Court Opinion

ID: 6499233
Source: CourtListenerOpinion
Date Created: 2022-07-12 00:01:32.692532+00
Date Added: 2024-06-11T09:11:57.892161
License: Public Domain

Filed 7/11/22 (unmodified opinion attached)

CERTIFIED FOR PARTIAL PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FOUR

XPO LOGISTICS FREIGHT, INC.,

Plaintiff, Cross-defendant and
Appellant,

Vv.

HAYWARD PROPERTY, LLC et al.,

Defendants, Cross-complainants
and Appellants.

 

XPO LOGISTICS FREIGHT, INC.,

Plaintiff, Cross-defendant and
Appellant,

Vv.

HAYWARD PROPERTY, LLC et al.,

Defendants, Cross-complainants
and Respondents.

 

 

THE COURT:

A157687

(Alameda County Super. Ct.
Nos. HG16841187, RG16843893)

A158291, A159299

(Alameda County Super. Ct.
Nos. HG16841187, RG16843893)

ORDER MODIFYING OPINION
AND DENYING REHEARING;
NO CHANGE IN JUDGMENT

The opinion filed herein on June 17, 2022 is modified as follows:

1. On page 8, lines 9-10, after the words “The correctory deed has not been
recorded,” delete the comma and the words “allegedly by inadvertence.”

2. On page 12, line 4, at the end of the parenthetical, after “69 Cal.2d 33, 37”

add “(PG&E).”
3. On page 13, line 10, add the following as footnote 7 at the end of the sentence
concluding with the words “as a matter of law” (and renumber all subsequent
footnotes accordingly):

7 Hayward contends that, under the common law rule articulated
in PG&E, supra, 69 Cal.2d 33, as applied in Fremont Indemnity Co. v.
Fremont General Corp. (2007) 148 Cal.App.4th 97, 114-115, a court may
never take judicial notice of the proper interpretation of a contract at the
pleadings stage. However, the rule of PG&E does not categorically bar a
court from determining the correct interpretation of a contract at the
pleadings stage. (George v. Automobile Club of Southern California
(2011) 201 Cal. App.4th 1112, 1122 [court may, after conditionally
accepting and considering proffered parol evidence, determine that “the
parol evidence alleged must be disregarded because, for whatever
reason, the contract is not reasonably susceptible of the interpretation
... alleged”].) Revenue and Taxation Code sections 327 and 11911.1,
read together, mandate a specific rule for the interpretation of deeds and
other conveyances, overriding any general common law rule to the
contrary.

4. On page 17, line 3, add the following as footnote 10 at the end of the
sentence concluding “that is all that the judgment correctly determines” (and
renumber all subsequent footnotes accordingly) :

10 Hayward contends that the trial court erred in granting judgment
on the pleadings without adjudicating its affirmative defenses or granting
it leave to amend its cross-complaint. However, Hayward has not
identified any proposed new factual allegations or affirmative defense
that could possibly defeat XPO’s right to a declaratory judgment.

5. On page 19, lines 2-3, replace the words “Hayward’s own deed (i.e., the 2003
correctory deed, which incorporates the 2002 bankruptcy legal description)”
with the words “the document on which Hayward itself relies (i.e., the 2002
bankruptcy legal description).”

There is no change in the judgment.

The petition for rehearing is denied.

Dated: July 11, 2022 POLLAK, P. J.
 

Trial Court:

Alameda County Superior Court

 

Trial Judges:

Honorable Ioana Petrou
Honorable Evelio Grillo

 

Counsel for Plaintiff, Cross-
defendant and Appellant:

STUART KANE LLP
Donald J. Hamman

McALPINE PC
Douglas W. Eyre
Mark L. McAlpine

BUCHALTER, APC
Glenn P. Zwang
Alexandra Grayner

 

 

Counsel for Defendants,
Cross-complainants and
Appellants:

 

GREENBERG TRAURIG, LLP
Eric V. Rowen
Scott D. Bertzyk

 

 
Filed 6/17/22 (unmodified opinion)
CERTIFIED FOR PARTIAL PUBLICATION’

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT

DIVISION FOUR

XPO LOGISTICS FREIGHT, INC.,
Plaintiff, Cross-defendant and

Appellant, A157687
Vv. (Alameda County Super. Ct.
HAYWARD PROPERTY, LLC, et al., Nos. HG16841187, RG16843893)
Defendants, Cross-complainants
and Appellants.

 

XPO LOGISTICS FREIGHT, INC.,

Plaintiff, Cross-defendant and

Appellant, (Alameda County Super. Ct.
Vv. Nos. HG16841187, RG16843893)

HAYWARD PROPERTY, LLC, et al.,

Defendants, Cross-complainants
and Respondents.

A158291, A159299

 

 

These appeals arise from a dispute over title to one part of a property in
the City of Hayward. As of 1979, the entire property was owned by one entity
and divided into four parcels. In 1997, the owner reconfigured it into two
parcels. In several transactions between 1998 and 2002, one reconfigured
parcel was conveyed to XPO Logistics Freight, Inc. (XPO), and the other to
Crown Enterprises, Inc., and Hayward Property, LLC Gointly Hayward). This

 

* Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this opinion is
certified for publication with the exception of part 2 of the Discussion.
case concerns which of the two parcels includes a certain part of the original
property (the disputed area).

The dispute has two sources. One is the 1997 document reconfiguring the
property into two parcels, which has an undisputed error in defining one of the
parcels by its metes and bounds. The other is the fact that, sometime before
1997, the county assessor divided the property—for purposes of property
taxes—into three assessor’s parcels with distinct assessor’s parcel numbers
(APNs). When the property was reconfigured into two parcels, which later
passed to different owners, the boundaries of the APNs were not changed. The
parties’ dispute concerns the significance, if any, of references to those APNs in
various title documents. The documents’ metes-and-bounds descriptions of
parcels support XPO’s claim to the disputed area; the APN references arguably
support Hayward’s claim.

