Opinion ID: 1198871
Heading Depth: 1
Heading Rank: 1

Heading: buying lawsuits and curative statutes

Text: Tax titles, long regarded as buying a lawsuit, have historically been uninsurable and practically unmarketable. (2 Bowman, Ogden's Revised Cal. Real Property Law (1975) § 21.26, p. 1098 (Ogden's).) In 1938, in common with other states emerging from the Great Depression, the Legislature strengthened tax titles by enacting limitations statutes requiring attacks based on irregularit[ies] of the tax collector's deed to be brought within one year. (Rev. & Tax.Code, §§ 3725, 3726.) Intended to armor tax titles against defeasance in a period of wholesale tax delinquencies and general economic insecurity, these measures were good for the counties because they enhanced marketability. Without them, local governments might face a glut of tax-defaulted property and falling revenues. (Ogden's, supra, § 21.26, at p. 1098 [in 1937, in Los Angeles County, over 100,000 parcels removed from the tax rolls]; see also Craland, Inc. v. State of California (1989) 214 Cal.App.3d 1400, 1404, 263 Cal.Rptr. 255 [The tax sale furthers the public interest by collecting the taxes owed... and also returning the property to the tax rolls....].) Despite plaintiffs' claim to the contrary, shortened limitations statutes do not mean tax titles are risk free. ( Van Petten v. County of San Diego (1995) 38 Cal.App.4th 43, 50, 44 Cal.Rptr.2d 816 [a purchaser of property at a tax sale takes the risk of any defect].) Plaintiffs overlook that property owners involuntarily sold out by tax foreclosures are an inherently sympathetic lot, just as those who buy tax titles are speculators profiting off the misfortune of others. (See, e.g., Note, The Current Status of Tax Titles: Remedial Legislation v. Due Process (1948) 62 Harv. L.Rev. 93, 100, fn. 40[[T]ax lien purchasers are traditionally speculators who do not enlist the sympathy of the court.].) Forced to choose, courts may look with a jaundiced eye on such a newly minted title, especially given the often gross disparity between land value and tax redemption price. (See id. at p. 100[[T]he notorious insecurity of tax titles keeps the purchase price at the level of the statutory minimum  taxes, interest, penalties, and costs of the sale.].) This minefield of contingencies would naturally weigh against the actuarial calculations of any rational insurer, the curative provisions of Revenue and Taxation Code sections 3725 and 3726 notwithstanding. It is not surprising, then, that the Legislature has not required title companies to insure tax titles. Yet it is just that extraordinary proposition plaintiffs assert is the law. The majority does not endorse plaintiffs explicitly, it does so impliedly by holding they may seek to prove summary allegations that defendants conspired to refuse them title insurance. (See maj. opn., ante, at pp. 722-723 of 77 Cal.Rptr.2d, at pp. 526-527 of 960 P.2d.) Such allegations are easy to plead. Holding these legally sufficient to survive a demurrer ensures costly, extended litigation and furnishes leverage for settlement, especially where a conclusory conspiracy is the only predicate for a UCL claim. Unlike the majority, I would require more.