Court Opinion

ID: 5136525
Source: CourtListenerOpinion
Date Created: 2021-12-20 20:02:57.300115+00
Date Added: 2024-06-11T08:23:56.304891
License: Public Domain

Filed 12/20/21 Wilmington Savings Fund Society, FSB v. Stapleton CA3
                                                NOT TO BE PUBLISHED
           California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not
certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115.

                   IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
                                            THIRD APPELLATE DISTRICT
                                                              (Placer)
                                                                 ----

 WILMINGTON SAVINGS FUND SOCIETY, FSB ,                                                         C091616

                    Plaintiff and Respondent,                                    (Super. Ct. No. SCV0041307 )

           v.

 JOHN M. STAPLETON,

                    Defendant and Appellant.

         A borrower generally executes two documents when taking out a home loan: a
promissory note to repay the loan and a security instrument (often a deed of trust)
authorizing the sale of the home if the buyer fails to pay the debt. This case concerns a
deed of trust that all parties acknowledge includes a defective description of the covered
property. In 2004, John M. Stapleton entered into a deed of trust that secured a home
loan and that named Wilmington Savings Fund Society’s predecessor as the beneficiary.
Over a decade later, in 2018, Wilmington sued Stapleton to reform the deed of trust. It

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asserted that, because of the parties’ mutual mistake, the deed of trust misidentified the
covered property.
       Stapleton, in response, acknowledged the error. But he countered that Wilmington
brought its suit too late because, under the relevant statute of limitations, Wilmington
needed to file its suit within three years of discovering the error. He reasoned that
Wilmington’s predecessor (and thus also Wilmington) had constructive notice of the
flawed property description in the deed of trust in 2006 because, that year, the prior
owners of Stapleton’s home recorded a corrective grant deed to address a similarly
flawed property description in the 2004 grant deed to Stapleton. Stapleton further argued
that Wilmington’s predecessor (and thus also Wilmington) had actual knowledge of the
error in 2013 because, late that year, it hired a company to resolve the issue. Stapleton
based this latter argument on three letters he received in 2013 and 2014 from a company
that claimed to act on Wilmington’s predecessor’s behalf.
       After the parties filed dueling motions for summary judgment, the trial court
rejected Stapleton’s claims and granted Wilmington’s motion. It concluded, relevant
here, that both of Stapleton’s claims based on the statute of limitations failed as a matter
of law. Stapleton’s constructive notice claim failed, the trial court found, because the
recording of the corrective grant deed in 2006 did not, in itself, provide notice to
Wilmington’s predecessor of the defect in the deed of trust. And Stapleton’s actual
notice claim failed, the trial court concluded, because Stapleton failed to show that the
company purportedly acting on Wilmington’s predecessor’s behalf in 2013 was actually
acting on its behalf.
       On appeal, Stapleton challenges both of these conclusions. He also argues that the
trial court, at the least, should have granted him a continuance to perform further
discovery. We reject Stapleton’s contentions and affirm.