In 2016, XPO sued to quiet title. Hayward cross-complained to quiet title
in itself or else obtain restitution of two sums—the property taxes it had paid
on the disputed area since 2002 and the purchase price it paid for its parcel.

In 2017, the court granted XPO’s motion for judgment on the pleadings on
the title claims. The parties continued to litigate Hayward’s restitution claims.
They ultimately stipulated to an estimated amount of real property taxes
Hayward had paid with respect to the disputed area, in excess of the taxes that
XPO had paid on a portion of Hayward’s property. In 2019, the court entered
judgment quieting title to the disputed area in XPO, denying Hayward’s
purchase-price restitution claim, and awarding relief on its tax restitution
claim in the stipulated sum—plus prejudgment interest, over XPO’s objection.

Hayward appeals the judgment quieting title, and XPO cross-appeals the
award of prejudgment interest on the restitution award, though it does not

challenge the restitution award itself (appeal No. A157687). In two consolidated
appeals (Nos. A158291 and A159299), XPO also challenges postjudgment orders
taxing its costs and declining to award it attorney fees as a sanction for
Hayward’s discovery abuses and alleged pursuit of a “knowingly false” claim.

In the published portion of this opinion, we conclude that the trial court
correctly disregarded APN references in the deeds, and that its judgment must
be affirmed insofar as it encompasses a declaration that Hayward did not
acquire an interest in the disputed area. In the unpublished portion of this
opinion, we address the remaining issues. We conclude that the award of
prejudgment interest on Hayward’s restitution award, which the trial court
evidently considered as mandatory, must be reversed so the court can exercise
its discretion in determining whether and from what date to award such
interest and, if awarded, apply the correct interest rate. We also affirm the
orders taxing XPO’s costs and denying sanctions.

Factual History and Procedural History

In 1979, the entire property at issue was owned by CF Properties, Inc.

and divided into four parcels—original parcels 1, 2, 3, and 4—as shown in

recorded parcel map No. 3094 (the 1979 parcel map):
 

 

    
    
     
  

 

 

 

 

  

 

 

 

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MOC MEN SERCO NO INDUSTRIAL PARKWAY WEST
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Some time before 1997, the Alameda County Assessor divided the
property, for purposes of assessing property taxes, into three assessor’s parcels,
which were enumerated on an unrecorded assessor’s map as APN 463-0025-040

(APN 40), APN 463-0025-043-01 (APN 43) and APN 463-0025-044 (APN 44):

 
 

 

 

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As can be seen by comparing the maps, APN 40 comprised original parcel 1;
APN 43 comprised all of original parcels 3 and 4 and most of original parcel 2;
and APN 44 comprised the southeast corner of parcel 2. The following exhibit

shows the parties’ claims about their parcels:

 

 

 

   
    
 
 
 
  
 
  

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The parties agree that, after the transactions set out below, Hayward owns at
least the polygon to the southwest outlined in blue (the Utah-shaped parcel)
and XPO owns at least the unshaded part of the larger polygon to the north
and east outlined in green. The highlighted area is the disputed area. It
includes all of APN 44 and most of the eastern leg of APN 43.

In brief, events began in 1997 when CF Properties, owner of the entire
property, recorded a “lot line adjustment” reconfiguring the four original
parcels on the 1979 parcel map into two parcels. Hayward ultimately acquired
part or all of reconfigured parcel one, and XPO acquired reconfigured parcel
two. The question is which parcel includes the disputed area.

The 1997 lot line adjustment describes reconfigured parcel one—the basis
of Hayward’s claims—in three ways: (1) as “a portion of [original] parcel [1], a
portion of [original] parcel 2, all of [original] parcel 3, and all of [original]
parcel 4” as shown on the 1979 parcel map, (2) by metes and bounds, and (3) as
“containing 16.42 acres more or less.” The legal description of the reconfigured
parcels in the 1997 lot line adjustment does not refer to APNs. The metes and
bounds are flawed and do not close. They trace a gapped rectangle that does not
include the disputed area, but has a gap bordering that area.

In 1998, the parties’ chains of title diverged. CF Properties’ successor
CNF Properties, Inc., issued a deed transferring reconfigured parcel one to
Consolidated Freightways Corporation (the 1998 deed). CNF retained
reconfigured parcel two, which eventually passed to XPO.

The face page of the 1998 deed conveying reconfigured parcel one to
Consolidated Freightways states that the parcel is described in “Attached
Exhibit ‘A, ” and below that phrase contains a notation: “Assessor’s Parcel
No. 463-25-43-1 & 44.” The text of the attached exhibit A is identical to the

text in the 1997 lot line adjustment describing reconfigured parcel one—with
the same flawed metes and bounds and the same estimate of “16.42 acres more
or less.”

In 2000, a “correction grant deed” was recorded. Its face page is identical
in relevant part to that of the 1998 deed. Exhibit A to the 2000 correction deed
modifies exhibit A to the 1998 deed by fixing the metes and bounds so that the
parcel closes and by changing the estimate of “16.42 acres more or less” to
“7.9 acres more or less.” The new description changes the parcel’s boundaries to
match the Utah-shaped parcel.

In September 2002, Consolidated Freightways declared bankruptcy , and
CNF Properties executed a one-page quitclaim deed that transferred
reconfigured parcel two to XPO’s predecessor Con-Way Transportation
Services (Con-Way). The deed purports to transfer the entire original property
to Con-Way, but, as XPO acknowledges, CNF Properties could transfer only so
much of the property as it had not already transferred to Consolidated
Freightways in the 1998 deed. Con-Way thus received whatever was not
conveyed by the 1998 deed.

