Court Opinion

ID: 6327966
Source: CourtListenerOpinion
Date Created: 2022-03-29 23:01:47.652596+00
Date Added: 2024-06-11T09:22:33.501390
License: Public Domain

Filed 3/29/22 Wang v. Lone Oak Fund CA2/4
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115.

          IN THE COURT OF APPEAL OF THE STATE OF
                        CALIFORNIA

                          SECOND APPELLATE DISTRICT

                                            DIVISION FOUR

 ZHENGJUN WANG et al.,                                                                B308656

             Plaintiffs and Appellants,                                               (Los Angeles County
                                                                                      Super. Ct. No. 19PSCV00290)
             v.

 LONE OAK FUND LLC et al.,

             Defendants and Respondents.

           APPEAL from a judgment of the Superior Court of Los
Angeles County, Peter A. Hernandez, Judge. Reversed and
remanded with directions.
        MagStone Law and Dezhan Li for Plaintiffs and
Appellants Zengpeng Feng, Jixiang Feng and Yongxiang
Feng.
        Garrett & Tully, Robert Garrett, Candie Y. Chang, Zi
C. Lin, and Sonia Plesset Edwards for Defendant and
Respondent Lone Oak Fund LLC.
        Fidelity National Law Group and Kevin R. Broersma
for Defendant and Respondent Qualfax, Inc.

                  ______________________________________

                       INTRODUCTION
       Appellants Zhengjun Wang and Baohua Wang (father
and son)1 sued respondents Lone Oak Fund, LLC (Lone Oak)
and Qualfax, Inc. (Qualfax) (among others), seeking to quiet
title to a piece of real property owned by Baohua or, failing
that, to establish an equitable lien against the property.
Appellants alleged that without their knowledge or consent,
the property was encumbered with deeds of trust in favor of
both Lone Oak and Qualfax, securing loans made by
respondents to entities unaffiliated with appellants. In

1      Because appellants share a surname, we refer to them by
their first names.

                               2
2019, Qualfax purchased the property at a nonjudicial
foreclosure sale that it initiated.
      In the proceedings below, both respondents filed
motions for judgment on the pleadings, arguing the
operative complaint failed to state causes of action against
them because they were good faith encumbrancers. The
court granted both motions without leave to amend, and
subsequently entered a judgment in respondents’ favor. On
appeal, appellants contend both that the court erred in
granting the motions, and that regardless, we should
remand because they can amend their operative complaint to
state a cause of action.
      We conclude that while appellants have failed to
demonstrate the trial court erred in granting respondents’
motions, they have demonstrated a reasonable possibility
that they can amend the operative complaint to state a cause
of action. We thus reverse the judgment, and remand the
matter to permit them to do so.

          STATEMENT OF RELEVANT FACTS

      A.    The First Amended Complaint
      In June 2019, appellants filed a first amended
complaint (FAC).2 It alleged that defendant Fai Wong aided
appellants, who are Chinese nationals, with their purchase
of real properties in the United States, including a property

2     The original complaint, filed in March 2019, is not in the
record.

                                3
on Northview Terrace in Hacienda Heights (the Property),
which was purchased on behalf of Zhengjun, but titled in the
name of his son, Baohua. As with other properties Wong
acquired for appellants, Wong purchased the Property
through Golden Ocean Investment (a company controlled by
Wong and his wife) using money provided by appellants;
Golden Ocean then sold the Property to Baohua for more
than it paid. Specifically, paragraph 39 of the FAC alleged
that the Property “was acquired by Golden Ocean on or
about June 28, 2012 and transferred to Baohua shortly
thereafter on or about August 17, 2012.”
       In January 2015, without appellants’ knowledge or
consent, the Property was transferred to a company called
Global Panda, which permitted respondent Lone Oak to
record a “mortgage” against it (the First Lone Oak DOT). In
November 2017, without appellants’ knowledge or consent, a
company called Global Travel & Cultural Entertainment
entered into a loan agreement with respondent Qualfax, and
the loan was secured by a deed of trust recorded against the
Property (the Qualfax DOT). Eight days later, the Property
was transferred to Global Travel, again without appellants’
knowledge or consent. In January 2019, Qualfax conducted
a nonjudicial foreclosure and took possession of the Property.
       Based on these allegations, appellants sought to quiet
title to the Property in their favor. In the alternative,
appellants asked the court to impose an equitable lien
against the Property, and deem the lien superior to any

                              4
other liens established against the Property after appellants
provided the money to purchase it.

