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FORGERY VOIDS DEED!! APPEAL COURT REVERSES TRIAL COURT DECISION - Yvonne Casonhua v Washington Mutual (Now Known as Chase)

FORGERY VOIDS DEED!! APPEAL COURT REVERSES TRIAL COURT DECISION - Yvonne Casonhua v Washington Mutual (Now Known as Chase)

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Published by 83jjmack
Contrary to the trial court's ruling, Berry's deed would be rendered void under all three of these factual circumstances. First, as Wutzke made clear, "a forged document is void ab initio and constitutes a nullity." (Wutzke, supra, 151 Cal.App.3d at p. 43.) Second, Bohne concluded that a deed is void if the conveyor lacked the capacity to understand the nature of his or her actions. (Bohne, supra, 130 Cal.App.2d at pp. 555-557.) Third, several cases have held that a deed is void if the grantor signs "an instrument without knowledge of its true nature or contents." (Wurzl, supra, 46 Cal.App.4th at p. 1751.) As stated in Bohne, a transaction is void if "one, at the time totally incapacitated from attending to business, is induced to sign a deed when in fact, he believes, because of fraudulent misrepresentations, that he is . . . signing a [document that is not a deed].'" (Bohne, supra, 130 Cal.App.2d at p. 556.) Plaintiffs' first three claims fall squarely within these holdings and, as a result, they have adequately

Although a bona fide encumbrancer is entitled to rely on a deed that is voidable, it will not retain title if the deed is found to be void. (Schiavon v. Arnaudo Brothers (2000) 84 Cal.App.4th 374, 378 (Schiavon); Wutzke v. Bill Reid Painting Service, Inc. (1984) 151 Cal.App.3d 36, 41 (Wutzke); Firato v. Tuttle (1957) 48 Cal.2d 136, 139 (Firato).) More specifically, our courts have explained that "[i]f [a] reconveyance [i]s voidable, . . . it may be subject to cancellation and rescission as against [the grantee], but could be relied upon by a subsequent bona fide [encumbrancer]. . . ." (Schiavon, supra, 84 Cal.App.4th at p. 378.) In contrast, "[i]nstruments which are wholly void cannot ordinarily provide the foundation for good title even in the hands of an innocent purchaser." (Firato, supra, 48 Cal.2d at p. 139.) Therefore, the Plaintiffs may only assert superior title against Washington Mutual if Berry's deed is found to be wholly void, but not if it is voidable.[6]
Contrary to the trial court's ruling, Berry's deed would be rendered void under all three of these factual circumstances. First, as Wutzke made clear, "a forged document is void ab initio and constitutes a nullity." (Wutzke, supra, 151 Cal.App.3d at p. 43.) Second, Bohne concluded that a deed is void if the conveyor lacked the capacity to understand the nature of his or her actions. (Bohne, supra, 130 Cal.App.2d at pp. 555-557.) Third, several cases have held that a deed is void if the grantor signs "an instrument without knowledge of its true nature or contents." (Wurzl, supra, 46 Cal.App.4th at p. 1751.) As stated in Bohne, a transaction is void if "one, at the time totally incapacitated from attending to business, is induced to sign a deed when in fact, he believes, because of fraudulent misrepresentations, that he is . . . signing a [document that is not a deed].'" (Bohne, supra, 130 Cal.App.2d at p. 556.) Plaintiffs' first three claims fall squarely within these holdings and, as a result, they have adequately

Although a bona fide encumbrancer is entitled to rely on a deed that is voidable, it will not retain title if the deed is found to be void. (Schiavon v. Arnaudo Brothers (2000) 84 Cal.App.4th 374, 378 (Schiavon); Wutzke v. Bill Reid Painting Service, Inc. (1984) 151 Cal.App.3d 36, 41 (Wutzke); Firato v. Tuttle (1957) 48 Cal.2d 136, 139 (Firato).) More specifically, our courts have explained that "[i]f [a] reconveyance [i]s voidable, . . . it may be subject to cancellation and rescission as against [the grantee], but could be relied upon by a subsequent bona fide [encumbrancer]. . . ." (Schiavon, supra, 84 Cal.App.4th at p. 378.) In contrast, "[i]nstruments which are wholly void cannot ordinarily provide the foundation for good title even in the hands of an innocent purchaser." (Firato, supra, 48 Cal.2d at p. 139.) Therefore, the Plaintiffs may only assert superior title against Washington Mutual if Berry's deed is found to be wholly void, but not if it is voidable.[6]

