Opinion
WALLIN, J. Petitioners Prudential Home Mortgage Company, Inc., Centerbank Mortgage Company and Guild Mortgage Company are all real estate lenders, and each is a defendant in one of three potential class actions by former borrowers. The borrowers claim petitioners violated Civil Code section 2941, which regulates the process for recording a reconveyance of a deed of trust after a borrower pays off a secured loan. For these alleged violations, the borrowers seek to recover the $300 statutory forfeiture for each loan, all of which were repaid more than one year but less than three years before these actions were filed.
Petitioners challenged the pleadings below by demurrers and motions to strike, claiming the recovery of the statutory forfeiture is barred by the one-year statute of limitations. (Code Civ. Proc., § 340, subd. (1).) At a joint hearing on all three cases, the trial court disagreed. Relying on MacManus v. A. E. Realty Partners (1983) 146 Cal.App.3d 275 [194 Cal.Rptr. 567], it ruled that Civil Code section 2941 is remedial, rather than penal, and therefore the three-year statute of limitations applies. (Code Civ. Proc., § 338, subd. (a).) Petitioners seek extraordinary relief from these orders, urging us to find the one-year statute applies to the forfeiture as a matter of law.
In the cases filed against Prudential and Centerbank, the borrowers also request equitable relief under Business and Professions Code section 17200 et seq., requiring those petitioners to record a deed of reconveyance on each repaid, but as yet unreconveyed, deed of trust. The trial court denied the motions to strike the requests for equitable relief by Prudential and Center-bank; they challenge these orders, claiming the legal remedies provided in Civil Code section 2941 are adequate and- equitable relief is unnecessary.
These petitions present a statute of limitations issue which is critical to as many as 50 cases pending around the state. Trial courts have issued contradictory rulings, and rulings by the judges of the Orange County Superior Court are inconsistent. Petitioners filed their writs in this court in January 1997. We invited informal responses and subsequently denied the writs. The [1241]Supreme Court granted review in all three cases and transferred them to us with instructions to set an order to show cause hearing.
After briefing and argument, we find the one-year statute of limitations applies to the claims for the statutory forfeiture under Civil Code section 2941 and that the statutory remedies preclude additional equitable relief. We publish this opinion with the exception of part I, which deals with requests for judicial notice and related matters.
I. Motions During the Course of These Writ Proceedings*
II. Statute of Limitations
Civil Code section 2941 establishes the respective duties of the beneficiary and trustee with respect to the reconveyance of a deed of trust after the secured obligation is satisfied. Subdivision (b)(1) requires the beneficiary, upon payoff, to “execute and deliver to the trustee the original note, deed of trust, request for a full reconveyance . . . .” The trustee then executes and records the full reconveyance within 21 days of receipt of the documents from the beneficiary, delivers a copy of the reconveyance to the beneficiary and, upon request, delivers the original note and deed of trust to the trustor. (Civ. Code, § 2941, subd. (b)(1)(A)-(C).)
In case the former procedure is not followed by either the trustee or the beneficiary, the statute provides two backup methods to assure the trustor can promptly clear title to the secured property. First, upon request by the trustor, the beneficiary must substitute itself in as trustee and execute a full reconveyance. (Civ. Code, § 2941, subd. (b)(2).) Second, if neither the trustee nor the beneficiary has executed the full reconveyance within 75 calendar days after the loan payoff, “a title insurance company may prepare and record a release of the obligation” after giving notice of its intent to do so to the trustor, trustee, and beneficiary. “The release issued pursuant to this subdivision shall be entitled to recordation and, when recorded, shall be deemed to be the equivalent of a reconveyance of a deed of trust.” (Civ. Code, § 2941, subd. (b)(3)(B).)
The crucial statute here is subdivision (d) of Civil Code section 2941, which provides: “The violation of this section shall make the violator liable to the person affected by the violation for all damages which that person may [1242]sustain by reason of the violation, and shall require that the violator forfeit to that person the sum of three hundred dollars ($300).” Petitioners claim this is an action for a statutory penalty or forfeiture, which is clearly governed by Code of Civil Procedure section 340, subdivision (1).1 We agree.
