Filed 7/31/14 Getsen Acquisitions v. Zapf CA4/1 

NOT TO BE PUBLISHED IN OFFICIAL REPORTS 

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COURT OF APPEAL, FOURTH APPELLATE DISTRICT 

DIVISION ONE 

STATE OF CALIFORNIA 

GETSEN ACQUISITIONS, LLC, 

 Cross-Complainant and Respondent, 

 v. 

ERIC ZAPF, 

 Cross-Defendant and Appellant. 

 D062874 

 (Super. Ct. No. 

 37-2011-00050599-CU-OR-NC) 

 APPEAL from a judgment of the Superior Court of San Diego County, Robert P. 

Dahlquist, Judge. Affirmed. 

 Eric Zapf, in pro. per., for Cross-defendant and Appellant. 

 Andersen, Hilbert & Parker, David Michael Parker and Joseph A. LeVota, for 

Cross-complainant and Respondent Getsen Acquisitions, LLC. 
2 

I. 

INTRODUCTION 

Cross-defendant Eric Zapf appeals from a judgment entered against him and in 

favor of cross-complainant Getsen Acquisitions, LLC (Getsen) on Getsen's claim for 

professional negligence. Zapf was the real estate agent for the sellers of a residential 

property that Getsen purchased. 

After Getsen purchased the property, it discovered that the property remained 

encumbered by a deed of trust in favor of a mortgage lender because the property owner's 

loan had not been paid off. It was ultimately determined that someone had signed and 

recorded fraudulent documents that made it appear that the seller's loan had been satisfied 

and that the trust deed in favor of the lender had been reconveyed to a third party, such 

that it appeared that the only lien on the property was for an amount substantially less 

than the amount truly owed by the sellers. 

 In litigation that involved a number of parties and multiple complaints and crosscomplaints, Getsen cross-complained against the sellers, Zapf, and another man who had 

been involved in assisting the sellers with the fraudulent documents. Getsen alleged that 

Zapf had participated in the fraud, but also asserted a claim for professional negligence 

against Zapf for his role in the transaction. 
3 

 After conducting a bench trial, the court found the sellers and the other individual 

liable for fraud, and found Zapf liable for negligence. The court concluded that the 

defendants, including Zapf, were jointly and severally liable to Getsen for damages in the 

amount of $1,027,266.80. 

 On appeal, Zapf challenges the sufficiency of the evidence to support the trial 

court's determination that he was negligent. He further challenges the sufficiency of the 

evidence to support the trial court's damages award. Specifically, he contends that 

Getsen did not suffer $875,000 in damages as a result of its settlement of the claims 

between it and the mortgage lender, which permitted Getsen to quiet title to the property, 

on the ground that Getsen's title insurer, not Getsen, had paid that money to the mortgage 

lender. He also contends that the trial court should not have awarded Getsen $87,266.87 

in "additional expenses" because those damages were "speculative." Finally, Zapf 

contends that there was not sufficient evidence to support the $65,000 in legal expenses 

that the trial court awarded. 

 The trial court's findings and damages award are supported by substantial 

evidence. We therefore affirm the judgment as to Zapf. 

II. 

FACTUAL AND PROCEDURAL BACKGROUND 

A. Factual background

 As the trial court aptly summarized, "This case involve[d] real estate fraud. All 

parties agree that a fraud was perpetuated, but they all claim not to have actively 
4 

participated in it, or to have had knowledge about it until after it was completed. 

Everyone claims to be an innocent victim of the fraud. However, the evidence does not 

support the claim that all parties to this case were innocent victims of the fraud. In fact, 

the evidence establishes that some of the parties knowingly and intentionally perpetrated 

the fraud." 

 George and Peggy Haber owned a residence in Encinitas, California. In 2006, the 

Habers executed a note in an amount just over $1.6 million and a deed of trust in favor of 

their lender to secure repayment of the note. At some point, Aurora Loan Servicing, Inc. 

(Aurora) assumed the servicing rights to the Habers' loan. By 2009, the Habers were 

having difficulty making payments on their mortgage. Aurora initiated nonjudicial 

foreclosure proceedings in July 2009. At the time the foreclosure proceedings were 

initiated, the Habers owed more on the mortgage than their home was worth.1

 Two notices of trustees' sales were recorded, on October 26, 2009, and April 16, 

2010, respectively. The Habers obtained extensions of these dates while they attempted 

to sell the Property pursuant to a short sale. The Habers initially were working with 

Steve Morris, a RE/MAX realtor, to try to sell the property. Morris had arranged for a 

 

