Court Opinion

ID: 9945817
Source: CourtListenerOpinion
Date Created: 2024-02-28 17:02:07.213577+00
Date Added: 2024-06-11T14:22:13.355167
License: Public Domain

Filed 2/28/24 Overland Direct v. Esola Capital Investment CA4/1
Opinion following rehearing
                                          OPINION ON REHEARING

                   NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for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.

                 COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                                       DIVISION ONE

                                              STATE OF CALIFORNIA

 OVERLAND DIRECT, INC.,                                                       D080447

            Intervener and Respondent,
                                                                              (Super. Ct. No. 37-2011-00071216-
            v.
                                                                              CU-OR-EC)
 ESOLA CAPITAL INVESTMENT,
 LLC et al.,

            Defendants and Respondents;

 A&S PARK BOULEVARD, LLC,

            Objector & Appellant.

          APPEAL from an order of the Superior Court of San Diego County,
Eddie C. Sturgeon, Judge. Motion to dismiss denied; requests for judicial
notice granted in part and denied in part. Reversed.
          Manatt, Phelps & Phillips, Benjamin G. Shatz, and Benjamin E.
Strauss; and Philip A. Metson for Objector and Appellant.
          No appearance for Defendants and Respondents.
          Blanchard, Krasner & French, Alan Kipp Williams, John F.
Whittemore; Williams Iagmin, Jon R. Williams; Law Offices of George Rikos
and George D. Rikos for Intervener and Respondent.
      This appeal involves a complex set of real estate dealings gone awry in
the wake of the 2008 global financial crisis, spawning contentious litigation
in multiple courts. Cutting through the thicket of claims, this appeal
ultimately turns on whether the trial court acted within the scope of the
operative complaint in intervention in voiding three instruments pertaining
to a parcel of real property in Van Nuys, California (the Friar property).
The trial court voided these instruments following an uncontested trial at
which the two named defendants, Daniel Tepper and Esola Capital
Investment, LLC (Esola) failed to appear. It later amended that judgment to
include the parcel numbers of the affected properties.
      We conclude the court exceeded the scope of the operative pleading,
rendering the Amended Judgment void as to the named defendants.
Nonparty A&S Park Boulevard, LLC (A&S) was sufficiently affected by the
Amended Judgment, which resulted in foreclosure on its property, to bring
this voidness claim. Accordingly, we reverse and remand, directing the trial
court to set aside the Amended Judgment.

            FACTUAL AND PROCEDURAL BACKGROUND

      While the dealings between the parties are admittedly complex, the
facts needed to resolve this appeal are relatively few. Overland Direct, Inc.
(Overland), a subsidiary of Overland Direct (Israel), Ltd. (Overland-Israel),
made loans to California property owners secured by liens on real property.
The loans were funded by Israeli bondholders who were represented by
Aurora Fidelity Trust (Aurora). In the wake of the 2008 global financial
crisis, deeds of trust securing Overland’s loans were assigned to Esola and its
owner, Daniel Tepper. Overland claimed the assignments were fraudulent,
prompting litigation in multiple courts to adjudicate competing property

                                       2
claims.1 Broadly speaking, this appeal involves the alleged assignment of
two deeds of trust, one concerning the Friar property and the other
concerning a different property in El Cajon, California.

A.    Background Facts

      Overland loaned Michael Cartwright $960,000 in 2007. The note was
secured by a first deed of trust on real property owned by his business,
Cartwright Termite & Pest Control, LLC in El Cajon (the Cartwright

property).2 That same year Overland also made a $1.3 loan to Sarkis
Grigoryan to construct a 14-unit apartment building on the Friar property.
This one-year loan matured in May 2008 and was secured by a first deed of
trust on the property.
      Following the global financial crisis, Aurora hired Tepper to evaluate
Overland’s assets and review its records. Overland ended up assigning its
deeds of trust to Tepper’s company, Esola. This included the first trust deeds
on the Friar and Cartwright properties. The validity, scope and purpose of
these assignments are hotly disputed by the parties. Esola, in turn, assigned
the Friar property note and deed of trust to A&S Park Boulevard, LLC (A&S)
in 2011 for $600,000. A&S foreclosed on the note in 2012 and became the fee

1      We grant A&S’s November 15, 2022 request for judicial notice of two
volumes of pleadings and orders, as well as Overland’s May 9, 2023 request
for judicial notice of additional case filings and recorded deeds of trust. (Evid.
Code, § 452, subds. (d), (h); Cal. Rules of Court, rule 8.252(a).) Because they
are unnecessary to our analysis, we deny the remaining requests for judicial
notice filed by the parties on September 15, September 25, and October 2,
2023 in response to the court’s first request for supplemental briefing. (See
Arce v. Kaiser Foundation Health Plan, Inc. (2010) 181 Cal.App.4th 471, 482.)
2     In 2009, Overland assigned a one-third interest in the note to a third
party. That assignment has no relevance for these proceedings.
                                        3
simple owner of the Friar property after submitting the winning bid at a
trustee’s sale.
      After Cartwright Termite defaulted in 2010, Esola attempted to
foreclose. Cartwright Termite responded by filing this case, which we refer to
as the “Cartwright action,” against Tepper and Esola in 2011. Eventually the
court dismissed all but the cause of action for declaratory relief. When in
2013 the court determined that Cartwright Termite lacked standing to sue
Esola and Tepper for fraud, Michael Cartwright set out to acquire Overland