The language of Civil Code section 2941 itself and the cases construing it uniformly characterize the $300 sum as a penalty or forfeiture. Subdivision (d) compels a statutory violator to “forfeit” the sum to the affected person, in addition to actual damages. The legislative history of the statute consistently refers to the sum imposed as a forfeiture or civil penalty. And in Dixon v. Grossman (1972) 22 Cal.App.3d 941 [99 Cal.Rptr. 659], the court stated, “The obvious statutory purpose [of the $300 sum] is to encourage prompt reconveyance by penalizing unwarranted delay. It imposes a statutory penalty [citation] which may properly be fixed without reference to the actual damages sustained [citation].” (id. at p. 944; accord, Trustors Security Service v. Title Recon Tracking Service (1996) 49 Cal.App.4th 592, 602-603 [56 Cal.Rptr.2d 793]; Pintor v. Ong (1989) 211 Cal.App.3d 837, 844 [259 Cal.Rptr. 577]; Drewry v. Welch (1965) 236 Cal.App.2d 159, 174 [46 Cal.Rptr. 65].)
Case law has consistently applied the one-year limitations period to statutes that provide for recovery of actual damages and a mandatory additional penalty. The seminal case is County of Los Angeles v. Ballerino (1893) 99 Cal. 593, in which the Supreme Court stated, “The statutory penalty there referred to [in Code of Civil Procedure section, 340, subdivision (1)] is one which an individual is allowed to recover against a wrongdoer, as a satisfaction for the wrong or injury suffered, and without reference to the actual damage sustained, or one which is given to the individual and the state as a punishment for some act which is in the nature of a public wrong. The action to recover such a penalty is a penal action, founded upon a statute, and is the action which, under section 340 of the Code of Civil Procedure, must be brought within one year.” (Id. at p. 596; accord, County of San Diego v. Milotz (1956) 46 Cal.2d 761 [300 P.2d 1]; Hansen v. Vallejo Electric Light etc. Co. (1920) 182 Cal. 492 [188 P. 999].) Although there is no recent Supreme Court case reiterating the rule, the Courts of Appeal have consistently done so. “[T]he settled rule in California is that statutes which provide for recovery of damages additional to actual losses incurred, such as double or treble damages, are considered penal in nature [citations], and thus governed by the one-year period of limitations stated in section 340, subdivision (1).” (G.H.I.I. v. MTS, Inc. (1983) 147 Cal.App.3d 256, 277 [195 [1243]Cal.Rptr. 211, 41 A.L.R.4th 653]; accord, Sylve v. Riley (1993) 15 Cal.App.4th 23, 26 [18 Cal.Rptr.2d 608]; Menefee v. Ostawari (1991) 228 Cal.App.3d 239, 243-245 [278 Cal.Rptr. 805]; Community Cause v. Boat-wright (1981) 124 Cal.App.3d 888, 897 [177 Cal.Rptr. 657]; and see Ashland Oil Co. of Cal. v. Union Oil Co. of Cal. (9th Cir. 1977) 567 F.2d 984, 991.)
Petitioners contend that MacManus v. A. E. Realty Partners, supra, 146 Cal.App.3d 275, on which the trial court relied, is the “sole exception to the otherwise unanimous line of authority interpreting Code of Civil Procedure section 340(1)” and was wrongly decided. Because the case was decided by this court, they urge us to reconsider and reject its “divergent limitations test.”
In MacManus, plaintiffs alleged violations of Civil Code section 2995, which prohibits a real estate developer from requiring the provision of escrow services by an entity in which the developer has a financial interest. Section 2995 states a violator “shall be liable to the purchaser ... in the amount of three times the amount charged for the escrow services, but in no event less than two hundred fifty dollars ($250), plus reasonable attorney’s fees and costs.” In determining the statute was governed by the three-year statute of limitations, the court stated, “Our decision [regarding the applicable limitations period] must depend upon whether the statute is characterized as ‘penal’ or ‘remedial.’ [Citation.] The distinction is rarely clear cut, for the same provision may be penal to the offender and remedial to the victim.” (146 Cal.App.3d at p. 283.)
The court proceeded to look at the legislative history of the statute and found it was enacted as a remedial statute to protect buyers. It further observed recovery under the statute was “remedial in nature” because the liability of the developer was not dependent on its culpability. (146 Cal.App.3d at p. 283.) Finally, it characterized the statutory damages as a “liquidated damage measure” which was “consistent with a remedial purpose.” (Id. at p. 284.)
