Filed 12/8/14 Candelaria v. Valencia CA2/4 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

MARGIE M. CANDELARIA,
Plaintiff and Appellant,

v.

LE ONEL VALENCIA,
Defendant and Respondent. B252768
(Los Angeles County Super. Ct. No. PC051712)

APPEAL from a judgment of the Superior Court of Los Angeles County, Stephen P. Pfahler, Judge. Affirmed. Forry Law Group , Craig B. Fo rry, for Plaintiff and Appellant. Russell J. Thomulka, for Defendant and Respondent.2

Plaintiff Margie Candelaria brought suit against d efendant s Leonel Valencia and Daniel Mendoza, whom she alleged duped her into conveying to Mendoza a one

- half
int erest in real property located at 18223 Sandringham Court, Los Angeles, so that
Valencia could later encumber and foreclose the property

. In addition to her fraud claim, Candelaria asserted claims for quie t title and declaratory relief. V alencia sought r elief against Mendoza as well as the application and enforcement of an equitable mortg age on 18223 Sandringham Court

. After a bench trial, t he trial court granted judgment in favor of both Candelaria and Valencia against the absent Mendoza , in the amounts of $40,000 and $120,000, respectively. The trial court also granted judgment for Candelaria against Valencia, “in that the Court quiets title on the property as of June 21, 2011,” and judgment for Valencia against Candelaria on the equitable mortgage cou nt in the amount of $40,000, which Candelaria was to pay as a condition precedent to the quieting of title and declaratory relief

. Candelaria ti mely appealed. We affirm.

FACTUAL BACKGROUND
Plaintiff Margie Candelaria ’s daughter, Pauline Macareno, is the sole owner of Hopevale Development, Inc. (“Hopevale”), a company that purchases, rehabilitates, and
resells distressed real properties. Hopevale purchased a home located at 18223 Sandringham Court, Los Angeles, for $350,000 in May 2010. Hopevale spen t the next
few months rehabilitating the Sandringham Court home. Macareno’s then

- fiancé,
d efendant Daniel Mendoza , assisted wi th the rehabilitation. Mendoza helped Macareno
secure favorable pricing on some construction materials
, performed menial job

- sit e tasks “[l]ike a gopher,” and supervised some of the workers on the project. Mendoza did not perform substantive labor, did not act as contractor, and was not authorized to make any representations on behalf of Hopevale. Nonetheless, he served as the pr imary point of contact with at least one of the vendors on the project, d efendant Leonel Valencia, who

o wn s a trash

- bin rental company. Valencia testified that Mendoza sometimes was the one who paid him when he delivered trash bin s to the job site, and th at these payments3

sometimes were in the form of checks issued by “Mendoza Properties.” Valencia
believed that Mendoza was a supervisor at the job site and that Mendoza and Macareno were business partners who bought the Sandrin gham Court home together.
I n October 2010, Hopevale sold the Sandringham Court home to Candelaria for $800,000, its appraised value as of August 28, 2010 . Candelaria, who has only a tenth

grade education and allows Macareno to handle all of her financial affairs , viewed the
Sandrin gham Court home as “a long term investment” and a “tax deduction.” Candelaria took title to the Sandringham Court home in her own name, but allowed Macareno, Mendoza, Macareno’s daughter, and her own son, Erik, to live at the residence. Hopevale purchas ed a home on Telfair Avenue in Los Angeles for $100,000 on August 8, 2010. After investing several thousand dollars and about one month of work
into the Telfair Avenue home, Hopevale sold it to Valencia for the “wholesale” price of $185,000

. Valencia tes tified that Mendoza was involved with the Telfair Avenue home transaction; he stated that “Pauline and D aniel offered me the Telfair.” Valencia re sold
the Telfair Avenue home for $260,000 in December 2010, realizing a profit of about $20,000.
In the wa ke of his successful “flip,” Valencia continued transacting business with
Mendoza and Macareno. On November 12, 2010, he provided Mendoza with a $20,000 cashier’s check payable to Mendoza Properties. On December 29, 2010, Valencia gave
Mendoza a second c ashier’s check, in the amount of $117,000, payable t o Mendoza Property. Mendoza prepared a “Note and Promise to Pay” in conjunction with the latter
check. The note referenced property at 6917 Alcove Avenue, North Hollywood, and by its terms obligated Men doza to repay $140,000 plus net profits from the sale of the Alcove Avenue property. The note further stated that the profits from the sale of the Alcove Avenue property would be split between Hopevale and LV Trucking, Inc., Valencia’s trash

