1 William C.

Dresser #104375
Richard Swenson #221586
2 4 North Second Street, Suite 1230
E-FILED
Jan 24, 2008 1:10 PM
KIRI TORRE
San Jose, CA 95113-1307 Chief Executive Officer
3 Tel: 408\279-7529 Superior Court of CA, County of Santa Clara
Fax: 408\298-3306 Case #1-07-CV-083156 Filing #G-6857
4 By R. Walker, Deputy
Attorneys for Plaintiffs
5 Saeed Fazeli, individually and as trustee for the
Fazeli Irrevocable Trust dated October 1979 and
6 the Fazeli Irrevocable Trust dated September 2003

7
IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA
8
IN AND FOR THE COUNTY OF SANTA CLARA
9

10 Saeed Fazeli, individually and as trustee for No: 1-07-CV-083156

the Fazeli Irrevocable Trust dated October
11 1979 and the Fazeli Irrevocable Trust dated Memorandum of Points and
September 2003, Authorities in Opposition to Motion by
12 Miguel Vargas, as sole successor
Plaintiffs, trustee of the Miguel & Victoria
13 Vargas Living Trust, to Expunge Lis
vs. Pendens
14
Bank of the West, et al, Date: January 25, 2008
15 Time: 9:00 a.m.
Defendants Dept: 17C
16 /
Initial complaint filed 4/2/07
17 First amended complaint filed 11/1/07

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Fazeli v Bank of West, et al, Santa Clara Superior Court no. 1-07-CV-083156
MPA in Opposition to Vargas Motion to Expunge Lis Pendens
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1 TABLE OF CONTENTS

2 I. SUMMARY OF ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

3 II. STATEMENT OF CASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

4 III. THE WITHIN ACTION STATES A CLAIM TO SUPPORT A LIS PENDENS . . . . . . . 4

5 IV. PLAINTIFF WILL PREVAIL ON HIS REAL PROPERTY CLAIM . . . . . . . . . . . . . . . . 6

6 A. Plaintiff has an undisputed initial right to a secured interest in real property . . 6

7 B. Plaintiff's secured interest is not removed by an unauthorized action . . . . . . . 7

8 1. A forged instrument does not give constructive notice of its existence . 7

9 2. Defendant cannot assert a position as a bona fide purchaser by reliance

10 on a void forged instrument . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

11 3. An unauthorized transaction is voidable as against a party that has not

12 transferred title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

13 4. Defendant's assertion of a waiver of rights is without factual basis . . . 12

14 V. EXPUNGING THE LIS PENDENS WILL CAUSE AN INJUSTICE TO PLAINTIFF . . 13

15 A. Harm to Plaintiff is patent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

16 B. Potential harm is to be passed to Defendant who can be covered for this loss by

17 title insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

18 VI. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

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Fazeli v Bank of West, et al, Santa Clara Superior Court no. 1-07-CV-083156
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1 TABLE OF AUTHORITIES

2 STATUTES

3 Code of Civil Procedure section 405.20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

4 Code of Civil Procedure section 405.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

5 Code of Civil Procedure section 405.4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 5

6 Code of Civil Procedure section 405.60 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

7 Code of Civil Procedure section 405.61 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

8 DECISIONS

9 Firato v. Tuttle (1957) 48 Cal.2d 136, 308 P.2d 333 . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 12

10 First Fidelity Thrift & Loan v. Alliance Bk. (1998) 60 Cal.App.4th 1433 . . . . . . . . 9, 12, 15

11 Handy v. Shiells (1987) 190 Cal.App.3d 512 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

12 Hopkins v. Fresno County A. Co. (1918) 36 Cal.App. 699, 173 P. 106 . . . . . . . . . . . 7, 10

13 In re Marriage of Jovel (1996) 49 Cal.App.4th 575, 584-585 . . . . . . . . . . . . . . . . . . . 9, 11

14 Kirkeby v. Superor Court (2004) 33 Cal.4th 642 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

15 People v. Sanders (1998) 67 Cal.App.4th 1403 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

16 Schiavon v. Arnaudo Brothers (2000) 84 Cal.App.4th 374, 100 Cal.Rptr.2d 801 . . . . 9, 12

17 Wutzke v. Bill Reid Painting Service, Inc. (1984) 151 Cal.App.3d 36,

18 198 Cal.Rptr. 418 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-12, 14

19 OUT OF STATE DECISIONS

20 Burk v. Demaray (2002) 264 Neb. 257, 264-265, 646 N.W.2d 635 . . . . . . . . . . . . . . . . . 9

21 Glass v. Stewart Title Guaranty Company (1987) 181 Ga. App. 804, 354 S.E.2d 187 . . 9

22 In re Orosco (9th Cir. BAP 1988) 93 B.R. 203 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 11

23 OTHER AUTHORITIES

24 Matthew Bender, California Insurance Law & Practice, Division III, Life, Disability and

25 Property Insurance, Chapter 39, Title Insurance, Part C, Standard Policies . . . . . . . . . 15

26 Matthew Bender, California Real Estate Law & Practice, Part 2, Acquisition & Transfer,

27 Division 7, Remedies in Secured Transactions, Chapter 121, Priorities of Liens, Part B,

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Fazeli v Bank of West, et al, Santa Clara Superior Court no. 1-07-CV-083156
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1 Priority of Deeds of Trust and Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 14