Hayward acquired its parcel after the bankruptcy court issued an order
in November 2002 authorizing a sale of real property. The order approves a
sales contract between Consolidated Freightways and Hayward. The contract
states that the parcel sold is “legally described in exhibit A attached hereto.”

Exhibit A to the sales contract is a legal description in a form designed to
be attached to a deed (the 2002 bankruptcy legal description). It defines the
parcel sold to Hayward in two ways: (1) as comprising “a portion of parcel 1, a
portion of parcel 2, all of parcel 3, and all of parcel 4” from the 1979 parcel
map, and (2) by metes and bounds. It includes no acreage estimate. The metes
and bounds are identical to those used in exhibit A to the 2000 correction deed

defining the parcel conveyed to Consolidated Freightways as the Utah-shaped
parcel. At the bottom of the 2002 bankruptcy legal description is a notation
reading: “Assessor’s Parcel No. 463-0025-043-1 [§]] Assessor’s Parcel No.
463-0025-044.”

In December 2002, a quitclaim deed from Consolidated Freightways to
Hayward was recorded. It transfers “the following described real property in
the City of Hayward... .[§]] See attached Exhibit A.” The attached exhibit,
however, describes unrelated land in Emeryville. In 2003, the bankruptcy
trustee executed a correctory quitclaim deed with an attached exhibit A
identical to the 2002 bankruptcy legal description. The correctory deed has not
been recorded, allegedly by inadvertence. !

No transaction has occurred since 2003. The question is thus whether
the parcel conveyed to Hayward by the 2003 correctory deed is, as Hayward
contends, the Utah-shaped parcel plus the disputed area (.e., all of APNs 43
and 44), or simply the Utah-shaped parcel, as the court found. This history
gives rise to at least two subsidiary questions: Was the disputed area part of
the parcel conveyed to Consolidated Freightways by the 1998 deed and, if so,
was it part of the parcel sold to Hayward by that company’s bankruptcy estate
in 2002? As will be seen, the record definitively answers only the latter
question.

Litigation began in 2015. Hayward petitioned the bankruptcy court to
reopen Consolidated Freightways’s bankruptcy and amend the description of
the parcel in the 2002 bankruptcy legal description to match Hayward’s view.
The bankruptcy court declined to reopen the bankruptcy, and the federal

 

' While the 2003 correctory deed is unrecorded, it nonetheless is
necessarily the basis of Hayward’s title claims. (See 3 Miller & Starr, Cal. Real
Estate (4th ed. 2016) § 10:2 [duly executed and delivered grant deed conveys
title even if unrecorded].)
district court affirmed. Neither federal court reached the merits of the title
question.

In December 2016, XPO filed its complaint to quiet title and for
declaratory relief. Hayward filed a cross-complaint? asserting causes of action
to quiet title, for slander of title, and for restitution on a theory that XPO was
unjustly enriched when Hayward paid the purchase price for its parcel, and
when it paid property taxes on the disputed area.

XPO moved for judgment on the pleadings, requesting judicial notice of
title-related documents. In October 2017, the court granted its motion as to the
title claims. The court, referring to Consolidated Freightways as “CFC,” held
that “the real property that CNF conveyed to CFC in 1998 (as clarified by the
[2000 correction deed]) did not include Parcel 2. Because Parcel 2 had not been
conveyed by CNF to CFC, CFC had no power to convey Parcel 2 to [Hayward]
in the bankruptcy proceedings.”

The court held that the title documents are not ambiguous so as to
permit resort to extrinsic evidence: “[Hayward] contends that the [deeds] were
ambiguous because they referred to the [APNs] for the property. But [APNs]
are created for use by the assessor in assessing property taxes; they are not
relevant to issues concerning the alienation of real property.” (Citing Cafferkey
v. City and County of San Francisco (2015) 236 Cal.App.4th 858, 868.) “As part
of any final judgment,” the court held, it would “order that XPO owns the

[disputed area] free and clear of any claims by [Hayward].”

 

2 In fact, soon after XPO filed its complaint, Hayward—unaware of its
filing—initiated a second action by filing its own complaint. The court issued a
stipulated order to consolidate the two actions, stay Hayward’s, and treat its
complaint as a counterclaim in this action.
The parties spent the next 18 months litigating the restitution claims and
collateral issues. In May 2019, the court entered a judgment purporting to
“quiet title” to the disputed area in XPO as against Hayward.

Discussion

We review de novo a judgment granted on the pleadings. (Smiley v.
Citibank (1995) 11 Cal.4th 138, 146.)

1. Title-Related Issues

a. Hayward’s claim to the disputed area was properly rejected.

We turn first to whether the 2002 bankruptcy legal description approved
by the bankruptcy court and attached to the 2003 correctory deed to Hayward,
which in metes and bounds does not include the disputed area, is ambiguous
because of the notation referring to the APNs, which would preclude judgment
on the pleadings. Revenue and Taxation Code section 327 provides that if, as
here, an assessor’s map is unrecorded, “land shall not be described in any deed
or conveyance by a reference to [that] map.” But if, as here, a county imposes a
documentary transfer tax, Revenue and Taxation Code section 11911.1
authorizes the county to require, as Alameda County has done, that each deed
or conveyance “shall have noted upon it the tax roll parcel number,” though
such notations “will not be proof of title’ and shall be governed, in case of

conflict, by “the stated legal description.”?