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                                       BACKGROUND
          In 2004, Stapleton obtained a loan to finance the purchase of a home in Placer
County. The prior homeowners conveyed the property to Stapleton by grant deed and, at
the same time, Stapleton’s wife also conveyed the same property to him by interspousal
transfer grant deed. A deed of trust, which was intended to cover the whole of the
purchased property, secured Stapleton’s loan and named Mortgage Electronic
Registration Systems Inc. (MERS), the lender’s nominee, as the beneficiary. (See
Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 270 [“A ‘nominee’ is a
person or entity designated to act for another in a limited role—in effect, an agent”],
disapproved of on other grounds in Yvanova v. New Century Mortgage Corp. (2016)
62 Cal.4th 919, 939 fn. 13.)
          Around 2006, Stapleton learned of an issue with the deeds. Because of an
apparent oversight, all the deeds—the grant deed, the interspousal transfer grant deed,
and the deed of trust—provided an incorrect legal description that omitted part of the
property. To address the issue, Stapleton’s predecessors recorded a corrective grant deed
in late 2006, and his wife, similarly, recorded a corrective interspousal transfer grant deed
around the same time. Stapleton, it appears, never notified his lender about the title
defect.
          In August 2015, MERS’s successor, Bank of America N.A., sued Stapleton to
reform the deed of trust. Bank of America, which acquired MERS’s interest in 2012,
asserted that the deed of trust “was intended to encumber [Stapleton’s entire] property”
but, “as a result of inadvertence, mistake, or neglect, the Deed of Trust was recorded with
an incorrect legal description.” (See Civ. Code, § 3399 [“When, through . . . a mutual
mistake of the parties. . . , a written contract does not truly express the intention of the
parties, it may be revised on the application of a party aggrieved, so as to express that
intention, so far as it can be done without prejudice to rights acquired by third persons, in
good faith and for value.”].) Bank of America afterward, in September 2016, assigned its

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interest in the deed of trust to Wilmington and, a few months later, in January 2017,
dismissed its suit without prejudice. 1
       In June 2018, Wilmington filed a similar suit against Stapleton. It alleged that the
deed of trust “is incomplete and incorrect in that it omits [a] portion of the Subject
Property.” It then asked the trial court to reform the deed of trust to provide a correct
legal description of the property and to declare the modified deed of trust “a valid
security instrument[] securing the [loan] obligations.”
       Stapleton, in his answer to the complaint, asserted that Wilmington had filed its
suit too late under Code of Civil Procedure section 338, which, relevant here, states: “An
action for relief on the ground of fraud or mistake” must be brought within three years of
“the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.”
(Code Civ. Proc., § 338, subd. (d).)
       Stapleton later sought summary judgment on that ground. His argument was
twofold. First, he argued that MERS (and thus Wilmington, as MERS’s successor) had
constructive notice of the error in the deed of trust in 2006, when Stapleton’s
predecessors recorded the corrective grant deed and his wife recorded the corrective
interspousal transfer grant deed. Second, he argued that Bank of America (and thus
Wilmington, as Bank of America’s successor) had actual notice of the title defect in 2013
because, at that time, Bank of America’s agent, Ursus Advisors LLC, sent him a letter
discussing the title defect. Stapleton alleged that he received a total of three letters from
Ursus Advisors. In the first letter, which was dated November 2013, Ursus Advisors said
it “ha[d] been engaged by Bank of America . . . to oversee resolution of certain issues

1 In a footnote, Stapleton asks us to “take judicial notice of the complaint filing date,
causes of action alleged, and dismissal date.” We deny the request. The proper
procedure for requesting judicial notice is through a motion, not a footnote. (Cal. Rules
of Court, rule 8.252(a).) In any event, no one disputes that Bank of America filed its
complaint in 2015, sought reformation of the deed of trust, and dismissed its suit in 2017.