1 It appears that the balance remaining on the loan was approximately $1.8 million 

as of the date foreclosure proceedings commenced. 
5 

short sale, having obtained approval of the sale from Aurora, and the Habers were under 

contract with a buyer.2

 While the proposed short sale was pending, the Habers met Zapf and Greg 

Strange. Zapf and Strange pitched a plan to the Habers that purportedly would allow 

them to avoid foreclosure or a short sale. The plan involved challenging the validity of 

their debt to their current mortgage holder. Strange and others "referred to the process of 

sending documents to challenge secured debts as 'the administrative process.' " The trial 

court found that, "[t]his phrase—'the administrative process'—as used in this case, is a 

pseudonym for 'the fraud process,' because the process consisted of not only sending 

letters to challenge the legitimacy of secured debts but it also included the recordation of 

false documents in the chain of title." Strange advised the Habers that this 

" 'administrative process' " would allow the Habers to avoid foreclosure and to "walk 

away with money from their property." 

 Morris learned of the Habers' plans to terminate the proposed short sale that he had 

arranged and to use something called the " 'administrative process' " to avoid foreclosure 

and/or a short sale. Morris advised the Habers both orally and in writing that the 

proposed plan appeared to be "a 'scam' and a 'fraud.' " Nevertheless, the Habers decided 

to move forward with the " 'administrative process.' " 

 

2 The buyer in the short-sale deal had apparently agreed to purchase the property for 

$1.35 million. 
6 

 According to the trial court's findings, Zapf "told the Habers, in essence, that the 

entire banking/real estate industry was crooked, and that the financial system was 

arranged so that banks could make their money and 'screw the homeowner.' " The 

Habers authorized Zapf to act as their representative to deal with Aurora regarding their 

loan. Zapf contacted Aurora a number of times concerning the loan, and was able to 

negotiate on the Habers' behalf a " 'Foreclosure Alternative Agreement' "—i.e., a 

forbearance agreement—with Aurora. The forbearance agreement contemplated a series 

of " 'stipulated payments' " to be made by the Habers over a period of six months, in 

order to avoid foreclosure. The first payment of $12,283.38 was due on October 4, 2010. 

 The Habers did not have the financial resources to make any of the required 

payments. The trial court found that the Habers never intended to make all of the 

payments as required by the forbearance agreement. The Habers made an initial payment 

using cash that, according to Mrs. Haber's trial testimony, "was mysteriously delivered to 

the Habers' home by a courier." However, at her deposition, Mrs. Haber indicated that 

the cash had been given to the Habers by Strange, who was accompanied by Zapf at the 

time. The trial court believed Mrs. Haber's deposition testimony, finding her deposition 

testimony to be more credible than her trial testimony. 

 Zapf accompanied Mrs. Haber to a bank where she wired the money to Aurora. 

After receiving these funds, Aurora suspended the foreclosure of the Habers' home. Zapf 

confirmed with Aurora and the foreclosure trustee that the foreclosure was on hold, and 

upon receiving confirmation, informed Strange of this fact. The Habers then sent "a 
7 

series of letters" to Aurora in which they contested the validity of the Aurora loan. The 

Habers purported to " 'cancel' " the underlying deed of trust.3 Legal counsel for Aurora 

responded to the Habers' letters. In one letter sent to the Habers, Aurora confirmed that 

the Habers owed Aurora $1,908,731.64. In another letter, Aurora later stated, " 'Aurora 

rejects any attempt by you to reassign the duty(s) and benefit(s) of Trustee and 

Beneficiary as set forth in the original Deed of Trust.' " That letter also informed the 

Habers that any attempt they might make to reassign the rights and duties under the deed 

of trust would be " 'fraudulent' and 'unauthorized.' " 

 Despite these communications from Aurora, the Habers signed a "phony deed of 

trust, reflecting a purported $810,000 loan from 'Real Holdings.' " The Habers knew that 

they did not have a loan from "Real Holdings"4 for $810,000, but the phony deed of trust 

was recorded. Someone also recorded a "phony reconveyance" of the Aurora loan. That 

document was signed by " 'Daniel Mikac.' "5 The reconveyance states that the Aurora 

loan had been fully paid and/or satisfied. This was untrue. 

 A few weeks after the fraudulent deed of trust and reconveyance were recorded, 

Getsen offered to buy the Habers' property for $1,010,000. The Habers accepted the 

 

3 The letters appeared to be similar in substance to letters that Strange had sent to 

his own lender a year earlier. 

4 "Real Holdings" is a fictitious entity. 

5 As the trial court noted, no one at trial presented credible evidence as to the 

whereabouts of "Daniel Mikac," or even whether such a person exists. 
8 

offer. Zapf, acting as the Habers' real estate agent, prepared a standard form purchase 

agreement that reflected the offer and acceptance. 