- bin company. The note was scheduled to mature on “Friday, May 27th, 2011, which is a 6

- month period for prope rty to be listed and sold in a Real Estate Transaction.” Both M endoza and Valencia signed the note. Macareno had no knowledge4

of the note or the loans it ina rtfully purported to secure. And, of course, Mendoza had no authority to pledge Hopevale’s profits. More problematically, Mendoza did not have

– and never would have

– any interest in the property located at 6917 Alcove Avenue. As of the dates of the two ca shier’s checks and the promissory note, none of the players in this case had any interest in the Alcove Avenue property. Hopevale eventually purchased the property, but did not close
the sale until March 1, 2011. It financed the $280,000 purchase price w ith a $230,000 mortgage loan secured by a deed of trust on the property and an additional $55,000
unsecured contribution from Valencia. Macareno was aware of Valencia’s $55,000 contribution, which he had negotiated with Hopevale; she and Valencia both int ended the money to be used as a down payment for the purchase of the Alcove Avenue property. Valencia’s $55, 000 cashier’s check, which was made payable to and deposited directly with the escrow agent, included the subject line “RE: MENDOZA.”
The Alcove Aven ue home had not been re sold by May 27, 2011 , the maturity date
of the note Mendoza issued to Valencia. Valencia initially was not disappointed that Mendoza did not timely repay him as promised, “because we had already done business before and everyth ing had turned out fine so [he] thought [they] were just going to continue on.” Valencia became concerned, however, when he learned around the same
time that Macareno and Mendoza “were no longer together” and “started worrying because [he] had nothin g in his hands that would ensure [him].” Valencia tried to speak
to Mendoza and Macareno jointly, but he “could never get them together.” He only managed to talk to Mendoza, who promised to pay Valencia but never explained how he planned to do so. At some p oint in late June or early July 2011 , Valencia contacted Macareno and asked for a deed of trust in the Alcove Avenue home. Based on her understanding that
Valencia had contributed only $55,000 to the project , Macareno called Rose Lucero, an escrow agent a nd notary public with whom she had worked in the past , and asked her to prepare a deed of trust in the Alcove Avenue home for that amount. Lucero prepared the5

document, dated July 8, 2011, and Macareno executed it on July 13, 2011. Macareno left

a copy o f the deed of trust for Valencia to pick up.
When Valencia retrieved the deed of trust, he informed Macareno that it was incorrect as to the amount and terms he had been promised. Valencia told Macareno that he had been promised more by Mendoza. Valen cia did not show Macareno any documentation to back up his claim that he gave Mendoza “a lot mor e money than this, than $55,000, ” however. Macareno told Valencia to take up his concerns with Mendoza, with whom she was no longer speaking.
Valencia spoke to Mendoza, who assured him that the remaining debt could be secured by a deed of trust on another property that Mendoza owned: the Sandringham
Court home. Although Candelaria originally took title to the Sandringham Court home in her own name, she had t ransferred a one

- half interest to Mendoza by grant deed on June 21, 2011. Candelaria testified that she was unaware the document she signed before notary Lucero on June 21, 2011, was a grant deed that gave Mendoza one

- half interest in her property; she di d not read the document and thought it was a note representing a $90,000 debt Mendoza was owed for his work on the Sandringham Court home. 1
Mendoza told Candelaria that “he was owed some money from [Macareno] , and that it was a $90,000 amount, and that he had spoken to [Macareno] in regards to the money being owed to him and for [Candelaria] to go ahead and get a note signed for him to get reimbursed.” Candelaria called Macareno to tell her about the arrangement, but
Macareno was on vacation and Candelari a did not hear back from her. Mendoza did not explain

– and Candelaria did not understand , even though she knew that he had no interest in Hopevale

– that in fact he was owed nothing and that she was transferring a one

- half

1 Macareno testified that when her relationship with Mendoza ended in May 2011, “he felt that since he helped me with the development [of the Sandringham Court home] that he should be entitled to some kind of monies for his efforts.” According to Macareno, Mendoza claimed an $80,000 interest in the property “because he helped [her] with the dealings of the subcontractors, with the dealings of that. He didn’t w ant to walk away empty

