Dupree v. CIT Bank - Case Brief

Case Number: A163903M
Court: California Court of Appeal, First Appellate District, Division Four
Date Filed: 2025‑09‑01

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Holding

The court held that the trial court erred in concluding it lacked authority to permit a curative amendment substituting the successor trustee for the trust; under Code of Civil Procedure § 473(a)(1) the court possessed discretion to allow the amendment, and its denial constituted an abuse of discretion. Accordingly, the appellate court affirmed the judgment but clarified that the trial court’s reliance on the “void‑ab‑initio” doctrine was misplaced.

Narrative

Lead
In a decision that revives the liberal amendment policy long championed by California courts, the First District Court of Appeal rejected a trial‑court reading of the 1963 Oliver decision that had barred a successor trustee from curing a pleading defect. The ruling underscores that a misnamed trust does not render an entire action a nullity and that courts retain the power to correct such defects even after jurisdictional challenges arise.

Procedural History
The dispute began in the Superior Court of Del Norte County (Case No. CVUJ‑2017‑1050) when the Jo Redland Trust—administered by successor trustee Eric Dupree—filed a complaint in 2017 alleging that a reverse‑mortgage line of credit was secured only by one of two parcels of real‑property. The complaint mistakenly named the trust itself as plaintiff and listed as defendants the original lender, Financial Freedom Senior Funding (FFSF), and its successor, MTC Financial. After a series of assignments, CIT Bank, N.A. became the ultimate holder of the loan, and Mortgage Assets Management LLC (MAM LLC) intervened in 2020, asserting that the trust, as a non‑entity, lacked capacity to sue and that the action was therefore void ab initio.

The trial court, persuaded by MAM’s reliance on Oliver v. Swiss Club Tell, granted MAM’s motion to expunge the lis pendens and later dismissed the action, holding that it could not entertain a curative amendment because the proceeding was a nullity. Dupree appealed, arguing that the trial court misapplied Oliver and that, under CCP § 473, it had discretion to allow an amendment substituting Dupree as plaintiff. The appellate panel affirmed the judgment but remanded for clarification of the title; the present opinion modifies the title and addresses the substantive error.

Facts
Jo Redland, an 83‑year‑old homeowner, obtained a reverse‑mortgage line of credit in 2006 from FFSF, secured by two parcels (Parcel One, .58 acre, and Parcel Two, 9.4 acres). The loan was held in the Jo Redland Trust, a statutory trust created under the Probate Code to manage Redland’s assets. Redland died in 2015; her nephew, Eric Dupree, became successor trustee. After a chain of bank failures and assignments, CIT Bank succeeded to the loan and deed of trust; MAM LLC succeeded to CIT’s interest and acted as loan servicer.

In February 2017 the Trust, through Dupree, sued, claiming the loan was secured only by Parcel Two and seeking declaratory relief and quiet‑title relief. The complaint erroneously named the Trust (rather than the trustee) as plaintiff and listed FFSF and MTC Financial—both no longer parties to the loan—as defendants. An amended complaint in August 2018 added CIT Bank and asserted that only Parcel One was secured, while also seeking reformation of the deed of trust. CIT Bank filed a cross‑complaint, and MAM LLC intervened in September 2020, moving to expunge the lis pendens and arguing that the Trust could not sue because it lacked legal existence.

Issues

Whether the trial court possessed authority to permit a curative amendment substituting the successor trustee for the trust despite the alleged “void‑ab‑initio” defect.
Whether, assuming an amendment were permitted, Dupree’s claims were barred by the three‑year statute of limitations for reformation actions (CCP § 338(d)).

Holding and Reasoning

1. Power to Amend
The appellate court emphasized that a pleading defect concerning the identity of the plaintiff is not a jurisdictional defect that deprives the trial court of authority. The court distinguished Oliver, noting that the 1963 decision addressed a non‑existent defendant and expressly declined to decide whether a curative amendment could be allowed. The opinion in Oliver therefore does not create a categorical bar to amendment when a plaintiff is misnamed.

California law treats a trust as a fiduciary relationship rather than a separate juristic person; however, the trust can sue only through its trustee. The trial court’s conclusion that the action was void because the trust “does not exist” ignored the well‑settled principle that a defect in party capacity is “excess of jurisdiction” and therefore “voidable,” not “void.” As the court explained, “the trial court has inherent power to determine its own jurisdiction and, concomitantly, to permit a curative amendment that cures the capacity defect.” This power is codified in CCP §§ 472 (right to amend before answer) and 473(a)(1) (court may, in the interest of justice, allow amendment to correct a mistake or add a party).

The appellate panel applied the “abuse of discretion” standard articulated in Schifando v. City of Los Angeles and Howard v. County of San Diego. Dupree demonstrated a “reasonable possibility” of curing the defect by substituting himself as plaintiff, and no substantive impediment existed. Accordingly, the trial court’s refusal to exercise its discretion was an abuse.