2 Matthew Bender, California Real Estate Law & Practice, Part 2, Acquisition & Transfer,

3 Division 6, Secured Transactions, Chapter 115, Release and Reconveyance, Part A,

4 Reconveyance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 14

5 Matthew Bender, California Real Estate Law & Practice, Part 2, Acquisition & Transfer,

6 Division 4, Closing Sales Transactions, Chapter 92, Title Insurance, Part F, Title Insurance

7 Policies, Part 2, CLTA Standard Coverage Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 14

8 14 West's Ann. Code (2003 supp.) com. 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

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Fazeli v Bank of West, et al, Santa Clara Superior Court no. 1-07-CV-083156
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1 I. SUMMARY OF ARGUMENT

2 The first, second and third causes of action of the First Amended Complaint state

3 claims to title to real property, including the property commonly known as 3750 Fabian

4 Way, Palo Alto, California. These are meritorious claims, the basis of which is undeniable

5 and admitted even by the Defendant’s moving papers. Plaintiff has produced clear and

6 substantial evidence to support his real property claim. Defendant's motion mis-states the

7 allegations of the First Amended Complaint and is not supported by any demonstrative

8 evidence.

9 Plaintiff Saeed Fazeli as trustee of the Fazeli Irrevocable Trust dated October 1979

10 has not acted to remove his specific right to an encumbrance on the real property to

11 secure the $100,000 that he loaned the Defendant. He has a right to a judicial

12 determination that transactions which are at best memorialized by forged documents are

13 voidable and upon his election deemed void. He has a right to a judicial determination

14 that the forged documents do not provide constructive notice of their existence. All known

15 decisions provide that these rights under the circumstances presented herein are clear

16 and uncontradicted.

17 The lender Plaintiff who is not responsible for the Defendant’s actions must not lose

18 his rights. Defendant’s remedy lies with a claim under a title insurance policy.

19 II. STATEMENT OF CASE

20 Plaintiff Saeed Fazeli, individually and as trustee of the Fazeli Irrevocable Trust

21 dated October 1979 filed in the within action on November 1, 2007 a First Amended

22 Complaint. This First Amended Complaint alleged in paragraph 85 I, found at page 35,

23 line 19, through page 36, line 26, a factual basis for asserting a right to a recorded

24 encumbrance of $100,000 on the real property 3750 Fabian Way, Palo Alto, California

25 94303, APN 127-56-004 and 127-10-052. This is based on the admitted fact that Victoria

26 Vargas as borrower obtained a loan in the nominal sum of $100,000 with Saeed Fazeli as

27 the investor. 1/16/08 executed and 1/17/08 filed Vargas Declaration (hereinafter “Vargas

28 Decl”), 1:28-2:3. This loan was memorialized by a Note Secured by a Deed of Trust,
Fazeli v Bank of West, et al, Santa Clara Superior Court no. 1-07-CV-083156
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1 Vargas Decl, 2:4-5, 1/24/08 Fazeli Declaration (hereinafter “Fazeli Decl”), Ex. A. It was

2 also the basis of a recorded encumbrance filed on June 28, 1996 in the Santa Clara

3 County Recorders Office as document number 13350532. Fazeli Decl, Ex. B.

4 Plaintiff asserts on this basis a first cause of action titled for “Quiet Title.” Plaintiff

5 seeks by this cause of action for relief that:

6 “the Deed of Trust for the benefit of beneficiary Plaintiff remains and should be

7 declared to remain as an encumbrance, right to, or interest in the real property”;

8 a “lien should be charged and imposed upon said real property for the benefit of

9 Plaintiff”; and

10 to the extent that any Deed of Reconveyance is deemed to be voidable and not

11 void, Plaintiff hereby elects to void such Deed of Reconveyance and obtain a finding and

12 order that Plaintiff remains entitled to assert the lien on the real property.” 1 A Compl,

13 para 85 I, at 36:

14 Plaintiff has also asserted a second cause of action titled for “Constructive trust

15 against persons claiming interest in real property.” Plaintiff seeks by this cause of action

16 “an order for issuance of a constructive trust to place them in the position that they would

17 have been in but for the fraudulent actions by and fraudulent documents prepared by

18 Schneider and California Plan, Inc.” 1 A Compl, para 103, at 50:8-10.

19 Plaintiff has also asserted a third cause of action titled for “Declaratory Relief

20 against persons claiming interest in real property.” Plaintiff seeks “an adjudication of the

21 existence, nature, and extent of the right, if any, that Plaintiffs and the named Defendants

22 have with respect to the ownership both equitable and legal to the real properties identified

23 in paragraphs 85 and 86 of this Complaint.” 1 A Compl, para 107, at 50:23-26.

24 Plaintiff has not asserted as against the moving defendants herein any other causes of

25 action.

26 It is this clear right to a secured interest that Defendant seeks to expunge. This

27 would have the intended result of leaving Plaintiff with a loss of a $100,000 secured

28 interest.
Fazeli v Bank of West, et al, Santa Clara Superior Court no. 1-07-CV-083156
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1 Defendant asserts that Plaintiff has "not alleged and cannot demonstrate" title to

2 the subject property. Deft MPA, 5:3-4. Defendant asserts without evidence that California

3 Plan collected all proceeds and recorded a Deed of Full Reconveyance. The actual facts

4 are that Plaintiff has not been paid the principal sum due on this Note Secured by Deed of

5 Trust. Fazeli Decl, para 7. Nor has Plaintiff authorized any act or the filing of any

6 document to remove the Fazeli Irrevocable Trust’s recorded right to an encumbrance.

