Tag: 2923.5 2923.6 2924 2932.5 Audit bankruptcy california California cram down Chapter 13 civil code 2923.5 civil code 2924 Countrywide Cram down Cramdown criminal acts eviction FCRA FDCPA Federal Jurisdi

Wells Fargo says we don’t dual track you just never really applied for a modification 7944 pages later it was not “complete”

Upon doing the deposition of Joeffery Long Wells Fargo I was amazed that they could be so blatant as against the California Homeowners Bill of Rights but then again it is Wells Fargo

Joffrey Long rough draft

Joffrey Long exhibits

Pacific Western Bank $227,000 in attorney fees for a 2 hour bench trial eviction wow !!!!

Brillouet Trial Brief 7-8-15

Timothy L. McCandless, Esq. SBN 145577
Law Offices of Timothy L. McCandless
26875 Calle Hermosa Suite A,
Capistrano Beach, CA 92624
Telephone: (925) 957-9797

Attorneys for Defendants
Pierrick Briolette and Yong C. Briolette

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF VENTURA
COASTLINE REAL ESTATE HOLDINGS, INC.

Plaintiff,

vs.

PIERRICK BRILLOUET, an individual;
YONG BRILLOUET, an individual; and DOE 1 through DOE 10, INCLUSIVE;
Defendants.
)
)
) Case No. 56-2014-00461981-CU-UD-VTA

DEFENDANTS’ OPPOSITION TO
PLAINTIFF’S MOTION FOR
ATTORNEY’S FEES AND COSTS, MEMORANDUM OF POINTS AND
AUTHORITIES

DATE: January 6, 2016
TIME: 8:30 a.m.
DEPT.: 41

BANKmagesDefendants Pierrick Brillouet and Yong C. Brillouet respectfully submit their Opposition to Plaintiff’s Motion for Attorney’s Fees and Costs as follows:
MEMORANDUM OF POINTS AND AUTHORITIES
I.
INTRODUCTION AND HISTORICAL PERSPECTIVE
Dates relevant to this matter are as follows:
On December 31, 2014, Plaintiff Coastline Real Estate Holdings, LLC filed the instant unlawful detainer action.
A two hour bench trial was conducted on September 8, 2015, and the court awarded possession to the Plaintiff.
Judgment was entered on October 7, 2015. The time to file an appeal was November 6, 2015, because the matter was filed as a limited action.
Additionally, the deadline to file the present Motion For Attorney’s was November 6, 2015, pursuant to California Rules of Court Rule 3.1702(b)(1). However the Motion was not filed until December 4, 2015. As such, the Motion was filed almost one month after the deadline and for that reason alone must be denied.
Plaintiff now seeks the award of $227,084.50 in attorney’s fees. The Declaration of Attorney Richman at Paragraph 19 specifically alleges that he expended 769.85 hours “in this matter.” However, when you review the charges, the hours were actually incurred for by other parties (Western Commercial Bank, Pacific Western Bank), in entirely different actions. The assertion of 769.85 hours by Plaintiff’s counsel related to this action is an intentional misrepresentation pursuant to California Rules of Professional Conduct 5-200(b).
Additionally, the identical charges were already disallowed in a prior motion in a different action, and therefore are barred by collateral estoppel.
Even worse, Defendant redacted in its Motion what attorney services were performed and the amount of time which was expended in completing those tasks. As a result, even if Plaintiff was entitled to recovery attorney’s fees for this case, based on the information served on Defendant, it is impossible to determine: (1) the nature of the service provided, (2) whether that service was necessary, (3) the amount of time which was expended to complete the service, and (4) is the amount of time and charge a reasonable fees for the “alleged” services. Given the foregoing, the Motion must be denied.
II. THE MOTION IS UNTIMELY FILED.
The unlawful detainer action was filed as a limited action, the Plaintiff paid the filing fee for a limited action, and the defendants likewise paid the filing fees for a limited action. The action was tried as a limited action.
Judgment was entered on October 7, 2015.
The deadline to file the present Motion For Attorney’s was thirty (30) days later, or November 6, 2015, pursuant to California Rules of Court Rule 3.1702(b)(1). Section 3.1702 provides in pertinent part:
(b) Attorney’s fees before trial court judgment
(1) Time for motion
“A notice of motion to claim attorney’s fees for services up to and including the rendition of judgment in the trial court-including attorney’s fees on an appeal before the rendition of judgment in the trial court-must be served and filed within the time for filing a notice of appeal under rules 8.104 and 8.108 in an unlimited civil case or under rules 8.822 and 8.823 in a limited civil case.”

The parties did not enter into a stipulation to extend the time for Plaintiff to file its Motion for Attorney’s Fees.
Plaintiff filed the instant Motion on December 4, 2015.
California Rules of Court Rule 8.822(1)(A) provides in pertinent part:
Rule 8.822. Time to appeal
(a) Normal time
(1) “Unless a statute or rule 8.823 provides otherwise, a notice of appeal must be filed on or before the earliest of:

(A) 30 days after the trial court clerk serves the party filing the notice of appeal a document entitled “Notice of Entry” of judgment or a file-stamped copy of the judgment, showing the date it was served;”

As such, the Motion was filed almost one month after the deadline and for that reason alone must be denied.

III. THE INSTANT MOTION IS NOT SUPPORTED IN CONTRACT OR
STATUTE AND MUST BE DENIED.
Plaintiff Coastline Real Estate Holdings, LLC purchased the position of Pacific Western Bank. Defendants believe that Plaintiff is a wholly owned subsidiary of Pacific Western Bank.
Pacific Western Bank (as successor in interest) became a Defendant in Superior Court of California, County of Ventura Case No. 56-2014-00458447-CU-OR-VTA stylized as:
Pierrick Brillouet and Yong Brillouet v. Western Commerical Bank, brought the identical motion for attorney’s fees. That motion was denied. The court adopted its Tentative Ruling which stated:

The Bank is only entitled to an award of attorney fees in this matter if a contractual provision exists which provides for such an award.
The Bank argues that the construction trust deed contains an attorney provision which provides it with a basis for attorney fees. However, the deed only permits an award of attorney fees by a court “[i]f Lender institutes any suit or action to enforce any of the terms of this Deed of Trust, Lender shall be entitled to recover such sum as the court may adjudge reasonable as attorneys’ fees at trial and upon any appeal.” (Emphasis added). Only actions which the “Lender institutes” are subject to the attorney’s fees provision and this action was not brought by the lender. The Bank has made no argument for the extension of the plain language of the provision which would encompass the current suit and as such it has not demonstrated it is entitled to fees under the construction trust deed.
The Bank claims that it is also entitled to attorney fees under the Promissory Note which provides:
Lender may hire or pay someone else to collect this note. Borrower will pay Lender that amount. This includes, subject to any limits under applicable law, Lender’s attorneys’ fee and Lender’s legal expenses, whether or not there is a lawsuit, including attorneys’ fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. Borrower will also pay any court costs, in addition to all other sums provided by law.
This was not a suit brought to collect the note. While “that amount” includes attorney fees and legal expenses, there is no indication that the court is authorized to make an award of these fees and expenses as a result of the current litigation. The Promissory Note does not indicate that the prevailing party in an action such as this is entitled to reasonable attorney fees.
The Bank also points to the assumption agreement as a basis for fees. It allegedly provides that “[i]f any lawsuit, arbitration or other proceedings is brought to interpret or enforce the terms of this Agreement, the prevailing party shall be entitled to recover the reasonable fees and costs of its attorneys in such proceeding.” This lawsuit didn’t involve the interpretation or enforcement of the terms of the assumption agreement. Santisas v. Goodin (1988) 17 Cal.4th 599 is of no help to the Bank as it involved an expansive attorney’s fee clause that clearly applied to the suit and the question was whether Civil Code §1717(b)(2) thwarted its application. That is not the case here.” A true and correct copy of the Tentative Ruling is attached hereto as Exhibit “1” and is incorporated by this reference.
Notwithstanding the court’s prior Order denying the very same attorney’s fees, Plaintiff in the instant action once again argues the identical points and seeks fees which are unsupported, unreasonable, and which are untimely. As such, the Motion for Attorney’s fees must be denied.
IV. MOVANTS HAVE THE BURDEN OF PROVING THE REASONABLE
NATURE OF THE SERVICES ALLEGED.
The Declaration of Attorney Steven N. Richman contains an attachment which purports to be a listing of the attorney services which were provided. However, a summary inspection shows that the listing of services, the time incurred for such service and the amount charged for such services have been redacted.
As such, Plaintiffs cannot determine the propriety of: (1) the nature of the services provided, (2) whether those services were necessary, (3) the amount of time which was expended to complete the services, and (4) whether the amount of time and charge is a reasonable fee for the particular service rendered.
Attorney fee shifting statutes and contractual provisions usually provide only the right to recover “reasonable attorneys’ fees” incurred as a result of the litigation. In order to determine the reasonableness of the fee award requested, courts generally start with the “lodestar amount,” which is the reasonable number of hours spent on the litigation multiplied by the reasonable hourly rate. Serrano v. Priest, 20 Cal.3d 25, 48 (1977); Thayer v. Wells Fargo Bank, N.A., 92 Cal.App.4th 819 (2001).
Once this amount is determined, the court can take into consideration additional factors to adjust the “lodestar” either up or down as appropriate. Such factors include: the novelty or difficulty of the issues involved in the case and the skill required to present those issues; the extent to which the nature of the case precluded the employment of other attorneys; and the fee arrangement of the attorney and the client. Serrano, 20 Cal.3d at 48; Thayer, 92 Cal. App.4th at 833. The party seeking the fees has the burden of proof to establish that the time spent and the hourly fee charged is reasonable. Levy v. Toyota Motor Sales, U.S.A., Inc., 4 Cal.App.4th 807 (1992).
This particular case was an unlawful detainer action, the trial lasted two hours, the trial presented no novel issues, nor did it require herculean efforts. The case was disposed by bench trial within two hours. As such, although Defendants believe that no right to attorney’s fees exists in this matter, if the court is going to award attorney’s fees, then Movant has failed to prove the reasonableness of the fees requested. Given the foregoing the Motion should be denied.
Dated: December 22, 2015 LAW OFFICES OF
TIMOTHY L. MCCANDLESS
By ____________________________
Timothy L. McCandless, Esq.
Attorney for Defendants
Pierrick Brillouet and Yong C. Brillouet

 

Denial of Loan Modification mortgage redlining as a constitutional right

Punitive Damages for Civil Rights – Convincing the Jury and Judge By Jeffrey Needleboa-billboard1“Let this case serve as a lesson for all employers who would ignore the existence of racial harassment in the workplace.” With those introductory words, the Ninth Circuit Court of Appeals affirmed a jury’s verdict for $1 million in punitive damages and $35,612 in compensatory damages. In the process, not only was justice served for the Plaintiff, Troy Swinton, but strong precedent was created for future civil rights claimants. Swinton v. Potomac Corporation, 270 F.3d 794 (9th Cir. Oct. 24, 2001). Although the Defendant portrayed the racial harassment suffered by Mr. Swinton as “jokes”, the Ninth Circuit correctly understood that neither the verdict nor the discrimination was a laughing matter. Id. at 799. Not only did the Plaintiff get what he deserved, but the Defendant, Potomac Corporation, got what it deserved as well.

On the issue of liability, the Court in Swinton analyzed at considerable length the various of theories of holding an employer liable and a variety of evidentiary issues relevant to liability and punitive damages. The Court also considered the legal issues which define the availability of a punitive damages award and the legal standard for keeping the punitive damages once awarded. The Court determined that a ratio of punitive to compensatory damages of 28:1 was not excessive. Satisfying the legal standard concerning an award of punitive damages, however, is only half the battle. Convincing the jury that an award of punitive damages is appropriate can often be the more difficult task.

 

Convincing the Jury

It is uniquely the function of punitive damages to punish the defendant, and to deter future misconduct by the defendant and others similarly situated. Especially for large corporations, relatively insubstantial compensatory damages don’t begin to measure the enormity of the defendant’s wrongful behavior, and have no deterrent effect. It is for that reason that punitive damages are an essential ingredient in all civil rights litigation.

The availability of punitive damages in civil rights cases affords juries the opportunity to enhance the quality of equal opportunity and\or constitutional freedoms, not just for the litigants before the court, but in the community at large. They create an opportunity to give contemporary meaning and vitality to the universal ideals which distinguish this country as a free society. Punitive damages in civil rights cases promotes this highest public purpose.

The challenge to trial lawyers is to communicate to juries the broad and compelling social justification for a punitive damages award. This requires a special focus on social issues which transcend a monetary award from a particular defendant to a particular plaintiff. In order to achieve the intended purpose, it must be clearly explained to the jury that an award of punitive damages doesn’t represent what the plaintiff deserves, but what the defendant deserves for its reckless disregard of fundamental constitutional or civil rights.

exclusionAlmost all Americans are extremely passionate about the Bill of Rights and the right to equal opportunity. The eloquence to convince them that these are ideals which need to be perpetuated can be legitimately borrowed from Thomas Jefferson or James Madison in the case of constitutional rights, or legendary civil rights leaders, such as Martin Luther King, Jr. or Thurgood Marshall for the cases involving equal opportunity. For example, liberal use of quotations from King’s “I have a Dream” speech have almost irresistible appeal. References to Jackie Robinson, the first African American major league baseball player for the Brooklyn Dodgers, or Rosa Parks, who refused to sit on the back of the bus, always resonate with jurors.

A brief historical review of the struggle for equal opportunity is appropriate to communicate to the jury their role in a continuing effort. The Civil Rights Act of 1866, 42 U.S.C. Section 1981, is often utilized in cases involving race harassment or discrimination. This statute was originally enacted to guarantee the civil rights of newly emancipated slaves, and to eliminate the vestiges of slavery which existed immediately after the Civil War. But initially, the statute didn’t fulfill its intended purpose. In the years immediately after the Civil War, newly emancipated slaves were denied the most basic civil rights; they were denied the right to own property, to vote, to enter places of public accommodation and hold employment. African Americans were second class citizens in this county in virtually every sense of the word.

Comparisons to the system of apartheid in South Africa serve to illustrate that the principles the jury is being asked to vindicate are the ideals that distinguish our country as a free society. In our country the repressive system of segregation wasn’t called apartheid, it was called Jim Crow. But the concept was essentially the same. For almost 90 years after the Civil War, Jim Crow was the rule of law. In May of 1954, the Supreme Court rejected the concept and required integration in the public schools. Important civil rights statutes followed. Substantial progress has been made. But the vestiges of slavery still exist in the country. The proof is nowhere more powerfully demonstrated than in the facts presented in this case, Swinton v. Potomac. Mr. Swinton was the only African-American of approximately 140 employees. Swinton, 270 F.3d at 799. At the workplace there were jokes about a wide variety of ethnic groups, including whites, Asians, Polish people, gays, Jews, and Hispanics. A co-worker testified that the majority of the people at U.S. Mat had actually witnessed the use of racially offensive language, and another employee testified that “just about everybody” at U.S. Mat had heard “racial slurs and comments.” Id. at 800. During the short time he was at U.S. Mat, Swinton heard the term “nigger” more than fifty times. Id. Swinton’s immediate superior as supervisor of the shipping department, witnessed the telling of racial jokes and laughed along. The supervisor also acknowledged making “racial jokes or a slur” two or three iStock_000015861187Mediumtimes. The supervisor also overheard one of the two plant managers make racial jokes on several occasions. The supervisor further admitted that although he had an obligation under company policy to report the racial harassment, he never made any such report and never told anyone to stop making such jokes. Id. at 799-800. Some of the racial “jokes” included: “What do you call a transparent man in a ditch? A nigger with the shit kicked out of him. Why don’t black people like aspirin? Because they’re white, and they work. Did you ever see a black man on ‘The Jetsons’? Isn’t it beautiful what the future looks like? Reference to ‘Pontiac’ as an acronym for ‘Poor old nigger thinks it’s a Cadillac.’ Id. at 799. “The jokes and comments ranged from numerous references to Swinton as a ‘Zulu Warrior’ to a comment in the food line, ‘They don’t sell watermelons on that truck, you know, how about a 40-ouncer?’ On the subject of Swinton’s broken-down car, it was suggested why don’t you get behind it and push it and call it black power and why don’t you just jack a car. You’re all good at that.” Id. at 800. The “jokes” and slurs started the day Swinton began to work for the defendant, and didn’t stop until the day six months later he left in disgust.

The civil justice system provides an opportunity for the jury to dispense social justice for the victim of bigotry and to fulfill the purpose of the Civil Rights Act of 1866; the elimination of the vestiges of slavery. Plaintiff’s counsel can explain to the jury that their verdict will help fulfill the purpose of this 140 year old civil rights statute, and give it contemporary meaning and vitality.

Many civil rights cases involve wrongful discharge from employment. For the purpose of compensatory damages, the appropriate focus is the injury to victim, including the economic hardship created and the emotional distress associated with being unemployed for a prolonged and continuing period. For the purpose of punitive damages, however, it is important to maintain a focus on the broader social issues involved. We need the contribution everyone is capable of making so that we can actualize our potential as a society. We can’t afford to exclude people from the workplace. In employment discrimination cases, the damage is not limited to the injury and social injustice suffered by the employee, it extends to the broader society which is deprived of the contribution the employee is capable of making. The jury must be made aware that punitive damages are intended to prevent future civil rights violations and to redress the injury suffered by the broader society.

6a00d83451b7a769e201676871ac87970b-320wiThe focus of Swinton v. Potomac was racial harassment. But these principles apply with equal force to other protected classifications. President Franklin Roosevelt was disabled! He spent the most productive years of his life in a wheel chair. Its hard to imagine what American society would be like without his contribution. Statistics appearing in the Congressional History of the American with Disabilities Act can be utilized to demonstrate the need for reasonable accommodation, not only so the disabled person can live with dignity, but also so that society can reap the benefits of his or her contribution.

Shirley Chisholm was the first female African American representative in the United States Congress. She experienced both racial and sexual discrimination. Ms. Chisholm can be quoted as saying that sexual discrimination was by far the more destructive of the two. The historical fight for women’s equal rights in many ways parallels the fight for racial equality. Historically, women could not own real property, enter into contracts or vote. African Americans got the legal right to vote before women. Counsel can explain the full meaning of dower rights, and that civil rights statutes were required so that women could work without discrimination and receive equal pay. Susan B. Anthony and other historic champions of women’s rights can be quoted liberally. Comparisons to the Taliban in Afghanistan serve to demonstrate the fundamentality of women’s rights in a free society.

Precious few jurors will deny the great value of these fundamental rights. Punitive damages in a civil rights case is just one vehicle for assessing their monetary worth.

Convincing the Judge In Kolstad v. American Dental Association, 527 U.S. 526, 119 S.Ct. 2118 (1999), the Court ruled that the controlling standard required Plaintiff to prove that the defendant acted with malice or with reckless indifference to the federally protected rights of an aggrieved individual. “Applying this standard in the context of §1981a, an employer must at least discriminate in the face of a perceived risk that its actions will violate federal law to be liable in punitive damages.” Id. at 536. The Court rejected the more onerous egregious conduct standard. Id. at 538-539. The Court declined, however, to allow vicarious liability “for the discriminatory employment decisions of managerial agents where these decisions are contrary to the employer’s good faith efforts to comply with Title VII.” Id at 544.

Morgan-Stanley2-300x199The Court in Kolstad also established a standard for imputing punitive damages liability to a corporate wrongdoer. Without briefing, the Court adopted the Restatement (Second) of Agency and the Restatement (Second) of Torts. “Suffice it to say here that the examples provided in the Restatement of Torts suggest that an employee must be “important,” but perhaps need not be the employer’s “top management, officers, or directors,” to be acting “in a managerial capacity.” Id. at 543. “[D]etermining whether an employee meets this description [managerial capacity] requires a fact-intensive inquiry. . . .” Id. In EEOC v. Wal-Mart , 187 F.3d 1241 (10th Cir. 1999), the Tenth Circuit considered, in light of Kolstad, “the evidentiary showing required to recover punitive damages under a vicarious liability theory against an employer accused of violating the American with Disabilities Act.” Id. at 1243. In determining whether the managers had sufficient authority to impute punitive damages, the Court acknowledged that “authority to ‘hire, fire, discipline or promote, or at least to participate in or recommend such actions,’ is an indicium of supervisory or managerial capacity.” (emphasis added). Id. at 1247. Citing Miller v. Bank of America, 600 F.2d 211, 213 (9th Cir. 1979), the Court found that both the supervisor and the store manager had sufficient authority to bind the corporation for punitive damages. Id.

Applying these standards in Swinton, the Court ruled “that the inaction of even relatively low-level supervisors may be imputed to the employer if the supervisors are made responsible, pursuant to company policy, for receiving and acting on complaints of harassment.” Swinton v. Potomac Corp., 270 F.3d at 810. Citing Deters v. Equifax Credit Information Servs., Inc., 202 F.3d 1262 (10th Cir.2000), the Court in Swinton ruled that the good faith defense could not apply “because the very person the company entrusted to act on complaints of harassment failed to do so, and failed with malice or reckless disregard to the plaintiff’s federally protected rights.” Id. In addition, the existence of employment policies is not sufficient. In order to satisfy the good faith defense, employment policies must be implemented and in Swinton they were not. Id.

Remittitur23458820In BMW of North America, Inc. v. Gore, 517 U.S. 559, 116 S.Ct. 1589 (1996), the Supreme Court established the standard for constitutionally excessive awards of punitive damages. As stated repeatedly by the Supreme Court, there is no mathematical bright line. “Only when an award can fairly be categorized as “grossly excessive” in relation to these interests [punishment and deterrence] does it enter the zone of arbitrariness that violates the Due Process Clause.” BMW, supra at 568. The Court announced three “guideposts” to assist courts in determining whether an award violates this standard: the “degree of reprehensibility” of the tortfeasor’s actions; “the disparity between the harm or potential harm suffered by [the plaintiff] and his punitive damage award”; “and the difference between this remedy and the civil penalties authorized or imposed in comparable cases.” Id . at 575.

In reference to reprehensibility, the Court in Swinton recognized the so called “hierarchy of reprehensibility,” with acts and threats of violence at the top, followed by acts taken in reckless disregard for others’ health and safety, affirmative acts of trickery and deceit, and finally, acts of omission and mere negligence. Id. at 818. Although the Court recognized that racial harassment is not the worst kind of tortious conduct, “in sum, we have no trouble concluding that the highly offensive language directed at Swinton, coupled by the abject failure of Potomac to combat the harassment, constitutes highly reprehensible conduct justifying a significant punitive damages award.” Id.

In reference to the ratio of compensatory damages to punitive damages, quoting BMW, the Court acknowledged, “[i]ndeed, low awards of compensatory damages may properly support a higher ratio than high compensatory awards, if, for example, a particularly egregious act has resulted in only a small amount of economic damages. A higher ratio may also be justified in cases in which the injury is hard to detect or the monetary value of non-economic harm might have been difficult to determine.” BMW at 582. Because Swinton made only $8.50 an hour, this was such a case.

For the purpose of evaluating the ratio, the Court also considered Plaintiff’s counsel’s repeated admonition to the jury “not to get carried away,” the financial asserts of the Defendant and “the harm likely to result from the defendant’s conduct as well as the harm that actually has occurred.” Swinton at 819. After comparing similar cases, the Court had no trouble in concluding that a ratio of 28:1 was not excessive. Id . at 819-820.

In reference to analogous civil penalties, the Court refused to impose the cap of $300,000 made applicable to other types of civil rights cases pursuant to the Civil Rights Act of 1991; 42 U.S.C. Section 1981. Id. at 820. There are no caps on punitive damages under 42 U.S.C. Section 1981.

Conclusion Punitive damages in civil rights cases are a meaningful way of promoting important social values.

Watchdog Report: Foreclosure Review Scrapped On Eve Of Critical, Congressman Says

Image

Posted: 12/31/2012 3:53 pm EST  |  Updated: 12/31/2012 4:08 pm EST

Foreclosure Review
242
5
103
211
Get Business Alerts:

The surprising decision by regulators to scrap a massive and expensive foreclosure review program in favor of a $10 billion settlement with 14 banks — reported by The New York Times Sunday night — came after a year of mounting concerns about the independence and effectiveness of the controversial program.

The program, known as the Independent Foreclosure Review, was supposed to give homeowners who believe that their bank made a mistake in handling their foreclosure an opportunity for a neutral third party to review the claim. It’s not clear what factors led banking regulators to abandon the program in favor of a settlement, but the final straw may have been a pending report by the Government Accountability Office, a nonpartisan investigative arm of Congress, which was investigating the review program.

Rep. Brad Miller, a North Carolina Democrat, told The Huffington Post that the report, which has not been released, was “critical” and that the Office of the Comptroller of the Currency, which administers the review, was aware of its findings. Miller said that that one problem the GAO was likely to highlight was an “unacceptably high” error rate of 11 percent in a sampling of bank loan files.

The sample files were chosen at random by the banks from their broader pool of foreclosed homeowners, who had not necessarily applied for relief. The data suggests that of the 4 million families who lost their homes to foreclosure since the housing crash, more than 400,000 had some bank-caused problem in their loan file. It also suggests that many thousands of those who could have applied for relief didn’t — because they weren’t aware of the review, or weren’t aware that their bank had made a mistake. Some of these mistakes pushed homeowners into foreclosure who otherwise could have afforded to keep their homes.

Miller said the news that a settlement to replace the review was in the works caught him by surprise, and stressed that he had no way of knowing whether the impending GAO report had triggered the decision.

It’s not clear what will happen to the 250,000 homeowners who have already applied to the Independent Foreclosure Review for relief. The Times, citing people familiar with the negotiations, said that a deal between the banks and banking regulators, led by the Office of the Comptroller of the Currency, could be reached by the end of the week. It wasn’t clear how that money would be distributed or how many current and former homeowners who lost their homes to foreclosure — or who were hit with an unnecessary fee — might qualify.

Bryan Hubbard, a spokesman for the OCC, which administers the program, declined to comment on the Times’ story. Hubbard told HuffPost, “The Office of the Comptroller of the Currency is committed to ensuring the Independent Foreclosure Review proceeds efficiently and to ensuring harmed borrowers are compensated as quickly as possible.”

Since the housing market crashed in 2007, thousands of foreclosed homeowners have complained that their mortgage company made a mistake in the management of their home loan, such as foreclosing on someone making payments on a loan modification plan. The Independent Foreclosure Review emerged from a legal agreement in April 2011 between 14 mortgage companies and bank regulators over these abusive “servicing” practices. It was supposed to give homeowners an opportunity to have an unbiased third party review their foreclosure and determine whether they might qualify for a cash payout of up to $125,000.

The initial response was tepid, at best. Homeowners and advocates complained that the application forms were confusing and that information about what type of compensation they might get was missing. Some told HuffPost that they were so disillusioned by the federal government’s anemic response to widely reported bank errors that they weren’t going to bother to apply.

In one instance, Daniel Casper, an Illinois wedding videographer, applied to the program in January after years of combat with Bank of America over his home loan. As The Huffington Post reported in October, he was initially rejected, because, according to the bank, his mortgage was not in the foreclosure process during the eligible review period. Promontory Financial Group, which Bank of America hired to review his loan, apparently did not double check Bank of America’s analysis against the extensive documentation that Chase submitted. That documentation clearly showed that his loan was eligible for review.

In recent months ProPublica, an investigative nonprofit, has issued a series of damning articles about the Independent Foreclosure Review. The most recent found that supposedly independent third-party reviewers looking over Bank of America loan files were given the “correct” answers in advance by the bank. These reviewers could override the answers, but they weren’t starting from a blank slate.

Banks, if they did not find a “compensable error,” did not have to pay anything, giving them a strong incentive to find no flaws with their own work.

“It was flawed from the start,” Miller said of the review program. “There was an inherent conflict of interest by just about everyone involved.”

Also on HuffPost:

Related News On Huffington Post:

Bank Of America Supplied Answers For ‘Independent’ Foreclosure Reviewers

ProPublica: The Independent Foreclosure Review is the government’s main effort to compensate homeowners for harm they suffered at the hands of banks — and, as…

Central Valley Foreclosures: Few Homeowners Taking Advantage Of Reviews

MODESTO — Nearly 50,000 Northern San Joaquin Valley homeowners potentially may be owed compensation for financial losses they incurred because of errors made during foreclosure…

Foreclosure-Prevention Roadshow Still Drawing Crowds Indicating Not All Is Well In The Housing Market

* NACA has hosted more than 100 events to assist homeowners * Group plays middleman between borrowers and banks * Foreclosures down from last year,…

Rebecca Mairone, BofA Exec Who Allegedly Enabled Fraud, Now Head Of JPMorgan Chase Foreclosure Review

by Paul Kiel ProPublica, Nov. 9, 2012, 1:18 p.m. An executive who the Justice Department says facilitated a scheme to defraud Fannie Mae and…

Ruling Against Bank In Mortgage Modification Suit

Judge Rules Against Bank In Mortgage Modification Suit

Shah Gilani Shah Gilani, Contributor
Half million dollar house in Salinas, Californ...Image via Wikipedia

A recent ruling by a California appeals court clears the way for fraud charges against a lender that promised a loan modification but then foreclosed on the borrower.

The ruling throws into question the legality of hundreds of thousands of foreclosures.

Not only was the ruling a frontal assault on the empty promises made by servicers and banks, the case highlighted some despicable tactics often employed to force foreclosures.

Claudia Aceves, who originally sued U.S. Bank, NA in the Los Angeles County Superior Court, had taken out an $845,000 mortgage with Option One Mortgage Corporation. Option One later assigned the loan over to U.S. Bank.

The interest on Aceves’ adjustable rate note ratcheted up two years after it was entered into. By January 2008 she was falling behind on her payments. Shortly after March 26, 2008 when the loan’s servicer recorded a “Notice of Default and Election to Sell Under Deed of Trust,” Aceves filed for bankruptcy protection under chapter 7 of the Bankruptcy Code.

The bankruptcy filing imposed an automatic stay on the foreclosure proceedings.

After being offered financial help from her husband, Aceves converted her bankruptcy case from a chapter 7 to a chapter 13 case. Chapter 7, entitled “Liquidation,” would allow Aceves to discharge her debt on the home but not allow her to keep it. Chapter 13, entitled “Adjustment of Debts of an Individual with Regular Income,” has protections for homeowners that allows them to reinstate loan payments, pay arrearages, avoid foreclosure and keep their home.

U.S. Bank, upon learning of the original bankruptcy filing, filed a motion to lift the stay in order to execute a nonjudicial foreclosure and take the house back.

What happens next is indicative of the underhandedness of many servicers and banks.

Aceves’ bankruptcy attorney gets a letter from counsel to the loan’s servicer (American Home Mortgage Servicing, Inc.) that asks for permission to talk directly to Aceves to “explore Loss Mitigation possibilities.”  Aceves calls the servicer’s attorney because she wants a loan modification, which they are promising. But they tell her they can’t do anything or talk to her until their motion to lift the bankruptcy stay is granted.

So, Aceves doesn’t oppose the motion to lift the stay and further decides not to file the chapter 13 bankruptcy. All in the hopes that a modification would be negotiated.

On December 4, 2008 the stay is lifted. And, unbeknownst to Aceves, on December 9, 2008 U.S. Bank schedules the home for public auction one month later on January 9, 2009.

On December 10, 2008 Aceves sends in documents to American Home aiming to modify and reinstate the loan. Then on December 23, 2008 the servicer tells Aceves a “negotiator” will contact her on or before January 13, 2009.

Too bad for Aceves January 13, 2009 is going to be four days after her home is sold at auction. Which it is, with none other than U.S. Bank as the buyer.

But just to cover its promise to modify the loan, one day before the home is to be sold at auction the negotiator for American Home presents a unilateral offer to raise the loan balance from the original $845,000 to $965,926.22 and make the new monthly payments $7,200 as opposed to the original monthly payment amount of $4,857.09.

Aceves told them where to go.

She lost her home and sued. She lost when the Superior Court found that the defendants had met their obligations. The three-judge panel Appeals Court disagreed in its January 27, 2010 ruling.

The crux of the ruling, which in part relied on a decision in a previous case (Garcia v. World Savings, FSB) determined that “To be enforceable, a promise need only be ”’definite enough that a court can determine the scope of the duty.”’

Further illuminating its stance the Court said the point is, “simply whether U.S. Bank made and kept a promise to negotiate with Aceves, not whether the bank promised to make a loan, or more precisely, to modify a loan” is what matters.

As far as the servicer’s offer of a modification, the Appeals Court found that the promise to negotiate is “not based on a promise to make a unilateral offer but on a promise to negotiate in an attempt to reach a mutually agreeable loan modification.”

With all the unkept promises by banks and servicers to negotiate loan modifications that were never entertained, new litigation on top of all the foreclosure cases already being pursued is bound to cloud the future of real estate for the foreseeable future.

Predatory Lending and Predatory Servicing together at last Jan 1, 2013 Civil Code §2924.12(b)

Predatory Lending are abusive practices used in the mortgage industry that strip borrowers of home equity and threaten families with bankruptcy and foreclosure.

Predatory Lending can be broken down into three categories: Mortgage Origination, Mortgage Servicing; and Mortgage Collection and Foreclosure.

Mortgage Origination is the process by which you obtain your home loan from a mortgage broker or a bank.

Predatory lending practices in Mortgage Origination include:
# Excessive points;
# Charging fees not allowed or for services not delivered;
# Charging more than once for the same fee
# Providing a low teaser rate that adjusts to a rate you cannot afford;
# Successively refinancing your loan of “flipping;”
# “Steering” you into a loan that is more profitable to the Mortgage Originator;
# Changing the loan terms at closing or “bait & switch;”
# Closing in a location where you cannot adequately review the documents;
# Serving alcohol prior to closing;
# Coaching you to put minimum income or assets on you loan so that you will qualify for a certain amount;
# Securing an inflated appraisal;
# Receiving a kickback in money or favors from a particular escrow, title, appraiser or other service provider;
# Promising they will refinance your mortgage before your payment resets to a higher amount;
# Having you sign blank documents;
# Forging documents and signatures;
# Changing documents after you have signed them; and
# Loans with prepayment penalties or balloon payments.

Mortgage Servicing is the process of collecting loan payments and credit your loan.

Predatory lending practices in Mortgage Servicing include:
# Not applying payments on time;
# Applying payments to “Suspense;”
# “Jamming” illegal or improper fees;
# Creating an escrow or impounds account not allowed by the documents;
# Force placing insurance when you have adequate coverage;
# Improperly reporting negative credit history;
# Failing to provide you a detailed loan history; and
# Refusing to return your calls or letters.
#

Mortgage Collection & Foreclosure is the process Lenders use when you pay off your loan or when you house is repossessed for non-payment

Predatory lending practices in Mortgage Collection & Foreclosure include:
# Producing a payoff statement that includes improper charges & fees;
# Foreclosing in the name of an entity that is not the true owner of the mortgage;
# Failing to provide Default Loan Servicing required by all Fannie Mae mortgages;
# Failing to follow due process in foreclosure;
# Fraud on the court;
# Failing to provide copies of all documents and assignments; and
# Refusing to adequately communicate with you.

Abuses by Mortgage Service Companies

Although predatory lending has received far more attention than abusive servicing, a significant percentage of consumer complaints over loans involve servicing, not origination. For example, the director of the Nevada Fair Housing Center testified that of the hundreds of complaints of predatory lending issues her office received in 2002, about 42 percent involved servicing once the loan was transferred

Abusive Mortgage Servicing Defined:

Abusive servicing occurs when a servicer, either through action or inaction, obtains or attempts to obtain unwarranted fees or other costs from borrowers, engages in unfair collection practices, or through its own improper behavior or inaction causes borrowers to be more likely to go into default or have their homes foreclosed. Abusive practices should be distinguished from appropriate actions that may harm borrowers, such as a servicer merely collecting appropriate late fees or foreclosing on borrowers who do not make their payments despite proper loss mitigation efforts. Servicing can be abusive either intentionally, when there is intent to obtain unwarranted fees, or negligently, when, for example, a servicer’s records are so disorganized that borrowers are regularly charged late fees even when mortgage payments were made on time.

Abusive servicing often happens to debtors who have filed a Chapter 13 Bankruptcy Plan and are in the process of making payments under the Plan. If you suspect that your mortgage servicer is abusing your relationship by charging unnecessary fees while you are paying off your Chapter 13 Plan, call us. We can help.

There is significant evidence that some Mortgage servicers have engaged in abusive behavior and that borrowers have frequently been the victims. Some servicers have engaged in practices that are not only detrimental to borrowers but also illegal Such abuse has been documented in court opinions and decisions, in the decisions and findings of ratings agencies, in litigation and settlements obtained by government agencies against prominent servicers, in congressional testimony, and in newspaper accounts of borrowers who claim to have been mistreated by servicers. The abusive servicing practices documented in these sources include improper foreclosure or attempted foreclosure, improper fees, improper forced-placed insurance, and improper use or oversight of escrow funds .

Civil Code §2924.12(b) Right to Sue Mortgage Servicers for Injunctive Relief, Damages, Treble Damages, and Right to Attorney’s Fees. : )

5 Dec

prohabition-images

H. Right to Sue Mortgage Servicers for Injunctive Relief, Damages, Treble Damages, and Right to Attorney’s Fees

2013 is going to be a good year

One of the most important provisions of the Act from a lender’s perspective is that it provides borrowers with the right to sue mortgage servicers for injunctive relief before the trustee’s deed upon sale has recorded, or if it has already recorded, to sue for actual economic damages, if the mortgage servicer has not corrected any “material” violation of certain enumerated portions of the Act before the trustee’s deed upon sale recorded. (Civil Code §2924.12(a).) In an area that will certainly open up a Pandora’s Box of litigation, the Act does not define what constitutes a “material” violation of the Act. If a court finds that the violation was intentional, reckless or willful, the court can award the borrower the greater of treble (triple) damages or $50,000. (Civil Code §2924.12(b).) Furthermore, a violation of the enumerated provisions of the Act is also deemed to be a violation of the licensing laws if committed by a person licensed as a consumer or commercial finance lender or broker, a residential mortgage lender or servicer, or a licensed real estate broker or salesman. (Civil Code §2924.12(d).) Lastly, in a one-sided attorney’s fee provision that only benefits borrowers, the court may award a borrower who obtains an injunction or receives an award of economic damages as a result of the violation of the Act their reasonable attorney’s fees and costs as the prevailing party. (Civil Code §2924.12(i).) This provides all the more reason for lenders and mortgage servicers to comply with the terms of the Act. This provision for the recovery by only the borrower of their reasonable attorney’s fees makes it more likely that borrowers will file litigation against mortgage lenders or servicers than they otherwise would. Compliance is the lender’s or mortgage servicer’s best defense to litigation under the Act.

Significantly for lenders, as long as the mortgage servicer remedies the material violation of the Act before the trustee’s deed upon sale has recorded, the Act specifically provides that the mortgage servicer shall not be liable under the Act for any violation or damages. (Civil Code §2924.12(b) & (c).) The Act also clarifies that signatories to the National Mortgage Settlement who are in compliance with the terms of that settlement, as they relate to the terms of the Act, will not face liability under the Act. (Civil Code §2924.12(g).

Improper foreclosure or attempted foreclosure

Because servicers can exact fees associated with foreclosures, such as attorneys’ fees, some servicers have attempted to foreclose on property even when borrowers are current on their payments or without giving borrowers enough time to repay or otherwise working with them on a repayment plan Furthermore, a speedy foreclosure may save servicers the cost of attempting other techniques that might have prevented the foreclosure.

Some servicers have been so brazen that they have regularly claimed to the courts that borrowers were in default so as to justify foreclosure, even though the borrowers were current on their payments. Other courts have also decried the frequent use of false statements to obtain relief from stay in order to foreclose on borrowers’ homes. For example, in Hart v. GMAC Mortgage Corporation, et al., 246 B.R. 709 (2000), even though the borrower had made the payments required of him by a forbearance agreement he had entered into with the servicer (GMAC Mortgage Corporation), it created a “negative suspense account” for moneys it had paid out, improperly charged the borrower an additional monthly sum to repay the negative suspense account, charged him late fees for failing to make the entire payment demanded, and began foreclosure proceedings.

Improper fees

Claiming that borrowers are in default when they are actually current allows servicers to charge unwarranted fees, either late fees or fees related to default and foreclosure. Servicers receive as a conventional fee a percentage of the total value of the loans they service, typically 25 basis points for prime loans and 50 basis points for subprime loans In addition, contracts typically provide that the servicer, not the trustee or investors, has the right to keep any and all late fees or fees associated with defaults. Servicers charge late fees not only because they act as a prod to coax borrowers into making payments on time, but also because borrowers who fail to make payments impose additional costs on servicers, which must then engage in loss mitigation to induce payment.

Such fees are a crucial part of servicers’ income. For example, one servicer’s CEO reportedly stated that extra fees, such as late fees, appeared to be paying for all of the operating costs of the company’s entire servicing department, leaving the conventional servicing fee almost completely profit The pressure to collect such fees appears to be higher on subprime servicers than on prime servicers:

Because borrowers typically cannot prove the exact date a payment was received, servicers can charge late fees even when they receive the payment on time Improper late fees may also be based on the loss of borrowers’ payments by servicers, their inability to track those payments accurately, or their failure to post payments in a timely fashion. In Ronemus v. FTB Mortgage Services, 201 B.R. 458 (1996), under a Chapter 13 bankruptcy plan, the borrowers had made all of their payments on time except for two; they received permission to pay these two late and paid late fees for the privilege. However, the servicer, FTB Mortgage Services, misapplied their payments, then began placing their payments into a suspense account and collecting unauthorized late fees. The servicer ignored several letters from the borrowers’ attorney attempting to clear up the matter, sent regular demands for late fees, and began harassing the borrowers with collection efforts. When the borrowers sued, the servicer submitted to the court an artificially inflated accounting of how much the borrowers owed.

Some servicers have sent out late notices even when they have received timely payments and even before the end of a borrower’s grace period Worse yet, a servicer might pocket the payment, such as an extra payment of principal, and never credit it to the borrower Late fees on timely payments are a common problem when borrowers are making mortgage payments through a bankruptcy plan

Moreover, some servicers have also added false fees and charges not authorized by law or contract to their monthly payment demands, relying on borrowers’ ignorance of the exact amount owed. They can collect such fees or other unwarranted claims by submitting inaccurate payoff demands when a borrower refinances or sells the house). Or they can place the borrowers’ monthly payments in a suspense account and then charge late fees even though they received the payment Worse yet, some servicers pyramid their late fees, applying a portion of the current payment to a previous late fee and then charging an additional late fee even though the borrower has made a timely and full payment for the new month Pyramiding late fees allows servicers to charge late fees month after month even though the borrower made only one late payment

Servicers can turn their fees into a profit center by sending inaccurate monthly payment demands, demanding unearned fees or charges not owed, or imposing fees higher than the expenses for a panoply of actions For example, some servicers take advantage of borrowers’ ignorance by charging fees, such as prepayment penalties, where the note does not provide for them Servicers have sometimes imposed a uniform set of fees over an entire pool of loans, disregarding the fact that some of the loan documents did not provide for those particular fees. Or they charge more for attorneys’, property inspection, or appraisal fees than were actually incurred. Some servicers may add a fee by conducting unnecessary property inspections, having an agent drive by even when the borrower is not in default, or conducting multiple inspections during a single period of default to charge the resulting multiple fees

The complexity of the terms of many loans makes it difficult for borrowers to discover whether they are being overcharged Moreover, servicers can frustrate any attempts to sort out which fees are genuine.

Improperly forced-placed insurance

Mortgage holders are entitled under the terms of the loan to require borrowers to carry homeowners’ insurance naming the holder as the payee in case of loss and to force-place insurance by buying policies for borrowers who fail to do so and charging them for the premiums However, some servicers have force-placed insurance even in cases where the borrower already had it and even provided evidence of it to the servicer Worse yet, servicers have charged for force-placed insurance without even purchasing it. Premiums for force-placed insurance are often inflated in that they provide protection in excess of what the loan.

Escrow Account Mismanagement

One of the benefits of servicing mortgages is controlling escrow accounts to pay for insurance, taxes, and the like and, in most states, keeping any interest earned on these accounts Borrowers have complained that servicers have failed to make tax or insurance payments when they were due or at all. The treasurer of the country’s second largest county estimated that this failure to make timely payments cost borrowers late fees of at least $2 million in that county over a two-year span, causing some to lose their homes. If servicers fail to make insurance payments and a policy lapses, borrowers may face much higher insurance costs even if they purchase their own, non-force-placed policy. Worse yet, borrowers may find themselves unable to buy insurance at all if they cannot find a new insurer willing to write them a policy

You can make a claim for mortgage service abuse, and often the court will award actual and punitive damages. If you think you have been a victim of mortgage service abuse, contact us. We can help you make a claim.

Many a client call me when its toooooo late however sometimes something can be done it would envolve an appeal and this application for a stay. Most likely you will have to pay the reasonable rental value till the case is decided. And … Yes we have had this motion granted. ex-parte-application-for-stay-of-judgment-or-unlawful-detainer3
When title to the property is still in dispute ie. the foreclosure was bad. They (the lender)did not comply with California civil code 2923.5 or 2923.6 or 2924. Or the didn’t possess the documents to foreclose ie. the original note. Or they did not possess a proper assignment 2932.5. at trial you will be ignored by the learned judge but if you file a Motion for Summary Judgmentevans sum ud
template notice of Motion for SJ
TEMPLATE Points and A for SJ Motion
templateDeclaration for SJ
TEMPLATEProposed Order on Motion for SJ
TEMPLATEStatement of Undisputed Facts
you can force the issue and if there is a case filed in the Unlimited jurisdiction Court the judge may be forced to consider title and or consolidate the case with the Unlimited Jurisdiction Case

BILL NUMBER: AB 278	CHAPTERED
	BILL TEXT

	CHAPTER  86
	FILED WITH SECRETARY OF STATE  JULY 11, 2012
	APPROVED BY GOVERNOR  JULY 11, 2012
	PASSED THE SENATE  JULY 2, 2012
	PASSED THE ASSEMBLY  JULY 2, 2012
	AMENDED IN SENATE  SEPTEMBER 1, 2011
	AMENDED IN SENATE  JUNE 23, 2011

INTRODUCED BY   Assembly Members Eng, Feuer, Mitchell, and John A.
Pérez
   (Principal coauthors: Assembly Members Davis, Carter, and Skinner)

   (Principal coauthors: Senators Leno, Evans, Calderon, Corbett,
DeSaulnier, Hancock, Pavley, and Steinberg)

                        FEBRUARY 8, 2011

   An act to amend and add Sections 2923.5 and 2923.6 of, to amend
and repeal Section 2924 of, to add Sections 2920.5, 2923.4, 2923.7,
2924.17, and 2924.20 to, to add and repeal Sections 2923.55, 2924.9,
2924.10, 2924.18, and 2924.19 of, and to add, repeal, and add
Sections 2924.11, 2924.12, and 2924.15 of, the Civil Code, relating
to mortgages.

	LEGISLATIVE COUNSEL'S DIGEST

   AB 278, Eng. Mortgages and deeds of trust: foreclosure.
   (1) Existing law, until January 1, 2013, requires a mortgagee,
trustee, beneficiary, or authorized agent to contact the borrower
prior to filing a notice of default to explore options for the
borrower to avoid foreclosure, as specified. Existing law requires a
notice of default or, in certain circumstances, a notice of sale, to
include a declaration stating that the mortgagee, trustee,
beneficiary, or authorized agent has contacted the borrower, or has
tried with due diligence to contact the borrower, or that no contact
was required for a specified reason.
   This bill would add mortgage servicers, as defined, to these
provisions and would extend the operation of these provisions
indefinitely, except that it would delete the requirement with
respect to a notice of sale. The bill would, until January 1, 2018,
additionally require the borrower, as defined, to be provided with
specified information in writing prior to recordation of a notice of
default and, in certain circumstances, within 5 business days after
recordation. The bill would prohibit a mortgage servicer, mortgagee,
trustee, beneficiary, or authorized agent from recording a notice of
default or, until January 1, 2018, recording a notice of sale or
conducting a trustee's sale while a complete first lien loan
modification application is pending, under specified conditions. The
bill would, until January 1, 2018, establish additional procedures to
be followed regarding a first lien loan modification application,
the denial of an application, and a borrower's right to appeal a
denial.
   (2) Existing law imposes various requirements that must be
satisfied prior to exercising a power of sale under a mortgage or
deed of trust, including, among other things, recording a notice of
default and a notice of sale.
   The bill would, until January 1, 2018, require a written notice to
the borrower after the postponement of a foreclosure sale in order
to advise the borrower of any new sale date and time, as specified.
The bill would provide that an entity shall not record a notice of
default or otherwise initiate the foreclosure process unless it is
the holder of the beneficial interest under the deed of trust, the
original or substituted trustee, or the designated agent of the
holder of the beneficial interest, as specified.
   The bill would prohibit recordation of a notice of default or a
notice of sale or the conduct of a trustee's sale if a foreclosure
prevention alternative has been approved and certain conditions exist
and would, until January 1, 2018, require recordation of a
rescission of those notices upon execution of a permanent foreclosure
prevention alternative. The bill would, until January 1, 2018,
prohibit the collection of application fees and the collection of
late fees while a foreclosure prevention alternative is being
considered, if certain criteria are met, and would require a
subsequent mortgage servicer to honor any previously approved
foreclosure prevention alternative.
   The bill would authorize a borrower to seek an injunction and
damages for violations of certain of the provisions described above,
except as specified. The bill would authorize the greater of treble
actual damages or $50,000 in statutory damages if a violation of
certain provisions is found to be intentional or reckless or resulted
from willful misconduct, as specified. The bill would authorize the
awarding of attorneys' fees for prevailing borrowers, as specified.
Violations of these provisions by licensees of the Department of
Corporations, the Department of Financial Institutions, and the
Department of Real Estate would also be violations of those
respective licensing laws. Because a violation of certain of those
licensing laws is a crime, the bill would impose a state-mandated
local program.
   The bill would provide that the requirements imposed on mortgage
servicers, and mortgagees, trustees, beneficiaries, and authorized
agents, described above are applicable only to mortgages or deeds of
trust secured by residential real property not exceeding 4 dwelling
units that is owner-occupied, as defined, and, until January 1, 2018,
only to those entities who conduct more than 175 foreclosure sales
per year or annual reporting period, except as specified.
   The bill would require, upon request from a borrower who requests
a foreclosure prevention alternative, a mortgage servicer who
conducts more than 175 foreclosure sales per year or annual reporting
period to establish a single point of contact and provide the
borrower with one or more direct means of communication with the
single point of contact. The bill would specify various
responsibilities of the single point of contact. The bill would
define single point of contact for these purposes.
   (3) Existing law prescribes documents that may be recorded or
filed in court.
   This bill would require that a specified declaration, notice of
default, notice of sale, deed of trust, assignment of a deed of
trust, substitution of trustee, or declaration or affidavit filed in
any court relative to a foreclosure proceeding or recorded by or on
behalf of a mortgage servicer shall be accurate and complete and
supported by competent and reliable evidence. The bill would require
that before recording or filing any of those documents, a mortgage
servicer shall ensure that it has reviewed competent and reliable
evidence to substantiate the borrower's default and the right to
foreclose, including the borrower's loan status and loan information.
The bill would, until January 1, 2018, provide that any mortgage
servicer that engages in multiple and repeated violations of these
requirements shall be liable for a civil penalty of up to $7,500 per
mortgage or deed of trust, in an action brought by specified state
and local government entities, and would also authorize
administrative enforcement against licensees of the Department of
Corporations, the Department of Financial Institutions, and the
Department of Real Estate.
   The bill would authorize the Department of Corporations, the
Department of Financial Institutions, and the Department of Real
Estate to adopt regulations applicable to persons and entities under
their respective jurisdictions for purposes of the provisions
described above. The bill would provide that a violation of those
regulations would be enforceable only by the regulating agency.
   (4) The bill would state findings and declarations of the
Legislature in relation to foreclosures in the state generally, and
would state the purposes of the bill.
   (5) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.

THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The Legislature finds and declares all of the
following:
   (a) California is still reeling from the economic impacts of a
wave of residential property foreclosures that began in 2007. From
2007 to 2011 alone, there were over 900,000 completed foreclosure
sales. In 2011, 38 of the top 100 hardest hit ZIP Codes in the nation
were in California, and the current wave of foreclosures continues
apace. All of this foreclosure activity has adversely affected
property values and resulted in less money for schools, public
safety, and other public services. In addition, according to the
Urban Institute, every foreclosure imposes significant costs on local
governments, including an estimated nineteen thousand two hundred
twenty-nine dollars ($19,229) in local government costs. And the
foreclosure crisis is not over; there remain more than two million
"underwater" mortgages in California.
   (b) It is essential to the economic health of this state to
mitigate the negative effects on the state and local economies and
the housing market that are the result of continued foreclosures by
modifying the foreclosure process to ensure that borrowers who may
qualify for a foreclosure alternative are considered for, and have a
meaningful opportunity to obtain, available loss mitigation options.
These changes to the state's foreclosure process are essential to
ensure that the current crisis is not worsened by unnecessarily
adding foreclosed properties to the market when an alternative to
foreclosure may be available. Avoiding foreclosure, where possible,
will help stabilize the state's housing market and avoid the
substantial, corresponding negative effects of foreclosures on
families, communities, and the state and local economy.
   (c) This act is necessary to provide stability to California's
statewide and regional economies and housing market by facilitating
opportunities for borrowers to pursue loss mitigation options.
  SEC. 2.  Section 2920.5 is added to the Civil Code, to read:
   2920.5.  For purposes of this article, the following definitions
apply:
   (a) "Mortgage servicer" means a person or entity who directly
services a loan, or who is responsible for interacting with the
borrower, managing the loan account on a daily basis including
collecting and crediting periodic loan payments, managing any escrow
account, or enforcing the note and security instrument, either as the
current owner of the promissory note or as the current owner's
authorized agent. "Mortgage servicer" also means a subservicing agent
to a master servicer by contract. "Mortgage servicer" shall not
include a trustee, or a trustee's authorized agent, acting under a
power of sale pursuant to a deed of trust.
   (b) "Foreclosure prevention alternative" means a first lien loan
modification or another available loss mitigation option.
   (c) (1) Unless otherwise provided and for purposes of Sections
2923.4, 2923.5, 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11,
2924.18, and 2924.19, "borrower" means any natural person who is a
mortgagor or trustor and who is potentially eligible for any federal,
state, or proprietary foreclosure prevention alternative program
offered by, or through, his or her mortgage servicer.
   (2) For purposes of the sections listed in paragraph (1),
"borrower" shall not include any of the following:
   (A) An individual who has surrendered the secured property as
evidenced by either a letter confirming the surrender or delivery of
the keys to the property to the mortgagee, trustee, beneficiary, or
authorized agent.
   (B) An individual who has contracted with an organization, person,
or entity whose primary business is advising people who have decided
to leave their homes on how to extend the foreclosure process and
avoid their contractual obligations to mortgagees or beneficiaries.
   (C) An individual who has filed a case under Chapter 7, 11, 12, or
13 of Title 11 of the United States Code and the bankruptcy court
has not entered an order closing or dismissing the bankruptcy case,
or granting relief from a stay of foreclosure.
   (d) "First lien" means the most senior mortgage or deed of trust
on the property that is the subject of the notice of default or
notice of sale.
  SEC. 3.  Section 2923.4 is added to the Civil Code, to read:
   2923.4.  (a) The purpose of the act that added this section is to
ensure that, as part of the nonjudicial foreclosure process,
borrowers are considered for, and have a meaningful opportunity to
obtain, available loss mitigation options, if any, offered by or
through the borrower's mortgage servicer, such as loan modifications
or other alternatives to foreclosure. Nothing in the act that added
this section, however, shall be interpreted to require a particular
result of that process.
   (b) Nothing in this article obviates or supersedes the obligations
of the signatories to the consent judgment entered in the case
entitled United States of America et al. v. Bank of America
Corporation et al., filed in the United States District Court for the
District of Columbia, case number 1:12-cv-00361 RMC.
  SEC. 4.  Section 2923.5 of the Civil Code is amended to read:
   2923.5.  (a) (1) A mortgage servicer, mortgagee, trustee,
beneficiary, or authorized agent may not record a notice of default
pursuant to Section 2924 until both of the following:
   (A) Either 30 days after initial contact is made as required by
paragraph (2) or 30 days after satisfying the due diligence
requirements as described in subdivision (e).
   (B) The mortgage servicer complies with paragraph (1) of
subdivision (a) of Section 2924.18, if the borrower has provided a
complete application as defined in subdivision (d) of Section
2924.18.
   (2) A mortgage servicer shall contact the borrower in person or by
telephone in order to assess the borrower's financial situation and
explore options for the borrower to avoid foreclosure. During the
initial contact, the mortgage servicer shall advise the borrower that
he or she has the right to request a subsequent meeting and, if
requested, the mortgage servicer shall schedule the meeting to occur
within 14 days. The assessment of the borrower's financial situation
and discussion of options may occur during the first contact, or at
the subsequent meeting scheduled for that purpose. In either case,
the borrower shall be provided the toll-free telephone number made
available by the United States Department of Housing and Urban
Development (HUD) to find a HUD-certified housing counseling agency.
Any meeting may occur telephonically.
   (b) A notice of default recorded pursuant to Section 2924 shall
include a declaration that the mortgage servicer has contacted the
borrower, has tried with due diligence to contact the borrower as
required by this section, or that no contact was required because the
individual did not meet the definition of "borrower" pursuant to
subdivision (c) of Section 2920.5.
   (c) A mortgage servicer's loss mitigation personnel may
participate by telephone during any contact required by this section.

    (d) A borrower may designate, with consent given in writing, a
HUD-certified housing counseling agency, attorney, or other adviser
to discuss with the mortgage servicer, on the borrower's behalf, the
borrower's financial situation and options for the borrower to avoid
foreclosure. That contact made at the direction of the borrower shall
satisfy the contact requirements of paragraph (2) of subdivision
(a). Any loan modification or workout plan offered at the meeting by
the mortgage servicer is subject to approval by the borrower.
    (e) A notice of default may be recorded pursuant to Section 2924
when a mortgage servicer has not contacted a borrower as required by
paragraph (2) of subdivision (a) provided that the failure to contact
the borrower occurred despite the due diligence of the mortgage
servicer. For purposes of this section, "due diligence" shall require
and mean all of the following:
   (1) A mortgage servicer shall first attempt to contact a borrower
by sending a first-class letter that includes the toll-free telephone
number made available by HUD to find a HUD-certified housing
counseling agency.
   (2) (A) After the letter has been sent, the mortgage servicer
shall attempt to contact the borrower by telephone at least three
times at different hours and on different days. Telephone calls shall
be made to the primary telephone number on file.
   (B) A mortgage servicer may attempt to contact a borrower using an
automated system to dial borrowers, provided that, if the telephone
call is answered, the call is connected to a live representative of
the mortgage servicer.
   (C) A mortgage servicer satisfies the telephone contact
requirements of this paragraph if it determines, after attempting
contact pursuant to this paragraph, that the borrower's primary
telephone number and secondary telephone number or numbers on file,
if any, have been disconnected.
   (3) If the borrower does not respond within two weeks after the
telephone call requirements of paragraph (2) have been satisfied, the
mortgage servicer shall then send a certified letter, with return
receipt requested.
   (4) The mortgage servicer shall provide a means for the borrower
to contact it in a timely manner, including a toll-free telephone
number that will provide access to a live representative during
business hours.
   (5) The mortgage servicer has posted a prominent link on the
homepage of its Internet Web site, if any, to the following
information:
   (A) Options that may be available to borrowers who are unable to
afford their mortgage payments and who wish to avoid foreclosure, and
instructions to borrowers advising them on steps to take to explore
those options.
   (B) A list of financial documents borrowers should collect and be
prepared to present to the mortgage servicer when discussing options
for avoiding foreclosure.
   (C) A toll-free telephone number for borrowers who wish to discuss
options for avoiding foreclosure with their mortgage servicer.
   (D) The toll-free telephone number made available by HUD to find a
HUD-certified housing counseling agency.
    (f) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
   (g) This section shall apply only to entities described in
subdivision (b) of Section 2924.18.
    (h) This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 5.  Section 2923.5 is added to the Civil Code, to read:
   2923.5.  (a) (1) A mortgage servicer, mortgagee, trustee,
beneficiary, or authorized agent may not record a notice of default
pursuant to Section 2924 until both of the following:
   (A) Either 30 days after initial contact is made as required by
paragraph (2) or 30 days after satisfying the due diligence
requirements as described in subdivision (e).
   (B) The mortgage servicer complies with subdivision (a) of Section
2924.11, if the borrower has provided a complete application as
defined in subdivision (f) of Section 2924.11.
   (2) A mortgage servicer shall contact the borrower in person or by
telephone in order to assess the borrower's financial situation and
explore options for the borrower to avoid foreclosure. During the
initial contact, the mortgage servicer shall advise the borrower that
he or she has the right to request a subsequent meeting and, if
requested, the mortgage servicer shall schedule the meeting to occur
within 14 days. The assessment of the borrower's financial situation
and discussion of options may occur during the first contact, or at
the subsequent meeting scheduled for that purpose. In either case,
the borrower shall be provided the toll-free telephone number made
available by the United States Department of Housing and Urban
Development (HUD) to find a HUD-certified housing counseling agency.
Any meeting may occur telephonically.
   (b) A notice of default recorded pursuant to Section 2924 shall
include a declaration that the mortgage servicer has contacted the
borrower, has tried with due diligence to contact the borrower as
required by this section, or that no contact was required because the
individual did not meet the definition of "borrower" pursuant to
subdivision (c) of Section 2920.5.
   (c) A mortgage servicer's loss mitigation personnel may
participate by telephone during any contact required by this section.