     B.     Qualfax’s Initial Motion for Judgment on
            the Pleadings
      In October 2019, Qualfax moved for judgment on the
pleadings, arguing that the allegations in the FAC, as well
as documents that Qualfax asked the court to judicially
notice, established that Qualfax was a good faith
encumbrancer, and thus appellants could not state causes of
action for quiet title or equitable lien against Qualfax.
Specifically, Qualfax argued that in October 2017, Baohua
executed a power of attorney (the 2017 POA) naming
non-party Qun Yang his attorney-in-fact, and granting Yang
the power to transfer title to the Property.3 Yang
subsequently transferred title to Global Travel, and Global
Travel encumbered it with the Qualfax DOT to secure a loan
it obtained from Qualfax. Because the 2017 POA granted
Yang the power to transfer title to the Property, Qualfax did
not need authorization from appellants to issue the loan or
secure it with the Qualfax DOT. Qualfax served the motion
electronically on appellants’ counsel.
      In December 2019, appellants opposed Qualfax’s
motion, arguing the 2017 POA was forged. In a declaration

3     The 2017 POA also gave Yang power over two other pieces
of real property, including one located in the city of Whittier
known as the “Santa Cruz Property.”

                               5
submitted with the opposition, Baohua asserted that on
October 31, 2017, the day when he purportedly signed the
2017 POA in Clark County, Nevada, he was in China.
Appellants contended that because the 2017 POA was
forged, any transfers made by Yang were void, and passed no
title to the transferee. Qualfax replied to appellants’
opposition, arguing that it referred to evidence not present
in the FAC.

      C.   Substitution of Counsel
      In March 2020, prior to the hearing on Qualfax’s
motion, appellants’ counsel moved to be relieved. Counsel
declared that he had mailed the motion to appellants “c/o
Michael E. Smith, Esq.” (attorney Smith) at Smith’s address
in Las Vegas. On April 8, 2020, both appellants filed
substitution of counsel forms, electing to represent
themselves. The address they provided for themselves was
“Law Office of Michael E. Smith, Esq.” at Smith’s Las Vegas
address. Appellants’ former counsel electronically served
these documents on respondents’ counsel.

     D.    Lone Oak’s Initial Motion for Judgment on
           the Pleadings
     On April 20, 2020, Lone Oak filed its own motion for
judgment on the pleadings and request for judicial notice,
arguing that on December 21, 2016, Baohua had signed a
power of attorney (the 2016 POA) authorizing defendant

                             6
Wong to encumber the Property, and therefore Lone Oak
had no notice that Wong’s action in encumbering the
Property in 2017 with a deed of trust (the Second Lone Oak
DOT) was unauthorized.4 Lone Oak served the motion on
appellants’ former attorney.
      On April 22, 2020, the court set both motions for
hearing on July 28, 2020, at 1:30 p.m., and stated “Any
briefs not yet filed will be due in accordance with the new
hearing date(s).”

      E.    Refiled Motions
      On June 11, 2020, Qualfax refiled its motion for
judgment on the pleadings. With the exception of the dates,
the refiled motion was identical to the initial motion, and
was served on attorney Smith via overnight delivery.5
      On June 22, 2020, Lone Oak refiled its motion for
judgment on the pleadings. Like Qualfax’s motion, Lone
Oak’s refiled motion was identical to its initial motion. Lone
Oak’s refiled motion was served electronically on attorney
Smith.
      On July 21, 2020, Lone Oak filed a notice of
non-opposition, which was served electronically on attorney
Smith. That same day, Qualfax served a notice that its

4    The 2016 POA also gave Wong power to encumber the
Santa Cruz Property.
5     The notice of motion erroneously gave the hearing time as
8:30 a.m., rather than 1:30 p.m.

