Trenal v. Schumacher

Filed 8/27/07 Trenal v. Schumacher CA2/3

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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 THREE

APPEAL from a judgment of the Superior Court of Los Angeles County, James R. Dunn, Judge. Affirmed.

Jay S. Bloom for Plaintiff and Appellant.

Law Offices of Stanley T. Denis and Stanley T. Denis for Defendant and Respondent.

INTRODUCTION

Plaintiff and appellant Quenton Trenal (Trenal) filed the present lawsuit against defendant and respondent Wanda M. Schumacher (Schumacher) to cancel a real estate grant deed to Schumacher and to quiet title in residential real property. Following a bench trial, the trial court entered judgment in favor of Schumacher. The trial court found that Trenal did not carry his burden of proof to show that he did not intend to transfer ownership of the real property to Schumacher at the time he executed the grant deed. Alternatively, the trial court found that Trenal was estopped from asserting ownership of the real property. Because substantial evidence supports the judgment, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

1. The Lender Forecloses on Schumachers Home

In 1998, Schumacher owned real property located at 11635 Cedar Avenue, Hawthorne, California (the property). At that time, the first deed of trust was in default. The lender, Bankers Trust, initiated non-judicial foreclosure proceedings, and eventually obtained title to the property. Following an unlawful detainer action, the sheriff removed Schumacher from the property.

2. Trenal Purchases the Property

In 1999, Trenal, who had owned other properties, utilized the services of Bert Washington (Washington) to purchase residential real property. Trenal had known Washington since 1993. Washington had shown Trenal several properties over the years. Trenal believed that Washington was a licensed real estate agent, which later turned out to be untrue.

On March 12, 1999, Trenal purchased the property from Bankers Trust for $125,000, with title in his name. To complete a 100 percent financing purchase of the property, Trenal obtained loans for $100,000 and $25,000, both of which were solely in his name.

At trial, Trenal testified that over the years he provided Washington with funds to locate properties and make down payments, including payments of $5000, $3000, and $1,700. With respect to the property at issue, Trenal assumed that Washington used $8,500 from those prior payments to make an escrow deposit to purchase the property.

3. Trenal Executes Grant Deed to Schumacher

After escrow closed on the property, Trenal discovered that Schumacher was residing there. Trenal testified at trial that he told Schumacher he was the owner and that she responded that he should talk to Washington. Trenal then advised Washington of the situation. According to Trenal, Washington stated he would take care of the problem.

Trenal testified at trial that Washington devised a plan to remove Schumacher from the property. To effectuate Washingtons plan, on June 4, 1999, Trenal read and executed a grant deed in favor of Schumacher, which was subsequently recorded. At that time, Washington explained the nature of a grant deed to Trenal. According to Trenal, Schumacher was to move out once he executed the grant deed.

4. Schumacher Continues to Reside on the Property

Beginning in June 1999, Schumacher made the monthly mortgage payments, as well as payments for taxes and insurance. Schumacher testified that to make the mortgage payments, she used her disability payments and cashed in her life insurance policy. Schumacher testified that she understood that she owned the house at the time that she made the mortgage payments.

5. Trenal Seeks to Have the Loans in Schumachers Name

In 2001, Trenal visited Schumacher at the property. He informed Schumacher that he was trying to qualify for a loan to refurbish another home he owned with his wife. He also informed Schumacher that the loans on the property were interfering with his credit report.~(RT 217)~ Schumacher testified that Trenal stated that he did not know he was on the loan until the lender ran the credit report on Trenals new loan application.

Trenal and Schumacher then visited a lender in Glendale to prove that Schumacher, not Trenal, was making the payments on the loans related to the property at issue. Trenal could not otherwise qualify for a loan on his home.

In 2002, Trenal informed Schumacher that he wanted his name off the loans related to the property at issue to improve his credit rating. In response, on September 3, 2002, Schumacher applied for a loan in the amount of $120,000. Trenal confirmed at trial that Schumacher attempted to secure financing in order to purchase Trenals interest in the property.

6. Trenal Files Suit

On March 27, 2003, Trenal filed a complaint against Schumacher and Washington. Ultimately, Trenal was not able to locate Washington, against whom the trial court entered a default judgment.

In the complaint, Trenal alleged seven causes of action, including: fraud, breach of fiduciary duty, negligence, unfair business practice, cancellation of the grant deed, quiet title, and imposition of a resulting trust on the real property.

Trenal alleged that the grant deed was a forgery. Trenal also alleged that Schumacher failed to pay appropriate amounts of rent on the property. Trenal alleged that he visited the property in May 2001 to inquire about the missing rental payments. Trenal alleged that at that time, he learned Schumacher had paid Washington $5,000 to purchase the property and that she was attempting to obtain financing.

