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

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

Defendants 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 Needle“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 (9^th 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.

Almost 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 times. 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.

The 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.

The 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 (10^th 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 (9^th 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.

RemittiturIn 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

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

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Bank Of America, Foreclosure Crisis, Foreclosure Crisis, Video, Brad Miller, Foreclosure Settlement, Independent Foreclosure Review, Foreclosure Review, Office Of The Comptroller Of The Currency, Business News

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:

Columbine Shooting Survivor Fighting Foreclosure With Occupy LA’s Help

Richard Castaldo survived the shooting at Columbine High School 13 years ago and now he is fighting to <a href=”http://www.huffingtonpost.com/2012/11/27/richard-castaldo-columbine-foreclosure-occupy-la_n_2198146.html?utm_hp_ref=business” target=”_hplink”>rescue his home from foreclosure</a>. The people of Occupy Los Angeles are helping Castaldo and others like him to save their homes.
USDA Forecloses On 78-Year-Old Cancer Patient

The USDA foreclosed on 78-year-old Texas resident Alicia Ramirez, reportedly <a href=”http://www.huffingtonpost.com/2012/08/06/alicia-ramirez-cancer-eviction_n_1747933.html?utm_hp_ref=business” target=”_hplink”>after she was diagnosed with cancer.</a> While the USDA has thus far allowed Ramirez to remain in her home, a court order evicting the senior citizen could be issued at any time.
Foreclosure Victims Lose Belongings After Free Yard Sale Goes Wrong

The Vercher family of Woodstock, Georgia, offered to give away a <a href=”http://www.huffingtonpost.com/2012/10/25/vercher-family-woodstock-craigslist-foreclosed_n_2017738.html?1351188857″ target=”_hplink”>number of household items in a Craigslist ad</a> after their house was foreclosed on. Instead, they ended up losing nearly all of their belongings when people began taking items from inside the house.
Wells Fargo Offers Cancer Patient ‘Assistance’ Then Forecloses

Terminal breast cancer patient Cindi Davis could no longer keep up with her mortgage payments due to the cost of her medical bills. Faced with media scrutiny, her lender <a href=”http://www.huffingtonpost.com/2012/09/14/wells-fargo-forecloses-cancer-patient-cindi-davis_n_1883956.html?1347635836″ target=”_hplink”>Wells Fargo told a local radio station it was seeking “assistance”</a> for Davis just weeks before setting the date to auction her home for December 19th, 2012.
Coca-Cola Heirs Lose $37.5 Million To Foreclosure

Descendants of Coca-Cola founder Asa Candler have been hit hard by the housing bust with their <a href=”http://www.huffingtonpost.com/2012/09/17/candler-family-foreclosure-losses_n_1890911.html?1347906436″ target=”_hplink”>real estate development company losing $37.5 million to foreclosure since the Great Recession began</a>. (Pictured: the former mansion of Coca-Cola heir Asa Griggs “Buddy” Candler, Jr.)
Mom Evicted On Mother’s Day

After she and her husband were allegedly duped into a bad loan, California mom Sheri Prizant faced the possibility of being evicted from her home on Mother’s Day, <a href=”http://www.huffingtonpost.com/2012/05/11/sheri-prizant-eviction-mothers-day_n_1507681.html?1336741860″ target=”_hplink”>MSNBC</a> reports.
CT Family Never Missed A Payment

Shock Baitch and his wife Lisa of Connecticut <a href=”http://www.huffingtonpost.com/2010/12/30/bank-of-america-foreclosure_n_802861.html” target=”_hplink”>were threatened with foreclosure by Bank of America</a> after never missing a payment. BofA mistakenly told credit agencies they were seeking a loan modification. “Now I am literally and financially paying for it,” Baitch told <a href=”http://ctwatchdog.com/finance/bank-of-americas-christmas-present-foreclose-even-though-not-a-payment-missed” target=”_hplink”>CTWatchdog.com</a>.
Man Gets Free Home After Lender Shutdown