The MacManus court embarked on the wrong analytical path. Rather than adhering to the long-standing application of Code of Civil Procedure section 340, subdivision (1) to statutes awarding an arbitrary sum in addition to, and unrelated to, actual damages, the court borrowed the remedial versus penal test from Huntington v. Attrill (1892) 146 U.S. 657 [13 S.Ct. 224, 36 L.Ed. 1123]. In Huntington, the Supreme Court considered whether a New York statute imposing liability to corporate creditors on a corporate director was “penal,” thus avoiding its enforcement in Maryland under the full faith and [1244]credit clause of the United States Constitution. The court explained: “[T]he words ‘penal’ and ‘penalty’ have been used in various senses. Strictly and primarily, they denote punishment, whether corporal or pecuniary, imposed and enforced by the State, for a crime or offense against its laws. [Citation.] But they are also commonly used as including any extraordinary liability to which the law subjects a wrongdoer in favor of the person wronged, not limited to the damages suffered.” (Id. at pp. 666-667 [13 S.Ct. at p. 227].) The court concluded the statute was remedial because it did “not . . . administer a punishment imposed upon an offender against the state, but simply . . . enforce[d] a private right secured under its laws to an individual.” (Id. at pp. 676-677 [13 S.Ct. at p. 231].) It carefully distinguished, however, the use of the word “penal” for purposes of barring enforcement in a foreign state or country from its use in other contexts, citing, by way of example, a New York case that had previously held the same statute to be penal for purposes of a statute of limitations substantially similar to the one before us. “Within the meaning of a statute of limitations applicable to private actions only, the action against [a corporate] officer is not ‘upon a liability created by statute, other than a penalty or forfeiture,’ which would be barred in six years, but is barred in three years as ‘an action upon a statute for a penalty or forfeiture where action is given to the party aggrieved,’ because the provisions in question . . . ‘impose a penalty, or a liability in that nature.’ [Citation.]” (Id. at pp. 677-678 [13 S.Ct. at pp. 227-228].)
The two other cases cited by the MacManus court are likewise inapposite. In Levy v. Superior Court (1895) 105 Cal. 600 [38 P. 965], the question was whether a person who allegedly had embezzled property of a decedent could be compelled to appear and testify in the probate court, or whether he could assert the privilege against self-incrimination. In this context, the court concluded the statute was remedial rather than penal, because it was not designed to punish for a public wrong, but to allow the estate’s administrator to recover estate property. And in Riggs v. Government Emp. Financial Corp. (9th Cir. 1980) 623 F.2d 68, the parties characterized the issue of whether a truth-in-lending claim survived the death of its original owner and was thus transferable to a bankruptcy trustee as dependent on whether the claim provision was penal or remedial. The court stated, “Our efforts to resolve this novel question have convinced us that [15 United States Code] section 1640 is neither wholly remedial nor wholly penal. We have reached the conclusion, as have other courts before us, that ‘[t]he use of labels such as “penal” or “remedial” is [only] a shorthand way of expressing relevant considerations,’ [citation], and that an inquiry as to whether a statute ‘is penal or remedial seems bound to result in the conclusion that ... it is both.’ [Citation.]” (Id. at p. 70.)
[1245]The borrowers here cite Stone v. Travelers Corp. (9th Cir. 1995) 58 F.3d 434 in support of the trial court’s ruling. In Stone, the federal court held a provision under the Employee Retirement Income Security Act (ERISA), providing that an employee benefits plan participant could recover “up to $100 a day” from the plan administrator if it fails or refuses to comply with the participant’s request for information, was not a penalty or forfeiture within the meaning of Code of Civil Procedure section 340, subdivision (1), but was instead “a remedy sought by an individual as compensation to address a private wrong. It follows that the three-year limitation of Cal. Code Civ. Proc. Code § 338(a) applies.” (58 F.3d at p. 439.) The federal court relied on its earlier decision in Rivera v. Anaya (9th Cir. 1984) 726 F.2d 564, which dealt with a provision of the Federal Farm Labor Contractor Registration Act providing for recovery of “actual damages or statutory damages up to $500 per plaintiff for violations of the registration, disclosure, record-keeping and posting requirements of the Act.” The Rivera court held that the test under California law for whether a recovery was a penalty for limitations purposes was “whether the wrong sought to be redressed is a wrong to the public, or a wrong to the individual.” (Rivera v. Anaya, supra, 726 F.2d at p. 567.) Inexplicably, it took this test directly from Huntington v. Attrill, supra, 146 U.S. 657, 668 [13 S.Ct. 224, 228], which, as we discussed above, dealt with the full faith and credit clause of the United States Constitution.
