Tsasu LLC v. U.S. Bank Trust, N.A.
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The Court of Appeal held that California's Quiet Title Act, Code of Civil Procedure 760.010 et seq., insulates a third party from the effect of a subsequent invalidation of an earlier quiet title judgment only if the third party has no actual or constructive knowledge of any defects or irregularities in that judgment.
The court concluded that the trial court properly granted summary judgment against the third party in its current quiet title action to assert lien priority. The court explained that the recorded chain of title revealed that the earlier quiet title judgment had been prosecuted and obtained against a party that no longer held interest in a deed of trust and the third party whose lien priority rested on that judgment actually knew of facts warranting further inquiry into the validity of the judgment. Therefore, the third party had constructive knowledge of a defect or irregularity in the judgment. In this case, U.S. Bank is entitled to summary judgment due to the inapplicability of section 764.060 and the inapplicability of the alternative grounds offered by Tsasu.
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