Court Opinion

ID: 8487752
Source: CourtListenerOpinion
Date Created: 2022-11-18 18:03:11.637593+00
Date Added: 2024-06-11T16:50:05.164079
License: Public Domain

Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER.
      Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,
      303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email
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               THE SUPREME COURT OF THE STATE OF ALASKA

KRISTER EVERTSON, f/k/a Kris           )
Eriksson,                              )            Supreme Court No. S-17791
                                       )
                    Appellant,         )            Superior Court No. 3PA-18-02570 CI
                                       )
       v.                              )            OPINION
                                       )
LILLIAN ERIKSSON SIBLEY, f/k/a )                    No. 7632 – November 18, 2022
Lillian K. Eriksson-Hebdon and Lillian )
K. Hebdon; LILLIAN K. HEBDON           )
LIVING TRUST; FIRST NATIONAL )
BANK ALASKA; and MAT-SU                )
TITLE AGENCY LLC,                      )
                                       )
                    Appellees.         )
                                       )

              Appeal from the Superior Court of the State of Alaska, Third
              Judicial District, Palmer, Jonathan A. Woodman, Judge.

              Appearances: Krister Evertson, pro se, Wasilla, Appellant.
              Anna C. Crary and Bruce A. Moore, Landye Bennett
              Blumstein LLP, Anchorage, for Appellees.

              Before:    Winfree, Chief Justice, Maassen, Carney,
              Borghesan, and Henderson, Justices.

              MAASSEN, Justice.

I.    INTRODUCTION
              A mother, son, and daughter conveyed real property among themselves by
competing deeds. The daughter used the property as security for two bank loans and
defaulted on the second one; when the bank attempted foreclosure, the son, claiming to
be the property’s owner, brought suit against the bank on a constructive notice theory,
also alleging that the daughter’s deed to the property was void because of fraud. The
superior court found that the bank lacked notice of the son’s alleged adverse interest and
granted it summary judgment as a bona fide lender. The court also dismissed the fraud
claim.
              The son appeals. We affirm the grant of summary judgment on the bank’s
bona fide lender status, but we remand for a determination of whether the daughter
acquired her deed as a result of fraud in the factum, which, if proven, would render her
title and the bank’s mortgage interest void.
II.      FACTS AND PROCEEDINGS
         A.   Facts
              This appeal concerns competing claims to a tract of real property in Wasilla.
In January 2004 the owner, Krister Evertson, conveyed the property to his mother, Karin
Eriksson, by a quitclaim deed he recorded in June. In August Karin conveyed the
property back to Krister,1 but the deed memorializing this reconveyance was not
recorded until October 2011, over seven years later.
              In the meantime, in April 2008, Karin executed another quitclaim deed
conveying the same property to her daughter Lillian Sibley, Krister’s sister. The dispute
here is focused in part on the circumstances of that conveyance. Krister asserts that
“Lillian obtained title through fraud” because she “exercised undue influence and
fraudulently caused Karin to sign [the] Quitclaim Deed.” He asserts that Karin had been

         1
            Given the different surnames by which Krister and his sister have been
known, we use the family members’ first names for the sake of clarity; we intend no
disrespect.