7 Fazeli Decl, para 8 and 10. The unauthorized actions which purport to remove the

8 encumbrance are voidable upon the election of the borrower, which Plaintiff by the filing of

9 the First Amended Complaint seeks to do.

10 There are two subsequent documents which are referred to in the Declaration of

11 Miguel Vargas. Neither one is attached to the Declaration of Miguel Vargas. See 1/24/08

12 Objection to Evidence. Presumably the reason is that the documents themselves are not

13 helpful and are in fact harmful to the argument asserted by the moving Defendant. One of

14 the two is not mentioned at all in the Declaration of Miguel Vargas. These both contain

15 forged signatures. One contains a signature of Saeed Fazeli which was forged. Both

16 contain signatures of Paul Letsinger which were forged. A forged instrument does not

17 give constructive notice of its existence.

18 Defendant Vargas does not possess and has not filed or shown the Promissory

19 Note because he does not have the original. This is a failure to follow typical and standard

20 practice of a lender who has possession of the original note giving it to the borrower.

21 Defendant Vargas also has not identified who he paid. He has not produced either

22 the forged “Assignment” containing the forged purported signature of Saeed Fazeli, nor

23 any instruction for assignment, nor a copy of the “Rose” note, nor the original of the “Rose”

24 note, nor any instruction for a reconveyance or request for reconveyance, nor any of the

25 other documents which are typically created and exchanged in a payoff of a six figure

26 loan.

27 Defendant seeks to have this court impose on blameless lender Saeed Fazeli a

28 loss of $100,000. It is under circumstances substantially similar to that presented by the

Fazeli v Bank of West, et al, Santa Clara Superior Court no. 1-07-CV-083156
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1 within fact situation that the courts and all other known authorities place the risk of such

2 loss on the borrower who is relying on unauthorized and forged documents. This is a risk

3 born by the borrower who has recourse to a title insurance policy which is typically

4 obtained in the transaction by which the secured interest is sought to be removed.

5 III. THE WITHIN ACTION STATES A CLAIM TO SUPPORT A LIS PENDENS

6 A lis pendens is a recorded document giving constructive notice that an action has

7 been filed affecting title to or right to possession of the real property described in the

8 notice. A lis pendens may be filed by any party in an action who asserts a "real property

9 claim." C.C.P. § 405.20. Code of Civil Procedure section 405.4 defines a "real property

10 claim" as the cause or causes of action in a pleading which would, if meritorious, affect

11 title to, or the right to possession of, specific real property.

12 Plaintiff through counsel filed a Complaint and a First Amended Complaint to

13 ensure his right to title in the specific real property which is both identified in the First

14 Amended Complaint, 1 A Compl, para 85 I, and in the Declaration of Saeed Fazeli. Fazeli

15 Decl, Ex. B, page 5 (“Addendum A” to filed Deed of Trust). Plaintiff has requested a

16 determination as set forth on page 36 of the First Amended Complaint that:

17 “the Deed of Trust for the benefit of beneficiary Plaintiff remains and should be
declared to remain as an encumbrance, right to, or interest in the real property
18
commonly known as 3750 Fabian Way, Palo Alto, CA 94303, APNs 127-56-004,
19 127-10-052. Said lien should be charged and imposed upon said real property for
20 the benefit of Plaintiff.
To the extent that a reconveyance does exist, said reconveyance was not
21
authorized by or made known to the beneficiary Plaintiff Saeed Fazeli, as Trustee
22 of the Fazeli Trust Agreement Dated October 1979, nor was a copy provided to
23 Plaintiff as required by Civil Code section 2041. Any such Deed of Full
Reconveyance was not delivered by the beneficiary Plaintiff, nor was it made
24
pursuant to request or direction of the beneficiary Plaintiff.
25 Any Deed of Reconveyance is void and Plaintiff's rights cannot be displaced
26 by this fraudulent and purported reconveyance. Any subsequent encumbrance is
not and would not be in good faith based on the constructive knowledge that the
27
first in time trust deed in favor of Plaintiff was erroneously reconveyed. The Deed
28 of Trust for the benefit of beneficiary Plaintiff remains and should be declared to
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1 remain as an encumbrance, right to, or interest in the real property commonly

known as 3750 Fabian Way, Palo Alto, CA 94303, APNs 127-56-004, 127-10-052.
2
Said lien should be charged and imposed upon said real property for the benefit of
3 Plaintiff.
4 To the extent that any Deed of Reconveyance is deemed to be voidable and
not void, Plaintiff hereby elects to void such Deed of Reconveyance and obtain a
5
finding and order that Plaintiff remains entitled to assert the lien on the real property
6 commonly known as 3750 Fabian Way, Palo Alto, CA 94303, APNs 127-56-004,
7 127-10-052.”

8 Defendant asserts that Plaintiff has “not alleged and cannot demonstrate” title to

9 the subject property. Deft MPA, 5:3-4. Defendant asserts without evidence that California

10 Plan collected all proceeds and recorded a Deed of Full Reconveyance.

11 The Defendant seeks to make both a legal argument on the legal viability of the

12 pleadings to support a real property claim while arguing the merits of the claim. The basis

13 of the motion is not clear, as the Notice of Motion does not specify whether the within

14 motion is based on a claimed lack of a real property claim or its probable validity. See

15 1/17/08 Deft Notice of Motion, 2:2 (§ 405.30 et seq). The First Cause of Action alone

16 supports a real property claim to title in the specific real property that the lis pendens was

17 directed to. The lack of factual merit to this argument is addressed below.

