This appeal requires us to interpret the statute governing judgments in quiet title actions. The statutory language is about as straightforward as such language ever gets: "The court shall not enter judgment by default. . . ." (Code Civ. Proc., § 764.010.) Entry of a default judgment against appellant HSBC Mortgage Services Inc., and in favor of respondent Harbour Vista, LLC, in a quiet title action was error.
Harbour Vista has alleged it is the lessee of a ground lease of land on which a Huntington Beach condominium complex has been built. This case concerns one of the condos in the complex. The owner, Julie Nugent, borrowed the money to buy the unit from Fieldstone Mortgage Company. Nugent secured her Fieldstone loan with a deed of trust on the condo. She is also alleged to have entered into a sublease with Harbour Vista for the right to occupy the land on which the unit sits.
Nugent did not pay her rent pursuant to the sublease, and Harbour Vista obtained an unlawful detainer judgment, removing her from the condo. Nugent also defaulted on her mortgage with Fieldstone, and Fieldstone foreclosed on the unit. HSBC bought the condo at the foreclosure sale in December 2009.
In October 2009, Harbour Vista filed a quiet title action, alleging a right to the unit itself. HSBC was among the defendants named in the quiet title action, and it received the pleadings, including a lis pendens on the unit, no later than November.
HSBC failed to answer or otherwise respond to the complaint, and Harbour Vista took its default in January 2010.
The race was a 10-yard dash. On the day of the case management conference, April 28, 2010, the court entered the default judgment for quiet title in favor of Harbour Vista. HSBC subsequently filed its motion to set aside the default and vacate the default judgment. The court denied this motion and a later motion for reconsideration. This appeal followed.
HSBC has identified several issues on appeal. One of them, we believe, disposes of the entire matter. Contrary to the controlling statute, Code of Civil Procedure
Section 760.010 et seq. set out the process for quieting title in property. The statute that concerns us here, section 764.010, provides, "The court shall examine into and determine the plaintiff's 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
Yeung v. Soos (2004) 119 Cal.App.4th 576 [14 Cal.Rptr.3d 502] (Yeung) has been the leading case in quiet title default judgments since it was decided. In Yeung, the plaintiffs filed a complaint to quiet title, which the defendant did not answer. After a default judgment was entered against him, the defendant moved to set it aside on the grounds that it was a void judgment. The motion was denied, and he appealed from the judgment as being void on its face. (Id. at p. 579.)
The appellate court held that the judgment was not void on its face, but was merely erroneous, because the court had not held the evidentiary hearing mandated by section 764.010. (Yeung, supra, 119 Cal.App.4th at p. 582.) Defendant's motion to set aside the judgment was untimely, and the judgment was affirmed. (Id. at p. 583.)
After acknowledging that no prior cases had construed section 764.010 (Yeung, supra, 119 Cal.App.4th at pp. 580-581), the court put its own gloss on the statutory language: "[S]ection 764.010 is frequently referred to as a prohibition against default judgments in quiet title actions. [Citation.] `However, the provision against default judgments [in quiet title actions] appears to be a misnomer; i.e., it seems only to require a higher standard of evidence at the "prove-up" hearing [].' (Weil & Brown, Cal. Practice Guide: Civil
We reluctantly disagree with Yeung and the practice guide. To us, the prohibition against default judgments in quiet title actions appears absolute. If the Legislature had wanted merely to increase the standard of proof for a quiet title default judgment, it would have constructed this statute differently; it would have addressed the standard of proof. Forbidding default judgments entirely seems an unlikely and excessively subtle way of accomplishing such a goal.
Our dissenting colleague is concerned that permitting a defaulting defendant to participate at a hearing represents too great a departure from normal civil procedure. He would instead rely on the plaintiff to present the evidence of the defaulting defendant's claim to title and exclude the defendant from any participation in the hearing itself, as would be the case in an ordinary default. This position, however, does not sufficiently recognize the adversarial nature of a quiet title action. Given both the nature of an adversarial proceeding and an attorney's duty of loyalty to his or her client, we cannot really expect plaintiff's counsel to present evidence or argue in favor of a defendant's adverse claim.
Finally, our dissenting colleague is concerned that a defaulting defendant may show up for the first time at the adjudication hearing and present evidence of its adverse claim the plaintiff has had no chance to see, in effect conducting a "trial by ambush." But a defendant who pulled such a stunt would hardly find favor with the trial court, which would, in all likelihood, continue the hearing to allow the plaintiff to respond to the newly presented evidence.