from the bankruptcy estate of supposed owner Doron Ezra.3 In 2013,
Cartwright purchased “the Estate’s interest, if any” in Overland for $15,000.
      Having acquired Ezra’s “if any” shares in Overland, Cartwright as
Overland filed a series of complaints. In this action, he filed a complaint in
intervention against Esola, Tepper, and Citivest Financial Services, Inc.
(Citivest) for fraud and declaratory relief. This original complaint, filed in
January 2016, sued Tepper and Esola for fraudulent conduct in relation to
two assignments of the Cartwright property deed of trust. The complaint in
intervention did not name A&S as a party or mention the Friar property.
The only property referenced was the Cartwright property, and all of the
attached exhibits pertained to it. As will become apparent, Overland’s
primary claim is that its January 2016 complaint in intervention was
superseded by a “First Amended Cross-Complaint in Intervention,” seeking
much broader relief, filed by Cartwright on behalf of Overland in March 2016
in a coordinated action, Payan v. Cartwright Termite & Pest Control (Super.

3     The parties dispute whether Ezra, the president of Overland, owned
any stock in the company at the time he filed for chapter 7 bankruptcy
protection. Standing is an issue we do not resolve in this appeal, and we
therefore spend little time on the underlying contested facts.
                                        4
Ct. San Diego County, No. 37-2013-00049616-CU-OR-CTL) (the Payan

action).4
      Cartwright qua Overland also filed two other cases against Esola and
Tepper that did name A&S as a party and reference Overland’s assignment of

the Friar property deed of trust.5 The LA Friar action sued Esola, Tepper,
A&S, and Wells Fargo for quiet title, declaratory relief, conversion, and
fraud. In addition, Cartwright as Overland substituted A&S as a Doe
defendant in the SD Friar action, a previously filed case before Judge
Sturgeon in San Diego seeking largely the same relief. A&S moved to
disqualify Judge Sturgeon from the SD Friar action (Code Civ. Proc., § 170.6),
prompting the case to be reassigned to Judge Wohlfeil. Eventually the LA
Friar action was also transferred to Judge Wohlfeil and consolidated with the
SD Friar action.

B.    Phase 1 Trial

      In August 2016, Judge Sturgeon conducted a one-week bench trial on
Cartwright Termite’s sole remaining cause of action for declaratory relief.
Having severed the two causes of action in Cartwright qua Overland’s
complaint in intervention, Judge Sturgeon adjudicated only the declaratory
relief claim in the phase 1 trial. He issued a detailed statement of decision in
December 2016.

4      The parties dispute which of these reflects the operative pleading in
this case. This question is ultimately dispositive of our inquiry on appeal,
and we explore the record carefully to conclude the January 2016 complaint
in intervention was the operative pleading.
5     We refer to the lawsuits filed in Los Angeles Superior Court as the “LA
Friar action” (Super. Ct. Los Angeles County, 2016, No. LC103983) and in the
San Diego Superior Court as the “SD Friar action” (Super. Ct. San Diego
County, No. 37-2013-00078078-CU-BT-CTL).
                                       5
         Preliminarily, the court found Cartwright resolved the standing issue
by acquiring Ezra’s interest in Overland from the bankruptcy estate. On the
merits, it determined that Tepper, purporting to represent Aurora,
fraudulently induced Overland to assign the Cartwright deed of trust to
Esola. After Cartwright Termite filed this lawsuit, third party Firooz Payan
intervened, claiming to have acquired the trust deed from Esola (which
Tepper denied). The court granted declaratory relief and declared both
purported assignments void. As a result, it held that Overland still owned a
two-thirds interest in the Cartwright property deed of trust, and that a 2015
substitution of trustee and deed of full reconveyance between Overland and
Cartwright Termite were valid.

C.       Phase 2 Trial

         Litigation continued between the parties and A&S in the consolidated
SD Friar action before Judge Wohlfeil. Meanwhile, Judge Sturgeon
conducted a one-day trial in September 2020 to adjudicate Cartwright qua
Overland’s previously severed fraud claim. With Esola and Tepper failing to
appear at this second phase of trial, the trial was uncontested. (Code Civ.
Proc., § 594.) Overland presented its case in a little over forty minutes.
Cartwright testified as the person most knowledgeable for Overland, and the
court considered the prior testimony and evidence from the first phase of
trial.
         At the close of trial, the court directed Overland’s counsel to prepare
separate statements of decision as to Tepper and Esola. Judge Sturgeon
approved the proposed statements of decision in November 2020, entering
judgment for Overland against Tepper and Esola. As before, the court found
that Cartwright owned Overland, having purchased all its shares from Ezra’s
bankruptcy estate. But in contrast to the first phase of trial, the decision in