18 The first portion is for the court to engage in a demurrer-like analysis. Kirkeby v.

19 Superor Court (2004) 33 Cal.4th 642. The court undertakes a limited analysis of whether

20 the pleading states a real property claim. See Code Comment, 14 West's Ann. Code

21 (2003 supp.) com. 3 following section 405.32, p. 224. Review involves only an

22 examination of the adequacy of the pleading and normally should not involve evidence

23 from either side.

24 The determination to be made is whether the First Amended Complaint states a

25 real property claim as defined by Code of Civil Procedure section 405.4. C.C.P. § 405.4.

26 (cause or causes of action ... which would, if meritorious, affect (a) title to, or the right to

27 possession of, specific real property ...”) The lack of legal merit to Defendant’s argument

28 that Plaintiff has not alleged a cause of action affecting title to specific real property is
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1 demonstrated by the passage quoted above.

2 Defendant does not analyze the actual specific pleadings of this case. Defendant

3 cites to authority for a straw man argument that a holder of equitable title cannot maintain

4 a quiet title action against the legal owner. Plaintiff does not assert merely an equitable

5 title. Plaintiff asserts a recorded title and a right to a recorded title. 1 A Compl, para 85 I,

6 35:20-36:2 (“A Deed of Trust, filed as Santa Clara County Official Records document

7 number 13350532, was filed on June 28, 1996.. Saeed Fazeli, Trustee of the Fazeli Trust

8 Agreement dated October 1979, was beneficiary.. [providing] constructive notice to all

9 persons of the rights of Plaintiff in the real property commonly known as 3750 Fabian

10 Way, Palo Alto, CA 94303, APNs 127-56-004, 127-10-052"). Plaintiff’s relief if and when

11 granted will affect title to specific real property, either as a quiet title claim, or by imposing

12 equitable relief to convey title, or by a judicial declaration of Plaintiff’s right to an

13 encumbrance on specific real property. The First Amended Complaint in the within action

14 states a real property claim to support a lis pendens.

15 IV. PLAINTIFF WILL PREVAIL ON HIS REAL PROPERTY CLAIM

16 A. Plaintiff has an undisputed initial right to a secured interest in real

17 property

18 The specific real property right alleged by Plaintiff in the First Amended Complaint

19 is not disputed. Defendant admits that Victoria Vargas as borrower obtained a loan in the

20 nominal sum of $100,000 with Saeed Fazeli as the investor. 1/16/08 executed and

21 1/17/08 filed Vargas Declaration (hereinafter "Vargas Decl"), 1:28-2:3. This loan was

22 memorialized by a Note Secured by a Deed of Trust, Vargas Decl, 2:4-5, 1/24/08 Fazeli

23 Declaration (hereinafter "Fazeli Decl"), Ex. A.

24 This note secured by deed of trust was the basis of a recorded encumbrance filed

25 on June 28, 1996 in the Santa Clara County Recorders Office as document number

26 13350532. Fazeli Decl, Ex. B. Though Defendant has ignored this recording of a secured

27 interest in the specific real property, Defendant has in effect admitted to its existence by

28 referring in the Declaration of Miguel Vargas to loans “secured by the property,” Vargas
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1 Decl, 1:28, and arguing to a document enclosed in a letter as being a document intended

2 to remove that security interest from recorded chain of title. Vargas Decl, 2:13-16.

3 Plaintiff has an undisputed initial right to a secured interest in the specific real property

4 which is the subject of the lis pendens at issue in this motion.

5 B. Plaintiff’s secured interest is not removed by an unauthorized action

6 1. A forged instrument does not give constructive notice of its existence

7 Plaintiff requests by this lawsuit, among other things, to obtain a judicial finding

8 confirming the legal recorded rights of the Fazeli Irrevocable Living Trust dated October

9 1979 to a $100,000 encumbrance on the real property commonly known as 3750 Fabian

10 Way, Palo Alto, CA 94303, APNs 127-56-004, 127-10-052. There are only two

11 documents which might affect this right. Both are forged documents. They involve forgery

12 both of the signature of a beneficiary under a deed of trust and a forgery of a notary on a

13 deed of reconveyance. Neither of these provides a right to Defendant superior to

14 Plaintiff’s rights.

15 The two California decisions which concern the effect of a forgery on the

16 ineffectiveness of a forged deed of reconveyance and the effect of a forged notarization

17 are Wutzke v. Bill Reid Painting Service, Inc. (1984) 151 Cal.App.3d 36, 198 Cal.Rptr. 418

18 and Hopkins v. Fresno County A. Co. (1918) 36 Cal.App. 699, 173 P. 106. These

19 decisions hold that a forged instrument does not give constructive notice of its existence,

20 including when they involve a forged deed of reconveyance and a forged notarization.

