancel forged deed of trust where her silence after learning 

of the forgery prevented lender of the money paid to forger from learning of fraud 

in time to bring action to recover it].)

By October 2006, a few months after she executed the deed of trust, 

appellant was apprised of all the facts she now claims rendered it void. Her 
21

conduct thereafter -- making payments, seeking to refinance, curing the first 

default, remaining silent in discussions with Waldman/NXT’s controller, 

petitioning for bankruptcy and listing the loan as an obligation without disputing it

-- would have led any reasonable person to believe the deed of trust was valid. 

Respondent, ignorant of any challenge by appellant to his right to foreclose, relied 

to his detriment by bearing the expenses of a foreclosure, paying off a senior 

lender, paying another lender to keep the loan current, and repairing the property. 

This was sufficient evidence to establish estoppel, as the trial court found.20

G. The Trustee’s Deed Was Not Invalid or Void

Citing Dimock v. Emerald Properties (2000) 81 Cal.App.4th 868 (Dimock), 

appellant contends the trustee’s deed transferring legal title to respondent after the 

May 2008 foreclosure sale was void, because respondent introduced no evidence

of a recorded substitution naming Reliable as trustee in place of Waldman 

Financial, the trustee named in the original deed of trust.

21

 In Dimock, the parties 

 

20 Quoting Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 929, 

appellant contends: “A void contract is without legal effect. [Citation.] ‘It binds no one 

and is a mere nullity.’ [Citation.] ‘Such a contract has no existence whatever. It has no 

legal entity for any purpose and neither action nor inaction of a party to it can validate it 

. . . .’” Yvanova did not address estoppel. “‘It is axiomatic that language in a judicial 

opinion is to be understood in accordance with the facts and issues before the court. An 

opinion is not authority for propositions not considered.’” (Kinsman v. Unocal Corp. 

(2005) 37 Cal.4th 659, 680; accord, Santisas v. Goodin (1998) 17 Cal.4th 599, 620 

[appellate decision is authority “only ‘for the points actually involved and actually 

decided’”].)

21 As explained in Dimock: “By statute the Legislature has permitted the beneficiary 

of a deed of trust [the lender or its assignee] to substitute, at anytime, a new trustee for 

the existing trustee. Under the governing statute the substitution is made by simply 

recording a document evidencing the substitution. (Civ. Code, § 2934a, subd. (a).) By 

its terms the statute provides that after such a substitution has been recorded, ‘the new 

trustee shall succeed to all the powers, duties, authority, and title granted and delegated to 

(Fn. continued on next page.)
22

presented evidence establishing that the lender recorded a substitution of trustee in 

August 1996, substituting Calmco as trustee in the place of Commonwealth (the 

trustee named in the original deed of trust), but that Commonwealth conducted the 

trustee’s sale a month later, giving the buyer a deed. (Id. at pp. 872-873.) The 

appellate court found that under these undisputed facts, Commonwealth had no 

power to convey the property, and that the deed issued at the trustee’s sale was 

void. It directed the trial court to enter a judgment quieting title in favor of the 

original owner, “subject to such encumbrances as existed at the time of the 

purported sale by Commonwealth.” (Id. at p. 874.) 

Dimock does not stand for the proposition that the beneficiary of a deed of 

trust bears the burden of establishing that the trustee conducting the foreclosure 

sale was properly appointed in every litigation having some bearing on the deed of 

trust or the foreclosure. Appellant’s own complaint alleged that Reliable was the 

duly appointed trustee effective September 11, 2007. She presented no contrary 

evidence at trial. Accordingly, respondent was under no burden to present 

evidence on this point.22 

 

the trustee named in the deed of trust.’ (§ 2934a, subd. (a)(4).)” (Dimock, supra, 81 

Cal.App.4th at p. 871, fn. omitted.)

22 In any event, at respondent’s request, this court took judicial notice of certified 

copies of the recorded substitution of trustee showing that Reliable had been substituted 

in place of Waldman Financial. 
23

DISPOSITION

The judgment is affirmed. Respondent is awarded his costs on appeal. 

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

MANELLA, J.

We concur:

EPSTEIN, P. J.

COLLINS, J.