                               7
motion had been rescheduled from 8:30 a.m. to 1:30 p.m.
This notice was served via overnight mail and electronic
service on attorney Smith. The next day, Qualfax also filed a
notice of non-opposition, which was served via overnight
mail and electronic service on attorney Smith.

      F.    Judgment and Appeal
      On July 28, 2020, the court heard both respondents’
motions for judgment on the pleadings. After noting that
neither appellant had appeared, the court granted both
motions, ordered respondents to provide the court with
proposed judgments, and set an order to show cause why the
case should not be dismissed. Qualfax electronically served
a notice of this order on attorney Smith. On August 24,
2020, the court entered judgment in favor of Lone Oak and
Qualfax. Notice of Entry of Judgment was served
electronically on attorney Smith.
      On October 23, 2020, through new counsel, appellants
appealed the judgment. They also responded to the court’s
order to show cause, attesting that they had failed to oppose
Lone Oak’s and Qualfax’s motions because they had not
received actual notice of the motions, and because they
believed attorney Smith, who was their attorney in a related
case, would take care of their disputes. The response also
asserted that both the 2016 POA and 2017 POA were forged.

                              8
      G.    Motion for Relief from Judgment and
            Proposed Second Amended Complaint
       On January 27, 2021, appellants filed a motion for
relief from judgment, attaching a proposed second amended
complaint (proposed SAC).6 The motion admitted that
attorney Smith “received five dispositive motions in this
case” and a related case, but asserted he was “overwhelmed”
due to serious health issues. The motion also contended that
the orders granting respondents’ motions and subsequent
judgment in their favor were caused by attorney Smith’s
neglect. Appellants additionally claimed that Lone Oak’s
motion was served only electronically, and attorney Smith
had never agreed to accept electronic service. The proposed
SAC contained the same causes of action as the FAC, but
included more detail regarding the transactions with
respondents, including an allegation that both the 2016 POA
and 2017 POA were forged, rendering void any subsequent
transfers of the Property. The proposed SAC also alleged
that the August 2012 grant deed transferring title of the
Property from Golden Ocean to Baohua contained the untrue
notation that “‘The Grantors and the Grantees in this
conveyance are comprised of the same parties who continue
to hold [t]he same proportionate interest in the property,

6     While the record is silent as to how the court ruled on this
motion, Lone Oak claims in its brief that the court denied it for
lack of jurisdiction, because appellants filed it after filing their
notice of appeal.

                                  9
R&T 11925(d)’” in an effort “to avoid documentary transfer
tax.”7

                         DISCUSSION

      A.   Appellants Have Failed to Demonstrate the
           Court Erred in Granting the Motions for
           Judgment on the Pleadings
     Appellants contend: (1) the court erred in considering
the motions because respondents served them with
inadequate notice; (2) as a matter of law, courts may not
determine on a motion for judgment on the pleadings
whether a defendant is a good faith encumbrancer; and (3)
on the record before the court, it erroneously concluded
respondents were good faith encumbrancers and thus should
not have granted the motions. We address and reject each
contention below.

7     In July 2021, appellants asked us to judicially notice their
proposed SAC. They failed to attach the proposed pleading,
instead informing us that it was included in the Clerk’s
Transcript. We denied the request. In October 2021, appellants
renewed their request, this time attaching the document. We
deny their request again because, as appellants acknowledge, the
proposed SAC is already part of the record on appeal.