Equally puzzling, the Stone court expressly pointed out that the statutory damages in both the ERISA section and the statute in Rivera were not “calculated in any measurable way according to the loss actually suffered by the plaintiff.” (Stone v. Travelers Corp., supra, 58 F.3d at p. 439.) The court dismissed this as insignificant: “It is true that there is one California case that held that a payment of a specified sum of liquidated damages was a penalty because ‘the specified recovery is authorized without any reference to the question of actual damage.’ Hansen v. Vallejo Electric Light & Power, 182 Cal. 492, 496, 188 P. 999 (1920). We discussed the Hansen case in Rivera, however, and held that ‘[t]o the extent that Hansen may not be consistent with the Huntington [private wrong] rule, it appears to have been superseded by later California case law.’ [quoting Rivera].” (Stone v. Travelers Corp., supra, 58 F.3d at p. 439.) But Hansen has not been superseded by later law. As we noted above, Hansen is but one in a long line of California cases holding the one-year statute of limitations applies to recovery of statutory damages calculated without reference to actual harm.
We conclude the analysis of the MacManus court was analytically flawed and does not apply to the statute of limitations issue before us.
[1246]III. Tolling of Statute of Limitations
Petitioners refer to the borrowers’ argument below that if the one-year statute of limitations applies, the accrual of their causes of action should be tolled under the doctrine of delayed discovery. The trial court did not rule on this question, having found the cases governed by the three-year statute of limitations. Petitioners claim the absence of a full reconveyance is a matter of public record and ask us to rule that the borrowers were thus on notice as a matter of law. We decline to do so.
The general rule is that a cause of action accrues when the wrongful act is done and not at the time of plaintiff’s discovery. But under the delayed discovery rule, a cause of action will not accrue until the plaintiff discovers or should have discovered, through the exercise of reasonable diligence, all the facts essential to the cause of action. (Leaf v. City of San Mateo (1980) 104 Cal.App.3d 398, 407 [163 Cal.Rptr. 711].)
The application of the delayed discovery rule rests on considerations of policy. “Two common themes run through the cases applying the discovery rule of accrual. First, the rule is applied to types of actions in which it will generally be difficult for plaintiffs to immediately detect or comprehend the breach or the resulting injuries. In some instances, the cause or injuries are actually hidden .... Even when the breach and damage are not physically hidden, they may be beyond what the plaintiff could reasonably be expected to comprehend. An action for professional malpractice, for example, typically involves the professional’s failure to apply his or her specialized skills and knowledge. . . . The same rationale has been adopted where defendant held itself out or was required by law to be specially qualified in a trade; [Citations.] fl[] Second, courts have relied on the nature of the relationship between defendant and plaintiff to explain application of the delayed accrual rule. The rule is generally applicable to confidential or fiduciary relationships.” (Evans v. Eckelman (1990) 216 Cal.App.3d 1609, 1614-1615 [265 Cal.Rptr. 605]; see Parsons v. Tickner (1995) 31 Cal.App.4th 1513, 1526 [37 Cal.Rptr.2d 810].)
In April Enterprises, Inc. v. KTTV (1983) 147 Cal.App.3d 805 [195 Cal.Rptr. 421], the court applied the delayed discovery rule to a breach of contract action where the breach was committed “in secret” and the harm was not reasonably discoverable by plaintiffs at the time. The court reviewed the application of the rule in California and other states and concluded, “A common thread seems to run through all the types of actions where courts have applied the discovery rule. The injury or the act causing the injury, or [1247]both, have been difficult for the plaintiff to detect. In most instances, in fact, the defendant has been in a far superior position to comprehend the act and the injury. And in many, the defendant had reason to believe the plaintiff remained ignorant he had been wronged. Thus, there is an underlying notion that plaintiffs should not suffer where circumstances prevent them from knowing they have been harmed. And often this is accompanied by the corollary notion that defendants should not be allowed to knowingly profit from their injuree’s ignorance.” (Id. at p. 831.)