- handed.” No objections were made to this hearsay testimony.6

interest in the Sandringham Court h ome to him. Notary Lucero, who witnessed the execution of the grant deed, testified that Candelaria voluntarily signed the document without asking any questions. The grant deed was recorded on June 22, 2011. Another
witness
, a friend of Mendoza ’s
, testi fied that Mendoza later bragged to him about tricking Candelaria into giving him a one

- half interest in her property.
Mendoza showed the Sandringham Court grant deed to Valencia. Valencia
, who testified at trial through a Spanish interpreter
, believed t hat the grant deed was legitimate

. Mendoza then prepared a deed of trust giving Valencia a $160,000 lien on “his” interest in the Sandringham Court property. Valencia “trust[ed] the papers” Mendoza prepared
, even though he no longer trusted Mendoza perso nally, because he and Mendoza were in front of a notary public (Lucero) and Mendoza had signed them. Valencia thus accepted the deed of trust executed on July 13, 2011 as security for the $160,000 2 Mendoza still
owed him

. Lucero, who witnessed the signin g of all the pertinent documents in this case
, testified that Mendoza asked her to prepare several deeds of trust to settle his debt with Valencia, but that several of the documents he requested she prepare and notarize were invalid because Mendoza had no interest in the properties he was seeking to encumber.
Lucero testified that she advised Mendoza of the invalid nature of these documents.
Lucero did not recall personally prepar ing the deed of trust encumbering the Sandringham Court home or advis ing Vale ncia that it was invalid.
Macareno did not learn that Candelaria had given Mendoza a one

- half interest in the property until Candelaria received a notice from the tax assessor’s office in August
2011. Candelaria did not discuss the matter with Macareno upon the latter’s return from
vacation bec ause Candelaria “assumed that she knew everything was okay.” Macareno

2 The origin of the $160,000 figure is unclear, as the cashier’s checks totaled $137,000 and the “Note and Promise to Pay” did not state that Valencia was entitled to $16 0,000. Nonetheless, the deed of trust that Mendoza gave Valencia securitized “the principal sum of $160,000,” both Candelaria and Valencia specifically requested relief in that amount during their closing arguments, and the trial court’s judgment suggests that it credited the $16 0,000 figure.7

“almost had a heart attack” when she opened the envelope and saw that her mother had conveyed a one

- half interest in the Sandringham Court home to Mendoza. Candelaria was “bewildered” by Macareno’s reaction because Mendoza had told Candelaria that Macareno had wanted her to sign the document. Candelaria trusted Mendoza because “he was going to be [her] son

- in

- law .” Macareno had not informed he r mother of her
break

- up with Mendoza or her concerns about his honesty. Candelaria similarly made no efforts to inform herself what was going on between Macareno and Mendoza because she “didn’t really want to know or get involved with their relationship. ” Candelaria was “not totally sure” when Mendoza moved out of the Sandringham Court home but thought it might have been in May 2011.
The Alcove Avenue home sold several months later, in January 2012. Valencia recovered his $55,000 contribution, with i nterest, when the sale closed
, pursuant to the
deed of trust Macareno issued him. Mendoza never repaid Valencia for the other two cashier’s checks.

PROCEDURAL HISTORY
Candelaria filed a three

- count verified complaint against Mendoza and Valencia

on Octo ber 11, 2011. She alleged that Mendoza and Valencia defrauded her. In addition to compensatory and punitive damages for the alleged fraud, Candelaria sought declaratory relief and requested that the court quiet title on the Sandringham Court home
as of J une 21, 2011. Mendoza, appearing in propia persona, filed a verified cross

complaint against Candelaria, Macareno, Hopevale, and other business entities allegedly owned by Macareno. Valencia also filed a cross

- complaint against Mendoza, alleging
breach o f contract. Valenci a amended his cross

- complaint to add a fraud count against Mendoza, and later amended it again to add a claim against Candelaria to establish and enforce an equitable mortgage against the Sandringham Court home.
The clerk entered defa ult against Mendoza at Valencia’s request on November 19,
2012