 

3 Alameda County has adopted a transfer tax ordinance (Alameda County
Mun. Code, ch. 2.04) that includes, as XPO notes, an APN-notation
requirement. (/d., § 2.04.040(A).) The text of that requirement is effectively
identical to that set forth in Revenue and Taxation Code section 11911.1.
(§ 2.04.040(A) [“Each deed, instrument or writing by which lands, tenements,
or other realty [in Alameda County] is sold, granted, assigned, transferred or
otherwise conveyed shall have noted upon it the tax roll parcel number. The
number shall be used only for administrative and procedural purposes and
shall not be proof of title and in the event of any conflicts, the stated legal
description noted upon the documents shall govern.” ].)

10
Although neither party has cited, and we have not found, a decision
applying these sections to the interpretation of a deed, these provisions, read
together, plainly require that APN references in a deed recorded in such a
county be disregarded unless the face of the deed clearly shows the references
to be part of the legal description of the parcel conveyed.* The property
described in an assessor’s map referred to by its APN “need not correspond
with actual subdivisions, lots, tracts or other legal divisions or boundaries of
land.” (Cafferkey v. City and County of San Francisco, supra, 236 Cal.App.4th at
p. 869.)

This interpretation is consistent with what simple observation of the
documents in this case would suggest. In this case, the APN references on
which Hayward relies appear on the face pages of the 1998 deed and the 2000
correction deed with no apparent reference to the description of the property
being conveyed, which appears in each deed on a separate attachment with no
reference to the APN. On the 2002 bankruptcy legal description the notation
appears at the bottom of the page, plainly distinct from the legal description of
the property. (A full-page image of the bankruptcy legal description is attached
to this opinion as Appendix 1.)

A deed is a contract subject to all usual rules of contract interpretation.
(Pear v. City and County of San Francisco (2021) 67 Cal.App.5th 61, 70.)
Under those rules, “the test of admissibility of extrinsic evidence to explain the
meaning of a written instrument is not whether [the instrument] appears to

the court to be plain and unambiguous on its face, but whether the offered

 

4 We have reviewed the available legislative history of the statutes that
adopted or added the relevant language to Revenue and Taxation Code
sections 327 (Stats. 1939, ch. 154, p. 1285; Stats. 1951, ch. 1121, § 1, p. 2878)
and 11911.1 (tats. 1971, ch. 102, § 4, p. 131). That history sheds no light on
the issue addressed in this appeal.

11
evidence is relevant to prove a meaning to which the language of the
instrument is reasonably susceptible.” (Murphy Slough Assn. v. Avila (1972)
27 Cal.App.3d 649, 653, citing Pacific Gas & Elec. Co. v. G. W. Thomas
Drayage etc. Co. (1968) 69 Cal.2d 33, 37.) In determining whether the property
description in the 2002 bankruptcy legal description is reasonably susceptible
to the inclusion of acreage beyond the metes and bounds description, Revenue
and Taxation Code sections 327 and 11911.1, read together, preclude basing
any such interpretation on the mere presence of the APN notations. If a deed
is recorded in a county with an APN-notation requirement, and the deed bears
APN notations referring to an unrecorded assessor’s map, those APN notations
may not be treated as part of the deed’s legal description of the parcel
conveyed unless the face of the deed clearly indicates such an intention.® While
an APN reference might be considered in resolving an ambiguity that
otherwise appears in a deed, the inclusion of the APN reference does not itself
create an ambiguity. Otherwise, potentially every deed recorded in a county
with an APN-notation requirement would be rendered ambiguous. This is
consistent with the California rule of contract interpretation governing the use
of parol evidence. (See Weber v. Dobyns (1961) 193 Cal.App.2d 402, 406
[“[p]arol evidence is admissible to explain an ambiguity, but not to create
one’]; see also Bionghi v. Metropolitan Water Dist. (1999) 70 Cal.App.4th 1358,
1366-1370.)

 

>In MTC Financial Inc. v. California Dept. of Tax & Fee Administration
(2019) 41 Cal.App.5th 742, the court found “no reason to disagree that a parcel
number could theoretically satisfy the law’s requirement for sufficient legal
description of a property” (id. at p. 749) (although it was there insufficient to
do so), but it did not address Revenue and Taxation Code section 327 and said
nothing implying that an APN reference not explicitly part of a deed’s property
description might itself render the deed ambiguous.

12
Thus, the APN references on the 1998 deed and the 2002 bankruptcy
legal description must be construed as APN notations included for tax
purposes in compliance with section 11911.1 of the Revenue and Taxation
Code, and cannot be read as part of the legal description of the property
conveyed.® And none of the extrinsic matters to which Hayward refers renders
the metes and bounds description in the 2002 bankruptcy legal description
reasonably susceptible to the inclusion of the disputed area. The trial court
correctly disregarded the APN notations and properly granted judgment on
the pleadings insofar as that judgment states that Hayward does not have title
to the disputed area as a matter of law.

Hayward contends that section 327 of the Revenue and Taxation Code
does not govern the interpretation of the 2002 bankruptcy legal description
because the document is not a “deed or conveyance” but an attachment toa
bankruptcy court order, which must be construed using ordinary rules of
contract interpretation. Hayward cannot have its title and eat it too: It cannot
treat the 2002 bankruptcy sale order as if it were a conveyance and yet also
argue that section 327 of the Revenue and Taxation Code does not govern
interpretation of the 2002 bankruptcy legal description because the document
is technically not a deed. The description is incorporated in a deed. The trustee
attached a copy of the 2002 bankruptcy legal description as an exhibit to the
2003 correctory deed. As a part of that deed, the 2002 bankruptcy legal

 

° Hayward also emphasizes the fact that the 2002 quitclaim deed to
XPO’s predecessor Con-Way has a handwritten notation “Assessor’s Parcel
# 463-25-40” immediately adjacent to the legal description “Parcels 1, 2, 3, and
4 [1979 parcel map].” Hayward contends that the handwritten APN reference
shows that the grant to Con-Way was limited to APN 40—that is, original
parcel 1 only. But for the reasons discussed in text above, the APN reference
on the 2002 quitclaim deed to Con-Way must be construed as an APN notation
included for tax purposes, not as part of the legal description.

