Court Opinion

ID: 2681829
Source: CourtListenerOpinion
Date Created: 2014-07-02 23:01:31.267633+00
Date Added: 2024-06-11T13:12:22.337348
License: Public Domain

Filed 7/2/14 JP Morgan Chase Bank v. Greenberg CA2/6
                    NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or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 8.111.5.

                IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                       SECOND APPELLATE DISTRICT

                                                     DIVISION SIX

JP MORGAN CHASE BANK etc.,                                                 2d Civil No. B246079
                                                                  (Super. Ct. No. 56-2011-00391727-CU-
             Plaintiff and Respondent,                                           OR-VTA)
                                                                             (Ventura County)
v.

BERNARD GREENBERG,

             Defendant and Appellant.

                   This appeal is about competing lien claims and California's "first in time, first
in right" system of lien priorities. (First Bank v. East West Bank (2011) 199 Cal. App. 4th
1309, 1313 [discussing Civ. Code, § 2897].) JP Morgan Chase (Chase) owns a $265,000
deed of trust that was recorded more than a year before Bernard Greenberg perfected a
$153,310.35 judgment lien on a Thousand Oaks condominium. The trial court found that
Chase was a good faith encumbrancer for value and made the $265,000 loan "without actual
or constructive notice of whatever inchoate interest [appellant] may have had or hoped to
have" in the property. Greenberg appeals. We affirm.
                                           Facts and Procedural History
                   In 2001 Zohreh Khabushani (Zohreh) acquired title to the Thousand Oaks
property based on a quitclaim deed from Paramount Group, Inc. (PGI) to Zohreh, "a married
woman as her sole and separate property." In 2003, Chase's predecessor in interest,
Washington Mutual Savings (WaMu), loaned Zohreh $265,000 and recorded a deed of trust
on the property.
                On June 3, 2005, appellant obtained a $153,310.35 judgment against PGI and
Zohreh's husband, Michael Khabushani, in Los Angeles County Superior Court.
(Paramount Group, Inc. v. Greenberg, Los Angeles County Sup. Ct. Case No. BC-305818.)
                On September 7, 2005, appellant filed a creditor's action to enforce the
judgment. (Greenberg v. Khabushani et al., Ventura County Sup. Ct. Case No. SC-
043980.) WaMu/Chase was not a defendant in the action. Appellant prevailed and recorded
a June 30, 2008 judgment stating that Zohreh "is a third person who has property in which
Defendants, Mike Khabushani and Paramount Group, Inc, have an interest. . ."
                In 2011, Chase sued for declaratory relief on the ground that the judgment lien
was subordinate to Chase's deed of trust. The trial court found that the 2001 quitclaim deed
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to Zohreh was ambiguous and received evidence concerning two recitals in the deed. Next
to the recital "THE UNDERSIGNED GRANTOR(s) DECLARE(s) DOCUMENTARY
TRANSFER TAX $NONE ," is the handwritten notation: "the Grantee are [sic] sole owner
and shareholder of the Grantor Corporation, and proportionate interests have not changed."
A second recital states: "The grantors and the grantees in this conveyance are comprised of
the same parties who continue to hold the same proportionate interest in the property, R & T
11923(d)."
                The trial court found that the recitals had no bearing on the interest conveyed
and were put in the quitclaim deed to avoid paying a documentary transfer tax. The court
concluded that Chase was a bona fide encumbrancer and made the loan without actual or
constructive notice of PGI's purported interest in the property. Judgment was entered
declaring that the Chase $265,000 deed of trust is superior and senior to any interest held by
appellant in the property.
                                      Substantial Evidence

1
    A copy of the 2001 quitclaim deed is attached as Exhibit A.

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              The grant or denial of declaratory relief rests in the trial court's sound
discretion and will not be disturbed on appeal absent a showing of clear abuse of discretion.
(Hannula v. Hacienda Homes (1999) 34 Cal. 2d 442, 448.) " '[T]o the extent the trial court
had to review the evidence to resolve disputed factual issues, and draw inferences from the
presented facts, [we] review such factual findings under a substantial evidence standard.'
[Citation.]" (Horsford v. Board of Trustees of California State University (2005) 132
Cal. App. 4th 359, 390.)