   (d) A borrower may designate, with consent given in writing, a
HUD-certified housing counseling agency, attorney, or other adviser
to discuss with the mortgage servicer, on the borrower's behalf, the
borrower's financial situation and options for the borrower to avoid
foreclosure. That contact made at the direction of the borrower shall
satisfy the contact requirements of paragraph (2) of subdivision
(a). Any loan modification or workout plan offered at the meeting by
the mortgage servicer is subject to approval by the borrower.
   (e) A notice of default may be recorded pursuant to Section 2924
when a mortgage servicer has not contacted a borrower as required by
paragraph (2) of subdivision (a) provided that the failure to contact
the borrower occurred despite the due diligence of the mortgage
servicer. For purposes of this section, "due diligence" shall require
and mean all of the following:
   (1) A mortgage servicer shall first attempt to contact a borrower
by sending a first-class letter that includes the toll-free telephone
number made available by HUD to find a HUD-certified housing
counseling agency.
   (2) (A) After the letter has been sent, the mortgage servicer
shall attempt to contact the borrower by telephone at least three
times at different hours and on different days. Telephone calls shall
be made to the primary telephone number on file.
   (B) A mortgage servicer may attempt to contact a borrower using an
automated system to dial borrowers, provided that, if the telephone
call is answered, the call is connected to a live representative of
the mortgage servicer.
   (C) A mortgage servicer satisfies the telephone contact
requirements of this paragraph if it determines, after attempting
contact pursuant to this paragraph, that the borrower's primary
telephone number and secondary telephone number or numbers on file,
if any, have been disconnected.
   (3) If the borrower does not respond within two weeks after the
telephone call requirements of paragraph (2) have been satisfied, the
mortgage servicer shall then send a certified letter, with return
receipt requested.
   (4) The mortgage servicer shall provide a means for the borrower
to contact it in a timely manner, including a toll-free telephone
number that will provide access to a live representative during
business hours.
   (5) The mortgage servicer has posted a prominent link on the
homepage of its Internet Web site, if any, to the following
information:
   (A) Options that may be available to borrowers who are unable to
afford their mortgage payments and who wish to avoid foreclosure, and
instructions to borrowers advising them on steps to take to explore
those options.
   (B) A list of financial documents borrowers should collect and be
prepared to present to the mortgage servicer when discussing options
for avoiding foreclosure.
   (C) A toll-free telephone number for borrowers who wish to discuss
options for avoiding foreclosure with their mortgage servicer.
   (D) The toll-free telephone number made available by HUD to find a
HUD-certified housing counseling agency.
   (f) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
   (g) This section shall become operative on January 1, 2018.
  SEC. 6.  Section 2923.55 is added to the Civil Code, to read:
   2923.55.  (a) A mortgage servicer, mortgagee, trustee,
beneficiary, or authorized agent may not record a notice of default
pursuant to Section 2924 until all of the following:
    (1) The mortgage servicer has satisfied the requirements of
paragraph (1) of subdivision (b).
   (2) Either 30 days after initial contact is made as required by
paragraph (2) of subdivision (b) or 30 days after satisfying the due
diligence requirements as described in subdivision (f).
   (3) The mortgage servicer complies with subdivision (c) of Section
2923.6, if the borrower has provided a complete application as
defined in subdivision (h) of Section 2923.6.
   (b) (1) As specified in subdivision (a), a mortgage servicer shall
send the following information in writing to the borrower:
   (A) A statement that if the borrower is a servicemember or a
dependent of a servicemember, he or she may be entitled to certain
protections under the federal Servicemembers Civil Relief Act (50
U.S.C. Sec. 501 et seq.) regarding the servicemember's interest rate
and the risk of foreclosure, and counseling for covered
servicemembers that is available at agencies such as Military
OneSource and Armed Forces Legal Assistance.
   (B) A statement that the borrower may request the following:
   (i) A copy of the borrower's promissory note or other evidence of
indebtedness.
   (ii) A copy of the borrower's deed of trust or mortgage.
   (iii) A copy of any assignment, if applicable, of the borrower's
mortgage or deed of trust required to demonstrate the right of the
mortgage servicer to foreclose.
   (iv) A copy of the borrower's payment history since the borrower
was last less than 60 days past due.
   (2) A mortgage servicer shall contact the borrower in person or by
telephone in order to assess the borrower's financial situation and
explore options for the borrower to avoid foreclosure. During the
initial contact, the mortgage servicer shall advise the borrower that
he or she has the right to request a subsequent meeting and, if
requested, the mortgage servicer shall schedule the meeting to occur
within 14 days. The assessment of the borrower's financial situation
and discussion of options may occur during the first contact, or at
the subsequent meeting scheduled for that purpose. In either case,
the borrower shall be provided the toll-free telephone number made
available by the United States Department of Housing and Urban
Development (HUD) to find a HUD-certified housing counseling agency.
Any meeting may occur telephonically.
   (c) A notice of default recorded pursuant to Section 2924 shall
include a declaration that the mortgage servicer has contacted the
borrower, has tried with due diligence to contact the borrower as
required by this section, or that no contact was required because the
individual did not meet the definition of "borrower" pursuant to
subdivision (c) of Section 2920.5.
   (d) A mortgage servicer's loss mitigation personnel may
participate by telephone during any contact required by this section.

   (e) A borrower may designate, with consent given in writing, a
HUD-certified housing counseling agency, attorney, or other adviser
to discuss with the mortgage servicer, on the borrower's behalf, the
borrower's financial situation and options for the borrower to avoid
foreclosure. That contact made at the direction of the borrower shall
satisfy the contact requirements of paragraph (2) of subdivision
(b). Any foreclosure prevention alternative offered at the meeting by
the mortgage servicer is subject to approval by the borrower.
   (f) A notice of default may be recorded pursuant to Section 2924
when a mortgage servicer has not contacted a borrower as required by
paragraph (2) of subdivision (b), provided that the failure to
contact the borrower occurred despite the due diligence of the
mortgage servicer. For purposes of this section, "due diligence"
shall require and mean all of the following:
   (1) A mortgage servicer shall first attempt to contact a borrower
by sending a first-class letter that includes the toll-free telephone
number made available by HUD to find a HUD-certified housing
counseling agency.
   (2) (A) After the letter has been sent, the mortgage servicer
shall attempt to contact the borrower by telephone at least three
times at different hours and on different days. Telephone calls shall
be made to the primary telephone number on file.
   (B) A mortgage servicer may attempt to contact a borrower using an
automated system to dial borrowers, provided that, if the telephone
call is answered, the call is connected to a live representative of
the mortgage servicer.
   (C) A mortgage servicer satisfies the telephone contact
requirements of this paragraph if it determines, after attempting
contact pursuant to this paragraph, that the borrower's primary
telephone number and secondary telephone number or numbers on file,
if any, have been disconnected.
   (3) If the borrower does not respond within two weeks after the
telephone call requirements of paragraph (2) have been satisfied, the
mortgage servicer shall then send a certified letter, with return
receipt requested, that includes the toll-free telephone number made
available by HUD to find a HUD-certified housing counseling agency.
   (4) The mortgage servicer shall provide a means for the borrower
to contact it in a timely manner, including a toll-free telephone
number that will provide access to a live representative during
business hours.
   (5) The mortgage servicer has posted a prominent link on the
homepage of its Internet Web site, if any, to the following
information:
   (A) Options that may be available to borrowers who are unable to
afford their mortgage payments and who wish to avoid foreclosure, and
instructions to borrowers advising them on steps to take to explore
those options.
   (B) A list of financial documents borrowers should collect and be
prepared to present to the mortgage servicer when discussing options
for avoiding foreclosure.
   (C) A toll-free telephone number for borrowers who wish to discuss
options for avoiding foreclosure with their mortgage servicer.
   (D) The toll-free telephone number made available by HUD to find a
HUD-certified housing counseling agency.
   (g) This section shall not apply to entities described in
subdivision (b) of Section 2924.18.
   (h) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
   (i)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 7.  Section 2923.6 of the Civil Code is amended to read:
   2923.6.  (a) The Legislature finds and declares that any duty that
mortgage servicers may have to maximize net present value under
their pooling and servicing agreements is owed to all parties in a
loan pool, or to all investors under a pooling and servicing
agreement, not to any particular party in the loan pool or investor
under a pooling and servicing agreement, and that a mortgage servicer
acts in the best interests of all parties to the loan pool or
investors in the pooling and servicing agreement if it agrees to or
implements a loan modification or workout plan for which both of the
following apply:
   (1) The loan is in payment default, or payment default is
reasonably foreseeable.
   (2) Anticipated recovery under the loan modification or workout
plan exceeds the anticipated recovery through foreclosure on a net
present value basis.
   (b) It is the intent of the Legislature that the mortgage servicer
offer the borrower a loan modification or workout plan if such a
modification or plan is consistent with its contractual or other
authority.
   (c) If a borrower submits a complete application for a first lien
loan modification offered by, or through, the borrower's mortgage
servicer, a mortgage servicer, mortgagee, trustee, beneficiary, or
authorized agent shall not record a notice of default or notice of
sale, or conduct a trustee's sale, while the complete first lien loan
modification application is pending. A mortgage servicer, mortgagee,
trustee, beneficiary, or authorized agent shall not record a notice
of default or notice of sale or conduct a trustee's sale until any of
the following occurs:
   (1) The mortgage servicer makes a written determination that the
borrower is not eligible for a first lien loan modification, and any
appeal period pursuant to subdivision (d) has expired.
   (2) The borrower does not accept an offered first lien loan
modification within 14 days of the offer.
   (3) The borrower accepts a written first lien loan modification,
but defaults on, or otherwise breaches the borrower's obligations
under, the first lien loan modification.
   (d) If the borrower's application for a first lien loan
modification is denied, the borrower shall have at least 30 days from
the date of the written denial to appeal the denial and to provide
evidence that the mortgage servicer's determination was in error.
   (e) If the borrower's application for a first lien loan
modification is denied, the mortgage servicer, mortgagee, trustee,
beneficiary, or authorized agent shall not record a notice of default
or, if a notice of default has already been recorded, record a
notice of sale or conduct a trustee's sale until the later of:
   (1) Thirty-one days after the borrower is notified in writing of
the denial.
   (2) If the borrower appeals the denial pursuant to subdivision
(d), the later of 15 days after the denial of the appeal or 14 days
after a first lien loan modification is offered after appeal but
declined by the borrower, or, if a first lien loan modification is
offered and accepted after appeal, the date on which the borrower
fails to timely submit the first payment or otherwise breaches the
terms of the offer.
   (f) Following the denial of a first lien loan modification
application, the mortgage servicer shall send a written notice to the
borrower identifying the reasons for denial, including the
following:
   (1) The amount of time from the date of the denial letter in which
the borrower may request an appeal of the denial of the first lien
loan modification and instructions regarding how to appeal the
denial.
   (2) If the denial was based on investor disallowance, the specific
reasons for the investor disallowance.
   (3) If the denial is the result of a net present value
calculation, the monthly gross income and property value used to
calculate the net present value and a statement that the borrower may
obtain all of the inputs used in the net present value calculation
upon written request to the mortgage servicer.
   (4) If applicable, a finding that the borrower was previously
offered a first lien loan modification and failed to successfully
make payments under the terms of the modified loan.

         (5) If applicable, a description of other foreclosure
prevention alternatives for which the borrower may be eligible, and a
list of the steps the borrower must take in order to be considered
for those options. If the mortgage servicer has already approved the
borrower for another foreclosure prevention alternative, information
necessary to complete the foreclosure prevention alternative.
   (g) In order to minimize the risk of borrowers submitting multiple
applications for first lien loan modifications for the purpose of
delay, the mortgage servicer shall not be obligated to evaluate
applications from borrowers who have already been evaluated or
afforded a fair opportunity to be evaluated for a first lien loan
modification prior to January 1, 2013, or who have been evaluated or
afforded a fair opportunity to be evaluated consistent with the
requirements of this section, unless there has been a material change
in the borrower's financial circumstances since the date of the
borrower's previous application and that change is documented by the
borrower and submitted to the mortgage servicer.
   (h) For purposes of this section, an application shall be deemed
"complete" when a borrower has supplied the mortgage servicer with
all documents required by the mortgage servicer within the reasonable
timeframes specified by the mortgage servicer.
   (i) Subdivisions (c) to (h), inclusive, shall not apply to
entities described in subdivision (b) of Section 2924.18.
   (j) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
    (k)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 8.  Section 2923.6 is added to the Civil Code, to read:
   2923.6.  (a) The Legislature finds and declares that any duty
mortgage servicers may have to maximize net present value under their
pooling and servicing agreements is owed to all parties in a loan
pool, or to all investors under a pooling and servicing agreement,
not to any particular party in the loan pool or investor under a
pooling and servicing agreement, and that a mortgage servicer acts in
the best interests of all parties to the loan pool or investors in
the pooling and servicing agreement if it agrees to or implements a
loan modification or workout plan for which both of the following
apply:
   (1) The loan is in payment default, or payment default is
reasonably foreseeable.
   (2) Anticipated recovery under the loan modification or workout
plan exceeds the anticipated recovery through foreclosure on a net
present value basis.
   (b) It is the intent of the Legislature that the mortgage servicer
offer the borrower a loan modification or workout plan if such a
modification or plan is consistent with its contractual or other
authority.
   (c) This section shall become operative on January 1, 2018.
  SEC. 9.  Section 2923.7 is added to the Civil Code, to read:
   2923.7.  (a) Upon request from a borrower who requests a
foreclosure prevention alternative, the mortgage servicer shall
promptly establish a single point of contact and provide to the
borrower one or more direct means of communication with the single
point of contact.
   (b) The single point of contact shall be responsible for doing all
of the following:
   (1) Communicating the process by which a borrower may apply for an
available foreclosure prevention alternative and the deadline for
any required submissions to be considered for these options.
   (2) Coordinating receipt of all documents associated with
available foreclosure prevention alternatives and notifying the
borrower of any missing documents necessary to complete the
application.
   (3) Having access to current information and personnel sufficient
to timely, accurately, and adequately inform the borrower of the
current status of the foreclosure prevention alternative.
   (4) Ensuring that a borrower is considered for all foreclosure
prevention alternatives offered by, or through, the mortgage
servicer, if any.
   (5) Having access to individuals with the ability and authority to
stop foreclosure proceedings when necessary.
   (c) The single point of contact shall remain assigned to the
borrower's account until the mortgage servicer determines that all
loss mitigation options offered by, or through, the mortgage servicer
have been exhausted or the borrower's account becomes current.
   (d) The mortgage servicer shall ensure that a single point of
contact refers and transfers a borrower to an appropriate supervisor
upon request of the borrower, if the single point of contact has a
supervisor.
   (e) For purposes of this section, "single point of contact" means
an individual or team of personnel each of whom has the ability and
authority to perform the responsibilities described in subdivisions
(b) to (d), inclusive. The mortgage servicer shall ensure that each
member of the team is knowledgeable about the borrower's situation
and current status in the alternatives to foreclosure process.
   (f) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
   (g) (1) This section shall not apply to a depository institution
chartered under state or federal law, a person licensed pursuant to
Division 9 (commencing with Section 22000) or Division 20 (commencing
with Section 50000) of the Financial Code, or a person licensed
pursuant to Part 1 (commencing with Section 10000) of Division 4 of
the Business and Professions Code, that, during its immediately
preceding annual reporting period, as established with its primary
regulator, foreclosed on 175 or fewer residential real properties,
containing no more than four dwelling units, that are located in
California.
   (2) Within three months after the close of any calendar year or
annual reporting period as established with its primary regulator
during which an entity or person described in paragraph (1) exceeds
the threshold of 175 specified in paragraph (1), that entity shall
notify its primary regulator, in a manner acceptable to its primary
regulator, and any mortgagor or trustor who is delinquent on a
residential mortgage loan serviced by that entity of the date on
which that entity will be subject to this section, which date shall
be the first day of the first month that is six months after the
close of the calendar year or annual reporting period during which
that entity exceeded the threshold.
  SEC. 10.  Section 2924 of the Civil Code, as amended by Section 1
of Chapter 180 of the Statutes of 2010, is amended to read:
   2924.  (a) Every transfer of an interest in property, other than
in trust, made only as a security for the performance of another act,
is to be deemed a mortgage, except when in the case of personal
property it is accompanied by actual change of possession, in which
case it is to be deemed a pledge. Where, by a mortgage created after
July 27, 1917, of any estate in real property, other than an estate
at will or for years, less than two, or in any transfer in trust made
after July 27, 1917, of a like estate to secure the performance of
an obligation, a power of sale is conferred upon the mortgagee,
trustee, or any other person, to be exercised after a breach of the
obligation for which that mortgage or transfer is a security, the
power shall not be exercised except where the mortgage or transfer is
made pursuant to an order, judgment, or decree of a court of record,
or to secure the payment of bonds or other evidences of indebtedness
authorized or permitted to be issued by the Commissioner of
Corporations, or is made by a public utility subject to the
provisions of the Public Utilities Act, until all of the following
apply:
   (1) The trustee, mortgagee, or beneficiary, or any of their
authorized agents shall first file for record, in the office of the
recorder of each county wherein the mortgaged or trust property or
some part or parcel thereof is situated, a notice of default. That
notice of default shall include all of the following:
   (A) A statement identifying the mortgage or deed of trust by
stating the name or names of the trustor or trustors and giving the
book and page, or instrument number, if applicable, where the
mortgage or deed of trust is recorded or a description of the
mortgaged or trust property.
   (B) A statement that a breach of the obligation for which the
mortgage or transfer in trust is security has occurred.
   (C) A statement setting forth the nature of each breach actually
known to the beneficiary and of his or her election to sell or cause
to be sold the property to satisfy that obligation and any other
obligation secured by the deed of trust or mortgage that is in
default.
   (D) If the default is curable pursuant to Section 2924c, the
statement specified in paragraph (1) of subdivision (b) of Section
2924c.
   (2) Not less than three months shall elapse from the filing of the
notice of default.
   (3) Except as provided in paragraph (4), after the lapse of the
three months described in paragraph (2), the mortgagee, trustee, or
other person authorized to take the sale shall give notice of sale,
stating the time and place thereof, in the manner and for a time not
less than that set forth in Section 2924f.
   (4) Notwithstanding paragraph (3), the mortgagee, trustee, or
other person authorized to take sale may record a notice of sale
pursuant to Section 2924f up to five days before the lapse of the
three-month period described in paragraph (2), provided that the date
of sale is no earlier than three months and 20 days after the
recording of the notice of default.
   (5) Until January 1, 2018, whenever a sale is postponed for a
period of at least 10 business days pursuant to Section 2924g, a
mortgagee, beneficiary, or authorized agent shall provide written
notice to a borrower regarding the new sale date and time, within
five business days following the postponement. Information provided
pursuant to this paragraph shall not constitute the public
declaration required by subdivision (d) of Section 2924g. Failure to
comply with this paragraph shall not invalidate any sale that would
otherwise be valid under Section 2924f. This paragraph shall be
inoperative on January 1, 2018.
   (6) No entity shall record or cause a notice of default to be
recorded or otherwise initiate the foreclosure process unless it is
the holder of the beneficial interest under the mortgage or deed of
trust, the original trustee or the substituted trustee under the deed
of trust, or the designated agent of the holder of the beneficial
interest. No agent of the holder of the beneficial interest under the
mortgage or deed of trust, original trustee or substituted trustee
under the deed of trust may record a notice of default or otherwise
commence the foreclosure process except when acting within the scope
of authority designated by the holder of the beneficial interest.
   (b) In performing acts required by this article, the trustee shall
incur no liability for any good faith error resulting from reliance
on information provided in good faith by the beneficiary regarding
the nature and the amount of the default under the secured
obligation, deed of trust, or mortgage. In performing the acts
required by this article, a trustee shall not be subject to Title
1.6c (commencing with Section 1788) of Part 4.
   (c) A recital in the deed executed pursuant to the power of sale
of compliance with all requirements of law regarding the mailing of
copies of notices or the publication of a copy of the notice of
default or the personal delivery of the copy of the notice of default
or the posting of copies of the notice of sale or the publication of
a copy thereof shall constitute prima facie evidence of compliance
with these requirements and conclusive evidence thereof in favor of
bona fide purchasers and encumbrancers for value and without notice.
   (d) All of the following shall constitute privileged
communications pursuant to Section 47:
   (1) The mailing, publication, and delivery of notices as required
by this section.
   (2) Performance of the procedures set forth in this article.
   (3) Performance of the functions and procedures set forth in this
article if those functions and procedures are necessary to carry out
the duties described in Sections 729.040, 729.050, and 729.080 of the
Code of Civil Procedure.
   (e) There is a rebuttable presumption that the beneficiary
actually knew of all unpaid loan payments on the obligation owed to
the beneficiary and secured by the deed of trust or mortgage subject
to the notice of default. However, the failure to include an actually
known default shall not invalidate the notice of sale and the
beneficiary shall not be precluded from asserting a claim to this
omitted default or defaults in a separate notice of default.
  SEC. 11.  Section 2924 of the Civil Code, as amended by Section 2
of Chapter 180 of the Statutes of 2010, is repealed.
  SEC. 12.  Section 2924.9 is added to the Civil Code, to read:
   2924.9.  (a) Unless a borrower has previously exhausted the first
lien loan modification process offered by, or through, his or her
mortgage servicer described in Section 2923.6, within five business
days after recording a notice of default pursuant to Section 2924, a
mortgage servicer that offers one or more foreclosure prevention
alternatives shall send a written communication to the borrower that
includes all of the following information:
   (1) That the borrower may be evaluated for a foreclosure
prevention alternative or, if applicable, foreclosure prevention
alternatives.
   (2) Whether an application is required to be submitted by the
borrower in order to be considered for a foreclosure prevention
alternative.
   (3) The means and process by which a borrower may obtain an
application for a foreclosure prevention alternative.
   (b) This section shall not apply to entities described in
subdivision (b) of Section 2924.18.
   (c) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
   (d)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 13.  Section 2924.10 is added to the Civil Code, to read:
   2924.10.  (a) When a borrower submits a complete first lien
modification application or any document in connection with a first
lien modification application, the mortgage servicer shall provide
written acknowledgment of the receipt of the documentation within
five business days of receipt. In its initial acknowledgment of
receipt of the loan modification application, the mortgage servicer
shall include the following information:
   (1) A description of the loan modification process, including an
estimate of when a decision on the loan modification will be made
after a complete application has been submitted by the borrower and
the length of time the borrower will have to consider an offer of a
loan modification or other foreclosure prevention alternative.
   (2) Any deadlines, including deadlines to submit missing
documentation, that would affect the processing of a first lien loan
modification application.
   (3) Any expiration dates for submitted documents.
   (4) Any deficiency in the borrower's first lien loan modification
application.
   (b) For purposes of this section, a borrower's first lien loan
modification application shall be deemed to be "complete" when a
borrower has supplied the mortgage servicer with all documents
required by the mortgage servicer within the reasonable timeframes
specified by the mortgage servicer.
   (c) This section shall not apply to entities described in
subdivision (b) of Section 2924.18.
   (d) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
   (e)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 14.  Section 2924.11 is added to the Civil Code, to read:
   2924.11.  (a) If a foreclosure prevention alternative is approved
in writing prior to the recordation of a notice of default, a
mortgage servicer, mortgagee, trustee, beneficiary, or authorized
agent shall not record a notice of default under either of the
following circumstances:
   (1) The borrower is in compliance with the terms of a written
trial or permanent loan modification, forbearance, or repayment plan.

   (2) A foreclosure prevention alternative has been approved in
writing by all parties, including, for example, the first lien
investor, junior lienholder, and mortgage insurer, as applicable, and
proof of funds or financing has been provided to the servicer.
   (b) If a foreclosure prevention alternative is approved in writing
after the recordation of a notice of default, a mortgage servicer,
mortgagee, trustee, beneficiary, or authorized agent shall not record
a notice of sale or conduct a trustee's sale under either of the
following circumstances:
   (1) The borrower is in compliance with the terms of a written
trial or permanent loan modification, forbearance, or repayment plan.

   (2) A foreclosure prevention alternative has been approved in
writing by all parties, including, for example, the first lien
investor, junior lienholder, and mortgage insurer, as applicable, and
proof of funds or financing has been provided to the servicer.
   (c) When a borrower accepts an offered first lien loan
modification or other foreclosure prevention alternative, the
mortgage servicer shall provide the borrower with a copy of the fully
executed loan modification agreement or agreement evidencing the
foreclosure prevention alternative following receipt of the executed
copy from the borrower.
   (d) A mortgagee, beneficiary, or authorized agent shall record a
rescission of a notice of default or cancel a pending trustee's sale,
if applicable, upon the borrower executing a permanent foreclosure
prevention alternative. In the case of a short sale, the rescission
or cancellation of the pending trustee's sale shall occur when the
short sale has been approved by all parties and proof of funds or
financing has been provided to the mortgagee, beneficiary, or
authorized agent.
   (e) The mortgage servicer shall not charge any application,
processing, or other fee for a first lien loan modification or other
foreclosure prevention alternative.
   (f) The mortgage servicer shall not collect any late fees for
periods during which a complete first lien loan modification
application is under consideration or a denial is being appealed, the
borrower is making timely modification payments, or a foreclosure
prevention alternative is being evaluated or exercised.
   (g) If a borrower has been approved in writing for a first lien
loan modification or other foreclosure prevention alternative, and
the servicing of that borrower's loan is transferred or sold to
another mortgage servicer, the subsequent mortgage servicer shall
continue to honor any previously approved first lien loan
modification or other foreclosure prevention alternative, in
accordance with the provisions of the act that added this section.
   (h) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
   (i) This section shall not apply to entities described in
subdivision (b) of Section 2924.18.
   (j)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 15.  Section 2924.11 is added to the Civil Code, to read:
   2924.11.  (a) If a borrower submits a complete application for a
foreclosure prevention alternative offered by, or through, the
borrower's mortgage servicer, a mortgage servicer, trustee,
mortgagee, beneficiary, or authorized agent shall not record a notice
of sale or conduct a trustee's sale while the complete foreclosure
prevention alternative application is pending, and until the borrower
has been provided with a written determination by the mortgage
servicer regarding that borrower's eligibility for the requested
foreclosure prevention alternative.
   (b) Following the denial of a first lien loan modification
application, the mortgage servicer shall send a written notice to the
borrower identifying with specificity the reasons for the denial and
shall include a statement that the borrower may obtain additional
documentation supporting the denial decision upon written request to
the mortgage servicer.
   (c) If a foreclosure prevention alternative is approved in writing
prior to the recordation of a notice of default, a mortgage
servicer, mortgagee, trustee, beneficiary, or authorized agent shall
not record a notice of default under either of the following
circumstances:
   (1) The borrower is in compliance with the terms of a written
trial or permanent loan modification, forbearance, or repayment plan.

   (2) A foreclosure prevention alternative has been approved in
writing by all parties, including, for example, the first lien
investor, junior lienholder, and mortgage insurer, as applicable, and
proof of funds or financing has been provided to the servicer.
   (d) If a foreclosure prevention alternative is approved in writing
after the recordation of a notice of default, a mortgage servicer,
mortgagee, trustee, beneficiary, or authorized agent shall not record
a notice of sale or conduct a trustee's sale under either of the
following circumstances:
   (1) The borrower is in compliance with the terms of a written
trial or permanent loan modification, forbearance, or repayment plan.

   (2) A foreclosure prevention alternative has been approved in
writing by all parties, including, for example, the first lien
investor, junior lienholder, and mortgage insurer, as applicable, and
proof of funds or financing has been provided to the servicer.
   (e) This section applies only to mortgages or deeds of trust as
described in Section 2924.15.
   (f) For purposes of this section, an application shall be deemed
"complete" when a borrower has supplied the mortgage servicer with
all documents required by the mortgage servicer within the reasonable
timeframes specified by the mortgage servicer.
   (g) This section shall become operative on January 1, 2018.
  SEC. 16.  Section 2924.12 is added to the Civil Code, to read:
   2924.12.  (a) (1) If a trustee's deed upon sale has not been
recorded, a borrower may bring an action for injunctive relief to
enjoin a material violation of Section 2923.55, 2923.6, 2923.7,
2924.9, 2924.10, 2924.11, or 2924.17.
   (2) Any injunction shall remain in place and any trustee's sale
shall be enjoined until the court determines that the mortgage
servicer, mortgagee, trustee, beneficiary, or authorized agent has
corrected and remedied the violation or violations giving rise to the
action for injunctive relief. An enjoined entity may move to
dissolve an injunction based on a showing that the material violation
has been corrected and remedied.
   (b) After a trustee's deed upon sale has been recorded, a mortgage
servicer, mortgagee, trustee, beneficiary, or authorized agent shall
be liable to a borrower for actual economic damages pursuant to
Section 3281, resulting from a material violation of Section 2923.55,
2923.6, 2923.7, 2924.9, 2924.10, 2924.11, or 2924.17 by that
mortgage servicer, mortgagee, trustee, beneficiary, or authorized
agent where the violation was not corrected and remedied prior to the
recordation of the trustee's deed upon sale. If the court finds that
the material violation was intentional or reckless, or resulted from
willful misconduct by a mortgage servicer, mortgagee, trustee,
beneficiary, or authorized agent, the court may award the borrower
the greater of treble actual damages or statutory damages of fifty
thousand dollars ($50,000).
   (c) A mortgage servicer, mortgagee, trustee, beneficiary, or
authorized agent shall not be liable for any violation that it has
corrected and remedied prior to the recordation of a trustee's deed
upon sale, or that has been corrected and remedied by third parties
working on its behalf prior to the recordation of a trustee's deed
upon sale.
   (d) A violation of Section 2923.55, 2923.6, 2923.7, 2924.9,
2924.10, 2924.11, or 2924.17 by a person licensed by the Department
of Corporations, Department of Financial Institutions, or Department
of Real Estate shall be deemed to be a violation of that person's
licensing law.
   (e) No violation of this article shall affect the validity of a
sale in favor of a bona fide purchaser and any of its encumbrancers
for value without notice.
   (f) A third-party encumbrancer shall not be relieved of liability
resulting from violations of Section 2923.55, 2923.6, 2923.7, 2924.9,
2924.10, 2924.11, or 2924.17 committed by that third-party
encumbrancer, that occurred prior to the sale of the subject property
to the bona fide purchaser.
   (g) A signatory to a consent judgment entered in the case entitled
United States of America et al. v. Bank of America Corporation et
al., filed in the United States District Court for the District of
Columbia, case number 1:12-cv-00361 RMC, that is in compliance with
the relevant terms of the Settlement Term Sheet of that consent
judgment with respect to the borrower who brought an action pursuant
to this section while the consent judgment is in effect shall have no
liability for a violation of Section 2923.55, 2923.6, 2923.7,
2924.9, 2924.10, 2924.11, or 2924.17.
   (h) The rights, remedies, and procedures provided by this section
are in addition to and independent of any other rights, remedies, or
procedures under any other law. Nothing in this section shall be
construed to alter, limit, or negate any other rights, remedies, or
procedures provided by law.
   (i) A court may award a prevailing borrower reasonable attorney's
fees and costs in an action brought pursuant to this section. A
borrower shall be deemed to have prevailed for purposes of this
subdivision if the borrower obtained injunctive relief or was awarded
damages pursuant to this section.
   (j) This section shall not apply to entities described in
subdivision (b) of Section 2924.18.
   (k)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 17.  Section 2924.12 is added to the Civil Code, to read:
   2924.12.  (a) (1) If a trustee's deed upon sale has not been
recorded, a borrower may bring an action for injunctive relief to
enjoin a                                                 material
violation of Section 2923.5, 2923.7, 2924.11, or 2924.17.
   (2) Any injunction shall remain in place and any trustee's sale
shall be enjoined until the court determines that the mortgage
servicer, mortgagee, trustee, beneficiary, or authorized agent has
corrected and remedied the violation or violations giving rise to the
action for injunctive relief. An enjoined entity may move to
dissolve an injunction based on a showing that the material violation
has been corrected and remedied.
   (b) After a trustee's deed upon sale has been recorded, a mortgage
servicer, mortgagee, trustee, beneficiary, or authorized agent shall
be liable to a borrower for actual economic damages pursuant to
Section 3281, resulting from a material violation of Section 2923.5,
2923.7, 2924.11, or 2924.17 by that mortgage servicer, mortgagee,
trustee, beneficiary, or authorized agent where the violation was not
corrected and remedied prior to the recordation of the trustee's
deed upon sale. If the court finds that the material violation was
intentional or reckless, or resulted from willful misconduct by a
mortgage servicer, mortgagee, trustee, beneficiary, or authorized
agent, the court may award the borrower the greater of treble actual
damages or statutory damages of fifty thousand dollars ($50,000).
   (c) A mortgage servicer, mortgagee, trustee, beneficiary, or
authorized agent shall not be liable for any violation that it has
corrected and remedied prior to the recordation of the trustee's deed
upon sale, or that has been corrected and remedied by third parties
working on its behalf prior to the recordation of the trustee's deed
upon sale.
   (d) A violation of Section 2923.5, 2923.7, 2924.11, or 2924.17 by
a person licensed by the Department of Corporations, Department of
Financial Institutions, or Department of Real Estate shall be deemed
to be a violation of that person's licensing law.
   (e) No violation of this article shall affect the validity of a
sale in favor of a bona fide purchaser and any of its encumbrancers
for value without notice.
   (f) A third-party encumbrancer shall not be relieved of liability
resulting from violations of Section 2923.5, 2923.7, 2924.11, or
2924.17 committed by that third-party encumbrancer, that occurred
prior to the sale of the subject property to the bona fide purchaser.

   (g) The rights, remedies, and procedures provided by this section
are in addition to and independent of any other rights, remedies, or
procedures under any other law. Nothing in this section shall be
construed to alter, limit, or negate any other rights, remedies, or
procedures provided by law.
   (h) A court may award a prevailing borrower reasonable attorney's
fees and costs in an action brought pursuant to this section. A
borrower shall be deemed to have prevailed for purposes of this
subdivision if the borrower obtained injunctive relief or was awarded
damages pursuant to this section.
   (i) This section shall become operative on January 1, 2018.
  SEC. 18.  Section 2924.15 is added to the Civil Code, to read:
   2924.15.  (a) Unless otherwise provided, paragraph (5) of
subdivision (a) of Section 2924, and Sections 2923.5, 2923.55,
2923.6, 2923.7, 2924.9, 2924.10, 2924.11, and 2924.18 shall apply
only to first lien mortgages or deeds of trust that are secured by
owner-occupied residential real property containing no more than four
dwelling units. For these purposes, "owner-occupied" means that the
property is the principal residence of the borrower and is security
for a loan made for personal, family, or household purposes.
   (b)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 19.  Section 2924.15 is added to the Civil Code, to read:
   2924.15.  (a) Unless otherwise provided, Sections 2923.5, 2923.7,
and 2924.11 shall apply only to first lien mortgages or deeds of
trust that are secured by owner-occupied residential real property
containing no more than four dwelling units. For these purposes,
"owner-occupied" means that the property is the principal residence
of the borrower and is security for a loan made for personal, family,
or household purposes.
   (b) This section shall become operative on January 1, 2018.
  SEC. 20.  Section 2924.17 is added to the Civil Code, to read:
   2924.17.  (a) A declaration recorded pursuant to Section 2923.5
or, until January 1, 2018, pursuant to Section 2923.55, a notice of
default, notice of sale, assignment of a deed of trust, or
substitution of trustee recorded by or on behalf of a mortgage
servicer in connection with a foreclosure subject to the requirements
of Section 2924, or a declaration or affidavit filed in any court
relative to a foreclosure proceeding shall be accurate and complete
and supported by competent and reliable evidence.
   (b) Before recording or filing any of the documents described in
subdivision (a), a mortgage servicer shall ensure that it has
reviewed competent and reliable evidence to substantiate the borrower'
s default and the right to foreclose, including the borrower's loan
status and loan information.
   (c) Until January 1, 2018, any mortgage servicer that engages in
multiple and repeated uncorrected violations of subdivision (b) in
recording documents or filing documents in any court relative to a
foreclosure proceeding shall be liable for a civil penalty of up to
seven thousand five hundred dollars ($7,500) per mortgage or deed of
trust in an action brought by a government entity identified in
Section 17204 of the Business and Professions Code, or in an
administrative proceeding brought by the Department of Corporations,
the Department of Real Estate, or the Department of Financial
Institutions against a respective licensee, in addition to any other
remedies available to these entities. This subdivision shall be
inoperative on January 1, 2018.
  SEC. 21.  Section 2924.18 is added to the Civil Code, to read:
   2924.18.  (a) (1) If a borrower submits a complete application for
a first lien loan modification offered by, or through, the borrower'
s mortgage servicer, a mortgage servicer, trustee, mortgagee,
beneficiary, or authorized agent shall not record a notice of
default, notice of sale, or conduct a trustee's sale while the
complete first lien loan modification application is pending, and
until the borrower has been provided with a written determination by
the mortgage servicer regarding that borrower's eligibility for the
requested loan modification.
   (2) If a foreclosure prevention alternative has been approved in
writing prior to the recordation of a notice of default, a mortgage
servicer, mortgagee, trustee, beneficiary, or authorized agent shall
not record a notice of default under either of the following
circumstances:
   (A) The borrower is in compliance with the terms of a written
trial or permanent loan modification, forbearance, or repayment plan.

   (B) A foreclosure prevention alternative has been approved in
writing by all parties, including, for example, the first lien
investor, junior lienholder, and mortgage insurer, as applicable, and
proof of funds or financing has been provided to the servicer.
   (3) If a foreclosure prevention alternative is approved in writing
after the recordation of a notice of default, a mortgage servicer,
mortgagee, trustee, beneficiary, or authorized agent shall not record
a notice of sale or conduct a trustee's sale under either of the
following circumstances:
   (A) The borrower is in compliance with the terms of a written
trial or permanent loan modification, forbearance, or repayment plan.

   (B) A foreclosure prevention alternative has been approved in
writing by all parties, including, for example, the first lien
investor, junior lienholder, and mortgage insurer, as applicable, and
proof of funds or financing has been provided to the servicer.
   (b) This section shall apply only to a depository institution
chartered under state or federal law, a person licensed pursuant to
Division 9 (commencing with Section 22000) or Division 20 (commencing
with Section 50000) of the Financial Code, or a person licensed
pursuant to Part 1 (commencing with Section 10000) of Division 4 of
the Business and Professions Code, that, during its immediately
preceding annual reporting period, as established with its primary
regulator, foreclosed on 175 or fewer residential real properties,
containing no more than four dwelling units, that are located in
California.
   (c) Within three months after the close of any calendar year or
annual reporting period as established with its primary regulator
during which an entity or person described in subdivision (b) exceeds
the threshold of 175 specified in subdivision (b), that entity shall
notify its primary regulator, in a manner acceptable to its primary
regulator, and any mortgagor or trustor who is delinquent on a
residential mortgage loan serviced by that entity of the date on
which that entity will be subject to Sections 2923.55, 2923.6,
2923.7, 2924.9, 2924.10, 2924.11, and 2924.12, which date shall be
the first day of the first month that is six months after the close
of the calendar year or annual reporting period during which that
entity exceeded the threshold.
   (d) For purposes of this section, an application shall be deemed
"complete" when a borrower has supplied the mortgage servicer with
all documents required by the mortgage servicer within the reasonable
timeframes specified by the mortgage servicer.
   (e) If a borrower has been approved in writing for a first lien
loan modification or other foreclosure prevention alternative, and
the servicing of the borrower's loan is transferred or sold to
another mortgage servicer, the subsequent mortgage servicer shall
continue to honor any previously approved first lien loan
modification or other foreclosure prevention alternative, in
accordance with the provisions of the act that added this section.
   (f) This section shall apply only to mortgages or deeds of trust
described in Section 2924.15.
   (g)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 22.  Section 2924.19 is added to the Civil Code, to read:
   2924.19.  (a) (1) If a trustee's deed upon sale has not been
recorded, a borrower may bring an action for injunctive relief to
enjoin a material violation of Section 2923.5, 2924.17, or 2924.18.
   (2) Any injunction shall remain in place and any trustee's sale
shall be enjoined until the court determines that the mortgage
servicer, mortgagee, beneficiary, or authorized agent has corrected
and remedied the violation or violations giving rise to the action
for injunctive relief. An enjoined entity may move to dissolve an
injunction based on a showing that the material violation has been
corrected and remedied.
   (b) After a trustee's deed upon sale has been recorded, a mortgage
servicer, mortgagee, beneficiary, or authorized agent shall be
liable to a borrower for actual economic damages pursuant to Section
3281, resulting from a material violation of Section 2923.5, 2924.17,
or 2924.18 by that mortgage servicer, mortgagee, beneficiary, or
authorized agent where the violation was not corrected and remedied
prior to the recordation of the trustee's deed upon sale. If the
court finds that the material violation was intentional or reckless,
or resulted from willful misconduct by a mortgage servicer,
mortgagee, beneficiary, or authorized agent, the court may award the
borrower the greater of treble actual damages or statutory damages of
fifty thousand dollars ($50,000).
   (c) A mortgage servicer, mortgagee, beneficiary, or authorized
agent shall not be liable for any violation that it has corrected and
remedied prior to the recordation of the trustee's deed upon sale,
or that has been corrected and remedied by third parties working on
its behalf prior to the recordation of the trustee's deed upon sale.
   (d) A violation of Section 2923.5, 2924.17, or 2917.18 by a person
licensed by the Department of Corporations, the Department of
Financial Institutions, or the Department of Real Estate shall be
deemed to be a violation of that person's licensing law.
   (e) No violation of this article shall affect the validity of a
sale in favor of a bona fide purchaser and any of its encumbrancers
for value without notice.
   (f) A third-party encumbrancer shall not be relieved of liability
resulting from violations of Section 2923.5, 2924.17 or 2924.18,
committed by that third-party encumbrancer, that occurred prior to
the sale of the subject property to the bona fide purchaser.
   (g) The rights, remedies, and procedures provided by this section
are in addition to and independent of any other rights, remedies, or
procedures under any other law. Nothing in this section shall be
construed to alter, limit, or negate any other rights, remedies, or
procedures provided by law.
   (h) A court may award a prevailing borrower reasonable attorney's
fees and costs in an action brought pursuant to this section. A
borrower shall be deemed to have prevailed for purposes of this
subdivision if the borrower obtained injunctive relief or damages
pursuant to this section.
   (i) This section shall apply only to entities described in
subdivision (b) of Section 2924.18.
   (j)  This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or extends
that date.
  SEC. 23.  Section 2924.20 is added to the Civil Code, to read:
   2924.20.  Consistent with their general regulatory authority, and
notwithstanding subdivisions (b) and (c) of Section 2924.18, the
Department of Corporations, the Department of Financial Institutions,
and the Department of Real Estate may adopt regulations applicable
to any entity or person under their respective jurisdictions that are
necessary to carry out the purposes of the act that added this
section. A violation of the regulations adopted pursuant to this
section shall only be enforceable by the regulatory agency.
  SEC. 24.  The provisions of this act are severable. If any
provision of this act or its application is held invalid, that
invalidity shall not affect other provisions or applications that can
be given effect without the invalid provision or application.
  SEC. 25.   No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.

The NEW Sevicing abuse cases california Jan1, 2013

Abuses by Mortgage Service Companies

Although predatory lending has received far more attention than abusive servicing, a significant percentage of consumer complaints over loans involve servicing, not origination. For example, the director of the Nevada Fair Housing Center testified that of the hundreds of complaints of predatory lending issues her office received in 2002, about 42 percent involved servicing once the loan was transferred

Abusive Mortgage Servicing Defined:

Abusive servicing occurs when a servicer, either through action or inaction, obtains or attempts to obtain unwarranted fees or other costs from borrowers, engages in unfair collection practices, or through its own improper behavior or inaction causes borrowers to be more likely to go into default or have their homes foreclosed. Abusive practices should be distinguished from appropriate actions that may harm borrowers, such as a servicer merely collecting appropriate late fees or foreclosing on borrowers who do not make their payments despite proper loss mitigation efforts. Servicing can be abusive either intentionally, when there is intent to obtain unwarranted fees, or negligently, when, for example, a servicer’s records are so disorganized that borrowers are regularly charged late fees even when mortgage payments were made on time.

Abusive servicing often happens to debtors who have filed a Chapter 13 Bankruptcy Plan and are in the process of making payments under the Plan. If you suspect that your mortgage servicer is abusing your relationship by charging unnecessary fees while you are paying off your Chapter 13 Plan, call us. We can help.

There is significant evidence that some Mortgage servicers have engaged in abusive behavior and that borrowers have frequently been the victims. Some servicers have engaged in practices that are not only detrimental to borrowers but also illegal Such abuse has been documented in court opinions and decisions, in the decisions and findings of ratings agencies, in litigation and settlements obtained by government agencies against prominent servicers, in congressional testimony, and in newspaper accounts of borrowers who claim to have been mistreated by servicers. The abusive servicing practices documented in these sources include improper foreclosure or attempted foreclosure, improper fees, improper forced-placed insurance, and improper use or oversight of escrow funds .

Improper foreclosure or attempted foreclosure

Because servicers can exact fees associated with foreclosures, such as attorneys’ fees, some servicers have attempted to foreclose on property even when borrowers are current on their payments or without giving borrowers enough time to repay or otherwise working with them on a repayment plan Furthermore, a speedy foreclosure may save servicers the cost of attempting other techniques that might have prevented the foreclosure.

Some servicers have been so brazen that they have regularly claimed to the courts that borrowers were in default so as to justify foreclosure, even though the borrowers were current on their payments. Other courts have also decried the frequent use of false statements to obtain relief from stay in order to foreclose on borrowers’ homes. For example, in Hart v. GMAC Mortgage Corporation, et al., 246 B.R. 709 (2000), even though the borrower had made the payments required of him by a forbearance agreement he had entered into with the servicer (GMAC Mortgage Corporation), it created a “negative suspense account” for moneys it had paid out, improperly charged the borrower an additional monthly sum to repay the negative suspense account, charged him late fees for failing to make the entire payment demanded, and began foreclosure proceedings.

Improper fees

Claiming that borrowers are in default when they are actually current allows servicers to charge unwarranted fees, either late fees or fees related to default and foreclosure. Servicers receive as a conventional fee a percentage of the total value of the loans they service, typically 25 basis points for prime loans and 50 basis points for subprime loans In addition, contracts typically provide that the servicer, not the trustee or investors, has the right to keep any and all late fees or fees associated with defaults. Servicers charge late fees not only because they act as a prod to coax borrowers into making payments on time, but also because borrowers who fail to make payments impose additional costs on servicers, which must then engage in loss mitigation to induce payment.

Such fees are a crucial part of servicers’ income. For example, one servicer’s CEO reportedly stated that extra fees, such as late fees, appeared to be paying for all of the operating costs of the company’s entire servicing department, leaving the conventional servicing fee almost completely profit The pressure to collect such fees appears to be higher on subprime servicers than on prime servicers:

Because borrowers typically cannot prove the exact date a payment was received, servicers can charge late fees even when they receive the payment on time Improper late fees may also be based on the loss of borrowers’ payments by servicers, their inability to track those payments accurately, or their failure to post payments in a timely fashion. In Ronemus v. FTB Mortgage Services, 201 B.R. 458 (1996), under a Chapter 13 bankruptcy plan, the borrowers had made all of their payments on time except for two; they received permission to pay these two late and paid late fees for the privilege. However, the servicer, FTB Mortgage Services, misapplied their payments, then began placing their payments into a suspense account and collecting unauthorized late fees. The servicer ignored several letters from the borrowers’ attorney attempting to clear up the matter, sent regular demands for late fees, and began harassing the borrowers with collection efforts. When the borrowers sued, the servicer submitted to the court an artificially inflated accounting of how much the borrowers owed.

Some servicers have sent out late notices even when they have received timely payments and even before the end of a borrower’s grace period Worse yet, a servicer might pocket the payment, such as an extra payment of principal, and never credit it to the borrower Late fees on timely payments are a common problem when borrowers are making mortgage payments through a bankruptcy plan

Moreover, some servicers have also added false fees and charges not authorized by law or contract to their monthly payment demands, relying on borrowers’ ignorance of the exact amount owed. They can collect such fees or other unwarranted claims by submitting inaccurate payoff demands when a borrower refinances or sells the house). Or they can place the borrowers’ monthly payments in a suspense account and then charge late fees even though they received the payment Worse yet, some servicers pyramid their late fees, applying a portion of the current payment to a previous late fee and then charging an additional late fee even though the borrower has made a timely and full payment for the new month Pyramiding late fees allows servicers to charge late fees month after month even though the borrower made only one late payment

Servicers can turn their fees into a profit center by sending inaccurate monthly payment demands, demanding unearned fees or charges not owed, or imposing fees higher than the expenses for a panoply of actions For example, some servicers take advantage of borrowers’ ignorance by charging fees, such as prepayment penalties, where the note does not provide for them Servicers have sometimes imposed a uniform set of fees over an entire pool of loans, disregarding the fact that some of the loan documents did not provide for those particular fees. Or they charge more for attorneys’, property inspection, or appraisal fees than were actually incurred. Some servicers may add a fee by conducting unnecessary property inspections, having an agent drive by even when the borrower is not in default, or conducting multiple inspections during a single period of default to charge the resulting multiple fees

The complexity of the terms of many loans makes it difficult for borrowers to discover whether they are being overcharged Moreover, servicers can frustrate any attempts to sort out which fees are genuine.

Improperly forced-placed insurance

Mortgage holders are entitled under the terms of the loan to require borrowers to carry homeowners’ insurance naming the holder as the payee in case of loss and to force-place insurance by buying policies for borrowers who fail to do so and charging them for the premiums However, some servicers have force-placed insurance even in cases where the borrower already had it and even provided evidence of it to the servicer Worse yet, servicers have charged for force-placed insurance without even purchasing it. Premiums for force-placed insurance are often inflated in that they provide protection in excess of what the loan.

290924_255783101119832_3781507_o

Escrow Account Mismanagement

One of the benefits of servicing mortgages is controlling escrow accounts to pay for insurance, taxes, and the like and, in most states, keeping any interest earned on these accounts Borrowers have complained that servicers have failed to make tax or insurance payments when they were due or at all. The treasurer of the country’s second largest county estimated that this failure to make timely payments cost borrowers late fees of at least $2 million in that county over a two-year span, causing some to lose their homes. If servicers fail to make insurance payments and a policy lapses, borrowers may face much higher insurance costs even if they purchase their own, non-force-placed policy. Worse yet, borrowers may find themselves unable to buy insurance at all if they cannot find a new insurer willing to write them a policy

You can make a claim for mortgage service abuse, and often the court will award actual and punitive damages. If you think you have been a victim of mortgage service abuse, contact us. We can help you make a claim.

Civil Code §2924.12(b) Right to Sue Mortgage Servicers for Injunctive Relief, Damages, Treble Damages, and Right to Attorney’s Fees. : )

prohabition-images

H. Right to Sue Mortgage Servicers for Injunctive Relief, Damages, Treble Damages, and Right to Attorney’s Fees

2013 is going to be a good year

One of the most important provisions of the Act from a lender’s perspective is that it provides borrowers with the right to sue mortgage servicers for injunctive relief before the trustee’s deed upon sale has recorded, or if it has already recorded, to sue for actual economic damages, if the mortgage servicer has not corrected any “material” violation of certain enumerated portions of the Act before the trustee’s deed upon sale recorded. (Civil Code §2924.12(a).) In an area that will certainly open up a Pandora’s Box of litigation, the Act does not define what constitutes a “material” violation of the Act. If a court finds that the violation was intentional, reckless or willful, the court can award the borrower the greater of treble (triple) damages or $50,000. (Civil Code §2924.12(b).) Furthermore, a violation of the enumerated provisions of the Act is also deemed to be a violation of the licensing laws if committed by a person licensed as a consumer or commercial finance lender or broker, a residential mortgage lender or servicer, or a licensed real estate broker or salesman. (Civil Code §2924.12(d).) Lastly, in a one-sided attorney’s fee provision that only benefits borrowers, the court may award a borrower who obtains an injunction or receives an award of economic damages as a result of the violation of the Act their reasonable attorney’s fees and costs as the prevailing party. (Civil Code §2924.12(i).) This provides all the more reason for lenders and mortgage servicers to comply with the terms of the Act. This provision for the recovery by only the borrower of their reasonable attorney’s fees makes it more likely that borrowers will file litigation against mortgage lenders or servicers than they otherwise would. Compliance is the lender’s or mortgage servicer’s best defense to litigation under the Act.

Significantly for lenders, as long as the mortgage servicer remedies the material violation of the Act before the trustee’s deed upon sale has recorded, the Act specifically provides that the mortgage servicer shall not be liable under the Act for any violation or damages. (Civil Code §2924.12(b) & (c).) The Act also clarifies that signatories to the National Mortgage Settlement who are in compliance with the terms of that settlement, as they relate to the terms of the Act, will not face liability under the Act. (Civil Code §2924.12(g).

 

How to chase Chase – People sometimes ask me why do you publish all this stuff. My slogan IF YOUR ENEMY IS MY ENEMY THAN WE ARE FRIENDS !!!!

People sometimes ask me why do you publish all this stuff. My slogan IF YOUR ENEMY IS MY ENEMY THAN WE ARE FRIENDS

Chase–Sucks.org

2. RESOURCES — Pleadings, Orders, and Exhibits

On this page you will find descriptions and links to various pleadings, orders, and exhibits filed by attorneys as well as individuals representing themselves. Where the outcome is known, that information is included. These documents are public records and are made available for your information, but their accuracy, competency, and effectiveness have not been verified. Only a judge can rule on a pleading and only an appellate court opinion that is certified for publication can be cited as precedent. That said, it can be both educational and entertaining to see how the great race is unfolding in the historic controversy of People v. Banks. For an entertaining public outing of history’s all-time greatest pickpockets, go see the documentary “Inside Job.”

Federal District Court

Carswell v. JPMorgan Chase, Case No. CV10-5152 GW

George Wu, Judge, U.S. District Court, Central District of California, Los Angeles
Douglas Gillies, attorney for Margaret Carswell

Plaintiff sued to halt a foreclosure initiated by JPMorgan Chase and California Reconveyance Co. on the grounds of failure to contract, wrongful foreclosure, unjust enrichment, RESPA and TILA violations, and fraud. She asked for quiet title and declaratory relief. Chase responded with a Motion to Dismiss. At a hearing on September 30, 2010, Judge Wu granted defendants’ motion to dismiss with leave to amend. Plaintiff’s First Amended Complaint was filed on October 18. It begins:

It was the biggest financial bubble in history. During the first decade of this century, banks abandoned underwriting practices and caused a frenzy of real estate speculation by issuing predatory loans that ultimately lowered property values in the United States by 30-50%. Banks reaped the harvest. Kerry Killinger, CEO of Washington Mutual, took home more than $100 million during the seven years that he steered WaMu into the ground. Banks issued millions of predatory loans knowing that the borrowers would default and lose their homes. As a direct, foreseeable, proximate result, 15 million families are now in danger of foreclosure. If the legions of dispossessed homeowners cannot present their grievances in the courts of this great nation, their only recourse will be the streets.

Chase responded with yet another Motion to Dismiss, Carswell filed her Opposition to the motion, and a hearing is scheduled for January 6, 2011, 8:30 AM in Courtroom 10, US District Court, 312 N. Spring Street, Los Angeles, CA.

 

Khast v. Washington Mutual, JPMorgan Chase, and CRC, Case No. CV10-2168 IEG

Irma E. Gonzalez, Chief Judge, U.S. District Court, Southern District of California
Kaveh Khast in pro se

A loan mod nightmare where Khast did everything right except laugh out loud when WaMu told him that he must stop making his mortgage payments for 90 days in order to qualify for a loan modification. As Khast leaped through the constantly shifting hoops tossed in the air, first by WaMu, then by Chase, filing no less than four applications, Chase issued a Notice of Trustee’s Sale.

Khast filed a pro se complaint in federal court. The District Court granted a Temporary Restraining Order to stop the sale. Hearing on a Preliminary Injunction is now scheduled for December 3. The court wrote that the conduct by WAMU appears to be “immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers,” and thus satisfies the “unfair” prong of California’s Unfair Competition Law, Cal. Bus.&Prof.Code §17200. Plaintiff has stated that he possesses documents which support his contention that Defendant WAMU instructed Plaintiff to purposefully enter into default and assured Plaintiff that, if he did so, WAMU would restructure his loan. Accordingly, Plaintiff has demonstrated that he is likely to succeed on the merits of his claim.

The court also relied upon the doctrine of promissory estoppel. Under this doctrine a promisor is bound when he should reasonably expect a substantial change of position, either by act or forbearance, in reliance on his promise. He who by his language or conduct leads another to do what he would not otherwise have done shall not subject such person to loss or injury by disappointing the expectations upon which he acted.

 

Saxon Mortgage v. Hillery, Case No. C-08-4357

Edward M. Chen, U.S. Magistrate, Northern District of California
Thomas Spielbauer, attorney for Ruthie Hillery

Hillery obtained a home loan from New Century secured by a Deed of Trust, which named MERS as nominee for New Century and its successors. MERS later attempted to assign the Deed of Trust and the promissory note to Consumer. Consumer and the loan servicer then sued Hillery. The court ruled that Consumer must demonstrate that it is the holder of the deed of trust and the promissory note. In re Foreclosure Cases, 521 F. Supp. 2d 650, 653 (S.D. Oh. 2007) held that to show standing in a foreclosure action, the plaintiff must show that it is the holder of the note and the mortgage at the time the complaint was filed. For there to be a valid assignment, there must be more than just assignment of the deed alone; the note must also be assigned. “The note and mortgage are inseparable; the former as essential, the latter as an incident…an assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity.” Carpenter v. Longan, 83 U.S. 271, 274 (1872).

There was no evidence that MERS held the promissory note or was given the authority by New Century to assign the note to Consumer. Without the note, Consumer lacked standing. If Consumer did not have standing, then the loan servicer also lacked standing. A loan servicer cannot bring an action without the holder of the note. In re Hwang, 393 B.R. 701, 712 (2008).