13
description must be construed in light of section 327, and all other principles of
California law governing interpretation of deeds.7

b. The judgment is properly regarded as providing declaratory relief only.

XPO submitted a proposed judgment quieting title against “all persons
and entities, including [Hayward], and all persons known and unknown who
claim any [interest] in the property, i.e., against the Doe Defendants who were
named... but were not served by publication.” The court declined to enter
such a judgment. It noted that “the only defendants who were served with
process and/or appeared... [,] such that the court had binding, in personam
jurisdiction over [them], were Hayward and Crown,” and that it never
obtained in rem jurisdiction of the property “by publication or any other means
of service such that XPO’s judgment of quiet title would run to all unknown
persons claiming a right title or interest in and to the property.” The judgment
it entered thus states that “Fee title to the following described real property
...1s quieted in plaintiff XPO Freight: That certain real property . . . legally
described as: [metes & bounds]. [{]] The real property described above is the
same as [reconfigured] parcel [two] depicted on the plat attached to [the 1997
lot line adjustment] and includes the [disputed area]... ; [§]] [Hayward] and

 

7 As XPO notes, Butner v. United States (1979) 440 U.S. 48 holds that
“Property interests are created and defined by state law. Unless some federal
interest requires a different result, there is no reason why such interests
should be analyzed differently simply because an interested party is involved
in a bankruptcy proceeding.” (Ud. at p. 55.) Hayward replies that Butner
“affirms exactly the principle that [Hayward] argue[s] here—i.e., that state
laws for interpreting contracts (rather than, e.g., any local or state ordinances
concerning use of [APNs] in instruments of conveyance) apply to interpretation
of... bankruptcy court orders.” But Butner never suggests that only state
common law, and not state statutes like Revenue and Taxation Code
section 327, governs the interpretation of a contract approved by a bankruptcy
court. All relevant state law, common law or statutory, is applicable.

14
all persons or entities claiming through them... , whether known or
unknown, shall have no claim or legal or equitable right, title, estate, lien, or
interest in the property ... which is adverse to [XPO]’s title or creates any
cloud on [XPO]’s title, or . . . is superior to the rights, titles, estates, and
interests of [XPO].”

The trial court correctly declined to enter an in rem judgment quieting
title in XPO as against the whole world because XPO failed to effect the
publication necessary to obtain in rem jurisdiction. The use of quiet title
verbiage in the judgment is problematic, but the purport of the judgment to
reject Hayward’s claim to the disputed area is correct. “Quiet title” is inapt not
only because the service-of-process requirements of Code of Civil Procedure
sections 763.010—763.040 were not followed, but because a party seeking a
judgment quieting title must prove its own title, and cannot rely solely on the
weakness of a defendant’s title. (Reed v. Hayward (19438) 23 Cal.2d 336, 339-
340.) Several ambiguities in the documents by which XPO’s predecessor
obtained title preclude a judgment quieting title in XPO on the pleadings.®

As explained above, the 1998 deed transferring the property to

Consolidated Freightways contained the same ambiguities that originated in

 

* While we need not decide the point, we note that it is questionable
whether the current quiet-title statute (Code Civ. Proc., § 760.010 et seq.) ever
permits judgment on the pleadings for a plaintiff. Code of Civil Procedure
section 764.010 states, “The court shall examine into and determine the
plaintiffs title against the claims of all the defendants. The court shall not
enter judgment by default but shall in all cases require evidence of plaintiff's
title and hear such evidence as may be offered respecting the claims of any of
the defendants... .” (Italics added.) Since the statute requires the court to
consider evidence respecting the claims of a defendant in default (see, e.g.,
Harbour Vista, LLC v. HSBC Mortgage Services, Inc. (2011) 201 Cal.App.4th
1496, 1501-1502), the same would presumably be true if a defendant has
answered.

15
the 1997 lot line adjustment. XPO contends that the 2000 correction deed
resolved the ambiguities, but that deed, which stated that reconfigured
parcel one contained only 7.9 acres, rather than 16.42 acres, and which replaced
the defective metes and bounds with metes and bounds that describe the
Utah-shaped parcel, would be valid only if consented to by the grantee.
(1 Patton & Palomar on Land Titles (3d ed. 2015) § 83 [If a correction
instrument “purports to diminish the original grantee’s rights in some ways” it
“should not be accepted, unless the original grantee first reconveyed to the
grantor or, at least, evidence in the record reveals her consent.”]; cf. Walters v.
Mitchell (1907) 6 Cal.App. 410, 412-413 [a grantor cannot unilaterally correct a
deed allegedly misnaming the grantee by simply recording a new deed naming
the grantee correctly].) Although the correction deed, in the upper left hand
corner, indicates that recording was requested by “Arthur A. Hackworth
[1] Consolidated Freightways,” it was unsigned by anyone on behalf of the
grantee and does not support judicial notice of the grantee’s consent. (See Scott
v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 743, 754-755.)
Therefore, the most that the trial court could adjudicate, and what we
construe its judgment to adjudicate, is that Hayward has no valid claim to the
disputed area. Such a judgment is consistent with the pleadings. The
judgment states, “Judgment hereby is entered in favor of XPO . . . on [its]
complaint in its entirety.” XPO pled causes of action not only to quiet title but
also for a declaratory judgment that it “holds fee title to the [disputed area]
free and clear of all claims, rights, .. . [and] interests” of Hayward, that
certain deeds of trust it made “are senior to and free and clear of all claims,
rights, ... [and] interests” of Hayward, and that Hayward has “no claims,
rights, ... or other interests” in or to the disputed area. While XPO did not
establish on the pleadings its right to a judgment quieting title to the disputed

16
area, XPO did establish that Hayward has no interest in that property.
Though using the quiet title vernacular, that is all that the judgment correctly
determines.