We agree with our dissenting colleague that allowing a defaulting defendant to participate in a hearing is unusual—verging on unique. But, then again, real property is unique, and the vast majority of these actions deal with real property. Perhaps the rationale behind the legislative creation of this juridical platypus can be gleaned from the history of the statute.
The quiet title statutes were originally enacted in 1901. They included a prohibition against default judgments, but only in cases where title was claimed through adverse possession. (See Batchelor v. Finn (1959) 169 Cal.App.2d 410, 420-422 [341 P.2d 803].)
The Legislature amended the entire statutory scheme in 1980. According to the California Law Revision Commission, the quiet title statutes needed revamping because under ordinary circumstances, a real property owner
One purpose of the new statutes was therefore to allow "the holder of any interest in property to quiet title as against any or all adverse claimants, as of the time of the lawsuit or any time prior thereto by permitting such persons to obtain an in rem quiet title decree."
Under the revised statutes, once a quiet title judgment on any grounds becomes final, it is good against all the world as of the time of the judgment. There is, for all practical purposes, no going back. Given the frequency with which quiet title actions involve real property—which is recognized as unique—it is understandable that the Legislature would want to take every precaution to assure title is adjudicated correctly. These precautions could reasonably include allowing a defendant having some claim to the property to present evidence, even if it has been dilatory in responding beforehand. Under these circumstances, suspending the prohibition against allowing a defaulting defendant to participate in an adjudication hearing seems not at all farfetched.
Section 764.010 requires the trial court to "examine into and determine the plaintiff's title," to "require evidence of plaintiff's title," and to "hear such evidence as may be offered respecting the claims of any of the defendants." Does this language require an open-court hearing?
We have had occasion in the past to deal with the question of whether a statute using the terms "hear" or "hearing" called for oral argument. In Mediterranean Construction Co. v. State Farm Fire & Casualty Co. (1998) 66 Cal.App.4th 257, 262-263 [77 Cal.Rptr.2d 781], we determined, by examining the statutory language, that a judge must hold oral argument before ruling on a summary judgment motion. In Hobbs v. Weiss (1999) 73 Cal.App.4th 76, 78 [86 Cal.Rptr.2d 146], we made the same determination for issuing a writ of attachment. We followed both cases in TJX Companies, Inc. v. Superior Court (2001) 87 Cal.App.4th 747, 751 [104 Cal.Rptr.2d 810] (TJX), holding that a demurrer to class action allegations requires oral argument.
The court clearly acts as a fact finder and adjudicates issues when it determines whether to quiet title in the plaintiff. Although the statute does not
If a court holds a properly noticed evidentiary hearing and no defendant turns up, then the court renders judgment "in accordance with the evidence and the law," based on what it has before it. This would not be a default judgment; any defendant, even one in default, has the right and the opportunity to appear and present evidence. This is another reason for scheduling and holding a hearing in open court; it allows the court to finish the case without falling foul of the statute. After judgment is entered, a defaulting defendant not present at the hearing will have to move to have the default and the judgment set aside under section 473, subdivision (b), in order to contest the judgment.
It follows that HSBC should not have had to move to set aside the default judgment; the judgment should not have been entered. Most assuredly there should have been no unseemly "race" to see whether Harbour Vista could get its default judgment entered before HSBC filed its set-aside motion. The statute requires the court to enter "judgment in accordance with the evidence and the law," not in accordance with one party's ability to file papers faster than the other party. The statute also obliges a court to "hear such evidence as may be offered respecting the claims of any of the defendants" (§ 764.010), HSBC appeared before the court in plenty of time to conduct the evidentiary
The case is reversed and remanded to the trial court to hold an evidentiary hearing in open court on both Harbour Vista's and HSBC's claims to title to the condominium and to render judgment in accordance with the evidence and the law. The parties are to bear their own costs on appeal.
Moore, J., concurred.
ARONSON, J., Concurring and Dissenting.—
I concur with the majority's conclusion the trial court prejudicially erred by entering a default judgment against defendant and appellant HSBC Mortgage Services Inc. As the majority explains, Code of Civil Procedure section 764.010 unmistakably prohibits entry of judgment by default in quiet title actions.