Facing foreclosure, Perry Laspina of Jacksonville, Florida ended up with a home practically for free after his mortgage lender was shut down by parent company Wells Fargo, <a href=”http://realestate.aol.com/blog/2011/04/14/foreclosure-foul-up-wins-man-a-free-home/” target=”_hplink”>AOL Real Estate reports</a>. Laspina got the home “because of the significant decreased value of the property,” a bank spokesman said.
BofA Forecloses On Building With Own Branch Office

In Boynton Beach, Florida, Bank of America filed a foreclosure lawsuit against the owner of a building that houses one of its own branches, <a href=”http://www.bizjournals.com/southflorida/news/2011/05/27/foreclosure-roundup.html?page=all” target=”_hplink”>South Florida Business Journal reports</a>.
Threatened Over $0.00 Unpaid Mortgage Payment

A Massachusetts man was told he’d <a href=”http://www.huffingtonpost.com/2011/06/08/massachusetts-homeowner-receives-foreclosure_n_872518.html” target=”_hplink”>face foreclosure unless he paid an outstanding mortgage payment worth $0.00</a>. “I’m going to write a check to them for zero dollars and have it clear? I couldn’t help but laugh,” he joked with local <a href=”http://www.wwlp.com/dpp/news/i_team/I-Team:Man-gets-a-$0-foreclosure-notice” target=”_hplink”>News 22 WWLP</a>.
Home Allegedly Ransacked By Mortgage Company

Chris Boudreau of Brooksville, Florida <a href=”http://www.huffingtonpost.com/2011/07/06/florida-home-ransacked_n_890656.html” target=”_hplink”>told local news that his house was ransacked by his mortgage company</a>, 21st Mortgage Corporation, who he says even shredded his wife’s wedding dress. “When she saw what happened…she was crying her eyes out,” <a href=”http://www.wtsp.com/news/local/article/199268/8/Mans-home-trashed-by-mortgage-company” target=”_hplink”>he told WTSP 10 News</a>.
Mortgage Payment Made Too Early

A senior couple in Pasco County, Florida faced foreclosure not for missing payments, <a href=”http://www.huffingtonpost.com/2011/08/22/senior-florida-couple-faces-foreclosure-mortgage-early_n_933147.html” target=”_hplink”>but for making one too early</a>. According to a Bank of America representative, they made themselves ineligible for a mortgage modification under the Home Affordable Modification Program when they did not make their payment in the “month in which it [was] due.”
Foreclosure In ‘World’s Richest Apartment Building’

Property developer Kent Swig and his soon-to-be ex-wife Elizabeth faced foreclosure from their apartment at 740 Park Avenue, <a href=”http://www.huffingtonpost.com/2011/08/26/foreclosure-hits-property-developer-billionaire-building_n_937676.html” target=”_hplink”>a New York City address often cited as “the world’s richest apartment building.”</a>
Untransferred Title Leads To Unfair Foreclosure

Brian and Khanklink Pyron of Houston, Texas were <a href=”http://www.huffingtonpost.com/2011/10/10/brian-khanklink-pyron-foreclosure_n_1003339.html” target=”_hplink”>threatened with foreclosure despite keeping current on their payments due to an untransferred title</a>. “We did everything we were supposed to do,” Brian Pyron told <a href=”http://www.myfoxhouston.com/dpp/news/local/110926-family-hit-by-surprise-foreclosure?CMP=201110_emailshare” target=”_hplink”>MyFoxHouston</a>.
Foreclosure On Hurricane-Destroyed Home

Brad Gana, of Seabrook, Texas was threatened with foreclosure by Bank of America even though his <a href=”http://www.huffingtonpost.com/2011/10/31/foreclosure-crisis-bank-of-america-hurricane-ike_n_1068080.html” target=”_hplink”>house had been completely destroyed years earlier in Hurricane Ike</a>. “Bank of America is ruthless in their incompetency,” <a href=”http://www.click2houston.com/news/Bank-Forecloses-On-Home-Destroyed-By-Ike/-/1735978/4718190/-/vpooliz/-/index.html” target=”_hplink”>he told Houston 2 News</a>.
$1 Coding Error Leads To Foreclosure