. The trial court dismissed Mendoza’s cross

- complaint in its entirety without8

prejudice on February 21, 2013, after he failed to appear “for the second consecutive appearance.” Candelaria and Valencia proceeded to a two

- day bench trial on the remaining claims and cross

- claims on February 26, 2013. The court asked the parties to focus their closing arguments on “specifically what are you requesting in regards to damages.”
Candelaria clarified that she sought : (1) to quiet title to the Sandringham Court
home “against the Mendoza Grant Deed . . . as of June 21, 2011, and that the Deed be
declared void ”; (2) to quiet title to the Sandringham Court home “against the Valencia
Deed . . . as of Jun e 21, 2011, and that the Deed of Trust b e declared void and set aside” ; (3) declarations that she is the sole owner of the Sandringham Court home and that all
other liens on the home are invalid ; and, “if Mr. Valencia prevails” or “if the court finds again st the plaintiff on the quiet title,” (4) damages of $160,000 against Mendoza. Candelaria explained that her alternative request for damages was intended to “guard[ ] against the reality that the court may grant Mr. Valencia relief under his cross

- complai nt on some theory in which case we want a money damage back against him,” and clarified that no damages would be necessary if she prevailed on the quiet title counts “because then she won’t be damaged.” Valencia explained that the relief he sought was “a n enforceable right of one half interest in the property through a foreclosure proceeding.” He also informed the court that he wanted “a judgment against Mendoza for fraud for the $160,000 that he misrepresented.” The parties did not request a stateme nt of decision from the trial court. (See Code Civ. Proc., § 632.) The trial court accordingly provided the parties only with a two

- page order outlining its decision.
In that March 6, 2013, order, the trial court found “that the key perpetrator in thi s matter is Daniel Mendoza based on his fraud and deceit of the plaintiff and the cross

complainant.” The trial court “also [found] that the plaintiff/cross

- defendant, Margie Candelaria, as well as the defendant/cross

- complainant, Leonel Valencia, are bot h9

partially responsible for the subject dispute.” “[B]ecause it is analytically the most logical to do so,” the trial court addressed Valencia’s cross

- claims first. The court proceeded to explain that it found for Valencia and against Mendoza on Valencia ’s first three causes of action, and awarded him total damages of $120,000. The court also found for Valencia and against Candelaria on his equitable mortgage claim, in the amount of $40,000. The court stated that “Valencia can perfect his lien against t he subject Sandringham property as lien holder, holding a second Deed of Trust, in the amount of $40,000.” On Candelaria’s claims, the court found for Candelaria and against Mendoza and Valencia. Specifically, the court awarded Candelaria $40,000 in dama ges against Mendoza, and quiet title as to both Mendoza and Valencia on the condition that Candelaria “first pays the $40,000 to cross

- complainant Valencia (as per the Judgment on
the cross

- complaint).” The court further awarded Candelaria the declaratory relief she requested, also on the condition that Candelaria pay $40,000 to Valencia. The court ordered the parties to meet and confer to prepare a proposed judgment “consistent with, and reflective of,” its order. The parties were unable to agree on a proposed judgment. Eventually, Valencia filed a motion to enter judgment and attached a draft proposed judgment for the court’s signature. In Candelaria’s brief opposing the motion , she called the court’s attention to Civil Code, section 3543, 3 a maxim o f jurisprudence that provides, “Where one of two innocent persons must suffer by the act of a third, he, by whose negligence it happened, must be the sufferer.” She argued that , in accordance with section 3543, Valencia “is estopped and barred by his agre eing to loan Mendoza $137,000 . . . without any security, and he cannot recover from Candelaria, an innocent party who was also deceived by Mendoza, because the loss must be borne by Valencia whose negligence or misplaced confidence enabled the injury to o ccur.” Candelaria further disputed the trial court’s