 Neither the Habers nor Zapf made any disclosures to Getsen about the Aurora 

loan. Although Zapf "knew (1) about the Habers' outstanding, unpaid obligation to 

Aurora; (2) that the Getsen purchase price was less than the [balance remaining on the] 

Aurora loan; (3) that Aurora had recently agreed to forbear from completing a pending 

foreclosure sale; and (4) that Aurora's forbearance had been induced by a payment made 

by the Habers using cash provided by Strange," Zapf failed to disclose any of these facts 

to Getsen. 

 In connection with the escrow that was opened for the Getsen purchase of the 

property, the Habers presented a "Seller Information Sheet" that reflected that the only 

loan on the property was the "phony $810,000 purported loan from 'Real Holdings.' " A 

" 'payoff statement' " was sent from "Real Holdings" to the escrow company, with 

instructions to have the payoff wired to a bank account owned and controlled by Strange. 

At trial, Strange referred to the account as " 'my account.' " 

 The escrow documents showed that upon the close of escrow, approximately 

$143,000 would be disbursed to the Habers, and approximately $810,000 would be 

disbursed to "Real Holdings." Nothing would be paid to Aurora. The Habers signed all 

of these documents. Zapf knew that the Habers would receive $143,000 from the sale of 

the property, and that Aurora would receive nothing. 
9 

 Escrow closed. After the payment of title and escrow fees, $814,119.33 was 

distributed to Strange's bank account, $143,082.32 was distributed to the Habers, and 

$47,125 was distributed to Zapf's real estate company. 

 Shortly after escrow closed, Getsen learned that Aurora was attempting to 

foreclose on the property. 

B. Procedural background

Upon learning that Aurora was trying to foreclose on the subject property, Getsen 

filed a lawsuit against Aurora, asserting that Aurora had no interest in the property and no 

right to foreclose. Getsen obtained a restraining order preventing a foreclosure sale. At 

some point, Getsen and Aurora learned of the "phony" documents in the chain of title. 

Aurora and Getsen filed separate cross-complaints against the Habers, Strange, and Zapf, 

among other parties. Aurora filed its initial cross-complaint for fraud, conspiracy, and 

cancellation of void instruments against the Habers, Strange, Mikac, and Real Holdings 

in March 2011.6 Getsen filed its cross-complaint for fraud, negligent misrepresentation, 

breach of contract, unjust enrichment, negligence and slander of title against the Habers, 

Zapf, Bug Realty, Strange, Mikac and Real Holdings in May 2011. 

Getsen and Aurora settled their claims against each other. Getsen agreed to pay 

$875,00 to Aurora, through its title insurer, Stewart Title, in exchange for Aurora 

 

6 Aurora amended its cross-complaint to name Zapf as a cross-defendant in June 

2011. 
10 

granting a genuine reconveyance of its deed of trust, which would enable Getsen to sell 

the property to a third party. Title to the property was cleared at the end of August 2011. 

Shortly before trial was scheduled to begin in early 2012, the Habers and Strange 

filed for bankruptcy protection. The claims against them were stayed, and the trial was 

continued. Getsen and Aurora were able to obtain orders from the bankruptcy court 

lifting the stay of the claims against the Habers and Strange. The trial court held a bench 

trial on Getsen's and Aurora's claims against the Habers, Strange, and Zapf in June 2012. 

 At the conclusion of the presentation of evidence, the trial court took the matter 

under submission. On July 30, 2012, the trial court issued a 22-page statement of 

decision. In that statement of decision, the court determined that Getsen prevailed on its 

claims for fraud and negligent misrepresentation against the Habers and Strange. The 

court further concluded that Getsen prevailed on its claim for unjust enrichment against 

the Habers, Strange, and Zapf. Finally, the court concluded that Getsen prevailed on its 

claim of negligence against Zapf.7 The court awarded damages of $1,027,266.80 in 

favor of Getsen and against Zapf, holding Zapf jointly and severally liable with the 

Habers and Strange for the total amount. The $1,027,266.80 included $875,000 in 

compensatory damages "paid by Getsen to Aurora to clear title to the property," 

$87,266.87 "in 'additional expenses' incurred by Getsen in carrying the property while 

 

7 The trial court also determined that Aurora had proven its claim for fraud against 

the Habers and Strange. 
11 

title was being cleared," and $65,000 "in legal expenses incurred by Getsen to clear title 

to the property, awarded under the 'tort of another' doctrine." 

 The trial court entered judgment on August 27, 2012. Zapf filed a timely notice of 

appeal. 

III. 

DISCUSSION 

 Zapf challenges four of the trial court's findings on the ground that the evidence is 

insufficient to support them. First, Zapf argues that there is insufficient evidence to 

support the court's finding that he was negligent. Zapf also takes issue with the amount 

of damages that the court awarded, arguing that there is insufficient evidence to support 

an award against Zapf for (1) the $875,000 that was paid to Aurora to clear title to the 

property; (2) the $87,266.87 in "additional expenses" incurred by Getsen in carrying the 

property while attempting to clear title; and (3) $65,000 in legal expenses incurred by 

Getsen to clear title to the property. 