7. The Trial Courts Statement of Decision

Following a bench trial, the trial court entered a statement of decision in favor of Schumacher on all causes of action. The trial court explained that Trenal had not pursued the causes of action related to fraud, negligence, restitution, and unfair business practice. The trial court ruled that to the extent that Trenal was pursuing those causes of action, he had not met his burden of proof.

The trial court ruled in favor of Schumacher on the remaining causes of action, the fifth cause of action to cancel the deed, the sixth cause of action to quiet title, and the seventh cause of action to impose a resulting trust on the real estate. As for the fifth and sixth causes of action, the trial court ruled that Trenal was not entitled to cancellation of the deed or a quiet title determination in his favor. As for the seventh cause of action for a resulting trust, the trial court ruled that plaintiff did not present sufficient evidence that there was an  inferred intent  to have Schumacher hold title to the home on Trenals behalf.

The trial court explained that Washington bore the primary responsibility for the parties dispute, but that, unfortunately, he had disappeared. Otherwise, the court found that Trenal was a bona fide purchaser for value when he became owner of the property following the foreclosure. The court found, however, that Trenal failed to show that he did not intend to transfer ownership at the time he executed the grant deed in Schumachers favor.

The trial court found that while Washington may have misled Trenal about the purpose of the grant deed to Schumacher, Trenal had enough experience and sophistication in real estate to understand the very straightforward and simple grant deed that he signed, and that he was indeed transferring the property.^[1]

The trial court then found that Trenal made no effort to have the property put back in this name until years after executing the grant deed, when he filed the present lawsuit. The trial court noted that Trenals conduct following execution of the grant deed was directed at removing his name from the loans, rather than having his name placed on the deed. Specifically, the court explained the evidence showed that in January 2001, Trenal sought legal assistance to fix his credit. In September 2002, he attempted to have Schumacher re-finance the property and obtain a new loan in her name. The court noted that Schumacher completed a loan application for that purpose. The trial court found that these actions were not consistent with having title to the property put back into Trenals name. In addition, the court noted that Schumacher testified that Trenal visited her to tell her that he wanted his name off the loans in order to improve his credit. Finally, the trial court explained that the evidence showed that Trenal filed this lawsuit because he was having difficulty re-financing his home because his name appeared on the loans related to the subject property. The trial court found that the evidence showed that Trenal was attempting to remove his name from loans on a house that he did not own, and over which he exercised no control as an owner.

Alternatively, the trial court found that Trenal was estopped from claiming an ownership interest in the home. The trial court explained that three months after obtaining title to the property, he deeded the property back to Schumacher. Trenal then took no action for over four years to obtain title to the property. He allowed Schumacher to live there, during which time, she cashed in her life insurance policy and used her disability payments to pay the mortgage, taxes and insurance. At trial, Trenal testified that he made no payments on the property because Schumacher made the payments. The trial court also found that there was no evidence that Schumacher made the payments based upon a written or oral lease, and that all of this occurred while Schumacher was the title holder to the property. In addition, there was no evidence that Trenal made any efforts to obtain homeowners insurance to protect an interest in the property.

On the estoppel issue, the trial court also explained that there was no evidence that Trenal put any new money into the property. The court noted that $8,500 was put into the escrow, but there was no evidence that this was the same money that Trenal had given to Washington over the years to look for properties for him. The trial court found that there was no evidence that Trenal spent any money to maintain the property.

Finally, the trial court noted that Trenal stood to lose almost nothing except the $8,500 (if that was the money he had given to Washington to search for properties), while Schumacher stood to lose the home in which her family had lived for years and for which she had maintained all the necessary payments since 1999. The trial court concluded that Trenal was estopped from claiming ownership.

The trial court entered judgment in favor of Schumacher and awarded her costs. Trenal timely filed a notice of appeal from judgment.

STANDARD OF REVIEW

We review for substantial evidence. (Santa Clarita Water Co. v. Lyons (1984) 161 Cal.App.3d 450, 457.) When a trial courts factual determination is attacked on the ground that there is no substantial evidence to sustain it, the power of an appellate court begins and ends with the determination as to whether, on the entire record, there is substantial evidence, contradicted or uncontradicted, which will support the determination, and when two or more inferences can reasonably be deduced from the facts, a reviewing court is without power to substitute its deductions for those of the trial court. If such substantial evidence be found, it is of no consequence that the trial court believing other evidence, or drawing other reasonable inferences, might have reached a contrary conclusion. (Bowers v. Bernards (1984) 150 Cal.App.3d 870, 873-874, original italics.)