I dissent, however, from the majority's conclusion that a defendant in default may present evidence or otherwise participate in the hearing to determine whether the plaintiff has established a right to quiet title in the subject property. The majority recognizes the oddity of allowing a defendant in default to contest the plaintiff's evidence, but claims this result is compelled by section 764.010. I disagree. The statute merely requires the trial court to hear evidence of a defendant's claims, which the plaintiff must present to quiet title in the property under dispute. But the majority sees in section 764.010 a right for a defaulted defendant to participate in the trial, a right heretofore unrecognized in California jurisprudence. In reaching this result, the majority fails to consider the purpose prompting the Legislature's
I also write separately to emphasize that section 764.010 does not authorize a plaintiff (or, under the majority's interpretation of the statute, a defendant) to rely on declarations to prove (or disprove) a quiet title case. Although the majority concludes section 764.010 requires a hearing in open court to adjudicate a quiet title claim, it fails to address whether evidence may be presented through declarations as Harbour Vista did below.
Based on section 764.010's language stating the trial court "shall in all cases . . . hear such evidence as may be offered respecting the claims of any of the defendants," the majority concludes defaulted defendants may present evidence and oppose a plaintiff's efforts to quiet title in the subject property. According to the majority, "`[a]ny' defendant has to include a defendant whose default has been taken, and `all cases' must mean even cases in which a default has occurred." (Maj. opn., ante, at p. 1504.)
The majority concedes section 764.010 does not spell out who may offer evidence "`respecting the claims of any of the defendants.'" (Maj. opn., ante, at p. 1502.) Section 764.010 does not state the trial court shall consider evidence that any of the defendants may offer respecting their claims. Nonetheless, the majority concludes the "only sensible alternative" (maj. opn., ante, at p. 1502) is that any defendant, even a defendant in default, may offer evidence "respecting the claims of any of the defendants." According to the majority, it would be absurd to interpret section 764.010 as allowing only plaintiff to present evidence on claims asserted by defendants. The majority, however, fails to consider the nature of quiet title actions and the evidentiary burden a quiet title plaintiff faces.
Quiet title is a statutory cause of action. (Yeung v. Soos (2004) 119 Cal.App.4th 576, 580 [14 Cal.Rptr.3d 502] (Yeung).) "`Such an action is brought, as authorized by the statute, "for the purpose of determining" any adverse claim that may be asserted therein by a defendant to the land in controversy; and this does not mean that the court is simply to ascertain, as against a plaintiff shown to have a legal interest, whether or not such
The quiet title statutory scheme requires a plaintiff to name as defendants "the persons having adverse claims to the title of the plaintiff against which a determination is sought." (§ 762.010.) Moreover, a quiet title complaint must be verified (§ 761.010, subd. (c)) and must identify the "specific adverse claims as to which the plaintiff seeks to quiet title."
In much the same way that a declaratory relief action requires an actual and present controversy, a quiet title action requires "antagonistic property interest[s]." (Friends of the Trails v. Blasius (2000) 78 Cal.App.4th 810, 831 [93 Cal.Rptr.2d 193].) In other words, a plaintiff cannot obtain a quiet title judgment unless someone claims a conflicting interest in the same property as the plaintiff. (Ibid.)
To obtain a judgment quieting title, a plaintiff not only must prove an interest in the property (Preciado v. Wilde (2006) 139 Cal.App.4th 321, 326 [42 Cal.Rptr.3d 792]), but also "must prove a title in himself [or herself] superior to that of defendant" (Gerhard v. Stephens (1968) 68 Cal.2d 864, 918 [69 Cal.Rptr. 612, 442 P.2d 692]; see Hines v. Hubble (1956) 144 Cal.App.2d 830, 837 [301 P.2d 592]). Before entering judgment in any quiet title action, the court must "examine into and determine the plaintiff's title against the claims of all the defendants." (§ 764.010.)
These requirements demonstrate it is not absurd to interpret section 764.010 to allow a quiet title plaintiff to present evidence "respecting the claims of any of the defendants." (See California School Employees Assn. v. Governing Bd. of South Orange County Community College Dist. (2004) 124 Cal.App.4th 574, 588 [21 Cal.Rptr.3d 451] [courts "must exercise caution using the `absurd result' rule; otherwise, the judiciary risks acting as a `"super-Legislature"' by rewriting statutes to find an unexpressed legislative intent"].) Indeed, a quiet title plaintiff likely will need to present at least some
The majority responds that "we cannot really expect plaintiff's counsel to present evidence or argue in favor of defendant's adverse claim" due to "both the nature of an adversarial proceeding and an attorney's duty of loyalty to his or her client . . . ." (Maj. opn., ante, at p. 1504.) The majority, however, conflates plaintiff's burden to identify defendant's competing claim to the property with advocating defendant's claim.