A. Legal standard pertaining to claims of insufficiency of the evidence

"Where findings of fact are challenged on appeal, we are bound by the 

'elementary, but often overlooked principle of law, that . . . the power of the appellate 

court begins and ends with a determination as to whether there is any substantial 

evidence, contradicted or uncontradicted,' to support the findings below. [Citation.] We 

must therefore view the evidence in the light most favorable to the prevailing party, 

giving it the benefit of every reasonable inference and resolving all conflicts in its favor." 
12 

(Garbell v. Conejo Hardwoods, Inc. (2011) 193 Cal.App.4th 1563, 1569.) The 

substantial evidence standard of review applies to findings with respect to the elements of 

a claim for negligence. (Ibid.) 

B. Analysis

 1. Professional negligence

Zapf contends that the evidence at trial "established that Appellant Zapf did not 

breach any duty owed to the buyer of the Property, Getsen." According to Zapf, "it is 

undisputed Appellant Zapf met his duty of disclosure since Getsen's managing member, 

Mr. Duden, testified that he knew prior to the close of escrow that the Property was 

encumbered in the approximate amount of $1.6 million and Appellant Zapf informed him 

that escrow could not close unless clear title could be delivered." Zapf contends that the 

trial court "ignored this true evidence" and improperly found him to have been negligent. 

We disagree with Zapf's representations regarding the evidence in the record, and 

conclude that there is substantial evidence to support the trial court's determination that 

Zapf may be held liable for professional negligence with respect to his role in this 

transaction. 

"The elements of a claim for professional negligence incorporate a specific 

standard of care into the elements of a negligence claim." (Burgess v. Superior Court

(1992) 2 Cal.4th 1064, 1077.) " 'The elements of a cause of action in tort for professional 

negligence are: (1) the duty of the professional to use such skill, prudence and diligence 

as other members of his profession commonly possess and exercise; (2) a breach of that 
13 

duty; (3) a proximate causal connection between the negligent conduct and the resulting 

injury; and (4) actual loss or damage resulting from the professional's negligence. 

[Citations.]' " (Ibid.) 

The trial court relied on Holmes v. Summer (2010) 188 Cal.App.4th 1510 

(Holmes) to conclude that Zapf acted negligently in his dealings with Getsen. In Holmes, 

the appellate court determined that a seller's real estate agent or broker is under the same 

duty of disclosure as a seller to disclose known facts that materially affect the value or 

desirability of a property, and that the failure of an agent or broker to disclose such facts 

constitutes negligence. (Id. at pp. 1518-1519.) The facts that must be disclosed, if 

known, include "impediment[s] to the ability of the seller to convey title free and clear of 

monetary liens and encumbrances." (Id. at p. 1520.) 

The Holmes court explained: 

"[T]he rule we articulate in this case is simply that when a real estate 

agent or broker is aware that the amount of existing monetary liens 

and encumbrances exceeds the sales price of a residential property, 

so as to require either the cooperation of the lender in a short sale or 

the ability of the seller to put a substantial amount of cash into the 

escrow in order to obtain the release of the monetary liens and 

encumbrances affecting title, the agent or broker has a duty to 

disclose this state of affairs to the buyer, so that the buyer can 

inquire further and evaluate whether to risk entering into a 

transaction with a substantial risk of failure." (Holmes, supra, 188 

Cal.App.4th at pp. 1522-1523.) 

The reason for this rule is as follows: "While a buyer may be harmed by acquiring 

title to a property with undisclosed defects, such as hazardous waste or soil subsidence 

problems, a buyer may also be harmed by entering into an escrow to purchase property 
14 

when it is highly likely that, unbeknownst to the buyer, the escrow will never close. We 

must bear in mind that the main purposes of the rule expressed in Lingsch v. Savage 

[(1963)] 213 Cal.App.2d 729, 'are to protect the buyer from the unethical broker and 

seller and to insure that the buyer is provided sufficient accurate information to make an 

informed decision whether to purchase.' [Citation.]" (Holmes, supra, 188 Cal.App.4th at 

p. 1519, italics added.) To impose a duty on real estate agents and brokers to disclose 

information that would alert a potential buyer that the sale is at high risk of failure 

"would be to further the purpose of protecting buyers from harm and providing them with 

sufficient information to enable them to wisely choose whether to enter into the 

transaction." (Id. at p. 1520.) 