                                            -2-                                      7632
diagnosed with dementia and was “incapable of comprehending the nature or impact of
the document” she was signing.
              The quitclaim deed from Karin to Lillian was recorded one day after it was
signed. A little over a week later, on April 30, 2008, Lillian pledged the property to First
National Bank of Alaska (FNBA) as collateral to secure a $120,000 loan. The deed of
trust was recorded on May 1.
              On May 8 Krister signed another quitclaim deed to the property. This deed
purported to transfer the property from himself and Karin to “Denali Trust.” Krister
admits that no trust with that name was actually created, and that Denali Trust was a
fictional entity he “envisioned . . . as a way to help protect [his] mother . . . against
fraud.” He nonetheless recorded the deed to Denali Trust on May 20, 2008.
              Lillian paid off her first FNBA loan in 2010 and a few months later entered
into another loan agreement with FNBA for $200,000, again secured by a deed of trust
on the property. This deed of trust was recorded in October 2010. In October 2011
Krister recorded the 2004 deed reflecting Karin’s conveyance of the property to him.
              Sometime around April 2018, Lillian defaulted on her second FNBA loan,
and the bank prepared for a non-judicial foreclosure sale. Krister asserts that he was
living on the property and taking care of Karin at the time.
       B.     Proceedings
              In September 2018 the Alaska Office of Elder Fraud and Assistance filed
a complaint against Lillian alleging that she had “committed Elder Fraud as defined in
AS 44.21.415(g)(1)(C)[2] by causing [Karin] to sign a Quitclaim Deed,” had failed to
tender consideration for the deed, and had breached a duty of good faith and fair

       2
              AS 44.21.415(g)(1)(C) defines fraud as “exploitation of another person or
another person’s resources for personal profit or advantage with no significant benefit
accruing to the person who is exploited.”

                                            -3-                                       7632
dealing.3 Two months later Krister recorded a lis pendens against the property and filed
his own complaint against Lillian and FNBA, alleging that he had title to the property
through adverse possession.4 FNBA moved for summary judgment; it argued that
Krister’s adverse possession claim failed because his attempted conveyance to the
admittedly fictional Denali Trust precluded him from asserting a good faith claim to title.
              Krister moved for leave to file an amended complaint containing three
claims: (1) that Lillian had committed “fraud in the factum,” a type of fraud that
generally involves obtaining a person’s signature through trickery;5 (2) that FNBA had
actual and constructive notice of Krister’s 2008 deed to Denali Trust when it made its
second loan to Lillian; and, again, (3) that he had adversely possessed the property.
FNBA did not oppose Krister’s addition of a fraud in the factum claim, but it asked that
Krister’s second and third claims be denied because they were “identical to the original
Complaint and should be resolved as a matter of law” on FNBA’s pending motion for
summary judgment.
              FNBA then filed another summary judgment motion, asserting that it was
a bona fide lender6 with no notice of Krister’s adverse claim to the property or Lillian’s

       3
             FNBA asserts that this complaint came “on the eve of the non-judicial
foreclosure sale,” which it then agreed to postpone, and that the sale still “remains to be
held.”
       4
              The court initially consolidated Krister’s case with the Office of Elder
Fraud and Assistance’s case against Lillian, but it decoupled the two cases again a year
later. The state agency was not involved in the proceedings giving rise to this appeal.
       5
            See Kight v. Miller, 94 N.E.3d 60, 70 (Ohio App. 2017); Ackerman v.
Ackerman, 993 N.Y.S.2d 53, 55 (N.Y. App. Div. 2014).
       6
               Generally speaking, a bona fide lender is one who acquires a security
interest in property without actual or constructive notice of others’ potentially adverse
                                                                           (continued...)

                                            -4-                                      7632
alleged fraud in obtaining title. In opposition Krister contended that FNBA had
constructive notice of his 2008 deed to Denali Trust because it would have discovered
the deed had it conducted a “No Plat Subdivision Search” on the Department of Natural
Resources’ website. He also argued that FNBA had inquiry notice of possible fraud in
Lillian’s acquisition of title given multiple indicia of fraud associated with her 2010 loan
application.
               The court granted Krister’s motion for leave to amend his complaint, but
at the same time it granted FNBA summary judgment on Krister’s adverse possession
claim. A month later it granted FNBA summary judgment on the bona fide lender issue
as well, concluding that FNBA lacked actual or constructive notice of any claims with
priority over Lillian’s interest in the property. Krister then filed his amended complaint,
now limited to an assertion that Lillian had acquired her deed from Karin as a result of
fraud and that Lillian’s deed and conveyance to FNBA were therefore void.
               FNBA moved for the entry of final judgment, asserting that all of Krister’s
claims had been resolved by the court’s two summary judgment orders. FNBA also
answered Krister’s amended complaint, asserting that it was barred by the summary
judgment orders and failed to assert a claim entitling him to relief. Krister opposed the
entry of final judgment, arguing that his fraud in the factum claim remained to be
litigated.
               The superior court entered final judgment in favor of FNBA, invalidated
and expunged Krister’s lis pendens, and dismissed Krister’s amended complaint with
prejudice. Krister moved for reconsideration, which the superior court denied.
               Krister appeals, arguing that the superior court erred by deciding FNBA