Petitioners correctly point out the doctrine of delayed discovery requires a plaintiff to plead facts showing an excuse for late discovery of the facts underlying his cause of action. He must show “that [he] was not at fault for failing to discover it or had no actual or presumptive knowledge of facts sufficient to put him on inquiry. [Citations.]” (Community Cause v. Boatwright, supra, 124 Cal.App.3d at p. 900.) Petitioners claim the borrowers cannot plead an excuse here because their failure to reconvey was a matter of public record and thus imparted presumptive knowledge of the breach of duty to the borrowers. But we have found no case suggesting the existence of public records precludes the application of the delayed discovery doctrine as a matter of law.
In Community Cause v. Boatwright, supra, 124 Cal.App.3d 888, the plaintiff was a nonprofit citizens’ group that had filed an action against an assemblyman for allegedly failing to disclose his interest in a partnership as required by political disclosure statutes. The court held that the delayed discovery rule applied to the statute of limitations under Code of Civil Procedure section 340, subdivision (1), but the allegations of the complaint were insufficient to toll it because the disclosure documents were a matter of public record more than one year before the filing of the complaint. “When a plaintiff has notice or information of circumstances to put a reasonable person on inquiry, or has the opportunity to obtain knowledge from sources open to his investigation (such as public records or corporation books), the statute applicable to the cause of action commences to run. [Citation.] Here, although plaintiff alleges that it discovered the nondisclosure only six months before its complaint was filed in May 1978, it also alleges that the documents which led to the discovery became available as public records in Tate 1976 and continuing through 1977.’ It alleges no facts to explain the gap between the date these documents first became available and the alleged date of discovery.” (124 Cal.App.3d at p. 902, italics omitted.)
The facts here are easily distinguishable from Community Cause, where the basis for the plaintiffs’ complaint was failure to disclose in accordance [1248]with a disclosure statute. Here, the borrowers alleged they “reasonably relied upon defendants as professionals, and as agents and fiduciaries, to perform the services that they were professionally, contractually and statutorily required to perform.” They “were not on notice of any facts or information that would have required them to inquire into whether defendants, have fulfilled their duty to record timely reconveyances . . . .” Letters from title insurance companies informing plaintiffs of their intent to record releases of obligation “instructed borrowers not to investigate into whether their titles had been cleared, by advising the borrower that: ‘You Need Not Take Any Action . . . , unless you have not paid this loan off.’ ” The borrowers did not actually discover the failure to reconvey until they were notified by letter shortly before the filing of the complaint.
While public records certainly impart presumptive notice under some circumstances, we decline to hold their mere existence imparts knowledge as a matter of law. The public policy that would support such a holding is not present here. On the contrary, the Legislature has firmly established the public policy that trustees must execute and record full reconveyances upon payment of loans, and has underscored it by providing for the $300 penalty in Civil Code section 2941, subdivision (d). Furthermore, the Legislature has provided that “[e]very person who willfully violates Section 2941 is guilty of a misdemeanor punishable by fine of not less than fifty dollars ($50) nor more than four hundred dollars ($400), or by imprisonment in the county jail for not to exceed six months, or by both such fine and imprisonment. [^] For purposes of this section, ‘willfully’ means simply a purpose or willingness to commit the act, or make the omission referred to. It does not require an intent to violate the law, to injure another, or to acquire any advantage.” (Civ. Code, § 2941.5.)
The borrowers here were entitled to expect petitioners would perform an act they were required to perform by statute and the omission of which is a crime. (Civ. Code, § 3548; Estate of Neilson (1962) 57 Cal.2d 733 [22 Cal.Rptr. 1, 371 P.2d 745] [It is presumed that a person obeys the law.].) Under these circumstances, they had no reason to check the public records to see if reconveyances had been made. “ ‘ “ ‘[W]here no duty is imposed by law upon a person to make inquiry, and where under the circumstances a prudent man would not be put upon inquiry, the mere fact that means of knowledge are open to a plaintiff, and he has not availed himself of them, does not debar him from relief when thereafter he shall make actual discovery.’ [Citations.]” ’ ” (Watts v. Crocker-Citizens National Bank (1982) 132 Cal.App.3d 516, 523 [183 Cal.Rptr. 304].)