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affecting title on [Stapleton’s] property,” enclosed a document to modify the deed of trust
and requested Stapleton’s “assistance” in resolving the issue. In the second and third
letters, which were dated May 2014 and August 2014, respectively, Ursus Advisors again
requested Stapleton’s cooperation in the matter.
       Wilmington afterward filed its own motion for summary judgment. Because, it
alleged, the undisputed facts showed that the parties intended the deed of trust to cover
the whole of Stapleton’s property, reformation of the deed of trust was proper as a matter
of law. It also disputed Stapleton’s defense under Code of Civil Procedure section 338.
First, on Stapleton’s constructive notice claim, Wilmington asserted that the recording of
the corrective deeds in 2006 provided neither actual notice nor constructive notice to
MERS about the title issue, as “[t]he recordation of a document or instrument in the
public records imparts constructive notice only to a subsequent purchaser or
encumbrancer. It does not give notice to the parties to the recorded document or to
persons who acquired a prior recorded interest.” Second, on Stapleton’s actual notice
claim, Wilmington asserted that Stapleton’s argument was premised entirely on
inadmissible evidence, namely, the three Ursus Advisors letters. It reasoned, among
other things, that the letters were inadmissible on hearsay grounds.
       The trial court later granted Wilmington’s motion and denied Stapleton’s own. It
found that Wilmington had met its initial burden to show that it was entitled to a
judgment as a matter of law, and it found unpersuasive Stapleton’s argument under Code
of Civil Procedure section 338. (See Code Civ. Proc., § 437c, subd. (p)(1) [after a
plaintiff that has moved for summary judgment “prove[s] each element of the cause of
action entitling the party to judgment on the cause of action,” the burden shifts to the
defendant “to show that a triable issue of one or more material facts exists as to the cause
of action or a defense thereto.”].) Agreeing with Wilmington, it concluded that the
“recordation of a document does not give notice to the parties to [previously] recorded
documents, or to persons who acquired a prior recorded interest.” And although the court

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admitted Ursus Advisors letters into evidence over Wilmington’s objections, it found that
Stapleton “fail[ed] to submit evidence that Bank of America had actual knowledge of the
letters sent by Ursus Advisors, or authorized the communications.” The trial court
afterward entered judgment in Wilmington’s favor.
                                      DISCUSSION
       On appeal, Stapleton first argues that the trial court should have granted his
motion for summary judgment because Wilmington filed its suit too late under Code of
Civil Procedure section 338. That statute, again, provides that “[a]n action for relief on
the ground of fraud or mistake” must be brought within three years of “the discovery, by
the aggrieved party, of the facts constituting the fraud or mistake.” (Code Civ. Proc.,
§ 338, subd. (d).) Repeating his arguments from the trial level, Stapleton asserts that
Wilmington had constructive notice of the parties’ mutual mistake in the deed of trust in
2006 and actual or imputed knowledge of the parties’ mistake in 2013. Under either
theory, Stapleton argues, Wilmington’s suit in 2018 to reform the deed of trust came too
late. We find neither argument persuasive.
       We start with Stapleton’s constructive notice claim. Stapleton asserts that MERS
(and thus its successors, including Wilmington) had constructive notice of the defective
property description in the deed of trust in 2006 because, late that year, Stapleton’s
predecessors recorded a corrective grant deed and his wife recorded a corrective
interspousal transfer grant deed to address similarly defective property descriptions in the
2004 grant deed and 2004 interspousal transfer grant deed. Stapleton reasons, it appears,
that a party to a recorded document concerning a property (in this case, MERS), has
constructive notice of all subsequent recorded documents affecting that same property.
We disagree.
       A properly recorded document involving the “conveyance of real property
. . . [provides] constructive notice of the contents thereof to subsequent purchasers and
mortagees.” (Civ. Code, § 1213, italics added; see also Citizens for Covenant