Utah’s Shantell Curtis and her family were threatened with <a href=”http://www.huffingtonpost.com/2011/11/03/bofa-foreclosure-missing-1-already-sold-home_n_1074538.html” target=”_hplink”>foreclosure by Bank of America on a home they had already sold years prior</a>. On top of that, the whole episode concerned the matter of just a $1 coding error.
Investigative Journalist Becomes Foreclosure Victim

George Knapp, chief investigative reporter for Las Vegas CBS affiliate KLAS, found he was a <a href=”http://www.huffingtonpost.com/2011/11/29/foreclosure-crisis-investigative-reporter-george-knapp-victims_n_1119480.html?ref=business” target=”_hplink”>victim of the very brand of foreclosure fraud he was investigating</a> for a news report. Him being the reporter, the episode put him in a “very weird spot,” <a href=”http://www.poynter.org/latest-news/als-morning-meeting/153585/local-tv-station-tackles-mortgage-mess-as-investigative-reporter-discovers-hes-a-victim-too/” target=”_hplink”>he told the Poynter Insitute</a>.
BofA Falsely Threatens Paralyzed Man With Foreclosure

Robert Galanida, a 41-year-old man paralyzed from the shoulders down, <a href=”http://www.huffingtonpost.com/2012/01/12/bank-of-america-sends-false-statements-paralyzed-eviction_n_1202463.html” target=”_hplink”>battled Bank of America for nearly a decade</a> because it repeatedly sent him false statements threatening foreclosure.
Tracy Morgan Refuses Mother Foreclosure Help

In January 2012, actor Tracy Morgan reportedly refused to give his mother <a href=”http://www.huffingtonpost.com/2012/01/31/tracy-morgan-foreclosure-mother_n_1244641.html” target=”_hplink”>$25,000 she needed to avoid foreclosure</a>, instead offering only $2,000.
Bank Of America Plaza Foreclosure

The Bank of America Plaza in Atlanta was sold at a foreclosure auction in February after its landlord, BentleyForbes, could no longer afford mortgage payments, <a href=”http://www.businessweek.com/news/2012-02-14/american-foreclosure-bottoms-at-atlanta-tower-auction-mortgages.html” target=”_hplink”>BusinessWeek reports</a>. BofA <a href=”http://www.huffingtonpost.com/2012/01/10/bank-of-america-plaza-foreclosure_n_1197040.html” target=”_hplink”>was a tenant in the building at the time</a> but had no other connection besides sharing the tower’s ironic name.
JPMorgan Tries To Foreclose On Civil Rights Activist

Even while it promoted a February 2012 campaign to “fulfill” the “vision” of Martin Luther King Jr., <a href=”http://www.huffingtonpost.com/2012/02/07/helen-bailey-foreclosure_n_1260078.html?ref=foreclosure-crisis” target=”_hplink”>JPMorgan Chase threatened 78-year-old civil rights activist Helen Bailey with foreclosure</a>. The bank ultimately allowed Bailey to stay in her home indefinitely after Occupy Nashville helped bring national attention to the issue, <a href=”http://thinkprogress.org/economy/2012/02/14/425255/helen-bailey-foreclosure/” target=”_hplink”>Think Progress</a> reports.
Foreclosure At Luxury Retirement Home

Despite being billed as “cosmopolitan living for ages 60+,” the luxury <a href=”http://www.huffingtonpost.com/2012/03/02/fox-hill-foreclosure_n_1314970.html” target=”_hplink”>Fox Hill Senior Condominiums was threatened with foreclosure</a> in March after its lenders said they were backing out.
Man Fined For Not Mowing His Old Lawn

David Englett was charged with fines by the city of Arlington, Texas for not mowing the lawn of <a href=”http://www.huffingtonpost.com/2012/03/02/david-englett_n_1317276.html” target=”_hplink”>a house he had already lost to foreclosure years earlier</a>.
101-Year-Old Woman Evicted From Home