       6
               (...continued)
interests in the same property. See James v. McCombs, 936 P.2d 520, 525 n.9 (Alaska
1997); infra note 12.

                                            -5-                                       7632
was a bona fide lender and by dismissing his amended complaint.
III.   STANDARD OF REVIEW
             “We review a grant of summary judgment de novo and will affirm the
judgment if there are no contested issues of material fact and if the moving party is
entitled to judgment as a matter of law.”7 Whether someone is a bona fide lender is a
question of law we review de novo.8 “We apply our independent judgment to questions
of law, adopting ‘the rule of law most persuasive in light of precedent, reason, and
policy.’ ”9 “We review trial court decisions regarding motions to dismiss de novo,
deeming all facts in the complaint true and provable.”10
IV.    DISCUSSION
       A.    It Was Not Error To Decide On Summary Judgment That FNBA Was
             A Bona Fide Lender.
             The superior court concluded that FNBA had neither actual nor constructive
notice of an adverse interest in the property and therefore was a bona fide lender with
priority over any claim of Krister’s. “A bona fide purchaser is one who ‘acquired title
without notice, actual or constructive, of another’s rights and also must have paid value

       7
             Dunleavy v. Alaska Legis. Council, 498 P.3d 608, 612 (Alaska 2021)
(quoting Alaskans for a Common Language, Inc. v. Kritz, 170 P.3d 183, 189 (Alaska
2007)).
       8
             See Watega v. Watega, 143 P.3d 658, 664-65 (Alaska 2006) (holding that
whether buyers “qualify as [bona fide purchasers] is a question of law to which we apply
a de novo standard of review”).
       9
            Jacob v. State, Dep’t of Health & Soc. Servs., Off. of Child.’s Servs., 177
P.3d 1181, 1184 (Alaska 2008) (quoting Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska
1979)).
       10
               Cath. Bishop of N. Alaska v. Does 1-6, 141 P.3d 719, 722 (Alaska 2006)
(internal citations omitted).

                                           -6-                                     7632
for the same’ ”;11 the rules applicable to bona fide purchaser status apply equally to
lenders.12 Krister argues that FNBA had constructive notice of his 2008 deed to Denali
Trust and inquiry notice of Lillian’s potential fraud, and therefore it was error to grant
summary judgment on this issue to FNBA. But we agree with the superior court’s
conclusion that FNBA was a bona fide lender.
              1.     FNBA had no notice of Krister’s 2008 deed to Denali Trust.
              Krister did not dispute the basic facts underlying the court’s decision of
FNBA’s bona fide lender status on summary judgment: FNBA’s first loan to Lillian, in
April 2008, preceded Krister’s purported conveyance of the property to Denali Trust in
May of that year, and when FNBA conducted a title search before making its second loan
to Lillian in 2010, it did not discover Krister’s deed to Denali Trust because the deed was
outside the chain of title. Nor did Krister dispute that FNBA’s inquiry included not only
a search for conveyances in the chain of title using Lillian’s name, but also a tract search
to locate all documents referencing the subdivision plat number since 1976. FNBA’s