                                          6
phase two was not limited to the Cartwright property. Instead, the court
voided all instruments purporting to convey real property from Overland to
Esola or any company controlled by Tepper, including the assignments
pertaining to the Friar property deed of trust (among others). Overland was
awarded $48 million in compensatory damages for fraud, as well as $60
million in punitive damages based on Tepper and Esola’s intentional,
malicious, and outrageous conduct. The court reserved jurisdiction over
attorney’s fees and costs.
      In January 2021, the court amended the judgment nunc pro tunc to add
parcel numbers and legal descriptions for each impacted property and name
each trustee under the respective deeds of trust that were bound by the
judgment. (Amended Judgment.) As relevant to A&S’s appeal, paragraphs 8
through 10 of the Amended Judgment voided: (1) an August 2010
assignment of the Friar property deed of trust from Overland to ESOLA
Capital, LLC, in trust for Aurora, naming LSI Title as trustee; (2) a June
2010 assignment of the Friar property deed of trust again naming LSI Title
as trustee; and (3) a May 2011 substitution of trustee replacing LSI Title

with Citivest as successor trustee.6

D.    A&S’s Set Aside Motion

      In July 2021, A&S specially appeared to set aside the Amended
Judgment as void. (Code Civ. Proc., § 473, subd. (d).) Describing past and
pending litigation between the parties, A&S first claimed the judgment
should be vacated for extrinsic fraud given Overland’s knowledge of A&S’s

6     Other properties were also affected. For example, nonparties Sunrise,
LLC and Nice Team, LLC claimed their interests in the Euclid Property were
detrimentally affected by the Amended Judgment. They filed a separate set
aside motion that was also largely denied.
                                       7
interest and failure to name or serve it as a party. Citing Save Our Bay, Inc.
v. San Diego Unified Port Dist. (1996) 42 Cal.App.4th 686, A&S argued it was
an indispensable party not bound by a judgment entered in its absence. It
maintained that due process was violated by the adjudication of its property
rights in its absence and contended it was prevented from asserting its
defenses to Overland’s title claims.
      Next, A&S argued the Amended Judgment exceeded the relief sought
in Overland’s operative complaint in intervention, which did not assert any
right or remedy involving A&S or the Friar property. Suggesting the phase 2
trial proceeded by default, A&S maintained the court exceeded its
jurisdiction in rendering the award.
      Finally, A&S contested Overland’s standing. It asserted that material
facts concerning Overland’s ownership had been concealed from the court.
According to A&S, Overland was, and remained, a wholly owned subsidiary
of Overland-Israel, meaning Cartwright acquired nothing from Ezra’s
bankruptcy estate.
      Explaining how it was prejudiced by the Amended Judgment, A&S
related additional history from the pending Friar actions. Trial commenced
in those cases before Judge Wohlfeil in October 2020 and was set to resume
in August 2021. According to A&S, Overland was proceeding in that case as
though it had obtained a judgment for quiet title from Judge Sturgeon,
recording a notice of default and attempting to proceed with nonjudicial

foreclosure proceedings on the Friar property.7

7      At the same time it filed its set aside motion, A&S moved ex parte to
advance the hearing date on that motion, requesting it be heard prior to the
first phase of bifurcated trial proceedings before Judge Wohlfeil in the Friar
actions. That motion was denied, and A&S’s set aside motion was calendared

                                       8
      Overland opposed A&S’s set aside motion. It claimed A&S was not
indispensable where it was not a party to any of the instruments pertaining
to the Friar property that were voided by the trial court. Maintaining A&S
knew of the case and sat on its rights, Overland urged the court to deem its
motion untimely. Overland also contended the operative complaint was not
its January 2016 complaint in intervention, but rather an amended cross-
complaint in the coordinated Payan action that expressly referenced the Friar
property.
      Turning to A&S’s claim of prejudice, Overland noted that Judge
Wohlfeil had considered and rejected the claim that it was a bona fide
purchaser for value. Overland further argued that A&S lacked standing to
challenge Cartwright’s ownership of Overland because it did not claim to be
Overland’s owner.
      On reply, A&S described the deleterious consequences of Overland’s
tactics. It claimed Overland relied on the Amended Judgment to force the
trustee on the deed of trust to conduct a nonjudicial foreclosure (trustee’s
sale) and convey title to the Friar property to Overland. A&S further
maintained that Judge Wohlfeil had improperly relied on the Amended
Judgment in the Friar actions, including in finding standing. A&S accused
Overland of gamesmanship and asserted that a void judgment could be
attacked at any time. It also reiterated its stance that Cartwright lacked
standing to represent Overland’s interests.

for hearing in January 2022. In the meantime, Judge Wohlfeil issued a
statement of decision in the related Friar actions on September 2021 finding
A&S was not a bona fide purchaser for value and rejecting its other merits
defenses. Briefing before Judge Sturgeon on A&S’s set aside motion
concluded after Judge Wohlfeil’s phase 1 rulings.
                                       9
E.    Order Denying Set Aside

      Judge Sturgeon denied A&S’s set aside motion in February 2022. In a
brief, two-page minute order, the court concluded A&S was not an
indispensable party that needed to be named as a defendant. Although its
ruling could later adversely affect A&S’s interests, the court found it
significant that A&S was not a party to any of the instruments voided by the
Amended Judgment. Next, the court rejected A&S’s claim of extrinsic fraud,
finding A&S had ample notice of proceedings and time to intervene if it
believed its rights were implicated. As to the scope of relief, the court
concluded that all portions of the judgment dealing with the Friar property
fell within the relief requested in Overland’s March 11, 2016 First Amended
Cross-Complaint in Intervention, which it treated as the operative pleading
notwithstanding that it bore the caption of the Payan action rather than the
Cartwright action. Finally, it concluded A&S lacked standing to challenge
Overland’s ownership where it did not claim to be Overland’s owner and
Aurora had not previously claimed ownership.

