Filed 5/19/17 Chavez v. CIT Bank CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA



MICHAEL CHAVEZ,

Plaintiff and Appellant,

v.

CIT BANK N.A. et al.,

Defendants and Respondents.
D070527



(Super. Ct. No. 37-2015-00027027-
CU-OR-CTL)

APPEAL from a judgment of the Superior Court of San Diego County, Judith F. Hayes, Judge. Affirmed.
Daniel J. Winfree for Plaintiff and Appellant.
Allen Matkins Leck Gamble Mallory & Natsis and Yale K. Kim for Defendants and Respondents.
I.
INTRODUCTION
Michael Chavez filed this action against respondents CIT Bank, N.A. et al. (CIT Bank) and OWB REO, LLC (OWB). Chavez's complaint included claims styled as "set aside and invalidate foreclosure sale," quiet title, and fraud. (Boldface & capitalization omitted.) Chavez alleged that OWB purported to be the holder of title to Chavez's real property, but that Chavez is the true and proper owner of the property. Chavez supported this allegation by contending that OWB's claim to title was premised on a trustee's deed issued after a nonjudicial foreclosure sale conducted pursuant to a void deed of trust (Deed of Trust) that had been assigned to OneWest Bank. Chavez claimed that the Deed of Trust was "void" for two reasons. First, Chavez alleged that he had not signed the Deed of Trust and that the signature bearing his name on the instrument was a forgery. Second, Chavez claimed that the Deed of Trust had "become void" upon his filing of a lawsuit in 2009 (2009 lawsuit) in which he purported to have provided respondents with notice that he was rescinding the loan that the Deed of Trust secured. Chavez further alleged that the forged signature was "first discovered" when his loan was being reviewed by an attorney who filed the 2009 lawsuit.
Respondents filed a demurrer and points and authorities in which they contended that the present action was barred by res judicata, collateral estoppel, and the statute of limitations. The trial court sustained respondents' demurrer without leave to amend, ruling that Chavez's claims were "untimely, and barred by res judicata and collateral estoppel" and that Chavez had not demonstrated that he could amend his complaint to properly state a claim. The trial court subsequently entered a judgment in favor of respondents.
On appeal, Chavez contends that the trial court erred in sustaining the demurrer. Among other arguments, Chavez claims that the trial court erred in concluding that all of his claims are " 'time barred.' " We conclude that the trial court properly determined that all of Chavez's claims are barred by an applicable statute of limitations. Accordingly, we affirm the judgment.
II.
FACTUAL AND PROCEDURAL BACKGROUND
A. Chavez's complaint
In August 2015, Chavez filed the operative complaint in this action. In his complaint, Chavez alleged that OneWest Bank was the assignee of the Deed of Trust purportedly signed by Chavez securing a loan on Chavez's property. Chavez further alleged that he did not sign the Deed of Trust, that "the signature on [the Deed of Trust] is forged," and that the Deed of Trust was "signed by a person . . . who was acting as the agent of [respondents] in order to acquire for them a security interest in the property of [Chavez]." As a result, Chavez claimed that the Deed of Trust was "void from the inception."
Chavez also alleged the following:
"[T]he ineffective signature on [the Deed of Trust] was first discovered when [Chavez's] loan was reviewed for predatory lending practices by an attorney acting for and on behalf of [Chavez]. Said attorney, upon review of the documents of [Chavez's] transaction in which [the Deed of Trust] was created, filed a lawsuit on [Chavez's] behalf on July 20, 2009, in the Southern District of California District Court, (09 cv 1570) . . . challenging the integrity of the transaction. Said Attorney eventually abandoned both [Chavez] and [Chavez's] causes of action, and said complaint was dismissed without leave to amend."

Chavez also alleged the following:
"Irrespective of the dismissal of the complaint in the United States District Court, [Chavez] alleges further that said complaint [from the 2009 lawsuit] put [respondents] on [n]otice that [Chavez] was rescinding the loan (Paragraphs 87, 95, 101 and prayer for Causes of Action 11, 12 and 13). By operation of 15 USC § 1635(b) said [r]escission caused the [Deed of Trust] to become void, and thereby lose any efficacy which it might have had at that time. Thus [Chavez] alleges that the [Deed of Trust] is void not only because it was forged, but by operation of law secondary to [Chavez's] [r]escission." (Italics omitted.)