 Applying the rule in Holmes to this case, the trial court found the following: 

"Here, Zapf knew, from his own dealings with the Habers and 

Aurora, that the Habers were delinquent on their existing mortgage, 

that Aurora had initiated foreclosure proceedings, that Aurora had 

agreed to forbear from concluding the foreclosure in exchange for 

receiving certain payments from the Habers, and that the agreedupon payments had not yet been made in full by the Habers. Zapf 

also knew that the Habers were upside down on their Aurora 

mortgage—that the property was worth less than the amount owed 

by the Habers. 

"Zapf prepared the purchase agreement whereby Getsen would 

acquire the Habers' property for an amount less than the debt owing 

to Aurora. Yet, Zapf failed to disclose to Getsen any of the facts 

mentioned above—namely, that the proposed purchase price was 

less than the amount owed by the Habers on their existing 

mortgage . . . , that Aurora had initiated foreclosure proceedings, that 

Aurora had agreed to forbear from concluding the foreclosure in 

exchange for receiving certain payments from the Habers, that the 

agreed-upon payments had not yet been made by the Habers, and 
15 

that Strange had provided the cash used by the Habers to induce 

Aurora to forbear from foreclosing." (Italics added.) 

 Based on these findings, the court ultimately concluded "that Zapf failed to fulfill 

his duty to disclose to Getsen material information that was known to Zapf at the time 

that the fraud was being perpetrated. Had Zapf disclosed the information, the fraud 

would almost certainly have been detected before it was consummated." There is 

substantial evidence to support the court's findings and its conclusion regarding Zapf's 

liability. The evidence clearly demonstrates that Zapf was aware of virtually all of the 

facts identified in Holmes, but did not disclose them. In addition, Zapf was aware that 

the Habers had not used their own money to make the limited number of forbearance 

payments that were made, and that Strange was somehow involved in making those 

payments. Further, Zapf testified that although he knew that the amount owed on the 

Aurora loan was more than $1.6 million and that purchase price was ultimately only 

$1,010,000, he "didn't pay much attention to the—what was owed." Zapf also 

acknowledged that he knew that the Habers did not have sufficient income to make their 

normal mortgage payments on the property. Beyond this, Zapf became aware that the 

Habers were to receive a significant sum of money from the proceeds of the sales 

transaction, and that a relative of the Habers was to receive a significant sum of money as 

well; Zapf admitted that he found some of the "details" of the transaction "odd." Despite 

knowing these facts, Zapf marketed the property for an amount that was far less than 

what the Habers owed Aurora, prepared a purchase agreement for an amount that was far 
16 

less than the amount of the existing liens, and played his role as the sellers' real estate 

agent in ensuring that the transaction would go forward, without disclosing any of this 

relevant information to Getsen. There is abundant evidence to support the trial court's 

finding that Zapf was aware of facts that materially affected the desirability of the 

property, yet failed to disclose these facts to Getsen. 

Zapf suggests that he should not be held liable for his failure to disclose these facts 

because Getsen, through Duden, "knew that there was a substantial risk that the Habers 

could not transfer title free and clear of monetary liens and encumbrances." Zapf bases 

this assertion on Duden's testimony that he knew that Aurora had a deed of trust recorded 

on the property for $1.6 million, apparently based on a "third-party report" that Duden 

had received that included information about the Aurora deed of trust. However, as Zapf 

acknowledges, in deciding to proceed with the transaction, Duden testified that he relied 

on the title company's issuance of a title policy on the property, which did not show 

Aurora's deed of trust as outstanding. Regardless what other "reports" Duden may have 

had access to, Zapf, as the seller's real estate agent, owed Getsen, as the buyer, "the 

affirmative duties of care, honesty, good faith, fair dealing and disclosure, as reflected in 

Civil Code section 2079.16, as well as such other nonfiduciary duties as are otherwise 

imposed by law." (Holmes, supra, 188 Cal. App.4th at p. 1528.) If Zapf had acted in 

accordance with these duties and disclosed to Getsen the information that he had about 

the Aurora loan, as well as his knowledge that the Habers did not have the financial 

wherewithal to make the required forbearance payments, and that Strange had provided 
17 

the Habers with the funds for those payments, Getsen would undoubtedly have 

approached the transaction with a different perspective. As the trial court concluded, 

Getsen could have discovered the fraud at the time it was being perpetrated, rather than 

going through with the transaction and discovering the fraud only much later. Quite 

simply, Getsen would have had reason to question what was going on at an earlier stage 

in the process, and would have known what the real risks of moving forward with the 

transaction were. There is thus substantial evidence to support the trial court's finding 

Zapf liable on Getsen's claim for professional negligence. 

