Punative damages and Wrongful Foreclosure and now Yvanova!

Both the trial court and defendants interpreted Munger narrowly, with defendants going so far as to say that “[t]he rule in Munger is an application of the benefit of the bargain rule.” It would be strange, however, to apply a contract measure of damages to a tort. We read Munger more broadly. It announced the rule that wrongful foreclosure is a tort (Munger, supra, 11 Cal.App.3d at p. 7, 89 Cal.Rptr. 323), and the measure of damages is the familiar measure of tort damages: all proximately caused damages. In Munger, the only damages at issue were the lost equity in the property, and certainly that is a recoverable item of damages (id. at p. 11, 89 Cal.Rptr. 323). It is not, however, the only recoverable item of damages. Wrongfully foreclosing on someone’s home is likely to cause other sorts of damages, such as moving expenses, lost rental income (which plaintiff claims here), and damage to credit. It may also result in emotional distress (which plaintiff also claims here). As is the case in a wrongful eviction cause of action, “ ‘The recovery includes all consequential damages occasioned by the wrongful eviction (personal injury, including infliction of emotional distress, and property damage) … and upon a proper showing …, punitive damages.’ ” (Spinks v. Equity Residential Briarwood Apartments (2009) 171 Cal.App.4th 1004, 1039, 90 Cal.Rptr.3d 453.)

     The rule applied by the trial court and urged by defendants would create a significant moral hazard in that lenders could foreclose on underwater homes with impunity, even if the debtor was current on all debt obligations and there was no legal justification for the foreclosure whatsoever. So long as there was no equity, there would be no remedy for wrongful foreclosure. And since lenders can avoid the court system entirely through nonjudicial foreclosures, there would be no court oversight whatsoever. Surely that cannot be the law. The consequences of wrongfully evicting someone from their home are too severe to be left unchecked. For the reasons expressed above, a tort action lies for wrongful foreclosure, and all proximately caused damages may be recovered. Accordingly, the summary judgment is reversed.

Banks are neither private attorneys general nor bounty hunters: language From Yvanova defining a Pretender Lenders

22. It is no mere “procedural nicety,” from a contractual point of view, to insist that only those with authority to foreclose on a borrower be permitted to do so. (Levitin, The Paper Chase: Securitization, Foreclosure, and the Uncertainty of Mortgage Title, supra, 63 Duke L.J. at p. 650.) “Such a view fundamentally misunderstands the mortgage contract. The mortgage contract is not simply an agreement that the home may be sold upon a default on the loan. Instead, it is an agreement that if the homeowner defaults on the loan, the mortgagee may sell the property pursuant to the requisite legal procedure.” (Ibid., italics added and omitted.)
The logic of defendants’ no-prejudice argument implies that anyone, even a stranger to the debt, could declare a default and order a trustee’s sale—and the borrower would be left with no recourse because, after all, he or she owed the debt to someone, though not to the foreclosing entity. This would be an “odd result” indeed. (Reinagel, supra, 735 F.3d at p. 225.) As a district court observed in rejecting the no-prejudice argument, “[b]anks are neither private attorneys general nor bounty hunters, armed with a roving commission to seek out defaulting homeowners and take away their homes in satisfaction of some other bank’s deed of trust.” (Miller v. Homecomings Financial, LLC (S.D.Tex.2012) 881 F.Supp.2d 825, 832.)

Remember the Foundation Objection to Evidence

An objection to “foundation” can mean that the examiner has asked the witness to provide information before establishing any of the following:

Relevance. The examiner has asked the witness to provide information without first establishing that the requested information is relevant to a matter in dispute. Governed by Evidence Code § 403 (jury decides whether foundation is credible).

Present Memory of Earlier Observation. The examiner has asked the witness to recount an observation or statement without first establishing that the witness has a present recollection of having observed or heard the matter in question. Governed by Evidence Code § 403 (jury decides whether foundation is credible)

Authentic Documents. The examiner has asked the witness to answer questions about a document without first establishing that the document is what it purports to be (i.e., that the document is authentic). Even then, the witness can only answer questions as to his own personal knowledge about the document (why did you write this?, what did you do upon receiving this? what was your reaction upon reading this? Did you reply to this?, etc.) Governed by Evidence Code § 403 (jury decides whether foundation is credible). Foundation can concern lack of authentication of a writing. Authenticating the writing is a matter of foundation decided by the jury.

Authentication is a necessary precondition to having a writing admitted, but it is not sufficient. A writing by definition is hearsay that can be admitted in evidence only under an allowed exception. A writing must therefore be authenticated, relevant, allowed under an exception to the hearsay rule, and not excluded on some other ground (settlement communication, attorney-client communication).

Hearsay Exception. The examiner has asked the witness to provide hearsay information before establishing that the information comes within an allowed exception to the hearsay rule. Governed by Evidence Code § 405 (judge decides whether foundation is credible).

Proper Lay or Expert Opinions. The examiner has asked the witness to provide an opinion without first establishing that the witness is qualified to give a lay opinion or an expert opinion.

Lay opinion: A lay opinion is the opinion of a lay witness who personally observed events at issue; it is admissible if his opinion about the events is a topic for common understanding, and his lay opinion will shed useful light on his testimony.

Expert opinion. An expert opinion is given by an expert who is qualified to give an opinion on a recognized expert topic that has been properly designated before trial. Its admissibility is governed by Evidence Code § 405 (judge decides whether foundation is credible).

Other Foundation Issues Decided by the Court Under Evidence Code § 405: The judge decides whether a proper foundation has been laid for the applicability of a legal privilege or immunity, the admissibility of settlement statements (must prove that statement is a settlement communication, subject to important exceptions) or any other foundation issue not covered by § 403 (relevance, perception, authenticity, or identity) or § 404 (self-incrimination).

Laying foundation is not a dreary task, like filling out a form at a bank.  You should always examine your witness in a way that will build interest and anticipation for the evidence that the foundation supports.

Approach: Lay your foundation concisely and, if possible, in a way that builds interest in what will follow.

Remedy When You Cannot Seem to Lay the Necessary Foundation.  If your opponent repeatedly objects to a question for “lack of foundation,” and if you try but fail to cure the deficiency, so that the Court keeps sustaining the objection, you can require the Court to explain what foundation is lacking, since the objection is merely shorthand for some other recognized objection.  See Parlier Fruit Co. v. Fireman’s Fund Ins. Co. (1957) 151 Cal. App.2d 6, 15.  The Court should do so unless the lack of foundation is obvious, and you can always assert that the missing foundation is not “obvious” to you!

Remember, the phrase “lack of foundation” means only that you have asked a question of the witness before establishing a fact that must be established before his answer becomes admissible evidence.  It is a fatal objection only if the foundation can never be laid.  Otherwise, it merely means that (1) you have not yet established that the witness has a present memory of having observed, heard, smelled, touched or tasted something on a past occasion, or (2)  if the question concerns the witness’s having heard something, that what he heard can be admitted as an exemption or exception to the rule against hearsay or can be presented merely to establish what the witness says he heard, not that what he heard is true, or (3) the answer is relevant to a fact in dispute, or (4) the witness is qualified to give the answer, which necessarily must be his lay or expert opinion; or (5) you have asked the witness to comment on a document before having it authenticated and admitted; or (6) your question apparently seeks privileged information, but you have not yet established that the privilege has been waived or is otherwise inapplicable; or (7) you have failed to establish some other fact that must be shown before you can properly seek the answer that you wish to present.  It is an exercise in logic:  What do I mean to show by this question?  What else must I first show before I can make this showing?