      A&S appeals.8

8     Under Code of Civil Procedure section 902, any aggrieved party may
appeal an adverse judgment. “[O]ne must be both a party of record to the
action and aggrieved to have standing to appeal. The first requirement, that
one be a party of record, is subject to an exception under which a nonparty
who moves to vacate the judgment is permitted to appeal as if he were a
party.” (Shaw v. Hughes Aircraft Co. (2000) 83 Cal.App.4th 1336, 1342; see
County of Alameda v. Carleson (1971) 5 Cal.3d 730, 736–737; Doe v. Regents
of University of California (2022) 80 Cal.App.5th 282, 293 (Doe) [appellant
became party to the action by filing an unsuccessful nonstatutory motion to
vacate a judgment affecting her interests].)
                                       10
                                 DISCUSSION

      Reasserting its claims below, A&S contends: (1) the trial court
exceeded its jurisdiction by granting relief in excess of what Overland
pleaded in its operative complaint; (2) A&S was a necessary and
indispensable party required to be joined for the court to void instruments in
its chain of title; (3) extrinsic fraud (Overland’s gamesmanship) warranted
setting the Amended Judgment aside; and (4) Cartwright as Overland lacked
standing.
      At the outset, we deny Overland’s motion to dismiss the appeal as well
as its associated request for judicial notice. Overland fails to demonstrate
why A&S’s alleged failure to comply with unrelated discovery rulings in the
SD Friar action before Judge Wohlfeil in any way hampered Overland’s
ability to defend this appeal. (See Menezes v. McDaniel (2019) 44
Cal.App.5th 340, 346 [disentitlement is a discretionary rule applied where
the balance of equities favors it].)
      Turning to the merits, we reach only the first of A&S’s claims. As we
explain, Overland’s original complaint in intervention is the operative
pleading. That complaint did not reference the Friar property and only
sought cancellation of instruments pertaining to the Cartwright property.
The Amended Judgment is void because due process prevented the trial court
from expanding the scope of relief sought in the operative complaint at an
uncontested trial. Given A&S’s interest in any adjudication affecting its
chain of title to the Friar property, it had standing to challenge the Amended
Judgment as void based on a violation of Tepper and Esola’s due process
rights.

                                       11
A.    Overland’s original complaint in intervention is the operative
      pleading.

      In denying the set aside motion, Judge Sturgeon stated that Overland’s
“March 11, 2016 First Amended Cross-Complaint-in-Intervention” sought to
void instruments pertaining to the Friar property. His order does not explain
how a cross-complaint filed in another coordinated action—the Payan
action—that bore only the Payan caption could replace a complaint in
intervention in the Cartwright action. Overland attempts to defend this
reasoning on appeal. By contrast, A&S asserts that throughout the
proceedings the operative pleading remained the original complaint in
intervention filed by Overland in January 2016, which was unaffected by any
cross-complaint filed in the Payan action.
      To better understand the record, we requested a supplemental letter
brief from the parties identifying any responsive pleadings filed by Tepper or
Esola in relation to either the January 2016 complaint in intervention or the
March 2016 cross-complaint in intervention. Both parties agree that Esola
filed an answer to the original complaint in intervention in this case. The
register of actions does not indicate that Overland thereafter sought leave to
amend, as would be required to file an amended complaint in intervention
against Esola. (Code Civ. Proc., § 472.) Questioned on this point, Overland
suggested at oral argument that leave to amend had been granted once
Firooz Payan expressed his intent to demurrer to the original complaint. But
this was in the Payan action; Payan was not named as a defendant in
Overland’s original complaint in intervention in the Cartwright action and
would have had no basis to demurrer.
      Most or all of the confusion stems from the coordinated (but not
consolidated) Payan action involving many of the same parties and issues,
which was also pending before Judge Sturgeon. Payan claimed to have
                                       12
acquired Esola’s two-thirds interest in the Cartwright deed of trust by
assignment, a contention Tepper denied. After this action was filed, Payan
brought a separate lawsuit—the Payan action—against Cartwright Termite
and Cartwright in 2013 seeking judicial foreclosure of his alleged interest in
the Cartwright deed of trust. Cartwright qua Overland sought leave to
intervene in the Payan action in April 2014, attaching a proposed cross-
complaint in intervention asserting claims against Payan, Tepper, and Esola.
The motion was eventually granted in early January 2016. Payan filed a
demurrer to the original cross-complaint in intervention. At a January 29
hearing, Judge Sturgeon took the demurrer off calendar in light of Overland’s
expressed intention to file a First Amended Cross-Complaint.
      On March 11, 2016, Overland filed a document titled, “First Amended
Cross-Complaint in Intervention” in the Payan action that asserted claims
against Esola, Tepper, and Payan. As depicted below, only the Payan action
is captioned; the Cartwright action is listed by number merely as a
coordinated case.