 

Serrano v. GMAC Mortgage, Case No. 8:09-CV-00861-DOC

David O. Carter, Judge, U.S. District Court, Central District of California, Los Angeles
Moses S. Hall, attorney for Ignacio Serrano

Plaintiff alleged in state court that GMAC initiated a non-judicial foreclosure sale and sold his residence without complying with the notice requirements of Cal. Civil Code Sec. 2923.5 and 2924, and without attaching a declaration to the 2923.5 notice under penalty of perjury stating that defendants tried with due diligence to contact the borrower. Defendants removed the case to federal court on the basis of diversity jurisdiction. The District Court granted defendants’ motion to dismiss without prejudice, and described in detail the defects in the Complaint with directions how to correct the defects. Plaintiff filed his Second Amended Complaint on 4/01/2010.

 

Sharma v. Provident Funding Associates, Case No. 3:2009-cv-05968

Vaughn R Walker, Judge, U.S. District Court, Northern District of California
Marc A. Fisher, attorney for Anilech and Parma Sharma

Defendants attempted to foreclose and plaintiffs sued in federal court, alleging that defendants did not contact them as required by Cal Civ Code § 2923.5. In considering plaintiffs’ request for an injunction to stop the foreclosure, the court found that plaintiffs had raised “serious questions going to the merits” and would suffer irreparable injury if the sale were to proceed. Property is considered unique. If defendants foreclosed, plaintiffs’ injury would be irreparable because they might be unable to reacquire it. Plaintiffs’ remedy at law, damages, would be inadequate. On the other hand, defendants would not suffer a high degree of harm if a preliminary injunction were ordered. While they would not be able to sell the property immediately and would incur litigation costs, when balanced against plaintiffs’ potential loss, defendants’ harm was outweighed.

The court issued a preliminary injunction enjoining defendants from selling the property while the lawsuit was pending.

 

Federal Bankruptcy Court

In re: Hwang, 396 B.R. 757 (2008), Case No. 08-15337 Chapter 7

Samuel L. Burford, U.S. Bankruptcy Judge, Los Angeles
Robert K. Lee, attorney for Kang Jin Hwang

As the servicer on Hwang’s promissory note, IndyMac was entitled to enforce the secured note under California law, but it must also satisfy the procedural requirements of federal law to obtain relief from the automatic stay in a Chapter 7 bankruptcy proceeding. These requirements include joining the owner of the note, because the owner of the note is the real party in interest under Rule 17, and it is also a required party under Rule 19. IndyMac failed to join the owner of the note, so its motion for relief from the automatic stay was denied.

Reversed on July 21, 2010. District Court Judge Philip Gutierrez reversed the Judge Burford’s determination that IndyMac is not the real party in interest under Rule 17 and that Rule 19 requires the owner of the Note to join the Motion.

 

In re: Vargas, Case No. 08-17036 Chapter 7

Samuel L. Burford, U.S. Bankruptcy Judge, Los Angeles
Marcus Gomez, attorney for Raymond Vargas

 

In re: Walker, Case No. 10-21656 Chapter 11

Ronald H. Sargis, Judge, U.S. Bankruptcy Court, Sacramento
Mitchell L. Abdallah, attorney for Rickie Walker

MERS assigned the Deed of Trust for Debtor’s property to Citibank, which filed a secured claim. Debtor objected to the claim. Judge Sargis ruled that the promissory note and the Deed of Trust are inseparable. An assignment of the note carries the mortgage with it, while an assignment of the Deed of Trust alone is a nullity. MERS was not the owner of the note, so it could not transfer the note or the beneficial interest in the Deed of Trust. The bankruptcy court disallowed Citibank’s claim because it could not establish that it was the owner of the promissory note.

 

California State Court

Cabalu v. Mission Bishop Real Estate

Superior Court of California, Alameda County
Brian A. Angelini, attorney for Cecil and Natividad Cabalu

 

Davies v. NDEX West, Case No. INC 090697

Randall White, Judge, Superior Court of California, Riverside County
Brian W. Davies, in pro per

 

Edstrom v. NDEX West, Wells Fargo Bank, et. al., Case No. 20100314

Superior Court of California, Eldorado County
Richard Hall, attorney for Daniel and Teri Anne Edstrom

A 61-page complaint with 29 causes of action to enjoin a trustee’s sale of plaintiffs’ residence, requesting a judicial sale instead of a non-judicial sale, declaratory relief, compensatory damages including emotional and mental distress, punitive damages, attorneys’ fees, and rescission.

 

Mabry v. Superior Court and Aurora Loan Services
185 Cal.App.4th 208, 110 Cal. Rptr. 3d 201 (4th Dist. June 2, 2010)
California Court of Appeal, 4th District, Division 3
California Supreme Court, Petition for Review filed July 13, 2010.

Moses S. Hall, attorney for Terry and Michael Mabry

The Mabrys sued to enjoin a trustee’s sale of their home, alleging that Aurora’s notice of default did not include a declaration required by Cal. Civil Code §2923.5, and that the bank did not explore alternatives to foreclosure with the borrowers. The trial court refused to stop the sale. The Mabrys filed a Petition for a Writ of Mandate and the Court of Appeal granted a stay to enjoin the sale. Oral argument was heard in Santa Ana on May 18, 2010.

Aurora argued that a borrower cannot sue a lender that fails to contact the borrower to discuss alternatives to foreclosure before filing a notice of default, as required by §2923.5, because §2923.5 does not explicitly give homeowners a “private right of action.” Aurora also argued that a declaration under penalty of perjury is not required because a trustee, who ordinarily files the notice of default, could not have personal knowledge of a bank’s attempts to contact the borrower. Nobody mentioned that the trustee is not authorized by the statute to make the declaration. §2923.5 states that a notice of default “shall include a declaration from the mortgagee, beneficiary, or authorized agent that it has contacted the borrower…”

The Court of Appeal ruled that a borrower has a private right of action under § 2923.5 and is not required to tender the full amount of the mortgage as a prerequisite to filing suit, since that would defeat the purpose of the statute. Under the court’s narrow construction of the statute, §2923.5 merely adds a procedural step in the foreclosure process. Since the statute is not substantive, it is not preempted by federal law. The declaration specified in §2923.5 does not have to be signed under penalty of perjury. The borrower’s remedy is limited to getting a postponement of a foreclosure while the lender files a new notice of default that complies with §2923.5. If the lender ignores the statute and makes no attempt to contact the borrower before selling the property, the violation does not cloud the title acquired by a third party purchaser at the foreclosure sale. Therefore §2923.5 claims must be raised in court before the sale. It is a question of fact for the trial court to determine whether the lender actually attempted to contact the borrower before filing a notice of default. If the lender takes the property at the foreclosure sale, its title is not clouded by its failure to comply with the statute. Finally, the case is not suitable for class action treatment if the lender asserts that it attempted to comply with the statute because each borrower will present “highly-individuated facts.”

In a petition for review to the California Supreme Court, the Mabrys noted that more than 100 federal district court opinions have considered §2923.5 and an overwhelming majority have rejected a private right of action under the statute. The petition for review was denied.

After the case was remanded to the trial court, Mabry’s motion for preliminary injunction was granted. The trial court found that the Notice of Default contained the form language required by the statute, i.e. that the lender contacted the borrower, tried with due diligence to contact the borrower, etc. However, the declaration on the Notice of Default was not made under panalty of perjury, and therefore had no evidentiary value to show whether the defendant satisfied §2923.5

 

Moreno v. Ameriquest

Superior Court of California, Contra Costa County
Thomas Spielbauer, attorney for Gloria and Carlos Moreno

Complaint for declaratory relief and fraud against lender for misrepresenting the terms of the loan, promising fixed rate with one small step after two years both orally and in the Truth In Lending Statement. Loan was actually variable rate with negative amortization. Morenos would have qualified for fixed rate 5% for 30 years, but instead received an exploding 7% ARM. Notary rushed plaintiffs through signing of documents with little explanation. Complaint requests a declaration the note is invalid, unconscionable and unenforceable and the Notice of Trustees Sale is invalid.

 

Other State Courts

JPMorgan Chase Bank v. George, Case No. 10865/06

Arthur M. Schack, Supreme Court Judge, Kings County, New York
Edward Roberts, attorney for Gertrude George

 

Florida Judge tosses foreclosure lawsuit

Homeowners dispute who owns mortgage

by Steve Patterson
St. Augustine Record
June 15, 2010

Changing stories about who owns a mortgage and seemingly fresh evidence from a long-closed bank led a judge to throw out a foreclosure lawsuit. It’s the second time in as many months that Circuit Judge J. Michael Traynor has dismissed with prejudice a foreclosure case where homeowners disputed who owns the mortgage. Lawyers representing New York-based M&T Bank gave three separate accounts of the ownership, with documentation that kept changing.

“The court has been misled by the plaintiff from the beginning,” the judge wrote in his order. He added that documents filed by M&T’s lawyers seemed to contradict each other and “have changed as needed to benefit the plaintiff.”

The latest account was that Wells Fargo owned the note, and M&T was a servicer, a company paid to handle payments and other responsibilities tied to a mortgage. To believe that, the judge wrote, the “plaintiff is asking the court to ignore the documents filed in the first two complaints.” He added that Wells Fargo can still sue on its own, if it has evidence that it owns the mortgage.

More and more foreclosure cases are being argued on shaky evidence, said James Kowalski, a Jacksonville attorney who represented homeowners Lisa and Larry Smith in the fight over their oceanfront home. “I think it’s very representative of what the banks and their lawyers are currently doing in court,” Kowalski said.

He said lawyers bringing the lawsuits are often pressed by their clients to close the cases quickly. But it’s up to lawyers to present solid evidence and arguments. “We are supposed to be better than that,” Kowalski said. “We are supposed to be officers of the court.”

 

Exhibits

Department of Treasury and FDIC Report on WaMu, 4/16/2010

The Offices of Inspector General for Department of the Treasury and Federal Deposit Insurance Corporation released its evaluation of the regulatory oversight of Washington Mutual on April 16. The table of contents tells the story. WaMu pursued a high-risk lending strategy which included systematic underwriting weaknesses. They didn’t care if borrowers could pay back their loans. WaMu did not have adequate controls in place to manage its reckless “high-risk” strategy. OTS examiners found weaknesses in WaMu’s strategy, operations, and asset portfolio but looked the other way.

 

OCC Advisory Letters

How could the regulators allow this breakdown to happen? Was it really fraud when banks arranged loans for homeowners who would inevitably go into defrault, sold them to Wall Street to be bundled into securities, then purchased insurance so that the bank would collect the unpaid balances when the borrowers lost their homes? Did anybody really know that repealing Glass-Steagall and permitting Wall Street banks to get under the covers with Main Street banks would cause so many borrowers to lose their homes? The Glass-Steagall Act, enacted in 1933, barred any institution from acting as any combination of an investment bank, a commercial bank, and an insurance company. It was repealed in 1999, and the repercussions have been immense.

The Office of the Comptroller of the Currency (OCC) issued Advisory Letter 2000-7 only months after Glass-Steagall was repealed. It warned regulators to be on the lookout for indications of predatory or abusive lending practices, including Collateral or Equity Stripping – loans made in reliance on the liquidation value of the borrower’s home or other collateral, rather than the borrower’s independent ability to repay, with the possible or intended result of foreclosure or the need to refinance under duress.

Proving fraud is a painstaking process. Getting inside the mind of a crook requires a careful foundation, and admissable evidence is not always easy to obtain. Many courts will take judicial notice of official acts of the legislative, executive, and judicial departments of the United States and of any state of the United States. See Cal Evidence Code Sec. 452(c).

Here is a set of smoking guns in the form of a series of Advisory Letters issued by OCC:

The Washington Mutual logo prior to its acquis...
The Washington Mutual logo prior to its acquisition by JPMorgan Chase. (Photo credit: Wikipedia)

Judge Firmat posted these notes on the law and motion calendar to assist attorneys pleading various theories in wrongful foreclosure cases etc

Orange County (Cali) Superior Court Judge Firmat posted these notes on
the law and motion calendar to assist attorneys pleading various
theories in wrongful foreclosure cases etc.  Some interesting
points….

FOOTNOTES TO DEPT. C-15 LAW AND MOTION CALENDARS

Note 1 – Cause of Action Under CCC § 2923.5, Post Trustee’s Sale –
There is no private right of action under Section 2923.5 once the
trustee’s sale has occurred.  The “only remedy available under the
Section is a postponement of the sale before it happens.”  Mabry v.
Superior  Court, 185 Cal. App. 4th 208, 235 (2010).

Note 2 – Cause of Action Under CCC § 2923.6 – There is no private
right of action under Section 2923.6, and it does not operate
substantively.  Mabry v. Superior Court, 185 Cal. App. 4th 208,
222-223 (2010).  “Section 2923.6 merely expresses the hope that
lenders will offer loan modifications on certain terms.”  Id. at 222.

Note 3 – Cause of Action for Violation of CCC §§ 2923.52 and / or
2923.53 – There is no private right of action.  Vuki v. Superior
Court, 189 Cal. App. 4th 791, 795 (2010).

Note 4 –  Cause of Action for Fraud, Requirement of Specificity – “To
establish a claim for fraudulent misrepresentation, the plaintiff must
prove: (1) the defendant represented to the plaintiff that an
important fact was true; (2) that representation was false; (3) the
defendant knew that the representation was false when the defendant
made it, or the defendant made the representation recklessly and
without regard for its truth; (4) the defendant intended that the
plaintiff rely on the representation; (5) the plaintiff reasonably
relied on the representation; (6) the plaintiff was harmed; and, (7)
the plaintiff’s reliance on the defendant’s representation was a
substantial factor in causing that harm to the plaintiff. Each element
in a cause of action for fraud must be factually and specifically
alleged. In a fraud claim against a corporation, a plaintiff must
allege the names of the persons who made the misrepresentations, their
authority to speak for the corporation, to whom they spoke, what they
said or wrote, and when it was said or written.”  Perlas v. GMAC
Mortg., LLC, 187 Cal. App. 4th 429, 434 (2010) (citations and
quotations omitted).

Note 5 –Fraud – Statute of Limitations- The statute of limitations for
fraud is three years.  CCP § 338(d).  To the extent Plaintiff wishes
to rely on the delayed discovery rule, Plaintiff must plead the
specific facts showing (1) the time and manner of discovery and (2)
the inability to have made earlier discovery despite reasonable
diligence.”  Fox v. Ethicon Endo-Surgery, Inc., 35 Cal. 4th 797, 808
(2005).

Note 6 – Cause of Action for Negligent Misrepresentation – “The
elements of negligent misrepresentation are (1) the misrepresentation
of a past or existing material fact, (2) without reasonable ground for
believing it to be true, (3) with intent to induce another’s reliance
on the fact misrepresented, (4) justifiable reliance on the
misrepresentation, and (5) resulting damage.  While there is some
conflict in the case law discussing the precise degree of
particularity required in the pleading of a claim for negligent
misrepresentation, there is a consensus that the causal elements,
particularly the allegations of reliance, must be specifically
pleaded.”  National Union Fire Ins. Co. of Pittsburgh, PA v. Cambridge
Integrated Services Group, Inc., 171 Cal. App. 4th 35, 50 (2009)
(citations and quotations omitted).

Note 7 – Cause of Action for Breach of Fiduciary Duty by Lender –
“Absent special circumstances a loan transaction is at arm’s length
and there is no fiduciary relationship between the borrower and
lender. A commercial lender pursues its own economic interests in
lending money. A lender owes no duty of care to the borrowers in
approving their loan. A lender is under no duty to determine the
borrower’s ability to repay the loan. The lender’s efforts to
determine the creditworthiness and ability to repay by a borrower are
for the lender’s protection, not the borrower’s.”  Perlas v. GMAC
Mortg., LLC, 187 Cal. App. 4th 429, 436 (2010) (citations and
quotations omitted).

Note 8 – Cause of Action for Constructive Fraud – “A relationship need
not be a fiduciary one in order to give rise to constructive fraud.
Constructive fraud also applies to nonfiduciary “confidential
relationships.” Such a confidential relationship may exist whenever a
person with justification places trust and confidence in the integrity
and fidelity of another. A confidential relation exists between two
persons when one has gained the confidence of the other and purports
to act or advise with the other’s interest in mind. A confidential
relation may exist although there is no fiduciary relation ….”
Tyler v. Children’s  Home Society, 29 Cal. App. 4th 511, 549 (1994)
(citations and quotations omitted).

Note 9 – Cause of Action for an Accounting – Generally, there is no
fiduciary duty between a lender and borrower.  Perlas v. GMAC Mortg.,
LLC, 187 Cal. App. 4th 429, 436 (2010).  Further, Plaintiff (borrower)
has not alleged any facts showing that a balance would be due from the
Defendant lender to Plaintiff.  St. James Church of Christ Holiness v.
Superior Court, 135 Cal. App. 2d 352, 359 (1955).  Any other duty to
provide an accounting only arises when a written request for one is
made prior to the NTS being recorded.  CCC § 2943(c).

Note 10 – Cause of Action for Breach of the Implied Covenant of Good
Faith and Fair Dealing – “[W]ith the exception of bad faith insurance
cases, a breach of the covenant of good faith and fair dealing permits
a recovery solely in contract.  Spinks v. Equity Residential Briarwood
Apartments, 171 Cal. App. 4th 1004, 1054 (2009).  In order to state a
cause of action for Breach of the Implied Covenant of Good Faith and
Fair Dealing, a valid contract between the parties must be alleged.
The implied covenant cannot be extended to create obligations not
contemplated by the contract.  Racine & Laramie v. Department of Parks
and Recreation, 11 Cal. App. 4th 1026, 1031-32 (1992).

Note 11 – Cause of Action for Breach of Contract – “A cause of action
for damages for breach of contract is comprised of the following
elements: (1) the contract, (2) plaintiff’s performance or excuse for
nonperformance, (3) defendant’s breach, and (4) the resulting damages
to plaintiff. It is elementary that one party to a contract cannot
compel another to perform while he himself is in default. While the
performance of an allegation can be satisfied by allegations in
general terms, excuses must be pleaded specifically.”  Durell v. Sharp
Healthcare, 183 Cal. App. 4th 1350, 1367 (2010) (citations and
quotations omitted).

Note 12 – Cause of Action for Injunctive Relief – Injunctive relief is
a remedy and not a cause of action.  Guessous v. Chrome Hearts, LLC,
179 Cal. App. 4th 1177, 1187 (2009).

Note 13 – Cause of Action for Negligence – “Under the common law,
banks ordinarily have limited duties to borrowers. Absent special
circumstances, a loan does not establish a fiduciary relationship
between a commercial bank and its debtor. Moreover, for purposes of a
negligence claim, as a general rule, a financial institution owes no
duty of care to a borrower when the institution’s involvement in the
loan transaction does not exceed the scope of its conventional role as
a mere lender of money. As explained in Sierra-Bay Fed. Land Bank
Assn. v. Superior Court (1991) 227 Cal.App.3d 318, 334, 277 Cal.Rptr.
753, “[a] commercial lender is not to be regarded as the guarantor of
a borrower’s success and is not liable for the hardships which may
befall a borrower. It is simply not tortious for a commercial lender
to lend money, take collateral, or to foreclose on collateral when a
debt is not paid. And in this state a commercial lender is privileged
to pursue its own economic interests and may properly assert its
contractual rights.”  Das v. Bank of America, N.A., 186 Cal. App. 4th
727, 740-741 (2010) (citations and quotations omitted).

Note 14 – Cause of Action to Quiet Title – To assert a cause of action
to quiet title, the complaint must be verified and meet the other
pleading requirements set forth in CCP § 761.020.

Note 15 – Causes of Action for Slander of Title – The recordation of
the Notice of Default and Notice of Trustee’s Sale are privileged
under CCC § 47, pursuant to CCC § 2924(d)(1), and the recordation of
them cannot support a cause of action for slander of title against the
trustee.  Moreover, “[i]n performing acts required by [the article
governing non-judicial foreclosures], the trustee shall incur no
liability for any good faith error resulting from reliance on
information provided in good faith by the beneficiary regarding the
nature and the amount of the default under the secured obligation,
deed of trust, or mortgage. In performing the acts required by [the
article governing nonjudicial foreclosures], a trustee shall not be
subject to [the Rosenthal Fair Debt Collection Practices Act].”  CCC §
2924(b).

Note 16 – Cause of Action for Violation of Civil Code § 1632 – Section
1632, by its terms, does not apply to loans secured by real property.
CCC § 1632(b).

Note 17 – Possession of the original promissory note – “Under Civil
Code section 2924, no party needs to physically possess the promissory
note.” Sicairos v. NDEX West, LLC, 2009 WL 385855 (S.D. Cal. 2009)
(citing CCC § 2924(a)(1); see also Lomboy v. SCME Mortgage Bankers,
2009 WL 1457738 * 12-13 (N.D. Cal. 2009) (“Under California law, a
trustee need not possess a note in order to initiate foreclosure under
a deed of trust.”).

Note 18 – Statute of Frauds, Modification of Loan Documents – An
agreement to modify a note secured by a deed of trust must be in
writing signed by the party to be charged, or it is barred by the
statute of frauds.  Secrest v. Security Nat. Mortg. Loan Trust 2002-2,
167 Cal. App. 4th 544, 552-553 (2008).

Note 19 – Statute of Frauds, Forebearance Agreement – An agreement to
forebear from foreclosing on real property under a deed of trust must
be in writing and signed by the party to be charged or it is barred by
the statute of frauds.  Secrest v. Security Nat. Mortg. Loan Trust
2002-2, 167 Cal. App. 4th 544, 552-553 (2008).

Note 20 – Tender – A borrower attacking a voidable sale must do equity
by tendering the amount owing under the loan.  The tender rule applies
to all causes of action implicitly integrated with the sale.  Arnolds
Management Corp. v. Eischen, 158 Cal. App. 3d 575, 579 (1984).

Note 21 – Cause of Action for Violation of Bus. & Prof. Code § 17200 –
“The UCL does not proscribe specific activities, but broadly prohibits
any unlawful, unfair or fraudulent business act or practice and
unfair, deceptive, untrue or misleading advertising. The UCL governs
anti-competitive business practices as well as injuries to consumers,
and has as a major purpose the preservation of fair business
competition. By proscribing “any unlawful business practice,” section
17200 “borrows” violations of other laws and treats them as unlawful
practices that the unfair competition law makes independently
actionable.  Because section 17200 is written in the disjunctive, it
establishes three varieties of unfair competition-acts or practices
which are unlawful, or unfair, or fraudulent. In other words, a
practice is prohibited as “unfair” or “deceptive” even if not
“unlawful” and vice versa.”  Puentes v. Wells Fargo Home Mortg., Inc.,
160 Cal. App. 4th 638, 643-644 (2008) (citations and quotations
omitted).

“Unfair” Prong

[A]ny finding of unfairness to competitors under section 17200 [must]
be tethered to some legislatively declared policy or proof of some
actual or threatened impact on competition. We thus adopt the
following test: When a plaintiff who claims to have suffered injury
from a direct competitor’s “unfair” act or practice invokes section
17200, the word “unfair” in that section means conduct that threatens
an incipient violation of an antitrust law, or violates the policy or
spirit of one of those laws because its effects are comparable to or
the same as a violation of the law, or otherwise significantly
threatens or harms competition.

Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co.,
20 Cal. 4th 163, 186-187 (1999).

“Fraudulent” Prong

The term “fraudulent” as used in section 17200 does not refer to the
common law tort of fraud but only requires a showing members of the
public are likely to be deceived. Unless the challenged conduct
targets a particular disadvantaged or vulnerable group, it is judged
by the effect it would have on a reasonable consumer.

Puentes, 160 Cal. App. 4th at 645 (citations and quotations
omitted).

“Unlawful” Prong

By proscribing “any unlawful” business practice, Business and
Professions Code section 17200 “borrows” violations of other laws and
treats them as unlawful practices that the UCL makes independently
actionable. An unlawful business practice under Business and
Professions Code section 17200 is an act or practice, committed
pursuant to business activity, that is at the same time forbidden by
law. Virtually any law -federal, state or local – can serve as a
predicate for an action under Business and Professions Code section
17200.

Hale v. Sharp Healthcare, 183 Cal. App. 4th 1373, 1382-1383 (2010)
(citations and quotations omitted).

“A plaintiff alleging unfair business practices under these statutes
must state with reasonable particularity the facts supporting the
statutory elements of the violation.”  Khoury v. Maly’s of California,
Inc., 14 Cal. App. 4th 612, 619 (1993) (citations and quotations
omitted).

Note 22 – Cause of Action for Intentional Infliction of Emotional
Distress –  Collection of amounts due under a loan or restructuring a
loan in a way that remains difficult for the borrower to repay is not
“outrageous” conduct.  Price v. Wells Fargo Bank, 213 Cal. App. 3d
465, 486 (1989).

Note 23 – Cause of Action for Negligent Infliction of Emotional
Distress – Emotional distress damages are not recoverable where the
emotional distress arises solely from property damage or economic
injury to the plaintiff.  Butler-Rupp v. Lourdeaux, 134 Cal. App. 4th
1220, 1229 (2005).

Note 24 – Cause of Action for Conspiracy – There is no stand-alone
claim for conspiracy.  Applied Equipment Corp. v. Litton Saudi Arabia
Ltd., 7 Cal. 4th 503, 510-511 (1994).

Note 25 – Cause of Action for Declaratory Relief – A claim for
declaratory relief is not “proper” since the dispute has crystallized
into COA under other theories asserted in other causes of actions in
the complaint.  Cardellini v. Casey, 181 Cal. App. 3d 389, 397-398
(1986).

Note 26 – Cause of Action for Violation of the Fair Debt Collection
Practices Acts – Foreclosure activities are not considered “debt
collection” activities.  Gamboa v. Trustee Corps, 2009 WL 656285, at
*4 (N.D. Cal. March 12, 2009).

Note 27 – Duties of the Foreclosure Trustee – The foreclosure
trustee’s rights, powers and duties regarding the notice of default
and sale are strictly defined and limited by the deed of trust and
governing statutes.  The duties cannot be expanded by the Courts and
no other common law duties exist.  Diediker v. Peelle Financial Corp.,
60 Cal. App. 4th 288, 295 (1997).

Note 28 – Unopposed Demurrer – The Demurrer is sustained [w/ or w/o]
leave to amend [and the RJN granted].  Service was timely and good and
no opposition was filed.
Failure to oppose the Demurrer may be construed as having abandoned
the claims.  See, Herzberg v. County of Plumas, 133 Cal. App. 4th 1,
20 (2005) (“Plaintiffs did not oppose the County’s demurrer to this
portion of their seventh cause of action and have submitted no
argument on the issue in their briefs on appeal.  Accordingly, we deem
plaintiffs to have abandoned the issue.”).

Note 29 – Responding on the Merits Waives Any Service Defect – “It is
well settled that the appearance of a party at the hearing of a motion
and his or her opposition to the motion on its merits is a waiver of
any defects or irregularities in the notice of the motion.”  Tate v.
Superior Court, 45 Cal. App. 3d 925, 930 (1975) (citations omitted).

Note 30 – Unargued Points – “Contentions are waived when a party fails
to support them with reasoned argument and citations to authority.”
Moulton Niguel Water Dist. v. Colombo, 111 Cal. App. 4th 1210, 1215
(2003).

Note 31 – Promissory Estoppel – “The doctrine of promissory estoppel
makes a promise binding under certain circumstances, without
consideration in the usual sense of something bargained for and given
in exchange. Under this doctrine a promisor is bound when he should
reasonably expect a substantial change of position, either by act or
forbearance, in reliance on his promise, if injustice can be avoided
only by its enforcement. The vital principle is that he who by his
language or conduct leads another to do what he would not otherwise
have done shall not subject such person to loss or injury by
disappointing the expectations upon which he acted. In such a case,
although no consideration or benefit accrues to the person making the
promise, he is the author or promoter of the very condition of affairs
which stands in his way; and when this plainly appears, it is most
equitable that the court should say that they shall so stand.”  Garcia
v. World Sav., FSB, 183 Cal. App. 4th 1031, 1039-1041 (2010)
(citations quotations and footnotes omitted).

Note 32 – Res Judicata Effect of Prior UD Action – Issues of title are
very rarely tried in an unlawful detainer action and moving party has
failed to meet the burden of demonstrating that the title issue was
fully and fairly adjudicated in the underlying unlawful detainer.
Vella v. Hudgins, 20 Cal. 3d 251, 257 (1977).  The burden of proving
the elements of res judicata is on the party asserting it.  Id. The
Malkoskie case is distinguishable because, there, the unlimited
jurisdiction judge was convinced that the title issue was somehow
fully resolved by the stipulated judgment entered in the unlawful
detainer court.  Malkoskie v. Option One Mortg. Corp., 188 Cal. App.
4th 968, 972 (2010).

Note 33 – Applicability of US Bank v. Ibanez – The Ibanez case, 458
Mass. 637 (January 7, 2011), does not appear to assist Plaintiff in
this action.  First, the Court notes that this case was decided by the
Massachusetts Supreme Court, such that it is persuasive authority, and
not binding authority.  Second, the procedural posture in this case is
different than that found in a case challenging a non-judicial
foreclosure in California.  In Ibanez, the lender brought suit in the
trial court to quiet title to the property after the foreclosure sale,
with the intent of having its title recognized (essentially validating
the trustee’s sale).  As the plaintiff, the lender was required to
show it had the power and authority to foreclose, which is
established, in part, by showing that it was the holder of the
promissory note.  In this action, where the homeowner is in the role
of the plaintiff challenging the non-judicial foreclosure, the lender
need not establish that it holds the note.

Note 34 – Statutes of Limitations for TILA and RESPA Claims – For TILA
claims, the statute of limitations for actions for damages runs one
year after the loan origination.  15 U.S.C. § 1640(e).  For actions
seeking rescission, the statute of limitations is three years from
loan origination.  15 U.S.C. § 1635(f).  For RESPA, actions brought
for lack of notice of change of loan servicer have a statute of
limitation of three years from the date of the occurrence, and actions
brought for payment of kickbacks for real estate settlement services,
or the conditioning of the sale on selection of certain title services
have a statute of limitations of one year from the date of the
occurrence.  12 U.S.C. § 2614.

Tell me not to make my payments could come back to bite the Bank. “Downey Savings could not take advantage of its own wrong. (Civ. Code, § 3517.)”

Ragland v. U.S. Bank N.A. (2012) , Cal.App.4th

[No. G045580. Fourth Dist., Div. Three. Sept. 11, 2012.]

PAM RAGLAND, Plaintiff and Appellant, v. U.S. BANK NATIONAL ASSOCIATION et al., Defendants and Respondents.

(Superior Court of Orange County, No. 30-2008-00114411, Gregory H. Lewis, Judge.)

(Opinion by Fybel, J., with Aronson, Acting P.J., and Ikola, J., concurring.)

COUNSEL

Travis R. Jack for Plaintiff and Appellant.

Sheppard, Mullin, Richter & Hampton, Karin Dougan Vogel, J. Barrett Marum and Mark G. Rackers for Defendants and Respondents. {SLIP OPN. PAGE 2}

OPINION

FYBEL, J.-

INTRODUCTION

After Pam Ragland lost her home through foreclosure, she sued defendants U.S. Bank National Association (U.S. Bank), the successor in interest to the Federal Deposit Insurance Corporation (FDIC) as the receiver for Downey Savings and Loan Association (Downey Savings); DSL Service Company (DSL), the trustee under the deed of trust; and DSL’s agent, FCI Lender Services, Inc. (FCI). (We refer to U.S. Bank, DSL, and FCI collectively as Defendants.) She asserted causes of action for negligent misrepresentation, fraud, breach of oral contract, violation of Civil Code section 2924g, subdivision (d) (section 2924g(d)), intentional and negligent infliction of emotional distress, and rescission of the foreclosure sale. Ragland appeals from the judgment entered after the trial court granted Defendants’ motion for summary judgment and summary adjudication.

Applying basic contract and tort law, we reverse the judgment in favor of U.S. Bank on the causes of action for negligent misrepresentation, fraud, violation of section 2924g(d), and intentional infliction of emotional distress. Ragland produced evidence creating triable issues of fact as to whether Downey Savings induced her to miss a loan payment, thereby wrongfully placing her loan in foreclosure, and whether she suffered damages as a result. We affirm summary adjudication of the causes of action for breach of oral contract, negligent infliction of emotional distress, and rescission, and affirm the judgment in favor of DSL and FCI because Ragland is no longer pursuing claims against them.

The FDIC took control of Downey Savings in November 2008 and later assigned its assets, including Ragland’s loan, to U.S. Bank. For the sake of clarity, we continue to use the name “Downey Savings” up through December 17, 2008, the date of the foreclosure sale. {Slip Opn. Page 3}

FACTS

I. Ragland Refinances Her Loan. Her Signature Is Forged on Some Loan Documents.

In June 2002, Ragland refinanced her home mortgage through Downey Savings. She obtained the refinance loan through a mortgage broker. The loan was an adjustable rate mortgage with an initial yearly interest rate of 2.95 percent, and the initial monthly payment was $1,241.03.

Ragland thought that Downey Savings had offered her a fixed rate loan and claimed her mortgage broker forged her name on certain loan documents. In July 2002, she sent a letter to the escrow company, asserting her signature had been forged on the buyer’s estimated closing statement and on the lender’s escrow instructions, and, in September 2002, she notified Downey Savings of the claimed forgery. A handwriting expert opined that Ragland’s signature had been forged on those two documents, and on a statement of assets and liabilities, an addendum to the loan application, a provider of service schedule, and an itemization of charges. By August 2002, Ragland had consulted two attorneys about the forged documents, one of whom wanted to file a class action lawsuit on her behalf, and the other of whom advised her of her right to rescind the loan. Ragland signed, and did not dispute signing, the adjustable rate mortgage note, the deed of trust, and riders to both instruments.

II. Ragland Seeks a Loan Modification. She Is Told to Miss a Loan Payment to Qualify.

By April 2008, the yearly interest rate on Ragland’s loan had increased to 7.022 percent and her monthly payment had increased to over $2,600. On April 13, Ragland spoke with a Downey Savings representative named John about modifying her {Slip Opn. Page 4} loan. John told Ragland her loan was not “behind” but he would work with her to modify it. He told Ragland not to make the April 2008 loan payment because “the worst thing that’s going to happen is you are going to have a late fee, we will get this done for you.” When Ragland asked if there was a chance the loan modification would not “go through,” John replied, “usually not, you are pre-qualified.”

John told Ragland a $1,000 fee would be charged to modify the loan, and Downey Savings would not waive that fee. She replied that Downey Savings should waive the fee because her “loan was forged and nothing was done about it.” John said he would check with his supervisor about waiving the fee.

John did not call back, and on April 16, 2008, the last day to make a timely loan payment for April, Ragland, who was nervous about a late payment, called him. John told her nothing could be done about the loan, so she asked to speak to his supervisor. The supervisor told Ragland, “[i]f you have one document in your packet that’s forged, you may not be responsible for anything in your loan, at all, you may not have to even pay your loan.” When Ragland said she had 13 to 15 forged documents, the supervisor checked her record and told her, “I can see that you reported . . . this to us. We are going to have to put it in legal.” The supervisor told Ragland that Downey Savings could not collect from her while its legal department investigated the forgery. Ragland had planned to make her April 2008 loan payment but, based on what John and the supervisor told her, manually cancelled the automatic payment from her checking account.

In late April 2008, Downey Savings sent Ragland a notice that her loan payment was delinquent. On April 29, 2008, Ragland spoke with Downey Savings representatives named Joseph and Claudia and made notes on the delinquency notice of her conversations with them. Ragland noted that Claudia or Joseph told her: “Can’t do modi[fication] while investigat[e] [¶] . . . Collection activity ‘frozen.'” Claudia told Ragland that Downey Savings was initiating an investigation into her claim of forgery {Slip Opn. Page 5} and could not accept further loan payments from her during the investigation. Ragland noted that Joseph also told her, “collection activity frozen.”

No one from Downey Savings further discussed a loan modification with Ragland or requested financial information from her. Ragland testified in her deposition, “once it went into legal, that was it. It was like the legal black hole.”

In May 2008, a withdrawal was made from Ragland’s checking account and transmitted to Downey Savings as the May 2008 loan payment. Downey Savings refused to accept the payment.

On May 5, 2008, Downey Savings sent Ragland a letter entitled “Notice of Intent to Foreclose” (some capitalization omitted). According to the letter, the amount required to reinstate the loan was $5,487.80. On May 9, Ragland called Downey Savings in response to this letter. Her notes for this conversation indicate she spoke with “Reb,” who transferred her to “Jasmine,” who transferred her to “Lilia,” who said the loan was in Downey Savings’s legal department and “they[‘]ll C/B.”

III. Downey Savings Institutes Foreclosure Proceedings; Ragland Gets the Runaround.

Nobody from Downey Savings called Ragland back. In early July 2008, Ragland received a letter from Downey Savings’s collection department, informing her that foreclosure proceedings on her home had begun. On July 15, Ragland had a telephone conversation with each of three Downey Savings representatives, identified in her notes of the conversations as Eric, Gail, and Leanna. Ragland spoke first with Eric, who told her the account was in foreclosure and transferred her to the foreclosure department. Ragland next spoke with Gail, who said she could not speak to her because the account was in foreclosure. Gail transferred Ragland to Leanna. Leanna told Ragland that the legal department failed to put a red flag in the computer to indicate the loan was being investigated and that the loan should never have been placed in {Slip Opn. Page 6} foreclosure. Leanna told Ragland that Downey Savings was “waiting for legal,” and Ragland’s attorney needed to “write the letter to legal and ask them . . . for a status update on the investigation, and that we had time, because it had just been referred in June and the sale wasn’t set for quite a while.” Ragland’s notes from the conversation include, “[f]oreclosure on hold.”

IV. Downey Savings Institutes Foreclosure Proceedings; Ragland Attempts to Make Loan Payments.

On July 18, 2008, Downey Savings instructed DSL, the trustee under the deed of trust, to initiate foreclosure proceedings on Ragland’s home. DSL assigned its agent, FCI, to take the actions necessary to foreclose the deed of trust on Ragland’s home.

Ragland attempted to make payments on her loan in September, October, and November 2008 through transfers from her checking account. Downey Savings rejected the payments.

On October 30, 2008, FCI recorded a notice of trustee’s sale, stating the foreclosure sale of Ragland’s home would be held on November 20. Ragland filed this lawsuit against Downey Savings on November 7, 2008. Several days later, Ragland’s attorney, Dean R. Kitano, spoke with general counsel for Downey Savings, Richard Swinney, about Ragland’s allegations of fraud and forgery in connection with the origination of her loan. Swinney agreed to postpone the foreclosure sale until December 9, 2008.

By letter dated November 12, 2008, Swinney informed Kitano that until Downey Savings received certain documentation from Ragland, it would not consider modifying her loan. The letter stated that any loan modification would require that she bring the loan current and described as “not credible” Ragland’s contention that a Downey Savings representative told her to skip a monthly payment. The forgery issue, {Slip Opn. Page 7} according to the letter, “has no impact on this loan” because Ragland did not claim her signatures on the disclosure statement, note, or deed of trust were forged.

Later in November 2008, the Office of Thrift Supervision closed Downey Savings, and the FDIC was appointed as its receiver. U.S. Bank acquired the assets of Downey Savings from the FDIC. Ragland’s loan was among those assets acquired by U.S. Bank.

V. Ragland’s Home Is Sold at Foreclosure Sale on the Day After the Trial Court Denied Ragland’s Motion for a Preliminary Injunction.

On November 12, 2008, Ragland filed an ex parte application for a temporary restraining order to enjoin the foreclosure sale scheduled for December 9. The ex parte application was heard on November 26, on which date the trial court issued an order stating: “Plaintiff shall be entitled to a temporary restraining order enjoining the foreclosure sale on December 9, 2008; upon bringing the loan current by Dec[ember] 16. Current is as of Nov[ember] 26, 2008.” A hearing on Ragland’s motion for a preliminary injunction was scheduled for December 16, 2008.

Following the ex parte hearing, Downey Savings provided Ragland a statement showing the amount necessary to reinstate her loan was $24,804.57, of which about $4,074 was for late charges, interest on arrears, property inspection and foreclosure costs. Kitano sent Downey Savings a letter, dated December 2, 2008, stating that “[c]urrently, my client is unable to pay the arrearage to make the loan current” and proposing that (1) $12,000 of the reinstatement amount be “tacked onto the back end of the loan” and (2) Downey Savings forgive the remaining amount.

In advance of the hearing on Ragland’s motion for a preliminary injunction, the trial court issued a tentative decision that stated, in part: “The court’s order of November 26, 2008, conditions the TRO [(temporary restraining order)] on plaintiff’s {Slip Opn. Page 8} bringing her payments current as of November 26, 20[08] by no later than December 16, 2008. According to defendant, t[he] amount necessary to bring the loan current is $24,804.57. Plaintiff does not dispute that she owes regular monthly mortgag[e] payments on the loan, and therefore whether or not she is likely to prevail on the merits is not at issue insofar as her responsibilit[ies] to bring the loan payments current [are] concerned. If plaintiff fails to bring her payments current by the hearing date, there is no reason to issue a preliminary injunction, since the injunction would serve no purpose but to prolong the inevitable to no good purpose. . . . [¶] If plaintiff does bring her payments current by the hearing date, then there is no basis for a foreclosure sale because the arrears would have been cured. Hence there would seem to be no need for the issuance of a preliminary injunction under such circumstances.”

Ragland did not pay the amount demanded by Downey Savings to reinstate the loan by December 16, 2008. She had sufficient funds to make the back payments due under the note, but not to pay the additional fees.

On December 16, 2008, the trial court denied Ragland’s motion for a preliminary injunction, and the foreclosure sale was conducted the next day. Ragland’s home was sold at the sale for $375,000.

MOTION FOR SUMMARY JUDGMENT

Ragland’s third amended complaint asserted causes of action against U.S. Bank for negligent misrepresentation, breach of oral contract, and fraud, and against Defendants for violations of section 2924g(d), intentional infliction of emotional distress, negligent infliction of emotional distress, and rescission of foreclosure sale.

In December 2010, Defendants moved for summary judgment and, in the alternative, for summary adjudication of each cause of action. In May 2011, the trial court granted the motion for summary judgment on the ground Ragland could not pay the full amount demanded by Downey Savings to reinstate her loan. The trial court ruled: {Slip Opn. Page 9} “A valid and viable tender of payment of the indebtedness owing is essential to an action to cancel a voidable sale under a deed of trust . . . . [Citation.] [¶] This rule . . . is based upon the equitable maxim that a court of equity will not order a useless act performed . . . if plaintiffs could not have redeemed the property had the sale procedures been proper, any irregularities in the sale did not result in damages to the plaintiffs. [¶] [Citation.] [¶] The defendants have shown that all of plaintiff’s damages under each cause of action were suffered as a result of the foreclosure sale of her property. . . . Plaintiff alleges that the foreclosure sale occurred six days too early in violation of Civil Code §2924g. Even if this were true, plaintiff’s damages are not recoverable because plaintiff was incapable of reinstating her loan. . . . This was made clear by plaintiff’s counsel in his letter to Downey Savings’ counsel two weeks before the foreclosure sale (December 2, 2008). Plaintiff’s counsel stated that ‘. . . my client is unable to pay the arrearage to make the loan current[.’] . . . Plaintiff’s failure to reinstate the loan by the December 16, 2008 preliminary injunction hearing confirmed as much, and plaintiff also admitted this in her deposition.”

As to the contention that Ragland could have made the past due loan payments but not the added fees, the trial court ruled: “Plaintiff claims that she indicated in her deposition that she had the money to make up the back payments, but not enough money to also make up the fees. Plaintiff’s Separate Statement, page 6, lines 16-18. The referenced deposition testimony amounts to a claim that plaintiff had only part of the money necessary to reinstate the loan.” The court also rejected the contention that Ragland was prepared to file bankruptcy to delay the foreclosure sale, stating, “[t]his is a further admission that plaintiff was incapable of reinstating her loan even if the foreclosure sale had been delayed an additional six days.”

Ragland timely filed a notice of appeal from the judgment entered in Defendants’ favor. {Slip Opn. Page 10}

REQUEST FOR JUDICIAL NOTICE AND MOTION TO STRIKE

I. Ragland’s Request for Judicial Notice

Ragland requests that we take judicial notice of 18 discrete facts concerning the financial condition of Downey Savings from 2005 to the time of its acquisition by U.S. Bank, the nature of Downey Savings’s assets in that timeframe, the resale of Ragland’s home, and the condition of the Orange County housing market. She argues those 18 facts are relevant to show “when Downey Savings’ disastrous financial condition beg[a]n showing in late 2007, and bec[ame] clear by April, 2008, Downey’s desperate need for cash explains its unusual behavior.” She concedes, “[t]he matters concerning which judicial notice is requested were not presented to the trial court.” We deny the request for judicial notice.

Ragland requests we take judicial notice pursuant to Evidence Code section 452, subdivision (h), which provides the court “may” take judicial notice of “[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.” The Court of Appeal has the same power as the trial court to take judicial notice of matters properly subject to judicial notice. (Evid. Code, § 459.) “‘Matters that cannot be brought before the appellate court through the record on appeal (initially or by augmentation) may still be considered on appeal by judicial notice.'” (Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 719, fn. 4.)

As evidentiary support for the request for judicial notice, Ragland offers 12 exhibits, consisting of an audit report of Downey Savings, prepared by the Office of the Inspector General of the United States Department of the Treasury (exhibit 1), printed pages from various Web sites and blogs (exhibits 2-6 and 8-12), and a recorded grant deed (exhibit 7). Ragland’s request for judicial notice requires us (with one exception) to take judicial notice of, and accept as true, the contents of those exhibits. While we may {Slip Opn. Page 11} take judicial notice of the existence of the audit report, Web sites, and blogs, we may not accept their contents as true. (Unruh-Haxton v. Regents of University of California (2008) 162 Cal.App.4th 343, 364.) “When judicial notice is taken of a document, however, the truthfulness and proper interpretation of the document are disputable. [Citation.]” (StorMedia Inc. v. Superior Court (1999) 20 Cal.4th 449, 457, fn. 9.)

Although the audit report is a government document, we may not judicially notice the truth of its contents. In Mangini v. R. J. Reynolds Tobacco Co. (1994) 7 Cal.4th 1057, 1063, overruled on another ground in In re Tobacco Cases II (2007) 41 Cal.4th 1257, 1276, the plaintiff sought judicial notice of a report of the United States Surgeon General and a report to the California Department of Health Services. The California Supreme Court denied the request: “While courts may notice official acts and public records, ‘we do not take judicial notice of the truth of all matters stated therein.’ [Citations.] ‘[T]he taking of judicial notice of the official acts of a governmental entity does not in and of itself require acceptance of the truth of factual matters which might be deduced therefrom, since in many instances what is being noticed, and thereby established, is no more than the existence of such acts and not, without supporting evidence, what might factually be associated with or flow therefrom.'” (Mangini v. R. J. Reynolds Tobacco Co., supra, at pp. 1063-1064.)

Nor may we take judicial notice of the truth of the contents of the Web sites and blogs, including those of the Los Angeles Times and Orange County Register. (See Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1141, fn. 6 [“The truth of the content of the articles is not a proper matter for judicial notice”]; Unlimited Adjusting Group, Inc. v. Wells Fargo Bank, N.A. (2009) 174 Cal.App.4th 883, 888, fn. 4 [statements of facts contained in press release not subject to judicial notice].) The contents of the Web sites and blogs are “plainly subject to interpretation and for that reason not subject to judicial notice.” (L.B. Research & Education Foundation v. UCLA Foundation (2005) 130 Cal.App.4th 171, 180, fn. 2.) {Slip Opn. Page 12}

The exception is the grant deed. A recorded deed is an official act of the executive branch, of which this court may take judicial notice. (Evid. Code, §§ 452, subd. (c), 459, subd. (a); Evans v. California Trailer Court, Inc. (1994) 28 Cal.App.4th 540, 549; Cal-American Income Property Fund II v. County of Los Angeles (1989) 208 Cal.App.3d 109, 112, fn. 2.) The grant deed purports to show that Ragland’s home was conveyed by the purchaser at the foreclosure sale to another party. While we may take judicial notice of the grant deed, we decline to do so because we conclude it is not relevant to any issue raised on appeal.

In addition, Ragland has not shown exceptional circumstances justifying judicial notice of facts that were not part of the record when the judgment was entered. (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444, fn. 3; Duronslet v. Kamps (2012) 203 Cal.App.4th 717, 737.)

II. Defendants’ Motion to Strike Portions of Ragland’s Opening Brief

Defendants move to strike (1) six passages from Ragland’s opening brief that are supported by citations to the exhibits attached to the request for judicial notice or by citations to Web sites outside the record on appeal, and (2) three passages accusing Downey Savings of trying to swindle Ragland to generate cash.

California Rules of Court, rule 8.204(a)(1)(C) states an appellate brief must “[s]upport any reference to a matter in the record by a citation to the volume and page number of the record where the matter appears.” We may decline to consider passages of a brief that do not comply with this rule. (Doppes v. Bentley Motors, Inc. (2009) 174 Cal.App.4th 967, 990.) As a reviewing court, we usually consider only matters that were part of the record when the judgment was entered. (Vons Companies, Inc. v. Seabest Foods, Inc., supra, 14 Cal.4th at p. 444, fn. 3.) {Slip Opn. Page 13}

We have denied Ragland’s request for judicial notice; we therefore decline to consider those passages of the appellant’s opening brief, noted in the margin, which are supported solely by citations to exhibits attached to that request or to Web sites outside the appellate record. fn. 1 The three passages from the appellant’s opening brief accusing Downey Savings of trying to swindle Ragland also are not supported by record references, fn. 2 but we consider those three passages to be argument rather than factual assertions.

STANDARD OF REVIEW

“A trial court properly grants summary judgment where no triable issue of material fact exists and the moving party is entitled to judgment as a matter of law. [Citation.] We review the trial court’s decision de novo, considering all of the evidence the parties offered in connection with the motion (except that which the court properly {Slip Opn. Page 14} excluded) and the uncontradicted inferences the evidence reasonably supports. [Citation.]” (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476.) We liberally construe the evidence in support of the party opposing summary judgment and resolve all doubts about the evidence in that party’s favor. (Hughes v. Pair (2009) 46 Cal.4th 1035, 1039.)

DISCUSSION

I. Negligent Misrepresentation Cause of Action

In the first cause of action, for negligent misrepresentation, Ragland alleged: “On or about April 29, 2008, Downey [Savings] represented to Plaintiff that Downey [Savings] could modify Plaintiff’s current loan during the time that the legal department was investigating the fraud allegation on Plaintiff’s loan. However, in order to do a modification of Plaintiff’s loan, Plaintiff would have to be in arrears on her current loan. Downey[ Savings]’s representative then told Plaintiff not to pay April’s mortgage payment. Upon . . . Downey[ Savings]’s representations Plaintiff did not pay April’s mortgage payment. Thereafter, Downey [Savings] informed Plaintiff that Downey [Savings] could not accept any further mortgage payments from Plaintiff until the legal department investigated the alleged fraud on the initial mortgage.”

The elements of negligent misrepresentation are (1) a misrepresentation of a past or existing material fact, (2) made without reasonable ground for believing it to be true, (3) made with the intent to induce another’s reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage. (Wells Fargo Bank, N.A. v. FSI, Financial Solutions, Inc. (2011) 196 Cal.App.4th 1559, 1573; National Union Fire Ins. Co. of Pittsburgh, PA v. Cambridge Integrated Services Group, Inc. (2009) 171 Cal.App.4th 35, 50.)

In opposition to Defendants’ motion for summary judgment, Ragland presented evidence that John or his supervisor represented (1) her loan was not “behind” {Slip Opn. Page 15} but he would work with her to modify the loan; (2) she should not make the April 2008 loan payment because “the worst thing that’s going to happen is you are going to have a late fee, we will get this done for you”; and (3) her loan modification request likely would be approved because she was prequalified. Ragland also presented evidence that several days later, on the last day for her to make a timely loan payment for April, John’s supervisor told her the loan would be turned over to the legal department because Ragland had reported some of the loan documents were forged. The supervisor told Ragland that Downey Savings would not attempt to collect from her until the matter had been investigated by the legal department.

Ragland presented evidence that in reliance on the representations made by John or his supervisor, she did not make her April 2008 loan payment. Defendants assert Ragland was already in default when she first spoke with John on April 13, 2008, because she failed to make her payment due April 1, 2008. The note stated Ragland’s monthly payment was due on the first day of each month, but that the monthly payment would be deemed timely if paid by the end of the 15th day after the due date. In addition, Ragland presented evidence that John told her on April 13, 2008, she was not “behind” but he would work with her to modify the loan. The payments made by Ragland for September and October 2008, which were rejected by Downey Savings, were dated the 16th of the month, and the rejected payment for November 2008 was dated the 14th. At the very least, there is a triable issue of fact whether Ragland was in default when she spoke with John on April 13.

Defendants argue Ragland did not rely on the misrepresentations because she tried to make her loan payments in May, September, October, and November 2008. Ragland made her loan payment by automatic transfer from her checking account. She manually prevented or undid the automatic payments for April, June, July, and August 2008. As Ragland argues in her reply brief, an inference could be drawn that she inadvertently did not stop the May 2008 payment. We draw all reasonable inference in {Slip Opn. Page 16} favor of the party against whom the summary judgment motion was made. (Crouse v. Brobeck, Phleger & Harrison (1998) 67 Cal.App.4th 1509, 1520.)

Defendants argue Ragland’s reliance was not justified because she was told her loan was in the foreclosure department and nobody at Downey Savings ever told her she could stop making loan payments. The evidence presented by Ragland created a triable issue of fact whether her reliance was justified. On April 29, 2008, Ragland spoke with Joseph and Claudia at Downey Savings, and they told her Downey Savings was initiating an investigation of her forgery claim; during the investigation, Downey Savings would not accept loan payments; and collection activity was frozen. In May 2008, on receiving a letter stating her loan was in foreclosure, Ragland called Downey Savings. Her call was transferred several times, until a person named Lilia told her the loan was in Downey Savings’s legal department, which would call her back. Nobody from the legal department called Ragland back. In July 2008, Ragland received a letter from Downey Savings, telling her foreclosure proceedings had begun. After receiving the letter, she called Downey Savings and spoke with three different representatives. The third, Leanna, told Ragland the legal department had failed to place a red flag on the loan and it should never have been placed in foreclosure. Ragland’s notes from the conversation include the statement, “[f]oreclosure on hold.”

The trial court granted summary judgment against Ragland on the ground she suffered no damages because, on the date of the foreclosure sale, she could not reinstate the loan by tendering $24,804.57–the amount Downey Savings claimed was due and owing. The evidence created at the very least a triable issue of fact on damages. Ragland testified in her deposition that as of the date of the foreclosure sale, “I could have covered the back payments but not the fees, not all the fees.” Those fees were tacked on because Ragland’s failure to make the April 2008 loan payment placed the loan in foreclosure. However, Ragland presented evidence that she did not make the April 2008 payment because she relied on misrepresentations made by Downey Savings. In {Slip Opn. Page 17} July 2008, Downey Savings told Ragland her loan should not have been placed in foreclosure and the foreclosure was “on hold.” If Downey Savings wrongfully placed Ragland’s loan in foreclosure, as Ragland alleges, then it had no right to demand payment of additional fees and interest to reinstate the loan. Downey Savings could not take advantage of its own wrong. (Civ. Code, § 3517.)

Defendants point to the December 2, 2008 letter from Ragland’s attorney as undermining her claim she could make the past due monthly loan payments. In that letter, the attorney stated that Ragland could not pay the full amount required to bring the loan current and proposed $12,000 of the reinstatement amount be “tacked onto the back end of the loan.” Defendants ask, if Ragland could have made all of the past due monthly loan payments, why did she not offer to pay them? The question is rhetorical: If she had offered to pay the past due monthly loan payments, Downey Savings certainly would have rejected the offer, just as now Defendants vigorously argue a tender must be unconditional and offer payment of additional fees.

Defendants argue Ragland’s declaration is inconsistent with her deposition testimony because, in her deposition, Ragland could not identify precisely the people from whom she asked to borrow money to make the past due monthly loan payments. Her declaration is consistent with her deposition testimony. Ragland testified, under oath, in her deposition that as of the date of the foreclosure sale, she “could have covered the back payments but not the fees.” The evidence established she was not behind on her monthly payments when she spoke with John at Downey Savings on April 13, 2008, and Downey Savings rejected her payments for May, September, October, and November 2008. A reasonable inference from this evidence, which we liberally construe in Ragland’s favor, is that Ragland would have been able to make the past due monthly payments by the time of the foreclosure sale. (Miller v. Department of Corrections (2005) 36 Cal.4th 446, 470 [“We stress that, because this is an appeal from a grant of {Slip Opn. Page 18} summary judgment in favor of defendants, a reviewing court must examine the evidence de novo and should draw reasonable inferences in favor of the nonmoving party”].)

II. Breach of Oral Contract Cause of Action

In her second cause of action, for breach of oral contract, Ragland alleged Downey Savings breached its promise to investigate her allegations of forgery. On appeal, she does not attempt to support a claim of breach of oral contract and argues instead, “[t]he second cause of action for breach of oral promise to investigate should have been labeled as a cause of action for promissory estoppel.” While conceding the second cause of action does not include the required allegation of detrimental reliance (Kajima/Ray Wilson v. Los Angeles County Metropolitan Transportation Authority (2000) 23 Cal.4th 305, 310), she argues a detrimental reliance allegation may be extrapolated from the fraud cause of action.

The second cause of action did not incorporate by reference the allegations of the fraud cause of action. Ragland argues we must ignore labels, but however labeled, the second cause of action does not allege promissory estoppel. On remand, Ragland may seek leave to amend her complaint to allege a promissory estoppel cause of action.

III. Fraud Cause of Action

In the third cause of action, for fraud, Ragland alleged Downey Savings “falsely and fraudulently” made the representations alleged in the negligent misrepresentation cause of action.

The elements of fraud are (1) the defendant made a false representation as to a past or existing material fact; (2) the defendant knew the representation was false at the time it was made; (3) in making the representation, the defendant intended to deceive {Slip Opn. Page 19} the plaintiff; (4) the plaintiff justifiably and reasonably relied on the representation; and (5) the plaintiff suffered resulting damages. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.)

Defendants argue U.S. Bank was entitled to summary adjudication of the fraud cause of action because no evidence was presented of “a misrepresentation, reliance or damages.” As explained in part I. of the Discussion on negligent misrepresentation, Ragland presented evidence in opposition to the motion for summary judgment that was sufficient to create triable issues as to misrepresentation, reliance, and damages.

Defendants do not argue lack of evidence of elements two (knowledge of falsity) and three (intent to deceive) and did not seek summary adjudication of the fraud cause of action on the ground of lack of evidence of either of those elements. fn. 3 Since Ragland submitted evidence creating triable issues of misrepresentation, reliance, and damages, summary adjudication of the fraud cause of action is reversed.

IV. Violation of Section 2924g(d) Cause of Action

In the fourth cause of action, Ragland alleged Defendants violated section 2924g(d) by selling her home one day after the expiration of the temporary restraining order.

Section 2924g(d) reads, in relevant part: “The notice of each postponement and the reason therefor shall be given by public declaration by the trustee at the time and {Slip Opn. Page 20} place last appointed for sale. A public declaration of postponement shall also set forth the new date, time, and place of sale and the place of sale shall be the same place as originally fixed by the trustee for the sale. No other notice of postponement need be given. However, the sale shall be conducted no sooner than on the seventh day after the earlier of (1) dismissal of the action or (2) expiration or termination of the injunction, restraining order, or stay that required postponement of the sale, whether by entry of an order by a court of competent jurisdiction, operation of law, or otherwise, unless the injunction, restraining order, or subsequent order expressly directs the conduct of the sale within that seven-day period.” (Italics added.)