       11
             James v. McCombs, 936 P.2d 520, 525 n.9 (Alaska 1997) (quoting State
v. 18,018 Square Feet, More or Less, 621 P.2d 887, 890 n.5 (Alaska 1980)).
       12
               See, e.g., S & H Packing & Sales Co., Inc. v. Tanimura Distrib., Inc., 883
F.3d 797 816 n.5 (9th Cir. 2018) (Ikuta, J., dissenting) (observing that “[a]lthough the
Second Restatement [of Trusts] uses the term ‘bona fide purchaser,’ the term also applies
when the trustee ‘creates a legal interest’ in trust property, § 284(1), such as by giving
‘a legal mortgage or pledge . . . upon the trust property,’ id. § 284 cmt. g”); Wash. Mut.
Bank v. Homan, 974 A.2d 376, 390 (Md. Spec. App. 2009) (“Maryland cases have
treated lenders who secure their interests with a mortgage or deed of trust as entitled to
the protections available to bona fide purchasers for value, where such lenders were
without notice of the mortgagor’s fraudulent conduct.”); see also AS 40.17.080(b) (“A
conveyance of real property in the state . . . is void as against a subsequent innocent
purchaser in good faith for valuable consideration of the property . . . whose conveyance
is first recorded. . . . In this subsection, “purchaser” includes a holder of a consensual
interest in real property that secures payment or performance of an obligation.”).

                                            -7-                                       7632
inquiry did not reveal Krister’s 2008 deed to Denali Trust because the deed did not
contain the property’s subdivision plat number.
              A “buyer is only charged with ‘constructive notice of all the facts which [it]
might have learned by means of a due and reasonable inquiry.’ ”13 Alaska Statute
40.17.080(a) provides that “from the time a document is recorded in the records of the
recording district in which land affected by it is located, the recorded document is
constructive notice of the contents of the document to subsequent purchasers and holders
of a security interest in the . . . property.” We held in Sabo v. Horvath, however, that a
deed “recorded outside the chain of title[] does not give constructive notice to [a
purchaser] and is not ‘duly recorded’ under the Alaskan Recording Act.”14
              Krister asserts that FNBA was nonetheless on constructive notice of the
Denali Trust deed because a reasonable inquiry would have included a “no plat
subdivision name” search of the Alaska Department of Natural Resources’ searchable
database, which according to Krister would have revealed the deed. He contends that
Sabo should not be controlling because it “was issued before any computerized record
searches were available” and when “[s]earches were done by hand.” And he argues that
given today’s ease of electronic search, parties should be on constructive notice of deeds
that can be found on the internet even if outside the chain of title.
              We will overrule a prior decision only if we are “clearly convinced that the
precedent is erroneous or no longer sound because of changed conditions, and that more

       13
             Gottstein v. Kraft, 274 P.3d 469, 477 (Alaska 2012) (quoting Methonen v.
Stone, 941 P.2d 1248, 1252 n.5 (Alaska 1997)).
       14
              559 P.2d 1038, 1044 (Alaska 1976).

                                            -8-                                       7632
good than harm would result from overturning the case.”15 While ease of information
access has certainly improved since 1976 when we decided Sabo, Krister has not shown
that more good than harm would result from overruling the case. In Sabo we recognized
that in circumstances of a double conveyance, “one or the other party . . . must suffer an
undeserved loss.”16 But we noted the importance of “promot[ing] simplicity and
certainty in title transactions.”17 We recognized that although the equities between
purchasers and recorders outside the chain of title were “closely balanced,” we
nonetheless were required to “delineate the requirements of Alaska’s recording laws.”18
Promoting simplicity and certainty is still a sound rationale for ranking the rights of
purchasers over those who record outside the chain of title. We are not convinced that
more good than harm would result from requiring that purchasers be on notice of
everything they could uncover if they conducted every conceivable online search of state
records. Sabo remains good law, and a deed recorded outside the chain of title does not
put a purchaser on constructive notice.
             Krister does not argue that FNBA, if lacking constructive notice, had actual
notice or inquiry notice of his 2008 deed to Denali Trust.19 We agree with the superior
court’s conclusion that FNBA had no notice of the deed that would affect FNBA’s bona
fide purchaser status.

