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CASE UPDATE: Court Affirms Dismissal Of Quiet Title Claim Even Though Plaintiff’s Name Was Fraudulently Omitted From Prior Deed.

In Lin v. Coronado (2014), 2014 WL 6398772, the court dismissed the plaintiff’s quiet title claim finding that a change that was made to a revised version of a deed that omitted plaintiff’s name was immaterial, and thus, no basis to void the altered deed.  The plaintiff, Helen Lin, alleged that she contributed $150,000 toward a $250,000 purchase of property at a trustee sale with two other partners, River Forest and Elevation Investments; that the original version of the trustee’s deed named the transferees as “RIVER FOREST FINANCIAL LLC 75%, ELEVATION INVESTMENTS 25% HELEN LIN”; that the version of the trust deed that was subsequently recorded was altered to omit HELEN LIN from the named transferees (unbeknownst to Lin); that River Forest then quitclaimed its entire interest in the property to Elevation, which then sold the property to the defendant in this case, Mireya Coronado.

When Lin discovered some time later that she had been left off the title and that the property had been sold, she sued River Forest and Elevation for fraud (seeking damages), and sued Coronado to quiet title. Lin’s quiet title claim was an attempt to have the court void the two prior transfers and then reform the trustee’s deed to add her name.  However, the trial court sustained Coronado’s demurrer and dismissed the quiet title claim.  The court of appeal applied the rule that a deed can be deemed void if it was altered prior to recording (and give rise to a quiet title claim), but only if the alteration was “material”, which the court defined as an alteration that changes the legal effect of the instrument. Conversely, an “immaterial” change would include “any change necessary to make an instrument conform to the intention of the parties and to correct a clerical mistake in the drafting.”  The court held that the alteration in this case – omitting Helen Lin’s name – was immaterial because in the original version no percentage interest was attributed to her, and in the trustee’s sale document on which the deed was based, no percentage interest was attributed to her.  Thus, the court concluded that removing Lin’s name in the final version of the deed that was recorded had no legal effect.

This case also involved the principal that the court cannot grant the remedy of rescission against a “bonafide purchaser,” that is, a transferee who took title with no knowledge of the underlying fraud.  Thus, money damages was Lin’s only remedy in this case.

©2014 Miles J. Dolinger. This article is not intended to and does not constitute legal advice or a solicitation for the formation of an attorney-client relationship

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