Texana Hollis was evicted from her home due to foreclosure in September 2011, then <a href=”http://www.huffingtonpost.com/2012/01/22/texana-hollis-evicted-detroit-woman_n_1222452.html?ref=foreclosure-crisis” target=”_hplink”>denied a subsequent promise that she could move back in</a> by the U.S. Department of Housing and Urban Development. It wasn’t until April 2012 that <a href=”http://www.cbsnews.com/8301-201_162-57409700/texana-hollis-evicted-at-101-allowed-back-home/” target=”_hplink”>she was finally granted permission to return to the home</a> she’s lived in for 60 years.
BofA Forecloses On Woman After Telling Her To Miss Payments

According to Pamela Flores, an Atlanta homeowner, <a href=”http://www.huffingtonpost.com/2012/04/10/bank-america-foreclosure-miss-mortgage-payment_n_1414988.html” target=”_hplink”>Bank of America advised her to stop making payments</a> on her loan in order to negotiate a modification. After doing so, the bank foreclosed on her anyway, claiming she’d missed a trial payment
Mother, Disabled Daughter Forced Out Of Home Even After BofA Modification

Dirma Rodriguez and her disabled daughter<a href=”https://editorial.huffingtonpost.com/entry/?blog_id=2&entry_id=1423883″ target=”_hplink”> were forced to flee their home in minutes</a> after Bank of America sold it to a flipper at a foreclosure auction, even though the bank had already modified her loan. But not all hope is lost; Rodriguez may get her home back after the Occupy Fights Foreclosure movement intervened.

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Ruling Against Bank In Mortgage Modification Suit

Judge Rules Against Bank In Mortgage Modification Suit

Shah Gilani, Contributor

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Half million dollar house in Salinas, Californ...

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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.

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

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.

First Amended Complaint 10/18/2010
Declaration of Margaret Carswell 7/13/2010
Chase’s Motion to Dismiss First Amended Complaint 10/27/2010
Chase’s Request for Judicial Notice 10/27/2010
Plaintiff’s Opposition to Motion to Dismiss 12/03/2010
Plaintiff’s Request for Judicial Notice 12/03/2010 – Congressional Oversight Panel’s Report

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.

Complaint 10/10/2010
Temporary Restraining Order 10/26/2010

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).

Order Granting Hillery’s Motion to Dismiss dated 12/09/2008

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.

Order Granting Motion to Dismiss Without Prejuduce 3/18/2010
Second Amended Complaint for Wrongful Foreclosure 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.

Opinion Denying Relief from Automatic Stay 10/29/2008
District Court Reversal of Judge Burford’s Order 7/21/2010

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

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

Motion for Stay 7/03/2008
Order Denying MERS Relief from Stay 10/21/2009
First Amended Adversary Complaint Case No. 09-01135-SB 1/15/2010
Opposition to MERS Motion to Dismiss Complaint 2/24/2010

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.

Objection to CitiBank Proof of Claim 4/06/2010
Declaration in Support of Objection 4/06/2010
Points & Authorities in Support of Objection 4/06/2010
Order Disallowing CitiBank Claim 5/20/2010

California State Court

Cabalu v. Mission Bishop Real Estate

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

Complaint to Set Aside Trustee’s Sale filed August 2009

Davies v. NDEX West, Case No. INC 090697

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

Complaint for Fraud dated 4/08/2010

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.

Complaint to Stay Foreclosure 5/24/2010
Order to Show Cause 5/25/2010

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

Court of Appeal’s Stay of Foreclosure Sale 11/25/2009
Opinion of Court of Appeal, Fourth District 6/2/2010
Petition for review, California Supreme Court 7/13/2010. Denied 8/18/2010.
Order granting Preliminary Injunction Orange County Superior Court 11/23/2010.

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.

Complaint for Fraud dated January 2008

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

Order Vacating Foreclosure Sale and Dismissing Chase’s Complaint decided 5/04/2010

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.

Evaluation of Federal Oversight of WaMu released 4/16/2010

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:

OCC Advisory Letter 2000-7 July 25, 2000
OCC Advisory Letter 2000-9 August 29, 2000
OCC Advisory Letter 2002-3 March 22, 2002
OCC Advisory Letter 2003-2 February 21, 2003
OCC Advisory Letter 2003-3 February 21, 2003
Guidance from OCC, FDIC, OTS, and Federal Reserve October 4, 2005

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

California Can Finally Say “Show Me The…..Note!”