                               10
           1.   The Court Did Not Err in Hearing the
                Motions

                  (a) Lone Oak
      Appellants argue that because Lone Oak served its
motion electronically without a prior agreement for
electronic service, the court lacked jurisdiction to rule on
Lone Oak’s motion. Lone Oak does not deny that appellants
did not consent to electronic service, or that this was the
method by which the motion was served, but instead argues
that appellants have failed to demonstrate prejudice from
this procedural defect. (Reedy v. Bussell (2007) 148
Cal.App.4th 1272, 1289 [to obtain reversal due to inadequate
notice, “appellant must demonstrate not only that the notice
was defective, but that he or she was prejudiced”].)
Appellants admitted in their motion for relief from judgment
that attorney Smith received Lone Oak’s motion; they
argued that the granting of the motion was due to his
neglect, not because he failed to receive it. Thus, though
Lone Oak’s method of service was unauthorized, appellants
have failed to demonstrate any resulting prejudice, and
therefore no reversal is warranted due to inadequate service.

                 (b) Qualfax
      Appellants argue both that Qualfax did not serve its
motion on appellants, and that it belatedly served a notice
advising appellants of the rescheduled time of the hearing.
However, Qualfax’s proof of service demonstrates its motion
was sent via overnight delivery to appellants at the address

                             11
specified in their substitutions of attorney and, as with the
Lone Oak motion, they admit attorney Smith received it. As
to the notice of the new hearing time, while Qualfax failed to
serve the notice until July 21, even assuming this
constituted defective notice, appellants again have failed to
demonstrate prejudice. The original motion informed
appellants that it would be heard at 8:30 a.m. on July 28.
The notice of the rescheduled hearing stated the motion
would be heard five hours later, at 1:30 p.m. Nothing in the
record suggests appellants appeared at 8:30 a.m., or that
they would have appeared at the 1:30 p.m. hearing had they
known of it several weeks earlier. Therefore, no reversal is
warranted due to insufficient notice.

           2.    A Court May Determine Good Faith
                 Encumbrancer Status on a Motion for
                 Judgment on the Pleadings
     Appellants argue that the court was not permitted to
determine on a motion for judgment on the pleadings
whether respondents were good faith encumbrancers,
because that issue was a question of fact. But courts may
decide questions of fact on a motion for judgment on the
pleadings so long as the undisputed facts permit only one
reasonable interpretation. (See Czajkowski v. Haskell &
White, LLP (2012) 208 Cal.App.4th 166, 175 [though
question of plaintiff’s reasonableness in relying on negligent
misrepresentation is question of fact, “if the undisputed facts

                              12
do not leave any room for reasonable differences of opinion,”
issue “should be decided as a matter of law”]; Unruh-Haxton
v. Regents of University of California (2008) 162 Cal.App.4th
343, 368 [“‘“Ordinarily, the determination whether an
employee has acted within the scope of employment presents
a question of fact; it becomes a question of law, however,
when ‘the facts are undisputed and no conflicting inferences
are possible’”’”].) Here, the court presumably found that the
facts stated in the FAC and the judicially noticed documents
could lead only to the reasonable conclusion that
respondents were good faith encumbrancers. As explained
below, appellants have failed to demonstrate the court erred
in doing so.

           3.   Appellants Have Failed to Demonstrate
                the Court Erred in Granting the
                Motions for Judgment on the Pleadings

                  (a) Good Faith Encumbrancer
      Both respondents argued that appellants failed to state
a cause of action against them because they were good faith
encumbrancers when they made their loans and recorded the
deeds of trust. “‘A purchaser (including an encumbrancer) in
good faith for value and without actual or constructive notice
is entitled to protection against undisclosed liens and
equities existing against . . . unrecorded instruments.’”
(Caito v. United California Bank (1978) 20 Cal.3d 694, 702.)
Lone Oak argued that it was a good faith encumbrancer