                                      13
A separate proof of service was filed the same day in the Payan action
confirming service on cross-defendants Payan, Tepper, and Esola.
      Although an exact copy of the First Amended Cross-Complaint in
Intervention (with identical time stamp and caption) also appears out-of-
order in the register of actions for this case, the purpose for the filing is not
specified. It was not accompanied by any proof of service, nor does the
register of actions separately indicate service of process on Esola or Tepper,
who had already answered Overland’s original complaint in intervention in

this case.9
      Proceedings in this case were bifurcated, with Esola and Tepper
appearing at the contested phase 1 trial. Judge Sturgeon issued a statement
of decision in December 2016 addressing only the Cartwright property. The
Friar property and A&S were never referenced in the phase 1 decision. In
addition, the court only referenced the January 2016 original complaint in
intervention in its statement of decision.
      Leading up to the phase 2 trial, Overland filed a trial brief as to its sole
remaining cause of action for fraud against Tepper and Esola. In over nine
pages summarizing the evidence, Overland’s trial brief never mentioned the
Friar property. The minutes for the September 30, 2020 uncontested phase 2
trial mention only the original pleading: “Operative pleading is Complaint in
Intervention filed 01/08/2016.” While we lack a trial transcript, the

9     Counsel for A&S made a comment at oral argument suggesting Esola
and Tepper had been served with the “First Amended Cross-Complaint in
Intervention.” It is unclear whether counsel meant that Esola and Tepper
had been served in the Payan action or in this case. Based on our review,
Overland filed a separate proof of service in connection with this pleading in
the Payan action. In this case, no proof of service referencing the First
Amended Cross-Complaint in Intervention was attached to that document or
separately filed.
                                        14
statements of decision issued by Judge Sturgeon following the phase 1 and
phase 2 trials likewise only reference Overland’s original complaint in
intervention. Judge Sturgeon explained that the phase 2 “trial consisted
solely of Overland’s cause of action for fraud against Defendants as alleged in
Overland’s Complaint in Intervention filed on January 8, 2016.”
      The only reasonable conclusion on this record is that Overland’s
January 2016 complaint in intervention is the operative pleading. The trial
court was mistaken in concluding otherwise. As A&S suggests, had the “First
Amended Cross-Complaint in Intervention” amended Overland’s prior
pleading, judgment against Esola and Tepper would have proceeded by way
of default, given that neither filed a responsive pleading. Instead, Tepper
appeared in the phase 1 trial, and Judge Sturgeon held an uncontested phase

2 trial in his absence to adjudicate the fraud claim.10 The “First Amended
Cross-Complaint in Intervention” filed and served in the Payan action, even
if a copy was for some reason filed in this action, could not have amended
Overland’s original complaint in intervention.

10    A default judgment can be entered when a defendant defaults by failing
to answer a complaint. (Code Civ. Proc., § 585, subd. (a).) But “a court has
no power to enter a defendant’s default after the defendant has answered but
has failed to appear for trial.” (Yeung v. Soos (2004) 119 Cal.App.4th 576,
582.) Instead, where a defendant answers the complaint and receives proper
notice of trial but fails to appear at trial, the court may enter a judgment
following an uncontested evidentiary hearing. (See Heidary v. Yadollahi
(2002) 99 Cal.App.4th 857, 862–863; Merrifield v. Edmonds (1983) 146
Cal.App.3d 336, 341.) In any event, merely filing a proof of service in the
Cartwright action regarding a pleading filed in a different action (the Payan
action) would not provide reasonable notice that the pleading was intended to
apply substantively in the Cartwright action as well.
                                      15
B.    By exceeding the scope of relief in the operative pleading, the
      Amended Judgment is void as to Esola and Tepper.