 2. Compensatory damages of $875,000

 Zapf contends that Getsen did not suffer damages in the amount of $875,000 

because Stewart Title paid the $875,000 to Aurora, on Getsen's behalf, to settle the claims 

between Aurora and Getsen and ultimately quiet title. Zapf contends that since there is 

no evidence that Getsen, itself, paid the $875,000, there is insufficient evidence to uphold 

the trial court's award of this amount to Getsen. We disagree that Zapf may avoid 

liability for the $875,000 that the trial court determined he owed Getsen under this 

theory. 

 Getsen apparently transferred its interest in the litigation to Stewart Title upon 

Stewart Title's payment to Aurora in satisfaction of Getsen's claim under the title 

insurance policy that Getsen purchased from Stewart Title. However, by operation of 

contract and under statutory law, Getsen may continue this action to its completion in its 

own name. 
18 

 Generally, a defendant has a statutory right to have an action prosecuted against 

him in the name of the real party in interest. (Code Civ. Proc., § 367; Giselman v. Starr

(1895) 106 Cal. 651, 657.) "The real party in interest is 'the person possessing the right 

sued upon by reason of the substantive law.' [Citation.]" (Ventura County Ry. Co. v. 

Hadley Auto Transport (1995) 38 Cal.App.4th 878, 880.) However, in a situation in 

which a party transfers its interest in a pending action or proceeding, Code of Civil 

Procedure section 367 does not apply. Rather, in such a circumstance, " '[t]he action or 

proceeding may be continued in the name of the original party . . . .' (Code Civ. Proc., 

§ 368.5.)"8 (Casey v. Overhead Door Corp. (1999) 74 Cal.App.4th 112, 121 (Casey), 

overruled on other grounds in Jimenez v. Superior Court (2002) 29 Cal.4th 473, 478, 

481.)9 "[T]he law allows the assignees . . . to pursue the action in the name of the 

assignor . . . for their own protection and benefit." (Casey, supra, at p. 121, fn. 6.) 

 

8 Code of Civil Procedure section 368.5 provides: 

"An action or proceeding does not abate by the transfer of an interest 

in the action or proceeding or by any other transfer of an interest. 

The action or proceeding may be continued in the name of the 

original party, or the court may allow the person to whom the 

transfer is made to be substituted in the action or proceeding." 

9 "In the event of a transfer of interest in a pending action, the attorney for the 

nominal party/assignor does not automatically cease to be the attorney of record. (See, 

e.g., Davis v. Rudolph (1947) 80 Cal.App.2d 397, 401; Tuffree v. Stearns Ranchos Co.

(1899) 124 Cal. 306; Crescent Canal Co. v. Montgomery (1899) 124 Cal. 134.)" (Casey, 

supra, 74 Cal.App.4th at p. 121.) "[T]he attorney of record [generally] has the exclusive 

right to appear in court for his client and to control the court proceedings, so that neither 

the party himself [citations], nor another attorney [citations], can be recognized by the 
19 

Getsen is the real party in interest to the rights that it originally sued upon in its 

cross-complaint against these parties since Getsen is the party that suffered the injury 

from the Habers' and Strange's fraud, and Zapf's negligence. However, by operation of 

law and pursuant to the terms of the title insurance policy, when Stewart Title paid 

$875,000 to settle Getsen's claim, which occurred while this litigation was pending, 

Stewart Title took over Getsen's interest in the action. The title insurance policy obtained 

by Getsen from Stewart Title provides, in relevant portion: 

"When we settle your claim, we have all the rights you have against 

any person or property related to this claim. You must transfer these 

rights to us when we ask, and you must not do anything to affect 

these rights. You must let us use your name in enforcing these 

rights." 

 Upon the payment of the $875,000 to Aurora to settle the claims between Aurora 

and Getsen, Stewart Title "ha[d] all of the rights [Getsen] ha[d] against" the third parties. 

In essence, Stewart Title was the subrogee to Getsen's rights against Zapf and the other 

cross-defendants. " 'Subrogation is defined as the substitution of another person in place 

of the creditor or claimant to whose rights he or she succeeds in relation to the debt or 

claim. By undertaking to indemnify or pay the principal debtor's obligation to the 

creditor or claimant, the "subrogee" is equitably subrogated to the claimant (or 

"subrogor"), and succeeds the subrogor's rights against the obligor. [Citation.] In the 

case of insurance, subrogation takes the form of an insurer's right to be put in the position 

 

court in the conduct or disposition of the case." (Wells Fargo & San Francisco (1944) 25 

Cal.2d 37, 42-43.) 
20 

of the insured in order to pursue recovery from third parties legally responsible to the 

insured for a loss which the insurer has both insured and paid. [Citations.]' [Citation.]" 

(Gulf Ins. Co. v. TIG Ins. Co. (2001) 86 Cal.App.4th 422, 430-431.) 