                             13
because the 2016 POA authorized defendant Wong to
encumber the Property with the Second Lone Oak DOT, and
Lone Oak had no notice that Wong’s actions were
unauthorized. On appeal, appellants argue the court erred
in finding Lone Oak was a good faith encumbrancer because
the 2016 POA had “a serious problem on its face: it cover[ed]
the Santa Cruz Property . . . which was not owned by
Baohua Wang.” We are unpersuaded.
      The 2016 POA, which implied that Baohua had an
interest in the Santa Cruz Property, was signed on
December 21, 2016. The Second Lone Oak DOT, which
stated that Global Travel owned the Santa Cruz Property,
was signed on December 27, 2016. Given that the Second
Lone Oak DOT was not signed until six days after the 2016
POA, we find this insufficient to constitute constructive
notice that the 2016 POA could not be relied on.
      Qualfax similarly argued that appellants failed to state
a cause of action against it because the 2017 POA gave Yang
the power to transfer the Property. Appellants similarly
argue that Qualfax could not rely on the 2017 POA, as it also
“cover[ed] the Santa Cruz Property,” and Qualfax must have
known that Baohua did not own the Santa Cruz Property
because the Qualfax DOT encumbered it. Appellants
additionally allege that the grant deed transferring title of
the Property from Baohua to Global Travel was “suspicious”
because it had a notation that the transfer was a “bonafide
gift and the grantor received nothing in return.” But, like
the situation with Lone Oak, the 2017 POA was signed on

                             14
October 31, 2017, and the Qualfax DOT was not signed until
November 7, 2017. Moreover, given a previous attempt at
avoiding transfer taxes, the notation that the transfer from
Baohua to Global Travel was a “bonafide gift,” was
insufficient to raise suspicions of fraud.8 Thus, we find no
error in the court’s conclusion that Qualfax lacked notice
that the 2017 POA was fraudulent.9

                  (b) Quiet Title
      To quiet title to real property, a plaintiff must state the
basis on which title should be quieted. (Code Civ. Proc.,
§ 61.020, subd. (b) [quiet title complaint shall be verified and
shall include “[t]he title of the plaintiff as to which a
determination under this chapter is sought and the basis of
the title”].) Appellants contend that they stated this basis in

8     In their proposed SAC, appellants allege that the 2012
Grant Deed conveying the Property to Baohua contained the
untrue notation that “‘The Grantors and the Grantees in this
conveyance are comprised of the same parties who continue to
hold [t]he same proportionate interest in the property, R&T
11925(d)’” in an effort “to avoid documentary transfer tax.”
9      In their reply brief, appellants contend that to the extent
the court took judicial notice of the truth of the facts stated in the
recorded documents to determine respondents were good faith
encumbrancers, it erred. This argument is forfeited for failure to
raise it in the opening brief. (L.A. Taxi Cooperative, Inc. v. The
Independent Taxi Owners Assn. of Los Angeles (2015) 239
Cal.App.4th 918, 926, fn. 7 [“As this argument was first raised in
the reply brief, it is forfeited”].)

                                 15
paragraph 39 of the FAC. That paragraph alleged that the
Property “was acquired by Golden Ocean on or about June
28, 2012 and transferred to Baohua shortly thereafter on or
about August 17, 2012.” But if respondents were good faith
encumbrancers subsequent to the 2012 transfer of the
Property to Baohua, then appellants have failed to state a
basis upon which title should be quieted against them. (See,
e.g., Reiner v. Danial (1989) 211 Cal.App.3d 682, 689-690 [“A
purchaser or encumbrancer who pays valuable consideration
for his interest in real property in good faith and who records
his interest, receives his interest free and clear of all prior
unrecorded claims in the property which are unknown to
him”].) As discussed above, because appellants failed to
demonstrate the court erred in determining respondents
were good faith encumbrancers, they also have failed to
demonstrate the court erred in granting the motions for
judgment on the pleadings.10

10    The FAC also alleged causes of action against respondents
for “Equitable Lien” and “Preliminary and Permanent
Injunction.” Appellants do not argue on appeal that they
adequately stated a cause of action for equitable lien. And “[a]n
injunction is a remedy, not a cause of action. Therefore, it may
not be issued if the underlying causes of action are not
established.” (Venice Coalition to Preserve Unique Community
Character v. City of Los Angeles (2019) 31 Cal.App.5th 42, 54.)
Appellants do argue that they stated a cause of action for
declaratory relief, but the FAC contains no such cause of action.