3 All further statutory references are to the Civil Code unless otherwise indicated.10

conclusion that Valencia was entitled to receive a second deed of trust on the Sandringham Court property and “recover a $40,000 portion of his loss caused by his
trust in Mendoza from Candelaria.” Val encia responded that the “facts do not support her position,” in that Candelaria was negligent by signing the grant deed giving Mendoza

a one

- half interest in the Sandringham Court home. He further contended that he acted in good faith and accordingly sho uld be considered a “bona fide purchaser or
encumbrancer.”
The trial court held a hearing on Valencia’s motion for entry of judgment on September 16, 2013. Candelaria did not attend the hearing 4 , and we have been provided only with the resultant motion ruling and judgment , no transcript. The trial court granted in part and denied in part Valencia’s motion and entered the following judgment,
consistent with its earlier order:
“1. Judgment for Plaintiff Margie M. Candelaria on her c omplaint as against
De fendant Daniel A. Mendoza, and Plaintiff Margie M. Candelaria shall have and recover from Defendant Daniel A. Mendoza the amount of Forty Thousand dollars ($40,000.00), and costs of suit pursuant to a timely filed Memorandum of Costs. The Court quiets tit le as of June 21, 2011 in favor of P laintiff Margie M. Candelaria on the real property commonly known as 18223 Sandringham Court, Los Angeles, California, 91326 . . . (hereinafter ‘Property’) against the Grant Deed recorded on June 22, 2011

. . . in favor o f Defendant Daniel A. Mendoza, and that Grand [ sic ] Deed is declared void;
“2. Judgment for Plaintiff Margie M. Candelaria on her complaint as against Defendant Leonel Valencia, in that the Court quiets title on the property as of June 21, 2011 against th e Short Form Deed of Trust and Assignment of Rents recorded on July 19, 2011 . . . in favor of Leonel Valencia, and that Short Form of Deed of Trust And

4 The record indicates that Candelaria’s attorney had to attend to another matter before a different court , and the attorney he enlisted to cover the hearing unexpect edly fell ill, slept through his alarm clock, and did not wake up until Candelaria’s attorney telephoned him to ask where he was.11

Assignment of Rents is declared void. Otherwise, the Plaintiff Margie M. Candelaria is

to recover no m oney against Defendant Leonel Valencia;
“3. Judgment for Cross

- Complainant Leone l Valencia on his Second Amended
Cross

- Complaint as against Defendant Daniel A. Mendoza in the amount of One Hundred and Twenty Thousand dollars ($120,000.00) and costs of sui t pursuant to a timely filed Memorandum of Costs; and
“4. The Court further grants Judgment on the Cross

- Complaint of Leonel Valencia and against Margie M. Candelaria on the Fourth Cause of Action to ‘Establish and Enforce Equitable Mortgage’ in the amou nt of $40,000.00 and to perfect his lien against the subject property as a lien holder, holding a Second Deed of Trust, in the amount of $40,000.00.
“Once the Plaintiff/Cross

- Defendant Margie M. Candelaria first pays the $40,00 0.00 to Cross

- Complainant L eonel Valencia (as per the Judgment on the Cross

Complaint), the Court then declares as follows:

“a. Court quiets title on the Property against the Mendoza Grant Deed as of June 21, 2011, and that Deed will be declared void;

“b. Court quiets title on t he Property against the Valencia Deed of Trust recorded July 19, 2011 . . . , and that Second Deed of Trust will then be declared void and set aside;
“c. Candelaria is the sole owner of the Sandringham property, and the
Mendoza Grant Deed is set aside a nd is not a lien against Sandringham property; and

“d. The Valencia Deed is not a valid lien on the Sandringham pr operty and is to be set aside.” Candelaria timely filed a notice of appeal on November 14, 2013. She requests that we “modify the Judgmen t by striking that portion that awards Valencia a second deed of trust for $40,000, and in all other respects affirm the J udgment.”12 DISCUSSION
A. Standard of Review
As a general rule, “ [t] he substantial evidence standard of review is applicable to

app eals from both jury and nonjury trials.” ( Jameson v. Five Feet Restaurant, Inc. (2003) 107 Cal.App.4th 138, 143.) Under that standard, “ we resolve any conflict in the evidence and reasonable inferences to be drawn from the facts in support of the determi nation of the trial court.” ( Citizens Business Bank v. Gevorgian (2013) 218 Cal.App.4th 602, 613.) Where, as here, no statement of decision is requested or rendered, we “imply all findings necessary to support the judgment, so long as those findings are supported by substantial evidence.” ( McLaughlin v. Walnut Properties, Inc. (2004) 119 Cal.App.4th 293, 302.) The portion of the judgment that Candelaria challenges, however, is the trial court’s award to Valencia of a $40,000 equitable mortgage in the S andringham Court property