Chavez further contended that respondents "ignored the factual and legal limitations on their rights within [the Deed of Trust] and uttered the forged and voided document in a non-judicial foreclosure proceeding," pursuant to which OWB obtained record title to Chavez's property.
Chavez incorporated these allegations in claims for wrongful foreclosure, quiet title, and fraud. In his wrongful foreclosure claim, Chavez alleged that respondents "caused an illegal, fraudulent, and willfully oppressive sale of real property, using a power of sale contained in a fraudulently created and subsequently rescinded Deed of Trust." Chavez requested that the foreclosure sale "be set aside as void," and that the court "restore title to [Chavez]." Chavez alleged in his quiet title claim that "[t]he Deed of Trust was invalid as hereinabove established, making the Trustee's Deed upon Sale [v]oid." In his fraud claim, Chavez alleged that respondents had represented that they had "the right to conduct the [trustee's] sale," and that this representation was false since the Deed of Trust "was not executed by [Chavez]," and, in any event, became "void by [Chavez's] notice of Rescission . . . ."
Chavez attached three exhibits to his complaint: the Deed of Trust, his July 20, 2009 complaint from the 2009 lawsuit against OneWest Bank, and the trustee's deed upon sale in favor of OWB.
B. Respondents' demurrer
Respondents filed a demurrer to Chavez's complaint. In a supporting brief, respondents contended that Chavez's claims were time barred, among other arguments. Respondents contended that Chavez's claims were premised on fraud, and that the claims were therefore governed by the three-year statute of limitations contained in Code of Civil Procedure, section 338, subdivision (d). Respondents argued, "As the Bankruptcy Court explained, when [Chavez] filed the [2009 lawsuit] on July 20, 2009, he ineluctably knew about the [D]eed of [T]rust," and thus knew whether he had signed it or not. Chavez was therefore required to file his complaint no later than July 20, 2012. Since Chavez's complaint in this action was not filed until August 2015, it was time barred.
Respondents requested that the trial court take judicial notice of five documents: a November 2010 order granting OneWest Bank's motion to dismiss the 2009 lawsuit, Chavez's October 2014 first amended complaint in the adversary proceeding in the bankruptcy court, a January 29, 2015 bankruptcy court order dismissing Chavez's adversary proceeding with prejudice, a January 29, 2015 bankruptcy court judgment in favor of OneWest Bank in the adversary proceeding, and a May 15, 2015 dismissal of a bankruptcy appeal of the adversary proceeding.
C. Chavez's opposition
Chavez filed an opposition to the demurrer. Chavez argued that the statute of limitations did not bar his claim because a void deed of trust cannot be used to convey title. Chavez argued in part:
"[Respondents'] demurrer and demeanor clearly suggest that somehow they have been cleared to use a void deed to convey legitimate title . . . that their 'statute of limitation' judgment has made that which was void, valid. If all of this contest had involved counterfeit currency, would it now be tradeable as 'legal tender'? If it had involved a forged Mona Lisa [p]ainting, could it now be sold as legitimate? The answer is clearly [n]o. Where then do they generate the concept that that which was dead on arrival, has somehow been brought back to life? [¶] . . . [¶] [E]ven against a bona fide purchaser, a forged deed of trust is void and cannot be revived."

Chavez also argued, "All of the events that are the basis for [Chavez's] complaint occurred after all prior judicial activity."
D. The trial court's ruling
The trial court issued an order sustaining the demurrer without leave to amend, stating:
"For all the reasons raised in the demurrer, the Court finds [Chavez's] complaint fails to state sufficient facts to constitute the claims asserted therein. The Court finds [Chavez's] claims untimely, and barred by res judicata and collateral estoppel.

"[Chavez] failed to sustain his burden to demonstrate reasonable amendment could be made on the facts of this case. As such, the Court will not entertain leave to amend.

"The Complaint is hereby dismissed in its entirety."

E. Chavez's appeal
Chavez timely appealed from the judgment.
III.
DISCUSSION
The trial court properly sustained respondents' demurrer without leave to amend
Chavez claims that the trial court erred in sustaining respondents' demurrer without leave to amend on the ground that all of his claims are time barred.
A. Governing law
1. The law governing demurrers and the applicable standard of review
In Hamilton v. Greenwich Investors XXVI, LLC (2011) 195 Cal.App.4th 1602, the court outlined the following well-established law governing the review of an order sustaining a demurrer without leave to amend:
"A demurrer tests the legal sufficiency of the complaint. We review the complaint de novo to determine whether it alleges facts sufficient to state a cause of action. For purposes of review, we accept as true all material facts alleged in the complaint, but not contentions, deductions or conclusions of fact or law. We also consider matters that may be judicially noticed. [Citation.] When a demurrer is sustained without leave to amend, 'we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discretion and we affirm.' [Citation.] Plaintiff has the burden to show a reasonable possibility the complaint can be amended to state a cause of action." (Id. at pp. 1608–1609, fn. omitted.)