                               16
     B.    Appellants Have Demonstrated a Reasonable
           Possibility That They Can Amend Their
           Operative Complaint to State a Claim

           1.     Appellants Have Not Forfeited This
                  Issue
      Appellants did not request leave to amend their FAC,
either in the only written opposition they submitted (in
response to Qualfax’s initial motion for judgment on the
pleadings), or at the hearing on the motions (at which they
did not appear). Qualfax argues we should not remand to
permit appellants to amend because they failed to meet their
burden to demonstrate how they could amend successfully.
While appellants failed to request leave to amend in the
proceedings below, we conclude the matter must be
remanded, as appellants are permitted to make, and have
made, the requisite showing on appeal.11
      “‘“In the case of either a demurrer or a motion for
judgment on the pleadings, leave to amend should be
granted if there is any reasonable possibility that the
plaintiff can state a good cause of action.”’ [Citation.] The
plaintiff has the burden of showing what amendment can be
made, and how it will change the legal effect of the pleading,

11    Moreover, appellants made at least a partial showing
below. As noted, in opposing Qualfax’s initial motion which
argued that the transfer from Baohua to Global Travel was
permitted by the 2017 POA, appellants contended that the POA
was forged, voiding any transfers under its authority.

                             17
so that it states a cause of action. [Citation.] A plaintiff can
even make this showing for the first time on appeal.”
(Ventura Coastal, LLC v. Occupational Safety & Health
Appeals Bd. (2020) 58 Cal.App.5th 1, 32-33; see also Code
Civ. Proc., § 472c, subd. (a) [“When any court makes an order
sustaining a demurrer without leave to amend the question
as to whether or not such court abused its discretion in
making such an order is open on appeal even though no
request to amend such pleading was made”]; Palm Springs
Tennis Club v. Rangel (1999) 73 Cal.App.4th 1, 7 [“plaintiff
need not request leave to amend in order to preserve on
appeal the issue of whether the court abused its discretion in
sustaining a demurrer without leave to amend (Code Civ.
Proc., § 472c)”]; MacIsaac v. Pozzo (1945) 26 Cal.2d 809, 816
[“section 472c of the Code of Civil Procedure . . . provides
that the question whether the trial court abused its
discretion in sustaining a demurrer without leave to amend
‘is open on appeal even though no request to amend such
pleading was made.’ [Citation.] Since the reason for the
rule is the same on a motion for judgment on the pleadings,
the same result should obtain”].) As discussed below, we
conclude appellants have made the requisite showing on
appeal.

           2.   Quiet Title
     Appellants contend that if permitted to amend their
operative complaint, they would allege that both the 2016
POA and 2017 POA were forged and thus void ab initio,

                              18
rendering the Second Lone Oak DOT and the Qualfax DOT
void as well. (See, e.g., Estate of Stephens (2002) 28 Cal.4th
665, 672 [when attorney-in-fact acts without authority under
invalid power of attorney, attempted action is void, and any
conveyance under such circumstances is void]; Trout v.
Taylor (1934) 220 Cal. 652, 656 [“Numerous authorities have
established the rule that an instrument wholly void, such as
an undelivered deed, a forged instrument, or a deed in blank,
cannot be made the foundation of a good title, even under
the equitable doctrine of bona fide purchase”].)
       Lone Oak argues that these new allegations are
inconsistent with the allegations made in the FAC, and that
appellants have failed to explain why they were omitted
from the FAC. It is true, as Lone Oak asserts, that the FAC
“never alluded to any forged power of attorney.” However, it
contained broad allegations that recorded deeds of trust and
related loan transactions occurred “without the
authorization or knowledge of any of the Plaintiffs.”
Appellants’ proposed allegations regarding forged powers of
attorney (which appellants claim to have learned of after the
filing of the FAC) are not inconsistent with these allegations,
but rather elucidate them, providing an explanation why the
transactions were unauthorized, and how they could have
occurred without appellants’ knowledge. We discern no
inconsistency.
       Lone Oak additionally argues that even if appellants
were permitted to allege the 2016 POA was forged, under
Probate Code section 4303, Lone Oak cannot be found liable

