Martinez v. Affordable Housing Network

In 1999, Affordable Housing Network (defendant), offered to help Marvin and JoRene Martinez (plaintiffs), refinance their home, falsely claiming that Affordable was part of a federally approved program. If the refinancing failed, Affordable would help the Martinezes sell the property and purchase a new home. The Martinezes entered into an option agreement with Affordable under which Affordable could purchase the property if it cured the mortgage deficiencies within 10 days. A quitclaim deed signed by Martinez would be placed into escrow and delivered to Affordable only upon payment of the mortgages. Affordable, however, fraudulently convinced Martinez to give them the deed directly. 26 days later, Affordable cured the deficiencies and listed the property for sale. After several months, dissatisfied with Affordable’s services, the Martinezes decided to keep the home and reimbursed Affordable the mortgage payments. Thereafter, Affordable insisted that the Martinezes allow a real estate agent to show the home. Despite their protests, the agent pushed her way inside the home, proceeding to show it to Overton, an investor of Troco, Inc. (defendant). Troco agreed to purchase Affordable’s interest in the property and did not conduct any further title searches. Affordable then recorded the Martinezes’ quitclaim deed, and the following day, quitclaimed the property to Troco. The mortgages remained unpaid. Thereafter, the Martinezes were informed of the sale and filed suit. The trial court concluded that Troco was a bona fide purchaser entitled to rely upon the quitclaim deed and dismissed the Martinezes’ claims. The court of appeals affirmed. The Martinezes appealed.