      Relying on Code of Civil Procedure section 580, A&S contends that
because Overland’s operative original complaint in intervention sought relief
only as to the Cartwright property, the Amended Judgment is void either
under Code of Civil Procedure section 580 or as a matter of due process. It
cites Garamendi v. Golden Eagle Insurance Company (2004) 116 Cal.App.4th
694 (Garamendi) for the proposition that a judgment exceeding the scope of
relief requested in the operative complaint following an uncontested trial is
void as a matter of due process. Although the argument could have been
better developed, A&S reasoned that the complaint in intervention failed to
give either A&S or Esola and Tepper notice that the Friar property would be
at issue in the Cartwright action. Overland does not distinguish Garamendi,
and we ultimately find A&S’s argument compelling.
      In Garamendi, homeowners sued a subdivision developer for
construction defects, and the developer filed a cross-complaint for indemnity
against a subcontractor and its insurer. In settling with the developer, the
homeowners were assigned the developer’s claims against the subcontractor.
(Garamendi, supra, 116 Cal.App.4th at pp. 699−700.) The case proceeded to
trial against the subcontractor. A few days before trial, the subcontractor
discovered that its corporate status had been suspended, meaning it could not
appear. The subcontractor’s insurer, which had undertaken the defense,
declined to intervene to represent its interests. Following an uncontested
trial, the court found the subcontractor liable and entered a substantial
damages award. (Id. at pp. 700−701.)
      The insurer became insolvent shortly after trial, and the homeowners
sought to enforce their judgment by submitting a claim to the state insurance
commissioner (serving as liquidation trustee). The insurance commissioner
                                      16
denied the proof of claim, and the homeowners successfully challenged that
decision in the superior court. (Garamendi, supra, 116 Cal.App.4th at
pp. 701−702.) On appeal, the insurer contended that because the
subcontractor had not participated at trial, the judgment was akin to a
default judgment that had to be limited to the amount of damages specifically
requested in the complaint. (Id. at p. 704.) The Court of Appeal disagreed,
explaining that section 580 of the Code of Civil Procedure only placed that
limitation where “there is no answer” by the defendant, not where the
defendant answers and participates in discovery but later fails to appear at
trial. (Id. at p. 705.)
      Although Code of Civil Procedure section 580 did not apply to create a
strict monetary limitation on the scope of the judgment, the Garamendi court
nonetheless concluded that a related limitation was required by
constitutional due process principles. As the court explained, if the judgment
entered after the uncontested trial exceeded the scope of liability articulated
in the pleadings, then “the constitutional mandate of due process would void
the excess, even if Code of Civil Procedure section 580 did not.” (Garamendi,
supra, 116 Cal.App.4th at pp. 706−707.) In reaching this result, the court
acknowledged, “The fact that the precise amount of the requested damages
was not specified in the complaint does not mean that the resulting judgment
necessarily resulted in a deprivation of due process of law.” (Id. at p. 706.)
Instead, procedural due process was violated by the award of personal injury
damages or attorney’s fees because the operative complaint at the time of
trial failed to give the subcontractor reason to anticipate liability along these
lines. (Id. at pp. 707−709.)

                                       17
      As A&S suggests, Garamendi compels the conclusion that the Amended
Judgment was void to the extent it canceled instruments and awarded
damages on properties other than the Cartwright property referenced in
Overland’s original complaint in intervention. The operative complaint did
not put Tepper and Esola on notice that title to the Friar property was in any
way involved in or potentially affected by this case. Overland only requested
cancellation of two instruments pertaining solely to the Cartwright property
without ever mentioning the Friar property. The fact that pleadings filed in
different cases sought broader relief would not have put Tepper or Esola on
notice that they faced liability in the Cartwright action as to the Friar
property. In this context, due process precluded the court from entering a
judgment pertaining to the Friar property following an uncontested trial.
The Amended Judgment is void to the extent it granted relief not
encompassed by Overland’s operative complaint in intervention.
      At oral argument and in subsequent briefing, counsel for Overland has
suggested there was no due process violation because Esola and Tepper had
both notice and an opportunity to be heard regarding the Friar property. The
notice argument initially assumed the First Amended Cross-Complaint in
Intervention filed in March 2016 was the operative pleading and placed Esola
and Tepper on notice that the Friar property was at issue in the Cartwright
action. Shifting its focus at oral argument and subsequently, Overland
maintains that Esola and Tepper had adequate notice and an opportunity to
be heard because they presented evidence during the phase 1 trial in August
2016 regarding the Friar property. Following oral argument, we gave
Overland permission to designate portions of the phase 1 trial record that it
believed reflected Esola and Tepper’s notice and opportunity to be heard. Out
of an abundance of caution, we later granted rehearing to allow Overland the

                                       18
opportunity to fully brief the issue. Having reviewed both the phase 1 trial
record and the supplemental briefs, we reject the claim.
      Starting with the inescapable conclusion that the original complaint in
intervention filed in January 2016 was the operative pleading, there is no
basis to conclude that Esola or Tepper had due process notice that their
rights to the Friar property would be adjudicated in the Cartwright action.
The Cartwright property is specifically defined in the first paragraph of the
complaint in intervention as the “Property” that is the subject of the action.
As we have noted, it is the only “Property” identified in the pleading as a
whole and expressly referred to in the prayer for relief.
      In its supplemental brief, Overland retreats from its position that the
first amended complaint in intervention was the operative pleading. And by
admitting that the original complaint in intervention “did specifically
highlight instruments pertaining to the Cartwright Property,” Overland
implicitly concedes that the Cartwright property is the only property
specifically mentioned. But it suggests that if the complaint is “construed in
its entirety,” it actually “sought broader relief.” In support of this assertion,
Overland points to references in the complaint restating its contention that
“Defendants never had the authority to assign any of [Overland’s] assets to
themselves or others and as such any such assignments are void as a matter
of law.” As a result, Overland posited that a judicial declaration was
necessary “to determine Overland’s rights to its own assets, deeds of trust
and . . . properties.”
      But vague references in the complaint to plural nouns—assignments,
assets, deeds of trust and properties—did not provide fair notice to Tepper
and Esola that their rights to properties other than the Cartwright property
were going to be adjudicated. That Overland believed “any such assignments