2. Remaining Issues

Following the entry of the court’s order granting judgment on the
pleadings with respect to the title issue, there ensued extended proceedings on
Hayward’s cause of action for restitution. The court found Hayward entitled to
restitution of the property taxes it had paid with respect to the disputed area
but not to restitution of the amount it had allegedly overpaid to purchase its
parcel. The tax-restitution claim was based on the fact that both parties had
paid some tax on property found to be part of the other’s parcel. The parties
ultimately stipulated that the net amount of Hayward’s overpayment was
$160,000. The court ruled that Hayward was entitled to that sum plus interest
on that amount from the dates on which the payments had been made, at the
rate of 10 percent per annum, totaling $131,472.97.

The court found XPO to be the prevailing party on its complaint and
Hayward on its cross-complaint, and held that each party could recover costs
incurred with respect to its pleading. Each party submitted a cost bill and
moved to tax the other’s costs. Hayward challenged all costs incurred by XPO
after October 3, 2017, when the court entered its order granting the motion for
judgment on the pleadings. It argued that, since then, “all costs incurred in this
litigation [necessarily] related to Hayward’s cross-complaint.” The court agreed
and granted Hayward’s motion to tax almost in full, allowing XPO to recover
only costs incurred before October 3, 2017, or in seeking entry of judgment.
XPO also moved for an award of attorney fees as a sanction for bad-faith
litigation conduct (Code Civ. Proc., § 128.5) or discovery abuse (id., §§ 2023.010—
2023.030), contending that Hayward had pursued “knowingly false” claims and

17
engaged in discovery abuse by hiding evidence that it knew its claim was
unfounded. The court denied the motion, noting that each side had engaged in
discovery abuse, and Hayward’s did not “affect the eventual outcome of the
case,’ as XPO had prevailed.

On appeal, Hayward challenges the denial of relief on its purchase-price
restitution claim, and XPO challenges the award of prejudgment interest on
the tax restitution claim, the order taxing its costs, and the order denying
sanctions. We address each issue in turn.

a. The purchase-price “restitution” claim®

Hayward sought restitution of the purchase price for its parcel on the
ground that it had been deceived into thinking that its parcel would include
the disputed area. The court granted judgment on the pleadings on that claim
on limitations grounds. The court reasoned that the 2002 quitclaim deed to
XPO’s predecessor Con-Way had given Hayward constructive notice that
Con-Way (and later XPO) owned the disputed area, which started the statute
running. Hayward challenges this ruling, arguing that, like the judgment
quieting title in XPO, it rests on the validity of the 2000 correction deed, which
we have held cannot be determined on the pleadings. While Hayward is
correct in that respect, the claim was nonetheless barred by either the two-

year statute of limitations for obligations or liabilities not founded on an

instrument (Code Civ. Proc., § 339) or the three-year statute for actions

 

° Hayward did not explain how its payment to Consolidated
Freightways’s bankruptcy estate unjustly enriched XPO, so as to give rise to
an equitable duty to make restitution. Because we affirm the denial of relief on
limitations grounds, we need not address that question.

18
sounding in fraud or mistake (Code Civ. Proc., § 338, subd. (d))!° because
Hayward’s own deed (i.e., the 2003 correctory deed, which incorporates the
2002 bankruptcy legal description) gave Hayward constructive and actual
notice that the parcel it had acquired did not include the disputed area. !!

b. Prejudgment interest

The record suggests that the trial court considered the monetary relief
awarded Hayward to be “damages” for breach of contract in an amount
certain, subject to mandatory prejudgment interest pursuant to Civil Code
section 3287, subdivision (a), at the rate of 10 percent set by Civil Code section
3289 for damage awards for “breach” of a “contract.” That is the reason for
which the parties disputed whether the amount to which Hayward is entitled
became certain when the taxes were paid or when they reached a stipulation
as to the amount of overpayment. However, the award is neither “damages”
subject to Civil Code section 3287, nor is it for a breach of contract subject to
Civil Code section 3289. Hayward recovered not “damages” but restitution. (See
Espejo v. The Copley Press, Inc. (2017) 13 Cal.App.5th 329, 375 (Espejo)
[because § 3287, subd. (a) “governs recovery of damages,’ it does not apply to

monetary relief under a statute authorizing awards of “injunctive relief and

 

10 XPO pled both statutes in its operative amended answer and raised
both in its motion for judgment on the pleadings, which the court granted
based on “the applicable statute of limitations.”

11 XPO requests judicial notice of a 2021 federal district court order, now
on appeal, granting summary judgment in favor of Hayward’s title insurer on
Hayward’s cause of action for breach of contract based on the insurer’s refusal
to defend this action or indemnify Hayward for losses due to the defect in its
title. The court granted summary judgment on limitations grounds based on
other evidence that Hayward learned of the title defect in 2003. While we take
judicial notice of the order as a federal court record (Code Civ. Proc., §§ 452,
subd. (d), 459), we need not and do not rely on XPO’s collateral estoppel
argument based on that order to affirm the ruling in the present case.