      15
             Kinegak v. State, Dep’t of Corr., 129 P.3d 887, 889-90 (Alaska 2006).
      16
             559 P.2d at 1044.
      17
             Id.
      18
             Id.
      19
              See Rosenberg v. Smidt, 727 P.2d 778, 784 (Alaska 1986) (noting that cases
generally interpret the phrase “[bona fide purchasers] without notice” “to apply to one
who lacks actual, constructive (i.e., from the land records) or inquiry notice”).

                                           -9-                                      7632
              2.     FNBA was not on notice of Lillian’s potential fraud.
              The superior court also found that FNBA “had no reason to suspect
[Lillian] had obtained title to the property by fraud” and that Krister’s “claims that the
bank should have been on notice [of] fraud based on other details in the application is not
probative as to whether or not the bank was on constructive notice.” Krister asserts that
FNBA was on inquiry notice of Lillian’s potential fraud and the superior court
erroneously limited its consideration to constructive notice.
              Krister may be correct that the superior court should have analyzed issues
of inquiry notice, but any error is harmless. “[W]e must disregard harmless errors that
have no substantial effect on the rights of parties or on the outcome of the case.”20 And
“[w]e may affirm the superior court on any basis supported by the record, even if that
basis was not considered by the court below or advanced by any party.”21
              The doctrine of inquiry notice provides that in “circumstances . . . which
suggest outstanding equities in third parties,” there is “a duty upon the purchaser to make
a reasonable investigation into the existence of a claim.”22 “[A] purchaser will be
charged with notice of an interest adverse to his title when he is aware of facts which
would lead a reasonably prudent person to a course of investigation which, properly
executed, would lead to knowledge of the servitude.”23 And “[l]ack of diligence in the
prosecution of a required inquiry creates a conclusive presumption of knowledge of

       20
              Pedersen v. Blythe, 292 P.3d 182, 184 (Alaska 2012); Alaska R. Civ. P. 61.
       21
             Leahy v. Conant, 436 P.3d 1039, 1043 (Alaska 2019) (quoting Brandner
v. Pease, 361 P.3d 915, 920 (Alaska 2015)).
       22
              Modrok v. Marshall, 523 P.2d 172, 174 (Alaska 1974).
       23
              Methonen v. Stone, 941 P.2d 1248, 1252 (Alaska 1997).

                                           -10­                                      7632
those facts which reasonable inquiry would have revealed.”24
              In opposition to summary judgment, Krister listed seven indicia of fraud
he believed should have prompted FNBA to investigate whether Lillian had obtained title
fraudulently. Several of the indicia stem from two lease agreements Lillian submitted
to FNBA in support of her 2010 loan application, which according to Krister
misrepresented that the property was being rented. Both of the lease agreements lack
lessee contact information and are filled out in similar handwriting, though purportedly
by two different people. Although the lease agreements specify that utilities will be paid
by the tenants, Lillian included “rental utility costs” for the two units in her loan
application, and the costs were represented to be nearly identical. Finally, one of the two
lease agreements is dated January 2008 even though Lillian did not acquire her quitclaim
deed until April of that year. As additional indicia of fraud Krister notes that Lillian
listed the property as an asset acquired in 2002 although her deed was from 2008; that
Lillian wrongly listed herself as unmarried; that a credit report obtained by the bank
noted a “fraud alert”; and that the credit report listed 13 aliases for Lillian, one of which
was Karin Eriksson, her mother’s name.
              Krister argued that following up on these indicia should have “led FNBA
to the duly recorded quitclaim deed for Denali Trust,” and then, “[b]eing on notice,
FNBA could have stopped the loan and [done] further inquiry.” But Krister does not
explain why the alleged irregularities in the loan application “suggest outstanding
equities in third parties” such that a duty to reasonably investigate would be triggered.25
We conclude that the chain connecting Lillian’s loan application to Krister’s own deed,
outside the chain of title, is too tenuous to support the imposition of a duty on a