                                         Deed Recitals
              Appellant contends that the 2001 quitclaim deed is conditional because it
recites that "the Grantee [i.e., Zohreh] are (sic) sole owner and shareholder of the Grantor
Corporation, and proportionate interests have not changed." Appellant argues that the deed
recital put WaMu/Chase on notice that PGI retained an ownership interest in the property,
thus destroying WaMu's/Chase's status as a good faith encumbrancer.
              " 'A good faith encumbrancer for value who first records takes its interest in
the real property free and clear of unrecorded interests. [Citations.] "An encumbrancer in
good faith and for value means a person who has taken or purchased a lien. . . and who has
parted with something of value in consideration thereof. [Citation.] . . . [A] 'good faith'
encumbrancer is one who acts without knowledge or notice of competing liens on he subject
property. [Citations.]" [Citation.] ' " (Triple A Management Co. v. Frisone (1999) 69
Cal. App. 4th 520, 530.)
              It is uncontroverted that WaMu/Chase loaned $265,000 to the record title
holder, Zohreh, and recorded the trust deed more than a year before appellant obtained the
Los Angeles County Superior Court judgment against PGI. In the 2005 creditor's action, the
court found that PGI "has an interest in the Triunfo property equal to the interest that was
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transferred to Zohreh by Paramount. . ." Chase, however, was not a party to the creditor
2
 The statement of decision in the creditor's action states that Zohreh bought the property
from PGI for $435,000, of which $358,000 was borrowed money. On October 17, 1991,
Michael Khabushani and Zohreh, as PGI officers, "executed a quitclaim deed in favor of
Zohreh for this property. The deed as recorded on October 25, 2001 contains language not
present when the quitclaim was signed The additional language recites that the grantee are

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action. Code of Civil Procedure section 764.045 provides "the judgment does not affect a
claim in the property or part thereof of any person who was not a party to the action if any
of the following conditions is satisfied: [¶] (a) . . . at the time the judgment was recorded."
The trial court correctly found that the 2005 judgment against PGI is not binding on Chase
and has no collateral estoppel effect. (5 Witkin, Cal. Procedure (5th ed. 2008) Pleading, §
662, p. 89; see e.g., Deutsche Bank National Trust Co. v. McGurk (2012) 206 Cal. App. 4th
201, 212.)
                             Documentary Transfer Tax Recitals
              The 2001 quitclaim deed states that PGI "remise[s], release[s] and forever
quitclaim[s]" the property to Zohreh but recites: "The grantors and the grantees in the
conveyance are comprised of the same parties who continue to hold the same proportionate
interest in the property, R & T 11923(d)." The trial court correctly found that the deed
recital was ambiguous and received parol evidence. (See e.g., City of Manhattan Beach v.
Superior Court (1996) 13 Cal. 4th 232, 238.) Where the extrinsic evidence is in conflict, we
will uphold any reasonable interpretation of the deed that is supported by substantial
evidence. (WYDA Associates v. Merner (1996) 42 Cal. App. 4th 1702, 1710.) "Even in cases
where the evidence is undisputed or uncontradicted, if two or more different inferences can
reasonably be drawn from the evidence this court is without power to substitute its own
inferences or deductions for those of the trier of fact . . . ." (Howard v. Owens Corning
(1999) 72 Cal. App. 4th 621, 631.)
              Appellant argues that the reference to Revenue and Taxation Code section
11923 shows that PGI retained an interest in the property. The California Documentary
Transfer Tax Act provides that a county recorder may impose a tax on any deed or
instrument by which land in the county is transferred or conveyed. (Rev. & Tax. Code, §
11911, subd. (a); Miller & Starr, Cal. Real Estate (3d ed. 2011) § 11.14, pp. 11-68 to 11-69.)
Revenue and Taxation Code section 11923, subdivision (d) (now subdivision (a)(4))

[sic] sole owners and shareholders of the Grantor Corporation (Paramount), and
proportionate interests have not changed."