19
restitution, but not damages”].) Because the parties had not addressed this
issue, we asked them to submit supplemental briefs addressing whether the
award could be upheld as an exercise of the court’s discretion under Civil Code
section 3288—which applies to “an action for the breach of an obligation not
arising from contract’”—or under the court’s equitable discretion to include
interest in a restitution award (Espejo, supra, at p. 375). We also asked if the
interest rate should be not 10 percent but 7 percent, the rate set by our state
constitution unless a statute provides otherwise (see Palomar Grading &
Paving, Inc. v. Wells Fargo Bank, N.A. (2014) 230 Cal.App.4th 686, 689-690,
citing Cal. Const., art. XV, § 1). Based on the responses received, we conclude
that the matter must be remanded for the court to exercise its discretion to
determine whether to award prejudgment interest on its tax-restitution
award, either under Civil Code section 3288 or its equity power to avoid unjust
enrichment (see Espejo, supra, at p. 375). The date from which interest should
run is included within the court’s discretion. In all events, any prejudgment
interest awarded must be at the constitutional default rate of 7 percent. (Cal.
Const., art. XV, § 1).

c. Order taxing costs

XPO’s opening brief contended that the trial court abused its discretion in
ruling on each party’s motion to tax—by taxing Hayward’s costs too little, and
by taxing XPO’s costs too much. In its reply, XPO abandons its challenge to

rulings on specific costs incurred by Hayward. !? It now contends only that the

 

 XPO’s only such challenge involved deposition costs. Its opening brief
asserted that, in response to its motion to tax, Hayward’s counsel “offered a
declaration that ‘[u]pon information and belief, Hayward does not retain
reproducible invoice detail to support’ the claimed expenses.” Hayward’s
opposition explains that the trial court struck the deposition costs that
Hayward “acknowledged it could not substantiate” and awarded only

20
court abused its discretion in ruling that Hayward was the sole prevailing
party on its cross-complaint and could thus recover all costs incurred after the
October 2017 order resolving the title claims, while XPO, with one exception,
could recover no costs for that period.

There is some basis for XPO’s contention. Hayward’s cross-complaint
sought the recovery of restitution for the payment of excess property taxes and
for the alleged overpayment of the purchase price of the property, as well as a
decree quieting title and damages for slander of title. Hayward prevailed only
as to the tax-restitution claim and not the others. Nonetheless, the
determination of the prevailing party is within the broad discretion of the trial
court, which we review only for an abuse of discretion. (City of Santa Maria v.
Adam (2016) 248 Cal.App.4th 504, 516.) We cannot say that the trial court
abused its discretion here. It is not uncommon for a claimant to recover only a
portion of its claim, yet to be recognized as the prevailing party. (Friends of
Spring Street v. Nevada City (2019) 33 Cal.App.5th 1092, 1104.) XPO initially
resisted Hayward’s claim for any restitution. The court did not act arbitrarily
or abuse its discretion in treating Hayward as the prevailing party on its
cross-complaint.

d. Dental of sanctions.

XPO contends the trial court abused its discretion by declining to award
it attorney’s fees as a sanction, pursuant to Code of Civil Procedure sections
128.5 (bad-faith litigation conduct) or 2023.010 and 2023.030 (discovery abuse)
for Hayward having maintained its purchase-price “restitution” claim while

allegedly knowing it “was a fabrication dependent upon the knowing falsehood

 

substantiated costs. The record confirms that the court awarded the requested
costs “with the exception of... costs that are not supported by invoices.” XPO’s
reply abandons the issue.

21
that Hayward understood it was purchasing the [disputed area]” and for
having allegedly withheld evidence that revealed the contemporaneous
knowledge making the claim knowingly false. The order addresses completed
litigation conduct, so our partial reversal of the judgment does not prevent its
review. We find no abuse of the trial court’s broad discretion. (Childs v.
PaineWebber Incorporated (1994) 29 Cal.App.4th 982, 997.)

To substantiate its allegations of a “sham” claim based on a “knowing
falsehood,” XPO relies on Hayward’s belated production of a survey provided
to Hayward before the 2002 bankruptcy sale, and the testimony of Hayward’s
decision-maker Matthew Moroun that “he reviewed the survey before the
purchase’—a fact that, in XPO’s view, “confirms that Hayward always was
aware that it was not purchasing the [disputed area].” As for the objective
merit of Hayward’s claim, XPO contends that its “maintenance of its APN-
based theories—when settled California law rejected them” is the type of
frivolous claim subject to sanctions.

We disagree that the governing law was so “settled” that Hayward’s
claim was legally frivolous. The numerous errors and ambiguities in the chain
of title created numerous issues about which there was reasonable
disagreement. As for the alleged knowing falsity of the claim’s factual
predicate, Moroun’s review of a survey showing the parcel Hayward purchased
to have the boundaries the trial court ultimately accepted does not necessarily
prove that Moroun believed, in 2002, that the surveyor was correct. Maroun
may well also have been aware of the several ambiguities discussed above,
creating reason to question the surveyor’s conclusions.

Nor did the court abuse its discretion in declining to award a discovery
sanction. Such sanctions “may not place the party seeking discovery in a better

position than it would have been in if the desired discovery had been favorable.”

22
(Rail Services of America v. State Comp. Ins. Fund. (2003) 110 Cal.App.4th
323, 332.) The court reasoned that XPO prevailed on almost all claims, and
failed to show how an earlier production of the survey (assuming its
production was untimely) would have affected the outcome. XPO cites
Sherman v. Kinetic Concepts, Inc. (1998) 67 Cal.App.4th 1152, 1162-1164, an
extreme case in which the Fourth Appellate District held that a defendant that
had withheld vital documents, lied about them, and prevailed at trial, making
a new trial necessary, must be sanctioned in an amount sufficient to
compensate the plaintiffs for all costs of the first trial. dd. at pp. 1162-1164.)
By contrast, XPO not only prevailed as to the title issue, but did so at the
earliest possible stage—on the pleadings. The survey in question was not a
factor in that ruling. XPO never explains how earlier production of the survey
would have enabled it to achieve a speedier, less costly resolution of the title
issue than by the motions for judgment on the pleadings by which it did so.
Disposition!