"A party may demur to a complaint, alleging that the pleading does not state facts sufficient to constitute a cause of action, when the claims are barred by the applicable statutes of limitations. [Citation.] 'When a ground for objection to a complaint, such as the statute of limitations, appears on its face or from matters of which the court may or must take judicial notice, a demurrer on that ground is proper.' " (Staniforth v. Judges' Retirement System (2016) 245 Cal.App.4th 1442, 1449.)
In considering a trial court's order sustaining a demurrer without leave to amend, " 'we review the trial court's result for error, and not its legal reasoning.' " (Bains v. Moores (2009) 172 Cal.App.4th 445, 478.) " 'It is [also] well settled . . . that a party challenging a judgment has the burden of showing reversible error . . . .' " (Ibid.) Finally, "[o]n appeal from a judgment of dismissal entered after a demurrer has been sustained without leave to amend . . . the appellate court must affirm the judgment if it is correct on any theory." (Hendy v. Losse (1991) 54 Cal.3d 723, 742.)
2. Applicable law pertaining to the statute of limitations
" ' "To determine the statute of limitations which applies to a cause of action it is necessary to identify the nature of the cause of action, i.e., the 'gravamen' of the cause of action." ' " (Cyr v. McGovran (2012) 206 Cal.App.4th 645, 650.) "The nature of the cause of action and the primary right involved, not the form or label of the cause of action or the relief demanded, determine which statute of limitations applies." (Carter v. Prime Healthcare Paradise Valley LLC (2011) 198 Cal.App.4th 396, 412.) A single pled claim—e.g., wrongful foreclosure—may be governed by more than one statute of limitations, whenever more than one primary right is implicated in the single claim. (See Smith v. Ben Bennett, Inc. (2005) 133 Cal.App.4th 1507, 1525.)
"Courts have . . . concluded that an action to cancel a deed on the ground that the deed is void is subject to a statute of limitations." (Walters v. Boosinger (2016) 2 Cal.App.5th 421, 428 (Walters); see also id. at p. 433 ["we reject [appellant's] contention that a quiet title claim based on the theory that a deed is void ab initio is not subject to any statute of limitation and 'can be brought at any time' "]). The applicable statute of limitations in such an instance is dependent upon the basis upon which the plaintiff seeks to cancel the instrument:
" 'Ordinarily a suit to set aside and cancel a void instrument is governed by section 343 of the Code of Civil Procedure.'[ ] (Zakaessian v. Zakaessian (1945) 70 Cal.App.2d 721, 725 (Zakaessian); see also, to the same effect, Trubody v. Trubody (1902) 137 Cal. 172, 173; Wade v. Busby (1944) 66 Cal.App.2d 700, 702; Estate of Pieper (1964) 224 Cal.App.2d 670, 688–689; cf. Leeper v. Beltrami (1959) 53 Cal.2d 195, 212–213.) The only exception to this rule, the Zakaessian court indicated, would be as and when fraud or mistake were involved, in which case the three-year period of section 338, subdivision (4)[ ] would apply." (Robertson v. Superior Court (2001) 90 Cal.App.4th 1319, 1326 (Robertson).)