                                        19
[were] void as a matter of law” is a perfectly acceptable statement of legal
position to explain why relief as to the Cartwright property and the two
assignments referenced in the complaint should be granted. (Italics added.)
That is all the complaint in intervention requested. Moreover, opening and
closing statements at the phase 1 trial only confirmed that the case involved

the Cartwright property alone.11
      Although the lack of fair notice provided by the complaint in
intervention is determinative, Overland extensively discusses evidence at the
phase 1 trial that mentioned properties other than the Cartwright property,

including the Friar property.12 That such evidence was presented is hardly
surprising. Each party took the position that events and circumstances
pertaining to other properties were relevant in deciding the status of the

11     We grant Overland’s December 18, 2023 motion to augment the record
and include attached exhibits A and B in the record on appeal. Exhibit A is a
minute order stating that Overland had filed a first amended cross-complaint
in intervention in the Payan action, which was being heard with the
Cartwright action. Nothing in this order suggests that Overland’s pleading
had been filed in the Cartwright action. The phase 1 transcripts attached as
exhibit B are even less helpful to Overland. Judge Sturgeon stated at the
outset that the Payan and Cartwright actions had not been consolidated.
Payan’s counsel referred to Overland’s original complaint in intervention to
define the issues at trial. Opening and closing statements by counsel for
Overland and Cartwright limited the relief sought to voiding assignments
affecting the Cartwright property. Counsel for Tepper and Esola responded
in her opening and closing statements that those specific assignments were
valid.
12     In this regard we grant Overland’s January 25, 2024 request for
judicial notice of the declaration of Daniel Tepper filed in the Cartwright
action in support of Esola’s motion for summary judgment. As with the
materials submitted with the motion to augment, the Tepper declaration does
not alter our conclusion that Overland’s complaint in intervention did not
place the validity of the assignments or ownership of the Friar property fairly
at issue.
                                       20
Cartwright property. Certainly, the mere presentation of evidence
concerning the Friar property during the phase 1 trial does not furnish
adequate notice that the validity of assignments affecting the Friar property

would be adjudicated.13 Absent such notice, Overland’s due process
rejoinder crumbles.

C.    As an aggrieved party, A&S has standing to challenge the
      Amended Judgment as void.

      Even if the Amended Judgment is void under due process as to
defendants Esola and Tepper, it is a separate question whether A&S—a
nonparty—has standing to raise that claim. “It is elementary that, in the
absence of some ground of estoppel, parties and their privies may collaterally
impeach a judgment void on its face for lack of jurisdiction. [Citations.] This
right does not depend upon any showing of prejudice to their interests.”
(Mitchell v. Automobile Owners Indem. Underwriters (1941) 19 Cal.2d 1, 9.)
A different rule applies to strangers to the case, who “may attack a void
judgment only when, if the judgment were given full effect, some right in
them would be affected by its enforcement.” (Ibid. [nonparty whose
substantive rights were not affected by void order could not set it aside].)
“ ‘An aggrieved person, for this purpose, is one whose rights or interests are

13    Ezra and Tepper were each questioned about trust deeds for other
properties. Payan’s counsel objected that other transactions were “irrelevant
to these proceedings,” which pertained solely “to a property pertaining to
Cartwright Termite.” Ezra was asked about his signature on various
instruments and why the assignments were made in trust for Aurora. The
Friar property was discussed in this context. Ezra was pressed vigorously on
cross-examination as to his claim the instruments had been doctored. Later
during phase 1 proceedings, Tepper was asked about his course of dealings
with both Overland and Aurora, including in connection to the Friar
property.
                                       21
injuriously affected by the decision in an immediate and substantial way, and
not as a nominal or remote consequence of the decision.’ ” (Doe, supra, 80
Cal.App.5th at p. 293.)
      This court recently applied that standard in Paterra v. Hansen (2021)
64 Cal.App.5th 507 (Paterra), a quiet title case. After condominium owner
Natalie Paterra engaged in a reverse mortgage transaction in 1997, title to
her property was reconveyed numerous times to several individuals without
notice to Paterra. The 2006 then-owner obtained a $480,000 loan from lender
Clarion Mortgage Capital, Inc. (Clarion), secured by a deed of trust on the
property (Clarion Deed of Trust) that named Mortgage Electronic
Registration Systems, Inc. (MERS) as the beneficiary. (Id. at pp. 513–514.)
Paterra sued the various transferees, including Clarion, for quiet title, but
Clarion did not answer the amended complaint and was defaulted. Paterra
then filed a second amended complaint, continuing to name Clarion as a
defendant, but did not serve Clarion with that pleading. (Id. at p. 514.) At
the close of trial, MERS unsuccessfully moved to intervene. While denying
that motion, the court stated MERS would not be bound by the judgment.
(Ibid.) It entered an amended final judgment that quieted title against all
defendants, including Clarion, but stated the amended judgment did not bind
persons claiming an interest through the Clarion Deed of Trust. (Ibid.)
      MERS assigned the Clarion Deed of Trust to ABS REDO Trust II
(ABS), which then sought to foreclose. Paterra was able to block the
foreclosure in a separate lawsuit against MERS and ABS based in part on the
amended judgment against Clarion. The ruling in that related case
prompted ABS to move to set aside or correct the amended judgment against
Clarion. (Paterra, supra, 64 Cal.App.5th 507, 515.) ABS argued the
amended judgment was void against Clarion because Paterra never served

