Lemon Law

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Plaintiff former wife sought review of the judgment

Plaintiff former wife sought review of the judgment of the California Court of Appeal that reversed the trial court’s clarification of its judgment in favor of plaintiff in her action to set aside a security interest in community property awarded to her in a separate divorce proceeding, pursuant to Cal. Civ. Code § 5127 (current version at Cal Fam. Code § 1102).

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Overview

Plaintiff former wife sought declaratory relief against defendant bank to quiet title and cancel its deed of trust that encumbered community property. The trial court entered a judgment for plaintiff, declaring the deed void and canceled, and entered a money judgment on defendant’s cross-complaint against former husband. In a separate divorce action, plaintiff was awarded the property and then discovered that defendant had filed an abstract of judgment encumbering the property. Plaintiff sought to have the judgment clarified so that the abstract did not create an equitable lien against the property. The appellate court reversed the clarification, and plaintiff appealed. The court affirmed, holding that, pursuant to Cal. Civ. Code § 5127 (current version at Cal. Fam. Code § 1102), defendant’s loss of the security interest in the property did not extinguish the money judgment awarded against former husband. Although the community property awarded to one spouse was no longer liable for marital debts assigned to the other, defendant retained the rights of an unsecured creditor and could resort to the same property to satisfy the underlying debt.

Outcome

The court affirmed the appellate court’s reversal of the clarification of judgment in favor of plaintiff former wife. The court held that, even though defendant bank’s security interest in community property was declared void and canceled, the subsequent award of that property to plaintiff did not extinguish defendant’s judgment lien against the property.

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