                              19
for relying on it. Such an argument is inappropriate at this
stage, because it relies on facts that are neither in any
iteration of the complaint, nor judicially noticeable.
       Probate Code section 4303 provides that a third party
may rely on a Power of Attorney without liability under
three conditions: “(1) The power of attorney is presented to
the third person by the attorney-in-fact designated in the
power of attorney. [¶] (2) The power of attorney appears on
its face to be valid. [¶ and] (3) The power of attorney includes
a notary public’s certificate of acknowledgment or is signed
by two witnesses.” (Prob. Code, § 4303, subd. (a).) Here,
nothing in either the pleadings or the judicially noticed
documents demonstrated that the 2016 POA was presented
to Lone Oak by the person named therein (defendant Wong).
Lone Oak contends we can deduce this requirement was met
because the proposed SAC alleges that the 2016 POA and
the Second Lone Oak DOT were “recorded together.” But an
allegation that the two documents were recorded together
has no bearing on whether Wong was the one who presented
the POA to Lone Oak. Therefore, regardless of whether
Probate Code section 4303 might ultimately insulate Lone
Oak from being named in causes of action for quiet title or
equitable lien -- a question on which we express no opinion --
it is not an issue that can be properly addressed at the
pleading stage in this case.

                              20
             3.    Equitable Lien
      “In general, equity will create a lien on property where
this is necessary to accomplish substantial justice and
protect creditors. Thus, courts will construe the existence of
equitable liens where the parties have erroneously created a
defective mortgage . . . or, even in the absence of any
agreement, where it is necessary to prevent unjust
enrichment . . . .” (Grappo v. Coventry Financial Corp.
(1991) 235 Cal.App.3d 496, 509.)
      Appellants contend that if they can prove respondents
were not good faith encumbrancers, “they may also prove
their third cause of action [for] Equitable Lien, at least
against Qualfax, who is in possession of the . . . Property.”
Qualfax does not dispute this in its brief. Lone Oak,
however, argues that no claim for equitable lien can be
stated against it, because it is not in possession of the
Property. Lone Oak too narrowly characterizes the scope of
appellants’ equitable lien cause of action.
      The proposed SAC requests that if the court does not
quiet title to the Property in their favor, it find an equitable
lien exists, and deem the lien “prior to all interests acquired
or allegedly acquired after the purchase money [for the
Property] was provided.” In other words, appellants request
that if title to the Property is not restored to them, the court
not only grant them an equitable lien on the Property, but
also declare the lien superior to Lone Oak’s. Lone Oak is
therefore a proper defendant to this cause of action.

                               21
           4.    Injunction
      Appellants also intend to allege a cause of action for an
injunction. But “[a]n injunction is a remedy, not a cause of
action.” (Venice Coalition to Preserve Unique Community
Character v. City of Los Angeles , supra, 31 Cal.App.5th at
54.) Nevertheless, despite the inapt pleading, we are aware
of nothing that would prevent appellants from requesting
the remedy of an injunction if tethered to a suitable cause of
action.

                              22
                         DISPOSITION
      The judgment in favor of respondents is reversed. On
remand, appellants are granted leave to file an amended
complaint. Respondents may challenge any such amended
complaint in any manner permitted by law. In the interests
of justice, the parties shall bear their own costs on appeal.
      NOT TO BE PUBLISHED IN THE OFFICIAL
      REPORTS

                                          MANELLA, P. J.

We concur:

WILLHITE, J.

COLLINS, J.

                             23