In appeal No. A157687, construing the judgment as a declaratory
judgment that Crown Enterprises, Inc., and Hayward Property, LLC have no
claims, rights, titles, liens, estates or other interests in, to, or respecting the
disputed area, the judgment is affirmed (other than with respect to the award of
interest). On XPO’s cross-appeal in No. A157687, the award of interest is
vacated and the matter remanded for further proceedings in accord with this
opinion to redetermine whether to award prejudgment interest and, if so, the

amount of such interest. In appeal No. A158291, the orders entered on

 

13 Hayward has filed motions for judicial notice of 31 documents. As to
each document's existence, contents, and recordation or filing, as relevant, but
not as to the truth of matters asserted therein, the motions are granted as to
items 2-10, 14, 18-27, and 29. The motions are otherwise denied.

23
August 21, 2019, on each party’s motion to tax costs are affirmed. In appeal

No. A159299, the order denying sanctions is affirmed.

POLLAK, P. J.
WE CONCUR:

STREETER, J.
BROWN, J.

24
Appendix 1

25
File No.: 02003175

EXHIBIT "A

(City of Hayward)

Parcel One:

A portion of Parcel 1, a portion of Parcel 2, all of Parcel 3, and all of Parcel 4,‘as said parcel are shown
on the map entitled “Parcel Map No, 3094,” 4 7 Of Maps at

7 @ office of County Recorder of Alameda County, described as follows:

Beginning at a point on the Southern line of said Parcel 2, distant along said line South 88° 03‘ 00”
East, 132.00 feet from the intersection thereof with the Western line of said Parcel 2; thence alang
said Southern line of Parcel 2 and the Southern line of said Parcel 4, the following two (2) courses; 1)
North 88°03'00" West, 322.18 feet; 2) Westerly along the arc of a tangent curve, to the left, having a
radius of 605,00 feet, through an angle of 15° 04'15”, a distance of 159.14 to the Intersection thereof
with the Western line of said Parcel 4; thence along said Western line of Parcel 4 North 1°49°35” East,
775.97 feet; thence Northerly, Northeasterly, and Easterly along the arc of a tangent curve, to the
right, having a radius of 20.00 feet, through an angle of 90°00’00”, a distance of 31.42 feet to a point
of tangency thereof with the Southern line of Claremont Court (shown on said map as Claremont
Avenue); thence along said Southern line of Claremont Court the following three (3) courses; 1) South
88°10'25 East, 213.06 feet; 2) Easterly and Southeasterly along the arc of a tangent curve to the
right, having a radius of 20.00 feet, through an angle of 51°19'04", a distance of 17.91 feet to a point
of reverse curve; 3) Southeasterly, Easterly, and Northeasterly along the arc of said reverse curve,
having a radius of 60.00 feet, through an angle of 111°26’19”, a distance of 116,70 feet to the
intersection thereof with the Western line of Parcel 1; thence along sald Western line of Parcel 1 South.
1°49'35” West, 203 feet; thence leaving said Western line of Parcel 1, at right angles, South 88°10’23”
West, 132.00 feet; thence parallel with said Western line of Parcel 1 and said Western line of Parcel 2,
South 1°49'35” West, 573.30 feet to the point of beginning. ..

Cc 0:

An easement to excavate for, install, replace, maintain and use an underground storm sewer line as
granted to Consolidated Freightways Corporation of Delaware by Deed recorded April 5, 1968, over
that Parcel of land described as follows: ©

Commencing for reference at a point on the Southern line of that certain strip of land 110.00 feet
wide, known as Industrial Parkway West, as described In Deed to City of Hayward, a Municipal
Corporation, recorded April 22, 1955, in Book 7637, Official Records, Page 405, at the most Western
comer of that certain 0.372 of an acre parcel of land described in Deed to City of Hayward, recorded
October 8, 1963, Reed 1011, Official Records, Image 266; thence along the Southern boundary line of
said 0.372 acre Parcel South 83° 42’ 16” East 51.63 feet; thence South 1° 49’ 35” West 1,322.84 feet
to a point on the Northern boundary line of the land described in the Deed to Alameda County Flood
Control and Water Conservation District, recorded In Book 9524 Official Records, Page 279; thence
along the last aforesaid line the following two courses respectively: North 88* 01’ 32” West 189.86
feet and thence tangent to the last aforesaid course Westerly and Sauthwesterly on a 605 foot radius
circular arc to the left, through a central angle of 15° 05’ 42", a distance of 159.39 feet to the actual
point of beginning of this description; thence continuing along last said course Southwesterly along
the 605 foot radius circular arc to the left, through a central angle of 19° 10’ 11”, a distance of 202.42
feet to the Southern line of the Jand of the Grantor; thence along the last aforesaid line North 88° 01’
32” West 17.46 feet; thence Northeasterly along a 615 foot radius circular arc to the right concentric
to the last aforesald 605 radius arc, through a central angle of 20° 45’ 46”, a distance of 222.86 feet;
thence South 1° 49’ 35” West 10.35 feet to the actual point of beginning.

Assessor's Parcel Number: 463-0025-043-1
Assessor's Parcel Number: 463-0025-044

ALTA Commltmen’_———————_—__[—_?

26
 

Trial Court:

Alameda County Superior Court

 

Trial Judges:

Honorable Ioana Petrou
Honorable Evelio Grillo

 

Counsel for Plaintiff, Cross-
defendant and Appellant:

STUART KANE LLP
Donald J. Hamman

McALPINE PC
Douglas W. Eyre
Mark L. McAlpine

BUCHALTER, APC
Glenn P. Zwang
Alexandra Grayner

 

 

Counsel for Defendants, Cross-

complainants and Appellants:

 

GREENBERG TRAURIG, LLP
Eric V. Rowen
Scott D. Bertzyk

 

27