The plaintiff does not advocate the defendant's claim by presenting evidence showing the basis and scope of the defendant's claim. To the contrary, the plaintiff advocates his or her own claim by presenting evidence respecting the defendant's claim because the plaintiff cannot meet the burden to show a superior title without first showing the title the defendant claims. The plaintiff is not required to present evidence establishing the validity of the defendant's claim, but rather the plaintiff need only present evidence describing the defendant's claim.
Requiring a party to present evidence or authority respecting an opponent's claim is not at all unusual in our adversarial system. Indeed, parties are frequently required to identify or present evidence and authority adverse to their own claims or interests. (See, e.g., Batt v. City and County of San Francisco (2007) 155 Cal.App.4th 65, 82-83, fn. 9 [65 Cal.Rptr.3d 716] [counsel has ethical obligation to disclose applicable legal authority adverse to client's position]; Pierotti v. Torian (2000) 81 Cal.App.4th 17, 32 [96 Cal.Rptr.2d 553] [appellate court sanctioned counsel for failing to discuss applicable, adverse authority]; Rio Linda Unified School Dist. v. Superior Court (1997) 52 Cal.App.4th 732, 740 [60 Cal.Rptr.2d 710] [defendant moving for summary judgment based on plaintiff's lack of evidence must disclose all evidence material to plaintiff's claim, including evidence adverse to defendant]; Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881 [92 Cal.Rptr. 162, 479 P.2d 362] [appellant challenging sufficiency of evidence to support trial court ruling must present all material evidence, not merely favorable evidence].)
The majority's interpretation of section 764.010 also ignores a default's legal effect and the difference between a default and a default judgment. "`[T]he "default and default judgment are separate procedures."' [Citation.]" (Cisneros v. Vueve (1995) 37 Cal.App.4th 906, 910 [44 Cal.Rptr.2d 682].) A default may be entered against any defendant who fails to respond to a complaint within the time permitted by statute. (§ 585, subds. (a)-(c).) The court clerk has a ministerial duty to enter a defendant's default on the plaintiff's request when the court's records show the plaintiff served the
"The entry of a default terminates a defendant's rights to take any further affirmative steps in the litigation until either its default is set aside or a default judgment is entered. [Citations.] `A defendant against whom a default has been entered is out of court and is not entitled to take any further steps in the cause affecting plaintiff's right of action; he cannot thereafter, until such default is set aside in a proper proceeding, file pleadings or move for a new trial or demand notice of subsequent proceedings.' [Citation.]" (Devlin v. Kearny Mesa AMC/Jeep/Renault, Inc. (1984) 155 Cal.App.3d 381, 385-386 [202 Cal.Rptr. 204].)
Once a default is entered against a defendant, the plaintiff ordinarily may apply to the court for a default judgment awarding the relief sought in the complaint.
A quiet title cause of action is governed by the statutes and rules generally applicable to civil actions unless otherwise inconsistent with the quiet title statutes. (§ 760.060.) Because section 764.010 states "[t]he court shall not enter judgment by default," the foregoing procedures for obtaining a default judgment in civil actions are inconsistent with the quiet title statutes and therefore inapplicable in quiet title actions.
Section 764.010, however, does not prohibit the entry of a default in quiet title actions. (Yeung, supra, 119 Cal.App.4th at p. 581.) Nothing in the quiet title statutes is inconsistent with the trial court entering a default against a defendant who fails to answer and thereafter prohibiting that defendant from participating in the action without first vacating the default. The majority acknowledges that section 764.010 does not prohibit the trial court from
Under the majority's interpretation of section 764.010, a defendant in default may avoid participating in a quiet title action until the hearing or trial on the plaintiff's complaint, and then appear at that hearing, object to the plaintiff's evidence, and present evidence in opposition to the plaintiff's claim without giving the plaintiff notice of any kind. This sort of trial by ambush runs afoul of all notions of due process and fair play forming the foundation for our adversarial system and nothing in the quiet title statutory scheme supports this result.