We conclude the doctrine of delayed discovery applies to the accrual of the cause of action under Civil Code section 2941. The trial court must [1249]consider the sufficiency of the pleading of delayed discovery in light of our ruling that the one-year statute of limitations applies and, if deemed necessary, allow the borrowers an opportunity to amend to allege additional facts.
IV. Equitable Relief
Petitioners Prudential Home Mortgage Company, Inc., and Center-bank Mortgage Company claim the trial court erred in failing to strike the borrowers’ request for equitable relief under Business and Professions Code section 17200 et seq. Petitioners concede these sections allow courts to enjoin wrongful business practices in whatever context they occur (People v. McKale (1979) 25 Cal.3d 626 [159 Cal.Rptr. 811, 602 P.2d 731]), but argue the availability of the statutory relief is subject to fundamental equitable principles, including inadequacy of the legal remedy. Petitioners contend the legal remedies under Civil Code section 2941 are adequate because the relief sought, requiring petitioners to record full reconveyances and thus clear the borrowers’ title, can be achieved by having a title insurance company record a release of obligation. (Civ. Code, § 2941, subd. (b)(3).)
The trial court relied on subdivision (b)(5) of Civil Code section 2941, which states: “Paragraphs (2) [requiring the lender to substitute itself as trustee to execute a full reconveyance] and (3) [allowing a title insurance company to record a release of obligation] do not excuse the beneficiary or the trustee from compliance with paragraph (1) [requiring the lender to reconvey the deed of trust upon satisfaction]. Paragraph (3) does not excuse the beneficiary from compliance with paragraph (2).”
The meaning of this subdivision was explained in Trustors Security Service v. Title Recon Tracking Service, supra, 49 Cal.App.4th 592: “The language the Legislature used in this subdivision reinforces the view the [1988] amendment [to the statute allowing title insurers to clear title] was intended to create a hierarchical system for issuing reconveyances which permits title insurers to use the substitute method of releases of obligation for clearing title only as a last resort. . . . HD ... HD [T]he language of [Civil Code] section 2941, subdivision (b)(5) makes clear beneficiaries and trustees remain liable for failing to perform their statutory obligations even though a title insurer ultimately cleared title by releasing the obligation. . . . This provision, which continues to hold lenders/beneficiaries and trustees liable for nonperformance regardless of the circumstances which prevented performance, indicates the Legislature intended these parties to be primarily responsible for issuing reconveyances. Presumably trustees, and especially lenders/beneficiaries, expose themselves to the risk of at least [1250]civil penalties and damages in the event a trustor suffers damages from, for example, lost opportunities during the 75-day period a title insurer holds the necessary documentation for reconveying before recording a release of obligation.” (Id. at pp. 602-603.)
Trustors Security Service suggests that lenders remain liable for damages for noncompliance even though one of the backup methods of clearing title is used. Because the Legislature has prescribed these backup methods when a lender fails to execute a request for reconveyance under subdivision (b)(1) of Civil Code section 2941, we must assume the statutory remedies are adequate, thus precluding equitable relief under the Business and Professions Code.
The borrowers argue a release of obligation recorded by a title insurance company is not considered by knowledgeable persons within the industry as sufficient to clear title. They claim complete relief can only be had if petitioners are compelled to execute and record a full reconveyance.
Again, we resort to the language of the statute. Civil Code section 2941, subdivision (b)(3)(B) specifically states: “The release issued pursuant to this subdivision . . . , when recorded, shall be deemed to be the equivalent of a reconveyance of a deed of trust.” This is a clear public policy determination by the Legislature that an expeditious means of clearing title will facilitate the orderly progression of commerce, i.e., the refinancing or sale of homes. We are not at liberty to disturb this determination.
Disposition
Let a writ issue directing the superior court to vacate that portion of its December 13, 1996, order holding that Civil Code section 2941 is remedial and that the three-year statute of limitations applies. In No. G021015 and No. G021016, the superior court is also directed to strike the entire last sentence of paragraph 73 of the second amended complaint which seeks an order directing petitioners to execute and record reconveyances, and paragraph 5 of the prayer.
Sills, P. L, concurred.
See footnote, ante, page 1236.
Code of Civil Procedure section 340, subdivision (1) provides that “[a]n action upon a statute for a penalty or forfeiture, when the action is given to an individual, or to an individual and the state, . . .” shall be brought within one year.