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YVONNE CASONHUA et al., ADMINISTRATORS FOR THE ESTATE OF FLORENCE SIMS, DECEASED, andTHE ESTATE OF DAVID SIMS, DECEASED Petitioners and Appellants,v.WASHINGTON MUTUAL BANK (currently known as J.P. Morgan Chase), Successor-in-Interest to LongBeach Mortgage Company, Defendant and Respondent.
Nos. B218606, B218608
Court of Appeals of California, Second District, Division Seven.
 Filed October 26, 2010.Larson & Associates and Larry Larson, for Petitioners and Appellants.Horton & Debolt, Barton E. Debolt and Partick G. Bollig, for Defendant and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
ZELON, J.
INTRODUCTION
In 2003, Sheron Berry recorded a grant deed that gave her title to a residential property previouslyowned by the Sims Family Trust. The deed appeared to be signed by Berry's grandmother, FlorenceSims, who passed away seven months before Berry recorded the deed. Berry later obtained a loan fromWashington Mutual, which she secured with a deed of trust to the property. After Berry defaulted onthe loan, Washington Mutual initiated foreclosure proceedings.Shortly thereafter, Florence Sims's step-daughter, Yvonne Casonhua, and her husband, James Casonhua,filed two complaints against Berry, Washington Mutual and others, alleging that Berry fraudulentlyobtained the deed thereby voiding the deed in its entirety. The first complaint was brought on behalf of the Estate of Florence Sims and the second was brought on behalf of the Estate of David Sims, who wasFlorence's husband. Washington Mutual demurred to both complaints, arguing that, as a bona fideencumbrancer, it was entitled to rely on Berry's deed of trust. The trial court agreed, concluding that,under the facts pleaded in both complaints, Berry's grant deed was voidable but not void and, as aresult, Washington Mutual retained good title. The court sustained the demurrers without leave toamend and entered judgments in favor of Washington Mutual. The Casonhuas timely appealed the judgments.We reverse the trial court's orders sustaining the demurrers and conclude that the Casonhuas havepleaded claims that, if proven at trial, would void Berry's deed in its entirety thereby nullifyingWashington Mutual's interest in the property.
FACTUAL AND PROCEDURAL BACKGROUNDA. Allegations in the Complaint
 
1. Events Preceding the Plaintiffs' Lawsuits
 
Florence and David Sims owned two parcels of real property, which included a personal residence (theResidence Property) and a two-unit income property (the Income Property; collectively "theProperties"). In 1991, the Simses established the Sims Family Trust, which was funded with theResidence Property and the Income Property. According to the terms of the Trust, upon the Simses'death, the Residence Property was to be distributed to Florence Sims's daughter, Shirley Traylor, andthe Income Property was to be distributed to David Sims's daughter, Yvonne Casonhua. David diedshortly after the Trust was created, leaving Florence  then 86 years old  as the sole trustee.Shortly after her husband's death, Florence began to exhibit symptoms of dementia. As her medicalcondition deteriorated, Florence developed a confidential relationship with her granddaughter, SheronBerry, who helped Florence make medical decisions. In December of 2001, Florence provided Berry witha power of attorney. Two weeks later, Florence was diagnosed with dementia; she died in April of 2003.After Florence died, Berry recorded two grant deeds that conveyed the Residence Property and theIncome Property from the Sims Family Trust to Berry. The grant deeds indicate that Florence transferredthe Properties to Berry as "bona fide gifts." The grant deeds were purportedly signed by Florence inJanuary of 2002.Between 2004 and 2006, Berry used the Properties to secure several loans. In 2006, she obtained a$440,000 loan from Washington Mutual Bank secured by a deed of trust to the Income Property.
[1]
Laterthat year, Berry obtained a loan in the amount of $361,000 from Avelo Mortgage, LLC, which shesecured with a deed of trust to the Residence Property.
[2]
 In early 2008, Berry defaulted on both loans and Washington Mutual and Avelo initiated foreclosureproceedings. Yvonne Casonhua became aware that Berry had obtained title to the Properties after thelenders affixed notices of foreclosure to each property.
2
. The Casonhua's Lawsuit and Washington Mutual's Demurrer 
 