By prohibiting default judgments and requiring the trial court to "examine into and determine the plaintiff's title against the claims of all the defendants," section 764.010 ensures a plaintiff affirmatively proves the right to a judgment quieting title in his or her name. Section 764.010 prevents a plaintiff from relying on the lower, prima facie standard of proof that otherwise applies in civil actions when a defendant defaults. It also prevents a plaintiff from relying on the complaint's material allegations that are ordinarily deemed admitted by a defendant who defaults. Simply stated, when a defendant defaults in a quiet title action, section 764.010 requires the plaintiff to prove the case like any other quiet title plaintiff. The only difference is that a defaulted defendant has no right to present evidence or otherwise oppose the plaintiff's case.
Although the majority concludes section 764.010 requires a hearing in open court where the judge must "examine into and determine the plaintiff's title against the claims of all the defendants," the majority also states that oral argument is not required and stops short of prohibiting a plaintiff from using declarations. I agree a hearing in open court is required, but write separately to emphasize that a plaintiff may not prove his or her quiet title claim through declarations, as Harbour Vista sought to do in this case.
As out-of-court statements offered for the truth of the matter asserted, declarations constitute hearsay and are inadmissible unless a statute or other authority creates an exception and authorizes their use. (Elkins v. Superior Court (2007) 41 Cal.4th 1337, 1354 [63 Cal.Rptr.3d 483, 163 P.3d 160] ["It is well established, however, that declarations constitute hearsay and are inadmissible at trial, subject to specific statutory exceptions . . . ."]; North Beverly Park Homeowners Assn. v. Bisno (2007) 147 Cal.App.4th 762, 778 [54 Cal.Rptr.3d 644]; United Community Church v. Garcin (1991) 231 Cal.App.3d 327, 344 [282 Cal.Rptr. 368] (conc. opn. of Spencer, P. J.) ["In the absence of statutory authorization for use, an affidavit is hearsay."]; Rowan v. City Etc. of San Francisco (1966) 244 Cal.App.2d 308, 314, fn. 3 [53 Cal.Rptr. 88] ["Affidavits being hearsay may not be used in evidence except where permitted by statute . . . ."].)
When the Legislature intends to allow litigants to offer evidence through declarations, it enacts a statute authorizing their use.
Similarly, Family Code section 2336, subdivision (a), allows the court to enter a default judgment of dissolution upon proof of the grounds for dissolution presented through declarations. (Fam. Code, § 2336, subd. (a) ["No judgment of dissolution or of legal separation of the parties may be granted upon the default of one of the parties or upon a statement or finding of fact made by a referee; but the court shall, in addition to the statement or finding of the referee, require proof of the grounds alleged, and the proof, if not taken before the court, shall be by affidavit."].)
Section 2009 permits litigants to present evidence on law and motion matters and other miscellaneous proceedings through declarations: "An affidavit may be used to verify a pleading or a paper in a special proceeding, to prove the service of a summons, notice, or other paper in an action or special proceeding, to obtain a provisional remedy, the examination of a witness, or a stay of proceedings, and in uncontested proceedings to establish a record of birth, or upon a motion, and in any other case expressly permitted by statute."
Nothing in section 764.010, however, permits a quiet title plaintiff to rely on declarations. (See Yeung, supra, 119 Cal.App.4th at p. 581.) The hearsay exception section 585, subdivision (d), creates for default "prove ups" in ordinary civil actions does not apply in quiet title actions because, as explained above, section 764.010 prohibits entry of judgment by default in quiet title actions.
In sum, the majority's interpretation of the quiet title default statute potentially confers unwarranted litigation advantages for a defendant in default. Now a defendant in a quiet title action may choose to default and avoid revealing defense weaknesses during discovery, tactically waiting to contest the plaintiff's case at the hearing with evidence the plaintiff might
Regardless of whether a default is entered against a defendant, the defendant has no right to receive notice or any papers other than amended pleadings until the defendant appears in the action. (§ 1010 ["No bill of exceptions, notice of appeal, or other notice or paper, other than amendments to the pleadings, or an amended pleading, need be served upon any party whose default has been duly entered or who has not appeared in the action or proceeding." (italics added)].) Moreover, in today's information era, court dockets, filings, and calendars are readily available to virtually everyone at the click of a mouse. A defendant who is so inclined may easily decide not to appear after being served, but nonetheless monitor all filings and hearing dates in an action.