On November 26, 2008, the trial court issued an order stating: “Plaintiff shall be entitled to a temporary restraining order enjoining the foreclosure sale on December 9, 2008; upon bringing the loan current by Dec[ember] 16. Current is as of Nov[ember] 26, 2008.” The foreclosure sale was conducted on December 17, 2008.

A. Section 2924g(d) Creates a Private Right of Action and Is Not Preempted by Federal Law.

In their summary judgment motion, Defendants argued section 2924g(d) does not create a private right of action and is preempted by federal law. Although Defendants do not make those arguments on appeal, we address, due to their significance, the issues whether section 2924g(d) creates a private right of action and whether it is preempted by federal law. Following the reasoning of Mabry v. Superior Court (2010) 185 Cal.App.4th 208 (Mabry), we conclude section 2924g(d) creates a private right of action and is not preempted.

In Mabry, supra, 185 Cal.App.4th at page 214, our colleagues concluded Civil Code section 2923.5 may be enforced by private right of action. Section 2923.5 requires a lender to contact the borrower in person or by telephone before a notice of default may be filed to “‘assess'” the borrower’s financial situation and “‘explore'” options to prevent foreclosure. (Mabry, supra, at pp. 213-214.) Section 2923.5, though {Slip Opn. Page 21} not expressly creating a private right of action, impliedly created one because there was no administrative mechanism to enforce the statute, a private remedy furthered the purpose of the statute and was necessary for it to be effective, and California courts do not favor constructions of statutes that render them advisory only. (Mabry, supra, at p. 218.)

There is no administrative mechanism to enforce section 2924g(d), and a private remedy is necessary to make it effective. While the Attorney General might be responsible for collective enforcement of section 2924g(d), “the Attorney General’s office can hardly be expected to take up the cause of every individual borrower whose diverse circumstances show noncompliance with section [2924g(d)].” (Mabry, supra, 185 Cal.App.4th at p. 224.)

The Mabry court also concluded Civil Code section 2923.5 was not preempted by federal law because the statute was part of the foreclosure process, traditionally a matter of state law. Regulations promulgated by the Office of Thrift Supervision pursuant to the Home Owners’ Loan Act of 1933 (12 U.S.C. § 1461 et seq.) preempted state law but dealt with loan servicing only. (Mabry, supra, 185 Cal.App.4th at pp. 228-231.) “Given the traditional state control over mortgage foreclosure laws, it is logical to conclude that if the Office of Thrift Supervision wanted to include foreclosure as within the preempted category of loan servicing, it would have been explicit.” (Id. at p. 231.) Section 2924g(d), as section 2923.5, is part of the process of foreclosure and therefore is not subject to federal preemption.

B. The Foreclosure Sale Violated Section 2924g(d).

Defendants argue the foreclosure sale did not violate section 2924g(d) on the ground the trial court’s November 26, 2008 order was not a temporary restraining order because it conditioned injunctive relief on Ragland bringing her loan current by December 16, 2008. That condition was not met, and, therefore, Defendants argue, a temporary restraining order was never issued. {Slip Opn. Page 22}

We disagree with Defendants’ interpretation of the November 26 order. The foreclosure sale had been scheduled for December 9, 2008. The November 26 order was for all intents and purposes a temporary restraining order subject to section 2924g(d) because the effect of that order was to require postponement of the sale at least to December 16, 2008. The requirement that Ragland bring the loan current by that date was not a condition precedent to a temporary restraining order, which in effect had been issued, but a condition subsequent, the failure of which to satisfy would terminate injunctive relief. fn. 4

Defendants argue they were entitled nonetheless to summary adjudication of the fourth cause of action because Ragland could not have brought her loan current within seven days of December 16, 2008. Although Ragland submitted evidence that she could pay back amounts due, she did not present evidence she could bring the loan current, including payment of additional fees, as required by the trial court’s November 26 order.

The purpose of the seven-day waiting period under section 2924g(d) was not, however, to permit reinstatement of the loan, “but to ‘provide sufficient time for a trustor to find out when a foreclosure sale is going to occur following the expiration of a court order which required the sale’s postponement’ and ‘provide the trustor with the opportunity to attend the sale and to ensure that his or her interests are protected.’ [Citation].” (Hicks v. E.T. Legg & Associates (2001) 89 Cal.App.4th 496, 505.) “The bill [amending section 2924g(d) to add the waiting period] was sponsored by the Western Center on Law and Poverty in response to an incident in which a foreclosure sale was held one day after a TRO was dissolved. The property was sold substantially below fair {Slip Opn. Page 23} market value. The trustor, who had obtained a purchaser for the property, did not learn of the new sale date and was unable to protect his interests at the sale.” (Ibid.)

Thus, in obtaining relief under section 2924g(d), the issue is not whether Ragland could have reinstated her loan within the seven-day waiting period but whether the failure of Downey Savings to comply with the statute impaired her ability to protect her interests at a foreclosure sale. Defendants did not raise that issue as ground for summary adjudication of the fourth cause of action.

V. Intentional Infliction of Emotional Distress Cause of Action

In the fifth cause of action, Ragland alleged that in December 2008, Defendants intentionally caused her severe emotional distress by selling her home in a foreclosure sale.

Defendants argue Ragland cannot recover emotional distress damages–either intentionally or negligently inflicted–because she suffered property damage at most as result of their actions. (See Erlich v. Menezes (1999) 21 Cal.4th 543, 554 [“‘No California case has allowed recovery for emotional distress arising solely out of property damage'”].) Erlich v. Menezes and other cases disallowing emotional distress damages in cases of property damage involved negligent infliction of emotional distress. (Ibid. [negligent construction of home does not support emotional distress damages]; Butler-Rupp v. Lourdeaux (2005) 134 Cal.App.4th 1220, 1228-1229 [negligent breach of lease of storage space]; Camenisch v. Superior Court (1996) 44 Cal.App.4th 1689, 1693 [negligent infliction of emotional distress based on legal malpractice]; Smith v. Superior Court (1992) 10 Cal.App.4th 1033, 1040 [“mere negligence will not support a recovery for mental suffering where the defendant’s tortious conduct has resulted in only economic injury to the plaintiff”].) The rule does not apply to intentional infliction of emotional distress: “[R]ecovery for emotional distress caused by injury to property is permitted {Slip Opn. Page 24} only where there is a preexisting relationship between the parties or an intentional tort.” (Lubner v. City of Los Angeles (1996) 45 Cal.App.4th 525, 532; see also Cooper v. Superior Court (1984) 153 Cal.App.3d 1008, 1012 [no recovery for emotional distress arising solely out of property damage “absent a threshold showing of some preexisting relationship or intentional tort”].)

The elements of a cause of action for intentional infliction of emotional distress are (1) the defendant engages in extreme and outrageous conduct with the intent to cause, or with reckless disregard for the probability of causing, emotional distress; (2) the plaintiff suffers extreme or severe emotional distress; and (3) the defendant’s extreme and outrageous conduct was the actual and proximate cause of the plaintiff’s extreme or severe emotional distress. (Potter v. Firestone Tire & Rubber Co. (1993) 6 Cal.4th 965, 1001.) “Outrageous conduct” is conduct that is intentional or reckless and so extreme as to exceed all bounds of decency in a civilized community. (Ibid.) The defendant’s conduct must be directed to the plaintiff, but malicious or evil purpose is not essential to liability. (Ibid.) Whether conduct is outrageous is usually a question of fact. (Spinks v. Equity Residential Briarwood Apartments (2009) 171 Cal.App.4th 1004, 1045 (Spinks).)

Ragland argues Downey Savings engaged in outrageous conduct by inducing her to skip the April loan payment, refusing later to accept loan payments, and selling her home at foreclosure. She likens this case to Spinks, supra, 171 Cal.App.4th 1004, in which the appellate court reversed summary adjudication in the defendants’ favor of a cause of action for intentional infliction of emotional distress. The defendants in Spinks were landlords of an apartment complex in which the plaintiff resided under a lease entered into by her employer. (Id. at p. 1015.) When the plaintiff’s employment was terminated following an industrial injury, the defendants, at the employer’s direction, changed the locks on the plaintiff’s apartment, causing her to leave her residence. (Ibid.) The Court of Appeal rejected the contention the defendants’ conduct was not outrageous {Slip Opn. Page 25} as a matter of law: “First, as a general principle, changing the locks on someone’s dwelling without consent to force that person to leave is prohibited by statute. [Citation.] Though defendants’ agents were polite and sympathetic towards plaintiff, they nevertheless caused her to leave her home without benefit of judicial process. . . . ‘While in the present case no threats or abusive language were employed, and no violence existed, that is not essential to the cause of action. An eviction may, nevertheless, be unlawful even though not accompanied with threats, violence or abusive language. Here the eviction was deliberate and intentional. The conduct of defendants was outrageous.'” (Id. at pp. 1045-1046.) In addition, the defendants’ onsite property manager had expressed concern over the legality of changing the locks, and the plaintiff was particularly vulnerable at the time because she was recovering from surgery. (Id. at p. 1046.)

Defendants argue Spinks is inapposite because changing locks on an apartment to force the tenant to leave is unlawful, while, in contrast, Downey Savings proceeded with a lawful foreclosure after Ragland defaulted and had a legal right to protect its economic interests. (See Sierra-Bay Fed. Land Bank Assn. v. Superior Court (1991) 227 Cal.App.3d 318, 334 [“It is simply not tortious for a commercial lender to lend money, take collateral, or to foreclose on collateral when a debt is not paid”]; Quinteros v. Aurora Loan Services (E.D.Cal. 2010) 740 F.Supp.2d 1163, 1172 [“The act of foreclosing on a home (absent other circumstances) is not the kind of extreme conduct that supports an intentional infliction of emotional distress claim”].)

This argument assumes Downey Savings had the right to foreclose, an issue at the heart of the case. Ragland created triable issues of fact on her causes of action for negligent misrepresentation, fraud, and violation of section 2924g(d). Defendants do not argue Downey Savings would have had the right to foreclose if any of those causes of action were meritorious. Ragland’s treatment by Downey Savings, if proven, was at least {Slip Opn. Page 26} as bad as the conduct of the defendants in Spinks and was so extreme as to exceed all bounds of decency in our society.

VI. Negligent Infliction of Emotional Distress Cause of Action

In the sixth cause of action, Ragland alleged that in December 2008, Defendants negligently caused her severe emotional distress by selling her home in a foreclosure sale. As explained above, Ragland cannot recover under her cause of action for negligent infliction because Defendants’ conduct resulted only in injury to property. In addition, she cannot recover for negligent infliction of emotional distress because she cannot prove a relationship giving rise to a duty of care.

There is no independent tort of negligent infliction of emotional distress; rather, “[t]he tort is negligence, a cause of action in which a duty to the plaintiff is an essential element.” (Potter v. Firestone Tire & Rubber Co., supra, 6 Cal.4th at p. 984.) “That duty may be imposed by law, be assumed by the defendant, or exist by virtue of a special relationship.” (Id. at p. 985.)

Ragland asserted a “direct victim” claim for negligent infliction of emotional distress rather than a “bystander” claim. “‘Direct victim’ cases are cases in which the plaintiff’s claim of emotional distress is not based upon witnessing an injury to someone else, but rather is based upon the violation of a duty owed directly to the plaintiff. ‘[T]he label “direct victim” arose to distinguish cases in which damages for serious emotional distress are sought as a result of a breach of duty owed the plaintiff that is “assumed by the defendant or imposed on the defendant as a matter of law, or that arises out of a relationship between the two.” [Citation.] In these cases, the limits [on bystander cases . . . ] have no direct application. [Citations.] Rather, well-settled principles of negligence are invoked to determine whether all elements of a cause of {Slip Opn. Page 27} action, including duty, are present in a given case.'” (Wooden v. Raveling (1998) 61 Cal.App.4th 1035, 1038.)

Ragland argues a relationship between her and Defendants, sufficient to create a duty of care, arose by virtue of (1) the implied covenant of good faith and fair dealing in the loan documents and (2) financial advice rendered by John or Joseph during the telephone calls in April 2008.

The implied covenant of good faith and fair dealing is a contractual relationship and does not give rise to an independent duty of care. Rather, “‘[t]he implied covenant of good faith and fair dealing is limited to assuring compliance with the express terms of the contract, and cannot be extended to create obligations not contemplated by the contract.'” (Pasadena Live v. City of Pasadena (2004) 114 Cal.App.4th 1089, 1094.) Outside of the insured-insurer relationship and others with similar qualities, breach of the implied covenant of good faith and fair dealing does not give rise to tort damages. (Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 692-693; see also Cates Construction, Inc. v. Talbot Partners (1999) 21 Cal.4th 28, 61 [no tort recovery for breach of implied covenant arising out of performance bond]; Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 516 [“In the absence of an independent tort, punitive damages may not be awarded for breach of contract” even when the breach was willful, fraudulent, or malicious]; Mitsui Manufacturers Bank v. Superior Court (1989) 212 Cal.App.3d 726, 730-732 [commercial borrower may not recover tort damages for lender’s breach of implied covenant in loan documents].)

No fiduciary duty exists between a borrower and lender in an arm’s length transaction. (Oaks Management Corporation v. Superior Court (2006) 145 Cal.App.4th 453, 466; Union Bank v. Superior Court (1995) 31 Cal.App.4th 573, 579; Price v. Wells Fargo Bank (1989) 213 Cal.App.3d 465, 476.) “[A]s a general rule, a financial institution owes no duty of care to a borrower when the institution’s involvement in the loan transaction does not exceed the scope of its conventional role as a mere lender of {Slip Opn. Page 28} money.” (Nymark v. Heart Fed. Savings & Loan Assn. (1991) 231 Cal.App.3d 1089, 1096.)

Relying on Barrett v. Bank of America (1986) 183 Cal.App.3d 1362 (Barrett), Ragland argues Downey Savings exceeded the scope of its role as a lender of money because John and Joseph gave her what amounted to investment advice by telling her not to make her April 2008 loan payment. In Barrett, the plaintiffs executed personal guarantees to the defendant bank of two loans made to a corporation of which the plaintiffs were the principal shareholders. (Id. at p. 1365.) Soon after the loans funded, the plaintiffs were informed the corporation was in technical default because the corporation’s liability to asset ratios no longer met the bank’s requirements. (Ibid.) The bank’s loan officer assigned to the matter suggested three different ways to improve the corporation’s financial situation. As to the third suggestion, merger or acquisition, the loan officer told the plaintiffs a merging company would be responsible for the loans and the plaintiffs would be released from the guarantees. (Ibid.)

The plaintiffs followed the third suggestion, and their corporation merged with another one. The merging corporation soon could not make the payments on the loans. (Barrett, supra, 183 Cal.App.3d at pp. 1365-1366.) The assignee of the loans enforced them against the plaintiffs and instituted foreclosure proceedings against their home. (Id. at p. 1366.) The plaintiffs sued the bank for various causes of action, including constructive fraud and intentional infliction of emotional distress. (Ibid.) The jury returned a verdict in favor of the bank. (Id. at pp. 1366-1367.)

The issue on appeal was whether the trial court erred by refusing to instruct the jury on constructive fraud. (Barrett, supra, 183 Cal.App.3d at p. 1368.) The Court of Appeal, reversing, concluded substantial evidence supported a constructive fraud theory of recovery. (Id. at p. 1369.) Constructive fraud usually arises from a breach of duty in which a fiduciary relationship exists. (Ibid.) The court reasoned the bank acted as the plaintiffs’ fiduciary because one plaintiff perceived his relationship with the loan officer {Slip Opn. Page 29} as “very close,” relied on the loan officer’s financial advice, shared confidential financial information with the loan officer, and relied on the loan officer’s advice about mergers. (Ibid.) In addition, a consultant for the merging corporation testified the loan officer assured him the plaintiffs would not be released from their guarantees. (Ibid.)

The evidence presented in opposition to the motion for summary judgment did not create a triable issue of Ragland’s relationship with Downey Savings. In contrast with the extensive financial and legal advice given by the loan officer in Barrett, John or his supervisor at Downey Savings told Ragland not to make her April 2008 loan payment in order to be considered for a loan modification. This advice was directly related to the issue of loan modification and therefore fell within the scope of Downey Savings’s conventional role as a lender of money.

The undisputed facts established there was no relationship between Ragland and Downey Savings giving rise to a duty the breach of which would permit Ragland to recover emotional distress damages based on negligence. The trial court did not err by granting summary adjudication of the cause of action for negligent infliction of emotional distress.

VII. Rescission Cause of Action

Ragland concedes her seventh cause of action, for rescission, is no longer viable (“a dead letter”) because her home was resold after the foreclosure sale to a bona fide purchaser for value. For that reason too, she states she is no longer asserting claims against DSL and FCI.

VIII. Temporary Restraining Order

Ragland argues the trial court’s November 26, 2008 order violated her due process rights because it, in effect, required her to pay nearly $25,000 to bring her loan {Slip Opn. Page 30} current or face foreclosure of her home. There are two fundamental problems with Ragland’s challenge to the November 26 order. First, an order granting or dissolving an injunction, or refusing to grant or dissolve an injunction, is directly appealable. (Code Civ. Proc., § 904.1, subd. (a)(6).) Ragland did not file a notice of appeal from the November 26 order or from the later order denying her motion for a preliminary injunction. Second, even if Ragland properly had appealed, the sale of her home at foreclosure would have rendered the appeal moot. An appeal from an order denying a temporary restraining order or preliminary injunction will not be entertained after the act sought to be enjoined has been performed. (Finnie v. Town of Tiburon (1988) 199 Cal.App.3d 1, 10.) “An appeal should be dismissed as moot when the occurrence of events renders it impossible for the appellate court to grant appellant any effective relief. [Citation.]” (Cucamongans United for Reasonable Expansion v. City of Rancho Cucamonga (2000) 82 Cal.App.4th 473, 479.)

Ragland concedes her attempt to halt the foreclosure sale, like her rescission cause of action, is a “dead letter” and she is not seeking to set aside the November 26 order or the order denying a preliminary injunction. She argues, “the denial of due process at the application for temporary restraining order was a substantial factor in [the] trial court’s decision to grant summary judgment in favor of U.S. Bank.” We fail to see the connection. In any event, we are reversing the judgment as to U.S. Bank, and affirming summary adjudication only of the causes of action for breach of oral contract, negligent infliction of emotional distress, and rescission.

DISPOSITION

The judgment in favor of DSL and FCI, and summary adjudication of the causes of action for breach of oral contract, negligent infliction of emotional distress, and rescission are affirmed. Ragland may seek leave to amend in the trial court, as explained {Slip Opn. Page 31} in this opinion. In all other respects, the judgment is reversed and the matter remanded for further proceedings. Ragland shall recover costs incurred on appeal.

Aronson, Acting P.J., and Ikola, J., concurred.

­FN 1. 1. From page 4, the third full paragraph beginning “In October, 2007, Downeys’ publicly traded common stock,” through page 6, the citation following the first full paragraph and ending http://www.ocregister.com/articles/bank-16076-fremont-fdic.html).

2. On page 7, footnote 3 that continues from page 6, the second sentence beginning “Between April 2008” and ending “[$543,000 + 14% = $619,020].”

3. From page 7, in the third paragraph, the second sentence beginning “By that time, Downey’s” to page 8, the first line ending “(http:/www.bankaholic.com/ downey-savings/).”

4. On page 8, the second full paragraph beginning “In late July, 2008.”

5. From page 9, the third full paragraph beginning “On November 21, 2008” through the first full paragraph on page 10.

6. From page 31, the first full paragraph beginning “Going through a foreclosure can be so stressful” through page 32, the first full paragraph ending “(http://abcnews.go.com/Health/DepressionNews/story?id=5444573&page=1).”

­FN 2. The three passages are:

1. On page 16, the first full paragraph beginning “In the present case.”

2. On page 16, footnote 4.

3. On page 30, in the first full paragraph, the fourth sentence beginning “Downey Savings took Ms. Ragland’s home.”

­FN 3. In its notice of motion and separate statement of undisputed material facts, U.S. Bank moved for summary adjudication of two issues (issues 9 and 10) related to the fraud cause of action: “9. U.S. Bank is entitled to summary adjudication against Plaintiff on the third cause of action for Fraud because U.S. Bank did not make an actionable misrepresentation. [¶] 10. U.S. Bank is entitled to summary adjudication against Plaintiff on the third cause of action for Fraud because all of Plaintiff’s alleged damages arise from the foreclosure of her property and Plaintiff was incapable of reinstating the loan at the time of the foreclosure.”

­FN 4. The requirement that Ragland bring her loan current might also be viewed as a condition precedent to a preliminary injunction. But, as the trial court noted: “If plaintiff does bring her payments current by the hearing date, then there is no basis for a foreclosure sale because the arrears would have been cured. Hence there would seem to be no need for the issuance of a preliminary injunction under such circumstances.”

Win the house back at the eviction on summary judgement

Here goes

Timothy L. McCandless, Esq., SBN 147715
LAW OFFICES OF TIMOTHY L. MCCANDLESS
820 Main Street, Suite #1
P.O. Box 149
Martinez, California 94553

Telephone: (925) 957-9797
Facsimile: (925) 957-9799
Email: legal@prodefenders.com

Attorney for Defendant(s):

SUPERIOR COURT OF THE STATE OF CALIFORNIA

IN AND FOR THE COUNTY OF SAN MATEO

SOUTHERN BRANCH – HALL OF JUSTICE & RECORDS

FEDERAL HOME LOAN MORTGAGE
CORPORATION, ITS ASSIGNEES
AND/OR SUCCESSORS,

Plaintiff(s),

VS.

; and DOES 1 -10, Inclusive,

Defendant(s)

CASE NO:

MEMORANDUM OF POINTS AND
AUTHORITIES IN SUPPORT OF MOTION
FOR SUMMARY JUDGMENT BY
DEFENDANT

[Filed concurrently with: Notice of Motion and
Motion for Summary Judgment by Defendant;
Declaration of Alexander B. Paragas in Support
of Motion for Summary Judgment by
Defendant; Defendant’s Separate Statement of
Undisputed Facts and Supporting Evidence on
Motion for Summary Judgment; [Proposed]
Order]

Hearing’s:
Date : September X, 2012
Time : X:XX a.m.
Dept. : Law and Motions
Reservation No.:

Defendant and Movant herein,  (“Defendant”), submits the
following Memorandum of Points and Authorities in Support of his Motion for Summary

Judgment against Plaintiff FEDERAL HOME LOAN MORTGAGE CORPORATION, ITS
ASSIGNEES AND/OR SUCCESSORS,(hereinafter “FHLMC”)(“Plaintiff”).

POINTS AND AUTHORITIES
I
FACTUAL BACKGROUND OF THIS LITIGATION

On or about January 24, 2008, Defendant executed an “Adjustable Rate Note” promising to
pay INDYMAC BANK, F.S.B. (hereinafter “INDYMAC”)1, the sum of $417,000.00, by monthly
payment commencing February 1, 2008.
The Deed of Trust (“DOT”) and the Note are between Defendant, Defendant’s wife Mrs.
Paragas and INDYMAC, Plaintiff was never a signatory to this Note, or DOT. A true and correct
copy of DOT and Adjustable Rate Rider is attached to the Declaration of Alexander B. Paragas
and incorporated herein as Exhibit “1”.
The issue is does Plaintiff has a right as a stranger to the Note to foreclose on the Note and
DOT that was not in its name and for which Plaintiff was not party to the Note or financing
transaction nor a disclosed beneficiary by virtue of a recorded assignment.
Furthermore Defendant alleges that MORTGAGE ELECTRONIC REGISTRATION
SYSTEMS INC., a/k/a MERSCORP, INC. (hereinafter “MERS”) was not listed anywhere on his
Note executed at the same time as DOT. Furthermore Defendant is informed and believes that
directly after INDYMAC caused MERS to go on title as the “Nominee Beneficiary” this is

1 Independent National Mortgage Corporation “INDYMAC” before its failure was the largest savings and loan association in the
Los Angeles area and the seventh largest mortgage originator in the United States. The failure of INDYMAC on July 11, 2008, was the
fourth largest bank failure in United States history, and the second largest failure of a regulated thrift.

The primary causes of INDYMAC’s failure were largely associated with its business strategy of originating and securitizing Alt-
A loans on a large scale. During 2006, INDYMAC originated over $90 billion of mortgages. INDYMAC’s aggressive growth strategy, use
of Alt-A and other nontraditional loan products, insufficient underwriting, credit concentrations in residential real estate in the California
and Florida markets, and heavy reliance on costly funds borrowed from the Federal Home Loan Bank (FHLB) and from brokered deposits,
led to its demise when the mortgage market declined in 2007. As an Alt-A lender, INDYMAC’s business model was to offer loan products
to fit the borrower’s needs, using an extensive array of risky option-adjustable-rate-mortgages (option ARMs), subprime loans, 80/20 loans,
and other nontraditional products. Ultimately, loans were made to many borrowers who simply could not afford to make their payments.
The thrift remained profitable only as long as it was able to sell those loans in the secondary mortgage market.

When home prices declined in the latter half of 2007 and the secondary mortgage market collapsed, INDYMAC was forced to
hold $10.7 billion of loans it could not sell in the secondary market. Its reduced liquidity was further exacerbated in late June 2008 when
account holders withdrew $1.55 billion or about 7.5% of INDYMAC’s deposits. During this time INDYMAC’s financial situation was
unraveling at the seams, culminating on July 11, 2008 when INDYMAC was placed into conservatorship by the Federal Deposit Insurance
Company “FDIC” due to liquidity concerns. A bridge bank, INDYMAC FEDERAL BANK, F.S.B., Defendant in the instant action, was
established to assume control of INDYMAC’s assets and secured liabilities, and the bridge bank was put into conservatorship under the
control of the FDIC.

On March 19, 2009 the Acting Director of Office of Thrift Supervision “OTS” replaced the FDIC as conservator for INDYMAC
pursuant to Section 5(d)(2)(C) of the Home Owners’ Loan Act (HOLA), 12 U.S.C. 1464(d)(2)(C); and appointed the FDIC as the receiver
for INDYMAC pursuant to Section 5(d)(2) of HOLA, 12 U.S.C. 1464(d)(2) and Section 11(c)(5) of the FDIA, 12 U.S.C. 1821(c)(5).

As a result of the OTS Order, INDYMAC became an “inactive institution” on March 19, 2009, the very same day that the Order
was issued. In other words, INDYMAC, as a defunct corporation, was no longer in existence as of March 19, 2009.

routinely done in order to hide the true identity of the successive Beneficiaries when and as the
loan was sold.
Based upon published reports, including MERS’ web site, Defendant believes and hereon
allege, MERS does not: (1) take applications for, underwrite or negotiate mortgage loans; (2)
make or originate mortgage loans to consumers; (3) extend credit to consumers; (4) service
mortgage loans; or (5) invest in mortgage loans.
MERS is used by Plaintiff and foreclosing entities to facilitate the unlawful transfers or
mortgages, unlawful pooling of mortgages and the injection into the United States banking
industry of un-sourced (i.e. unknown) funds, including, without limitation, improper off-shore
funds. Defendant is informed and thereon believes and alleges that MERS has been listed as
beneficiary owner of more than half the mortgages in the United States. MERS is improperly
listed as beneficiary owner of Defendant’s mortgage.
Nationwide, there are courts requiring banks that claim to have transferred mortgages to MERS
to forfeit their claim to repayment of such mortgages.
MERS’ operations undermine and eviscerate long-standing principles of real property law,
such as the requirement that any person who seeks to foreclose upon a parcel of real property: (1)
be in possession of the original Note and mortgage; and (2) possess a written assignment giving it
rights to the payments due from borrower pursuant to the mortgage and Note.
The Plaintiff and its agents did not want to pay the fees associated with recording mortgages
and they did not wanted to bother with the trouble of keeping track of the originals. That is the
significance of the word ‘Electronic’ in Mortgage Electronic Registration Systems, Inc. The
undermined long-established rights and sabotaged the judicial process, eliminating,
“troublesome” documentation requirements. While conversion to electronic loan documentation
may eventually be implemented, it will ultimately be brought about only through duly enacted
legislation which includes appropriate safeguards and counterchecks.
Upon information and belief:
a) MERS is not the original lender for Defendant’s loan;
b) MERS is not the creditor, beneficiary of the underlying debt or an assignee
under the terms of Defendant’s Promissory Note;
c) MERS does not hold the original Defendant’s Promissory Note, nor has it ever
held the originals of any such Promissory Note;

d) At all material times, MERS was unregistered and unlicensed to conduct
mortgage lending or any other type or real estate or loan business in the State of
California and has been and continues to knowingly and intentionally
improperly record mortgages and conduct business in California and elsewhere
on a systematic basis for the benefit of the Plaintiff and other lenders.
Defendant initiated loan modification negotiation efforts with ONEWEST BANK, F.S.B.,
(hereinafter “ONEWEST”) on or about November 2010, after experiencing unforeseen financial
hardship. Defendant believed that his loan servicer would be willing to avoid a foreclosure since
he and his wife Mrs. Paragas were willing to tender unconditionally but needed the monthly
payments restructured to reflect the downturn in their monthly gross income, and reflect the
current market conditions.
Despite Defendant’s efforts, ONEWEST has refused to work in any reasonable way to modify
the loan or avoid foreclosure sale. Furthermore ONEWEST is presently bound by a Consent
Order, WN-11-0112 , with the United States of America Department of the Office of Thrift
Supervision related to its initiation and handling of foreclosure proceedings. The Consent Order is
based in part on foreclosure affidavits that have been found to be false. ONEWEST presently
manages approximately 141 billion dollars in residential mortgage loans in which it has litigated
numerous wrongful foreclosure proceedings and initiated non-judicial foreclosure proceedings
without proper standing.
The challenged foreclosure process is based upon several Assignments of DOT.
a) First Assignment executed and effective January 3, 2011, a true and correct
copy of the Assignment of DOT is attached to the Declaration of Alexander B.
Paragas and incorporated herein as Exhibit “2”;
b) Second Assignment executed and effective May 24, 2011, a true and correct
copy of the Assignment of DOT is attached to the Declaration of Alexander B.
Paragas and incorporated herein as Exhibit “3”; and
c) Third Assignment executed and effective October 31, 2011, a true and correct
copy of the Assignment of DOT is attached to the Declaration of Alexander B.
Paragas and incorporated herein as Exhibit “4”.
There are no documents of which the Court can take judicial notice that establish that MERS

2 See: http://www.mortgagedaily.com/forms/OccConsentOrderOnewest041311.pdf

either held the Promissory Note or was given the authority by INDYMAC, the original lender, to
assign the Note.
Defendant further alleges and according the San Mateo County Recorder’s Office, that first
Assignment of DOT (See Exhibit “2”) was purportedly signed by Mr. BRIAN BURNETT as the
“Assistant Secretary” of MERS, Defendant believes and alleges that Mr. BRIAN BURNETT was
never, in any manner whatsoever, appointed as the “Assistant Secretary” by the Board of
Directors of MERS, as required by MERS’ corporate by-laws and an adopted corporate resolution
by the Board of Directors of MERS. For that reason, Mr. BRIAN BURNETT never had, nor has,
any corporate or legal authority from MERS, or the lender’s successors and assigns, to execute
the purported “Assignment.” Furthermore Mr. BRIAN BURNETT purports to be ONEWEST’s
“Assistant Vice President” according the Substitution of Trustee (“SOT”) executed and effective
January 13, 2011 a true and correct copy of the SOT is attached to the Declaration of Alexander
B. Paragas and incorporated herein as Exhibit “5”.
This is a shell game where Mr. BRIAN BURNETT purports to be “Assistant Secretary” and
“Assistant Vice President” for two different entities at the same time, in reality Mr. BRIAN
BURNETT is an employee for ONEWEST, so that he can manufacture the paperwork necessary
for ONEWEST to hijack the mortgage and then foreclose on the property. Furthermore this is
example of how MERS is being used by its members to perpetrate a fraud.
On or about October 31, 2011 another MERS’ employee Mrs. WENDY TRAXLER as
“Assistant Secretary” once again assigned same DOT to ONEWEST (See Exhibit “4”).
Defendant is left to wonder, which Assignment is valid, and how is possible that two
employees of same entity, in this case MERS’, Mr. BRIAN BURNETT and Mrs. WENDY
TRAXLER, both “Assistant Secretaries”, did not communicated as to the Defendant’s Note and
DOT before the execution of the Assignments, or it appears that MERS’ employees preparing and
signing off on foreclosures without reviewing them, as the law requires.
It has been widely reported in the media that mortgage servicers, lenders, and major banks
have suspended over a hundred thousand foreclosures because relevant documents may not have
been properly prepared by ROBO-SIGNERS. Typically, the ROBO-SIGNERS were given phony
titles such as “Vice President” and “Assistant Secretary” to make it appear that they were bank
officers. In reality, ROBO-SIGNERS were typically, teens, hair stylists, Wal-Mart workers,
students, and unemployed persons of varying backgrounds.

The ROBO-SIGNING of affidavits and Assignments of Mortgage and all other mortgage
foreclosure documents served to cover up the fact that loan servicers cannot demonstrate the facts
required to conduct a lawful foreclosure.
Here in this instant case Mr. BRIAN BURNETT assigned DOT from MERS to ONEWEST on
or about January 3, 2011 (See Exhibit “2”), on or about May 24, 2011 Mrs. MOLLIE
SCHIFFMAN an “Assistant Vice President” of ONEWEST assigned interest of Plaintiffs’ Note
and DOT to the Plaintiff (See Exhibit “3”), yet on or about October 31, 2011 Mrs. WENDY
TRAXLER once again assigns same Note and DOT from MERS to ONEWEST (See Exhibit
“4”), this fabricated Assignments of DOT is nothing more than an attempt of Plaintiff and its
agents to hijack the mortgage and then foreclose on the property, in violation of California Civil
Law.
Defendant further alleges that purported Assignments of his Note and DOT, is attempt to pave
the way for Plaintiff to be able to claim an estate or interest in the Property adverse to that of
Defendant.
Defendant alleges that, on information and belief, ONEWEST, QUALITY LOAN SERVICE
CORPORATION, (hereinafter “QUALITY”), Plaintiff and/or its agents have been fraudulently
enforcing a debt obligation, fraudulently foreclosed on Plaintiff’s Subject Property in which they
did not have pecuniary, equitable or legal interest. Thus, ONEWEST’s, QUALITY’s and/or
Plaintiff’s conduct was part of a fraudulent debt collection scheme.
Defendant further alleges that on or about January 26, 2011 QUALITY recorded Notice of
Default (“NOD”), a true and correct copy of the NOD is attached to the Declaration of Alexander
B. Paragas and incorporated herein as Exhibit “6”.
Defendant further alleges, on or about May 4, 2011, had received Notice of Trustee’s Sale
(“NTS”) a true and correct copy of the NTS is attached to the Declaration of Alexander B.
Paragas and incorporated herein as Exhibit “7”. The sale was scheduled for May 23, 2011 at 1:00
p.m., but postponed to several times, until April 23, 2012, when sale of the Subject Property was
executed.
On or about April 23, 2012 at 12:31 p.m., Defendant filed voluntary Chapter 13 bankruptcy
protection in the United States Bankruptcy Court for the Northern District of California, Case No.
12-31228 a true and correct copy of the filing is attached to the Declaration of Alexander B.
Paragas and incorporated herein as Exhibit “8”, along with Motion to Extend Automatic Stay

pursuant U.S.C. Section 362(c)(3)(B), Notice of Opportunity for Hearing on Motion to Extend
Automatic Stay pursuant U.S.C. Section 362(c)(3)(B), and Declaration in Support of Hearing on
Motion to Extend Automatic Stay pursuant U.S.C. Section 362(c)(3)(B) a true and correct copy of
the filing is attached to the Declaration of Alexander B. Paragas and incorporated herein as
Exhibit “9”.
Plaintiff and its agents have been notified of the filings, but failed to object and proceeded
with the sale of the Subject Property in violation of the 11 U.S.C. Section 362, and conveyed all
its right, tile and interest in and to the Plaintiffs’ property.
On or about May 4, 2012 QUALITY recorded Trustee’s Deed Upon Sale (“TDUS”) a true and
correct copy of the TDUS is attached to the Declaration of Alexander B. Paragas and incorporated
herein as Exhibit “10”, that operated to prefect the lenders/beneficiary interest in the property of
the Defendant during the pendency of the Chapter 13 proceeding.
On or about June 11, 2012 U.S. Bankruptcy Judge, Mr. THOMAS E. CARLSON granted
Motion to Extend Automatic Stay a true and correct copy of the Order is attached to the
Declaration of Alexander B. Paragas and incorporated herein as Exhibit “11”, stating that
Automatic Stay, under 11 U.S.C. Section 362(a), shall remain in force for the duration of
Defendant’s Chapter 13 proceeding, until is terminated under 11 U.S.C. Section 362(c)(1), or a
Motion for Relief from Stay is granted under 11 U.S.C. Section 362(d), no Motion for Relief has
been filed by any Creditor, including Plaintiff herein.
On or about May 16, 2012, Plaintiff filed this instant case. The Unlawful Detainer Complaint
states that the Plaintiff obtained the right to possession by a Trustee’s sale and that title was
perfected and recorded [UD Complaint, ¶11]. Title is “duly perfected” when all steps have been
taken to make it perfect, that is, to convey to purchaser that which he has purchased, valid and
good beyond all reasonable doubt, Kessler v. Bridge (1958, Cal App Dep’t Super Ct) 161 Cal
App 2d Supp 837, 327 P2d 241, 1958 Cal App LEXIS 1814.
In this instant case, the title has not been perfected in Plaintiff’s since the title to the Property
was not conveyed to Plaintiff under the power of sale contained in the DOT and/or was not
conveyed in compliance with California Civil Code Section 2924 et seq., and in violation of 11
U.S.C. Section 362.
///
///

FHLMC DOES NOT HAVE STANDING TO BRING THE INSTANT ACTION

FHLMC lacks standing to bring the instant action for possession of the subject property. (1)
FHLMC is not a proper party to this action, and as such the court is without jurisdiction to grant
possession of the subject property to Plaintiff. Further, (2) Plaintiff or Plaintiff’s predecessor
failed to perform (2) conditions precedent (i) mandated by the original DOT, Section (20) which
requires a separate Notice and opportunity to cure in addition to the procedure established by
California Civil Code Section 2924 thereby cancelling the performance of Defendant, and (ii)
they failed to record the assignment of the deed of Trust a condition precedent to conducting a
foreclosure sale, (3) Plaintiff cannot prove that the non-judicial foreclosure which occurred,
strictly complied with the tenets of California Civil Code Section 2924 in order to maintain an
action for possession pursuant to California Code of Civil Procedure Section 1161.
1. Plaintiff failed to perform a condition precedent contained in the DOT prior to
bringing this action pursuant to California Code of Civil Procedure Section
1161, which mandates that the trustee attempting in writing prior to the
institution of a non-judicial foreclosure to allow defendant to cure the default;
2. Plaintiff failed to record the assignment of the Note and DOT prior to initiating
the foreclosure therefore the foreclosure was invalid under Section 2924;
3. The original promissory note executed by Defendant and his wife Mrs. Paragas
is invalid due to the ineffective method of assignment utilized by the parties,
assignment of the promissory note was not contained on the body of the page of
the Note, but rather was effectuated on a different paper, notwithstanding the
fact that there was sufficient room to draft the assignment on the face of the
note;
4. At the time of making the Note and DOT, Plaintiff’s predecessor ONEWEST
was operating its business from Inside California; however, ONEWEST was not
lawfully registered with the Secretary of State to conduct business pursuant to
California Corporations Code Section 1502 et seq. invalidating the Note and
DOT; and
5. The Trustee that conducted the non-judicial foreclosure sale was not a holder in
due course of the Original Note, because the Note was rendered non-negotiable
by (i) the manner in which the assignment was attempted, and (ii) the failure of

FHLMC to record the assignment, invalidating the Note, and resulting TDUS,
which denies Plaintiff standing to seek possession under California Code of
Civil Procedure Section 1161a.

LEGAL ANALYSIS

In this matter before the Bench, it becomes pellucidly clear that several fatal errors occurred
throughout the assignment of the Defendant’s Note and DOT, and ineffective non-judicial
foreclosure sale, which when weighed together have the effect of denying Plaintiff the necessary
standing to seek possession.
1. Plaintiff failed to perform a condition precedent contained in the DOT
prior to bringing this action pursuant to California Code of Civil
Procedure Section 1161.
This party is charged with the duty to perform and condition precedent prior to bringing the
instant action and failed to do so. Paragraph (20) of the DOT provides in pertinent part:

Neither borrow or lender may commence, join, or be joined to any judicial action
(as either an individual litigant, or the member of a class, that arises from the other
party’s actions pursuant to this security instrument or alleges that the other party has
breached any provision of, or any duty by reason of, this Security Instrument, until
such borrower or lender has notified the other party (with such notice given in
compliance with the requirements of Section 15) of such alleged breach and
afforded the other party hereto a reasonable period after giving of such notice to
take corrective action. If applicable law provides a time period which must elapse
before certain action can be taken, that time period will be deemed to be reasonable for
the purposes of this paragraph. The notice of acceleration and notice to cure given to
borrower pursuant to Section 22 and the notice of acceleration given to borrower
pursuant to Section 18 shall be deemed to satisfy the notice and opportunity to take
corrective action provisions of this Section 20. (Emphasis added.)

When there is an agreement between the Beneficiary and Trustor, such as the Condition Precedent
expressed in Paragraph 20 of the DOT a Foreclosure cannot take place before the condition is
satisfied. If the Beneficiary fails to carry out its obligation a subsequent foreclosure is invalid.
Haywood Lumber & Investment Co. V. Corbett (1934) 138 CA 644, 650, 33 P2d 41;
The DOT was drafted solely by the original beneficiary, Defendant had no part in drafting this
document, only the execution thereof. Defendant contends that the aforementioned language
contained in the DOT creates a condition precedent prior to either Plaintiff or Defendant bringing
any action, without first giving written notice to perform a covenant.

By virtue of the fact that an Unlawful Detainer involves a forfeiture of the tenant’s right to
possession, the Courts strictly construe the statutory proceedings which regulate it. Kwok v.
Bergren, (1982) 130 Cal.App.3d 596, 600,181 Cal.Rptr. 795. The failure of Plaintiff to perform a
condition precedent, to wit, failure to give Defendant notice and a reasonable period to cure a
breach of the terms and conditions, cancels the performance of Defendant, until the condition
precedent is performed according to the terms of the DOT.
In the absence of proof that Plaintiff timely performed the condition precedent giving
Defendant a chance to cure his breach of the terms and conditions of the DOT, Plaintiff cannot
proceed with the present action. The Plaintiff is a stranger who is not in privity with the
tenant/owner, and he must prove that he is authorized by the statute to prosecute an Unlawful
Detainer proceeding pursuant to a properly conducted foreclosure sale. Therefore, the tenant can
raise the limited defense that the foreclosure sale is invalid because it was not processed ,in
compliance, with the statutes regarding foreclosures, and the Plaintiff has the burden of proof that
the foreclosure statutes were satisfied by performance of all of the notices and procedures
required.
2. Plaintiff failed to record the assignment of the Note and DOT prior to
initiating the foreclosure therefore the foreclosure was invalid under
Section 2924.
There is also a condition precedent to enforcing the note by an assignee, see California Civil
Code Section 2932.5 which states:

2932.5. Where a power to sell real property is given to a mortgagee, or
other encumbrancer, in an instrument intended to secure the payment of
money, the power is part of the security and vests in any person who by
assignment becomes entitled to payment of the money secured by the
instrument. The power of sale may be exercised by the assignee if the
assignment is duly acknowledged and recorded. (emphasis added).

The assignment was not Recorded

The assignment was not recorded. Since FHLMC failed to record the assignment they were not
entitled to enforce the Note or to foreclose on this Property therefore the Title was not perfected
under Section 2924 by a foreclosure sale and was not duly carried out under Section 2924 and was
wholly defective and this Plaintiff has no standing in this Unlawful Detainer action.
In addition to recording the assignment, the Beneficiary must also deliver the Original Note to

the Trustee in order for the Trustee to conduct the foreclosure sale. Haskell V. Matranga (1979)
CA 3d. 471, 479-480, 160 CR 177;
In the Case of a Mortgage with a power of Sale an assignee can only enforce the power of sale
if the assignment is recorded, since the assignee’s authority to conduct the sale must appear in the
public records, New York Life Insurance Co. V. Doane, (1936) 13 CA 2d. 233, 235-237, 56 P2d.
984, 56 ALR 224;
3. Plaintiff is not a holder in due course of the original promissory Note
executed by the borrower, because the method of assignment utilized by the
parties to indorse the assignment rendered the note non-negotiable as a
matter of law.
The assignment of the original promissory Note was invalidated by the manner in which the
assignment was attempted. It has long been settled that the assignment of a Note must be reflected
on the body of the note, as long as there is room available. If room to draft the assignment is
available, but the party making the assignment drafts the assignment on a separate piece of paper,
the Note is no longer negotiable. The public policy is to avoid one party from making multiple
assignments of the same property, at the same time, and defrauding each assignee of their
consideration for the assignment. In Privus vs. Bush, (1981) 118 Cal.App.3d 1003, the court held
that a promissory Note executed as security for a DOT was rendered non-negotiable because the
endorsement by the assignor was not contained on the face of the Note, notwithstanding the fact
that there was sufficient space on the Note to effectuate the assignment.
The Privus, supra., Court held at pages 106-107, in pertinent part: California Uniform
Commercial Code Section 3302, Subdivision (1) provides, “A holder in due course is a holder
who takes the instrument (a) For value; and (b) In good faith; and (c) without notice that it is
overdue or has been dishonored or of any defense against or claim to it on the part of any person.”
In the present case, the trial Court did not question Defendant’s status as a holder in due course
because of any failure to satisfy the value, good faith, or no notice requirements. Rather, the Court
concluded that Defendant is not a holder in due course because he is not a holder at all, an
essential prerequisite to qualifying as a holder in due course. A holder is “a person who is in
possession of … an instrument …, issued or indorsed to him ….” (Section 1201(20).) The trial
Court ruled that the Williams’ signature on the paper attached to the promissory Note did not
qualify as an endorsement because there was adequate space for the endorsement on the note

itself.” (emphasis added).
Section 3202(2) states, “An endorsement must be written by or on behalf of the holder and on
the instrument or on a paper so firmly affixed thereto as to become a part thereof.” Thus, the code
does not say whether or not such a paper, called an “allonge,” may be used when there is still
room for an endorsement on the instrument itself. Nor has any reported California case dealt with
this issue under the code. The code does, however, instruct us as to where to look for the law with
which to resolve the issue. Section 1103 states that, “(u)nless displaced by the particular
provisions of this code, the principles of law and equity, including the law merchant … shall
supplement its provisions,” and that section’s Uniform Commercial Code comment Notes “the
continued applicability to commercial contracts of all supplemental bodies of law except insofar
as they are explicitly displaced by this Act.” Therefore, since the Commercial Code has not
addressed the issue, we decide the present case according to the rules on allonges of the law
merchant.” Privus vs. Bush, (1981) 118 Cal.App.3d 1003,1007.
“Although the cases are not unanimous, the majority view is that the law merchant permits the
use of an allonge only when there is no longer room on the negotiable instrument itself to write an
indorsement. (See generally Annot., Indorsement of Negotiable Instrument By Writing Not On
Instrument Itself (1968) 19 A.L.R.3d 1297, 1301-1304; Annot., Indorsement of Bill or Note by
Writing Not On Instrument Itself (1928) 56 A.L.R. 921, 924-926.) Typical of the majority
position is Bishop v. Chase, (1900) 156 Mo. 158, 56 S.W. 1080. There it was held that the general
rule is that an instrument could be indorsed only by writing on the instrument itself, but that an
exception to the rule allows the use of an attached paper “when the back of the instrument is so
covered as to make it necessary.” (Id., 156 Mo. 158, 56 S.W. at p. 1083.) Thus, the Court
invalidated an attempted endorsement by allonge when “there was plenty of room upon the back
of the Note to have made the endorsement, and the only excuse for not doing so was that it was
more convenient to assign it on a separate paper.” (Id., 156 Mo. 158, 56 S.W. at p. 1084.)” Privus
vs. Bush, (1981) 118 Cal.App.3d 1003, 1007.
Here, the original Note executed had sufficient space for an endorsement, however, the note
does not contain an endorsement, and Defendant has never seen a document which purports to
assign the note to a third party. As such, Plaintiff is not a holder in due course, nor was the trustee
who conducted the non-judicial foreclosure a holder in due course. Such failures on the part of the
trustee who conducted the non-judicial foreclosure clearly demonstrate that the sale was not

conducted pursuant to the strict mandates of California Civil Code Section 2924.
A non-judicial foreclosure sale under the power-of-sale in a DOT or Mortgage, on the other
hand, must be conducted in strict compliance with its provisions and applicable statutory law. A
trustee’s powers and rights are limited to those set forth in the DOT and laws applicable thereto.
(See, e.g., Fleisher v. Continental Auxiliary Co., (1963) 215 Cal.App.2d 136, 139, 30 Cal.Rptr.
137; Woodworth v. Redwood Empire Sav. & Loan Assn., (1971) 22 Cal.App.3d 347, 366, 99
Cal.Rptr. 373). No Court order authorizing or approving the sale is involved. A sale under the
power of sale in a DOT or Mortgage is a “private sale.” Walker v. Community Bank, (1974) 10
Cal.3d at p. 736, 111 Cal.Rptr. 897. (emphasis added).
The statutory procedures governing the conduct of such sales are found in Civil Code Sections
2924, 2924a-2924h, which set forth the time periods in which to comply with certain
requirements, the persons authorized to conduct the sale, the requirements of Notice of Nefault
and Election to Sell and for cure of default and reinstatement, inter alia. The sale is concluded
when the trustee accepts the last and highest bid. (Civil Code Section 2924h, Subd. (c)). Coppola
vs. Superior Court, (1989) 211 Cal.App.3d 848, 868.
Here, Plaintiff’s predecessor rendered the note non-negotiable by failing to list the assignment
on the fact of the Note, notwithstanding the fact that sufficient space existed. Thus, the Note could
not be the security interest utilized for execution of the non-judicial foreclosure pursuant to
California Civil Code Section 2924. Plaintiff cannot prove that the foreclosure strictly complied
with Section 2924 as mandated. Thus, the TDUS is invalid, and does not confer upon Plaintiff a
right to seek possession of the subject premises pursuant to California Code of Civil Procedure
Section 1161a. Therefore, Plaintiff does not have standing to prosecute the instant action, and the
matter must be dismissed or in the alternative Defendant is entitled to Summary Judgment.
As a General Rule a Defendant in an Unlawful Detainer cannot test the strength or validity of
Plaintiff’s Title Vella v. Hudgins, (1977) 20 C3d 251, 255, 142 CR 414, 572 P2d 28; Old
National Financial Services, Inc. v. Seibert, (1987) 194 CA 3d 460, 465, 289 CR 728; However,
a different rule applies in an Unlawful Detainer which is brought by a purchaser after a
foreclosure sale. His right to obtain possession is based on the fact that the property has been
“Duly Sold” by foreclosure proceedings California Code of Civil Procedure Section 1161a, and
therefore it is necessary that the Plaintiff “Prove” that each of the statutory procedures have been
complied with as a condition for obtaining possession of the property Vella V. Hudgins Supra;

Stephens, Pertain and Cunningham V. Hollis (1987) 196 CA3d 948, 953, 242 CR 251.
In the first instance, it appears that Plaintiff is not even the real party in interest. Plaintiff has
the burden of proving that it is the proper Plaintiff and that the TDUS resulted from a properly
conducted non-judicial foreclosure sale.
Again as stated in Privus vs. Bush, (1981) 118 Cal.App.3d 1003, the court held that a
promissory note executed as security for a DOT was rendered non-negotiable because the
endorsement by the assignor was not contained on the face of the Note, notwithstanding the fact
that there was sufficient space on the Note to effectuate the assignment and thus the Plaintiff was
not a holder in due course, notwithstanding their title as a “Holders”.
California Code of Civil Procedure Section 1161(3) mandates that in order to seek possession
after a sale pursuant to Civil Code Section 2924, the Plaintiff’s interest must be “duly perfected”.
California Code of Civil Procedure Section 1161 provides in pertinent part:

(b) In any of the following cases, a person who holds over and continues in possession
of a manufactured home, mobile home, floating home, or real property after a three-day
written notice to quit the property has been served upon the person, or if there is a
subtenant in actual occupation of the premises, also upon such subtenant, as prescribed
in Section 1162, may be removed there from as prescribed in this chapter:

(3) Where the property has been sold in accordance with Section 2924 of the Civil
Code, under a power of sale contained in a deed of trust executed by such person, or a
person under whom such person claims, and the title under the sale has been duly
perfected.

Here, it has been shown that Plaintiff, FHLMC did not perfect its interest because the original
assignment rendered the note non-negotiable, and secondarily they failed to record the assignment
prior to commencing the foreclosure, thus, the non-judicial foreclosure could not lawfully
proceed, and the trustee did not strictly comply with the mandates of Section 2924.
A non-judicial foreclosure sale under the power-of-sale in a DOT or Mortgage, on the other
hand, must be conducted in strict compliance with its provisions and applicable statutory law. A
trustee’s powers and rights are limited to those set forth in the deed of trust and laws applicable
thereto. (See, e.g., Fleisher v. Continental Auxiliary Co., (1963) 215 Cal.App.2d 136, 139, 30
Cal.Rptr. 137. Therefore, the Court would properly exercise its discretion pursuant to California
Code of Civil Procedure Section 631.8, by granting the Motion to Dismiss for lack of standing on
the part of Plaintiff or under California Code of Civil Procedure Section 437C and Granting
Summary Judgment in Favor of Defendant.

LEGAL STANDARD

The standard for granting summary judgment

Summary Judgment shall be granted if all the papers submitted show there is no triable issue of
material fact and that the moving party is entitled to a judgment as a matter of law. Code Civil
Procedure Section 437c(c). A Defendant is entitled to Summary Judgment if the record
establishes that none of the Plaintiff’s asserted causes of actions can prevail as a matter of law.
Molko v. Holy Spirit Ass’n, (1988) 46 CAl.3d 1092, 1107. A Defendant moving for Summary
Judgment must conclusively negate a necessary element of the Plaintiff’s case and show there is
no material issue of fact that requires a trial. Ibid.
The moving Defendant has the burden of introducing evidence that the Plaintiff’s action is
without merit on any legal theory. Hulett v. Farmers Insurance Exchange, (1992) 10 Cal.App.
4th 1051, 1064. Once the Defendant has met that burden, the burden shifts to the Plaintiff to show
that a triable issue of material fact exists. Code Civil Procedure Section 437c(o)(1). But if the
Defendant fails to meet that burden, the adverse party has no burden to demonstrate the claim’s
validity, and the court must deny the motion. Hulett, supra, 10 Cal.App.4th at 1064.
Instead of introducing evidence that would negate the Plaintiff’s action, a moving Defendant
may introduce the Plaintiff’s own factually devoid discovery responses to demonstrate that it has
no case. Union Bank v. Superior Court, (1995) 31 Cal.App.4th 573, 589-593. The burden of
proof would then be on the Plaintiff to introduce evidence that would show a triable issue of
material fact. Id., at 593. But the Defendant does not meet its burden merely by asserting that the
Plaintiff has no evidence. Hagen v. Hickenbottom, (1995) 41 Cal.App.4th 168, 186. Instead, the
Defendant must submit discovery responses that would conclusively foreclose any cause of
action. Id. at 186-187.
When no or insufficient affidavits or other evidence is submitted to demonstrate the absence of
an issue of material fact, the Court may treat the motion as in legal effect one for Judgment on the
pleadings. White v. County of Orange, (1985) 166 Cal.App.3d 566, 569. In that case, the motion
performs the same function as a general demurrer. Ibid. A general demurrer will not test whether
a complaint is ambiguous or uncertain or states essential facts only inferentially or conclusionary.
Johnson v. Mead, (1987) 191 Cal.App.3d 156, 160. The Defendants’ failure to challenge those
defects by way of special demurrer waives them. Hooper v. Deukmejian, (1981) 122 Cal.App.3d

987, 994.

CONCLUSION

Defendant respectfully submits his Motion to Summary Judgment and requests that the court
grant the motion as framed herein.

Respectfully submitted;

DATED: August 24, 2012 LAW OFFICES OF TIMOTHY L. MCCANDLESS

_____________________________________
Timothy L. McCandless, Esq.
Attorney for Defendant(s): Alexander B. Paragas

California’s antideficiency rules latest holding

 

Bank of America v Mitchell (2012)

The Editor’s Take: Watching our courts attempt to steer California’s antideficiency rules through the treacherous currents of multiple security contexts is always somewhat painful. Code of Civil Procedure §580d, enacted in 1939, prohibits recovery of a deficiency judgment after a nonjudicial sale, which seems straightforward enough at the start. But 24 years later, the California Supreme Court held that this prohibition did not apply to a creditor suing on its junior note after having been sold out in a senior foreclosure sale (the “sold-out junior exception”). Roseleaf Corp. v Chierighino (1963) 59 C2d 35, 41, 27 CR 873. But then, 30 years after that, a court of appeal held that this sold-out junior exception did not apply to a creditor who held both the senior and junior notes. Simon v Superior Court (1992) 4 CA4th 63, 71, 5 CR2d 428. So from then on, we had a “being your own junior” exception to the “sold-out junior” exception.

A decade after that came two more exceptions to the exception to the exception: The court in Ostayan v Serrano Reconveyance Co. (2000) 77 CA4th 1411, 1422, 92 CR2d 577, , allowed a two-note-holding creditor to foreclose on its junior deed of trust and sell the property subject to its own senior encumbrance (although that is not a §580d issue). More importantly, National Enters., Inc. v Woods (2001) 94 CA4th 1217, 115 CR2d 37, allowed the holder of two notes to judicially foreclose on the first one and to sell the second note to a third party, who then was held able to sue on it as a sold-out junior. This was technically not a §580d issue, since the senior foreclosure was not by power of sale, but the reasoning made it look like we were going to have a “third party transferee” or “unbundling the package” exception to the “being your own junior” exception of Simon. It began to look like Simon would be eaten away with exceptions, especially when the original lender made a timely divestment of one of its notes.

But instead, we now learn from Mitchell that the Simon doctrine will be applied against a third party transferee who took the junior paper from the common lender after that lender had trustee sold the property under its senior deed of trust. Both National Enters. and Mitchell involved a transfer of the junior loan after a sale under the senior security, differing only with regard to whether the senior foreclosure was judicial or nonjudicial, which distinction should perhaps matter more to the selling senior than to the nonselling junior.

So many factors potentially affect the outcomes in these situations that it is really impossible to make any confident predictions. How much does it matter whether the two loans were made at the same or different times? Whether they were for related or entirely different purposes? Whether one of them was transferred (and before or after the other was foreclosed)? Whether the transferred loan was the senior or junior? Whether the one foreclosed was the senior or junior? Whether the foreclosure was judicial or nonjudicial? I can point out these distinctions, but that doesn’t mean I can forecast their effect on the outcome of the next case that comes up. —Roger Bernhardt

 

204 Cal.App.4th 1199 (2012)

139 Cal. Rptr. 3d 562

BANK OF AMERICA, N.A., Plaintiff and Appellant,
v.
MICHAEL MITCHELL, Defendant and Respondent.

No. B233924.

Court of Appeals of California, Second District, Division Four.

April 10, 2012.

1202*1202 The Dreyfuss Firm and Bruce Dannemeyer for Plaintiff and Appellant.

Law Offices of Ulric E. J. Usher, Ulric E. J. Usher and Richard Kavonian for Defendant and Respondent.