 A judgment or order of a lower court is presumed to be correct on appeal, and all intendments and presumptions [and ambiguities] are indulged in favor of its correctness. [Citations.] (Winograd v. American Broadcasting Co. (1998) 68 Cal.App.4th 624, 631.) The burden of demonstrating error rests on the appellant. (Id. at p. 632.)

CONTENTIONS

Trenal contends: (1) the trial court erred by refusing to cancel the grant deed because it was not supported by consideration, or, alternatively, it was based upon a mistake of fact; and (2) the trial court erred by finding that Trenal was estopped from claiming an ownership interest in the property.

DISCUSSION

1. Consideration is Not Essential For a Deed to be Valid

Trenal asserts that the trial court erred by failing to cancel the grant deed on the basis that there was a lack of consideration. We reject this assertion.

Pursuant to Civil Code section 1040, consideration is not necessary for a grant deed to be valid when substantial evidence supports the conclusion that the grantor intended to convey the subject property. (See also Odone v. Marzocchi (1949) 34 Cal.2d 431, 436 [Neither consideration, nor adequacy of consideration, is essential to the validity of a deed. [Citations.] The deed was delivered to and accepted by appellant, and it follows that if she intended to give him the property, her deed would pass title; or, if she intended to sell it to him for his past services, this also would be a sufficient consideration (if any were needed) to pass title to appellant.].)

In this case, substantial evidence supports the trial courts finding that Trenal intended to convey the property to Schumacher. Trenal testified that he read the grant deed and that Washington explained the nature of the deed to Trenal before he executed the deed. In addition, substantial evidence supports the trial courts finding that Trenal was sufficiently sophisticated in real estate matters to understand the nature of a grant deed. Moreover, for a time period of four years, until he filed the present lawsuit, substantial evidence shows that Trenal did not take action to obtain title to the property, but instead attempted to have his name removed from the two loans. Trenals conduct was consistent with an intent to convey the property to Schumacher.

Because substantial evidence supports the trial courts finding that Trenal intended to convey the property to Schumacher, we conclude that the there was not a mistake of fact which could support a cancellation of the grant deed.

2. Substantial Evidence Supports the Trial Courts Finding that Trenal was
Estopped From Claiming Ownership of the Property

In Strong v. County of Santa Cruz (1975)15 Cal.3d 720, the Supreme Court set forth the elements of the doctrine of equitable estoppel. The court explained that the doctrine is founded on concepts of equity and fair dealing. It provides that a person may not deny the existence of a state of facts if he intentionally led another to believe a particular circumstance to be true and to rely upon such belief to his detriment. The elements of the doctrine are that (1) the party to be estopped must be apprised of the facts; (2) he must intend that his conduct shall be acted upon, or must so act that the party asserting the estoppel has a right to believe it was so intended; (3) the other party must be ignorant of the true state of facts; and (4) he must rely upon the conduct to his injury. (Id. at p. 725.)

In this case, Trenal was apprised of the facts. According to his testimony, he knew that he had executed the grant deed in favor of Schumacher. He also believed that despite execution of the grant deed, he believed that the property was his and that the grant deed was part of a procedure for him to evict Schumacher from the property and regain title.

Substantial evidence supports the conclusion that Trenal intended that Schumacher would act upon his conduct in deeding her the property. After executing the grant deed, Trenal took no action for over four years to regain title to the property. He allowed Schumacher to make all the mortgage, insurance and tax payments on the property. He made no investments in the property and otherwise exerted no rights of ownership.

Substantial evidence supports the conclusion that Schumacher was ignorant of the fact that Trenal believed the property was his. She testified that she understood that the property was hers the entire time that she made the mortgage, taxes and insurance payments.

Finally, substantial evidence shows that Schumacher relied upon Trenals conduct. She understood that she owned the property. She made all necessary mortgage, insurance and tax payments. In addition, the trial court found that Schumacher would suffer certain injury based upon her reliance if the court were to cancel the grant deed or quiet title in Trenals favor.

DISPOSITION

The judgment is affirmed. Schumacher is awarded costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

KITCHING, J.

We concur:

KLEIN, P. J.

ALDRICH, J.

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^[1]The trial court explained in greater detail: Moreover, although the court finds that there is absolutely no evidence that [Trenal] was involved in any wrongdoing or fraudulent activities, it is a fact that he did utilize the services of Mr. Washington in real estate related matters on a continuing basis for several years before and after the transfer to [Schumacher], and relied on him in making decisions. [Trenal] must assume responsibility for his actions in transferring the property, even if Mr. Washington had not adequately explained the transaction or misrepresented it to him.