Attorneys representing homeowners in all 50 states must undoubtedly feel that their states do not do enough to protect homeowners from preventable foreclosures. In non-judicial states like California, the lack of oversight in the foreclosure process at all levels has led to rampant abuse, fraud and at the very least, negligence. Our courts have done little to diffuse this trend with cases like Chilton v. Federal Nat. Mortg. Ass’n holding: “(n)on-judicial foreclosure under a deed of trust is governed by California Civil Code Section 2924 which relevant section provides that a “trustee, mortgagee or beneficiary or any of their authorized agents” may conduct the foreclosure process.” California courts have held that the Civil Code provisions “cover every aspect” of the foreclosure process, and are “intended to be exhaustive.” There is no requirement that the party initiating foreclosure be in possession of the original note.

Chilton and many other rulings refuse to acknowledge that homeowners have any rights to challenge wrongful foreclosures including Gomes v Countrywide, Fontenot v Wells Fargo, and a long line of tender cases holding that a plaintiff seeking to set aside a foreclosure sale must first allege tender of the amount of the secured indebtedness. Complicating matters further is the conflict between state, federal and bankruptcy cases regarding Civil Code 2932.5 and the requirement of recording an assignment prior to proceeding to foreclosure.
While the specific terms are still evolving, the http://www.nationalmortgagesettlement.com/ information website has released the Servicing Standards Highlights that set forth the basic changes that the banks and servicers have agreed to as part of the settlement. When the AG Settlement is finalized, it will be reduced to a judgment that can be enforced by federal judges, the special independent monitor Joseph Smith, federal agencies and Attorneys General. This judgment can be used by attorneys to define a standard and therefore allow us to fashion a remedy that will improve our chances of obtaining relief for our clients.

Lean Forward

Many have opined about the deficiencies in the AG Settlement, from the lack of investigation to inadequacy of the dollars committed to compensate for wrongful foreclosures, principal reduction or refinancing. The reality is, as tainted as it may be, the AG Settlement leaves us better off than were were for future cases. It does not however, address past wrongs in any meaningful way. The terms make it abundantly clear that this is not the settlement for compensation; if there is any remote possibility of compensation it must be sought in the OCC Independent Foreclosure Review and the homeowner must meet the extreme burden of proving financial harm caused by the wrongful foreclosure. For California, the AG Settlement at best, improves our ability to request crucial documents to challenge wrongful foreclosures which previously were difficult if not impossible to obtain. This will allow us to negotiate better loss mitigation options for clients.

Loan Modification 2008-2011

The homeowner submits an application 10 times, pays on 3 different trial plans, speaks to 24 different representatives who give him various inconsistent versions of status. After two years, and thousands of default fees later, he is advised that the investor won’t approve a modification and foreclosure is imminent. Actually, the truth was that the homeowner was in fact qualified for the modification, the data used for the NPV analysis was incorrect and the investor had in fact approved hundreds of modifications according to guidelines that were known to the servicer from the beginning. How could the AG Settlement not improve on this common scenario?

Foreclosure Rules
14 days prior to initiating foreclosure, the servicer must provide the homeowner with notice which must include:

facts supporting the bank’s right to foreclose
payment history
a copy of the note with endorsements
the identity of the investor
amount of delinquency and terms to bring loan current
summary of loss mitigation efforts
A prompt review of the 14 Day Pre Foreclosure Notice and investigation regarding the securitization aspects of the case can result in the filing of a lawsuit and request for TRO if all terms have not been complied with or the documents provided do not establish the right to foreclose. There will be no issue of tender, prejudice or show me the note that can be raised in opposition by defendants and this is an opportunity that we have not been afforded under current case law. Additionally, a loan level review will reveal improper fees and charges that can be challenged. Deviation from the AG Settlement Servicing Standards should be aggressively pursued through the proper complaint channels.