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provides for a documentary transfer tax exemption where a change in identity, form, or
place of organization of a corporation is effected. That isn't what happened to PGI. It took
no leap in logic for the trial court to conclude that the deed reference to "R & T 11923(d)" is
a typo and should read "R & T 11925(d)." Revenue and Taxation Code section 11925,
subdivision (d) provides that no documentary transfer tax shall be imposed "by reason of
any transfer between an individual or individuals and a legal entity . . . that results solely in
a change in the method of holding title to the realty and in which proportional ownership
interests in the realty . . . remain the same immediately after the transfer." The evidence
shows that the deed recital was a tax dodge.
                                       Fee Simple Grant
              Richard D. Marks, a real estate expert, opined that the deed recitals did not
limit the conveyance to Zohreh. Marks explained, "it's a statement that[] -- the property is
not subject to the Documentary Transfer Tax. It's not a word or conveyance. It's not a grant.
It's not a release. It's not a remise. It's simply a statement by Paramount Group, Inc. that
there is no Documentary Transfer Tax . . . . [¶] That is not conveyancing language." The
quitclaim deed states that PGI "hereby remise[s], release[s] and forever quitclaim[s]" the
property to Zohreh.
              Marks' testimony, the quitclaim deed, the loan documents, and the 2001
preliminary title report show that WaMu/Chase was a good faith encumbancer for value.
The words of the grant, i.e., that PGI "hereby remise[s], release[s] and forever quitclaim[s]
to Zohreh" is without limitation and reserves no property interest to PGI. (Civ. Code, §
1105 [fee simple presumptively granted]; Moore v. Hoar (1938) 27 Cal. App. 2d 269, 276.)
              Deed recitals operate as an estoppel and bind only the parties to the instrument
and their privies (Evid. Code § 622) but not an innocent third party or one holding senior
title. (Huntington v. Donovan (1920) 183 Cal. 746, 753.) "If there is some ambiguity in the
deed, . . . the court may interpret the grant in accordance with the rules of construction
codified in the Civil Code. For example, . . . a clear and distinct limitation in a grant is not
controlled by other words which are less clear and distinct (Civ. Code, § 1067); a grant is to

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be interpreted in favor of a grantee, but a reservation in a grant is to be interpreted in favor
of the grantor (Civ. Code, § 1069); if several parts of a grant are absolutely irreconcilable,
then the former of the irreconcilable parts prevails (Civ. Code, § 1070); and most
importantly, a fee simple title is presumed to be intended to pass by a grant of real property,
unless it appears from the grant that a lesser estate was intended (Civ. Code, § 1105)."
(Machado v. Southern Pacific Transportation Co. (1991) 233 Cal. App. 3d 347, 353.)
              Marks testified that the recitals did not limit the conveyance and the quitclaim
deed utilized standard conveyance language. Appellant's expert, Emmett Bossard, admitted
that the quitclaim deed was not defective on its face but stated "I personally feel that the
deed is void." The trial court discredited Bossard's testimony. On review, we are precluded
from reweighing the evidence or determining credibility. "[I]t is a well-settled legal
doctrine that when the construction given an instrument by a trial court appears to be
reasonable and consistent with the intention of the parties making it, courts of appellate
jurisdiction will not substitute another interpretation, even though it seems equally tenable.
[Citations.]" (In re Wilson's Estate (1940) 40 Cal. App. 2d 229, 234.)
                                     Doctrine of Estoppels
              Deed recitals do not constitute estoppels where they are immaterial and not
essential to the conveyance. (Ingersoll v. Truebody (1871) 40 Cal. 603, 610; Moffitt v.
Bulson (1892) 96 Cal. 106, 110.) In Osborne v. Endicott (1856) 6 Cal. 149, our Supreme
Court held that "recitals in a deed bind all persons who are parties or privies thereto, but this
rule does not extend to that which is a mere description, or an averment which is not
essential. The doctrine of estoppels has always been construed with great strictness,
because loose statements or recitals may often, so far from expressing the truth (which no
one should be permitted to deny), exclude the party from setting it up." (Id., at p. 153.)
              Here the "loose" recital, typo and all, was to avoid a documentary transfer tax.
It was superfluous to the conveyance but came with a penalty. In 2008, the court in the
creditor's action found: "The deeds say what they say, and absent evidence as to who put

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the [recital] language on the deeds and why it was placed on the deeds, Mike and Zohreh as
the signatory parties and beneficiary to the transfer are stuck with it."

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                                          Conclusion
              Zohreh may be "stuck" with the judgment lien but WaMu/Chase should not
suffer by the act of another. (Civ. Code, § 3520.) WaMu/Chase relied on a preliminary title
report that showed clear title, loaned Zohreh $265,000, and took back a promissory note
secured by a deed of trust more than four years before appellant perfected his judgment lien.
Under California system of lien priority first in time, is first in right. (Civ. Code, § 2897;
Thaler v. Household Finance Corp. (2000) 80 Cal. App. 4th 1093, 1099.) The trial court did
not err in finding that Chase is a good faith encumbrancer for value and holds a $265,000
trust deed superior to appellant's judgment lien.
              The judgment is affirmed. Chase is awarded costs on appeal.
              NOT TO BE PUBLISHED.

                                                          YEGAN, J.
We concur:

              GILBERT, P.J.

              PERREN, J.

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                    Mark S. Borrell, Judge

              Superior Court County of Ventura

             ______________________________

Mark Henry Shafron, for Appellant.

S. Christopher Yoo, Mariel A. Gerlt and Alvarado Smith, for Respondent.

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