OPINION

SUZUKAWA, J.—

Appellant Bank of America’s (Bank) predecessor in interest loaned respondent Michael Mitchell (Mitchell) $315,000 to purchase a home, secured by two notes and first and second deeds of trust. When Mitchell defaulted on the loan, the lender foreclosed and sold the property. The lender then assigned the second deed of trust to the Bank, which initiated the present action to recover the indebtedness evidenced by the note. Mitchell demurred, and the court sustained the demurrer without leave to amend, concluding that the Bank’s action was barred by California’s antideficiency law. The Bank appeals from the judgment of dismissal and from the subsequent award of prevailing party attorney fees to Mitchell. We affirm.

STATEMENT OF THE CASE

The Bank filed the present action on September 16, 2010, and it filed the operative first amended complaint (complaint), asserting causes of action for 1203*1203 breach of contract, open book account, and money lent, on December 2, 2010. The complaint alleges that Mitchell obtained a loan from GreenPoint Mortgage Funding, Inc. (GreenPoint), on or about September 14, 2006. The loan was evidenced by a note secured by a deed of trust recorded against real property located at 45245 Kingtree Avenue, Lancaster, California (the property). The security for the loan was eliminated by a senior foreclosure sale in 2009. Because Mitchell defaulted on payments owing on the loan, the complaint alleged that he breached the terms of the contract, resulting in damage to the Bank in the principal sum of $63,000, plus interest at the note rate of 11.625 percent from March 1, 2010, through the date of judgment.

Mitchell demurred. Concurrently with his demurrer, he sought judicial notice of several documents, including two deeds of trust, a notice of trustee’s sale, and a trustee’s deed upon sale. On the basis of these documents, he contended that on September 14, 2006, GreenPoint made him two loans to purchase the property, with a note and deed of trust for each loan recorded against the property. The first note and deed of trust were for $252,000, and the second note and deed of trust were for $63,000. Both deeds of trust were recorded on September 21, 2006. Mitchell defaulted on the notes sometime in 2008. A notice of default was recorded, and the property was sold at trustee sale for $53,955.01 on November 6, 2009. More than a year later, on November 18, 2010, GreenPoint assigned the second deed of trust to Bank of America, which subsequently filed the present action to recover on the second note and deed of trust. Mitchell contended that the action was barred by California’s antideficiency legislation, which bars a deficiency judgment following nonjudicial foreclosure of real property.

The trial court granted Mitchell’s request for judicial notice and sustained the demurrer without leave to amend on January 27, 2011, concluding that the Bank’s breach of contract and common counts claims seek recovery of the balance owed on the obligation secured by the second deed of trust and, thus, are barred by the antideficiency statutes as a matter of law. On April 7, 2011, the court awarded Mitchell prevailing party attorney fees of $8,400 and costs of $534.72.

Judgment for Mitchell was entered on July 8, 2011. The Bank appealed from the award of attorney fees on June 17, 2011, and from the judgment on August 8, 2011. We ordered the two appeals consolidated on October 13, 2011.

STANDARD OF REVIEW

“A demurrer tests the legal sufficiency of the factual allegations in a complaint. We independently review the sustaining of a demurrer and determine de novo whether the complaint alleges facts sufficient to state a cause of 1204*1204 action or discloses a complete defense. (McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412, 415 [106 Cal.Rptr.2d 271, 21 P.3d 1189]; Cryolife, Inc. v. Superior Court (2003) 110 Cal.App.4th 1145, 1152 [2 Cal.Rptr.3d 396].) We assume the truth of the properly pleaded factual allegations, facts that reasonably can be inferred from those expressly pleaded, and matters of which judicial notice has been taken. (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081 [6 Cal.Rptr.3d 457, 79 P.3d 569].) We construe the pleading in a reasonable manner and read the allegations in context. (Ibid.)” (City of Industry v. City of Fillmore (2011) 198 Cal.App.4th 191, 205 [129 Cal.Rptr.3d 433].)

“If we determine the facts as pleaded do not state a cause of action, we then consider whether the court abused its discretion in denying leave to amend the complaint. (McClain v. Octagon Plaza, LLC [(2008)] 159 Cal.App.4th [784,] 791-792 [71 Cal.Rptr.3d 885].) It is an abuse of discretion for the trial court to sustain a demurrer without leave to amend if the plaintiff demonstrates a reasonable possibility that the defect can be cured by amendment. (Schifando v. City of Los Angeles[,supra,] 31 Cal.4th [at p.] 1081. . . .)” (Estate of Dito (2011) 198 Cal.App.4th 791, 800-801 [130 Cal.Rptr.3d 279].)

Attorney fee awards normally are reviewed for abuse of discretion. In the present case, however, the Bank contends that the trial court lacked the authority as a matter of law to award attorney fees in any amount. Accordingly, our review is de novo. (Connerly v. Sate Personnel Bd. (2006) 37 Cal.4th 1169, 1175 [39 Cal.Rptr.3d 788, 129 P.3d 1].)

DISCUSSION

I. The Trial Court Properly Sustained the Demurrer Without Leave to Amend

A. Code of Civil Procedure Section 580d

(1) “`In California, as in most states, a creditor’s right to enforce a debt secured by a mortgage or deed of trust on real property is restricted by statute. Under California law, “the creditor must rely upon his security before enforcing the debt. (Code Civ. Proc., §§ 580a, 725a, 726.) If the security is insufficient, his right to a judgment against the debtor for the deficiency may be limited or barred . . . .” [Citation.]’ [Citation.]” (In re Marriage of Oropallo (1998) 68 Cal.App.4th 997, 1003 [80 Cal.Rptr.2d 669].)

Code of Civil Procedure section 580d (section 580d) prohibits a creditor from seeking a judgment for a deficiency on all notes “secured by a deed of 1205*1205 trust or mortgage upon real property . . . in any case in which the real property . . . has been sold by the mortgagee or trustee under power of sale contained in the mortgage or deed of trust.”[1] The effect of section 580d is that “`the beneficiary of a deed of trust executed after 1939 cannot hold the debtor for a deficiency unless he uses the remedy of judicial foreclosure. . . .'” (Simon v. Superior Court (1992) 4 Cal.App.4th 63, 71 [5 Cal.Rptr.2d 428] (Simon).)

(2) In Roseleaf Corp. v. Chierighino (1963) 59 Cal.2d 35 [27 Cal.Rptr. 873, 378 P.2d 97] (Roseleaf), the California Supreme Court held that where two deeds of trust are held against a single property and the senior creditor nonjudicially forecloses on the property, section 580d does not prohibit the holder of the junior lienor “whose security has been rendered valueless by a senior sale” from recovering a deficiency judgment. (59 Cal.2d at p. 39.) There, defendant Chierighino purchased a hotel from plaintiff Roseleaf Corporation. The consideration for the hotel included three notes, each secured by a second trust deed on parcels owned by Chierighino. After the sale of the hotel, the third parties who held the first trust deeds on the three parcels nonjudicially foreclosed on them, rendering Roseleaf’s second trust deeds valueless. Roseleaf then brought an action to recover the full amount unpaid on the three notes secured by the second trust deeds. (Id. at p. 38.)

The trial court entered judgment for Roseleaf. Chierighino appealed, contending that Roseleaf’s action was barred by section 580d, but the Supreme Court disagreed and affirmed. It explained that the purpose of section 580d was to “put judicial enforcement [of powers of sale] on a parity with private enforcement.” (Roseleaf, supra, 59 Cal.2d at p. 43.) That purpose, the court said, would not be served by applying section 580d against a nonselling junior lienor: “Even without the section the junior has fewer rights after a senior private sale than after a senior judicial sale. He may redeem from a senior judicial sale (Code Civ. Proc., § 701), or he may obtain a deficiency judgment. [Citations.] After a senior private sale, the junior has no right to redeem. This disparity of rights would be aggravated were he also denied a right to a deficiency judgment by section 580d. There is no purpose in denying the junior his single remedy after a senior private sale while leaving 1206*1206 him with two alternative remedies after a senior judicial sale. The junior’s right to recover should not be controlled by the whim of the senior, and there is no reason to extend the language of section 580d to reach that result.” (59 Cal.2d at p. 44.)

In Simon, supra, 4 Cal.App.4th 63, the court held that the rule articulated in Roseleafdid not apply to protect a junior lienor who also held the senior lien. There, Bank of America (Lender) lent the Simons $1,575,000, for which the Simons gave it two separate promissory notes. Each note was secured by a separate deed of trust naming the Bank as beneficiary and describing the same real property (the property). Subsequently, the Simons defaulted on the senior note and the Lender foreclosed. The Lender purchased the property at the nonjudicial foreclosure sale and then filed an action to recover the unpaid balance of the junior note. (Id. at p. 66.)

(3) After detailing the history of the antideficiency legislation and the governing case law, the court held that section 580d barred the Lender’s deficiency causes of action. It noted that in Roseleaf, the Supreme Court explained that the purpose of section 580d was to create parity between judicial and nonjudicial enforcement. Such parity would not be served “if [the Lender] here is permitted to make successive loans secured by a senior and junior deed of trust on the same property; utilize its power of sale to foreclose the senior lien, thereby eliminating the Simons’ right to redeem; and having so terminated that right of redemption, obtain a deficiency judgment against the Simons on the junior obligation whose security [the Lender], thus, made the choice to eliminate.” (Simon, supra, 4 Cal.App.4th at p. 77.) The court continued: “Unlike a true third party sold-out junior, [the Lender’s] right to recover as a junior lienor which is also the purchasing senior lienor is obviously not controlled by the `whim of the senior.’ We will not sanction the creation of multiple trust deeds on the same property, securing loans represented by successive promissory notes from the same debtor, as a means of circumventing the provisions of section 580d. [Fn. omitted.] The elevation of the form of such a contrived procedure over its easily perceived substance would deal a mortal blow to the antideficiency legislation of this state. Assuming, arguendo, legitimate reasons do exist to divide a loan to a debtor into multiple notes thus secured, section 580d must nonetheless be viewed as controlling where, as here, the senior and junior lenders and lienors are identical and those liens are placed on the same real property. Otherwise, creditors would be free to structure their loans to a single debtor, and the security therefor, so as to obtain on default the secured property on a trustee’s sale under a senior deed of trust; thereby eliminate the debtor’s right of redemption thereto; and thereafter effect an excessive recovery by obtaining a deficiency judgment against that debtor on an obligation secured by a junior lien the creditor chose to eliminate.” (Id. at pp. 77-78.)

1207*1207 B. Simon and Roseleaf Bar a Deficiency Judgment in the Present Case

(4) Simon is dispositive of the present case. Here, Mitchell executed two promissory notes, for $252,000 and $63,000, secured by the first and second deeds of trust in the property. As in Simon, the first and second deeds of trust were held by a single lender, GreenPoint. GreenPoint, as beneficiary under the first deed of trust, chose to exercise its power of sale by holding a nonjudicial foreclosure sale. GreenPoint thus was not a “sold-out junior” lienor and would not have been permitted to obtain a deficiency judgment against Mitchell under the rule articulated in Simon. The result is no different because GreenPoint, after the trustee sale, assigned the second deed of trust to the Bank. “An assignment transfers the interest of the assignor to the assignee. Thereafter, `”[t]he assignee `stands in the shoes’ of the assignor, taking his rights and remedies, subject to any defenses which the obligor has against the assignor prior to notice of the assignment.”‘ [Citation.]” (Manson, Iver & York v. Black (2009) 176 Cal.App.4th 36, 49 [97 Cal.Rptr.3d 522].) Accordingly, because GreenPoint could not have obtained a deficiency judgment against Mitchell, the Bank also is precluded from doing so.

The Bank urges that Simon is distinguishable because in that case, the lender ultimately purchased the property for a credit bid at its own foreclosure sale, whereas in this case, the property was sold to a third party. The Bank thus contends that “[u]nder Simon if (a) both loans are held by the same lender and (b) that lender acquires the property at the foreclosure sale, the risk of manipulation by the lender is too great, so no deficiency is allowed. But if either is missing, the risk of manipulation is reduced, and a deficiency should be allowed.” Like the trial court, we reject the contention that the lender must have acquired the property at the foreclosure sale forSimon to apply. Although Simon noted the lender’s purchase at the foreclosure sale, that purchase was not material to its holding. Instead, the court’s focus was on the lender’s dual position as holder of the first and second deeds of trust, and its consequent ability to protect its own interest. (Simon, supra, 4 Cal.App.4th at p. 72 [“[The Lender] was not a third party sold-out junior lienholder as was the case inRoseleaf. As the holder of both the first and second liens, [the Lender] was fully able to protect its secured position. It was not required to protect its junior lien from its own foreclosure of the senior lien by the investment of additional funds. Its position of dual lienholder eliminated any possibility that [the Lender], after foreclosure and sale of the liened property under its first lien, might end up with no interest in the secured property, the principal rationale of the court’s decision in Roseleaf.“].)

The Bank further contends that the present case is distinguishable from Simonbecause the presence of a third party purchaser at the foreclosure sale 1208*1208prevented the kind of “manipulation” possible in Simon. According to the Bank, “[w]hen the foreclosure sale results in acquisition by a third party, who competed with the foreclosing lender and all other bidders at the public auction, a low-ball bid is impossible. If the foreclosing lender bids below market, it will be outbid; it will not acquire the property. The lender cannot manipulate the price. The presence of third party bids demonstrates the market is at work to achieve a fair price. Third party bids provide the functional equivalent of a right of redemption. By outbidding the lender, the third party prevents the lender from manipulating the process.” We disagree. Whatever the merits of the Bank’s argument as a matter of policy, it has no support in the statute, and the Bank suggests none. Indeed, nothing in the antideficiency legislation suggests that the presence of a third party bidder at a foreclosure sale excepts the sale from the legislation and permits the lender to seek a deficiency judgment.[2]

For all the foregoing reasons, section 580d bars the deficiency judgment the Bank seeks in the present case and, thus, the trial court properly sustained the demurrer. Because the Bank suggests no way in which the legal defects identified could be cured by amendment, the demurrer was properly sustained without leave to amend.

II. The Trial Court Properly Awarded Mitchell Attorney Fees

A. Relevant Facts

Following the trial court’s order sustaining Mitchell’s demurrer without leave to amend, Mitchell filed a motion for attorney fees pursuant to Civil Code section 1717. Two days later, on February 10, 2011, the Bank filed a request for dismissal with prejudice. It then filed opposition to the motion for attorney fees, contending that there could be no prevailing party within the meaning of Civil Code section 1717 because it had voluntarily dismissed its action.[3]

On March 8, 2011, the trial court vacated the dismissal and granted Mitchell’s motion for attorney fees. It explained that because it had sustained a demurrer to the Bank’s complaint without leave to amend, the Bank did not have a right pursuant to Code of Civil Procedure section 581 to voluntarily dismiss the action, and the dismissal had been entered in error. It awarded Mitchell attorney fees of $8,400 and costs of $534.72.

1209*1209 B. Analysis

The Bank contends that the trial court lacked authority to award Mitchell attorney fees. It urges that under Code of Civil Procedure section 581, it had an absolute right to dismiss its case voluntarily, so long as it did so with prejudice. Because it did so, there was no prevailing party pursuant to Civil Code section 1717, subdivision (b)(2), and thus the trial court lacked authority to award Mitchell contractual attorney fees.

(5) The Bank is correct that under Civil Code section 1717, a defendant in a contract action is not deemed a prevailing party where the plaintiff voluntarily dismisses the action. (Id., subd. (b)(2) [“Where an action has been voluntarily dismissed or dismissed pursuant to a settlement of the case, there shall be no prevailing party for purposes of this section.”].) Therefore, if the Bank’s dismissal was valid, the Bank is correct that the trial court erred in awarding attorney fees. The trial court determined, however, that the Bank’s dismissal was not valid, the issue to which we now turn.

(6) Pursuant to Code of Civil Procedure section 581, a plaintiff may voluntarily dismiss an action, “with or without prejudice,” at any time before the “actual commencement of trial.” (§ 581, subds. (b)(1), (c).) Further, a plaintiff may voluntarily dismiss an action with prejudice “at any time before the submission of the cause.” (Estate of Somers (1947) 82 Cal.App.2d 757, 759 [187 P.2d 433].) Upon the proper exercise of the right of voluntary dismissal, a trial court “`would thereafter lack jurisdiction to enter further orders in the dismissed action.’ (Wells v. Marina City Properties, Inc. (1981) 29 Cal.3d 781, 784 [176 Cal.Rptr. 104, 632 P.2d 217].) `Alternatively stated, voluntary dismissal of an entire action deprives the court of both subject matter and personal jurisdiction in that case, except for the limited purpose of awarding costs and . . . attorney fees. [Citations.]’ (Gogri v. Jack in the Box, Inc.(2008) 166 Cal.App.4th 255, 261 [82 Cal.Rptr.3d 629].)” (Lewis C. Nelson & Sons, Inc. v. Lynx Iron Corp. (2009) 174 Cal.App.4th 67, 76 [94 Cal.Rptr.3d 468].)

A plaintiff’s right to voluntarily dismiss an action before commencement of trial is not absolute, however. (Lewis C. Nelson & Sons, Inc. v. Lynx Iron Corp., supra, 174 Cal.App.4th at pp. 76-77; Zapanta v. Universal Care, Inc. (2003) 107 Cal.App.4th 1167, 1171 [132 Cal.Rptr.2d 842].) “Code of Civil Procedure section 581 recognizes exceptions to the right; other limitations have evolved through the courts’ construction of the term `commencement of trial.’ These exceptions generally arise where the action has proceeded to a determinative adjudication, or to a decision that is tantamount to an adjudication.” (Harris v. Billings (1993) 16 Cal.App.4th 1396, 1402 [20 Cal.Rptr.2d 718].)

1210*1210 (7) The Supreme Court found such a “determinative adjudication” in Goldtree v. Spreckels (1902) 135 Cal. 666 [67 P. 1091] (Goldtree). There, the defendant’s demurrer to each of the plaintiff’s causes of action was sustained without leave to amend as to the first two. The plaintiff then filed a written request to dismiss the entire case, and the court clerk entered an order of dismissal. The trial court vacated the dismissal, and the plaintiff appealed. (Id. at pp. 667-668.) The Supreme Court affirmed: “In our opinion the subdivision of the section 581 of the Code of Civil Procedure in question cannot be restricted in its meaning to trials of the merits after answer, for there may be such a trial on a general demurrer to the complaint as will effectually dispose of the case where the plaintiff has properly alleged all the facts which constitute his cause of action. If the demurrer is sustained, he stands on his pleading and submits to judgment on the demurrer, and, if not satisfied, has his remedy by appeal. In such a case, we think, there would be a trial within the meaning of the code, and the judgment would cut off the right of dismissal, unless it was first set aside or leave given to amend. [¶] The clerk had no authority, therefore, to enter the dismissal, and being void the court rightly set it aside.” (Id. at pp. 672-673.)

(8) The Supreme Court reached a similar result in Wells v. Marina City Properties, Inc., supra, 29 Cal.3d 781 (Wells). There, the trial court sustained the defendant’s demurrer with leave to amend. The plaintiff failed to amend within the time provided, but instead sought to voluntarily dismiss the action without prejudice. The Supreme Court held that the voluntary dismissal was improperly entered: “[O]nce a general demurrer is sustained with leave to amend and plaintiff does not so amend within the time authorized by the court or otherwise extended by stipulation or appropriate order, he can no longer voluntarily dismiss his action pursuant to section 581, subdivision 1, even if the trial court has yet to enter a judgment of dismissal on the sustained demurrer.” (Id. at p. 789.)

In the present case, the trial court sustained defendant’s demurrer without leave to amend on January 27, 2011. Although the trial court had not yet entered a judgment of dismissal when the Bank filed a request for voluntary dismissal on February 10, 2011, as in Goldtree and Wells, the trial court had already made a determinative adjudication on the legal merits of the Bank’s claim. Accordingly, as in those cases, the Bank no longer had the right to voluntarily dismiss under Code of Civil Procedure section 581.

The Bank contends that the present case is distinguishable from Goldtree and Wellsbecause here it sought to dismiss with prejudice, while in those cases the attempted dismissal was without prejudice. We do not agree. The 1211*1211 court rejected a similar contention in Vanderkous v. Conley (2010) 188 Cal.App.4th 111 [115 Cal.Rptr.3d 249] (Vanderkous). There, the plaintiff and the defendant formerly had lived together on a multilot parcel owned by the plaintiff. An arbitration award entered after their relationship ended directed the parties to cooperate in a lot line adjustment that would result in the home and a garage on a single lot to be owned by the defendant, with the remainder of the parcel to be owned by the plaintiff. The plaintiff was also to have access and utility easements over the garage area for the benefit of his parcel. The easements were executed by the defendant and recorded, but the garage and surrounding property were never transferred because the plaintiff never recorded either the lot line adjustment or the grant deed to the defendant for the garage and setback area. When the plaintiff subsequently sought to record a subdivision map, the title company that was to record the map refused to do so because the grants of easement by the defendant created a cloud on the plaintiff’s title. The plaintiff thus filed a complaint for declaratory relief and to quiet title. (Id. at pp. 114-115.)

Following a trial, the court filed a statement of decision that ordered the defendant to execute a quitclaim deed in favor of the plaintiff, and ordered the plaintiff to compensate the defendant in an amount equal to the full market value of the garage area. If the parties could not agree on the amount the plaintiff was to pay the defendant, each party was ordered to submit an appraisal for the court’s final determination. The defendant submitted an appraisal that valued the garage area at $410,000, and the plaintiff submitted an appraisal that valued the property at $75,000, but also requested a continuance and an evidentiary hearing on the value of the property. The day before the evidentiary hearing, the plaintiff filed a request for dismissal with prejudice with the clerk. The trial court ruled that the plaintiff’s attempt to dismiss was void ab initio and ordered the plaintiff to pay the defendant $199,246 plus attorney fees and costs. (Vanderkous, supra, 188 Cal.App.4th at p. 116.)

(9) The plaintiff appealed, contending that the trial court lacked jurisdiction to set aside his voluntary dismissal of his action and to award attorney fees. (Vanderkous, supra, 188 Cal.App.4th at p. 117.) The court disagreed and affirmed the judgment. It explained: “Section 581, subdivision (d) provides that a complaint may be dismissed with prejudice when the plaintiff abandons it before the final submission of the case.Here, the court’s statement of decision following the three-day court trial, states `[t]he matter was deemed submitted on March 10, 2008, following receipt of closing briefs from both sides.’ The statement of decision resolved Vanderkous’s quiet title cause of action and his claim for declaratory relief, and ordered him to compensate Conley for the fair market value of property she was required to quitclaim to 1212*1212 him. [¶] … [¶] Because Vanderkous has not convinced us that he had an absolute right to dismiss his complaint, we also reject his argument that the trial court lacked jurisdiction to set aside his attempted dismissal. [Citations.] A contrary rule would enable Vanderkous to avoid compliance with the court’s decision and would undermine the trial court’s authority to provide for the orderly conduct of proceedings before it and compel obedience to its judgments, orders, and process. (See § 128, subd. (a).)” (Vanderkous, supra, at pp. 117-118; see also Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2011) ¶ 11:28, p. 11-16 (rev. # 1, 2011) [“[O]nce the case is finally submitted for decision, there is no further right to dismiss with prejudice. At that point, plaintiffs cannot avoid an adverse ruling by abandoning the case.”].)

The present case is analogous. As in Vanderkous, the Bank sought to dismiss afterthe court made a dispositive ruling against it, not before. To allow the Bank to dismiss at that late stage would permit procedural gamesmanship inconsistent with the trial court’s authority to provide for the orderly conduct of proceedings before it.

We do not agree with the Bank that its right to dismiss is supported by this division’s decision in Marina Glencoe, L.P. v. Neue Sentimental Film AG (2008) 168 Cal.App.4th 874 [85 Cal.Rptr.3d 800] (Marina Glencoe). There, after the plaintiff presented its evidence on the single bifurcated issue of alter ego liability, the defendant moved for judgment. The court heard argument on the motion but did not rule; the following day, before a ruling on the pending motion, the plaintiff voluntarily dismissed the action with prejudice. The defendant moved for prevailing party attorney fees, and the court denied the motion, concluding that the defendant was not entitled to such fees under Civil Code section 1717. The defendant appealed. We affirmed, noting that because the plaintiff voluntarily dismissed with prejudice, “[i]ts intent was to end the litigation, not to manipulate the judicial process to avoid its inevitable end. This was entirely proper.” (168 Cal.App.4th at p. 878.)

The present case is distinguishable from Marina Glencoe. In Marina Glencoe, the plaintiff dismissed its action before the trial court ruled on a dispositive motion, and thus judgment in the defendant’s favor was not inevitable. In the present case, in contrast, the trial court had already sustained Mitchell’s demurrer without leave to amend, and thus judgment against the Bank had already “ripened to the point of inevitability.” (Marina Glencoe, supra, 168 Cal.App.4th at p. 878.) Accordingly, unlike in Marina Glencoe, the Bank no longer had the right to voluntarily dismiss its action, either with or without prejudice.

1213*1213 DISPOSITION

We affirm the judgment of dismissal and award of attorney fees. Mitchell shall recover his appellate costs.

Willhite, Acting P. J., and Manella, J., concurred.

[1] The full text of section 580d is as follows: “No judgment shall be rendered for any deficiency upon a note secured by a deed of trust or mortgage upon real property or an estate for years therein hereafter executed in any case in which the real property or estate for years therein has been sold by the mortgagee or trustee under power of sale contained in the mortgage or deed of trust.

“This section does not apply to any deed of trust, mortgage or other lien given to secure the payment of bonds or other evidences of indebtedness authorized or permitted to be issued by the Commissioner of Corporations, or which is made by a public utility subject to the Public Utilities Act (Part 1 (commencing with Section 201) of Division 1 of the Public Utilities Code).”

[2] Although not relevant to our analysis, we note that the property’s foreclosure sale purchase price of $53,955.01 does not convincingly demonstrate, as the Bank asserts, that the presence of a third party bidder made a “low-ball bid . . . impossible.”

[3] In its opposition, the Bank represented to the court as follows: “The litigation is over. There will be no appeal.”

 

Related articles

California non-judicial foreclosure cases and ruling recent to date

California Cases – 2004 to Present
Including Federal cases interpreting California law
LISTED WITH MOST RECENT CASES FIRST
Go to cases 2000 – 2003

Cadlerock Joint Venture v. Lobel     Docket
Cal.App. 4th Dist., Div. 3 (G045936)  6/20/12TRUSTEE’S SALES / DEFICIENCY JUDGMENTS: When a single lender contemporaneously makes two non-purchase money loans secured by two deeds of trust referencing a single parcel of real property and soon thereafter assigns the junior loan to a different entity, the assignee of the junior loan, who is subsequently “sold out” by the senior lienholder’s nonjudicial foreclosure sale, may pursue the borrower for a money judgment in the amount of the debt owed. The court pointed out that there was no suggestion in the record that the loan originator and assignees were affiliated in any way or that two loans were created, when one would have sufficed, as an artifice to evade C.C.P. Section 580d. (Section 580d prohibits a lender from obtaining a deficiency judgment after non-judicially foreclosing its deed of trust.)
Nickell v. Matlock     Docket
Cal.App. 2nd Dist. (B230321)  6/4/12QUIET TITLE: Normally, a defendant has no right to participate in the case after its default has been entered. But Code of Civil Procedure Section 764.010, pertaining to quiet title actions, provides that “[t]he court shall not enter judgment by default but shall in all cases require evidence of plaintiff’s title and hear such evidence as may be offered respecting the claims of any of the defendants . . .” The court held that, while default may be entered, Section 764.010 requires that before issuing a default judgment the trial court must hold an evidentiary hearing in open court, and that defendants were entitled to participate in the hearing even though their answers to the complaint had been stricken as a result of sanctions, and their defaults had been entered.
Cal Sierra Construction v. Comerica Bank     Docket
Cal.App. 3rd Dist. (C060707)  5/31/12MECHANICS LIENS: The court held that only owners, and not lenders, are entitled to bring a “Lambert” motion. This term refers to Lambert v. Superior Court (1991) 228 Cal.App.3d 383, which held that where a claimant has already filed suit to enforce a mechanics lien or stop notice, the owner may file a motion in the action to have the matter examined by the trial court. On such motion, the claimant bears the burden of establishing the “probable validity” of the claim underlying the lien or stop notice. If the claimant fails to meet that burden, the lien and stop notice may be released in whole or in part.
American Property Management Corporation v. Superior Court     Docket
Cal.App., 4th Dist., Div. 1 (D060868)  5/24/12INDIANS – SOVEREIGN IMMUNITY: The court held that a California limited liability company (“the LLC”), which was wholly owned through a series of California limited liability companies by an Indian tribe, was not entitled to sovereign immunity. The LLC owned a hotel and the lawsuit involved a dispute with its property management company. The court stated that the dispositive fact was that the LLC was a California limited liability company. Nevertheless, it went through the weighing process prescribed by the US 10th Circuit Court of Appeals in Breakthrough Mgmt. Group, Inc. v. Chukchansi Gold Casino & Resort629 F.3d 1173, which concluded that a court needs to determine whether a tribe’s entities are an “arm of the tribe” by looking to a variety of factors when examining the relationship between the tribe and its entities, including but not limited to: (1) their method of creation; (2) their purpose; (3) their structure, ownership, and management, including the amount of control the tribe has over the entities; (4) whether the tribe intended for the entities to have tribal sovereign immunity; (5) the financial relationship between the tribe and the entities; and (6) whether the purposes of tribal sovereign immunity are served by granting immunity to the entities. The court concluded that the balance of these factors weighed heavily against sovereign immunity, and reiterated that the most significant fact was the LLC’s organization as a California limited liability company.The concurring opinion would not accord the same dispositive effect of formation under state law as a limited liability company that the majority did, but agreed that the factors set forth by the 10th Circuit weighed against sovereign immunity.