       24
              Id.
       25
              Modrok, 523 P.2d at 174.

                                            -11­                                       7632
reasonably prudent lender to inquire further about the existence of third-party claims.
The superior court did not err by granting FNBA summary judgment on this issue.
       B.     It Was Error To Dismiss The First Amended Complaint’s Claim Of
              Fraud In The Factum.
              The superior court dismissed Krister’s first amended complaint, including
its claim for fraud in the factum, after granting summary judgment on his adverse
possession and bona fide lender claims. The court did not address the fraud claim
explicitly, presumably accepting FNBA’s argument that its bona fide lender status
resolved all of Krister’s claims in the bank’s favor.26 Although we agree that FNBA was
entitled to bona fide lender status, as explained above, this holding does not dispose of
Krister’s allegation of fraud in the factum, and it was error to dismiss it.
              1.     Property conveyances resulting from fraud in the factum are
                     void.
              Fraud in the factum — also known as fraud in the execution — “occurs
when ‘the promisor is deceived as to the nature of his act, and actually does not know
what he is signing, or does not intend to enter into a contract at all.’ ”27 It “most often
arises where some limitation — such as blindness, illness, or illiteracy — prevents a

       26
            See SMJ Gen. Constr., Inc. v. Jet Com. Constr., LLC, 440 P.3d 210, 213
(Alaska 2019) (noting that where superior court failed to explain its reasoning for
granting motion to dismiss, “we assume the court adopted [the moving party’s]
arguments for dismissal”).
       27
                Munoz v. Patel, 297 Cal. Rptr. 3d 574, 585 (Cal. App. 2022) (quoting
Rosenthal v. Great W. Fin. Sec. Corp., 926 P.2d 1061, 1073 (Cal. 1996)); Kight v. Miller,
94 N.E.3d 60, 70 (Ohio App. 2017) (explaining that fraud in the factum “exists where
the charging party engaged in some trick or device to procure the signature of the party
to be charged on an instrument which she did not intend to give, such as where there is
a surreptitious substitution of one paper for another at signing,” or “misreading a contract
to an illiterate party or obtaining a signature from a party under anesthesia”).

                                           -12-                                       7632
party from reading or understanding a contract he or she is about to sign.”28 Fraud in the
factum differs from the more common fraud in the inducement. While fraud in the
inducement generally refers to a misrepresentation of the transaction’s “risks, duties, or
obligations,” fraud in the factum generally refers to a misrepresentation of the “essential
nature” of the document being signed.29
              The common law uniformly treats conveyances resulting from fraud in the
factum differently from those resulting from fraud in the inducement. “[W]here the
grantor knowingly executes the very instrument intended, but is induced to do so by
some fraud in the treaty or by some fraudulent representation or pretense, the deed is
merely voidable.”30 “However, where there is fraud in the factum, as where the grantor
intends to execute one instrument but another is surreptitiously substituted in its place
and the grantor is fraudulently made to sign, seal, and deliver an instrument different
from that intended, such fraud in the factum renders the deed void.”31 Voidness is