. “An equitable decree is reviewed under the abuse of discretion standard, under which ‘we resolve all evidentiary conflicts in favor of the judgment and determine whether the court’s decision “‘falls within the permissible range of options set by the legal criteria.’”’” ( In re Estates of Collins & Flowers (201 2) 205 Cal.App.4th 1238, 1246; see also Tampico v. Wood (1963) 222 Cal.App.2d 211, 215 ( Tampico ); cf. Scottsdale Insurance Co. v. Century Surety Co. (2010) 182 Cal.App.4th 1 023, 1032

- 1033 [court’s allocation of liability in equitable contribution action reviewed for abuse of discretion].) Trial courts sitting in equity have broad discretion to fashion relief ( In re Estates of Collins & Flowers
, supra , 205 Cal.App.4th at p. 1 246 ), and an abuse of discretion occurs only when, “in light of applicable law and considering all relevant circumstances, the court’s ruling exceeds the bounds of reason.” ( Jhaveri v. Teitelbaum (2009) 176 Cal.App.4th 740, 749.) Both parties assert tha t the substantial evidence standard of review should be applied here. To the extent that Candelaria is challenging the trial court’s apparent13

rejection of her section 3543 argument, 5 we agree. “Estoppel based upon Civil Code section 3543 is factually est ablished and appellate review is limited to a determination of whether substantial evidence supports the finding: ‘Whether or not plaintiffs or defendants were negligent, . . . and whether or not section 3543 of the Civil Code is applicable, are [each] qu estions of fact.’” ( Wurzl v. Holloway (1996) 46 Cal.App.4th 1740, 1753

- 1754 [quoting Keegan v. Kaufman Bros. (1945) 68 Cal.App.2d 197, 200].) However, to the extent that she is challenging the trial court’s decision to grant an equitable mortgage or the court’s exercise of its equitable discretion in fashioning a remedy , we apply t he abuse of discretion standard

. B. Analysis
The main “premise of Candelaria’s appeal” is that section 3543 requires
modification

–

really, reversal

– of the trial court’s judgmen t that Valencia is entitled to a $40,000 second deed of trust on the Sandringham Court home. She argues that “[s]ubstantial evidence compels the conclusion that, as between Valencia and Candelaria, Valencia was principally responsible for causing his loss in November/December when he misplaced his confidence in Mendoza” by providing Mendoza with unsecured loans.
Since her own conceded “negligence in deeding title to Sandringham to Mendoza and
herself six months later was not a cause of, or factor in, Valen cia’s loss,” Candelaria

c ontends she should not bear any responsibility for rectifying that loss

. We have described section 3543 as “basically an estoppel theory, addressing comparative fault between two innocent victims.” ( Wurzl , supra, 46 Cal.App.4th at p. 1752.) “It is based upon misplaced confidence by one victim resulting in victimization of
the other.” ( Ibid. ) Here, the trial court expressly found that both Candelaria and Valencia were “partially responsible for the subject dispute.” Substanti al evidence supports this finding. Candelaria took Mendoza’s representations at face value despite

5 Without the benefit of a statement of decision or transcript of the hearing at whi ch the motion to enter judgment was presented, we are not able to ascertain whether the trial court accepted, rejected, or even consider ed Candelaria’s arguments concerning section 3543.14

her knowledge that he had no interest in Hopevale and no longer lived with Macareno
, failed to read the grant deed before signing it , and made no inquiry in to the transaction beyond leaving a voicemail message for Macareno (and proceeding without receiving a call back)

. Valencia loaned $137,000 to Mendoza without confirming that Mendoza had an interest in Hopevale or the Alcove Avenue home, and without obtai ning a security interest in any of Mendoza’s property. In other words, both Candelaria and Valencia erroneously placed their confidence
in Mendoza. “Misplaced confidence has been held to be negligence within section
3543.” ( Reusche v. California Pacifi c Title Insurance Co. (1965) 231 Cal.App.2d 731, 738 ( Reusche ). ) Thus, both Candela ria a n d Valencia were negligent for purposes of
section 3543 , which provides guidance for situations in which “one of two innocent persons must suf

fer by the act of a third .” The trial court’s factual finding of mutual culpability distinguishes the instant case from those cited by Candelaria. For example, in Tampico , the court expressly noted that it did not appear from the record “ that the [defendants] were in any way neg ligent in failing to discover” the fraud perpetrated on both plaintiffs and defendants. ( Tampico , supra , 222 Cal .App. 2d at p. 216.) Likewise, one of the parties in Reusche knowingly approved a forged check, while the other was entirely innocent. (See Re usche
, supra , 231 Cal.App.2d at pp. 738