[Ed. note: The “weighing” process is impossible to do with any certainty at the time of contracting with an LLC (or other entity) in which an Indian tribe owns an interest. In spite of the favorable outcome of this state court appellate opinion, it seems that in order to be safe, you need to insist on a specific waiver of sovereign immunity from a tribe that has an interest in any entity you enter into a contract with.]
Shady Tree Farms v. Omni Financial     Docket
Cal.App. 5th Dist. (F062924)  5/22/12MECHANICS LIENS: Plaintiff contracted directly with the owner of a development to deliver trees, and recorded a mechanics lien after not being paid. The court held that plaintiff’s mechanics lien was invalid because it failed to provide defendant construction lender with a preliminary 20-day notice under Civil Code Section 3097(b). Section 3097(a), requiring a 20-day notice to the owner, original contractor and construction lender, did not apply because plaintiff was under direct contract with the owner, and the subsection contains an exception for such persons. However, Section 3097(b) requires a 20-day notice to the construction lender by anyone under direct contract with the owner, except “the contractor”. The court interpreted that term to refer only to the general contractor, so the exception did not apply to plaintiff.
Deutsche Bank v. McGurk     Docket
Cal.App. 2nd Dist. (B231591)  5/22/12QUIET TITLE: Defendant McGurk filed a previous quiet title action against a purchaser who had defrauded her, and recorded a lis pendens. She also named as a defendant the lender holding a deed of trust executed by the purchaser. McGurk dismissed the lender after the lender filed bankruptcy intending to pursue the lender in the bankruptcy action. The lender then assigned the note and deed of trust to plaintiff, after which McGurk took the default of the purchaser. Plaintiff brought this declaratory relief action seeking a determination of the validity of the deed of trust. The court held that 1) even though the assignment was recorded subsequent to the lis pendens, plaintiff stands in the shoes of the lender, whose deed of trust recorded prior to the lis pendens, 2) while plaintiff took the assignment subject to the risk that its assignor’s interest would be proven to have been invalid, that risk never came to fruition because the assignor was dismissed, 3) the case was remanded to the trial court to determine the validity of the deed of trust.
Herrera v. Federal National Mortgage Association     Docket
Cal.App. 4th Dist., Div. 2 (E052943)  5/17/12TRUSTEE’S SALES: MERS, as nominee beneficiary, has the power to assign its interest under a deed of trust. Even assuming plaintiffs can allege specific facts showing that MERS’ assignment of the deed of trust was void, a plaintiff in a suit for wrongful foreclosure is required to demonstrate the alleged imperfection in the foreclosure process was prejudicial to the plaintiff’s interests. Not only did plaintiffs fail to show prejudice, but if MERS lacked the authority to assign the deed of trust, the true victim would not be the plaintiffs, who were admittedly in default, but the lender whose deed of trust was improperly assigned. Finally, Civil Code Section 2932.5, requiring recordation of an assignment of a mortgage, applies only to mortgages that give a power of sale to the creditor, not to deeds of trust which grant a power of sale to the trustee.
Estates of Collins and Flowers (Flowers v. Dancy)     Docket
Cal.App. 3rd Dist. (C064815)FORGERY: The son of one of two property owners forged a deed after they both had died. The court held that the administrator of the estates of the property owners was precluded from attacking the admittedly forged deed due to the “unclean hands” doctrine. The administrator, prior to being appointed as such, wrongfully sought to control the house by filing a defective mechanics lien, filing a baseless quiet title action for his own benefit, and renting the property to tenants for his own benefit, without regard for the other heirs of the two deceased property owners. The court pointed out that a forged deed is a nullity, but a party’s conduct may estop him from asserting that the deed is forged, and that the unclean hands doctrine can prevent a party from attacking a forged deed.The court also addressed the fact that as the other heirs should not suffer as a result of the administrator’s wrongful conduct. However, the court found that there was no evidence that any heirs who had not aided, ratified, or acquiesced in the administrator’s actions actually exist in this case.
Sumner Hill Homeowners’ Association v. Rio Mesa Holdings     Docket
Cal.App. 5th Dist. (F058617)  5/2/12EASEMENTS: In the published portion of the opinion, the court held that a subdivision map failed to provide public access to a river as required by Government Code Section 66478.4 ifthe river is navigable, but that the challenge to the map was barred by the 90-day statute of limitations in Government Code Section 66499.37. The court did not reach the question of whether or not the river is navigable. The court also held that implied and equitable easement rights are sufficient “title” to support a slander of title action, and that defendant slandered plaintiffs’ title by recording a Notice of Permission to Use Land Under Civil Code Section 813 that purported to restrict plaintiffs use of the easement.The court also addressed Streets and Highways Code Section 8353, which provides that the vacation of a street or highway extinguishes all private easements claimed by reason of the purchase of a lot by reference to a map on which the street or highway is shown, unless within two years after the vacation, the claimant records a notice describing the private easement. The court held that this section does not apply to private easements that are based on other or additional grounds besides the fact that the purchase was by reference to a map depicting a street.
Haynes v. EMC Mortgage Corporation     Docket
Cal.App. 1st Dist. (A131023)  4/9/12TRUSTEE’S SALES: Civil Code Section 2932.5, which requires the assignee of a mortgagee to record the assignment before exercising a power to sell the real property, applies only to mortgages and not to deeds of trust. Section 2932.5 requires the assignment of a mortgage to be recorded so that a prospective purchaser knows that the mortgagee has the authority to exercise the power of sale. This is not necessary when a deed of trust is involved, since the trustee conducts the sale and transfers title. (Ed. note: The result was not affected by the fact that the assignee substituted a new trustee.)
Brown v. Wells Fargo Bank     Docket
Cal.App. 2nd Dist (B233679)     Case complete 6/20/12TRUSTEE’S SALES: Plaintiff filed suit and sought a preliminary injunction to prevent a trustee’s sale. The trial court granted the injunction on the condition that plaintiff deposit $1,700 a month into a client trust account. The trial court subsequently dissolved the injunction after plaintiff failed to make any payments. The appellate court affirmed, and further determined that the appeal was frivolous because no viable issue was raised on appeal. It directed the court clerk to send a copy of the opinion to the California State Bar for consideration of discipline of plaintiff’s attorney.
Connolly v. Trabue     Docket     Sup.Ct. Docket
Cal.App. 1st Dist. (A131984)  4/10/12     Petition for review and depublication request filed with Cal Supreme Ct. 5/21/12PRESCRIPTIVE EASEMENTS: Plaintiffs brought an action to establish a prescriptive easement to a portion of defendant’s property they had fenced in 1998. Plaintiff and defendant’s predecessor intended to do a lot line adjustment that would transfer the disputed area to plaintiffs, but it was not accomplished because of an error in a deed. The trial court ruled that, even if such an easement had been acquired by Plaintiffs, their claim was barred by the doctrine of laches because they had delayed in asserting their claim in a timely manner. The appellate court reversed, holding that the doctrine of laches is inapplicable in an action involving a claim for a prescriptive easement because 1) once a prescriptive easement is established for the statutory period, the owner of the easement is under no obligation to take further action, rather, it is the record owner who must bring an action within 5 years after the prescriptive period commences, 2) this was an action at law, not equity, and laches applies only to equitable actions and 3) there was no evidence that plaintiffs were aware of the error in deed until shortly before they filed this action. [Ed. note: Plaintiff’s occupation of the disputed area was apparently exclusive, but the court did not discuss cases holding that a prescriptive easement cannot be established where the use is exclusive. For example, see Harrison v. Welch.]
Bank of America v. Mitchell     Docket
Cal.App. 2nd Dist. (B233924)  4/10/12     Case complete 6/11/12TRUSTEE’S SALES / DEFICIENCY JUDGMENTS: The court acknowledged existing case law holding that a “sold out” junior holder of a deed of trust can obtain a deficiency judgment when the junior lien is wiped out by a trustee’s sale under a senior deed of trust. But the court held that a deficiency judgment was not available in this case where the same lender held both deeds of trust and assigned the junior deed of trust to plaintiff after the trustee’s sale. The court also held that this applies regardless of whether the lender purchases at its own trustee’s sale or where, as here, a 3rd party purchases at the sale.
Montgomery Sansome LP v. Rezai     Docket
Cal.App. 1st Dist. (A130272, A130694)  3/28/12     Case complete 5/29/12MECHANICS LIENS/CONTRACTOR LICENSING: Plaintiff’s certificate of limited partnership with the California Secretary of State was in the name of “Montgomery-Sansome, LP”. Its contractor’s license was in the name of Montgomery Sansome LTD. A fictitious business name statement named Montgomery Sansome LTD, L.P. and incorrectly stated that it was a general partnership. The contract entered into with defendant to perform certain repairs named plaintiff as Montgomery Sansome LTD, LP. The trial court granted a summary judgment in favor of defendant, holding that plaintiff could not recover because the entity that signed the contract was not licensed. The appellate court reversed, holding that there is a triable issue of fact regarding whether there is actually only a single entity. Plaintiff did not violate the licensing law if the entity that entered into the contract is actually the same as the entity that signed the contract. The court distinguished cases holding that the licensing law is violated where a corporation or partnership enters into a contract and the principal is licensed, but not the entity.
Debrunner v. Deutsche Bank     Docket     Sup.Ct. Docket
Cal.App. 6th Dist. (H036379)  3/16/12     Petition for review and depublication request DENIED by Cal Supreme Ct. 6/13/12TRUSTEE’S SALES: The court upheld the trial court’s grant of a demurrer in favor of the lender without leave to amend, holding:
1. Since each assignment of deed of trust provided for the assignment “together with the note or notes therein described”, it was not necessary to separately endorse the promissory note.
2. Physical possession of the note is not a precondition to nonjudicial foreclosure.
3. A notice of default does not need to be filed by the person holding the note. C.C. 2924(a)(1) permits a notice of default to be filed by the “trustee, mortgagee or beneficiary, or any of their authorized agents”.
4. A notice of default (NOD) is valid even though the substitution of the trustee identified in the NOD is not recorded until after the NOD records.
Walker v. Ticor Title Company of California     Docket
Cal.App. 1st Dist. (A126710)  3/15/12     Case complete 5/16/12ESCROW: Plaintiffs filed suit against Ticor and 12 other defendants alleging defendants conspired to fraudulently induce them to refinance real estate loans. The court upheld the judgment in favor of Ticor, holding as follows:
1. Even though Ticor gave the loan documents to the loan broker in order to have plaintiffs sign them at home, this did not violate a provision of the lender’s closing instructions prohibiting the release of loan documents without lender’s prior approval because the lender was fully aware that this was Ticor’s and the loan broker’s practice so, therefore, it impliedly consented to it.
2. It was reasonable for the jury to conclude that Ticor did not violate a provision of the lender’s closing instructions requiring the closing agent to “coordinate the settlement” because the loan broker’s activity of obtaining signatures was only part of the larger coordination of the settlement handled and supervised by Ticor.
3. It was permissible for the loan broker to provide copies of the “Notice of Right to Cancel” because nothing in the language of the instructions precluded Ticor from delegating this task, nor could plaintiffs have been damaged by such a delegation.
4. One of the plaintiffs notified Ticor after the loan closed that his wife had not signed the loan documents. This was insufficient to establish that Ticor aided and abetted the loan broker’s fraud because it did not show that Ticor had actual knowledge of the fraud.
5. It was improper for the trial court to reduce the amount of attorney’s fees awarded to Ticor based on plaintiff’s financial condition.
Kavin v. Frye     Docket
Cal.App. 2nd Dist. (B230076)  3/5/12     Case complete 5/7/12OPTION TO RENEW LEASE:
1. An option to renew a lease was not effective where it was exercised by only one of four tenants, and the other tenants did not authorize the first tenant to do so.
2. A lease provision stating that all lessees are jointly and severally liable for lease obligations is not an authorization for only one lessee to execute an option to extend the lease.
3. The option was executed late per the terms of the lease. Normally, a lessor can waive the time requirement for an option since the provision normally benefits only the lessor. Here, however, the lessor could not waive the provision on behave of two of the tenants who, since they signed the lease basically as guarantors, also stood to benefit by the expiration of the option period.
SCI California Funeral Services v. Five Bridges Foundation     Docket
Cal.App. 1st Dist. (A126053)  2/14/12     Case complete 4/17/12DAMAGES-DIMINUTION IN VALUE: In this non-title insurance case, plaintiff purchased property, including an easement that was determined, in another action, to be invalid. The court held that the buyer’s damages for loss of the easement included, in addition to diminution in value caused by loss of the easement, damages attributable to the fact that the easement had additional unique value to a neighbor, which plaintiff could have used as a “bargaining chip” to obtain a higher price when negotiating a sale of the easement to the neighbor.[Ed. Note: This case may not be applicable to title insurance because standard ALTA policies contain a provision limiting liability for damages to “the difference between the value of the Title as insured and the value of the Title subject to the risk insured against by this policy”. CLTA policies contain a similar provision. The ALTA/CLTA Homeowners Policy of Title Insurance contains a provision limiting damages to “your actual loss”.]
California Redevelopment Association v. Matosantos     Docket
53 Cal.4th 231 – Cal. Supreme Court (S194861)  12/29/11REDEVELOPMENT AGENCIES:
1. Assembly Bill 1X 26, which bars redevelopment agencies from engaging in new business and provides for their windup and dissolution, is constitutional.
2. Assembly Bill 1X 27, which offers redevelopment agencies the alternative to continue to operate if the cities and counties that created them agree to make payments into funds benefiting the state’s schools and special districts, is unconstitutional.
Stebley v. Litton Loan Servicing     Docket     Sup.Ct. Docket
202 Cal.App.4th 522 – 3rd Dist. (C066130)  11/30/11 (Pub. Order 12/29/11)    Petition for review and depublication request by Cal Supreme Ct. DENIED 3/14/12TRUSTEE’S SALES: The court upheld the trial court’s sustaining of a demurrer without leave to amend in an action alleging that defendant violated Civil Code Section 2923.5, which requires that before a notice of default can be filed, a lender must attempt to contact the borrower and explore options to prevent foreclosure. The court held:
1. Section 2923.5 does not provide for damages or for setting aside a foreclosure sale. The only remedy available is to provide the borrower more time before a foreclosure sale occurs. After the sale, the statute provides no relief.
2. The statute does not require a lender to modify the loan.
3. While a tender of the loan amount is not necessary to delay a foreclosure sale, it is necessary in order to set aside a sale after it occurs.
4. Plaintiff’s cause of action for dependant adult abuse fails because plaintiff failed to allege that the property was taken wrongfully where an ordinary foreclosure sale occurred.
Portico Management Group v. Harrison     Docket     Sup.Ct. Docket
202 Cal.App.4th 464 – 3rd Dist. (C062060)  12/28/11     Petition for review by Cal Supreme Ct. DENIED 4/11/12TRUSTS: In the published portion of the opinion, the court held that an arbitration award and judgment against a trust, and not against the trustees in their capacity as trustees, were not valid because a trust is not an entity or person capable of owning title to property. A trust is, rather, a fiduciary relationship with respect to property. The court pointed out that if the judgment had been against the trustees in their representative capacities, it would have also bound successor trustees. Although the lawsuit properly named the trustees, for some reason plaintiff did not seek to correct or modify the arbitration award or judgment to indicate that it was properly against the trustees.
Gray1 CPB v. Kolokotronis     Docket
202 Cal.App.4th 480 – 3rd Dist (C064954)  12/2/11 (Pub. Order 12/28/11)     Case complete 2/28/12GUARANTY: The court rejected defendant’s contention that the guaranty he signed was actually a demand note, which would have meant that he could compel the lender to foreclose on the security first and that the waiver of his rights under various antideficiency statutes would be invalid. The court held that the following language in the guaranty did not turn the guaranty into a promissory note: “whether due or not due,” “on demand,” and “not contingent upon and are independent of the obligations of Borrower.”
Lona v. Citibank     Docket
202 Cal.App.4th 89 – 6th Dist (H036140)  12/21/11     Case complete 2/22/12TRUSTEE’S SALES: The court reversed a summary judgment in favor of defendants in an action seeking to set aside a trustee’s sale on the basis that the loan was unconscionable. The court held that summary judgment was improper for two reasons:
1. The homeowner presented sufficient evidence of triable issues of material fact regarding unconscionability. Plaintiff asserted that the loan broker ignored his inability to repay the loan (monthly loan payments were four times his monthly income) and, as a person with limited English fluency, little education, and modest income, he did not understand many of the details of the transaction which was conducted entirely in English.
2. Plaintiff did not tender payment of the debt, which is normally a condition precedent to an action by the borrower to set aside the trustee’s sale, but defendants’ motion for summary judgment did not address the exceptions to this rule that defendant relied upon.The case contains a good discussion of four exceptions to the tender requirement: 1. If the borrower’s action attacks the validity of the underlying debt, a tender is not required since it would constitute an affirmation of the debt. 2. A tender will not be required when the person who seeks to set aside the trustee’s sale has a counter-claim or set-off against the beneficiary. 3. A tender may not be required where it would be inequitable to impose such a condition on the party challenging the sale. 4. No tender will be required when the trustor is not required to rely on equity to attack the deed because the trustee’s deed is void on its face.
Pioneer Construction v. Global Investment Corp.     Modification Order     Docket     Sup.Ct. Docket
202 Cal.App.4th 161 – 2nd Dist. (B225685)  12/21/11     Request for depublication DENIED 3/28/12MECHANICS LIENS: The court held that:
1. A mechanics lien claimant who provided labor and materials prepetition to a debtor in bankruptcy can record a mechanics lien after the property owner files for bankruptcy without violating the automatic stay. (11 U.S.C. §362(b)(3).)
2. A mechanics lienor must, and defendant did, file a notice of lien in the debtor’s bankruptcy proceedings to inform the debtor and creditors of its intention to enforce the lien. (11 U.S.C. §546(b)(2)
3. The 90-day period to file an action after recording a mechanics lien is tolled during the pendency of the property owner’s bankruptcy. Accordingly, an action to enforce the lien was timely when filed 79 days after a trustee’s sale by a lender who obtained relief from the automatic stay. (The property ceased to be property of the estate upon completion of the trustee’s sale.)
Harbour Vista v. HSBC Mortgage Services     Docket
201 Cal.App.4th 1496 – 4th Dist., Div. 3 (G044357)  12/19/11     Case complete 2/21/12QUIET TITLE: Normally, a defendant has no right to participate in the case after its default has been entered. But Code of Civil Procedure Section 764.010, pertaining to quiet title actions, provides that “[t]he court shall not enter judgment by default but shall in all cases require evidence of plaintiff’s title and hear such evidence as may be offered respecting the claims of any of the defendants . . .” The court held that, while default may be entered, Section 764.010 requires that before issuing a default judgment the trial court must hold an evidentiary hearing in open court, and that a defendant is entitled to participate in the hearing even when it has not yet answered the complaint and is in default.
Park v. First American Title Insurance Company     Docket
201 Cal.App.4th 1418 – 4th Dist., Div. 3 (G044118)  11/23/11 (Pub. Order 12/16/11)     Case complete 2/15/12TRUSTEE’S SALES: A trustee’s sale was delayed due to defendant’s error in preparing the deed of trust. However, the court held that plaintiff could not establish damages because she could not prove that a potential buyer was ready, willing and able to purchase the property when the trustee’s sale was originally scheduled. Such proof would require showing that a prospective buyer made an offer, entered into a contract of sale, obtained a cashier’s check, or took any equivalent step that would have demonstrated she was ready, willing, and able to purchase plaintiff’s property. Also, plaintiff would need to show that the prospective buyer was financially able to purchase the property, such as by showing that the prospective buyer had obtained financing for the sale, preapproval for a loan or had sufficient funds to purchase the property with cash.
Bardasian v. Superior Court     Docket
201 Cal.App.4th 1371 – 3rd Dist. (C068488)  12/15/11TRUSTEE’S SALES: Civil Code Section 2923.5 requires that before a notice of default can be filed, a lender must attempt to contact the borrower and explore options to prevent foreclosure. Where the trial court ruled on the merits that a lender failed to comply with Section 2923.5, it was proper to enjoin the sale pending compliance with that section, but it was not proper to require plaintiff to post a bond and make rent payments. Also, discussions in connection with a loan modification three years previously did not constitute compliance with the code section.
Lang v. Roche     Docket
201 Cal.App.4th 254 – 2nd Dist. (B222885)  11/29/11     Case complete 2/3/12SHERIFF’S SALES: Plaintiff sought to set aside a Sheriff’s sale arising from the execution on a judgment rendered in another action. Defendant had obtained that judgment by default after service by publication even though plaintiff was defendant’s next door neighbor and could easily be found. The court set the sale aside, holding that even though C.C.P. 701.780 provides that an execution sale is absolute and cannot be set aside, that statute does not eliminate plaintiff’s right of equitable redemption where the judgment is void due to lack of personal jurisdiction.
Promenade at Playa Vista HOA v. Western Pacific Housing     Docket     Sup.Ct. Docket
200 Cal.App.4th 849 – 2nd Dist. (B225086)  11/8/11     Petition for review by Cal Supreme Ct. GRANTED 1/25/12CC&R’S: In a construction defect action brought by a condominium homeowners association, the court held that a developer cannot compel binding arbitration of the litigation pursuant to an arbitration provision in the Declaration of Covenants, Conditions, and Restrictions. CC&R’s are not a contract between the developer and the homeowners association. Instead, the provisions in the CC&R’s are equitable servitudes and can be enforced only by the homeowners association or the owner of a condominium, not by a developer who has sold all the units.
Alpha and Omega Development v. Whillock Contracting     Docket     Sup.Ct. Docket
200 Cal.App.4th 656 – 4th Dist., Div. 1 (D058445)  11/2/11     Petition for review by Cal Supreme Ct. DENIED 2/15/12LIS PENDENS: This is a slander of title and malicious prosecution action brought after defendant’s unsuccessful action to foreclose a mechanics lien. Plaintiff’s slander of title allegation is based on defendant’s recordation of a lis pendens in the prior mechanics lien action. The appellate court upheld the trial court’s granting of defendant’s anti-SLAPP motion and striking the slander of title cause of action, because recording a lis pendens is privileged under Civil Code Section 47(b)(4).
Biancalana v. T.D. Service Company     Docket     Sup.Ct. Docket
200 Cal.App.4th 527 – 6th Dist. (H035400)  10/31/11     Petition for review by Cal Supreme Ct. GRANTED 2/15/12TRUSTEE’S SALES: Inadequacy of the sale price is not a sufficient ground for setting aside a trustee’s sale of real property in the absence of any procedural errors. The unpaid balance of the loan secured by the subject deed of trust was $219,105. The trustee erroneously told the auctioneer to credit bid the delinquency amount ($21,894.17). Plaintiff was the successful bidder with a bid of $21,896. The court refused to set aside the sale because there were no procedural errors and the mistake was within the discretion and control of the trustee, who was acting as agent for the lender. The court distinguished Millennium Rock Mortgage, Inc. v. T.D. Service Co. because here the mistake was made by defendant in the course and scope of its duty as the beneficiary’s agent, not by the auctioneer as in Millennium Rock.The case also contains a discussion of the rule that once the trustee’s deed has been delivered, a rebuttable presumption arises that the foreclosure sale has been conducted regularly and properly. But where the deed has not been transferred, the sale may be challenged on the grounds of procedural irregularity.
First Bank v. East West Bank     Docket
199 Cal.App.4th 1309 – 2nd Dist. (B226061)  10/17/11     Case complete 12/19/11RECORDING: Where two deeds of trust secured by the same real property were simultaneously time-stamped for recording by the County Recorder’s Office but were indexed at different times, the lenders have equal priority. The recording laws protect subsequent purchasers and neither bank was a subsequent purchaser. The court acknowledged that a subsequent purchaser (or lender) who records his interest before the prior interest is indexed has priority, but this rule does not apply when both deeds of trust were recorded simultaneously.
Dollinger DeAnza Assoc. v. Chicago Title Insurance Company     Docket     Sup.Ct. Docket
199 Cal.App.4th 1132 – 6th Dist. (H035576)  9/9/11 (Pub. Order 10/6/11)     Request for depublication DENIED 1/4/12TITLE INSURANCE: Plaintiff’s title insurance policy, which was issued in 2004, insured property that originally consisted of seven parcels, but which had been merged into a single parcel pursuant to a Notice of Merger recorded by the City of Cupertino in 1984. The policy did not except the Notice of Merger from coverage. Plaintiff filed this action after Chicago Title denied its claim for damages alleged to result from the inability to sell one of the parcels separately. The court ruled in favor of Chicago, holding:
1. While the notice of merger may impact Plaintiff’s ability to market the separate parcel, it has no affect on Plaintiff’s title to that parcel, so it does not constitute a defect in title. It does not represent a third person’s claim to an interest in the property.
2. Chicago is not barred by principals of waiver or estoppel from denying plaintiff’s claim, after initially accepting the claim, because 1) waiver only applies to insurers that do not reserve rights when accepting a tender of defense and 2) plaintiff failed to show detrimental reliance, which is one of the elements of estoppel.
3. Plaintiff’s claim for breach of the implied covenant of good faith and fair dealing cannot be maintained where benefits are not due under plaintiff’s insurance policy.
4. Since the court held that the Notice of Merger was not a defect in title, it did not need to consider Chicago’s contention that the Notice of Merger was void because the County Recorder indexed it under the name of the City, rather than the name of the property owner.
[Ed. note: This case must have dealt with an ALTA 1992 policy. The ALTA 2006 policy made changes to the Covered Risks.]
Sukut Construction v. Rimrock CA     Docket     Sup.Ct. Docket
199 Cal.App.4th 817 – 4th Dist., Div. 1 (D057774)  9/30/11     Petition for review by Cal Supreme Ct. DENIED 12/14/11MECHANICS LIENS: Plaintiff could not establish a mining lien under Civil Code Section 3060 for removing rocks from a quarry because a quarry is not a mine and the rocks were not minerals. The court did not address whether plaintiff could establish a regular mechanics lien because it held that plaintiff was judicially estopped from asserting that position after leading defendant to believe that it was asserting only a mining claim.
UNPUBLISHED: First American Title Insurance Company v. Ordin     Docket
Cal.App. 2nd Dist. (B226671)  9/14/11     Case complete 11/17/11TITLE INSURANCE: An arbitrator found that defendants did not lose coverage under their title policy when they conveyed title to their wholly owned corporation, then to themselves as trustees of their family trust and finally to a wholly owned limited liability company. This conflicts with the holding in Kwok v. Transnation Title Insurance Company and this could have been an interesting case, except that whether the ruling was right or wrong was not before the court. The court held only that the arbitrator’s award could not be overturned, even if the the law was applied incorrectly, because there was no misconduct by the arbitrator.
Calvo v. HSBC Bank     Docket     Sup.Ct. Docket
199 Cal.App.4th 118 – 2nd Dist. (B226494)  9/13/11     Petition for review by Cal Supreme Ct. DENIED 1/4/12TRUSTEE’S SALES: Notice of the assignment of a deed of trust appeared only in the substitution of trustee, which was recorded on the same date as the notice of trustee’s sale, and which stated that MERS, as nominee for the assignee lender, was the present beneficiary. Plaintiff sought to set aside the trustee’s sale for an alleged violation of Civil Code section 2932.5, which requires the assignee of a mortgagee to record an assignment before exercising a power to sell real property. The court held that the lender did not violate section 2932.5 because that statute does not apply when the power of sale is conferred in a deed of trust rather than a mortgage.
Robinson v. Countrywide Home Loans     Docket
199 Cal.App.4th 42 – 4th Dist., Div. 2 (E052011)  9/12/11     Case complete 11/15/11TRUSTEE’S SALES: The trial court properly sustained defendant lender’s demurrer without leave to amend because 1) the statutory scheme does not provide for a preemptive suit challenging MERS authority to initiate a foreclosure and 2) even if such a statutory claim were cognizable, the complaint did not allege facts sufficient to challenge the trustee’s authority to initiate a foreclosure.
Hacienda Ranch Homes v. Superior Court (Elissagaray)     Docket
198 Cal.App.4th 1122 – 3rd Dist. (C065978)  8/30/11     Case complete 11/1/11ADVERSE POSSESSION: Plaintiffs (real parties in interest) acquired a 24.5% interest in the subject property at a tax sale. The court rejected plaintiffs’ claim of adverse possession under both 1) “color of title” because the tax deed by which they acquired their interest clearly conveyed only a 24.5% interest instead of a 100% interest, and 2) “claim of right” because plaintiffs’ claims of posting for-sale signs and clearing weeds 2 or 3 times a year did not satisfy the requirement of protecting the property with a substantial enclosure or cultivating or improving the property, as required by Code of Civil Procedure Section 325. The court also pointed out that obtaining adverse possession against cotenants requires evidence much stronger than that which would be required against a stranger, and plaintiffs failed to establish such evidence in this case.
Gramercy Investment Trust v. Lakemont Homes Nevada, Inc.     Docket
198 Cal.App.4th 903 – 4th Dist., Div. 2 (E051384)  8/24/11     Case complete 10/27/11ANTIDEFICIENCY: After a judicial foreclosure, the lender obtained a deficiency judgment against a guarantor. The court held that the choice of law provision designating the law of New York was unenforceable because there were insufficient contacts with New York. California is where the contract was executed, the debt was created and guaranteed, the default occurred and the real property is located. Also, Nevada law does not apply, even though the guarantor was a Nevada corporation, because Nevada had no connection with the transaction. The court also held that the guarantor was not entitled to the protection of California’s antideficiency statutes because the guaranty specifically waived rights under those statutes in accordance with Civil Code Section 2856.
Hill v. San Jose Family Housing Partners     Docket
198 Cal.App.4th 764 – 6th Dist. (H034931)  8/23/11     Case complete 10/25/11EASEMENTS: Plaintiff, who had entered into an easement agreement with defendant’s predecessor to maintain a billboard on a portion of defendant’s property, filed an action to prevent defendant from constructing a multi-unit building that would allegedly block the view of the billboard. Defendant asserted that the easement was unenforceable because it violated city and county building codes. The court held:
1. The easement was enforceable because the property’s use for advertising purposes is not illegal in and of itself. Although the instrumentality of that use, i.e., the billboard, may be illegal, that is not a bar to the enforcement of the agreement.
2. The easement agreement did not specifically state that it included the right to view the billboard from the street, but the parties necessarily intended the easement to include that right since viewing the billboard by passing traffic is the purpose of the easement.
3. Nevertheless, the trial court improperly denied a motion for a retrial to re-determine damages based on new evidence that the city had instituted administrative proceedings to have the billboard removed. The award of damages was based on plaintiff’s expected revenue from the billboard until 2037, and such damages will be overstated if the city forces plaintiff to remove the billboard.
Fontenot v. Wells Fargo Bank     Docket     Sup.Ct. Docket
198 Cal.App.4th 256 – 1st Dist. (A130478)  8/11/11     Depublication request DENIED 11/30/11FORECLOSURE / MERS: Plaintiff alleged a foreclosure was unlawful because MERS made an invalid assignment of an interest in the promissory note and because the lender had breached an agreement to forbear from foreclosure. The appellate court held that the trial court properly sustained a demurrer to the fourth amended complaint without leave to amend. The court held that MERS had a right to assign the note even though it was not the beneficiary of the deed of trust because in assigning the note it was acting on behalf of the beneficiary and not on its own behalf. Additionally, Plaintiff failed to allege that the note was not otherwise assigned by an unrecorded document. The court also held that plaintiff failed to properly allege that the lender breached a forbearance agreement because plaintiff did not attach to the complaint a copy of a letter (which the court held was part of the forbearance agreement) that purportedly modified the agreement. Normally, a copy of an agreement does not have to be attached to a complaint, but here the trial court granted a previous demurrer with leave to amend specifically on condition plaintiff attach a copy of the entire forbearance agreement to the amended pleading.
Boschma v. Home Loan Center     Docket
198 Cal.App.4th 230 – 4th Dist., Div. 3 (G043716)  8/10/11     Case complete 10/11/11LOAN DISCLOSURE: Borrowers stated a cause of action that survived a demurrer where they alleged fraud and a violation of California’s Unfair Competition Law (B&PC 17200, et seq.) based on disclosures indicating that borrowers’ Option ARM loan may result in negative amortization when, in fact, making the scheduled payments would definitely result in negative amortization. However, the court also pointed out that at trial in order to prove damages plaintiffs will have to present evidence that, because of the structure of the loans, they suffered actual damages beyond their loss of equity. For every dollar by which the loan balances increased, plaintiffs kept a dollar to save or spend as they pleased, so they will not be able to prove damages if their “only injury is the psychological revelation . . . that they were not receiving a free lunch from defendant”.
Thorstrom v. Thorstrom     Docket
196 Cal.App.4th 1406 – 1st Dist. (A127888)  6/29/11     Case complete 8/30/11EASEMENTS: Plaintiffs were not able to preclude defendants’ use of a well on plaintiffs’ property. The historic use of the well by the common owner (the mother of the current owners) indicated an intent for the well to serve both properties, and an implied easement was created in favor of defendants when the mother died and left one parcel to each of her two sons. However, the evidence did not establish that defendants were entitled to exclusive use of the well, so both properties are entitled to reasonable use of the well consistent with the volume of water available at any given time.
Herrera v. Deutsche Bank     Docket
196 Cal.App.4th 1366 – 3rd Dist. (C065630)  5/31/11 (Cert. for pub. 6/28/11)     Case complete 8/30/11TRUSTEE’S SALES: Plaintiffs sought to set aside a trustee’s sale, claiming that the Bank had not established that it was the assignee of the note, and that the trustee (“CRC”) had not established that it was properly substituted as trustee. To establish that the Bank was the beneficiary and CRC was the trustee, defendants requested that the trial court take judicial notice of the recorded Assignment of Deed of Trust and Substitution of Trustee, and filed a declaration by an employee of CRC referring to the recordation of the assignment and substitution, and stating that they “indicated” that the Bank was the assignee and CRC was the trustee. The trial court granted defendants’ motion for summary judgment and the appellate court reversed. The Court acknowledged that California law does not require the original promissory note in order to foreclose. But while a court may take judicial notice of a recorded document, that does not mean it may take judicial notice of factual matters stated therein, so the recorded documents do not prove the truth of their contents. Accordingly, the Bank did not present direct evidence that it held the note.Ed. notes: 1. It seems that the Bank could have avoided this result if it had its own employee make a declaration directly stating that the Bank is the holder of the note and deed of trust, 2. In the unpublished portion of the opinion, the Court held that if the Bank is successful in asserting its claim to the Property, there is no recognizable legal theory that would require the Bank to pay plaintiffs monies they expended on the property for back taxes, insurance and deferred maintenance.
Tashakori v. Lakis     Docket     Sup.Ct. Docket
196 Cal.App.4th 1003 – 2nd Dist. (B220875)  6/21/11     Petition for review by Cal Supreme Ct. DENIED 9/21/11EASEMENTS: The court granted plaintiffs an “equitable easement” for driveway purposes. Apparently, plaintiffs did not have grounds to establish a prescriptive easement. But a court can award an equitable easement where the court applies the “relative hardship” test and determines, as the court did here, that 1) the use is innocent, which means it was not willful or negligent, 2) the user will suffer irreparable harm if relief is not granted and 3) there is little harm to the underlying property owner.
Conservatorship of Buchenau (Tornel v. Office of the Public Guardian)     Docket
196 Cal.App.4th 1031 – 2nd Dist. (B222941)  5/31/11 (Pub. order 6/21/11)     Case complete 8/24/11CONTRACTS: A purchaser of real property was held liable for damages for refusing to complete the purchase contract, even though the seller deposited the deed into escrow 19 days after the date set for close of escrow. The escrow instructions did not include a “time is of the essence” clause, so a reasonable time is allowed for performance. The purchaser presented no evidence that seller’s delay of 19 days was unreasonable following a two-month escrow.
Diamond Heights Village Assn. v. Financial Freedom Senior Funding Corp.     Docket     Sup.Ct. Docket
196 Cal.App.4th 290 – 1st Dist. (A126145)  6/7/11     Petition for review by Cal Supreme Ct. DENIED 9/21/11HOMEOWNERS ASSOCIATION LIENS:
1. A homeowner’s association recorded a notice of assessment lien, judicially foreclosed and obtained a judgment against the homeowners. However, it did not record an abstract of judgment, which would have created a judgment lien, nor did it record a writ of execution, which would have created an execution lien. The court held that a subsequently recorded deed of trust had priority because when an assessment lien is enforced through judicial action, the debt secured by the lien is merged into the judgment. The association’s previous rights were merged into the judgment, substituting in their place only such rights as attach to the judgment.
2. After defendant lender prevailed on summary judgment as to the single cause of action naming the lender, trial proceeded as to the owners of the property, including a cause of action for fraudulent conveyance of a 1/2 interest in the property pertaining to a transfer from the original owner to himself and his mother. The trial court ruled in favor of the Association on the fraudulent conveyance cause of action AND held that defendant lender’s deed of trust was set aside as to that 1/2 interest. The appellate court held that trial of those remaining claims was proper, including trial of the Association’s cause of action against the homeowners for fraudulent conveyance of their condominium unit. It was not proper, however, to void the lender’s security interest in the property (in whole or part) when the lender had not been joined as a party to the fraudulent conveyance cause of action, and final judgment had already been entered in its favor.
Hamilton v. Greenwich Investors XXVI      Modification     Docket
195 Cal.App.4th 1602 – 2nd Dist. (B224896)  6/1/11     Case complete 8/17/11TRUSTEE’S SALES:
1. Plaintiff/borrower’s failure to disclose, in earlier bankruptcy proceedings, the existence of his breach of contract and fraud claims against the lender bars the borrower from litigating those claims now. The court distinguished several cases that permitted a debtor in bankruptcy from subsequently pursuing a cause of action that was not disclosed in the bankruptcy pleadings on the basis that in those cases the defendant was not a creditor in the bankruptcy and because the schedules specifically asked the debtor to disclose any offsets against the debts that were listed. This action against the lender amounts to an offset against the loan, so by listing the loan and failing to list this claim, the borrower’s bankruptcy schedules were inaccurate.
2. The borrower’s causes of action for breach of contract and fraud fail in any event because the borrower did not allege the essential fact of payment of sums due from the borrower (i.e. performance by the borrower) or set forth an excuse for performance.
3. The borrower cannot state a cause of action for violations of Civil Code Section 2923.5, which requires lenders to contact borrowers to explore options to avoid foreclosure, because the only remedy for such violations is postponement of the foreclosure sale, and borrower’s house has been sold.
***DECERTIFIED***
Ferguson v. Avelo Mortgage     Modification     Docket     Sup.Ct. Docket
Cal.App. 2nd Dist. (B223447)  6/1/11     Petition for review by Cal Supreme Ct. DENIED & DECERTIFIED 9/14/11FORECLOSURE / MERS:
1. A Notice of Default was defective because it was signed by a trustee before recordation of the substitution of trustee substituting it in place of the original trustee. But the Notice of Sale was properly given because it recorded at the same time as the substitution and included the statutorily required affidavit attesting to the mailing of a copy of the substitution to all persons to whom an NOD must be mailed. Since the NOS was valid, the court held that the sale was merely voidable and not void. Therefore, unlike a void sale (such as where a substitution of trustee is not recorded until after the trustee’s sale is completed), where the sale is merely voidable the plaintiff must tender full payment of the debt in order to bring an action setting aside the sale. The plaintiff did not make such a tender, so the trial court properly refused to set aside the sale.
2. Mortgage Electronic Registration Systems (MERS), as nominee of the original lender had the authority to assign the note and deed of trust to defendant, even if MERS does not possess the original note.
Creative Ventures, LLC v. Jim Ward & Associates     Docket     Sup.Ct. Docket
195 Cal.App.4th 1430 – 6th Dist. (H034883)  5/31/11     Petition for review by Cal Supreme Ct. DENIED 8/10/11USURY:
1. The real estate broker arranged loan exception to the Usury Law does not apply were a corporation was not licensed as a broker, even though the officer who negotiated the loan was licensed, where the officer was acting on behalf of the corporation and not on his own behalf.
2. The payee of the note assigned the note to multiple investors. In order to take free of the borrower’s defenses against the original payee, the assignees would have had to be holders in due course. They were not holders in due course because a) the original payee did not endorse the note and transfer possession of the note to the assignees, both of which are requirements for holder in due course status, and b) each investor was assigned a partial interest and partial assignees cannot be holders in due course.
3. The individual investors did not receive usurious interest because the interest rate itself was not usurious. But since the overall interest was usurious when the payee’s brokerage fee was included, the investors must refund the illegal interest each received.
4. The fact that the investors did not intend to violate the Usury Law is irrelevant because the only intent required is the intent to receive payment of interest.
5. An award of treble damages is within the discretion of the trial court, and the trial court properly exercised its discretion not to award treble damages because the conduct of defendants was not intentional.
Ribeiro v. County of El Dorado     Docket     Sup.Ct. Docket
195 Cal.App.4th 354 – 3rd Dist. (C065505)  5/10/111     Petition for review by Cal Supreme Ct. DENIED 8/24/11TAX SALES: “Caveat emptor” applies to tax sales. Accordingly, plaintiff/tax sale purchaser could not rescind the tax sale and obtain his deposit back where he was unaware of the amount of 1915 Act bond arrearages and where the County did not mislead him.
The Main Street Plaza v. Cartwright & Main, LLC     Docket
194 Cal.App.4th 1044 – 4th Dist., Div. 3 (G043569)  4/27/11     Case complete 6/27/11EASEMENTS: Plaintiff sought to establish a prescriptive easement for parking and access. The trial court granted a motion for summary judgment against plaintiff because it had not paid taxes on the easement. The appellate court reversed because, while payment of property taxes is an element of a cause of action for adverse possession, payment of taxes is not necessary for an easement by prescription, unless the easement has been separately assessed. A railway easement over the same area was separately assessed, but that is irrelevant because the railway easement and the prescriptive easement were not coextensive in use.
Liberty National Enterprises v. Chicago Title Insurance Company     Docket
194 Cal.App.4th 839 – 2nd Dist. (B222455)  4/6/11 (pub. order 4/26/11)     Case complete 6/28/11NOTE: This case is not summarized because it deals with disqualification of a party’s attorney, and not with issues related to title insurance. It is included here only to point out that fact.
Barry v. OC Residential Properties     Docket     Sup.Ct. Docket
194 Cal.App.4th 861 – 4th Dist., Div. 3 (G043073)  4/26/11     Petition for review by Cal Supreme Ct. DENIED 7/13/11TRUSTEE’S SALES: Under C.C.P. 729.035 a trustee’s sale to enforce a homeowners association lien is subject to a right of redemption for 90 days after the sale, and under C.C.P. 729.060 the redemption price includes reasonable amounts paid for maintenance, upkeep and repair. Defendant purchased plaintiff’s interest in a common interest development at a foreclosure sale of a homeowners association lien. Plaintiff sought to redeem the property and defendant included certain repair costs in the redemption amount. Plaintiff asserted that the costs were not for reasonable maintenance, upkeep and repair. The court held that the costs were properly included because the person seeking to redeem has the burden of proof, and plaintiff failed to carry that burden in this case. Plaintiff also asserted that she should not have to pay the repair costs because the work was performed by an unlicensed contractor. The court held that the cost of the repair work was properly included because plaintiff would receive a windfall if she did not have to reimburse those costs and because this is not an action in which a contractor is seeking compensation.
McMackin v. Ehrheart     Docket
194 Cal.App.4th 128 – 2nd Dist. (B224723)  4/8/11     Case complete 6/9/11CONTRACTS / PROBATE: This case involves a “Marvin” agreement, which is an express or implied contract between nonmarital partners. Plaintiff sought to enforce an alleged oral agreement with a decedent to leave plaintiff a life estate in real property. The court held that since the agreement was for distribution from an estate, it is governed by C.C.P. Section 366.3, which requires the action to be commenced within one year after the date of death. But the court further concluded that, depending on the circumstances of each case, the doctrine of equitable estoppel may be applied to preclude a party from asserting the statute of limitations set forth in section 366.3 as a defense to an untimely action where the party’s wrongdoing has induced another to forbear filing suit.
Ferwerda v. Bordon     Docket
193 Cal. App. 4th 1178 – 3rd Dist. (C062389)  3/25/11     Petition for review by Cal Supreme Ct. DENIED 6/8/11CC&R’s
In the published portion of the opinion, the court held:
1. The following language in the CC&R’s gave the Homeowners Association the authority to adopt new design standards pertaining to development of lots in the subdivision: “in the event of a conflict between the standards required by [the Planning] Committee and those contained herein, the standards of said Committee shall govern”; and
2. The Planning Committee could not adopt a rule that allowed for attorney’s fees to be awarded to the prevailing party in a lawsuit because such a provision was not contained in the CC&R’s. Adopting the rule was an attempt by the committee to insert a new provision that binds homeowners without their approval.In the unpublished portion of the opinion, the court held that the Planning Committee acted properly in denying the plaintiff’s building plans. (The details are not summarized here because that part of the opinion is not certified for publication.)
Capon v. Monopoly Game LLC     Docket
193 Cal. App. 4th 344 – 1st Dist. (A124964)  3/4/11     Case complete 5/5/11HOME EQUITY SALES CONTRACT ACT: In the published portion of the opinion, the court held that plaintiff was entitled to damages under the Home Equity Sales Contract Act because the purchaser was subject to the Act and the purchase contract did not comply with it. There is an exception in the Act for a purchaser who intends to live in the property. The principal member of the LLC purchase asserted that he intended to live in the property, but the court held the exception does not apply because the purchaser was the LLC rather than the member, so his intent was irrelevant.
Gomes v. Countrywide Home Loans     Docket     Cal. Sup.Ct. Docket     U.S. Supreme Ct. Docket
192 Cal. App. 4th 1149 – 4th Dist., Div. 1 (D057005)  2/18/11     Petition for review by Cal Supreme Ct. DENIED 5/18/11, Petition for a writ of certiorari DENIED 10/11/11FORECLOSURE / MERS: A borrower brought an action to restrain a foreclosure of a deed of trust held by MERS as nominee for the original lender. A Notice of Default had been recorded by the trustee, which identified itself as an agent for MERS. The court held that 1) There is no legal basis to bring an action in order to determine whether the person electing to sell the property is duly authorized to do so by the lender, unless the plaintiff can specify a specific factual basis for alleging that the foreclosure was not initiated by the correct party; and 2) MERS has a right to foreclose because the deed of trust specifically provided that MERS as nominee has the right to foreclose.
Schuman v. Ignatin     Docket
191 Cal. App. 4th 255 – 2nd Dist. (B215059)  12/23/10     Case complete 2/23/11CC&R’s: The applicable CC&R’s would have expired, but an amendment was recorded extending them. Plaintiff filed this action alleging that defendant’s proposed house violated the CC&R’s. The trial court held that the amendment was invalid because it was not signed by all of the lot owners in the subdivision. Since the CC&R’s had expired, it did not determine whether the proposed construction would have violated them. The appellate court reversed and remanded, holding that the defect in the amendment rendered it voidable, not void, and it could no longer be challenged because the four-year statute of limitations contained in C.C.P. 343 had run.
Schelb v. Stein     Docket
190 Cal. App. 4th 1440 – 2nd Dist. (B213929)  12/17/10     Case complete 2/16/11MARKETABLE RECORD TITLE ACT: In a previous divorce action, in order to equalize a division of community property, the husband was ordered to give the wife a note secured by a deed of trust on property awarded to the husband. In this case (many years later), the court held that under the Marketable Record Title Act, the deed of trust had expired. (Civil Code Section 882.020.) However, under Family Code Section 291, the underlying family law judgment does not expire until paid, so it is enforceable as an unsecured judgment.
Vuki v. Superior Court     Docket
189 Cal. App. 4th 791 – 4th Dist., Div. 3 (G043544)  10/29/10     Case complete 1/3/11TRUSTEE’S SALES: Unlike section 2923.5 as construed by this court in Mabry v. Superior Court (2010) 185 Cal.App.4th 208, neither Section 2923.52 or Section 2923.53 provides any private right of action, even a very limited one as this court found in Mabry. Civil Code section 2923.52 imposes a 90-day delay in the normal foreclosure process. But Civil Code section 2923.53 allows for an exemption to that delay if lenders have loan modification programs that meet certain criteria. The only enforcement mechanism is that a violation is deemed to be a violation of lenders license laws. Section 2923.54 provides that a violation of Sections 2923.52 or 2923.53 does not invalidate a trustee’s sale, and plaintiff also argued that a lender is not entitled to a bona fide purchaser protection. The court rejected that argument because any noncompliance is entirely a regulatory matter, and cannot be remedied in a private action.
Abers v. Rounsavell     Mod Opinion     Docket
189 Cal. App. 4th 348 – 4th Dist., Div. 3 (G040486)  10/18/10     Case complete 12/20/10LEASES: Leases of residential condominium units required a re-calculation of rent after 30 years based on a percentage of the appraised value of the “leased land”. The term “leased land” was defined to consist of the condominium unit and an undivided interest in the common area of Parcel 1, and did not include the recreational area (Parcel 2), which was leased to the Homeowners Association. The Court held that the language of the leases was clear. The appraisals were to be based only on the value of the lessees’ interest in Parcel 1 and not on the value of the recreational parcel.
UNPUBLISHED: Residential Mortgage Capital v. Chicago Title Ins. Company     Docket
Cal.App. 1st Dist. (A125695)  9/20/10     Case complete 11/23/10ESCROW: An escrow holder released loan documents to a mortgage broker at the broker’s request in order to have the borrowers sign the documents at home. They were improperly backdated and the broker failed to provide duplicate copies of the notice of right to rescind. Due these discrepancies, the lender complied with the borrower’s demand for a rescission of the loan, and filed this action against the escrow holder for amounts reimbursed to the borrower for finance charges and attorney’s fees. The Court held that the escrow holder did not breach a duty to the lender because it properly followed the escrow instructions, and it is common for escrow to release documents to persons associated with the transaction in order for them to be signed elsewhere.
Starr v. Starr     Docket
189 Cal. App. 4th 277 – 2nd Dist. (B219539)  9/30/10     Case complete 12/16/10COMMUNITY PROPERTY: In a divorce action the Court ordered the husband to convey title to himself and his former wife. Title had been taken in the husband’s name and the wife executed a quitclaim deed. But Family Code Section 721 creates a presumption that a transaction that benefits one spouse was the result of undue influence. The husband failed to overcome this presumption where the evidence showed that the wife executed the deed in reliance on the husband’s representation that he would subsequently add her to title. The husband was, nevertheless, entitled to reimbursement for his separate property contribution in purchasing the property.
Malkoskie v. Option One Mortgage Corp.     Docket
188 Cal. App. 4th 968 – 2nd Dist. (B221470)  9/23/10     Case complete 11/23/10TRUSTEE’S SALES: After plaintiff stipulated to a judgment in an unlawful detainer action, she could not challenge the validity of the trustee’s sale in a subsequent action because the subsequent action is barred by collateral estoppel. Because the action was barred, the court did not reach the question of the validity of the trustee’s sale based on the substitution of trustee being recorded after trustee’s sale proceedings had commenced and based on assignments of the deed of trust into the foreclosing beneficiary being recorded after the trustee’s deed.
Lee v. Fidelity National Title Ins. Co.     Docket     Sup.Ct. Docket
188 Cal. App. 4th 583 – 1st Dist. (A124730)  9/16/10     Petition for review and depublication by Cal Supreme Ct. DENIED 12/1/10TITLE INSURANCE:
1. The insureds could have reasonably expected that they were buying a title insurance policy on APN 22, and not just APN 9, where both the preliminary report and policy included a reference to APN 22, listed exclusions from coverage that were specific to APN 22, and attached an assessor’s parcel map with an arrow pointing to both APN 9 and 22.
2. A preliminary report is merely an offer to issue a title policy, but an insured has the right to expect that the policy will be consistent with the terms of the offer.
3. There was a triable issue of fact as to whether a neighbor’s construction of improvements on APN 22 was sufficient to commence the running of the statute of limitations, where the insureds testified that they did not know the precise location of APN 22 and assumed that the neighbors constructed the improvements on their own property.
4. There was a triable issue of fact as to whether Fidelity National Title Insurance Company acted as escrow holder or whether the escrow was conducted by its affiliate, Fidelity National Title Company (only the insurance company was named as a defendant).
Chicago Title Insurance Company v. AMZ Insurance Services     Docket     Sup.Ct. Docket
188 Cal. App. 4th 401 – 4th Dist., Div. 3 (G041188)  9/9/10     Petition for review and depublication by Cal Supreme Ct. DENIED 12/15/10ESCROW: A document entitled “Evidence of Property Insurance” (“EOI”) constitutes a binder under Insurance Code Section 382.5(a). In this case an EOI was effective to obligate the insurer to issue a homeowner’s policy even though the escrow failed to send the premium check. In order to cancel the EOI the insured has to be given notice pursuant to Insurance Code Section 481.1, which the insurer did not do. The escrow holder paid the insured’s loss and obtained an assignment of rights. The court held that the escrow holder did not act as a volunteer in paying the amount of the loss, and is entitled to be reimbursed by the insurance company under the doctrine of equitable subrogation.
Vanderkous v. Conley     Docket
188 Cal. App. 4th 111 – 1st Dist (A125352)  9/2/10     Case complete 11/3/10QUIET TITLE: 1) In a quiet title action the court has equitable powers to award compensation as necessary to do complete justice, even though neither party’s pleadings specifically requested compensation. 2) Realizing that the court was going to require plaintiff to compensate defendant in exchange for quieting title in plaintiff’s favor, plaintiff dismissed the lawsuit. However, the dismissal was invalid because it was filed following trial after the case had been submitted to the court.
Purdum v. Holmes     Docket
187 Cal. App. 4th 916 – 2nd Dist. (B216493)  7/29/10     Case complete 10/22/10NOTARIES: A notary was sued for notarizing a forged deed. He admitted that he knew the grantor had not signed the deed, but the lawsuit was filed more than six years after the deed was signed and notarized. The court held that the action was barred by the six-year limitation period in C.C.P. 338(f)(3) even though plaintiff did not discover the wrongful conduct until well within the six year period.
Perlas v. GMAC Mortgage     Docket
187 Cal. App. 4th 429 – 1st Dist. (A125212)  8/11/10     Case complete 10/10/10DEEDS OF TRUST: Borrowers filed an action against a lender to set aside a deed of trust, setting forth numerous causes of action. Borrowers’ loan application (apparently prepared by a loan broker) falsely inflated the borrowers’ income. In the published portion of the opinion. The court held in favor of the lender, explaining that a lender is not in a fiduciary relationship with borrowers and owes them no duty of care in approving their loan. A lender’s determination that the borrowers qualified for the loan is not a representation that they could afford the loan. One interesting issue in the unpublished portion of the opinion was the court’s rejection of the borrowers’ argument that naming MERS as nominee invalidated the deed of trust because, as borrower argued, the deed of trust was a contract with MERS and the note was a separate contract with the lender.
Soifer v. Chicago Title Company     Modification     Docket     Sup.Ct. Docket
187 Cal. App. 4th 365 – 2nd Dist. (B217956)  8/10/10     Petition for review by Cal Supreme Ct. DENIED 10/27/10TITLE INSURANCE: A person cannot recover for errors in a title company’s informal communications regarding the condition of title to property in the absence of a policy of title insurance or the purchase of an abstract of title. There are two ways in which an interested party can obtain title information upon which reliance may be placed: an abstract of title or a policy of title insurance. Having purchased neither, plaintiff cannot recover for title company’s incorrect statement that a deed of trust in foreclosure was a first lien.
In re: Hastie (Weinkauf v. Florez)     Docket     Sup.Ct. Docket
186 Cal. App. 4th 1285 – 1st Dist. (A127069)  7/22/10     Petition for review by Cal Supreme Ct. filed late and DENIED 9/21/10DEEDS: An administrator of decedent’s estate sought to set aside two deeds on the basis that the grantees were the grandson and granddaughter of decedent’s caregiver. Defendant did not dispute that the transfers violated Probate Code Section 21350, which prohibits conveyances to a fiduciary, including a caregiver, or the fiduciary’s relatives, unless specified conditions are met. Instead, defendant asserted only that the 3-year statute of limitations had expired. The court held that the action was timely because there was no evidence indicating that the heirs had or should have had knowledge of the transfer, which would have commenced the running of the statute of limitations.
Bank of America v. Stonehaven Manor, LLC     Docket     Sup.Ct. Docket
186 Cal. App. 4th 719 – 3rd Dist. (C060089)  7/12/10     Petition for review by Cal Supreme Ct. DENIED 10/20/10ATTACHMENT: The property of a guarantor of a debt–a debt which is secured by the real property of the principal debtor and also that of a joint and several co-guarantor–is subject to attachment where the guarantor has contractually waived the benefit of that security (i.e. waived the benefit of Civil Code Section 2849).
Jackson v. County of Amador     Docket
186 Cal. App. 4th 514 – 3rd Dist. (C060845)  7/7/10     Depublication request DENIED 9/15/10RECORDING LAW: An owner of two rental houses sued the county recorder for recording a durable power of attorney and two quitclaim deeds that were fraudulently executed by the owner’s brother. The superior court sustained the recorder’s demurrer without leave to amend. The court of appeal affirmed, holding that the legal insufficiency of the power of attorney did not provide a basis for the recorder to refuse to record the power of attorney under Government Code Section 27201(a) and the recorder did not owe the owner a duty to determine whether the instruments were fraudulently executed because the instruments were notarized.
Luna v. Brownell     Docket
185 Cal. App. 4th 668 – 2nd Dist. (B212757)  6/11/10     Case complete 8/17/10DEEDS: A deed transferring property to the trustee of a trust is not void as between the grantor and grantee merely because the trust had not been created at the time the deed was executed, if (1) the deed was executed in anticipation of the creation of the trust and (2) the trust is in fact created thereafter. The deed was deemed legally delivered when the Trust was established.
Mabry v. Superior Court     Docket     Sup.Ct. Docket
185 Cal. App. 4th 208 – 4th Dist., Div. 3 (G042911)  6/2/10     Petition for review by Cal Supreme Ct. DENIED 8/18/10TRUSTEE’S SALES: The court answered, and provided thorough explanations for, a laundry list of questions regarding Civil Code Section 2923.5, which requires a lender to explore options for modifying a loan with a borrower prior to commencing foreclosure proceedings.
1. May section 2923.5 be enforced by a private right of action?  Yes.
2. Must a borrower tender the full amount of the mortgage indebtedness due as a prerequisite to bringing an action under section 2923.5?  No.
3. Is section 2923.5 preempted by federal law?  No.
4. What is the extent of a private right of action under section 2923.5?  It is limited to obtaining a postponement of a foreclosure to permit the lender to comply with section 2923.5.
5. Must the declaration required of the lender by section 2923.5, subdivision (b) be under penalty of perjury?  No.
6. Does a declaration in a notice of default that tracks the language of section 2923.5(b) comply with the statute, even though such language does not on its face delineate precisely which one of three categories applies to the particular case at hand?  Yes.
7. If a lender forecloses without complying with section 2923.5, does that noncompliance affect the title acquired by a third party purchaser at the foreclosure sale?  No.
8. Did the lender comply with section 2923.5?  Remanded to the trial court to determine which of the two sides is telling the truth.
9. Can section 2923.5 be enforced in a class action in this case?  Not under these facts, which are highly fact-specific.
10. Does section 2923.5 require a lender to rewrite or modify the loan? No.
612 South LLC v. Laconic Limited Partnership     Docket
184 Cal. App. 4th 1270 – Cal.App. 4th Dist., Div. 1 (D056646)  5/25/10     Case complete 7/26/10ASSESSMENT BOND FORECLOSURE:
1. Recordation of a Notice of Assessment under the Improvement Act of 1911 imparted constructive notice even though the notice did not name the owner of the subject property and was not indexed under the owner’s name. There is no statutory requirement that the notice of assessment be indexed under the name of the property owner.
2. A Preliminary Report also gave constructive notice where it stated: “The lien of special tax for the following municipal improvement bond, which tax is collected with the county taxes. . .”
3. A property owner is not liable for a deficiency judgment after a bond foreclosure because a property owner does not have personal liability for either delinquent amounts due on the bond or for attorney fees incurred in prosecuting the action.
Tarlesson v. Broadway Foreclosure Investments     Docket
184 Cal. App. 4th 931 – 1st Dist. (A125445)  5/17/10     Case complete 7/20/10HOMESTEADS: A judgment debtor is entitled to a homestead exemption where she continuously resided in property, even though at one point she conveyed title to her cousin in order to obtain financing and the cousin subsequently conveyed title back to the debtor. The amount of the exemption was $150,000 (later statutorily changed to $175,000) based on debtor’s declaration that she was over 55 years old and earned less than $15,000 per year, because there was no conflicting evidence in the record.
UNPUBLISHED: MBK Celamonte v. Lawyers Title Insurance Corporation     Docket     Sup.Ct. Docket
Cal.App. 4th Dist., Div. 3 (G041605)  4/28/10     Petition for review by Cal Supreme Ct. DENIED 7/21/10TITLE INSURANCE / ENCUMBRANCES: A recorded authorization for a Mello Roos Assessment constitutes an “encumbrance” covered by a title policy, even where actual assessments are conditioned on the future development of the property.
Plaza Home Mortgage v. North American Title Company     Docket     Sup.Ct. Docket
184 Cal. App. 4th 130 – 4th Dist., Div. 1 (D054685)  4/27/10     Depublication request DENIED 8/11/10ESCROW / LOAN FRAUD: The buyer obtained 100% financing and managed to walk away with cash ($54,000) at close of escrow. (Actually, the buyer’s attorney-in-fact received the money.) The lender sued the title company that acted as escrow holder, asserting that it should have notified the lender when it received the instruction to send the payment to the buyer’s attorney-in-fact after escrow had closed. The court reversed a grant of a motion for summary judgment in favor of the escrow, pointing out that its decision is narrow, and holding only that the trial court erred when it determined the escrow did not breach the closing instructions contract merely because escrow had closed. The case was remanded in order to determine whether the escrow breached the closing instructions contract and if so, whether that breach proximately caused the lender’s damages.
Garcia v. World Savings     Docket     Sup.Ct. Docket
183 Cal. App. 4th 1031 – 2nd (B214822)  4/9/10     Petition for review and depublication by Cal Supreme Ct. DENIED 6/23/10TRUSTEE’S SALES: A lender told plaintiffs/owners that it would postpone a trustee’s sale by a week to give plaintiffs time to obtain another loan secured by other property in order to bring the subject loan current. Plaintiffs obtained a loan the following week, but the lender had conducted the trustee’s sale on the scheduled date and the property was sold to a third party bidder. Plaintiffs dismissed causes of action pertaining to setting aside the sale and pursued causes of action for breach of contract, wrongful foreclosure and promissory estoppel. The court held that there was no consideration that would support the breach of contract claim because plaintiffs promised nothing more than was due under the original agreement. Plaintiffs also could not prove a cause of action for wrongful foreclosure because that cause of action requires that the borrower tender funds to pay off the loan prior to the trustee’s sale. However, plaintiffs could recover based on promissory estoppel because procuring a high cost, high interest loan by using other property as security is sufficient to constitute detrimental reliance.
LEG Investments v. Boxler     Docket
183 Cal. App. 4th 484 – 3rd Dist. (C058743)  4/1/10     Certified for Partial Publication     Case complete 6/2/10PARTITION: A right of first refusal in a tenancy in common agreement does not absolutely waive the right of partition. Instead, the right of first refusal merely modifies the right of partition to require the selling cotenant to first offer to sell to the nonselling cotenant before seeking partition. [Ed. note: I expect that the result would have been different if the right of partition had been specifically waived in the tenancy in common agreement.]
Steiner v. Thexton     Docket
48 Cal. 4th 411 – Cal. Supreme Court (S164928)  3/18/10OPTIONS: A contract to sell real property where the buyer’s performance was entirely conditioned on the buyer obtaining regulatory approval to subdivide the property is an option. Although plaintiffs’ promise was initially illusory because no consideration was given at the outset, plaintiffs’ part performance of their bargained-for promise to seek a parcel split cured the initially illusory nature of the promise and thereby constituted sufficient consideration to render the option irrevocable.
Grotenhuis v. County of Santa Barbara     Docket
182 Cal. App. 4th 1158 – 2nd Dist. (B212264)  3/15/10     Case complete 5/18/10PROPERTY TAXES: Subject to certain conditions, a homeowner over the age of 55 may sell a principle residence, purchase a replacement dwelling of equal or lesser value in the same county, and transfer the property tax basis of the principal residence to the replacement dwelling. The court held that this favorable tax treatment is not available where title to both properties was held by an individual’s wholly owned corporation. The court rejected plaintiffs’ argument that the corporation was their alter ego because that concept is used to pierce the corporate veil of an opponent, and not to enable a person “to weave in and out of corporate status when it suits the business objective of the day.”
Clear Lake Riviera Community Assn. v. Cramer     Docket
182 Cal.App. 4th 459 – 1st Dist. (A122205)  2/26/10     Case complete 4/29/10HOMEOWNER’S ASSOCIATIONS: Defendant homeowners were ordered to bring their newly built house into compliance with the homeowners association’s guidelines where the house exceed the guidelines’ height restriction by nine feet. Even though the cost to the defendants will be great, they built the house with knowledge of the restriction and their hardship will not be grossly disproportionate to the loss the neighbors would suffer if the violation were not abated, caused by loss in property values and loss of enjoyment of their properties caused by blocked views. The height restriction was contained in the associations guidelines and not in the CC&R’s, and the association did not have records proving the official adoption of the guidelines. Nevertheless, the court held that proper adoption was inferred from the circumstantial evidence of long enforcement of the guidelines by the association.
Forsgren Associates v. Pacific Golf Community Development     Docket     Sup. Ct. Docket
182 Cal.App. 4th 135 – 4th Dist., Div. 2 (E045940)  2/23/10     Petition for review by Cal Supreme Ct. DENIED 6/17/10MECHANIC’S LIENS: 1. Owners of land are subject to mechanic’s liens where they were aware of the work being done by the lien claimant and where they failed to record a notice of non-responsibility.
2. Civil Code Section 3128 provides that a mechanic’s lien attaches to land on which the improvement is situated “together with a convenient space about the same or so much as may be required for the convenient use and occupation thereof”. Accordingly, defendant’s land adjacent to a golf course on which the lien claimant performed work is subject to a mechanic’s lien, but only as to the limited portions where a tee box was located and where an irrigation system was installed.
3. The fact that adjacent property incidentally benefits from being adjacent to a golf course does not support extending a mechanic’s lien to that property.
4. The owners of the adjacent property were liable for interest, but only as to their proportionate share of the amount of the entire mechanic’s lien.
Steinhart v. County of Los Angeles      Docket
47 Cal.4th 1298 – Cal. Supreme Court (S158007)  2/4/10PROPERTY TAXES: A “change in ownership”, requiring a property tax reassessment, occurs upon the death of a trust settlor who transferred property to a revocable trust, and which became irrevocable upon the settlor’s death. The fact that one trust beneficiary was entitled to live in the property for her life, and the remaining beneficiaries received the property upon her death, did not alter the fact that a change in ownership of the entire title had occurred.
Kuish v. Smith     Docket
181 Cal.App.4th 1419 – 4th Dist., Div. 3 (G040743)  2/3/10     Case complete 4/12/10CONTRACTS: 1. Defendants’ retention of a $600,000 deposit designated as “non-refundable” constituted an invalid forfeiture because a) the contract did not contain a valid liquidated damages clause, and b) plaintiff re-sold the property for a higher price, so there were no out-of-pocket damages. 2. The deposit did not constitute additional consideration for extending the escrow because it was labeled “non-refundable” in the original contract.
Kendall v. Walker (Modification attached)     Docket
181 Cal.App.4th 584 – 1st Dist. (A105981)  12/30/09     Case complete 3/29/10WATER RIGHTS: An owner of land adjoining a navigable waterway has rights in the foreshore adjacent to his property separate from that of the general public. The court held that the boundary in the waterway between adjacent parcels of land is not fixed by extending the boundary lines into the water in the direction of the last course ending at the shore line. Instead, it is fixed by a line drawn into the water perpendicular to the shore line. Accordingly, the court enjoined defendants from allowing their houseboat from being moored in a manner that crossed onto plaintiffs’ side of that perpendicular boundary line.
Junkin v. Golden West Foreclosure Service     Docket
180 Cal.App.4th 1150 – 1st Dist. (A124374)  1/5/10     Case complete 3/12/10USURY: The joint venture exception to the Usury Law, which has been developed by case law, provides that where the relationship between the parties is a bona fide joint venture or partnership, an advance by a joint venturer is an investment and not a loan, making the Usury Law inapplicable. The court applied the exception to a loan by one partner to the other because instead of looking at the loan in isolation, it looked at the entire transaction which it determined to be a joint venture. The case contains a good discussion of the various factors that should be weighed in determining whether the transaction is a bona fide joint venture. The presence or absence of any one factor is not, alone, determinative. The factors include whether or not: 1) there is an absolute obligation of repayment, 2) the investor may suffer a loss, 3) the investor has a right to participate in management, 4) the subject property was purchased from a third party and 5) the parties considered themselves to be partners.
Banc of America Leasing & Capital v. 3 Arch Trustee Services     Docket
180 Cal.App.4th 1090 – 4th Dist., Div. 3 (G041480)  12/11/09     Case complete 3/8/10TRUSTEE’S SALES: A judgment lien creditor is not entitled to receive a notice of default, notice of trustee’s sale or notice of surplus sale proceeds unless the creditor records a statutory request for notice. The trustee is required to disburse surplus proceeds only to persons who have provided the trustee with a proof of claim. The burden rests with the judgment creditor to keep a careful watch over the debtor, make requests for notice of default and sales, and to submit claims in the event of surplus sale proceeds.
Park 100 Investment Group v. Ryan     Docket
180 Cal.App.4th 795 – 2nd Dist. (B208189)  12/23/09     Case complete 2/26/10LIS PENDENS: 1. A lis pendens may be filed against a dominant tenement when the litigation involves an easement dispute. Although title to the dominant tenement would not be directly affected if an easement right was shown to exist, the owner’s right to possession clearly is affected2.A recorded lis pendens is a privileged publication only if it identifies an action previously filed with a court of competent jurisdiction which affects the title or right of possession of real property. If the complaint does not allege a real property claim, or the alleged claim lacks evidentiary merit, the lis pendens, in addition to being subject to expungement, is not privileged.
Millennium Rock Mortgage v. T.D. Service Company     Modification     Docket
179 Cal.App.4th 804 – 3rd Dist. (C059875)  11/24/09     Case complete 1/26/10TRUSTEE’S SALES: A trustee’s sale auctioneer erroneously read from a script for a different foreclosure, although the correct street address was used. The auctioneer opened the bidding with the credit bid from the other foreclosure that was substantially less than the correct credit bid. The errors were discovered after the close of bidding but prior to the issuance of a trustee’s deed. The court held that the errors constituted an “irregularity” sufficient to give the trustee the right to rescind the sale.The court distinguished 6 Angels v. Stuart-Wright Mortgage, in which the court held that a beneficiary’s negligent miscalculation of the amount of its credit bid was not sufficient to rescind the sale. In 6 Angels the error was totally extrinsic to the proper conduct of the sale itself. Here there was inherent inconsistency in the auctioneer’s description of the property being offered for sale, creating a fatal ambiguity in determining which property was being auctioned.
Fidelity National Title Insurance Company v. Schroeder     Docket
179 Cal.App.4th 834 – 5th Dist. (F056339)  11/24/09     Case complete 1/25/10JUDGMENTS: A judgment debtor transferred his 1/2 interest in real property to the other cotenant prior to the judgment creditor recording an abstract of judgment. The court held that if the trial court on remand finds that the transfer was intended to shield the debtor’s property from creditors, then the transferee holds the debtor’s 1/2 interest as a resulting trust for the benefit of the debtor, and the creditor’s judgment lien will attach to that interest. The court also held that the transfer cannot be set aside under the Uniform Fraudulent Transfer Act because no recoverable value remained in the real property after deducting existing encumbrances and Gordon’s homestead exemption.The case contains a good explanation of the difference between a resulting (“intention enforcing”) and constructive (“fraud-rectifying”) trust. A resulting trust carries out the inferred intent of the parties; a constructive trust defeats or prevents the wrongful act of one of them.
Zhang v. Superior Court     Docket     Sup.Ct. Docket
Cal.App. 4th Dist., Div. 2 (E047207) 10/29/09     Petition for review by Cal Supreme Ct. GRANTED 2/10/10INSURANCE / BAD FAITH: Fraudulent conduct by an insurer does not give rise to a private right of action under the Unfair Insurance Practices Act (Insurance Code section 790.03 et seq.), but it can give rise to a private cause of action under the Unfair Competition Law (Business and Professions Code section 17200 et seq.).
Presta v. Tepper     Docket
179 Cal.App.4th 909 – 4th Dist., Div. 3 (G040427)  10/28/09     Case complete 1/25/10TRUSTS: An ordinary express trust is not an entity separate from its trustee, like a corporation is. Instead, a trust is merely a relationship by which one person or entity holds property for the benefit of some other person or entity. Consequently, where two men entered into partnership agreements as trustees of their trusts, the provision of the partnership agreement, which required that upon the death of a partner the partnership shall purchase his interest in the partnership, was triggered by the death of one of the two men.
Wells Fargo Bank v. Neilsen      Modification     Docket     Sup.Ct. Docket
178 Cal.App.4th 602 – 1st Dist. (A122626)  10/22/09 (Mod. filed 11/10/09)     Petition for review by Cal Supreme Ct. DENIED 2/10/10CIRCUITY OF PRIORITY: The Court follows the rule in Bratcher v. Buckner, even though Bratcherinvolved a judgment lien and two deeds of trust and this case involves three deeds of trust. The situation is that A, B & C have liens on the subject property, and A then subordinates his lien to C’s lien. The problem with this is that C appears to be senior to A, which is senior to B, which is senior to C, so that each lien is senior and junior to one of the other liens.The Court held that the lien holders have the following priority: (1) C is paid up to the amount of A’s lien, (2) if the amount of A’s lien exceeds C’s lien, A is paid the amount of his lien, less the amount paid so far to C, (3) B is then paid in full, (4) C is then paid any balance still owing to C, (5) A is then paid any balance still owing to A.

This is entirely fair because A loses priority as to the amount of C’s lien, which conforms to the intent of the subordination agreement. B remains in the same position he would be in without the subordination agreement since his lien remains junior only to the amount of A’s lien. C steps into A’s shoes only up to the amount of A’s lien.

NOTE: The odd thing about circuity of priority cases is that they result in surplus proceeds after a foreclosure sale being paid to senior lienholders. Normally, only junior lienholders and the foreclosed out owner are entitled to share in surplus proceeds, and the purchaser takes title subject to the senior liens.
Schmidli v. Pearce     Docket
178 Cal.App.4th 305 – 3rd Dist. (C058270)  10/13/09      Case complete 12/15/09MARKETABLE RECORD TITLE ACT: This case was decided under the pre-2007 version of Civil Code Section 882.020, which provided that a deed of trust expires after 10 years if the maturity date is “ascertainable from the record”. The court held that this provision was not triggered by a Notice of Default, which set forth the maturity date and which was recorded prior to expiration of the 10-year period. NOTE: In 2007, C.C. Section 882.020 was amended to make it clear that the 10-year period applies only where the maturity date is shown in the deed of trust itself.
Nielsen v. Gibson     Docket
178 Cal.App.4th 318 – 3rd Dist. (C059291)  10/13/09     Case complete 12/15/09ADVERSE POSSESSION: 1. The “open and notorious” element of adverse possession was satisfied where plaintiff possessed the subject property by actual possession under such circumstances as to constitute reasonable notice to the owner. Defendant was charged with constructive knowledge of plaintiff’s possession, even though defendant was out of the country the entire time and did not have actual knowledge.2. The 5-year adverse possession period is tolled under C.C.P. Section 328 for up to 20 years if the defendant is “under the age of majority or insane”. In the unpublished portion of the opinion the court held that although the defendant had been ruled incompetent by a court in Ireland, there was insufficient evidence that defendant’s condition met the legal definition of “insane”.
Ricketts v. McCormack     Docket     Sup.Ct. Docket
177 Cal.App.4th 1324 – 2nd Dist. (B210123)  9/27/09     Petition for review by Cal Supreme Ct. DENIED 12/17/09RECORDING LAW: Civil Code Section 2941(c) provides in part, “Within two business days from the day of receipt, if received in recordable form together with all required fees, the county recorder shall stamp and record the full reconveyance or certificate of discharge.” In this class action lawsuit against the County recorder, the court held that indexing is a distinct function, separate from recording a document, and is not part of section 2941(c)’s stamp-and-record requirement.The court distinguished indexing, stamping and recording:
Stamping: The “stamping” requirement of Section 2941(c) is satisfied when the Recorder endorses on a reconveyance the order of receipt, the day and time of receipt and the amount of fees paid.
Recording: The reconveyance is “recorded” once the Recorder has confirmed the document meets all recording requirements, created an entry for the document in the “Enterprise Recording Archive” system, calculated the required fees and confirmed payment of the correct amount and, finally, generated a lead sheet containing, among other things, a bar code, a permanent recording number and the words “Recorded/Filed in Official Records.”
Indexing: Government Code Section 27324 requires all instruments “presented for recordation” to “have a title or titles indicating the kind or kinds of documents contained therein,” and the recorder is “required to index only that title or titles captioned on the first page of a document.
Starlight Ridge South Homeowner’s Assn. v. Hunter-Bloor     Docket
177 Cal.App.4th 440 – 4th Dist., Div. 2 (E046457)  8/14/09 (Pub. Order 9/3/09)     Case complete 10/19/09CC&R’s: Under Code Civ. Proc. Section 1859, where two provisions appear to cover the same matter, and are inconsistent, the more specific provision controls over the general provision. Here the provision of CC&R’s requiring each homeowner to maintain a drainage ditch where it crossed the homeowners’ properties was a specific provision that controlled over a general provision requiring the homeowner’s association to maintain landscape maintenance areas.
First American Title Insurance Co. v. XWarehouse Lending Corp.     Docket
177 Cal.App.4th 106 – 1st Dist. (A119931)  8/28/09      Case complete 10/30/09TITLE INSURANCE: A loan policy provides that “the owner of the indebtedness secured by the insured mortgage” becomes an insured under the loan policy. Normally, this means that an assignee becomes an insured. However, where the insured lender failed to disburse loan proceeds for the benefit of the named borrower, an indebtedness never existed, and the warehouse lender/assignee who disbursed money to the lender did not become an insured. The court pointed out that the policy insures against defects in the mortgage itself, but not against problems related to the underlying debt.NOTE: In Footnote 8 the court distinguishes cases upholding the right of a named insured or its assignee to recover from a title insurer for a loss due to a forged note or forged mortgage because in those cases, and unlike this case, moneys had been actually disbursed or credited to the named borrower by either the lender or its assignee.
Wells Fargo v. D & M Cabinets     Docket
177 Cal.App.4th 59 – 3rd Dist. (C058486)  8/28/09     Case complete 10/28/09JUDGMENTS: A judgment creditor, seeking to sell an occupied dwelling to collect on a money judgment, may not bypass the stringent requirements of C.C.P. Section 704.740 et seq. when the sale is conducted by a receiver appointed under C.C.P Section 708.620. The judgment creditor must comply with Section 704.740, regardless of whether the property is to be sold by a sheriff or a receiver.
Sequoia Park Associates v. County of Sonoma     Docket     Sup.Ct. Docket
176 Cal.App.4th 1270 – 1st Dist. (A120049)  8/21/09     Petition for review by Cal Supreme Ct. DENIED 12/2/09PREEMPTION: A County ordinance professing to implement the state mobilehome conversion statutes was preempted for the following reasons: (1) Gov. Code Section 66427.5 expressly preempts the power of local authorities to inject other factors when considering an application to convert an existing mobilehome park from a rental to a resident-owner basis, (2) the ordinance is impliedly preempted because the Legislature has established a dominant role for the state in regulating mobilehomes, and has indicated its intent to forestall local intrusion into the particular terrain of mobilehome conversions and (3) the County’s ordinance duplicates several features of state law, a redundancy that is an established litmus test for preemption.
Citizens for Planning Responsibly v. County of San Luis Obispo     Docket     Sup.Ct. Docket
176 Cal.App.4th 357 – 2nd Dist (B206957)  8/4/09     Petition for review by Cal Supreme Ct. DENIED 10/14/09PREEMPTION: The court held that the State Aeronautics Act, which regulates the development and expansion of airports, did not preempt an initiative measure adopted by the voters because none of the following three factors necessary to establish preemption was present: (1) The Legislature may so completely occupy the field in a matter of statewide concern that all, or conflicting, local legislation is precluded, (2) the Legislature may delegate exclusive authority to a city council or board of supervisors to exercise a particular power over matters of statewide concern, or (3) the exercise of the initiative power would impermissibly interfere with an essential governmental function.
Delgado v. Interinsurance Exchange of the Auto Club of So. Cal.     Docket
47 Cal.4th 302 – Cal. Supreme Court (S155129)  8/3/09INSURANCE / BAD FAITH: The case is not as relevant to title insurance as the lower court case, which held that an insurance company acted in bad faith as a matter of law where a potential for coverage was apparent from the face of the complaint. The Supreme Court reversed, basing its decision on the meaning of “accident” in a homeowner’s policy, and holding that an insured’s unreasonable belief in the need for self-defense does not turn the resulting intentional act of assault and battery into “an accident” within the policy’s coverage clause. Therefore, the insurance company had no duty to defend its insured in the lawsuit brought against him by the injured party.
1538 Cahuenga Partners v. Turmeko Properties     Docket
176 Cal.App.4th 139 – 2nd Dist. (B209548)  7/31/09     Case complete 10/7/09RECONVEYANCE: [This is actually a civil procedure case that it not of much interest to title insurance business, but it is included here because the underlying action sought to cancel a reconveyance.] The court ordered that a reconveyance of a deed of trust be cancelled pursuant to a settlement agreement. The main holding was that a trial court may enforce a settlement agreement against a party to the settlement that has interest in the subject matter of the action even if the party is not named in the action, where the non-party appears in court and consents to the settlement.
Lee v. Lee     Docket
175 Cal.App.4th 1553 – 5th Dist. (F056107)  7/29/09     Case complete 9/28/09DEEDS / STATUTE OF FRAUDS:
1. The Statute of Frauds does not apply to an executed contract, and a deed that is executed by the grantor and delivered to the grantee is an executed contract. The court rejected defendants’ argument that the deed did not reflect the terms of sale under a verbal agreement.
2. While the alteration of an undelivered deed renders the conveyance void, the alteration of a deed after it has been delivered to the grantee does not invalidate the instrument as to the grantee. The deed is void only as to the individuals who were added as grantees after delivery.
White v. Cridlebaugh     Docket
178 Cal.App.4th 506 – 5th Dist. (F053843)  7/29/09  (Mod. 10/20/09)     Case complete 12/21/09MECHANIC’S LIENS: Under Business and Professions Code Section 7031, a property owner may recover all compensation paid to an unlicensed contractor, in addition to not being liable for unpaid amounts. Furthermore, this recovery may not be offset or reduced by the unlicensed contractor’s claim for materials or other services.
Linthicum v. Butterfield     Docket     Sup.Ct. Docket
175 Cal.App.4th 259 – 2nd Dist. (B199645)  6/24/09     Petition for review by Cal Supreme Ct. DENIED 9/9/09NOTE: This is a new opinion following a rehearing. The only significant changes from the original opinion filed 4/2/09 (modified 4/8/09) involve the issue of a C.C.P. 998 offer, which is not a significant title insurance or escrow issue.
EASEMENTS: The court quieted title to an easement for access based on the doctrine of “balancing conveniences ” or “relative hardship”. Prohibiting the continued use of the roadway would cause catastrophic loss to the defendants and insignificant loss to the plaintiffs. However, the court remanded the case for the trial court to determine the width of the easement, which should be the minimal width necessary. The court reversed the judgment insofar as it awarded a utility easement to the defendants because they did not seek to quiet title to an easement for utilities, even though they denied the material allegations of that cause of action.
United Rentals Northwest v. United Lumber Products     Docket
174 Cal.App.4th 1479 – 5th Dist. (F055855)  6/18/09     Case complete 8/18/09MECHANIC’S LIENS: Under Civil Code Section 3106, a “work of improvement” includes the demolition and/or removal of buildings. The court held that lumber drying kilns are “buildings” so the contractor who dismantled and removed them was entitled to a mechanic’s lien.
People v. Shetty     Docket     Sup.Ct. Docket
174 Cal.App.4th 1488 – 2nd Dist. (B205061)  6/18/09     Petition for review by Cal Supreme Ct. DENIED 9/30/09HOME EQUITY SALES CONTRACT ACT: This case is not significant from a title insurance standpoint, but it is interesting because it is an example of a successful prosecution under the Home Equity Sales Contract Act (Civil Code Section 1695 et seq.).
Strauss v. Horton     Modification     Docket
46 Cal.4th 364 – Cal. Supreme Court (S168047)  5/26/09SAME SEX MARRIAGE: The California Supreme Court upheld Proposition 8, which amended the California State Constitution to provide that: “Only marriage between a man and a woman is valid or recognized in California.” Proposition 8 thereby overrode portions of the ruling of In re Marriage Cases, which allowed same-sex marriages. But the Court upheld the marriages that were performed in the brief time same-sex marriage was legal from 5:00pm on June 16, 2008 (when In re Marriage Cases was final) through November 4, 2008 (the day before Proposition 8 became effective restricting the definition of marriage to a man and a woman).
In re Marriage of Lund     Docket
174 Cal.App.4th 40 – 4th Dist., Div. 3 (G040863)  5/21/09     Case complete 7/27/09COMMUNITY PROPERTY: An agreement accomplished a transmutation of separate property to community property even though it stated that the transfer was “for estate planning purposes”. A transmutation either occurs for all purposes or it doesn’t occur at all.
St. Marie v. Riverside County Regional Park, etc.     Docket
46 Cal.4th 282 – Cal. Supreme Court (S159319)  5/14/09OPEN SPACE DEDICATION: Property granted to a Regional Park District is not “actually dedicated” under Public Resources Code Section 5540 for open space purposes until the district’s Board of Directors adopts a resolution dedicating the property for park or open space purposes. Therefore, until the Board of Directors adopts such a resolution, the property may be sold by the District without voter or legislative approval.
Manhattan Loft v. Mercury Liquors     Docket     Sup.Ct. Docket
173 Cal.App.4th 1040 – 2nd Dist. (B211070)  5/6/09     Petition for review by Cal Supreme Ct. DENIED 8/12/09LIS PENDENS: An arbitration proceeding is not an “action” that supports the recordation of a notice of pendency of action. The proper procedure is for a party to an arbitration agreement to file an action in court to support the recording of a lis pendens, and simultaneously file an application to stay the litigation pending arbitration.
Murphy v. Burch     Docket
46 Cal.4th 157 – Cal. Supreme Court (S159489)  4/27/09EASEMENT BY NECESSITY: This case contains a good discussion of the law of easements by necessity, which the court held did not apply in this case to provide access to plaintiff’s property. This means plaintiff’s property is completely landlocked because the parties had already stipulated that a prescriptive easement could not be established.An easement by necessity arises by operation of law when 1) there is a strict necessity as when a property is landlocked and 2) the dominant and servient tenements were under the same ownership at the time of the conveyance giving rise to the necessity. The second requirement, while not categorically barred when the federal government is the common grantor, requires a high burden of proof to show 1) the intent of Congress to establish the easement under federal statutes authorizing the patent and 2) the government’s lack of power to condemn the easement. Normally, a reservation of an easement in favor of the government would not be necessary because the government can obtain the easement by condemnation.