21 The Court in Wutzke was presented with a deed of reconveyance which transferred

22 title based on a false representation that a beneficiary had provided a written request to

23 convey and which contained fictitious names of a signatory and of a notary. Wutzke,

24 supra, 151 Cal.App.3d at 39. The property was then sold. The trial court ruled that both

25 the owner of the property and the subsequent purchaser were innocent victims, but that

26 because the “deed of reconveyance was a forgery and therefore void, to be given no force

27 and effect” the party whose rights were impaired by the forged deed of reconveyance had

28 priority over the other parties. The trial court held that the forged document should be
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1 cancelled, and that the initial party whose rights would have been lost if the deed was not

2 forged was instead entitled to recovery of the first proceeds from a judicially ordered

3 foreclosure. Id., at 39-40. This decision was upheld on appeal.

4 The Wutzke court reviewed authorities concerning both voidable and void

5 transactions. It reviewed the California Supreme Court decision in Firato v. Tuttle (1957)

6 48 Cal.2d 136, 308 P.2d 333, which concerned voidable deeds when title was changed

7 due to an unauthorized transaction. Its decision can be based on voidable transactions.

8 However, it rested its decision on the black letter law that title is not passed by virtue of a

9 forged document.

10 It may be that Defendant is factually innocent. That has not been shown. But this

11 innocence does not work to provide Defendant with a right greater than that of Plaintiff.

12 The holding in Wutzke, based on review and citation to an unbroken and overwhelming

13 series of authorities, is that a person in the position of Defendant does not obtain clear

14 title, that title remains with the person in the position of Plaintiff herein.

15 innocent encumbrancers and purchasers have a right to rely on the record title of
the grantor (Firato v. Tuttle, supra, 48 Cal.2d at p. 140); that protection extends only
16
to those who obtained good legal title. (Id., at p. 139; Trout v. Taylor (1934) 220
17 Cal. 652, 656 [32 P.2d 968].) (4) It has been uniformly established that a forged
18 document is void ab initio and constitutes a nullity; as such it cannot provide the
basis for a superior title as against the original grantor. (Firato v. Tuttle, supra, 48
19
Cal.2d at p. 139; Trout v. Taylor, supra, 220 Cal. at p. 656; Burns v. Ross (1923)
20 190 Cal. 269, 275 [212 P. 17]; Cutler v. Fitzgibbons (1906) 148 Cal. 562, 563-564
21 [83 P. 1075]; Blaisdell v. Leach (1894) 101 Cal. 405, 409 [35 P. 1019]; Forte v. Nolfi
(1972) 25 Cal.App.3d 656, 674 [102 Cal.Rptr. 455]; Kessler v. Bridge (1958) 161
22
Cal.App.2d Supp. 837, 841 [327 P.2d 241]; Shurger v. Demmel (1957) 148
23 Cal.App.2d 307, 309 [306 P.2d 497]; Crittenden v. McCloud (1951) 106 Cal.App.2d
24 42, 50 [234 P.2d 642]; Montgomery v. Bank of America (1948) 85 Cal.App.2d 559,
564 [193 P.2d 475]; Gioscio v. Lautenschlager (1937) 23 Cal.App.2d 616, 619-620
25
[73 P.2d 1230]; 1 Miller & Starr, Current Law of Cal. Real Estate (rev. 1975) § 3:76,
26 p. 465; see also 23 Am.Jur.2d (1965) Deeds, § 139, p. 169; Annot. (1954) 35
27 A.L.R.2d 944-959, and Later Case Service, and the out-of-state cases cited within.)
Wutzke, supra, 151 Cal.App.3d at 43
28
Fazeli v Bank of West, et al, Santa Clara Superior Court no. 1-07-CV-083156
MPA in Opposition to Vargas Motion to Expunge Lis Pendens 8
E-Filed: Jan 24, 2008 1:10 PM, Superior Court of CA, County of Santa Clara, Case #1-07-CV-083156 Filing #G-6857

1 The Wutzke holding, based on numerous cited authorities, has never been

2 overruled, or rejected, and its statement of black letter law has been universally upheld.

3 This is true:

4 in California appellate court decisions, Handy v. Shiells (1987) 190 Cal.App.3d 512,

5 517 (“There is no question that a forged document constitutes a nullity and as such,

6 cannot provide the basis for a superior title as against the original grantor. (Wutzke v. Bill

7 Reid Painting Service, Inc. (1984) 151 Cal.App.3d 36, 43 [198 Cal.Rptr. 418], and cases

8 cited therein”); In re Marriage of Jovel (1996) 49 Cal.App.4th 575, 584-585; First Fidelity

9 Thrift & Loan v. Alliance Bk. (1998) 60 Cal.App.4th 1433, 1441 (“Wutzke v. Bill Reid

10 Painting Service, Inc. (1984) 151 Cal.App.3d 36, 39 [198 Cal.Rptr. 418] [bona fide

11 purchaser's interest not senior to that of holder of deed of trust whose deed was

12 reconveyed by forgery]”); People v. Sanders (1998) 67 Cal.App.4th 1403, 1413; Schiavon

13 v. Arnaudo Brothers (2000) 84 Cal.App.4th 374, 100 Cal.Rptr.2d 801;

14 in out of state decisions, Glass v. Stewart Title Guaranty Company (1987) 181 Ga.