2. Statute of Limitations
MAM argued that the three‑year limitations period for reformation began at the 2006 execution of the deed of trust. The appellate court rejected this mechanistic view, citing Western Title Guar. Co. v. Sacramento & San Joaquin Drainage Dist. and Engebrecht v. Shelton, which hold that constructive knowledge of an instrument’s terms does not automatically trigger the limitations clock for a reformation claim based on mistake or fraud. The court noted that the alleged mistake—whether the loan was intended to encumber one or both parcels—was not discovered until after the trust’s administration changed hands, and that the “constructive knowledge” analysis must consider whether the mistake was excusable. Because the record showed no clear evidence that the trustee or the trust’s predecessor had actual knowledge of the alleged error, the limitations period had not definitively run, rendering the futility argument insufficient.

Disposition
The appellate court affirmed the trial court’s judgment denying the amendment but clarified that the denial was based on an erroneous legal premise. The opinion was modified only to correct the case caption; the substantive judgment stands, but the court’s reasoning on jurisdiction and amendment authority is now limited to the holding that the trial court lacked authority to deem the action a nullity and therefore could have permitted the amendment.

Impact and Unresolved Questions

The decision reasserts the primacy of California’s liberal amendment policy, even when a plaintiff is a non‑entity such as a trust. Practitioners should note that:

Capacity defects are not jurisdictional bar‑rooms. Courts may, and should, entertain amendments that cure a plaintiff’s lack of capacity, provided the amendment does not prejudice the opposing party beyond the limits of CCP § 473.
The “void‑ab‑initio” doctrine is narrowly confined to cases where a defendant is a non‑existent legal person. Extending it to plaintiff‑capacity issues, as MAM attempted, is contrary to modern pleading practice.
Statutes of limitation for reformation remain fact‑intensive. Parties must articulate why the alleged mistake was not discoverable earlier; blanket reliance on constructive knowledge will not suffice.

Unresolved issues include how courts will treat similar capacity defects when the misnamed plaintiff is a decedent’s estate rather than a trust, and whether the “indispensable party” analysis under CCP §§ 382‑384 will ever be elevated to a jurisdictional bar in the context of trusts. Moreover, the opinion leaves open the question of whether a court may, after a denial of amendment, entertain a post‑judgment motion to substitute a proper party, a scenario that may arise in complex probate‑related foreclosures.

Referenced Statutes and Doctrines

Code of Civil Procedure §§ 472, 473(a)(1) – amendment of pleadings; court’s discretion to allow amendment “in furtherance of justice.”
Code of Civil Procedure § 338(d) – three‑year limitations period for reformation of instruments.
Code of Civil Procedure §§ 382‑384 – indispensable parties and jurisdiction.
Code of Civil Procedure §§ 405.31‑405.32 – expungement of lis pendens.
Probate Code §§ 680.280 – definition of “person” (trusts are not persons).
Civil Code §§ 3399, 760.010 et seq. – reformation, declaratory relief, quiet‑title relief.

Key Cases

Oliver v. Swiss Club Tell, 222 Cal.App.2d 528 (1963) – “void‑ab‑initio” doctrine for non‑existent defendants; no holding on plaintiff‑capacity amendment.
Abelleira v. District Court of Appeal, 17 Cal.2d 280 (1941) – distinction between “fundamental” jurisdiction (void) and “excess of jurisdiction” (voidable).
Color‑Vue, Inc. v. Abrams, 44 Cal.App.4th 1599 (1996) – capacity vs. standing; capacity defects are waivable.
Presta v. Tepper, 179 Cal.App.4th 909 (2009) – trusts are not juristic persons.
Kraus v. Willow Park Public Golf Course, 73 Cal.App.3d 354 (1977) – failure to join indispensable party is not a jurisdictional defect.
Schifando v. City of Los Angeles, 31 Cal.4th 1074 (2003) – standard for abuse of discretion in denying amendment.
Howard v. County of San Diego, 184 Cal.App.4th 1422 (2010) – amendment denied only when futility is clear.
Warburton/Buttner v. Superior Court, 103 Cal.App.4th 1170 (2002) – courts may determine jurisdiction before trial.
Friedel v. Edwards, 327 So. 3d 1242 (Fla. Dist. Ct. App. 2021) – analogous rejection of nullity doctrine for deceased plaintiffs.
Marvin v. Marvin, 18 Cal.3d 660 (1976) – deference to trial court’s amendment discretion.
Western Title Guar. Co. v. Sacramento & San Joaquin Drainage Dist., 235 Cal.App.2d 815 (1965) – constructive knowledge does not automatically start limitations period for reformation.

The Dupree opinion thus re‑anchors California’s amendment jurisprudence in a modern, pragmatic framework, signaling to probate and real‑estate litigators that procedural missteps concerning party identity are correctable, and that the “nullity” doctrine should be applied with restraint.