In 2008, Yvonne Casonhua and her husband, James Casonhua, filed two, essentially identical complaintsagainst Berry, Washington Mutual, Avelo and Jerral E. Wesley, who notarized Berry's grant deeds. Thefirst suit was brought on behalf of the Estate of Florence Sims (the Florence Sims Complaint) and thesecond was brought on behalf of the Estate of David Sims (the David Sims Complaint).
[3]
The complaintsallege that Florence's conveyances to Berry are void under a variety of different legal theories. TheCasonhuas' first claim, which is pleaded against all of the Defendants, alleges that Berry forgedFlorence's signature on the grant deeds, thereby rendering them void. The second and third claims,which are also pleaded against all of the Defendants, allege that, if Florence did sign the grant deeds,they are nonetheless void because Florence "lacked the mental capacity to execute the deeds" or,alternatively, Florence was "unaware of the nature and effect of the deeds." The Florence SimsComplaint includes an additional claim, which is pleaded against Berry only, alleging that Berry "exertedundue influence over [Florence] and substituted her will for [Florence's] in the distribution of 
 
[Florence's] estate by causing the donative transfer of [Florence's] property to [Berry.]" This claim doesnot appear in David Sims's Complaint.
[4]
 Washington Mutual demurred to both complaints, arguing that, as a bona fide encumbrancer, it was justified in relying on Berry's deed to the Income Property regardless of how she had obtained it.
[5]
 Washington Mutual also demurred on the ground that the Plaintiffs' verified complaints containedinconsistent factual allegations. Specifically, Washington Mutual asserted that because the Plaintiffsalleged that Berry had obtained the deeds through undue influence, they were barred from alternativelyalleging that Berry had forged the deeds or fraudulently induced Florence to sign them. Finally,Washington Mutual asserted that the Plaintiffs' claims were untimely and vague.At the demurrer hearing, the trial court stated that it was "inclined to sustain the demurrers withoutleave to amend," explaining that "Washington Mutual is a bona fide encumbrancer, and I just don't seehow they can be shown to be anything but based on what I have seen pled [
sic
]." In response, Plaintiffs'counsel asserted that Washington Mutual's status as a bona fide encumbrancer was only relevant if Berry's deed to the Income Property was deemed voidable, rather than void. Counsel further contendedthat, under several theories pleaded in the complaints, the deed was wholly void, thereby nullifyingWashington Mutual's subsequently obtained deed of trust to the property. The trial court rejected theargument:PLAINTIFF'S COUNSEL: It's undisputed if you have a forged deed, the deed is void.THE COURT: No, it's not. It's voidable it's a voidable deed in this particular set of circumstances and thatseems to be in accord with the holding in the Fallon versus Triangle Management case. It's not void, it'svoidable.PLAINTIFF' COUNSEL: It's my understanding that if we won based on undue influence, it would bevoidable. But if it's a forged deed, it's void to the world, including all subsequent encumbrancers.THE COURT: How would Washington Mutual have any idea that this is a forged deed? How would theyknow? How are they going to know that they can't rely on the recorded documents?. . . .I don't know of any authority that puts . . . responsibility onto the bank . . . to go beyond a recordeddeed. And in light of the holding in the Fallon case . . . I am sustaining the demurrer without leave toamend as to all causes of action. And I am stating the basis of my sustaining the demurrer on the record.I am not going to be sending out any other rulings.Three weeks after the hearing, the court entered its orders sustaining Washington Mutual's demurrer toeach complaint with prejudice and dismissing Washington Mutual Bank from both cases. Plaintiffs timelyappealed the judgments.
DISCUSSION

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