15 App. 804, 805, 354 S.E.2d 187 ("It has been uniformly established that a forged document

16 is void ab initio and constitutes a nullity. . . . [Cits.]" Wutzke v. Bill Reid Painting Svc., 151

17 Cal.App.3d 36, 43 (198 Cal.Rptr. 418) (1984); Luther v. Clay, 100 Ga. 236 (4) (28 S.E. 46)

18 (1897). "[T]his is true even where the claimant under the forged instrument had no notice

19 of the forgery and honestly believed that it was valid and genuine. [Cits.]" Luther v. Clay,

20 supra at 244. See also Martin v. Carter, 400 A.2d 326 (7) (D.C.App. 1979), holding that

21 the risk of a forged deed falls on the purchaser); Burk v. Demaray (2002) 264 Neb. 257,

22 264-265 (Wutzke and multiple authorities, including 14 Richard R. Powell & Michael Allan

23 Wolf, Powell on Real Property § 82.02[1][e][i] (2002) for holding that “forged deeds are an

24 exception to the general rule that good faith purchasers are protected by recording acts

25 from claims of which they have no notice”);

26 in federal bankruptcy decisions, In re Orosco (9th Cir. BAP 1988) 93 B.R. 203; and

27 in legal publications and authorities. Matthew Bender, California Real Estate Law &

28 Practice, §§ 115.04, 121.18.

Fazeli v Bank of West, et al, Santa Clara Superior Court no. 1-07-CV-083156
MPA in Opposition to Vargas Motion to Expunge Lis Pendens 9
E-Filed: Jan 24, 2008 1:10 PM, Superior Court of CA, County of Santa Clara, Case #1-07-CV-083156 Filing #G-6857

1 There are two significant facts in the Wutzke decision that bear directly on the facts

2 of this case. The first fact was that Wutzke concerned a deed of reconveyance, which is

3 what the Defendant herein asserts as a basis to wipe out Saeed Fazeli’s rights as trustee.

4 The Wutzke decision held that the rule that a forged document is ineffective and void ab

5 initio applies to trust deeds, a holding which was found to be uniformly held. Wutzke,

6 supra, 151 Cal.App.3d at 43-44.

7 The second significant fact in the Wutzke decision was that it included a finding

8 based on a forgery as to a notary. Wutzke, supra, 151 Cal.App.3d at 43-44. Both of the

9 subsequent documents in the “chain of title” following the Fazeli June 28, 1996 filed Deed

10 of Trust contain forged signature purporting to be that of notary Paul Letsinger.

11 This fact, that a forgery can be that of a notary, has a long history. It was the basis

12 of the decision in Hopkins v. Fresno County A. Co. (1918) 36 Cal.App. 699, 173 P. 106.

13 Though the fact situation in every case is different, and hopefully there will not be a repeat

14 of the specific scheme of Mr. Schneider, these two essential facts are the same in the

15 within case.

16 Both of the two documents which follow in the “chain of title” contain a “writing

17 which falsely purports to be the writing of another.” The two forgeries are of both Saeed

18 Fazeli and Paul Letsinger’s signatures on a February 8, 2001 "Assignment of Deed of

19 Trust" and the Letsinger signature on a Deed of Reconveyance referred to in the Miguel

20 Vargas declaration. Fazeli decl, para 7 and 8; Dresser decl, para 5.

21 2. Defendant cannot assert a position as a bona fide purchaser by reliance on

22 a void forged instrument

23 Defendant seeks to assert a right to wipe out the secured interest of the Fazeli trust

24 by virtue of a forged document. This it cannot do.

25 “When a deed is void ab initio, it "constitutes a nullity; as such it cannot provide the
basis for a superior title as against the original grantor. [Citations.]" (Wutzke v. Bill
26
Reid Painting Service, Inc. (1984) 151 Cal.App.3d 36, 43 [198 Cal.Rptr. 418].) "`A
27 void deed passes no title and cannot be made the foundation of a good title even
28 under the equitable doctrine of bona fide purchase.'" (Erickson v. Bohne (1955) 130
Fazeli v Bank of West, et al, Santa Clara Superior Court no. 1-07-CV-083156
MPA in Opposition to Vargas Motion to Expunge Lis Pendens 10
E-Filed: Jan 24, 2008 1:10 PM, Superior Court of CA, County of Santa Clara, Case #1-07-CV-083156 Filing #G-6857