Stewart Title became subrogated to Getsen's negligence claim against Zapf, the 

Habers, and Strange, both equitably and pursuant to the terms of the title insurance 

policy, after Stewart Title paid the $875,000 sum to settle Aurora's claims against Getsen. 

However, under Code of Civil Procedure section 368.5, Getsen remained a proper 

plaintiff to prosecute the claims that transferred to Stewart Title. Further, this presented 

no prejudice to the third party defendants. Getsen's and Stewart Title's rights as to Zapf, 

the Habers, and Strange were identical because Stewart Title's interest was derivative of 

Getsen's interest in the litigation: " 'The right of subrogation is purely derivative. An 

insurer entitled to subrogation is in the same position as an assignee of the insured's 

claim, and succeeds only to the rights of the insured. The subrogated insurer is said to 

" 'stand in the shoes' " of its insured, because it has no greater rights than the insured and 

is subject to the same defenses assertable against the insured.' [Citation.]" (Gulf Ins. Co. 

v. TIG Ins. Co., supra, 86 Cal.App.4th at p. 431.) In addition, the same defenses that 

Zapf raised to Getsen's claims could have been asserted against Stewart Title in a direct 

subrogation action. For all purposes, any claim that Stewart Title possessed and the 

negligence claim that Getsen brought against Zapf were the same. Further, the judgment 

in this case would prevent any future subrogation action by Stewart Title against Zapf on 

Getsen's underlying negligence claim, since, under California law, double recovery is 
21 

barred for the same wrong. "Only one complete satisfaction is permissible, and if partial 

satisfaction is received from one, the liability of others will be correspondingly reduced." 

(6 Witkin, Summary of California Law (10th ed.) Torts, § 1550, p. 1023.) 

 Stewart Title was aware of the lawsuit, and specifically, of Getsen's claims against 

the cross-defendants, including Zapf. The cross-complaints against the Habers, Strange 

and Zapf had been filed by the time Stewart Title paid the $875,000 to Aurora on behalf 

of Getsen. The settlement between Aurora and Getsen, and the resultant clearing of title 

did not occur until the end of August 2011, whereas Aurora's and Getsen's crosscomplaints against the third-party defendants were filed in the spring of 2011. In 

addition, John Duden, the principal member of Getsen, testified that Getsen consented to 

allowing Stewart Title to use Getsen's name in enforcing its rights, and Stewart Title is 

the entity that hired attorneys to represent Getsen at trial. 

 There is thus substantial evidence to support the trial court's award of $875,000 in 

damages to Getsen as a result of Zapf's negligence. 

To the extent that Zapf suggests that "Stewart Title did not pay Aurora 

$875,000.00 for the benefit of Getsen," but "[i]nstead, . . . paid Aurora $875,000.00 to 

settle its own negligence and wrongdoing in this case," the procedural history 

demonstrates otherwise. Getsen and Aurora were in litigation with each other. Stewart 

Title was not a party to the action. Only after Stewart Title paid the $875,000 to Aurora 

did Getsen and Aurora dismiss their claims against each other. Clearly, Stewart Title's 
22 

payment was made to Aurora on Getsen's behalf, so that Getsen could receive clear title 

to the property and could move forward with selling the property to a third party. 

Zapf contends that Stewart Title is not entitled to rely on subrogation because it, 

"not Appellant Zapf—is responsible for any loss suffered by Getsen." He contends that 

Stewart Title mishandled the preliminary title report that it created with respect to the 

Haber property. Zapf cites to his own testimony that a Stewart Title employee made a 

comment to him during a telephone call to the effect that Stewart Title had made a 

mistake and "should not have insured the Property,"10 to suggest that Stewart Title is the 

party that is responsible for Getsen's loss. However, the trial court specifically found that 

Zapf was negligent in his duties to Getsen, and that Zapf's negligence was a proximate 

cause of the injuries that Getsen suffered as a result of purchasing a property that 

remained subject to a foreclosure action by Aurora. At no point in the litigation was 

there evidence presented that placed fault on Stewart Title, and the trial court made no 

finding that Stewart Title was responsible for Getsen's damages.11 

 3. $87,266.87 in additional expenses incurred by Getsen

 

10 Zapf's contention was directly contradicted by that employee's testimony at trial. 

The trial court specifically found the employee's trial testimony to be credible. 

11 The trial court's findings in this case indicate that the fraud that was perpetrated by 

the Habers and Strange was perpetrated on Getsen, Aurora, and Stewart Title, as well. 