       28
               Munoz, 297 Cal. Rptr. 3d at 585; see also Ackerman v. Ackerman, 993
N.Y.S.2d 53, 55 (N.Y. App. Div. 2014) (“[G]enerally such a cause of action only arises
if the signor is illiterate, blind, or not a speaker of the language in which the document
is written.”).
       29
            Suliveres v Commonwealth, 865 N.E.2d 1086, 1090 (Mass. 2007) (first
quoting Frederico v. Brockton Credit Union, 653 N.E.2d 607, 611 (Mass. App. 1995);
and then quoting BLACK’S LAW DICTIONARY 686 (8th ed. 2004)).
       30
              26A C.J.S. Deeds § 153 (2022) (citing Schiavon v. Arnaudo Brothers, 100
Cal. Rptr. 2d 801 (Cal. App. 2000); Lanier v. John L. Roper Lumber Co., 98 S.E. 593
(N.C. 1919)).
       31
             Id. (citing Erickson v. Bohne, 279 P.2d 619 (Cal. Dist. App. 1955); Perfect
Place, LLC v. Semler, 426 P.3d 325 (Colo. 2018); Delsas ex rel. Delsas v. Centex Home
Equity Co., LLC, 186 P.3d 141 (Colo. App. 2008); Hancock v. Kulana Partners, LLC,
452 P.3d 371 (Haw. 2019); Strother v. Shain, 78 N.E.2d 495 (Mass. 1948); Bank of Am.,
N.A. v. Adolphus, 112 N.Y.S.3d 726 (N.Y. App. Div. 2019)).

                                           -13-                                      7632
deemed the appropriate consequence because “[i]f a misrepresentation as to the character
or essential terms of a proposed contract induces . . . assent by one who neither knows
nor has reasonable opportunity to know of the character or essential terms of the
proposed contract, [that person’s assent] is not effective,” and no contract is formed.32
              Whether a conveyance is voidable or void is particularly important in the
bona fide purchaser context. “[A] good faith purchaser may acquire good title to
property if he takes it from one who obtained voidable title by misrepresentation but not
if he takes it from one who obtained ‘void title’ by misrepresentation.”33 “A void deed
is a nullity, and cannot be made the foundation of a good title even under the equitable
doctrine of bona fide purchase.”34
              We have held in other contexts that void transfers implicate the rights of
bona fide purchasers. In Watega v. Watega we explained that “if a [bona fide purchaser]
purchases property at a voidable foreclosure sale, the trustor cannot later set aside the
sale. If, by contrast, the sale was void rather than voidable, [bona fide purchaser] status
is unavailable to confer protection.”35

       32
              RESTATEMENT (SECOND) OF CONTRACTS § 163 (AM. L. INST., 1981).
       33
              Id. cmt. c.
       34
             26A C.J.S. Deeds § 151 (2022) (internal citation omitted) (citing Perfect
Place, 426 P.3d 325; CitiMortgage, Inc. v. Pantoja, 111 N.Y.S.3d 584 (N.Y. App. Div.
2019); Poag v. Flories, 317 S.W.3d 820 (Tex. App. 2010); Anadarko Land Corp. v.
Fam. Tree Corp., 389 P.3d 1218 (Wyo. 2017); In re Shelton, 593 B.R. 755 (Bankr. N.D.
Ohio 2018) (applying Alabama law); Bryce v. O’Brien, 55 P.2d 488 (Cal. 1936); Cornell
Univ. v. Howard, 228 P.2d 680 (Kan. 1951); Hoffer v. Crawford, 65 N.W.2d 625 (N.D.
1954)).
       35
              143 P.3d 658, 665 (Alaska 2006) (internal citation omitted).

                                           -14-                                      7632
              Citing our opinion in Modrok v. Marshall,36 FNBA asserts, “Alaska law
clearly establishes that when a prudent inquiry does not reveal facts that would charge
a lender with notice of a possible claim of fraud implicating the propriety of its loan, that
lender is entitled to protection from subsequent claims of fraud as a bona fide lender.”
In Modrok a divorced husband executed a quitclaim deed conveying the interest in the
marital home to his ex-wife in the event he failed to sell the home within 30 days.37
When there was no timely sale, the ex-wife executed a warranty deed conveying the
home to a third party.38 The divorced husband claimed that his ex-wife acquired title to
the marital property through fraud and thus title to the property was at issue.39 We noted
that we had “difficulty discerning the substance of th[e] fraud” because “[t]he record . . .
[was] unambiguous that [the divorced husband] agreed to sell the property or relinquish
all claim of title in favor of his former wife at the end of thirty days.”40 Apparently, the
divorced husband’s claim was not that he had not meant to sign the quitclaim deed, but
that his wife had used the deed to claim title when he thought she held it only as
security.41

       36
              523 P.2d 172, 174-75 (Alaska 1974).
       37
              Id. at 173.
       38
              Id.
       39
              Id. at 174.
       40
              Id. at 175 n.5.
       41
              Id.