1 Cal.App.2d 553, 557 [279 P.2d 619], quoting 26 C.J.S. at pp. 307-308.)
In re Marriage of Jovel (1996) 49 Cal.App.4th 575, 584-585
2
Nor can Defendant assert estoppel. Saeed Fazeli did not induce Mr. Vargas to act,
3
or as to the failure to obtain a copy of the original note, or the original deed, or to ensure
4
the lack of forgeries, or to take any of the other steps that a normal prudent investor would
5
do. As was stated by the court in In re Orosco (9th Cir. BAP 1988) 93 B.R. 203:
6
“In Wutzke v. Bill Reid Painting Service, Inc., 151 Cal.App.3d 36, 198 Cal.Rptr. 418,
7
424 (1984), which also dealt with a forged reconveyance, the court generally
8 addressed that issue. It held that the seller and the later encumbrancer "were both
9 unwilling victims of an unscrupulous peculator. There was no basis for finding an
estoppel." In the case before us there are no facts which can justify any inference
10
that Griffin could or should have reasonably anticipated that Orosco would engage
11 in diverting and transforming, by forgery, the reconveyance from one property to
12 another.”
Defendant herein has neither argued nor submitted any evidence to support an
13
unsupportable claim for estoppel. Defendant cannot assert a position as a bona fide
14
purchaser by reliance on a void forged instrument.
15
3. An unauthorized transaction is voidable as against a party that has not
16
transferred title
17
Plaintiff requests by this lawsuit, among other things, to enforce and obtain a
18
judicial finding voiding any action by any party without his authorization to attempt to
19
remove or impair the legal rights of the Fazeli Irrevocable Living Trust dated October 1979
20
to a $100,000 encumbrance on the real property commonly known as 3750 Fabian Way,
21
Palo Alto, CA 94303, APNs 127-56-004, 127-10-052.
22
Plaintiff did not authorize an Assignment, nor did he authorize a Deed of
23
Reconveyance to be issued, executed or filed for his security interest in the real property.
24
Fazeli decl, 8 para 10. This is not factually disputed by the Defendant. This is essentially
25
admitted by the Defendant’s lack of production in this motion of any of the documents that
26
it would normally have if there was a legitimate transfer of real property interests.
27
The Deed of Trust was by its terms subject to reconveyance only upon receipt of a
28
Fazeli v Bank of West, et al, Santa Clara Superior Court no. 1-07-CV-083156
MPA in Opposition to Vargas Motion to Expunge Lis Pendens 11
E-Filed: Jan 24, 2008 1:10 PM, Superior Court of CA, County of Santa Clara, Case #1-07-CV-083156 Filing #G-6857

1 “written request by Lender [Fazeli as trustee] stating that all sums secured [t]hereby have

2 been paid.” Fazeli Decl, Ex. B, pg 3, clause 20. There was no such written request, and

3 Defendant cannot possibly prove such. The deed of reconveyance upon which Defendant

4 presumably relies is thus unauthorized.

5 A similar fact pattern was analyzed in the Wutzke decision as follows

6 “Moreover, Miller's "authority" to act on behalf of Mid-Cal, the trustee, was limited
and defined by the terms of the trust deed. That deed authorized the trustee to
7
reconvey the security only upon the written request of the beneficiary. Because
8 Miller had not received such a request, the signing of any name, fictitious or
9 otherwise, was unauthorized.
Wutzke, supra, at 42.
10
The subject deed of reconveyance is thus voidable upon the election of Plaintiff
11
herein. This election would not be effective upon subsequent transfer by moving
12
Defendant of title to the subject property. See Firato v. Tuttle (1957) 48 Cal.2d 136, 308
13
P.2d 333; Schiavon v. Arnaudo Brothers (2000) 84 Cal.App.4th 374, 100 Cal.Rptr.2d 801
14
(voidable deed of trust); cf., Fallon v. Triangle Management Services, Inc., supra, 169
15
Cal.App.3d 1103 (voidable based on undue influence). The Defendant herein has not yet
16
made that transfer. Plaintiff may and in this instance has elected to void the purported
17
and both void, see above, and voidable deed of reconveyance. See generally First
18
Fidelity Thrift & Loan v. Alliance Bk. (1998) 60 Cal.App.4th 1433, 1441-1442 (citing to 3
19
Miller & Starr, Cal. Real Estate, (2d ed. 1989), Recording and Priorities, § 8:86, p. 431
20
“unrecorded equitable lien generally enforceable against grantee who is not a bona fide
21
purchaser”).
22
4. Defendant’s assertion of a waiver of rights is without factual basis
23
It is significant, though not directly dispositive, to this motion that the Defendant
24
trust from the start of its argument attempts to create a false impression of the facts in this
25
case. Defendant refers to a “greedy real estate investor.” Defendant is thus referring to
26
each of the many victims, most of them elderly, of the schemes of Michael J. Schneider
27
who lost their life savings, fell into depression, and in at least one instance died of despair,
28
Fazeli v Bank of West, et al, Santa Clara Superior Court no. 1-07-CV-083156
MPA in Opposition to Vargas Motion to Expunge Lis Pendens 12
E-Filed: Jan 24, 2008 1:10 PM, Superior Court of CA, County of Santa Clara, Case #1-07-CV-083156 Filing #G-6857

1 as all “greedy real estate investors.” See Dresser Decl, para 6;

2 Defendant refers to a “15% return in a 6% market.” The note that is the basis of the

3 secured interest herein is for a 12% interest rate. Fazeli Decl, Ex. A (Note), pg. 1. There

4 is no evidence of a “6% market” for a junior lien.

5 Defendant seeks to refer to himself as a former borrower of California Plan. The

6 “Lender” is defined and specified in the Note as Mr. Fazeli as Trustee of the Fazeli Trust

7 Agreement Dated October 1979.” Fazeli Decl, Ex. A (Note), pg. 1.

8 Defendant asserts that it “repaid its loan in 2001.” No evidence of repayment is

9 presented by Defendant, despite Defendant’s being on specific notice of this concern.

10 See 1/17/08 Ex Parte Application for Order Shortening Time, Ex. 2, pg 1 (“I am fairly sure

11 we have no record of payment by the Vargas parties”).

12 Defendant ignores the forged signature of Saeed Fazeli on a document titled

13 “Assignment.” Defendant completely ignores and makes no mention of this document in

14 any part of its motion. Defendant failed to address this irregularity in title despite

15 Defendant’s being on specific notice of this. See 1/17/08 Ex Parte Application for Order

16 Shortening Time, Ex. 2, pg 1 ("My vague recollection is that there were some irregularities

17 in the title for this property”), Dresser Decl, para 4.