- 739 ; see also Wutzke v. Bill Reid Painting Service, Inc. (1984) 151 Cal.App.3d 36, 39 [“At the conclusion of trial, the court found both Wuzke and Reid were ‘innocent parties’ and that neither had been negligent in t heir dealings with the Millers.”].)
Candelaria argue s that she nonetheless is comparatively innocent, as Valencia was the first to fall victim to Mendoza’s fraudulent ways and therefore “set in motion the chain of events resulting in his own loss when Mend oza’s representations regarding repayment from the sale of Alcove proved false.” This position has some support in the case law, as courts have invoked section 3543 as a basis for allocating loss to the party who “initiated the chain of events leading up to the loss,” or the one who vested in the wrongdoer the power to perpetrate a fraud. ( Tampico , supra , 222 Cal.App.2d at p. 215.)15

We do not find it particularly persuasive here, however, as the trial court found that
Candelaria was part ial ly responsible

. (Cf. In re Estates of Collins & Flowers
, supra , 205 Cal.App.4th at p. 1247 [noting that section 3543 and the unclean hands doctrine are “entwined theories”].) Both she and Valencia vested in wrongdoer Mendoza the power to perpetrate a fraud. Valencia’s and Candelaria’s independent negligence in dealing
with Mendoza set in motion two separate chains of events that happened to intersect at Sandringham Court. To the extent that Candelaria may have been less negligent than Valencia, it appears that the tri al court took this into account in fashioning the parties’ respective remedies. Though unconventional , the trial court’s judgment appears to be an attempt to “approach the s tatus quo as nearly as possible ” ( Tampico , supra , 222 Cal.App.2d at p. 215) while apportioning the loss in accordance with the parties’ respective negligence. We find the award to be a permissible exercise of the trial court’s discretion. When the
dust settled on the convoluted facts of this case , Valencia was out $160,000, Candelaria was out an interest in her property worth approximately $400,000, and Mendoza was out of the picture. The trial court’s award allows the more culpable Valencia to recover only one quarter of his loss immediately and requires him to seek the sizeable rema inder from Mendoza, who may never be found and may well be judgment

- proof if he is. Candelaria, on the other hand, must immediately suffer the pain of transferring $40,000 to Valencia, but this amounts to only 10 percent of her loss

– and she has been award ed a judgment in that very amount against Mendoza, an offset that she proposed during closing argument. Moreover, she is certain to receive all of the nonmonetary relief she requested. In the end, she will be much closer to the status quo than Valencia, t hough both will be made entirely whole if they are able to collect their judgments against Mendoza. Although we may have crafted the parties’ awards differently, the trial court’s judgment is not outside
the bounds of reason
, given the unusual circumstanc es of this complicated case. The same is true of the court’ s decision to grant Valencia a temporary equitable mortgage in the Sandringham Court property

. “In general, equity will create a lien on16

property where t his is necessary to accomplish substantial justice and protect creditors.” ( Grappo v. Coventry Financial Corp. (1991) 235 Cal.App.3d 496, 509.) Here, the court acted within its discretion in concluding that substantial justice would be served by the imposition of a small and temporary equitable li en on the Sandringham Court prop erty. Valencia had little reason to doubt the validity of Mendoza’s interest in the Sandringham Court home, which was evidenced by a notarized and recorded grant deed. Valencia plainly intended to “make real property securi ty for an obligation” ( ibid. ), which is one of the several typical situations in which courts often construe equitable liens, and the lien here is well within the interest that Candelaria negligently deeded to Mendoza. Candelaria is not “burdened further w ith a judicially constructed lien ” the burden her own negligence placed on the property is considerably reduced and will be eliminated completely if Mendoza is located.

DISPOSITION The judgment is a ffirmed. Respondent is awarded costs o n appeal.

NOT T O BE PUBLISHED IN THE OFFICIAL REPORTS

COLLINS , J.

We concur:

EPSTEIN, P. J.

MANELLA, J.