                                            -15­                                       7632
              Because we concluded that the divorced husband understood the nature of
the quitclaim deed he freely signed,42 we had no occasion to explain the concept of fraud
in the factum and its different consequences. And because the third party “[was] not
chargeable with notice of a possible claim of fraud,” its status as bona fide purchaser
protected it from the divorced husband’s claim.43 We explained that if the ex-wife had
“obtained [the deed] ‘as a result of fraud and misrepresentation,’ ” as the ex-husband
alleged, he was required to bring his claim against her, not the third party.44 Our holding
in Modrok is thus consistent with the principle that a bona fide purchaser is protected by
a voidable deed, and the opinion does not address void deeds because the facts did not
require us to make the distinction.
              Consistent with the generally followed common law rule, we now hold that
deeds conveyed as a result of fraud in the factum are void and confer no protection on
even a bona fide purchaser or lender. Thus if Karin conveyed the property to Lillian in
2008 as a result of fraud in the factum, as Krister alleges, the deed is void, and FNBA’s
status as a bona fide lender does not protect its mortgage interest in the property.
              2.     Krister’s allegations of fraud in the factum were sufficient to
                     survive dismissal.
              When reviewing an order of dismissal, we deem all facts in the complaint
to be “true and provable.”45 Although Krister needed to allege facts consistent with some
cause of action to survive a dismissal motion, his first amended complaint could be
dismissed only if it appeared beyond a doubt that he could prove no set of facts that

       42
              Id.
       43
              Id. at 174-75.
       44
              Id. at 175.
       45
              Cath. Bishop of N. Alaska v. Does 1-6, 141 P.3d 719, 722 (Alaska 2006).

                                           -16-                                        7632
would entitle him to relief.46
              Krister alleged that Karin had been diagnosed with “early dementia, and
found to be experiencing confusion, delusions, and paranoia,” that her native language
was Swedish, and that she “never became proficient in reading English.” He alleged that
“Lillian exercised undue influence and fraudulently caused Karin to sign [the quitclaim
deed to Lillian],” accomplishing it “by using her position of trust as a daughter” while
knowing that “Karin could not read the quitclaim deed because Karin did not have her
reading glasses and was unable to read without them,” “could not . . . understand the true
nature of the instrument in front of her because of her limited ability to read English,”
and “was incapable of comprehending the nature or impact of the document” “because
of her diminished mental capacity.”
              These facts, if proven, are consistent with a claim that Lillian obtained her
quitclaim deed from Karin as a result of fraud in the factum — that is, that Karin was
unaware of the essential nature of the document she was signing. The superior court’s
dismissal of Krister’s claim of fraud in the factum implied that FNBA’s status as a bona
fide lender protected it from that claim. But because a conveyance resulting from fraud
in the factum is not merely voidable but void, FNBA’s bona fide lender status is
irrelevant to its defense against that claim. The dismissal of the fraud in the factum claim
was therefore error.47

       46
              Id.
       47
               Krister also argues, “After Mat-Su Title LLC Insurance disclaimed any
present or future interest in [the] property, the true owner of the property remains an
unresolved material question of fact.” Because we reverse on other grounds, and Krister
failed to raise this argument before the superior court, we do not address it. Adkins v.
Collens, 444 P.3d 187, 195 (Alaska 2019) (“Arguments raised for the first time on appeal
are generally waived.”).

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V.    CONCLUSION
            We AFFIRM the superior court’s grant of summary judgment finding
FNBA to be a bona fide lender. We REVERSE the dismissal of Krister’s first amended
complaint and REMAND for further proceedings consistent with this opinion.

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