18 The facts and evidence as presented by this motion demonstrate that it is more

19 likely than not that the claimant will obtain a judgment against the defendant on the real

20 property claim. C.C.P. § 405.3.

21 V. EXPUNGING THE LIS PENDENS WILL CAUSE AN INJUSTICE TO PLAINTIFF

22 A. Harm to Plaintiff is patent

23 Plaintiff is an elderly gentlemen who placed the accumulation and savings from his

24 life time of work into a trust for retirement and savings and the eventual benefit of his

25 children and grandchildren. Fazeli Decl, para 3 and 4. He loaned money to the

26 Defendant property owners who are apparently seeking to cash in on their investment in

27 real property. See Vargas Decl, para . Plaintiff was never paid the principal on the loan.

28 Fazeli Decl, para 7.

Fazeli v Bank of West, et al, Santa Clara Superior Court no. 1-07-CV-083156
MPA in Opposition to Vargas Motion to Expunge Lis Pendens 13
E-Filed: Jan 24, 2008 1:10 PM, Superior Court of CA, County of Santa Clara, Case #1-07-CV-083156 Filing #G-6857

1 Mr. Fazeli was not responsible for any decision that Mr. Vargas made. Yet he will

2 lose his rights to his security interest and the right to repayment of the principal due on the

3 loan if this motion by the Miguel & Victoria Vargas Living Trust is granted. A sale by Mr.

4 Vargas would leave Mr. Fazeli with no rights concerning the deed of trust that he obtained

5 by virtue of loaning $100,000 to the Victoria Vargas as trustee of the Miguel & Victoria

6 Living Trust.

7 Code of Civil Procedure section 405.60 provides that a grant of the subject motion

8 will result in Plaintiff having no rights against any successor owner. Section 405.60 states

9 “Upon the withdrawal of a notice of pendency of action pursuant to Section 405.50

or upon recordation of a certified copy of an order expunging a notice of pendency
10
of action pursuant to this title, neither the notice nor any information derived from it,
11 prior to the recording of a certified copy of the judgment or decree issued in the
12 action, shall constitute actual or constructive notice of any of the matters contained,
claimed, alleged, or contended therein, or of any of the matters related to the
13
action, or create a duty of inquiry in any person thereafter dealing with the affected
14 property.”
15 C.C.P. § 405.60

16 The result will be the free transferability of title without any recourse by Plaintiff. C.C.P. §

17 405.61. This would be a virtually irreparable loss.

18 B. Potential harm is to be passed to Defendant who can be covered for this

19 loss by title insurance

20 It is under just such situation that a Solomon like decision must be made. This is

21 "the question of which of the two innocent parties must bear the loss caused by the perfidy

22 of [Schneider]." Wutzke, supra, at 42. The uniform holding is that it is passed to the party

23 that relies on the forged document for its claim to title. In this instance it is Defendant

24 Vargas trust.

25 This is based in part on the fact that the Defendant is in the position of the party

26 who can obtain title insurance to cover this loss. All known authorities provide that the

27 loss is covered under a title insurance policy. Matthew Bender, California Real Estate Law

28 & Practice, § 92.63 (“If an insured sustains a loss by reason of an altered or fraudulently
Fazeli v Bank of West, et al, Santa Clara Superior Court no. 1-07-CV-083156
MPA in Opposition to Vargas Motion to Expunge Lis Pendens 14
E-Filed: Jan 24, 2008 1:10 PM, Superior Court of CA, County of Santa Clara, Case #1-07-CV-083156 Filing #G-6857

1 obtained deed, the title insurer will be liable”, citing to Mutual B.-L. Assn. v. Security T. I. &

2 G. Co. (1936) 14 Cal.App.2d 225, 230-232; California Pac. T. & T. Co. v. MacArthur

3 (1934) 1 Cal.App.2d 323, 325-327; and Montgomery v. Bank of America (1948) 85

4 Cal.App.2d 559, 563); Matthew Bender, California Insurance Law & Practice, § 39.40 (“the

5 CLTA Standard Coverage Policy affords important protection against off-record risks,

6 including the risk of loss arising from forgery”); First Fidelity Thrift & Loan v. Alliance Bk.

7 (1998) 60 Cal.App.4th 1433, 1442 (citing to Miller & Starr, Cal.Real Estate (2d ed. 1989) §

8 8:10, p. 297 [bona fide purchaser could, however, be protected by title insurance]

9 VI. CONCLUSION

10 Plaintiff has an admitted right to an encumbrance. This right is not lost by the deed

11 of reconveyance which is referred to but not attached to Defendant’s motion, or the

12 “assignment” which is ignored by Defendant’s motion. They are both voidable as

13 unauthorized and void as based on forgeries.

14 Since a trust deed obtained by means of forgery is void, it follows that any claim of

15 title flowing from such a deed is void. Defendant’s motion to expunge must be denied.

16 Dated: January 24, 2008

_______________________
17 William C. Dresser
Attorneys for Plaintiff
18 Saeed Fazeli, individually and as trustee

19 Fazeli\Pld\MPAOpExp.124

20

21

22

23

24

25

26

27

28
Fazeli v Bank of West, et al, Santa Clara Superior Court no. 1-07-CV-083156
MPA in Opposition to Vargas Motion to Expunge Lis Pendens 15