                                       22
Clarion with her operative second amended complaint. (Ibid.) The trial court
denied ABS’s motion, concluding: (1) it lacked standing absent sufficient
evidence that MERS had assigned the Clarion Deed of Trust to it, and
(2) even otherwise, the second amended complaint made no substantive
changes and did not have to be served on Clarion. (Ibid.)
      On appeal, a different panel of this court held that the trial court erred.
The amended judgment was void as to Clarion given (among other things)
Paterra’s failure to serve it with the materially amended operative complaint.
(Paterra, supra, 64 Cal.App.5th at pp. 515, 530−531.) In reaching this result,
standing presented a threshold concern. Paterra argued ABS failed to prove
an assignment from Clarion; ABS claimed it had. (Id. at p. 527.) We
sidestepped that question, accepting ABS’s alternative argument that it had
standing as an aggrieved party to argue that the amended judgment was
void. (Ibid.) At the time of ABS’s motion to vacate, Paterra had successfully
prevented ABS from foreclosing on the Clarion Deed of Trust based on the
amended judgment. (Ibid.) As a result, “ABS was an aggrieved party with
standing to move to vacate the February 2018 Amended Judgment (as to
Clarion) on the grounds that the judgment was void (as to Clarion).” (Id. at
p. 528)
      Paterra stands for the proposition that a stranger to an action that led
to a void judgment has standing to challenge that judgment if its enforcement
would cause injury to the challenging party. (See also Doe, supra, 80
Cal.App.5th at p. 294 [nonparty had standing to attack court mandate order
that “directly impacts and potentially injures [her] education-related
rights”].) Applying that principle to this case, Judge Sturgeon voided three
instruments in A&S’s chain of title to the Friar property. Even if A&S could
later launch a separate collateral attack on the Amended Judgment based

                                       23
Overland’s failure to join it as a necessary and indispensable party (see
Washington Mutual Bank v. Blechman (2007) 157 Cal.App.4th 662, 668−669),
it was sufficiently aggrieved by the invalidation of the Friar property
instruments to have standing in this action to challenge the Amended
Judgment as void. As laid out in the set aside motion (and not contested in
the opposition), Overland used the Amended Judgment to record a notice of
default on the Friar property and complete a nonjudicial foreclosure. This
was ample injury to give A&S standing to attack the Amended Judgment as

void.14 (Paterra, supra, 64 Cal.App.5th at p. 527.)
      That brings us back to Garamendi, supra, 116 Cal.App.4th 694.
Overland’s operative complaint in intervention for fraud and declaratory
relief sought to void two instruments pertaining to the Cartwright property.
The Friar property was nowhere mentioned in that complaint. Tepper and
Esola failed to appear for the second phase of trial, but an uncontested trial
held in their absence could not, consistent with due process, exceed the scope
of relief requested in the operative complaint. (Id. at pp. 707−709 [judgment
following uncontested trial was void to the extent it awarded plaintiff
personal injury damages and attorney’s fees not requested in her operative
complaint].) Nonetheless, paragraphs 8, 9, and 10 of the Amended Judgment
dealt with the Friar property.

14     One of the three voided instruments was an August 12, 2010
assignment of the Friar property deed of trust from Overland to “ESOLA
Capital, LLC.” Noting the slight difference between the designation of the
assignee in the August 2010 assignment and the designation of the assignor
in the May 2, 2011 assignment by which A&S allegedly received its interest
in the Friar property—“Esola Capital Investment, LLC”—for the first time in
its petition for rehearing Overland contends that A&S has failed to establish
any interest affected by the voided assignment. Except in rare instances we
will not to consider an argument raised for the first time on rehearing (People
v. Brooks (2017) 3 Cal.5th 1, 116), and we find no basis to do so here.
                                       24
      In exceeding the scope of relief requested in Overland’s operative
complaint in intervention, the Amended Judgment was void as to Esola and
Tepper as a matter of due process. A&S is aggrieved by the ruling, giving it
standing to attack the Amended Judgment as void. This conclusion
eliminates the need to address any of A&S’s remaining contentions on

appeal.15
                               DISPOSITION

      The order denying A&S’s set aside motion is reversed. The trial court
is directed to enter a new order that grants the motion, vacates the Amended
Judgment as void, and enters a new judgment that limits relief to the
Cartwright property and does not void any instruments that were not
referenced in Overland’s original complaint in intervention filed in January
2016. A&S is entitled to its costs on appeal.

                                                           DATO, Acting P. J.

WE CONCUR:

DO, J.

KELETY, J.

15    Overland filed a letter in December 2023 attaching a final judgment
recently entered by Judge Wohlfeil in the Friar cases. Based on this
judgment, Overland maintained, “A&S stands to gain nothing by reversing
Judge Sturgeon’s Amended Judgment,” and “its remedy is to pursue an
appeal from the Friar Judgment based upon a whole record review of those
proceedings.” Given the parties’ disagreement regarding the extent to which
Judge Wohlfeil (and other courts) relied on the Amended Judgment, rulings
in those cases do not affect our analysis.
                                      25