As the parties stated in their Joint Trial Readiness Conference Report, "the Reconveyance 

appeared valid on its face," and for this reason, "Getsen had no reason to know of the 

Aurora [deed of trust]." It is unclear how Stewart Title would have, or reasonably should 

have, been aware that these documents were fraudulent at the time it searched the public 

record, given that the fraudulent reconveyance "appeared valid on its face." 
23 

 Zapf contends that the trial court should not have awarded Getsen $87,266.87 in 

"additional expenses" because those claimed damages were "speculative." He asserts that 

"[t]he only possible damage Getsen suffered with respect to any 'negligence' is the loss of 

approximately $10,000.00 on the ultimate sale price of the Property . . . and maintenance 

costs during the time in which Getsen worked to clear title on the Property." Zapf further 

contends that "these damages are speculative and therefore cannot support the damage 

award." 

 In awarding the $87,266.87 in " 'additional expenses' claimed by Getsen," the trial 

court specifically referred to "Trial exhibit [No.] 146." The court stated that it was 

"declin[ing] to award any of the so-called 'expected revenue decrease from loss of 

investors' because the Court believes that those claimed damages are speculative." The 

trial court also declined to award "a portion of the 'other carry costs and additional 

rehab[ilitation] required to prepare house for sale' because the Court believes those costs 

were not incurred as a result of any action or inaction on the part of any cross-defendant, 

but instead are normal rehabilitation costs that would have been incurred regardless of 

any action or inaction on the part of any cross-defendant." 

 Trial exhibit No. 146 was offered by Getsen and received in evidence by the trial 

court without objection. The "additional expenses" identified in trial exhibit No. 146 

include $10,000 for the "Difference in gross sale proceeds"; $11,192.92 for eight months 

of prorated property tax payments; $37,333.33 for carrying additional debt of $400,000 at 

a 14 percent interest rate for eight months; and $36,907.12 for "All other carry costs and 
24 

additional rehab required to prepare house for sale." Duden testified that until Getsen 

was able to clear title and sell the property, Getsen had to carry certain costs, including 

utility expenses, taxes, maintenance on the property, and hazard insurance. In addition, 

Getsen continued to carry debt that it had used "for leverage purposes," and this debt was 

"quite expensive." 

The trial court based its award of "additional costs" on Duden's testimony and the 

documentary evidence that was offered by Getsen and admitted without objection. These 

damages were not speculative, but rather, were in fact suffered by Getsen and were 

established by the evidence that Getsen presented. The trial court reduced the amount 

awarded to Getsen for "additional rehab required to prepare house for sale" on the ground 

that such amounts were not attributable to the conduct of the cross-defendants, but rather, 

would have been required regardless of the conduct of any of the cross-defendants. The 

court also rejected, as speculative, an additional amount claimed by Getsen in trial exhibit 

No. 146, i.e., $90,000 in "Expected revenue decrease from loss of investors." The trial 

court thus eliminated from Getsen's claimed additional damages those damages that were 

truly speculative. The remainder of the "additional damages" that Getsen claimed were 

not speculative, and there is substantial evidence to support the trial court's award of such 

damages. 

 4. $65,000 in legal expenses incurred by Getsen

 In awarding legal expenses to Getsen, the trial court stated, "The $65,000 in legal 

expenses reflects the Court's determination of the reasonable amount of legal expenses 
25 

actually incurred by Getsen to clear title." Although generally damages in a tort action 

do not include compensation for attorney fees or other litigation costs, Zapf 

acknowledges that there is an exception to this rule when a party, through the tort of 

another, has been required to act to protect his or her interests by bringing or defending 

an action. In such an instance, that party is entitled to recover attorney fees and other 

expenditures incurred in litigating that action. (See, e.g., Gray v. Don Miller & 

Associates, Inc. (1984) 35 Cal.3d 498, 505.) However, Zapf argues that "Getsen did not 

present any evidence of its alleged attorney's fees incurred to clear title to the Property." 

He asserts that no "testimony was offered and no documentary evidence was introduced 

to support this claimed damage." We conclude that there was sufficient documentary 

evidence to support the trial court's conclusion that Getsen was entitled to claim $65,000 

in attorney fees and costs for litigating with Aurora in an attempt to clear title. 

 The trial court relied on trial exhibit No. 120, which consists of Getsen's counsel's 

invoices. The court received this exhibit in evidence. The court awarded Getsen its 

attorney fees based on these invoices for work performed during the time period that 

Getsen was attempting to protect its interest in the property by clearing title to the 

property—i.e., from the start of litigation to the point at which title to the property 

cleared. The invoices contained in trial exhibit No. 120 constitute substantial evidence to 

support the portion of the trial court's award of damages based on the attorney fees that 

Getsen incurred in protecting its interest in the property against Aurora's claims. 
26 

IV. 

DISPOSITION 

 The judgment is affirmed. Getsen is entitled to costs on appeal. 

 

AARON, J. 

WE CONCUR: 

 

 HUFFMAN, Acting P. J. 

 

 IRION, J.