Facts

On Jan. 9, 1994, counter-defendant Countrywide Home Loans Inc. (CHL) had a deed of trust recorded quantified at $189,000 on residential real property at 765 East Woodhaven in Fresno, which was the property of cross-defendants Robert G. Gonzales and Marisela Gonzales. On Feb. 25, 1998, counter-defendant La Salle National Bank also had a deed of trust recorded in relation to an $18,900 home equity credit line, which was in the name of Gonzales.

Gonzales later failed to make good on the CHL loan and on April 8, 2001, a notice of default was filed against the property by CHL's trustee. Later, in July 2001, CHL was given funding necessary to reinstate the loan, but rather than canceling the notice of default, a full reconveyance of the CHL deed was recorded by CHL's agent. Also, records showed that CHL's deed of trust was no longer an encumbrance on the property. On Nov. 21, 2001, a notice of default was recorded by La Salle's trustee. On Jan. 4, 2002, another notice of default was recorded by CHL on its deed of trust. La Jolla Group asked for information regarding outstanding deeds of trust on the property. La Jolla Group received word that La Salle's deed of trust was first in line since CHL's deed of trust was reconveyed.

PLAINTIFF'S CONTENTIONS:
On Oct. 15, 2002, CHL had a "Notice of Void Reconveyance" recorded and on July 24, 2004, under a settlement agreement entered into by CHL and La Salle, La Salle had recorded a "notice of Rescission of Trustee's Deed Upon Sale," which alleged to cancel the deed respecting the counter-claimants.

CHL asserted that the counter-claimants had knowledge of the second notice of default at the point at which the purchase occurred and knowledge was held that the reconveyance was in error. The plaintiff claimed that counter-claimants were speculators in the real estate business who tried to take advantage of a clear error that was in reality known to counter-claimants. CHL also tried to have the property returned.

DEFENDANT'S CONTENTIONS:
Counter-claimants La Jolla Group and Terrance Frazier claimed that they did not have any reason to adhere to the allegation that the CHL reconveyance was faulty, even if there appeared a second notice of default, as a result of there being such faults in the past. The counter-claimants bought the property for $24,200 on the date of Aug. 15, 2002.

On Aug. 18, 2000, defendant Internal Revenue Service had a lien recorded against the land in the form of income taxes for $19,939. The notice given to the IRS asserted that the sale was less than the necessary 25 days, and IRS stated that the tax lien was still an encumbrance on the land.

On Aug. 30, 2002, counter-claimants found out that CHL had recorded a notice of sale regarding the foreclosure of the deed that was reconveyed. Counter-claimants gave CHL the amount of $22,721 to halt the foreclosure process and maintain their claim that CHL's interest in the property was non-existent.

Result

A judgment quieting title was established by the court against plaintiff Countrywide Home Loans Inc. (CHL) and cross-defendants Gonzales and in favor of counter-claimants La Jolla Group and Frazier. The court's order stated that the property should be kept subject to pre-foreclosure tax liens. CHL was also ordered to return $21,721 to counter-claimants and dispersed CHL a credit of $17,235 against the $21,721 for the real property taxes it gave from 2002 until 2007.

Other Information

FILING DATE: Nov. 12, 2002.