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Compliance v. Anderson (1995) 12 Cal.4th 345, 355.) It does not provide constructive
notice to previous purchasers and mortagees. (Berendsen v. McIver (1954)
126 Cal.App.2d 347, 354 [Civ. Code § 1213 “provides for constructive notice to
‘subsequent purchasers and mortgagees’ only.”]; Krause v. Marine Trust & Savings Bank
(1928) 93 Cal.App. 681, 685 [“The public record of any instrument which is by law
required to be recorded, or which is entitled to be recorded, is constructive notice only as
to subsequent purchasers or interested parties. A prior purchaser or interested party is not
affected thereby.”].) We thus decline to find that MERS (the mortgagees’ nominee
starting in 2004) had constructive notice of the defective property description in 2006
simply because the corrective grant deeds were recorded at that time.
       We turn next to Stapleton’s actual or imputed knowledge claim. Stapleton’s
argument here is premised on the three letters from Ursus Advisors—the purported agent
of Bank of America, which, again, was MERS’s successor and Wilmington’s
predecessor. According to Stapleton, because Ursus Advisors knew in 2013 that the deed
of trust covering Stapleton’s property contained an error, Bank of America also knew of
the error in 2013 under principles of agency. (Civ. Code, § 2332 [“As against a principal,
both principal and agent are deemed to have notice of whatever either has notice of, and
ought, in good faith and the exercise of ordinary care and diligence, to communicate to
the other.”].) We reject this claim too.
       To establish that Ursus Advisors acted as Bank of America’s agent, Stapleton’s
briefing relies solely on the three Ursus Advisors letters in which Ursus Advisors claimed
it was Bank of America’s agent. But these letters were not, in themselves, sufficient to
establish Ursus Advisors authority to act on the bank’s behalf. As our Supreme Court
long ago explained, “[a]gency is not provable by the mere declarations of the agent, not
made under oath or in the presence of the principal, unless communicated to and
acquiesced in by the principal.” (Union Constr. Co. v. Western Union Telegraph Co.
(1912) 163 Cal. 298, 305; see also Frank Pisano & Associates v. Taggart (1972)

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29 Cal.App.3d 1, 14 [“the declarations of an agent, other than his own testimony, are not
admissible to prove agency”]; Hill v. Barner (1908) 8 Cal.App. 58, 69; 1 Witkin, Cal.
Evid. (5th ed. 2020) Hearsay, § 121, p. 953 [“The agent’s declarations cannot prove the
fact of agency or authority; the existence of the relationship must be shown
independently, e.g., by testimony of the agent or another.”].) Considering the three Ursus
Advisors letters alone, then, we cannot agree that Ursus Advisors acted as Bank of
America’s agent and thus cannot agree that Stapleton was, as he argues, entitled to
judgment in his favor based on this claimed agency relationship.2
       Stapleton next argues that, at the very least, the trial court should have granted him
a continuance because he “rais[ed] the need for further discovery at oral argument.” But
he cites nothing in the record showing he even requested a continuance. Nor does he
even supply the transcript for the hearing on the parties’ motions for summary judgment.
We treat the point as forfeited as a result. (Cal. Rules of Court, rule 8.204(a)(1)(C) [each
brief must “[s]upport any reference to a matter in the record by a citation to the volume
and page number of the record where the matter appears.”]; Jumaane v. City of Los
Angeles (2015) 241 Cal.App.4th 1390, 1406 [courts “may disregard any claims when no
reference [to the record] is furnished.”].)3

2 At oral argument, Stapleton’s counsel pointed to an additional record that he said
demonstrates Ursus Advisors authority to act on Bank of America’s behalf. In particular,
he cited a declaration from Ursus Advisors director stating that Bank of America had
hired Ursus Advisors—a declaration that Stapleton filed with his motion for
reconsideration following the trial court’s ruling. We decline, however, to consider new
factual matters raised for the first time at oral argument. (Kinney v. Vaccari (1980)
27 Cal.3d 348, 356, fn. 6 [“An appellate court is not required to consider any point made
for the first time at oral argument, and it will be deemed waived.”].)
3  Wilmington asserts that Stapleton’s statute-of-limitations argument also fails because it
is premised on a statute, Code of Civil Procedure section 338, that is inapplicable. In
Wilmington’s telling, because this action is one to enforce the terms of a deed of trust, the
relevant statute of limitations derives from either Code of Civil Procedure section 336a,

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                                        DISPOSITION
       The judgment is affirmed. Wilmington is entitled to recover its costs on appeal.
(Cal. Rules of Court, rule 8.278(a).)

                                                    \s\                     ,
                                                BLEASE, Acting P. J.

       We concur:

           \s\              ,
       HULL, J.

          \s\               ,
       DUARTE, J.

subdivision (b), or Commercial Code section 3118, subdivision (a). But because we
reject Stapleton’s arguments on other grounds, we need not address this alternative
argument.

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