California Appellate Court Holds Limitations Period for Quiet Title Action Did Not Begin When Homeowners Received Notice of Trustee’s Sale

The California Court of Appeals recently found that a quiet title action brought by homeowners challenging a deed of trust five years after receiving a notice of trustee’s sale was not untimely because their possession was not disturbed, as they immediately submitted the issue to the title insurer.  See Huang v. Wells Fargo Bank, N.A., 2020 WL 2059951 (Cal. Ct. App. Apr. 29, 2020).  Plaintiffs purchased the property at issue in 2009.  Later that year, they received a notice of trustee’s sale from the holder of a deed of trust from the prior owner.  Plaintiffs sent the notice to their title company, who told them it would investigate.  The sale was adjourned, and plaintiffs assumed the issue was resolved.  Five years later, plaintiffs received another notice of trustee’s sale.  At this point, they brought a quiet title action against the lender.  The lender filed a motion for summary judgment, and the trial court granted the motion dismissing the complaint, finding that plaintiffs’ action was time-barred under California’s three-year statute of limitations.

On appeal, the Court reversed.  The Court held that “more than a threat to one’s title is required to commence the running of the limitations period against an owner in possession,” and that the period should not run until possession is “disturbed.”  Here, the Court found that the 2009 notice of trustee’s sale did not disturb plaintiffs’ possession because they immediately informed their title insurer and took action to resolve the issue.  “The matter was in the hands of their title insurer, and the Huangs should not be expected to independently sue to protect their title. . . . any challenge to their dominion was eliminated once the Huangs, pursuant to the advisement on the notice, took action to prevent the sale and the sale was indefinitely postponed.”  Thus, the limitations period did not begin to run in 2009 and the action was timely.  Finally, the Court recognized that the doctrine of laches may apply here, but that this doctrine was not at issue in this motion.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, Michael Crowley at mcrowley@riker.com, or Anthony Lombardo at alombardo@riker.com.