Harbour Vista v. HSBC Mortgage Services Inc.

INTRODUCTION

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.

*1500 We therefore reverse. After examining the relevant statutes, we conclude the court did not have the authority to enter a default judgment in this situation. In addition, we conclude the statute obligated the court to hold an evidentiary hearing in open court before it adjudicated title, a hearing in which both HSBC and Harbour Vista could participate. We therefore remand the case to the trial court to conduct this hearing.

FACTS

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…

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. 1 Accordingly, I agree with my colleagues that we must reverse the default judgment and remand the matter to the trial court for further proceedings.

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…