The three-year limitation period in Code of Civil Procedure section 338, subdivision (d) for "[a]n action for relief on the ground of fraud or mistake," (Code Civ. Proc. § 338, subd. (d)) is "comprehensive and applies 'if fraud or mistake is the basis of the legal injury (the "ground" of the action) . . . regardless of whether the complaint seeks legal or equitable relief or pleads a cause of action in tort or contract.' " (Hatch v. Collins (1990) 225 Cal.App.3d 1104, 1110 (Hatch).)
B. Application
Chavez contends that his complaint alleged "that [the] foreclosure sale was defective on two grounds," namely that "he had not signed the Trust Deed the use of which effected the sale," and that the "Deed of Trust was voided by [the 2009 lawsuit]" because Chavez's filing of the complaint in that action constituted a valid notice of rescission under 15 U.S.C. section 1635. We agree that these are the two bases for each of Chavez's three claims in his complaint. (See pt. II.A, ante [describing Chavez's complaint].)
With respect to the first basis, namely that the deed of trust is a forgery, the three-year limitation in Code of Civil Procedure section 338, subdivision (d) applies because " 'fraud . . . is the basis of the legal injury,' " (Hatch, supra, 225 Cal.App.3d at p. 1110) with respect to each of Chavez's claims for wrongful foreclosure, quiet title and fraud. (See also Robertson, supra, 90 Cal.App.4th at p. 1326 [three-year fraud statute of limitations applies to claims seeking relief from a purported void instrument on the basis of fraud].)
Chavez's complaint in this action establishes that Chavez was aware of the purported fraud in 2009. Chavez alleged in his complaint, "[T]he ineffective signature on [the deed of trust] was first discovered when [Chavez's] loan was reviewed for predatory lending practices by an attorney acting for and on behalf of [Chavez]." Even assuming that this allegation could be construed as referring to discovery by Chavez's attorney, rather than by Chavez himself, Chavez's attorney's knowledge of the alleged fraud is imputed to him. (See, e.g., Allied Grape Growers v. Bronco Wine Co. (1988) 203 Cal.App.3d 432, 449 ["[a]ctual notice of a fact to a litigant's attorney is imputed to the litigant"].)
Further, Chavez attached a copy of the 2009 lawsuit to his complaint in this action. The complaint in the 2009 lawsuit makes clear that Chavez had actual notice of the purportedly forged Deed of Trust. As the bankruptcy court reasoned in concluding that Chavez's claim for "declaratory relief on the grounds that somebody forged his signature on OneWest's note and [D]eed of [T]rust," was barred by the statute of limitations contained in Code of Civil Procedure section 338, subdivision (d):
"In filing that complaint [in the 2009 lawsuit], [Chavez] logically must have known of the note and [D]eed of [T]rust's existence. If he knew these documents existed, he per force must have known whether he himself executed them. Thus, simple and ineluctable logic leads to the conclusion that, by the time [Chavez] filed the [2009 lawsuit], he must have known the facts supporting this fraud action."

We agree. Since Chavez was aware of the alleged fraudulent Deed of Trust in 2009, his claims in this action, insofar as they are premised on such fraud, are time barred by virtue of the three-year limitation period in Code of Civil Procedure section 338, subdivision (d), because this action was not filed until 2015.
Chavez's claims are also barred insofar as they are based on his purported rescission of the loan secured by the Deed of Trust occasioned by his filing of the 2009 lawsuit. Chavez alleged in his complaint in this action that the filing of the 2009 lawsuit rendered the Deed of Trust "void." On appeal, Chavez argues that because "the Deed of Trust was voided by [the 2009 lawsuit] . . . the use of that document to convey away [Chavez's] title in 2015 was nugatory." Contrary to Chavez's suggestion that a plaintiff may bring a claim premised on a purportedly "void" instrument at any time, as noted, this court has held that a claim that an instrument is void remains subject to a statute of limitations. (Walters, supra, 2 Cal.App.5th at p. 428.) Chavez's claims, insofar as they are premised on the theory that the Deed of Trust is void based on the 2009 lawsuit, are subject to the four-year statute of limitations in Code of Civil Procedure section 343. (See Walters, supra, at p. 430 [" ' "Ordinarily a suit to set aside and cancel a void instrument is governed by section 343 of the Code of Civil Procedure," ' " and stating that the " 'only exception to this rule . . . would be as and when fraud or mistake were involved, in which case the three-year period of [Code of Civil Procedure] section 338, [former] subdivision (4) would apply,' " quoting Robertson, supra, 90 Cal.App.4th at pp. 1326–1327].) Because Chavez's claims were not brought until 2015, which is more than four years after 2009, they are time barred insofar as they are premised on Chavez's contention that the Deed of Trust became void as a result of the 2009 lawsuit.
In summary, the trial court properly determined that all of Chavez's claims are time barred, and Chavez has not demonstrated how he could amend his complaint to allege that his claims are not barred by the applicable statute of limitations. Accordingly, we conclude that the trial court did not err in sustaining respondents' demur to Chavez's complaint without leave to amend.
IV.
DISPOSITION
The judgment is affirmed. Chavez is to bear costs on appeal.


AARON, J.

WE CONCUR:

HUFFMAN, Acting P. J.

HALLER, J.