The court pointed out that there is a distinction between an implied grant and implied reservation, and favorably quotes a treatise that observes: “an easement of necessity may be created against the government, but the government agency cannot establish an easement by necessity over land it has conveyed because its power of eminent domain removes the strict necessity required for the creation of an easement by necessity.”
Abernathy Valley, Inc. v. County of Solano     Docket
173 Cal.App.4th 42 – 1st Dist. (A121817)  4/17/09     Case complete 6/22/09SUBDIVISION MAP ACT: This case contains a very good history of California’s Subdivision Map Act statutes. The court held that parcels shown on a 1909 map recorded pursuant to the 1907 subdivision map law are not entitled to recognition under the Subdivision Map Act’s grandfather clause (Government Code Section 66499.30) because the 1907 act did not regulate the “design and improvement of subdivisions”. The court also held that a local agency may deny an application for a certificate of compliance that seeks a determination that a particular subdivision lot complies with the Act, where the effect of issuing a certificate would be to effectively subdivide the property without complying with the Act.
Linthicum v. Butterfield     Modification     Docket     Sup.Ct. Docket
172 Cal.App.4th 1112 – 2nd Dist. (B199645)  4/2/09
SEE NEW OPINION FILED 6/24/09
EASEMENTS: The court quieted title to an easement for access based on the doctrine of “balancing conveniences ” or “relative hardship”. Prohibiting the continued use of the roadway would cause catastrophic loss to the defendants and insignificant loss to the plaintiffs. However, the court remanded the case for the trial court to determine the width of the easement, which should be the minimal width necessary. The court reversed the judgment insofar as it awarded a utility easement to the defendants because they did not seek to quiet title to an easement for utilities, even though they denied the material allegations of that cause of action.
McAvoy v. Hilbert     Docket
172 Cal.App.4th 707 – 4th Dist., Div 1 (D052802)  3/24/09     Case complete 5/27/09ARBITRATION: C.C.P. Section 1298 requires that an arbitration provision in a real estate contract be accompanied by a statutory notice and that the parties indicate their assent by placing their initials on an adjacent space or line. The court held that a listing agreement that is part of a larger transaction for the sale of both a business and real estate is still subject to Section 1298, and refused to enforce an arbitration clause that did not comply with that statute.
Peak-Las Positas Partners v. Bollag     Modification     Docket
172 Cal.App.4th 101 – 2nd Dist. (B205091)  3/16/09     Case complete 5/27/09ESCROW: Amended escrow instructions provided for extending the escrow upon mutual consent which “shall not be unreasonably withheld or delayed”. The court held that substantial evidence supported the trial court’s determination that the seller’s refusal to extend escrow was unreasonable. The court pointed out the rule that equity abhors a forfeiture and that plaintiff had paid a non-refundable deposit of $465,000 and spent $5 million in project costs to obtain a lot line adjustment that was necessary in order for the property to be sold.
Alfaro v. Community Housing Improvement System & Planning Assn     Modification     Docket     Sup.Ct. Docket
171 Cal.App.4th 1356 6th Dist. (H031127)  2/19/09     Petition for review by Cal Supreme Ct. DENIED 5/13/09CC&R’s: The court upheld the validity of recorded CC&R’s containing an affordable housing restriction that required property to remain affordable to buyers with low to moderate income. The court reached several conclusions:
1. Constructive notice of recorded CC&R’s is imparted even if they are not referenced in a subsequent deed,
2. CC&R’s may describe an entire tract, and do not need to describe individual lots in the tract,
3. An affordable housing restriction is a reasonable restraint on alienation even if it is of indefinite duration,
4. Defendants had a duty as sellers to disclose the existence of the CC&R’s. Such disclosure was made if plaintiffs were given, prior to close of escrow, preliminary reports that disclosed the CC&R’s.
5. The fact that a victim had constructive notice of a matter from public records is no defense to fraud. The existence of such public records may be relevant to whether the victim’s reliance was justifiable, but it is not, by itself, conclusive.
6. In the absence of a claim that defendants somehow prevented plaintiffs from reading the preliminary reports or deeds, or misled them about their contents, plaintiffs cannot blame defendants for their own neglect in reading the reports or deeds. Therefore, the date of discovery of alleged fraud for failing to disclose the affordable housing restriction would be the date plaintiffs received their preliminary reports or if they did not receive a preliminary report, the date they received their deeds.
Kwok v. Transnation Title Insurance Company     Docket     Sup.Ct. Docket
170 Cal.App.4th 1562 – 2nd Dist. (B207421)  2/10/09     Petition for review by Cal Supreme Ct. DENIED 4/29/09TITLE INSURANCE: Plaintiffs did not succeed as insureds “by operation of law” under the terms of the title insurance policy after transfer of the property from a wholly owned limited liability company, of which appellants were the only members, to appellants as trustees of a revocable family trust. This case highlights the importance of obtaining a 107.9 endorsement, which adds the grantee as an additional insured under the policy.
Pro Value Properties v. Quality Loan Service Corp.     Docket
170 Cal.App.4th 579 – 2nd Dist. (B204853)  1/23/09     Case complete 3/27/09TRUSTEE’S SALES: A Trustee’s Deed was void because the trustee failed to record a substitution of trustee. The purchaser at the sale was entitled to a return of the money paid plus interest. The interest rate is the prejudgment interest rate of seven percent set forth in Cal. Const., Art. XV, Section 1. A trustee’s obligations to a purchaser are based on statute and not on a contract. Therefore, Civil Code Section 3289 does not apply, since it only applies to a breach of a contract that does not stipulate an interest rate.
Sixells v. Cannery Business Park     Docket     Sup.Ct. Docket
170 Cal.App.4th 648 – 3rd Dist. (C056267)  12/29/08     Petition for review by Cal Supreme Ct. DENIED 3/25/09CONTRACTS: The Subdivision Map Act (Gov. Code, Section 66410 et seq.) prohibits the sale of a parcel of real property until a final subdivision map or parcel map has been filed unless the contract to sell the property is “expressly conditioned” upon the approval and filing of a final map (66499.30(e)). Here, the contract satisfied neither requirement because it allowed the purchaser to complete the purchase if, at its election, the subject property was made into a legal parcel by recording a final map or if the purchaser “waived” the recording of a final map. Therefore the contract was void.
Patel v. Liebermensch     Docket
45 Cal.4th 344 – Cal. Supreme Court (S156797)  12/22/08SPECIFIC PERFORMANCE: The material factors required for a  written contract are the seller, the buyer, the price to be paid, the time and manner of payment, and the property to be transferred, describing it so it may be identified. Here, specific performance of an option was granted even though it was not precise as to the time and manner of payment because where a contract for the sale of real property specifies no time of payment, a reasonable time is allowed. The manner of payment is also a term that may be supplied by implication.
In re Marriage of Brooks and Robinson     Docket     Sup.Ct. Docket
169 Cal.App.4th 176 – 4th Dist., Div. 2 (E043770)  12/16/08     Request for review and depublication by Cal Supreme Ct. DENIED 3/25/09COMMUNITY PROPERTY: The act of taking title to property in the name of one spouse during marriage with the consent of the other spouse effectively removes that property from the general presumption that the property is community property. Instead, there is a presumption that the parties intended title to be held as stated in the deed. This presumption can only be overcome by clear and convincing evidence of a contrary agreement, and not solely by tracing the funds used to purchase the property or by testimony of an intention not disclosed at the time of the execution of the conveyance. Because the court found that there was no agreement to hold title other than as the separate property of the spouse who acquired title in her own name, it did not reach the issue of whether a purchaser from that spouse was a BFP or would be charged with knowledge of that the seller’s spouse had a community property interest in the property.
The Formula, Inc. v. Superior Court     Docket
168 Cal.App.4th 1455 – 3rd Dist. (C058894)  12/10/09     Case complete 2/10/09LIS PENDENS: A notice of litigation filed in another state is not authorized for recording under California’s lis pendens statutes. An improperly filed notice of an action in another state is subject to expungement by a California court, but not under the authority of C.C.P. Section 405.30, and an order of expungement is given effect by being recorded in the chain of title to overcome the effect of the earlier filing.
Ekstrom v. Marquesa at Monarch Beach HOA     Docket     Sup.Ct. Docket
168 Cal.App.4th 1111 – 4th Dist., Div. 3 (G038537)  12/1/08     Depublication request DENIED 3/11/09CC&R’s: A provision in CC&R’s requiring all trees on a lot to be trimmed so as to not exceed the roof of the house on the lot, unless the tree does not obstruct views from other lots, applies to palm trees even though topping a palm tree will kill it. All trees means “all trees”, so palm trees are not exempt from the requirement that offending trees be trimmed, topped, or removed.
Spencer v. Marshall     Docket
168 Cal.App.4th 783 – 1st Dist. (A119437)  11/24/08     Case complete 1/26/09HOME EQUITY SALES: The Home Equity Sales Contract Act applies even where the seller is in bankruptcy and even where the seller’s Chapter 13 Bankruptcy Plan allows the seller to sell or refinance the subject property without further order of the court.
Kachlon v. Markowitz     Docket
168 Cal.App.4th 316 – 2nd Dist. (B182816)  11/17/08     Case complete 1/27/09TRUSTEE’S SALES:
1. The statutorily required mailing, publication, and delivery of notices in nonjudicial foreclosure, and the performance of statutory nonjudicial foreclosure procedures, are privileged communications under the qualified, common-interest privilege, which means that the privilege applies as long as there is no malice. The absolute privilege for communications made in a judicial proceeding (the “litigation privilege”) does not apply.
2. Actions seeking to enjoin nonjudicial foreclosure and clear title based on the provisions of a deed of trust are actions on a contract, so an award of attorney fees under Civil Code Section 1717 and provisions in the deed of trust is proper.
3. An owner is entitled to attorney fees against the trustee who conducted trustee’s sale proceedings where the trustee did not merely act as a neutral stakeholder but rather aligned itself with the lender by denying that the trustor was entitled to relief.
Hines v. Lukes     Docket
167 Cal.App.4th 1174 – 2nd Dist. (B199971)  10/27/08     Case complete 12/31/08EASEMENTS: [Not significant from a title insurance standpoint]. The underlying dispute concerns an easement but the case involves only civil procedure issues pertaining to the enforcement of a settlement agreement.
Satchmed Plaza Owners Association v. UWMC Hospital Corp.     Docket
167 Cal.App.4th 1034 – 4th Dist., Div. 3 (G038119)  10/23/08     Case complete 12/23/08RIGHT OF FIRST REFUSAL: [Not significant from a title insurance standpoint]. The underlying dispute concerns a right of first refusal but the case involves only civil procedure issues pertaining to a party’s waiver of its right to appeal where it has accepted the benefits of the favorable portion of judgment.
Gray v. McCormick     Docket     Sup.Ct. Docket
167 Cal.App.4th 1019 – 4th Dist., Div. 3 (G039738)  10/23/08     Petition for review by Cal Supreme Ct. DENIED 1/14/09EASEMENTS: Exclusive easements are permitted under California law, but the use by the owner of the dominant tenement is limited to the purposes specified in the grant of easement, not all conceivable uses of the property.
In re Estate of Felder     Docket
167 Cal.App.4th 518 – 2nd Dist.   (B205027)  10/9/08     Case complete 12/11/08CONTRACTS: [Not significant from a title insurance standpoint]. The case held that an estate had the right to retain the entire deposit upon a purchaser’s breach of a sales contract even though the estate had only a 1/2 interest in the subject property.
Secrest v. Security National Mortgage Loan Trust     Order Modifying Opinion     Docket     Sup.Ct. Docket
167 Cal.App.4th 544 – 4th Dist., Div. 3 (G039065)  10/9/08, Modified 11/3/08     Petition for review by Cal Supreme Ct. DENIED 12/17/08LOAN MODIFICATION: Because a note and deed of trust come within the statute of frauds, a Forbearance Agreement also comes within the statute of frauds pursuant to Civil Code section 1698. Making the downpayment required by the Forbearance Agreement was not sufficient part performance to estop Defendants from asserting the statute of frauds because payment of money alone is not enough as a matter of law to take an agreement out of the statute, and the Plaintiffs have legal means to recover the downpayment if they are entitled to its return. In addition to part performance, the party seeking to enforce the contract must have changed position in reliance on the oral contract to such an extent that application of the statute of frauds would result in an unjust or unconscionable loss, amounting in effect to a fraud.
FDIC v. Dintino     Docket
167 Cal.App.4th 333 – 4th Dist., Div. 1 (D051447)  9/9/08 (Pub. Order 10/2/08)     Case complete 12/2/08TRUST DEEDS: A lender who mistakenly reconveyed a deed of trust could not sue under the note because it would violate the one action rule. However, the lender prevailed on its unjust enrichment cause of action. The applicable statute of limitations was the 3-year statute for actions based on fraud or mistake, and not the 4-year statute for actions based on contract. Nevertheless, the action was timely because the statute did not begin to run until the lender reasonably discovered its mistake, and not from the date of recordation of the reconveyance. Finally, the court awarded defendant attorney’s fees attributable to defending the contract cause of action because defendant prevailed on that particular cause of action even though he lost the lawsuit.
California Coastal Commission v. Allen     Docket     Sup.Ct. Docket
167 Cal.App.4th 322 – 2nd Dist. (B197974)  10/1/08     Petition for review by Cal Supreme Ct. DENIED 1/14/09HOMESTEADS:
1. The assignees of a judgment properly established their rights as assignees by filing with the clerk of the court an acknowledgement of assignment of judgment.
2. The subject property was not subject to a homestead exemption because the debtor transferred the property to a corporation of which he was the sole shareholder. The homestead exemption only applies to the interest of a natural person in a dwelling.
3. The debtor could not claim that he was only temporarily absent from a dwelling in order to establish it as his homestead where he leased it for two years. This is true even though the debtor retained the right to occupy a single car section of the garage and the attic.
In re Marriage of Holtemann     Docket     Sup.Ct. Docket
162 Cal.App.4th 1175 – 2nd Dist. (B203089)  9/15/08     Petition for review by Cal Supreme Ct. DENIED 12/10/08COMMUNITY PROPERTY: Transmutation of separate property to community property requires language which expressly states that the characterization or ownership of the property is being changed. Here, an effective transmutation occurred because the transmutation agreement clearly specified that a transmutation was occurring and was not negated by arguably confusing language in a trust regarding the parties’ rights to terminate the trust. The court also stated that it was not aware of any authority for the proposition that a transmutation can be conditional or temporary. However, while questioning whether a transmutation can be conditional or temporary, the court did not specifically make that holding because the language used by the parties was not conditional.
Mission Shores Association v. Pheil     Docket
166 Cal.App.4th 789 – 4th Dist., Div. 2 (E043932)  9/5/08     Case complete 11/7/08CC&R’s: Civil Code Section 1356 allows a court to reduce a super-majority voting requirement to amend CC&R’s where the court finds that the amendment is reasonable. Here the court reduced the 2/3 majority requirement to a simple majority for an amendment to limit rentals of homes to 30 days or more.
Zanelli v. McGrath     Docket
166 Cal.App.4th 615 – 1st Dist. (A117111)  9/2/08     Case complete 11/4/08EASEMENTS:
1. The doctrine of merger codified in Civil Code Sections 805 and 811 applies when “the right to the servitude,” and “the right to the servient tenement” are not vested in a single individual, but in the same persons;2. The doctrine of merger applies regardless of whether the owners held title as joint tenants or tenants in common. Also, the fact that one owner held his interest in one of the properties as trustee for his inter vivos revocable trust does not preclude merger because California law recognizes that when property is held in this type of trust the settlor has the equivalent of full ownership of the property. (If he had held title only in a representative capacity as a trustee for other beneficiaries under the terms of an irrevocable trust, then his ownership might not result in extinguishment by merger because he would only hold the legal title for the benefit of others.) The court cites Galdjie v. Darwish (2003) 113 Cal.App.4th 1331, stating that a revocable inter vivos trust is recognized as simply a probate avoidance device, but does not prevent creditors of the settlers from reaching trust property.

(3) After being extinguished by merger, an easement is not revived upon severance of the formerly dominant and servient parcels unless it is validly created once again.
Ritter & Ritter v. The Churchill Condominium Assn.     Docket
166 Cal.App.4th 103 – 2nd Dist. (B187840) 7/22/08  (pub. order 8/21/08)     Case complete 10/21/08HOMEOWNERS’ ASSOCIATIONS: A member of a condominium homeowners’ association can recover damages from the association which result from a dangerous condition negligently maintained by the association in the common area. However, the court found in favor of the individual directors because a greater degree of fault is necessary to hold unpaid individual board members liable, and such greater degree of fault was not present here.
Kempton v. City of Los Angeles     Docket     Sup.Ct. Docket
165 Cal.App.4th 1344 – 2nd Dist. (B201128) 8/13/08     Request for Depublication by Cal Supreme Ct. DENIED 11/12/08NUISANCE: A private individual may bring an action against a municipality to abate a public nuisance when the individual suffers harm that is specially injurious to himself, or where the nuisance is a public nuisance per se, such as blocking a public sidewalk or road. The court held that plaintiff’s assertions that neighbors’ fences were erected upon city property, prevent access to plaintiff’s sidewalk area, and block the sightlines upon entering and exiting their garage were sufficient to support both a public nuisance per se and specific injury.
Claudino v. Pereira     Docket     Sup.Ct. Docket
165 Cal.App.4th 1282 – 3rd Dist. (C054808) 8/12/08     Petition for review by Cal Supreme Ct. DENIED 11/12//08SURVEYS: Determining the location of a boundary line shown on a plat recorded pursuant to the 1867 Townsite Acts requires an examination of both the plat and the surveyor’s field notes. Here, the plat showed the boundary as a straight line, but the court held that the boundary followed the center line of a gulch because the field notes stated that the boundary was “down said gulch”.
Zack’s, Inc. v. City of Sausalito     Docket
165 Cal.App.4th 1163 – 1st Dist. (A118244) 8/11/08     Case complete 10/14/08TIDELANDS / PUBLIC STREETS: A statute authorizing the City’s lease of tidelands does not supersede other state laws establishing procedures for the abandonment of public streets. Because the City failed to follow the normal procedure for abandonment of the portion of the street upon which it granted a lease, the leasehold was not authorized and can therefore be deemed a nuisance.
Gehr v. Baker Hughes Oil Field Operations     Docket     Sup.Ct. Docket
165 Cal.App.4th 660 – 2nd Dist. (B201195) 7/30/08     Petition for review by Cal Supreme Ct. DENIED 10/16/08NUISANCE: Plaintiff purchased from Defendant real property that was contaminated, and Defendant had begun the remediation process. The 3-year statute of limitations for suing under a permanent nuisance theory had expired. So Plaintiff sued for nuisance damages under a continuing nuisance theory, seeking interest rate differential damages based on the difference in the interest rate between an existing loan and a loan that plaintiff could have obtained if not for the contamination.The court held that plaintiff’s claim for interest rate differential damages is actually a claim for diminution in value, which may not be recovered under a continuing nuisance theory. Damages for diminution in value may only be recovered for permanent, not continuing, nuisances. When suing for a continuing nuisance, future or prospective damages are not allowed, such as damages for diminution in the value of the subject property. A nuisance can only be considered “continuing” if it can be abated, and therefore a plaintiff suing under this theory may only recover the costs of abating the nuisance.

If the nuisance has inflicted a permanent injury on the land, the plaintiff generally must bring a single lawsuit for all past, present, and future damages within three years of the creation of the nuisance. But if the nuisance is one which may be discontinued at any time, it is considered continuing in character and persons harmed by it may bring successive actions for damages until the nuisance is abated. Recovery is limited, however, to actual injury suffered prior to commencement of each action.
Witt Home Ranch v. County of Sonoma     Docket     Sup.Ct. Docket
165 Cal.App.4th 543 – 1st Dist. (A118911) 7/29/08     Petition for review by Cal Supreme Ct. DENIED 5/28/08SUBDIVISION MAP ACT: This case contains a good history of California’s Subdivision Map Act statutes. The court held that the laws governing subdivision maps in 1915 did not regulate the “design and improvement of subdivisions,” as required by the grandfather clause of Government Code Section 66499.30. The subdivision map in this case was recorded in 1915 and no lots were subsequently conveyed, so the map does not create a valid subdivision.
T.O. IX v. Superior Court     Docket     Sup.Ct. Docket
165 Cal.App.4th 140 – 2nd Dist. (B203794) 7/24/08     Petition for review by Cal Supreme Ct. DENIED 9/10/08MECHANIC’S LIENS: A mechanic’s lien claimant recorded a mechanic’s lien against each of the nine parcels in a project, each lien for the full amount due under the contract. The court held that defendant could record a single release bond under Civil Code Section 3143 to release all of the liens.
Kassir v. Zahabi     Docket
164 Cal.App.4th 1352 – 4th Dist., Div. 3 (G038449) 3/5/08 (Pub. Order 4/3/08, Received 7/16/08)     Case complete 5/9/08SPECIFIC PERFORMANCE: The trial court ordered Defendant to specifically perform his contract to sell real property to Plaintiff, and further issued a judgment ordering Defendant to pay Plaintiff for rents accruing during the time Defendant was able to perform the agreement but refused to do so. The court held that because the property was overencumbered, Defendant would have received nothing under the agreement and no offset was required.The court explained that because execution of the judgment in a specific performance action will occur later than the date of performance provided by the contract, financial adjustments must be made to relate their performance back to the contract date, namely: 1) when a buyer is deprived of possession of the property pending resolution of the dispute and the seller receives rents and profits, the buyer is entitled to a credit against the purchase price for the rents and profits from the time the property should have been conveyed to him, 2) a seller also must be treated as if he had performed in a timely fashion and is entitled to receive the value of his lost use of the purchase money during the period performance was delayed, 3) if any part of the purchase price has been set aside by the buyer with notice to the seller, the seller may not receive credit for his lost use of those funds and 4) any award to the seller representing the value of his lost use of the purchase money cannot exceed the rents and profits awarded to the buyer, for otherwise the breaching seller would profit from his wrong.
Grant v. Ratliff     Docket     Sup.Ct. Docket
164 Cal.App.4th 1304 – 2nd Dist. (B194368) 7/16/08     Request for depublication by Cal Supreme Ct. DENIED 10/1/08PRESCRIPTIVE EASEMENTS: The plaintiff/owner of Parcel A sought to establish a prescriptive easement to a road over Parcel B. In order to establish the requisite 5-year period of open and notorious possession, the plaintiff needed to include the time that the son of the owner of Parcel B spent living in a mobile home on Parcel A. The court held that the son’s use of Parcel A was not adverse but was instead a matter of “family accommodation” and, therefore, a prescriptive easement was not established. The court also discussed: 1) a party seeking to establish a prescriptive easement has the burden of proof by clear and convincing evidence and 2) once the owner of the dominant tenement shows that use of an easement has been continuous over a long period of time, the burden shifts to the owner of the servient tenement to show that the use was permissive, but the servient tenement owner’s burden is a burden of producing evidence, and not a burden of proof.
SBAM Partners v. Wang     Docket
164 Cal.App.4th 903 – 2nd Dist. (B204191) 7/9/08     Case complete 9/10/08HOMESTEADS: Under C.C.P. Section 704.710, a homestead exemption is not allowed on property acquired by the debtor after the judgment has been recorded unless it was purchased with exempt proceeds from the sale, damage or destruction of a homestead within the six-month safe harbor period.
Christian v. Flora     Docket
164 Cal.App.4th 539 – 3rd Dist. (C054523) 6/30/08     Case complete 9/2/08EASEMENTS: Where parcels in a subdivision are resubdivided by a subsequent parcel map, the new parcel map amends the provisions of any previously recorded parcel map made in compliance with the Map Act. Here, although the deeds to plaintiffs referred to the original parcel map, since the intent of the parties was that the easement shown on the amended parcel map would be conveyed, the grantees acquired title to the easement shown on the amended map.
Lange v. Schilling     Docket
163 Cal.App.4th 1412 – 3rd Dist. (C055471) 5/28/08; pub. order 6/16/08     Case Complete 8/18/08REAL ESTATE AGENTS: The clear language of the standard California real estate purchase agreement precludes an award of attorney’s fees if a party does not attempt mediation before commencing litigation. Because plaintiff filed his lawsuit before offering mediation, there was no basis to award attorney’s fees.
Talbott v. Hustwit     Docket     Sup.Ct. Docket
164 Cal.App.4th 148 – 4th Dist., Div. 3 (G037424) 6/20/08     Petition for review and depublication DENIED by Cal Supreme Ct. 9/24/08GUARANTEES:
1. C.C.P. 580a, which requires an appraisal of the real property security before the court may issue a deficiency judgment, does not apply to an action against a guarantor.
2. A lender cannot recover under a guaranty where there the debtor and guarantor already have identical liability, such as with general partners or trustees of a revocable trust in which the debtor is the settlor, trustee and primary beneficiary. Here, however, a  guarantee signed by the trustees of the debtors’ trust is enforceable as a “true guarantee” because, although the debtors were the settlors, they were a) secondary, not primary, beneficiaries and b) were not the trustees.
Mayer v. L & B Real Estate     Sup.Ct. Docket
43 Cal.4th 1231 – Cal. Supreme Court (S142211) 6/16/08TAX SALES: The one-year statute of limitations for attacking a tax sale does not begin to run against a property owner who is in “undisturbed possession” of the subject property until that owner has actual notice of the tax sale. Ordinarily, a property owner who has failed to pay property taxes has sufficient knowledge to put him on notice that a tax sale might result. However, in this case the property owners did not have notice because they purchased a single piece of commercial property and received a single yearly tax bill. They had no reason to suspect that due to errors committed by the tax assessor, a small portion of their property was being assessed separately and the tax bills were being sent to a previous owner.NOTE: This creates a hazard for title companies insuring after a tax sale in reliance on the one-year statute of limitations in Revenue and Taxation Code Section 3725.
California Golf v. Cooper     Docket     Sup.Ct. Docket
163 Cal.App.4th 1053 – 2nd Dist. (B195211) 6/9/08     Petition for review by Cal Supreme Ct. DENIED 9/17/08TRUSTEE’S SALES:
1. A bidder at a trustee’s sale may not challenge the sale on the basis that the lender previously obtained a decree of judicial foreclosure because the doctrine of election of remedies benefits only the trustor or debtor.
2. A lender’s remedies against a bidder who causes a bank to stop payment on cashier’s checks based on a false affidavit asserting that the checks were lost is not limited to the remedies set forth in CC Section 2924h, and may pursue a cause of  action for fraud against the bidder.
(The case contains a good discussion (at pp. 25 – 26) of the procedure for stopping payment on a cashier’s check by submitting an affidavit to the issuing bank.)
Biagini v. Beckham     Docket
163 Cal.App.4th 1000 – 3rd Dist. (C054915) 6/9/08     Case complete 8/11/08DEDICATION:
1. Acceptance of a dedication may be actual or implied. It is actual when formal acceptance is made by the proper authorities, and implied when a use has been made of the property by the public 1) of an  intensity that is reasonable for the nature of the road and 2) for such a length of time as will evidence an intention to accept the dedication. BUT the use in this case was not sufficient because the use was by neighbors whose use did not exceed what was permitted pursuant to a private easement over the same area.
2. A statutory offer of dedication can be revoked as to the public at large by use of the area that is inconsistent with the dedication, but the offer remains open for formal acceptance by the public entity to which the offer was made.
Steiner v. Thexton     Docket     Sup.Ct. Docket
Cal.App. 3rd Dist. (C054605) 5/28/08     REVERSED by Cal. Supreme Ct.OPTIONS: A contract to sell real property where the buyer’s performance was entirely conditioned on the buyer obtaining regulatory approval to subdivide the property is an option. An option must be supported by consideration, but was not here, where the buyer could back out at any time. Buyer’s promise to deliver to seller copies “of all information, reports, tests, studies and other documentation” was not sufficient consideration to support the option.
In re Marriage Cases     Docket
43 Cal.4th 757 – Cal. Supreme Court (S147999) 5/15/08MARRIAGE: The language of Family Code Section 300 limiting the designation of marriage to a union “between a man and a woman” is unconstitutional and must be stricken from the statute, and the remaining statutory language must be understood as making the designation of marriage available both to opposite-sex and same-sex couples.
Harvey v. The Landing Homeowners Association     Docket
162 Cal.App.4th 809 – 4th Dist., Div. 1 (D050263) 4/4/08 (Cert. for Pub. 4/30/08)     Case complete 6/30/08HOMEOWNERS ASSOCIATIONS: The Board of Directors of an HOA has the authority to allow owners to exclusively use common area accessible only to those owners where the following provision of the CC&R’s applied: “The Board shall have the right to allow an Owner to exclusively use portions of the otherwise nonexclusive Common Area, provided that such portions . . . are nominal in area and adjacent to the Owner’s Exclusive Use Area(s) or Living Unit, and, provided further, that such use does not unreasonably interfere with any other Owner’s use . . .” Also, this is allowed under Civil Code Section 1363.07(a)(3)(E).
Salma v. Capon     Docket
161 Cal.App.4th 1275 – 1st Dist. (A115057) 4/9/08     Case complete 6/11/08HOME EQUITY SALES: A seller claimed he sold his house for far less than it was worth “due to the duress of an impending trustee’s sale and the deceit of the purchasers”. The case involves procedural issues that are not relevant to this web site. However, it is included here because it demonstrates the kind of mess that can occur when you are dealing with property that is in foreclosure. Be careful, folks.
Aviel v. Ng     Docket
161 Cal.App.4th 809 – 1st Dist. (A114930) 2/28/08; pub. order 4/1/08     Case complete 5/6/08LEASES / SUBORDINATION: A lease provision subordinating the lease to “mortgages” also applied to deeds of trust because the two instruments are functionally and legally the same. Therefore a foreclosure of a deed of trust wiped out the lease.
People v. Martinez     Docket
161 Cal.App.4th 754 – 4th Dist., Div. 2 (E042427) 4/1/08     Case complete 6/2/08FORGERY: This criminal case involves a conviction for forgery of a deed of trust. [NOTE: The crime of forgery can occur even if the owner actually signed the deed of trust. The court pointed out that “forgery is committed when a defendant, by fraud or trickery, causes another to execute a document where the signer is unaware, by reason of such trickery, that he is executing a document of that nature.”
Pacific Hills Homeowners Association v. Prun     Docket
160 Cal.App.4th 1557 – 4th Dist., Div. 3 (G038244) 3/20/08     Case complete 5/27/08CC&R’s: Defendants built a gate and fence within the setback required by the CC&R’s. 1) The court held that the 5-year statute of limitations of C.C.P. 336(b) applies to unrecorded as well as recorded restrictions, so that the shorter 4-year statute of limitations of C.C.P. 337 is inapplicable. 2) The court upheld the trial court’s equitable remedy of requiring the HOA to pay 2/3 of the cost of relocation defendant’s gate based upon the HOA’s sloppiness in not pursuing its case more promptly.
Nicoll v. Rudnick     Docket
160 Cal.App.4th 550 – 5th Dist. (F052948) 2/27/08     Case complete 4/28/08WATER RIGHTS: An appropriative water right established in a 1902 judgment applied to the entire 300 acre parcel so that when part of the parcel was foreclosed and subsequently re-sold, the water rights must be apportioned according to the acreage of each parcel, not according to the prior actual water usage attributable to each parcel. NOTE: This case contains a good explanation of California water rights law.
Real Estate Analytics v. Vallas     Docket
160 Cal.App.4th 463 – 4th Dist., Div. 1 (D049161) 2/26/08     Case complete 5/29/08SPECIFIC PERFORMANCE: Specific performance is appropriate even where the buyer’s sole purpose and entire intent in buying the property was to earn money for its investors and turn a profit as quickly as possible. The fact that plaintiff was motivated solely to make a profit from the purchase of the property does not overcome the strong statutory presumption that all land is unique and therefore damages were inadequate to make plaintiff whole for the defendant’s breach.
Fourth La Costa Condominium Owners Assn. v. Seith     Docket
159 Cal.App.4th 563 – 4th Dist., Div. 1 (D049276) 1/30/08     Case complete 4/1/08CC&R’s/HOMEOWNER’S ASSOCIATIONS: The court applied CC 1356(c)(2) and Corp. Code 7515, which allow a court to reduce the supermajority vote requirement for amending CC&R’s and bylaw because the amendments were reasonable and the balloting requirements of the statutes were met.
02 Development, LLC v. 607 South Park, LLC     Docket
159 Cal.App.4th 609 – 2nd Dist. (B200226) 1/30/08     Case complete 4/3/08SPECIFIC PERFORMANCE: 1) An assignment of a purchaser’s rights under a purchase agreement prior to creation of the assignee as an LLC is valid because an organization can enforce pre-organization contracts if the organization adopts or ratifies them. 2) A purchaser does not need to prove that it already had the necessary funds, or already had binding commitments from third parties to provide the funds, when the other party anticipatorily repudiates the contract. All that plaintiff needed to prove was that it would have been able to obtain the necessary funding (or funding commitments) in order to close the transaction on time.
Richeson v. Helal     Docket     Sup.Ct. Docket
158 Cal.App.4th 268 – 2nd Dist. (B187273) 11/29/07; Pub. & mod. order 12/21/07 (see end of opinion)     Petition for review by Cal Supreme Ct. DENIED 2/20/08CC&R’s / MUNICIPALITIES: An Agreement Imposing Restrictions (“AIR”) and CC&R’s did not properly lend themselves to an interpretation that would prohibit the City from changing the permitted use or zoning and, were they so construed, the AIR and CC&R’s would be invalid as an attempt by the City to surrender its future right to exercise its police power respecting the property. Here, the AIR and CC&R’s did not prohibit the City from issuing a new conditional use permit allowing the continued use of the subject property as a neighborhood market.
Bill Signs Trucking v. Signs Family Ltd. Partnership     Docket     Sup.Ct. Docket
157 Cal.App.4th 1515 – 4th Dist., Div. 1 (D047861) 12/18/07     Petition for review by Cal Supreme Ct. DENIED 4/9/08LEASES / RIGHT OF FIRST REFUSAL: A tenant’s right of first refusal under a commercial lease is not triggered by the conveyance of an interest in the property between co-partners in a family limited partnership that owns the property and is the landlord.
Schweitzer v. Westminster Investments     Docket     Sup.Ct. Docket
157 Cal.App.4th 1195 – 4th Dist., Div. 1 (D049589) 12/13/07     Petition for review by Cal Supreme Ct. DENIED 3/26/08EQUITY PURCHASERS:
1) The bonding requirement of the Home Equity Sales Contracts Act (Civil Code Section 1695.17) is void for vagueness under the due process clause and may not be enforced. Section 1695.17 is vague because it provides no guidance on the amount, the obligee, the beneficiaries, the terms or conditions of the bond, the delivery and acceptance requirements, or the enforcement mechanisms of the required bond.
2) Although the bond requirement may not be enforced, the remainder of the statutory scheme remains valid because the bond provisions are severable from the balance of the enactment.
3) The court refused to set aside the deed in favor of the equity purchaser because, first, the notice requirements of Civil Code Section 1695.5 appear to have been met and, second, the seller’s right to rescind applies before the deed is recorded but the statute “does not specify that a violation of section 1695.5 provides grounds for rescinding a transaction after recordation of the deed”.
Crestmar Owners Association v. Stapakis     Docket
157 Cal.App.4th 1223 – 2nd Dist. (B191049) 12/13/07     Case complete 2/15/07CC&R’s: Where a developer failed to convey title to two parking spaces as required by the CC&R’s, the homeowner’s association was able to quiet title even though more than 20 years had passed since the parking spaces should have been conveyed. The statute of limitations does not run against someone, such as the homeowner’s association here, who is in exclusive and undisputed possession of the property.
Washington Mutual Bank v. Blechman     Docket     Sup.Ct. Docket
157 Cal.App.4th 662 – 2nd Dist. (B191125) 12/4/07     Petition for review by Cal Supreme Ct. DENIED 3/19/08TRUSTEE’S SALES: The foreclosing lender and trustee are indispensable parties to a lawsuit which seeks to set aside a trustee’s sale. Therefore, a default judgment against only the purchaser at the trustee’s sale is subject to collateral attack.
Garretson v. Post     Docket     Sup.Ct. Docket
156 Cal.App.4th 1508 – 4th Dist., Div.2 (E041858) 11/20/07     Petition for review by Cal Supreme Ct. DENIED 2/27/08TRUSTEE’S SALES: A cause of action for wrongful foreclosure does not fall within the protection of Code of Civil Procedure section 425.16, commonly referred to as the anti-SLAPP statute (strategic lawsuit against public participation).
Murphy v. Burch     Docket     Sup.Ct. Docket
Cal.App. 1st Dist. (A117051) 11/19/07
AFFIRMED by Cal Supreme Ct. 4/27/09EASEMENT BY NECESSITY: An easement by necessity arises by operation of law when 1) there is a strict necessity as when a property is landlocked and 2) the dominant and servient tenements were under the same ownership at the time of the conveyance giving rise to the necessity. However, the second requirement is not met when the properties were owned by the federal government because the Government has the power of eminent domain, rendering it unnecessary to resort to the easement by necessity doctrine in order to acquire easements.The court attempts to distinguish Kellogg v. Garcia, 102 Cal.App.4th 796, by pointing out that in that case the issue of eminent domain did not arise because the dominant tenement was owned by a private party and the servient tenements by the federal government. [Ed. Note: the court does not adequately address the fact that the government does not always have the power of eminent domain. It only has that power if a public purpose is involved. Also, I do not think the court adequately distinguishes Kellogg, which seems to hold that common ownership by the federal government satisfies the requirement of common ownership.]
Elias Real Estate v. Tseng     Docket     Sup.Ct. Docket
156 Cal.App.4th 425 – 2nd Dist. (B192857) 10/25/07     Petition for review by Cal Supreme Ct. DENIED 2/13/08SPECIFIC PERFORMANCE: Acts of a partner falling within Corp. Code 16301(1) (acts in ordinary course of business) are not subject to the statute of frauds. Acts of a partner falling within Corp. Code 16301(2) (acts not in the ordinary course of business) are subject to the statute of frauds. In this case, a sale of the partnership’s real property was not in the ordinary course of business, so it fell within Corp. Code 16301(2) and plaintiff could not enforce a contract of sale signed by only one partner.
Strong v. State Board of Equalization     Docket     Sup.Ct. Docket
155 Cal.App.4th 1182 – 3rd Dist. (C052818) 10/2/07     Petition for review by Cal Supreme Ct. DENIED 1/3/08CHANGE OF OWNERSHIP: The statute that excludes transfers between domestic partners from property tax reassessment is constitutional.
County of Solano v. Handlery     Docket     Sup.Ct. Docket
155 Cal.App.4th 566 – 1st Dist. (A114120) 9/21/07     Petition for review by Cal Supreme Ct. DENIED 12/12/07DEEDS: The County brought an action against grantors’ heirs to invalidate restrictions in a deed limiting the subject property to use as a county fair or similar public purposes. The court refused to apply the Marketable Record Title Act to eliminate the power of termination in favor of the grantors because the restrictions are enforceable under the public trust doctrine.
Baccouche v. Blankenship     Docket
154 Cal.App.4th 1551 – 2nd Dist (B192291) 9/11/07     Case complete 11/16/07EASEMENTS: An easement that permits a use that is prohibited by a zoning ordinance is not void. It is a valid easement, but cannot be enforced unless the dominant owner obtains a variance. As is true with virtually all land use, whether a grantee can actually use the property for the purposes stated in the easement is subject to compliance with any applicable laws and ordinances, including zoning restrictions.
WRI Opportunity Loans II LLC v. Cooper     Docket
154 Cal.App.4th 525 – 2nd Dist. (B191590) 8/23/07     Case complete 10/26/07USURY: The trial court improperly granted a motion for summary judgment on the basis that the loan was exempt from the usury law.1. The common law exception to the usury law known as the “interest contingency rule” provides that interest that exceeds the legal maximum is not usurious when its payment is subject to a contingency so that the lender’s profit is wholly or partially put in hazard. The hazard in question must be something over and above the risk which exists with all loans – that the borrower will be unable to pay.
2. The court held that the interest contingency rule did not apply to additional interest based on a percentage of the sale price of completed condominium units because the lender was guaranteed additional interest regardless of whether the project generated rents or profits.
3. The loan did not qualify as a shared appreciation loan, permitted under Civil Code Sections 1917-1917.006, because the note guaranteed the additional interest regardless of whether the property appreciated in value or whether the project generated profits.
4. The usury defense may not be waived by guarantor of a loan. (No other published case has addressed this issue.)
Archdale v. American International Specialty Lines Ins. Co.     Docket
154 Cal.App.4th 449 – 2nd Dist. (B188432) 8/22/07     Case complete 10/26/07INSURANCE: The case contains good discussions of 1) an insurer’s liability for a judgment in excess of policy limits where it fails to accept a reasonable settlement offer within policy limits and 2) the applicable statutes of limitation.
REVERSED by Cal. Supreme Court 12/22/08
Patel v. Liebermensch     Docket     Sup.Ct. Docket
154 Cal.App.4th 373 – 4th, Div. 1 (D048582) 8/21/07REVERSED: SPECIFIC PERFORMANCE: Specific performance of an option was denied where the parties never reached agreement on the amount of  the deposit, the length of time of the escrow or payment of escrow expenses if there were a delay. One judge dissented on the basis that the option contract was sufficiently clear to be specifically enforced and the court should insert reasonable terms in place of the uncertain terms.
In Re Marriage of Ruelas     Docket
154 Cal.App.4th 339 – 2nd Dist. (B191655) 8/20/07     Case complete 10/26/07RESULTING TRUST: A resulting trust was created where a daughter acquired property in her own name and the evidence showed that she was acquiring the property for her parents who had poor credit.
Stoneridge Parkway Partners v. MW Housing Partners     Docket     Sup.Ct. Docket
153 Cal.App.4th 1373 – 3rd Dist. (C052082) 8/3/07     Petition for review by Cal Supreme Ct. DENIED 11/14/07USURY: The exemption to the usury law for loans made or arranged by real estate brokers applies to a loan in which the broker who negotiated the loan was an employee of an affiliate of the lender, but nevertheless acted as a third party intermediary in negotiating the loan.
Kinney v. Overton     Docket     Sup.Ct. Docket
153 Cal.App.4th 482 – 4th Dist., Div. 3 (G037146) 7/18/07     Petition for review by Cal Supreme Ct. DENIED 10/10/07EASEMENTS: Former Civil Code Section 812 provided that

“[t]he vacation . . . of streets and highways shall extinguish all private easements therein claimed by reason of the purchase of any lot by reference to a map or plat upon which such streets or highways are shown, other than a private easement necessary for the purpose of ingress and egress to any such lot from or to a public street or highway, except as to any person claiming such easement who, within two years from the effective date of such vacation or abandonment . . . shall have recorded in the office of the recorder of the county in which such vacated or abandoned streets or highways are located a verified notice of his claim to such easement . . .” [Emphasis added.]

The court held that cross-complainant could not maintain an action against the person occupying the disputed abandoned parcel because it was not necessary for access and he did not record the notice required by C.C. Section 812. The court specifically did not address the state of title to the disputed parcel or what interest, if any, cross-defendant may have in the parcel.
Hartzheim v. Valley Land & Cattle Company     Docket     Sup.Ct. Docket
153 Cal.App.4th 383 – 6th Dist. (H030053) 7/17/07     Petition for review by Cal Supreme Ct. DENIED 10/10/07LEASES / RIGHT OF FIRST REFUSAL: A right of first refusal in a lease was not triggered by a partnership’s conveyance of property to the children and grandchildren of its partners for tax and estate planning purposes because it did not constitute a bona fide offer from any third party. The court considered three factors: 1) the contract terms must be reviewed closely to determine the conditions necessary to invoke the right, 2) where a right of first refusal is conditioned upon receipt of a bona fide third party offer to purchase the property, the right is not triggered by the mere conveyance of that property to a third party and 3) the formalities of the transaction must be reviewed to determine its true nature.
Berryman v. Merit Property Mgmt.     Docket     Sup.Ct. Docket
152 Cal.App.4th 1544 – 4th Dist., Div. 3 (G037156) 5/31/07     Petition for review by Cal Supreme DENIED 10/10/07HOMEOWNER’S ASSOCIATIONS: Fees charged by a homeowner’s association upon a transfer of title by a homeowner are limited by Civil Code Section 1368 to the association’s actual costs. The court held that this limitation does not apply to fees charged by a management company hired by the association.
Cal-Western Reconveyance Corp. v. Reed     Docket
152 Cal.App.4th 1308 – 2nd Dist. (B193014) 6/29/07     Case complete 8/29/07TRUSTEE’S SALES: After a trustee’s sale, the trustee deposited the surplus proceeds into court under CC 2924j in order to determine who was entitled to the excess proceeds. The court held that:
(1) The distribution of surplus proceeds to satisfy child and spousal support arrearages was proper because the County had properly recorded an abstract of support judgment,
(2) The trial court erred in distributing proceeds to the debtor’s former wife to satisfy her claims for a community property equalization payment and for attorney fees ordered in the dissolution proceeding, because no recorded lien or encumbrance secured those claims, which in any event were discharged in the debtor’s bankruptcy proceeding (because child and spousal support obligations are not dischargeable, but property settlement payments are dischargeable), and
(3) The trial court erred in distributing proceeds to the debtor’s former lawyer, who was retained to assist the debtor in the collection of proceeds from the trustee’s sale, because an attorney’s lien on the prospective recovery of a client must be enforced in a separate action.
(4) The debtor failed to produce sufficient evidence to support his claim that he was entitled to the $150,000 homestead exemption applicable when a debtor is physically disabled and unable to engage in substantial gainful employment (so he was entitled to only the standard $50,000 homestead exemption).
Poseidon Development v. Woodland Lane Estates     Order Modifying Opinion     Docket
152 Cal.App.4th 1106 – 3rd Dist. (C052573) 6/28/07     Case complete 8/31/07PROMISSORY NOTES: A penalty that applied to late payments of installments did not apply to a late payment of the final balloon payment of principal. The penalty was 10% of the amount due, which made sense for regular installments, but bore no reasonable relationship to actual damages if applied to the balloon payment.
Carr v. Kamins     Docket
151 Cal.App.4th 929 – 2nd Dist. (B191247) 5/31/07     Case complete 8/1/07QUIET TITLE: A quiet title judgment was set aside by defendant’s heir four years after being entered because the heir was not named and served. The plaintiff believed the defendant to be deceased, but made no effort to locate and serve the defendant’s heirs. [Even though this case contains some unique facts, the fact that a default judgment can be set aside four years after being entered demonstrates the danger of relying on default judgments and the need to closely examine the court file and surrounding circumstances before doing so.]
Estate of Yool     Docket
151 Cal.App.4th 867 – 1st Dist. (A114787) 5/31/07     Case complete 7/31/07RESULTING TRUST: A decedent held title with her daughter for the purpose of facilitating financing and did not intend to acquire beneficial title. A probate court properly ordered the Special Administrator to convey title to the daughter based on the Resulting Trust Doctrine. It held that the four-year statute of limitations under C.C.P. 343 applied and not C.C.P. 366.2, which limits actions to collect on debts of the decedent to one year after the date of death.
Kalway v. City of Berkeley     Docket
151 Cal.App.4th 827 – 1st Dist. (A112569) 5/31/07     Case complete 8/1/07SUBDIVISION MAP ACT: Plaintiff husband transferred title of a parcel to his wife in order to avoid merger under the Subdivision Map Act of a substandard parcel into their adjoining lot. The court held that plaintiffs could not evade the Map Act in this manner. It also held that the City had no authority to obtain an order canceling the deed, but that the wife also had no right to further transfer title to the substandard lot except back to her husband.
Delgado v. Interinsurance Exchange of the Auto Club of So. Cal.     Docket     Sup.Ct. Docket
Cal.App. 2nd Dist. (B191272) 6/25/07
REVERSED BY CALIFORNIA SUPREME COURTBAD FAITH: An insurance company acted in bad faith as a matter of law where a potential for coverage was apparent from the face of the complaint. The insured allegedly assaulted plaintiff and there was a potential for coverage because the insured may have acted in self defense. The case contains a thorough analysis of the duties of defense and indemnity.
Blackmore v. Powell     Docket     Sup.Ct. Docket
150 Cal.App.4th 1593 – 2nd Dist. (B185326) 5/22/07     Request for depublication DENIED 8/29/07EASEMENTS: An easement “for parking and garage purposes” includes the exclusive right to build and use a garage. Granting an exclusive easement may constitute a violation under the Subdivision Map act, but here there is no violation because the exclusive use of the garage covers only a small portion of the easement and is restricted to the uses described in the easement deed.
Amalgamated Bank v. Superior Court     Docket     Sup.Ct. Docket
149 Cal.App.4th 1003 – 3rd Dist. (C052156, C052395) 4/16/07     Petition for review by Cal Supreme Ct. DENIED 8/8/07LIS PENDENS:
1. In deciding a writ petition from an order granting or denying a motion to expunge a lis pendens after judgment and pending appeal, an appellate court must assess whether the underlying real property claim has “probable validity”. This is the same test that is used before judgment. “Probable validity” post-judgment means that it is more likely than not the real property claim will prevail at the end of the appellate process.
2. A judicial foreclosure sale to a third party is absolute, subject only to the right of redemption, and may not be set aside, except that under C.C.P. Section 701.680(c)(1) the judgment debtor may commence an action to set aside the sale within 90 days only if the purchaser at the sale was the judgment creditor. Here, a potential bidder who was stuck in traffic and arrived too late to the sale could not set it aside because only the judgment debtor can do that and because a third party purchased at the sale.
L&B Real Estate v. Housing Authority of Los Angeles     Docket
149 Cal.App.4th 950 – 2nd Dist. (B189740) 4/13/07     Case complete 6/13/07TAX DEEDS: Because public property is exempt from taxation, tax deeds purporting to convey such property for nonpayment of taxes are void. Two parcels were inadvertently not included in a deed to the State (subsequently conveyed to the Housing Authority of Los Angeles). Accordingly, the tax collector thought that those parcels were still owned by the seller and sold them at a tax sale after real estate taxes were not paid on them. The court also points out that plaintiff was not a good faith purchaser because it had constructive and actual knowledge of the fact that the Housing Authority’s low income housing was partially located on the two parcels sold at the tax sale.
Ulloa v. McMillin Real Estate     Docket
149 Cal.App.4th 333 – 4th Dist., Div. 1 (D048066) 3/7/07 (Cert. for pub. 4/4/07)     Case complete 6/4/07STATUTE OF FRAUDS: The Statute of Frauds requires the authority of an agent who signs a sales agreement to be in writing if the agent signs on behalf of the party to be charged. However, a plaintiff purchaser whose agent signed her name with only verbal authorization is not precluded by the Statute of Frauds from bringing the action because the defendant is the party to be charged.
Jordan v. Allstate Insurance Company     Docket     Sup.Ct. Docket
148 Cal.App.4th 1062 – 2nd Dist. (B187706) 3/22/07      Petition for review and depublication DENIED 6/27/07BAD FAITH: Where there is a genuine issue as to the insurer’s liability under the policy, there can be no bad faith liability imposed on the insurer for advancing its side of that dispute. However, there can be bad faith liability where an insurer denies coverage but a reasonable investigation would have disclosed facts showing the claim was covered under other provisions of the policy. The court clarified that an insurer’s failure to investigate can result in bad faith liability only if there is coverage. If there is no coverage, then any failure to properly investigate cannot cause the insured any damage.
Shah v. McMcMahon     Docket
148 Cal.App.4th 526 – 2nd Dist. (B188972) 3/12/07     Case complete 5/16/07LIS PENDENS: Plaintiffs could not appeal an order for attorney’s fees awarded in a hearing of a motion to expunge a lis pendens. The only remedy is to challenge the award by way of a petition for writ of mandate.
Sterling v. Taylor     Docket
40 Cal.4th 757 – Cal. Supreme Court (S121676) 3/1/07STATUTE OF FRAUDS: If a memorandum signed by the seller includes the essential terms of the parties’ agreement (i.e. the buyer, seller, price, property and the time and manner of payment), but the meaning of those terms is unclear, the memorandum is sufficient under the statute of frauds if extrinsic evidence clarifies the terms with reasonable certainty. Because the memorandum itself must include the essential contractual terms, extrinsic evidence cannot supply those required terms, however, it can be used to explain essential terms that were understood by the parties but would otherwise be unintelligible to others. In this case, the memorandum did not set forth the price with sufficient clarity because it was uncertain whether it was to be determined by a multiplier applied to the actual rent role or whether the price specified was the agreed price even though it was based on the parties’ incorrect estimate of the rent role.
Jet Source Charter v. Doherty     Docket
148 Cal.App.4th 1 – 4th Dist., Div. 1 (D044779) 1/30/07     (Pub. order and modification filed 2/28/07 – see end of opinion) Case complete 5/1/07PUNITIVE DAMAGES: Parts I, II, III and IV NOT certified for publication: Where the defendant’s conduct only involves economic damage to a single plaintiff who is not particularly vulnerable, an award which exceeds the compensatory damages awarded is not consistent with due process.
Dyer v. Martinez     Docket     Sup.Ct. Docket
147 Cal.App.4th 1240 – 4th Dist., Div. 3 (G037423) 2/23/07     Petition for review by Cal Supreme Ct. DENIED 6/13/07RECORDING: A lis pendens that was recorded but not indexed does not impart constructive notice, so a bona fide purchaser for value takes free of the lis pendens. The party seeking recordation must ensure that all the statutory requirements are met and the recorder is deemed to be an agent of the recording party for this purpose.
Behniwal v. Mix     Docket
147 Cal.App.4th 621 – 4th Dist., Div. 3 (G037200) 2/7/07     Case complete 4/13/07SPECIFIC PERFORMANCE: In a specific performance action, a judgment for plaintiff’s attorneys’ fees cannot be offset against the purchase price that the successful plaintiff must pay defendant for the property. A judgment for attorneys’ fees is not an incidental cost that can be included as part of the specific performance judgment, and it is not a lien that relates back to the filing of the lis pendens. Instead, it is an ordinary money judgment that does not relate back to the lis pendens. So, while plaintiff’s title will be superior to defendant’s liens that recorded subsequent to the lis pendens, those liens are nevertheless entitled to be paid to the extent of available proceeds from the full purchase price.
Castillo v. Express Escrow     Docket
146 Cal.App.4th 1301 – 2nd Dist. (B186306) 1/18/07     Case complete 3/20/07MOBILEHOME ESCROWS:
1) Health and Safety Code Section 18035(f) requires the escrow agent for a mobile home sale to hold funds in escrow upon receiving written notice of a dispute between the parties, even though the statute specifically states “unless otherwise specified in the escrow instructions” and even though the escrow instructions provided that escrow was to close unless “a written demand shall have been made upon you not to complete it”.
2) Section 18035(f) does not require the written notice of dispute to cite the code section, or to be in any particular form, or that the notice be addressed directly to the escrow holder, or that the notice contain an express request not to close escrow. The subdivision requires nothing more than that the escrow agent receive notice in writing of a dispute between the parties. So receiving a copy of the buyer’s attorney’s letter to the seller was sufficient to notify the escrow agent that a dispute existed.
Rappaport-Scott v. Interinsurance Exchange     Docket
146 Cal.App.4th 831 – 2nd Dist (B184917) 1/11/07     Case complete 3/14/07INSURANCE: An insurer’s duty to accept reasonable settlement offers within policy limits applies only to third party actions and not to settlement offers from an insured. An insurer has a duty not to unreasonable withhold payments due under a policy. But withholding benefits under a policy is not unreasonable if there is a genuine dispute between the insurer and the insured as to coverage or the amount of payment due, which is what occurred in this case.
In re: Rabin
BAP 9th Circuit 12/8/06BANKRUPTCY/HOMESTEADS: Under California law, the homestead exemption rights of registered domestic partners are identical to those of people who are married. Therefore, domestic partners are limited to a single combined exemption, in the same manner as people who are married. In the absence of a domestic partnership or marriage, each cotenant is entitled to the full homestead exemption.
Wachovia Bank v. Lifetime Industries     Docket
145 Cal.App.4th 1039 – 4th Dist., Div. 2 (E037560) 12/15/06     Case complete 2/16/07OPTIONS:
1. When the holder of an option to purchase real property exercises the option and thereby obtains title to the property, the optionee’s title relates back to the date the option was given, as long as the optionee has the right to compel specific performance of the option. But where the optionee acquires title in a transaction unconnected with the option, such as where there has been a breach of the option agreement so that the optionee did not have the right to specific performance, the optionee takes subject to intervening interests just like any other purchaser.
2. Civil Code Section 2906 provides a safe harbor for a lender to avoid the rule against “clogging” the equity of redemption as long as the option is not dependent on the borrower’s default. But even if the lender falls outside the safe harbor because the exercise of the option is dependent upon borrower’s default, it does not automatically follow that the option is void. Instead, the court will analyze the circumstances surrounding the transaction and the intent of the parties to determine whether the option is either void or a disguised mortgage. Also, even if the transaction is a disguised mortgage the optionee (now mortgagee) has a right to judicially foreclose, which will wipe out intervening interests.
Wright v. City of Morro Bay     Docket     Sup.Ct. Docket
144 Cal.App.4th 767, 145 Cal.App.4th 309a – 2nd Dist (B176929) 11/7/06     Modification of Opinion 12/6/06     Petition for review by Cal Supreme Ct. DENIED 2/21/07DEDICATION/ABANDONMENT: C.C.P. 771.010, which provides for termination of an offer of dedication if not accepted within 25 years, did not apply because 1) the statute cannot be applied retroactively to the City’s acceptance occurring more than 25 years after the offer of dedication and 2) the area covered by the dedicated road has never been used by anyone, so the requirement that the property be “used as if free of the dedication” was not met.
State Farm General Insurance Co. v. Wells Fargo Bank     Docket
143 Cal.App.4th 1098 – 1st Dist. (A111643) 10/10/06     Case complete 12/11/06The “superior equities rule” prevents an insurer, who is subrogated to the rights of the insured after paying a claim, from recovering against a party whose equities are equal or superior to those of the insurer. Thus, an insurer may not recover from an alleged tortfeasor where the tortfeasor’s alleged negligence did not directly cause the insured’s loss. The court questioned the continued vitality of the superior equities rule in California, but felt compelled to follow a 1938 Supreme Court case that applied the rule. The court suggests that the Supreme Court should re-address the issue in light of modern day fault principles.
Corona Fruits & Veggies v. Frozsun Foods     Docket     Sup.Ct. Docket
143 Cal.App.4th 319 – 2nd Dist. (B184507) 9/25/06     Petition for review by Cal Supreme Ct. DENIED 12/20/06UCC: A UCC-1 financing statement filed in the name of Armando Munoz is not effective where the debtor’s true name was Armando Munoz Juarez.
Warren v. Merrill     Docket
143 Cal.App.4th 96 – 2nd Dist. (B186698) 9/21/06     Case complete 11/21/06QUIET TITLE: The Court quieted title in plaintiff where title was taken in the real estate agent’s daughter’s name as part of a fraudulent scheme perpetrated by the agent. This is not a significant title insurance case, but I posted it for reference since it involves quiet title.
McKell v. Washington Mutual     Docket     Sup.Ct. Docket
142 Cal.App.4th 1457 – 2nd Dist. (B176377) 9/18/06     Request for depublication DENIED 1/17/07RESPA: Washington Mutual (i) charged hundreds of dollars in “underwriting fees” when the underwriting fee charged by Fannie Mae and Freddie Mac to WAMU was only $20 and (ii) marked up the charges for real estate tax verifications and wire transfer fees. The court followed Kruse v. Wells Fargo Home Mortgage (2d Cir. 2004) 383 F.3d 49, holding that marking up costs, for which no additional services are performed, is a violation of RESPA. Such a violation of federal law constitutes an unlawful business practice under California’s Unfair Competition Law (“UCL”) and a breach of contract. Plaintiffs also stated a cause of action for an unfair business practice under the UCL based on the allegation that WAMU led them to believe they were being charged the actual cost of third-party services.
Reilly v. City and County of San Francisco     Docket     Sup.Ct. Docket
142 Cal.App.4th 480 – 1st Dist. (A109062) 8/29/06     Request for depublication DENIED 12/13/06PROPERTY TAX: A change in ownership of real property held by a testamentary trust occurs when an income beneficiary of the trust dies and is succeeded by another income beneficiary. Also, for purposes of determining change in ownership, a life estate either in income from the property or in the property itself is an interest equivalent in value to the fee interest.
Markowitz v. Fidelity     Docket     Sup.Ct. Docket
142 Cal.App.4th 508 – 2nd Dist. (B179923) 5/31/06     Publication ordered by Cal. Supreme Court 8/30/06ESCROW: Civil Code Section 2941, which permits a title insurance company to record a release of a deed of trust if the lender fails to do so, does not impose an obligation on an escrow holder/title company to record the reconveyance on behalf of the trustee. Citing other authority, the Court states that an escrow holder has no general duty to police the affairs of its depositors; rather, an escrow holder’s obligations are limited to faithful compliance with the parties’ instructions, and absent clear evidence of fraud, an escrow holder’s obligations are limited to compliance with the parties’ instructions. The fact that the borrower had an interest in the loan escrow does not mean that he was a party to the escrow, or to the escrow instructions.
Cebular v. Cooper Arms Homeowners Association     Docket     Sup.Ct. Docket
142 Cal.App.4th 106 – 2nd Dist. (B182555) 8/21/06     Request for review by Cal Supreme Ct. DENIED 11/15/06; Request to publish Part III, Sec. B filed 10/24/06COVENANTS, CONDITIONS AND RESTRICTIONS: It is not unreasonable for CC&R’s to allocate dues obligations differently for each unit, along with the same allocation of voting rights, even though each unit uses the common areas equally. Although the allocation does not make much sense, courts are disinclined to question the wisdom of agreed-to restrictions.
Bernard v. Foley     Docket
39 Cal.4th 794 – Cal. Supreme Court (S136070) (8/21/06)TESTAMENTARY TRANSFERS: Under Probate Code Section 21350, “care custodians” are presumptively disqualified from receiving testamentary transfers from dependent adults to whom they provide personal care, including health services. The Court held that the term “care custodian” includes unrelated persons, even where the service relationship arises out of a preexisting personal friendship rather than a professional or occupational connection. Accordingly, the Court set aside amendments to decedent’s will that were made shortly before decedent’s death, which would have given most of the estate to the care providers.
Regency Outdoor Advertising v. City of Los Angeles     Docket
39 Cal.4th 507 – Cal. Supreme Court (S132619) 8/7/06     Modification of Opinion 10/11/06ABUTTER’S RIGHTS: There is no right to be seen from a public way, so the city is not liable for damages resulting from the view of plaintiff’s billboard caused by planting trees along a city street. The court pointed out that a private party who blocks the view of someone’s property by obstructing a public way would be liable to someone in plaintiff’s position.
Kleveland v. Chicago Title Insurance Company     Docket     Sup.Ct. Docket
141 Cal.App.4th 761 – 2nd Dist. (B187427) 7/24/06     Case complete 10/5/06     Request for depublication DENIED 10/25/06TITLE INSURANCE: An arbitration clause in a title policy is not enforceable where the preliminary report did not contain an arbitration clause and did not incorporate by reference the arbitration clause in the CLTA policy actually issued. (The preliminary report incorporated by reference the provisions of a Homeowner’s Policy of Title Insurance with a somewhat different arbitration clause, but a CLTA policy was actually issued.)
Essex Insurance Company v. Five Star Dye House     Docket
38 Cal.4th 1252 – Cal. Supreme Court (S131992) 7/6/06INSURANCE: When an insured assigns a claim for bad faith against the insurer, the assignee may recover Brandt (attorney) fees. Although purely personal causes of action are not assignable, such as claims for emotional distress or punitive damages, Brandt fees constitute an economic loss and are not personal in nature.
Peak Investments v. South Peak Homeowners Association     Docket
140 Cal.App.4th 1363 – 4th Dist., Div. 3 (G035851) 6/28/06     Case complete 8/31/06HOMEOWNER’S ASSOCIATIONS: Where CC&R’s require approval by more than 50 percent of owners in order to amend the Declaration, Civil Code Section 1356(a) allows a court, if certain conditions are met, to reduce the percentage of votes required, if it was approved by “owners having more than 50 percent of the votes in the association”. The Court held that the quoted phrase means a majority of the total votes in the HOA, not merely a majority of those votes that are cast.
CTC Real Estate Services v. Lepe     Docket
140 Cal.App.4th 856 – 2nd Dist. (B185320) 6/21/06     Case complete 8/23/06TRUSTEE’S SALES: The victim of an identity theft, whose name was used to obtain a loan secured by a purchase money deed of trust to acquire real property, may, as the only claimant, recover undistributed surplus proceeds that remained after a trustee sale of the property and the satisfaction of creditors. The Court pointed out that a victim of theft is entitled to recover the assets stolen or anything acquired with the stolen assets, even if the value of those assets exceeds the value of that which was stolen.
Slintak v. Buckeye Retirement Co.     Docket     Sup.Ct. Docket
139 Cal.App.4th 575 – 2nd Dist. (B182875) 5/16/06     Request for review by Cal Supreme Ct. DENIED 9/13/06MARKETABLE RECORD TITLE ACT
1) Under Civil Code Section 882.020(a)(1), a deed of trust expires after 10 years where “the final maturity date or the last date fixed for payment of the debt or performance of the obligation is ascertainable from the record”. Here, the October 1992 Notice of Default was recorded and contained the due date of the subject note; thus, the due date is “ascertainable from the record” and the 10-year limitations period of section 882.020(a)(1) applies.2) Under C.C. Section 880.260, if an action is commenced and a lis pendens filed by the owner to quiet or clear title, the running of the 10-year limitations period is reset and a new 10-year limitations period commences on the date of the recording of the lis pendens. After the expiration of the recommenced 10-year period, the power of sale in the trust deed expires.
Preciado v. Wilde     Docket     Sup.Ct. Docket
139 Cal.App.4th 321 – 2nd Dist. (B182257) 5/9/06     Request for review by Cal Supreme Ct. DENIED 8/16/06ADVERSE POSSESSION: Plaintiffs failed to establish adverse possession against defendant, with whom they held title as tenants in common. Before title may be acquired by adverse possession as between cotenants, the occupying tenant must impart notice to the tenant out of possession, by acts of ownership of the most open, notorious and unequivocal character, that he intends to oust the latter of his interest in the common property. Such evidence must be stronger than that which would be required to establish title by adverse possession in a stranger.
UNPUBLISHED Harbor Pipe v. Stevens
Cal.App. 4th Dist., Div. 3 (G035530) 4/4/06     Case complete 6/6/06JUDGMENTS: A judgment lien against the settlor of a revocable trust attached to trust property where the identity of the settlor is reflected in the chain of title, so a purchaser takes subject to the judgment lien. NOTE: In other words, title companies need to check the names of the settlors in the General Index when title is held in trust.
Aaron v. Dunham     Docket     Sup.Ct. Docket
137 Cal.App.4th 1244 – 1st Dist. (A109488) 3/15/06     Request for review by Cal Supreme Ct. DENIED 6/21/06PRESCRIPTIVE EASEMENTS: 1) Permission granted to an owner does not constitute permission to a successor. 2) Under Civil Code Section 1008, signs preventing prescriptive rights must be posted by an owner or his agent, so signs posted by a lessee without the knowledge of the owner, do not qualify.
***DECERTIFIED***
Newmyer v. Parklands Ranch     Docket     Sup.Ct. Docket
Cal.App. 2nd Dist. (B180461) 3/23/06     Request for review by Cal Supreme Ct. DENIED; CA opinion DECERTIFIED 6/14/06EASEMENTS: The owner of the dominant tenement possessing over the servient tenement an access easement that includes the right to grant other easements for “like purposes” may convey to an owner of property adjoining the dominant tenement an enforceable easement for access over the servient tenement.
Marion Drive LLC v. Saladino     Docket     Sup.Ct. Docket
136 Cal.App.4th 1432 – 2nd Dist. (B182727) 2/27/06     Request for review by Cal Supreme Ct. DENIED 5/24/06ASSESSMENT LIEN: After a tax sale, the holder of a bond secured by a 1911 Act assessment lien has priority as to surplus tax sale proceeds over a subsequently recorded deed of trust. This is true even though the bond holder purchased the property from the tax sale purchaser. The Court rejected defendant’s argument that fee title had merged with the assessment lien.
Barnes v. Hussa     Docket
136 Cal.App.4th 1358 – 3rd Dist. (C049163) 2/24/06     Case complete 4/26/06LICENSES / WATER RIGHTS: The Plaintiff did not overburden a license to run water in a pipeline across defendant’s property where he extended the pipeline to other property he owned because there was no increase in the burden on the servient tenement and no harm to defendants. A couple of interesting things pointed out by the Court are: 1) A person entitled to use water may use it elsewhere as long as others are not injured by the change, and 2) “An irrevocable license . . . is for all intents and purposes the equivalent of an easement.”
***REVERSED***
Mayer v. L & B Real Estate     Docket     Sup.Ct. Docket
Cal.App. 2nd Dist. (B180540) 2/14/06     REVERSED by Cal Supreme Ct. 6/16/08TAX SALES: The one-year statute of limitations for attacking a tax sale applies to preclude an action by a property owner who had actual notice of the tax sale, even where the tax collector’s conduct was egregious. The Court did not reach the question of whether the tax collector satisfied its due process obligations, but refers to a Supreme Court case which held that the limitations period is enforceable even if the defect is constitutional in nature. That case recognized a limited exception where an owner is in “undisturbed possession” such that the owner lacked any reasonable means of alerting himself to the tax sale proceedings.
Wright Construction Co. v. BBIC Investors     Docket     Sup.Ct. Docket
136 Cal.App.4th 228 – 1st Dist. (A109876) 1/31/06     Request for review by Cal Supreme Ct. DENIED 4/26/06MECHANICS’ LIENS: A mechanic’s lien is premature and invalid under Civil Code Section 3115 if it is recorded before the contractor “completes his contract”. A contract is complete for purposes of commencing the recordation period under section 3115 when all work under the contract has been performed, excused, or otherwise discharged. Here, because of the tenant’s anticipatory breach of the contract, plaintiff had “complete[d] [its] contract” within the meaning of section 3115 the day before the claim of lien was recorded, so the claim of lien was not premature. In a previous writ proceeding, the Court held that the landlord’s notice of nonresponsibility was invalid under the “participating owner doctrine” because the landlord caused the work of improvement to be performed by requiring the lessee to make improvements.
Torres v. Torres     Docket     Sup.Ct. Docket
135 Cal.App.4th 870 – 2nd Dist. (B179146) 1/17/06     Request for review by Cal Supreme Ct. DENIED 4/12/06POWER OF ATTORNEY: 1) A statutory form power of attorney is not properly completed where the principal marks the lines specifying the powers with an “X” instead of initials, as required by the form. However, the form is not the exclusive means of creating a power of attorney, so even though it is not valid as a statutory form, it is valid as regular power of attorney. 2) Under Probate Code Section 4264, an attorney in fact may not make a gift of the principal’s property unless specifically authorized to do so in the power of attorney. Here, the principal quitclaimed the property to himself, the other attorney in fact and the principal as joint tenants. However, the court refused to invalidate the conveyance because the plaintiff failed to produce any evidence that the conveyance was not supported by consideration.
Ung v. Koehler     Order Modifying Opinion     Docket     Sup.Ct. Docket
135 Cal.App.4th 186 – 1st Dist. (A109532) 12/28/05     Request for review by Cal Supreme Ct. DENIED 4/12/06TRUSTEE’S SALES:
1. Expiration of the underlying obligation does not preclude enforcement of the power of sale under a deed of trust.
2. A power of sale expires after 60 years or, if the last date fixed for payment of the debt is ascertainable from the record, 10 years after that date.
3. In order to avoid a statutory absurdity, a notice of default that is recorded more than 10 years after “the last date fixed for payment of the debt” does not constitute a part of the “record” for purposes of Civil Code Section 882.020(a).
Trust One Mortgage v. Invest America Mortgage     Docket
134 Cal.App.4th 1302 – 4th Dist., Div. 3 (G035111) 12/15/05     Case complete 2/21/06TRUSTEE’S SALES/ANTI-DEFICIENCY: An indemnification agreement is enforceable after a non-judicial foreclosure where the indemnitor is not the same person as the obligor. If the indemnitor and obligor were the same, the indemnity would be void as an attempt to circumvent antideficiency protections.
UNPUBLISHED OPINION
Citifinancial Mortgage Company v. Missionary Foundation     Docket
Cal.App. 2nd (B178664) 12/14/05     Case complete 2/16/06MARKETABLE RECORD TITLE ACT: (UNPUBLISHED OPINION) Under Civil Code Section 882.020(a)(1), a deed of trust becomes unenforceable 10 years after the final maturity date, or the last date fixed for payment of the debt or performance of the obligation, if that date is ascertainable from the record. Here, the record showed via an Order Confirming Sale of Real Property that the obligation was due five years after close of escrow. The Court held that since “close of escrow” is an event, and not a date certain, Section 882.020(a)(1) did not apply in spite of the fact that escrow must have closed in order for the deed of trust to have been recorded.
McElroy v. Chase Manhattan Mortgage Corp.     Docket
134 Cal.App. 4th 388 – 4th Dist., Div. 3 (G034588) 11/1/05     Case complete 2/1/06TRUSTEE’S SALES: The Court refused to set aside a trustee’s sale where the lender foreclosed after the trustors tendered payment in the form of a “Bonded Bill of Exchange Order”. The Court determined that “the Bill is a worthless piece of paper, consisting of nothing more than a string of words that sound as though they belong in a legal document, but which, in reality, are incomprehensible, signifying nothing.”
***DECERTIFIED***
The Santa Anita Companies v. Westfield Corporation     Docket     Sup.Ct. Docket
134 Cal.App.4th 77 – 2nd Dist. (B175820) 11/17/05     Request for review by Cal Supreme Ct. DENIED and DECERTIFIED 01/25/06DEEDS: The 3-year statute of limitations under C.C.P. 338(d) to seek relief on the ground of mistake does not begin to run until discovery of the mistake or receiving facts that would put a reasonable person on notice of the mistake. The fact that carefully reading the deed would have revealed the mistake is not sufficient to charge the plaintiff with notice, so the statute of limitations did not begin to run until plaintiff actually became aware of the error, and this action was therefore timely.
Big Valley Band of Pomo Indians v. Superior Court     Docket
133 Cal.App.4th 1185 – 1st Dist. (A108615) 11/1/05     Case complete 1/4/06INDIANS: An employment agreement with an Indian tribe contained the following clause: “Any claim or controversy arising out of or relating to any provisions of this Agreement, or breach thereof, shall . . . be resolved by arbitration under the rules of the American Arbitration Association in San Francisco, California, and judgment on any award by the arbitrators may be entered in any court having such jurisdiction”. The court held that the effect of the arbitration clause as limited to a consent to arbitrate and enforce any award in state court. But this clause was insufficient to waive the tribe’s immunity from a breach of contract action brought in state court. So plaintiffs are apparently free to bring the same breach of contract claims in an arbitration proceeding.
Behniwal v. Mix     Docket
133 Cal.App.4th 1027 – 4th Dist., Div. 3 (G034074) 9/30/05     Case complete 1/3/06STATUTE OF FRAUDS: A sales contract signed on the sellers’ behalf by their real estate agent did not satisfy the Statute of Frauds because the agent did not have written authority to sign for the sellers. However, a contract which must be in writing can be ratified if the ratification is also in writing. Here the sellers ratified the contract by a sufficient written ratification where they subsequently signed disclosure documents that specifically referred to the contract signed by the real estate agent.
Behniwal v. Superior Court     Docket
133 Cal.App.4th 1048 – 4th Dist., Div. 3 (G035299) 9/30/05     Case complete 1/3/06LIS PENDENS: (Related to Mix v. Superior Court, several cases below.) Having determined that the plaintiffs have at least a “probably valid” real property claim, the Court issued a peremptory writ of mandate directing the Superior Court to vacate its order expunging the lis pendens. The lis pendens will therefore protect plaintiff’s claim until the time for appeal to the Supreme Court expires or unless the Supreme Court issues its own writ directing that the lis pendens be expunged.
Zipperer v. County of Santa Clara     Docket
133 Cal.App.4th 1013 – 6th Dist. (H028455) 9/30/05 (Mod. 10/28/05)     Case complete 12/28/05EASEMENTS:
PUBLISHED PORTION: The Solar Shade Control Act provides that “. . . no person owning, or in control of a property shall allow a tree or shrub to be placed, or, if placed, to grow on such property, subsequent to the installation of a solar collector on the property of another so as to cast a shadow greater than 10 percent of the collector absorption area”. The County is exempt from the Act because it adopted an ordinance pursuant to a statute allowing cities and counties to exempt themselves from the Act. The Court did not address the issue of whether the act applies where a tree is not “placed” by a property owner.UNPUBLISHED PORTION: A common law easement for light and air generally may be created only by express written instrument. A statutory “solar easement” under Civil Code Section 801.5 may be created only by an instrument containing specified terms. The Court held that the County did not have an obligation to trim trees to avoid shading plaintiff’s solar panels, rejecting several theories asserted by plaintiff.
Fishback v. County of Ventura     Docket
133 Cal.App.4th 896 – 2nd Dist. (B177462) 10/26/05     Case complete 1/9/06SUBDIVISION MAP ACT: Under the 1937 and 1943 Subdivision Map Acts, “subdivision” was defined as “any land or portion thereof shown on the last preceding tax roll as a unit or as contiguous units which is divided for the purpose of sale . . . into five or more parcels within any one year period.” The Court makes numerous points interpreting those statutes, some of the most significant being: 1) Once the fifth parcel is created within a one-year period, all the parcels created within that year constitute a subdivision; 2) Even though a unit of land is defined as a unit as shown on the last tax roll preceding the division, that does not mean the unit shown on the last preceding tax roll is a legal parcel, and legal parcels cannot be created by dividing that illegal parcel; and 3) If land is divided for the purpose of sale, it is irrelevant that the retained parcel is not held for the purpose of sale. Thus, for example, if the owner of a unit of land divides it in half, the unit is divided for the purpose of sale even if the owner intends to sell only one half and keep the other.
Attorney General Opinion No. 04-1105
10/3/05ASSESSOR’S RECORDS: County Assessors maintain parcel boundary map data, which is detailed geographic information used to describe and define the precise geographic boundaries of assessor’s parcels. When maintained in electronic format, Assessors must make copies in electronic format available to the public. The fee charged for producing the copy is limited to the direct cost of producing the copy in electronic format, and may not include expenses associated with the county’s initial gathering of the information, with initial conversion of the information into electronic format, or with maintaining the information.
Villacreses v. Molinari     Docket     Sup.Ct. Docket
132 Cal.App.4th 1223 – 4th Dist., Div. 3 (G034719) 9/26/05     Request for review by Cal Supreme Ct. DENIED 12/14/05ARBITRATION: Section 1298 requires that an arbitration provision in a real estate contract be accompanied by a statutory notice and that the parties indicate their assent by placing their initials on an adjacent space or line. The arbitration notice, standing alone, does not constitute an arbitration provision. So the Defendants could not compel arbitration where the contract contained only the notice, but did not contain a separate arbitration provision.The Court has a good sense of humor. The opinion contains the following memorable quotes:

1. “If the first rule of medicine is ‘Do no harm,’ the first rule of contracting should be ‘Read the documents’.”

2. “. . . to paraphrase the immortal words of a former President of the United States, the applicability of this purported arbitration agreement to the instant dispute ‘depends upon what the meaning of the word “it” is.'”
Campbell v. Superior Court (La Barrie)     Docket     Sup.Ct. Docket
132 Cal.App.4th 904 – 4th Dist., Div. 1 (D046064) 9/14/05     Request for review by Cal Supreme Ct. DENIED 12/14/05LIS PENDENS: A cause of action for a constructive trust or an equitable lien does not support a lis pendens where it is merely for the purpose of securing a judgment for money damages. [Ed. Note: The Court in this and similar cases make the absolute statement that “an equitable lien does not support a lis pendens”, and explain that the lien is sought merely to secure a money judgment. But it is unclear whether the Court would reach the same conclusion in a pure equitable lien case. For example, where a loan is paid off with the proceeds of a new loan, but the new mortgage accidentally fails to be recorded, an action to impose an equitable lien seeks more than a mere money judgment. It seeks to allow the new lender to step into the shoes of the old lender and, in my opinion, a lis pendens should be allowed.]
Fripp v. Walters Docket     Docket     Sup.Ct. Docket
132 Cal.App.4th 656 – 3rd Dist. (C046733) 9/7/05 (ONLY PART I CERTIFIED FOR PUBLICATION)     Request for review by Cal Supreme Ct. DENIED 11/16/05BOUNDARIES / SURVEYS: A conveyance referring to a parcel map cannot convey more property than the creator of the parcel map owned. The Court rejected Defendant’s claim that the recorded parcel map was a “government sanctioned survey” which precludes a showing that the boundaries established by the parcel map are erroneous. The court explained that the rule cited by Defendants applies only to official survey maps that create boundaries. Boundary lines cannot be questioned after the conveyance of public land to a private party, even if they are inaccurate.
Title Trust Deed Service Co. v. Pearson     Docket
132 Cal.App.4th 168 – 2nd Dist (B175067) 8/25/05     Case complete 10/28/05HOMESTEADS: A declared homestead exemption applies to surplus proceeds from a trustee’s sale. [Comment: Applying the declared homestead exemption to trustee’s sales is fine. But the Court also seems to want to pay surplus proceeds to the debtor up to the amount of the exemption before paying the holder of a junior trust deed. This should be wrong since the homestead exemption does not apply to voluntary liens. I think the Court does not adequately address what appears to me to be a circuity of priority problem: The homestead exemption is senior to the judgment lien, which in this case happens to be senior to a junior TD, which is senior to the homestead exemption.]
In re Marriage of Benson     Docket
36 Cal.4th 1096 – Cal. Supreme Court (S122254) 8/11/05COMMUNITY PROPERTY: The doctrine of partial performance, which is an exception to the Statute of Frauds, is not an exception to the requirement of Family Code Section 852 that an agreement to transmute property be in writing. The concurring opinion points out that the Court does not decide what statutory or equitable remedy would be available to make whole a spouse who has been disadvantaged by an illusory oral promise to transmute property, or what sanction may be employed against a spouse who has used section 852(a) as a means of breaching his or her fiduciary duty and gaining unjust enrichment.
First Federal Bank v. Fegen     Docket
131 Cal.App.4th 798 – 2nd Dist. (B174252) 7/29/05     Case complete 9/29/05JUDGMENTS: The Court dismissed an appeal as being moot where the debtor did not post a bond after a sheriff’s sale of real property. C.C.P. Section 917.4 provides that an appeal of an order directing the sale of real property does not stay enforcement of the order. A sheriff’s sale is final, except that the debtor can commence an action within 90 days to set aside the sale if the judgment creditor is the successful bidder. Here, the debtor failed to file an action within 90 days so the sale is final.
Bear Creek Master Association v. Edwards     Docket     Sup.Ct. Docket
130 Cal.App.4th 1470 – 4th Dist. Div. 2 (E034859) 7/13/05     Request for review by Cal Supreme Ct. DENIED 10/19/05CONDOMINIUMS: The definition of “condominium” in Civil Code Section 1351(f) does not require that an actual structure has been built; rather it only requires that it be described in a recorded condominium plan. (Note, however, that under CC 1352 the condominium does not come into existence until a condominium unit has been conveyed.) The case also contains an extensive discussion of the procedural requirements for foreclosing on an assessment lien recorded by the homeowner’s association.
Woodridge Escondido Property Owners Assn. v. Nielsen     Docket     Sup.Ct. Docket
130 Cal.App.4th 559 – 4th Dist. Div. 1 (D044294) 5/25/05 (pub. order 6/16/05)     Request for review by Cal Supreme Ct. DENIED 8/31/05CC&R’s: A provision in CC&R’s that prohibited construction of a permanent structure in an easement area applied to a deck because it was attached to the house and had supporting posts that were buried in the ground, such that it was designed to continue indefinitely without change and was constructed to last or endure.
Beyer v. Tahoe Sands Resort     Docket
129 Cal.App.4th 1458 – 3rd Dist. (C045691) 6/8/05     Case complete 8/8/05EASEMENTS: California Civil Code Section 805 provides that a servitude cannot be held by the owner of the servient tenement. The Court held that the term “owner” under Section 805 means the owner of the full fee title, both legal and equitable, such that a property owner who owns less than full title may validly create easements in his own favor on his land. Here, the Court held that the grantor could reserve an easement over property conveyed to a time-share trustee where the grantor held all beneficial interest in the trust and the grantee held just bare legal title.
Bank of America v. La Jolla Group     Docket     Sup.Ct. Docket
129 Cal.App.4th 706 – 5th Dist. (F045318) 5/19/05     Request for review by Cal Supreme Ct. DENIED 9/7/05TRUSTEE’S SALES: A trustee’s sale, which was accidentally held after the owner and lender agreed to reinstate the loan, is invalid. The conclusive presumptions in Civil Code Section 2924 pertain only to notice requirements, not to every defect or inadequacy. The Court points out that the advantages of being a bona fide purchaser are not limited to the presumptions set forth in Section 2924, but does not discuss it further because the defendant did not argue that its bona fide purchaser status supports its position in any way other than the statutory presumptions.
Zabrucky v. McAdams     Docket
129 Cal.App.4th 618 – 2nd Dist. (B167590) 5/18/05     Case complete 7/20/05COVENANTS, CONDITIONS & RESTRICTIONS: The Court interpreted a provision in CC&R’s to prohibit an addition to a house which would unreasonably obstruct a neighbor’s view. The Court painstakingly nit-picked through the provisions of the CC&R’s and compared the provisions and the facts to other cases where courts have done the same. The main conclusion I draw is that these cases are each unique and it is very difficult to determine in advance what a court will do. In fact, one judge dissented in this case. This means it can be very dangerous to issue endorsements such as CLTA Endorsement No. 100.6 or 100.28, insuring against this kind of provision in CC&R’s.
Anolik v. EMC Mortgage Corp.     Docket     Sup.Ct. Docket
Cal.App. 3rd Dist. (C044201) 4/29/05 (Mod. 5/26/05)     Request for review by Cal Supreme Ct. DENIED and DECERTIFIED 8/10/05***DECERTIFIED***
 TRUSTEE’S SALES:
1. To be valid, a notice of default must contain at least one correct statement of a breach, and it must be substantial enough to authorize use of the drastic remedy of nonjudicial foreclosure.
2. An assertion in a notice of default of one or more breaches qualified with the words “if any” does not satisfy the requirements of section 2924 because it indicates that the lender has no clue as to the truth or falsity of the assertion.
3. It is not proper to declare a payment in default when the time for imposing a late fee on that payment has not expired because the default is not sufficiently substantial at that point.
4. Under Civil Code Section 2954, a lender cannot force impound payments for property taxes until the borrower has failed to pay two consecutive tax installments.
Kangarlou v. Progressive Title Company     Docket
128 Cal.App.4th 1174 – 2nd Dist. (B177400) 4/28/05     Case complete 6/29/05ESCROW: 1. Under Civil Code Section 1717, plaintiff can recover attorney’s fees after prevailing in an action against the escrow holder, even though the escrow instructions limited attorney’s fees to actions to collect escrow fees.
2. Under Business and Professions Code Section 10138, an escrow holder has a duty to obtain evidence that a real estate broker was regularly licensed before delivering compensation.
Paul v. Schoellkopf     Docket     Sup.Ct. Docket
128 Cal.App.4th 147 – 2nd Dist. (B170379) 4/5/05     Request for review by Cal Supreme Ct. DENIED 6/15/05ESCROW: A provision for attorneys’ fees in escrow instructions limited to fees incurred by the escrow company in collecting for escrow services does not apply to other disputes between the buyer and seller.
Knight v. Superior Court     Docket     Sup.Ct. Docket
128 Cal.App.4th 14 – 3rd Dist. (C048378) 4/4/05     Request for review by Cal Supreme Ct. DENIED 6/29/05DOMESTIC PARTNERSHIPS: Family Code Section 308.5, enacted by Proposition 22, 3/7/00, states: “Only marriage between a man and a woman is valid or recognized in California.” This statute did not prohibit the legislature from enacting California’s Domestic Partnership Law, Family Code Section 297, et seq., because Section 308.5 pertains only to marriages, not to other relationships.
Estate of Seifert     Docket     Sup.Ct. Docket
128 Cal.App.4th 64 – 3rd Dist. (C046456) 4/4/05     Request for review by Cal Supreme Ct. DENIED 6/22/05ADVERSE POSSESSION: A fiduciary, including an executor, may not acquire title by adverse possession against the heirs. Once the executor was appointed, the statutory period for his adverse possession of the subject property ceased to run.
Melendrez v. D & I Investment     Docket     Sup.Ct. Docket
127 Cal.App.4th 1238 – 6th Dist. (H027098) 3/29/05     Request for review by Cal Supreme Ct. DENIED 6/22/05 TRUSTEE’S SALES: A trustee’s sale cannot be set aside where the purchaser at the sale is a bona fide purchaser (“BFP”). The elements of being a BFP are that the buyer 1) purchase the property in good faith for value, and 2) have no knowledge or notice of the asserted rights of another. The value paid may be substantially below fair market value. Also, the buyer’s sophistication and experience in purchasing at trustee’s sales does not disqualify him from being a BFP, although in evaluating whether the buyer is a BFP, the buyer’s foreclosure sale experience may be considered in making the factual determination of whether he had knowledge or notice of the conflicting claim.
Radian Guaranty v. Garamendi     Docket     Sup.Ct. Docket
127 Cal.App.4th 1280 – 1st Dist. (A105789) 3/29/05     Request for review by Cal Supreme Ct. DENIED 7/20/05TITLE INSURANCE: Radian’s Lien Protection Policy constitutes title insurance pursuant to Insurance Code Section 12340.1. Because Radian does not possess a certificate of authority to transact title insurance, it is not authorized to sell the policy in California or anywhere else in the United States, pursuant to California’s monoline statutes: Ins. Code Section 12360 (title insurance) and Ins. Code Section 12640.10 (mortgage guaranty insurance).
Gardenhire v. Superior Court     Docket     Sup.Ct. Docket
128 Cal.App.4th 426a – 6th Dist. (H026601) 3/22/05     Request for review by Cal Supreme Ct. DENIED 6/8/05TRUSTS: A trust can be revoked by a will where the trust provided for revocation by “any writing” and the will expressed a present intent to revoke the trust. The Court pointed out that a will, which is inoperative during the testator’s life, can nevertheless have a present and immediate effect upon delivery, such as notice of intent to revoke.
Jones v. Union Bank of California     Docket     Sup.Ct. Docket
127 Cal.App.4th 542 – 2nd Dist. (B173302) 3/11/05     Request for review by Cal Supreme Ct. DENIED 6/8/05When a lender successfully defends an action to set aside or enjoin a foreclosure sale, the antideficiency provisions of C.C.P. Section 580d do not prohibit an award of attorney fees. In addition, Civil Code sections 2924c and 2924d do not limit the amount of fees the court may award.
O’Toole Company v. Kingsbury Court HOA     Docket
126 Cal.App.4th 549 – 2nd Dist. (B172607) 2/3/05     Case complete 4/8/05HOMEOWNER’S ASSOCIATIONS: In a suit to enforce a judgment, the trial court properly appointed a receiver and levied a special emergency assessment when defendant-homeowners association failed to pay. The Court pointed out that regular assessments are exempt from execution, but not special assessments.
State of California ex rel. Bowen v. Bank of America     Docket     Sup.Ct. Docket
126 Cal.App.4th 225 – 2nd Dist. (B172190) 1/31/05     Request for review by Cal Supreme Ct. DENIED 5/18/05ESCHEAT: This is a qui tam action filed on behalf of the State Controller. The court held that unused reconveyance fees do not need to be escheated because the obligation to return a specific sum of money is neither certain nor liquidated under Civil Code Section 2941 or under the provisions of the deeds of trust. This case was against lenders and I believe it would not apply in the context of escrow and title insurance.
Van Klompenburg v. Berghold     Docket     Sup.Ct. Docket
126 Cal.App.4th 345 – 3rd Dist. (C045417) 1/31/05     Request for review by Cal Supreme Ct. DENIED 5/11/05EASEMENTS: Where the grant of easement states that the right of way shall be “kept open” and “wholly unobstructed”, the normal rule does not apply, which would otherwise allow the owner of the servient estate to erect a locked gate as long as the owner of the dominant estate is given a key and the gate does not unreasonably interfere with the use of the easement.
State of California v. Old Republic Title Company     Docket     Sup.Ct. Docket
125 Cal.App.4th 1219 – 1st Dist. (A095918) 1/20/05     NOTE: request for order directing republication of court of appeal opinion DENIED 8/16/06.
Overruled in part on issue not significant to title insurance – SEE BELOW.TITLE INSURANCE: Old Republic was found liable for 1) failing to escheat unclaimed funds in escrow accounts, 2) failing to return fees collected for reconveyances which were not used and 3) failing to pay interest collected on escrow funds to the depositing party.Of particular interest, the Court stated:
“Insurance Code Section 12413.5 provides that interest on escrow funds must be paid to the depositing party ‘unless the escrow is otherwise instructed by the depositing party . . . .’ Any title company is free to draft escrow instructions that, with full disclosure to and agreement from the depositing party, direct that the arbitrage interest differential be paid to the company. It is a matter of disclosing the pertinent costs and benefits to the customer.”

State of California v. PriceWaterhouseCoopers
39 Cal.4th 1220 – Cal. Supreme Court (S131807) 8/31/06

FALSE CLAIMS ACT: A political subdivision may not bring an action under Government Code section 12652, subdivision (c), to recover funds on behalf of the state or another political subdivision.
Frei v. Davey     Docket
124 Cal.App.4th 1506 – 4th Dist., Div. 3 (G033682) 12/17/04     Case complete 2/22/05CONTRACTS: Under the most recent version of the CAR purchase contract, the prevailing party is barred from recovering attorney fees if he refused a request to mediate.
Mix v. Superior Court     Docket      Sup.Ct. Docket
124 Cal.App.4th 987 – 4th Dist., Div. 3  12/7/04  (G033875)     Request for review by Cal Supreme Ct. DENIED 2/16/05LIS PENDENS: (Related to Behniwal v. Superior Court, several cases above.) After the claimant loses at trial, the trial court must expunge a lis pendens pending appeal unless claimant can establish by a preponderance of the evidence the probable validity of the real property claim. Claimants will rarely be able to do this because it requires a trial court to determine that its own decision will probably be reversed on appeal. The court points out that this strict result is tempered by claimant’s ability to petition the appellate court for a writ of mandate, so that the appellate court can make its own determination of the probability of the trial court’s decision being reversed on appeal.
D’Orsay International Partners v. Superior Court     Docket     Sup.Ct. Docket
123 Cal.App.4th 836 – 2nd Dist. 10/29/04 (B174411)     Request for review by Cal Supreme Ct. DENIED 1/26/05MECHANIC’S LIENS: The court ordered the release of a mechanic’s lien because there was no actual visible work on the land or the delivery of construction materials. The criteria applicable to a design professional’s lien do not apply where the claimant filed a mechanic’s lien. The court specifically did not address the question of whether a contractor performing design services or employing design professionals may assert a design professionals’ lien.
Gibbo v. Berger     Docket     Sup.Ct. Docket
123 Cal.App.4th 396 – 4th Dist., Div. 2 10/22/04 (E035201)     Case complete 12/27/04    Req. for Depublication by Cal. Supreme Ct. DENIED 2/16/05USURY: The usury exemption for loans arranged by real estate brokers does not apply where the broker functioned as an escrow whose involvement was limited to preparing loan documents on the terms provided by the parties, ordering title insurance, and dispersing funds, all in accordance with the parties’ instructions. In order to “arrange a loan” the broker must act as a third party intermediary who causes a loan to be obtained or procured. Such conduct includes structuring the loan as the agent for the lender, setting the interest rate and points to be paid, drafting the terms of the loan, reviewing the loan documents, or conducting a title search.
Knapp v. Doherty     Docket
123 Cal.App.4th 76 – 6th Dist. 9/20/04 (H026670)     Case complete 12/21/04TRUSTEE’S SALES:
1. Civil Code Section 2924 requires the trustee to give notice of sale only “after the lapse of the three months” following recordation of the notice of default. The Notice of Sale technically violated this requirement because it was served by mail on the property owner several days prior to the end of three months. However, this did not invalidate the sale because the owner did not suffer prejudice from the early notice.
2. Incorrectly stating the date of the default in the Notice of Default did not invalidate the sale because the discrepancy was not material.
Royal Thrift and Loan v. County Escrow     Docket
123 Cal.App.4th 24 – 2nd Dist. 10/15/04 (B165006)     Case complete 12/16/04TRUSTEE’S SALES:
1. Postponements of a trustee’s sale during an appeal were reasonable, so they do not count toward the 3-postponement limit of Civil Code Section 2924g(c)(1). The postponements fall under the “stayed by operation of law” exception. However, the Court recognized that the better course would have been to re-notice the trustee’s sale after the appeal.
2. The court indicated that an appeal from an action to quiet title against a deed of trust should stay the trustee’s sale proceedings under Code of Civil Procedure Section 916 pending the appeal. However, the court did not formally make that holding because the owner did not appeal and the issues involving the appellants (escrow holder and bonding company) did not require a holding on that issue.
Tesco Controls v. Monterey Mechanical Co.     Docket
124 Cal.App.4th 780 – 3rd Dist. 12/6/04 (C042184) (Opinion on rehearing)     Case complete 2/7/05MECHANIC’S LIENS: A mechanic’s lien release that waives lien rights up to the date stated in the release is effective to waive lien rights up to that date, even if the progress payments did not fully compensate the lien claimant.
Gale v. Superior Court     Docket
122 Cal.App.4th 1388 – 4th Dist., Div. 3  10/6/04 (G033968) (Mod. 10/22/04)     Rehearing Denied 10/22/04; Case Complete 12/10/04LIS PENDENS / DIVORCE
1. The automatic stay contained in a divorce summons does not apply to the sale by the husband, as managing member of a family-owned management company, of real property vested in the management company.
2. A petition for dissolution of marriage which does not allege a community interest in specific real property does not support the filing of a lis pendens.
Nwosu v. Uba     Docket
122 Cal.App.4th 1229 – 6th Dist. 10/1/04 (H026182)     Case complete 12/01/04The court held that a transaction was a bona fide sale and not an equitable mortgage. The complicated facts provide little of interest to the title insurance business, other than to note the fact that a deed can be held to be a mortgage if the deed was given to secure a debt. The case contains a good discussion of the distinction between legal claims, for which there is a right to a jury trial, and equitable claims, for which there is no right to a jury trial.
Moores v. County of Mendocino     Docket
122 Cal.App.4th 883 – 1st Dist. 9/24/04 (A105446)     Case complete 11/24/04SUBDIVISION MAP ACT: The enactment of an ordinance requiring the County to record notices of merger did not result in the unmerger of parcels that had previously merged under the County’s previous automatic merger ordinance. The County properly sent a subsequent notice under Gov. Code Section 66451.302 notifying property owners of the possibility of a merger. Accordingly, plaintiff’s parcels remain merged.
Larsson v. Grabach     Docket     Sup.Ct. Docket
121 Cal.App.4th 1147 – 5th Dist. 8/25/04 (F042675)     Request for review by Cal Supreme Ct. DENIED 12/15/04EASEMENTS: An easement by implication can be created when an owner of real property dies intestate and the property is then divided and distributed to the intestate’s heirs by court decree.
Felgenhauer v. Soni     Docket
121 Cal.App.4th 445 – 2nd Dist. 8/5/04 (B157490)     Case complete 10/8/04PRESCRIPTIVE EASEMENTS: To establish a claim of right, which is one of the elements necessary to establish a prescriptive easement, the claimant does not need to believe he is entitled to use of the easement. The phrase “claim of right” has caused confusion because it suggests the need for an intent or state of mind. But it does not require a belief that the use is legally justified; it simply means that the property was used without permission of the owner of the land.
Jonathan Neil & Assoc. v. Jones     Docket
33 Cal.4th 917 – Cal. Supreme Court (S107855) 8/5/04 (Mod. 10/20/04)INSURANCE: A tort action for breach of the duty of good faith and fair dealing exists only in regard to the issues of bad faith payment of claims and unreasonable failure to settle. It does not pertain to the general administration of an insurance policy or to other contract settings. In this case, a tort cause of action does not lie for the insurer’s bad faith conduct in setting an unfairly high insurance premium.
Bello v. ABA Energy Corporation     Docket
121 Cal.App.4th 301 – 1st Dist. 8/2/04 (A102287)     Case complete 10/6/04RIGHTS OF WAY: A grant of a public right of way includes uses made possible by future development or technology, which are not in existence at the time of the grant. Here, the Court held that a right of way included the right to install a pipeline to transport natural gas.
California National Bank v. Havis     Docket
120 Cal.App.4th 1122 – 2nd Dist. 7/23/04 (B167152)     Case complete 9/22/04DEEDS OF TRUST: A bank holding a deed of trust holder was paid outside of escrow with a check. The bank sent a letter to escrow stating that it had “received payoff funds . . . it is our policy to issue the Full Reconveyance 10 days after receipt of the payoff check. Therefore, a Full Reconveyance will be sent to the County Recorder on or about August 5, 2002”. The escrow relied on the letter and closed escrow without paying off the lender. The check bounced and the lender began foreclosure.The Court reversed a summary judgment in favor of defendants, holding that the letter did not constitute a payoff demand statement binding on the bank under CC 2943. The Court determined that there was a triable issue of fact as to whether the parties could reasonably have relied on the letter. [Ed. note: The Court exhibited a scary lack of understanding of real estate transactions, and could not come to grips with the fact that reconveyances from institutional lenders never record at close of escrow.]
Kirkeby v. Sup. Ct. (Fascenelli)     Docket
33 Cal.4th 642 – Cal. Supreme Court 7/22/04 (S117640)LIS PENDENS: An action to set aside a fraudulent conveyance supports the recording of a lis pendens. The court stated that “[b]y definition, the voiding of a transfer of real property will affect title to or possession of real property”. (Ed. note: Several appellate court decisions have held that actions to impose equitable liens and constructive trusts do not support a lis pendens. The Supreme Court did not deal with those issues but it seems that, using the court’s language, it could similarly be said that “by definition imposing an equitable lien or constructive trust will affect title to or possession of real property.”)
Tom v. City and County of San Francisco     Docket     Sup.Ct. Docket
120 Cal.App.4th 674 – 1st Dist. 6/22/04 (A101950)     Request for review by Cal Supreme Ct. DENIED 10/13/04TENANCY IN COMMON AGREEMENTS: In order to evade burdensome regulations for converting apartments to condominiums, it has become a common practice in San Francisco for a group of people to acquire a multi-unit residential building and enter into a tenancy in common agreement establishing an exclusive right of occupancy for each dwelling unit. Seeking to end this practice, the People’s Republic of San Francisco enacted an ordinance prohibiting exclusive right of occupancy agreements. The Court held that the ordinance is unconstitutional because it violates the right of privacy set forth in Article I, section I of the California Constitution.
California Attorney General Opinion No. 03-1108
6/9/04RECORDING: A memorandum of lease is a recordable instrument.
Yeung v. Soos     Docket
119 Cal.App.4th 576 – 2nd Dist. 6/16/04 (B165939) (Mod. 7/2/04)     Case complete 9/10/04QUIET TITLE: A default judgment after service by publication is permissible in a quiet title action. However, the judgment may not be entered by the normal default prove-up methods; the court must require evidence of the plaintiff’s title, including live witnesses and complete authentication of the underlying real property records. Nevertheless, the judgment is not rendered void because the default prove-up method was used rather than an evidentiary hearing.
Villa de Las Palmas HOA v. Terifaj     Docket
33 Cal.4th 73 – Cal. Supreme Court 6/14/04 (S109123)RESTRICTIONS: Use restrictions in amended declarations are binding on owners who purchased prior to recordation of the amendment. They are also subject to the same presumption of validity as the original declaration.
In re Marriage of Gioia     Docket
119 Cal.App.4th 272 – 2nd Dist. 6/9/04 (B166803)     Case complete 8/11/04BANKRUPTCY: A bankruptcy trustee’s notice of abandonment of property was effective even though it was ambiguous because it did not specifically state that the trustee will be deemed to have abandoned the property 15 days from the date of mailing of the notice. The court also states that an abandonment is irrevocable even if the property later becomes more valuable.
Dieckmeyer v. Redevelopment Agency of Huntington Beach     Docket     Sup.Ct. Docket
127 Cal.App.4th 248 – 4th Dist., Div. 3  2/28/05 (G031869) (2nd Opinion)     Case complete 5/5/05DEEDS OF TRUST: Where a deed of trust secures both payment of a promissory note and performance of contractual obligations (CC&R’s in this case), the trustor is not entitled to reconveyance of the deed of trust after the note is paid off, but before the contractual obligations are satisfied.
Textron Financial v. National Union Fire Insurance Co.     Docket      Sup.Ct. Docket
118 Cal.App.4th 1061 – 4th Dist., Div. 3  5/20/04 (G020323) (Mod. 6/18/04)     Req. for rev. and depub. by Cal Supreme Ct. DENIED 9/15/04INSURANCE / PUNITIVE DAMAGES:
1. The amount of attorney’s fees incurred by an insured in obtaining policy benefits and recoverable under Brandt v. Sup. Ct. are limited to the fees under the contingency fee agreement between the insured and its counsel, and not a higher figure based on the reasonable value of the attorney’s services.
2. Punitive damages must be based on compensatory damages awarded for tortious conduct, including breach of the implied covenant of good faith and fair dealing, excluding the sum recovered on the breach of contract claim.
3. When compensatory damages are neither exceptionally high nor low, and the defendant’s conduct is neither exceptionally extreme nor trivial, the outer constitutional limit on the amount of punitive damages is approximately four times the amount of compensatory damages.
4. The wealth of a defendant cannot justify an otherwise unconstitutional punitive damages award.
Blackburn v. Charnley     Docket     Sup.Ct. Docket
117 Cal.App.4th 758 – 2nd Dist. 4/8/04 (B166080)     Request for review by Cal Supreme Ct. DENIED 7/21/04SPECIFIC PERFORMANCE: Specific performance is available even though the contract referred to lots which had not yet been subdivided. This violation of the Subdivision Map Act made the contract voidable at the option of the buyer, who chose to enforce the contract instead. The requirement in the standard CAR contract to mediate in order to collect attorney’s fees does not apply where an action is filed in order to record a lis pendens and where mediation was conducted pursuant to the court’s own practices.
Hedges v. Carrigan     Docket
117 Cal.App.4th 578 – 2nd Dist. 4/6/04 (B166248)     Case complete 6/11/04ARBITRATION: The Federal Arbitration Act preempts C.C.P. Section 1298, which requires that an arbitration clause in a real estate contract contain a specified notice and be in a specified type size. Preemption requires that the transaction affect interstate commerce, which the court found existed because the anticipated financing involved an FHA loan, and the purchase agreement was on a copyrighted form that stated it could only be used by members of the National Association of Realtors. [Ed. note: the form does not say that!] However, in the unpublished portion of the opinion, the court held that the arbitration clause could not be enforced because it required that the parties initial it in order to acknowledge their agreement to arbitration, and they did not all do so. [Ed. note: the concurring opinion makes much more sense than the majority opinion!]
Kapner v. Meadowlark Ranch Assn.     Docket
116 Cal.App.4th 1182 – 2nd Dist. 3/17/04 (B163525)     Case complete 5/25/04ADVERSE POSSESSION / PRESCRIPTIVE EASEMENTS: A prescriptive easement cannot be established where the encroacher’s use is exclusive. The Court affirmed the trial court’s order requiring the property owner to sign an encroachment agreement or remove the encroachment.
Harrison v. Welch     Docket     Sup.Ct. Docket
116 Cal.App.4th 1084 – 3rd Dist. 3/12/04 (C044320)     Request for depublication DENIED 6/23/04ADVERSE POSSESSION / PRESCRIPTIVE EASEMENTS:
1) In the uncertified Part I of the opinion, the court rejected Defendant’s claim of adverse possession because real property taxes were not paid on any area outside of Defendant’s lot. The court rejected defendant’s creative argument that real property taxes were paid on all land within the setback area where defendant’s house was 3-1/2 feet from the property line, and a zoning ordinance required a 5-foot setback.
2) A prescriptive easement cannot be established where the encroacher’s use is exclusive. The opinion contains an excellent discussion of the case law on this issue.
3) The 5-year statute of limitations in C.C.P. Sections 318 and 321, within which a plaintiff must bring an action to recover real property, does not commence until the encroacher’s use of the property has ripened into adverse possession.
Brizuela v. CalFarm Insurance Company     Docket     Sup.Ct. Docket
116 Cal.App.4th 578 – 2nd Dist. 3/3/04 (B160875)     Review by Cal Supreme Ct. DENIED 6/9/04INSURANCE: Where an insurance policy requires an insured who has filed a claim to submit to an examination under oath, that obligation is a condition precedent to obtaining benefits under the policy. The insurer is entitled to deny the claim without showing it was prejudiced by the insured’s refusal.
Hanshaw v. Long Valley Road Assn.     Docket     Sup.Ct. Docket
116 Cal.App.4th 471 – 3rd Dist. 3/2/04 (C041796)     Review by Cal Supreme Ct. DENIED 5/19/04PUBLIC STREETS: An offer of dedication of a public street that is not formally accepted may, nevertheless, be accepted by subsequent public use. This is known as common law dedication. However, counties have a duty to maintain only those roads that are “county roads”, and a public road does not become a county road unless specifically accepted as such by the appropriate resolution of the Board of Supervisors.
Miner v. Tustin Avenue Investors     Docket
116 Cal.App.4th 264 – 4th Dist., Div.3  2/27/04 (G031703)     Case complete 5/4/04LEASES / ESTOPPEL CERTIFICATES: A lease contained an option to renew for 5 years, but the tenant signed an estoppel certificate stating that the lease was in full force and effect, and that the tenant had no options except the following: (blank lines that followed were left blank). The Court held that the tenant was not bound by the estoppel certificate because it was ambiguous as to whether it referred only to options outside of the lease or whether the tenant had somehow given up his option rights.
Tremper v. Quinones     Docket
115 Cal.App.4th 944 – 2nd Dist. 2/17/04 (B165218)     Case complete 5/3/04GOOD FAITH IMPROVER: Attorney’s fees and costs may be included in the calculation of damages awarded against a person bringing an action as a good faith improver under C.C.P. Section 871.3, regardless of whether the costs and fees were incurred in prosecuting a complaint or defending against a cross complaint, and even where the good faith improver issues are part of a quiet title action which would not ordinarily support an award of attorney’s fees and costs.
Kertesz v. Ostrovsky     Docket
115 Cal.App.4th 369 – 4th Dist., Div.3  1/28/04 (G030640)     Case complete 4/2/04JUDGMENTS / BANKRUPTCY: The time for renewing a judgment was 10 years from entry of the judgment, plus the amount of time between the debtor’s filing of a bankruptcy petition and the date of the Bankruptcy Court’s order of nondischargeability, plus an additional 30 days under Bankruptcy Code Section 108(c). The court reached this conclusion even though the judgment was entered before the bankruptcy petition was filed, and the 10-year period for renewing the judgment expired long after the bankruptcy was closed.NOTE: I believe the judge misunderstood the automatic stay and Bankruptcy Code Section 108(c). I do not believe the automatic stay applies when a period of time for taking an action commences prior to bankruptcy, and expires after the bankruptcy case is closed.
Rancho Santa Fe Association v. Dolan-King     Docket     Sup.Ct. Docket
115 Cal.App.4th 28 – 4th Dist., Div.1  1/7/04 (D040637/D041486)     Pet. for Review by Cal Supreme Ct. DENIED 4/28/04HOMEOWNER’S ASSOCIATIONS: Regulations adopted and interpreted by a Homeowner’s Association must be reasonable from the perspective of the entire development, not by determining on a case-by-case basis the effect on individual homeowners.
Gray Cary Ware & Freidenrich v. Vigilant Insurance Co.     Docket
114 Cal.App.4th 1185 – 4th Dist., Div.1  1/12/04 (D041811)     Case complete 3/15/04INSURANCE: Civil Code Section 2860(c) provides for the arbitration of disputes over the amount of legal fees or the hourly billing rate of Cumis counsel, but does not apply to other defense expenses.

The Foreclosure Report – May 2012

Foreclosure Activity Shows Mixed Results

May 2012 Foreclosure activity was mixed with lenders more likely impacted by local market conditions then any overall trends. In Arizona, Foreclosure Sales were up 30.1 percent over last month but still down 39.2 percent vs. May 2011. In Oregon, Foreclosure Sales were down 21.3 percent over last month but flat vs. May 2011. In California, Foreclosure Sales were up 6.1 percent vs. previous month, driven by Sales to 3rd parties that were up 14.0 percent. Nevada’s Time to Foreclose is continuing to increase, up 9.4 percent to an all time high of 464 days. This is due to the Foreclosure Fraud Reform Law (Assembly Bill 284) that went into effect October 1, 2011.

In California, three Senate Bills under the Homeowner Bill of Rights are being actively debated by the legislature. While Senate Bill 1473, Senate Bill 1474, and Assembly Bill 1950 have already been passed, they should have little impact on foreclosure activity throughout the state. However if passed, two of the three remaining bills (Senate Bill 1470 and Senate Bill 1471) will significantly impact the Foreclosure Marketplace.

“”I continue to find the push to “Stop” foreclosures, as we are currently seeing play out in the CA Legislature, ludicrous. The real problem is negative equity, and the only thing stopping foreclosures will accomplish is insuring that we are stuck with the negative equity problem for far longer then necessary.” stated Sean O’Toole, Founder & CEO of ForeclosureRadar. “I completely get why folks are mad at both the banks and the situation. However, stopping foreclosures will lead to a much longer economic recovery, increased blight, fewer jobs, lower property tax receipts, and fewer opportunities for new homebuyers and investors. Please call your state representatives today and urge them to vote no on these measures.”

 

ARIZONA’S FORECLOSURE MARKET
Arizona Foreclosure Starts Arizona Foreclosure Sales Arizona Foreclosure Timeframes
View all Arizona statistics by county, city or ZIP »
CALIFORNIA’S FORECLOSURE MARKET
Arizona Foreclosure Starts Arizona Foreclosure Sales Arizona Foreclosure Timeframes
View all California statistics by county, city or ZIP »
NEVADA’S FORECLOSURE MARKET
Arizona Foreclosure Starts Arizona Foreclosure Sales Arizona Foreclosure Timeframes
View all Nevada statistics by county, city or ZIP »
OREGON’S FORECLOSURE MARKET
Arizona Foreclosure Starts Arizona Foreclosure Sales Arizona Foreclosure Timeframes
View all Oregon statistics by county, city or ZIP »
WASHINGTON’S FORECLOSURE MARKET
Arizona Foreclosure Starts Arizona Foreclosure Sales Arizona Foreclosure Timeframes

Mortgage paperwork mess: Next housing shock?

Scott Pelley reports how problems with mortgage documents are prompting lawsuits and could slow down the weak housing market

  • Play CBS Video Video The next housing shockAs more and more Americans face mortgage foreclosure, banks’ crucial ownership documents for the properties are often unclear and are sometimes even bogus, a condition that’s causing lawsuits and hampering an already weak housing market. Scott Pelley reports.
  • Video Extra: Eviction reprieveFlorida residents AJ and Brenda Boyd spent more than a year trying to renegotiate their mortgage and save their home. At the last moment, questions about who owns their mortgage saved them from eviction.
  • Video Extra: “Save the Dream” eventsBruce Marks, founder and CEO of the nonprofit Neighborhood Assistance Corporation of America talks to Scott Pelley about his “Save the Dream” events and how foreclosures are causing a crisis in America.
(CBS News)If there was a question about whether we’re headed for a second housing shock, that was settled last week with news that home prices have fallen a sixth consecutive month. Values are nearly back to levels of the Great Recession. One thing weighing on the economy is the huge number of foreclosed houses.Many are stuck on the market for a reason you wouldn’t expect: banks can’t find the ownership documents.Who really owns your mortgage?
Scott Pelley explains a bizarre aftershock of the U.S. financial collapse: An epidemic of forged and missing mortgage documents.

It’s bizarre but, it turns out, Wall Street cut corners when it created those mortgage-backed investments that triggered the financial collapse. Now that banks want to evict people, they’re unwinding these exotic investments to find, that often, the legal documents behind the mortgages aren’t there. Caught in a jam of their own making, some companies appear to be resorting to forgery and phony paperwork to throw people – down on their luck – out of their homes.

In the 1930s we had breadlines; venture out before dawn in America today and you’ll find mortgage lines. This past January in Los Angeles, 37,000 homeowners facing foreclosure showed up to an event to beg their bank for lower payments on their mortgage. Some people even slept on the sidewalk to get in line.

So many in the country are desperate now that they have to meet in convention centers coast to coast.

In February in Miami, 12,000 people showed up to a similar event. The line went down the block and doubled back twice.

Video: The next housing shock
Extra: Eviction reprieve
Extra: “Save the Dream” events

Dale DeFreitas lost her job and now fears her home is next. “It’s very emotional because I just think about it. I don’t wanna lose my home. I really don’t,” she told “60 Minutes” correspondent Scott Pelley.

“It’s your American dream,” he remarked.

“It was. And still is,” she replied.

These convention center events are put on by the non-profit Neighborhood Assistance Corporation of America, which helps people figure what they can afford, and then walks them across the hall to bank representatives to ask for lower payments. More than half will get their mortgages adjusted, but the rest discover that they just can’t keep their home.

For many that’s when the real surprise comes in: these same banks have fouled up all of their own paperwork to a historic degree.

“In my mind this is an absolute, intentional fraud,” Lynn Szymoniak, who is fighting foreclosure, told Pelley.

While trying to save her house, she discovered something we did not know: back when Wall Street was using algorithms and computers to engineer those disastrous mortgage-backed securities, it appears they didn’t want old fashioned paperwork slowing down the profits.

“This was back when it was a white hot fevered pitch to move as many of these as possible,” Pelley remarked.

“Exactly. When you could make a whole lotta money through securitization. And every other aspect of it could be done electronically, you know, key strokes. This was the only piece where somebody was supposed to actually go get documents, transfer the documents from one entity to the other. And it looks very much like they just eliminated that stuff all together,” Szymoniak said.

Szymoniak’s mortgage had been bundled with thousands of others into one of those Wall Street securities traded from investor to investor. When the bank took her to court, it first said it had lost her documents, including the critical assignment of mortgage which transfers ownership. But then, there was a courthouse surprise.

“They found all of your paperwork more than a year after they initially said that they had lost it?” Pelley asked.

“Yes,” she replied.

Asked if that seemed suspicious to her, Szymoniak said, “Yes, absolutely. What do you imagine? It fell behind the file cabinet? Where was all of this? ‘We had it, we own it, we lost it.’ And then more recently, everyone is coming in saying, ‘Hey we found it. Isn’t that wonderful?’”

But what the bank may not have known is that Szymoniak is a lawyer and fraud investigator with a specialty in forged documents. She has trained FBI agents.

She told Pelley she asked for copies of those documents.

Asked what she found, Szymoniak told Pelley, “When I looked at the assignment of my mortgage, and this is the assignment: it looked that even the date they put in, which was 10/17/08, was several months after they sued me for foreclosure. So, what they were saying to the court was, ‘We sued her in July of 2008 and we acquired this mortgage in October of 2008.’ It made absolutely no sense.”

Produced by Robert Anderson and Daniel Ruetenik

Now for the pleading

Timothy L. McCandless, Esq. SBN 147715

LAW OFFICES OF TIMOTHY L. MCCANDLESS

1881 Business Center Drive, Ste. 9A

San Bernardino, CA 92392

Tel:  909/890-9192

Fax: 909/382-9956

Attorney for Plaintiffs

 

SUPERIOR COURT OF THE STATE OF CALIFORNIA

 

COUNTY OF ____________

___________________________________,And ROES 1 through 5,000,

Plaintiff,

v.

SAND CANYON CORPORATION f/k/a OPTION ONE MORTGAGE CORPORATION; AMERICAN HOME MORTGAGE SERVICES, INC.; WELLS FARGO BANK, N.A., as Trustee for SOUNDVIEW HOME LOAN TRUST 2007-OPT2; DOCX, LLC; and PREMIER TRUST DEED SERVICES and all persons unknown claiming any legal or  equitable right, title, estate, lien, or interest  in the property described in the complaint adverse to Plaintiff’s title, or any cloud on Plaintiff’s  title thereto, Does 1 through 10, Inclusive,

Defendants.

 CASE NO:FIRST AMENDED COMPLAINT

FOR QUIET TITLE, DECLARATORY RELIEF, TEMPORARY RESTRAINING ORDER, PRELIMINARY INJUNTION AND PERMANENT INJUNCTION, CANCELATION OF INSTRUMENT AND FOR DAMAGES ARISING FROM:

SLANDER OF TITLE; TORTUOUS

VIOLATION OF STATUTE [Penal

Code § 470(b) – (d); NOTARY FRAUD;

///

///

///

///

Plaintiffs ___________________________ allege herein as follows:

GENERAL ALLEGATIONS

            1.         Plaintiffs ___________ (hereinafter individually and collectively referred to as “___________”), were and at all times herein mentioned are,  residents of the County of _________, State of California and the lawful owner of a parcel of real property commonly known as: _________________, California _______ and the legal description is:

Parcel No. 1:

A.P.N. No. _________ (hereinafter “Subject Property”).

2.         At all times herein mentioned, SAND CANYON CORPORATION f/k/a OPTION ONE MORTGAGE CORPORATION (hereinafter SAND CANYON”), is and was, a corporation existing by virtue of the laws of the State of California and claims an interest adverse to the right, title and interests of Plaintiff in the Subject Property.

3.