Loan Modification Guidelines

Notify the homeowner of all loss mitigation options
Servicer shall offer a loan modification if NPV positive
HAMP trial plans shall promptly be converted to permanent modifications
Servicer must review and make determination within 30 days of receipt of complete package
Homeowner must submit package within 120 days of delinquency to receive answer prior to referral to foreclosure (could be problematic since most homeowners are more than 120 days late)
After the loan has been referred to foreclosure, the homeowner must apply for a loan modification within 15 days before sale. Servicer must expedite review.
Servicer must cease all collection efforts while a complete loan modification package is under review or homeowner is making timely trial modification payments
Other significant terms include the requirement that the servicer maintain loan portals where the homeowner can check status which must be updated every ten days, assign a single point of contact to every loan, restriction on default fees and forced placed insurance, modification denials must state reasons and provide document support and the homeowner has 30 days to appeal a negative decision.

Short Sales Will Now Really Be Short

The rules regarding short sales will greatly increase the chances that short sales will be processed in a timely manner and accordingly, will result in more short sales being closed.

Banks/servicers must make short sale requirements public
Banks/servicers must provide a short sale price evaluation upon request by the homeowner prior to listing the property
Receipt of short sale packages must be confirmed and notification of missing documents must be provided within 30 days
Knowledge of all of the new requirements for processing foreclosures, loan modifications and short sales can greatly increase our chances of obtaining successful outcomes for clients. Resolution is the goal, and now, we may have leverage that did not exist before.

No right to “HAMP” as third party bene try Negligence with a side of “HAMP”

For all those who have found out the hard way that judges do not like a breach of HAMP contract cause of action, here is a way around it: sue for negligent handling of the HAMP application and use this citation in your opposition to demurrer:

“It is well established that a person may become liable in tort for negligently failing to perform a voluntarily assumed undertaking even in the absence of a contract so to do. A person may not be required to perform a service for another but he may undertake to do so — called a voluntary undertaking. In such a case the person undertaking to perform the service is under a duty to exercise due care in performing the voluntarily assumed duty, and a failure to exercise due care is negligence. [emphasis added]” Valdez v. Taylor Auto. Co. (1954) 129 Cal.App.2d 810, 817; Aim Ins. Co. v. Culcasi (1991) 229 Cal. App. 3d 209, 217-218.

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.”

Here is what not to do Get an injunction, then not post the Bond, then file a frivilious appeal

Filed 4/16/12

CERTIFIED FOR PUBLICTION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

JANE BROWN,

Plaintiff and Appellant,

WELLS FARGO BANK, NA,

Defendant and Respondent.

2d Civil No. B233679

(Super. Ct. No. 56-2010-00378817-CU-OR-VTA)

(Ventura County)

Some appeals are filed to delay the inevitable. This is such an appeal. It is frivolous and was ” ‘dead on arrival’ at the appellate courthouse.” (Estate of Gilkison (1998) 65 Cal.App.4th 1443, 1449.)

Jane Brown was/is in default on a home mortgage. Foreclosure proceedings were commenced and she filed suit to prevent the sale of her home. She appeals from a June 8, 2011 order dissolving a preliminary injunction and allowing the sale to go forward. This was attributable to her failing to deposit $1,700 a month into a trust account as ordered by the trial court. The preliminary injunction required that the money be deposited in lieu of an injunction bond. (Code Civ. Proc., § 529, subd. (a).)

In her opening brief appellant claims that the order dissolving the injunction is invalid because it issued “ex parte.” After calendar notice was sent to him, trial and appellate counsel, Jason W. Estavillo, asked that we dismiss the appeal. We will deny this request. We will affirm the judgment and refer the matter to the California State Bar for consideration of discipline.

Facts and Procedural History

In 2010 appellant defaulted on her $480,000 World Savings Bank FSB loan secured by a deed of trust.[1] Wachovia Mortgage, a division of Wells Fargo Bank NA (respondent) recorded a Notice of Trustee’s Sale on May 12, 2010. The trustee’s sale was postponed to August 9, 2010.

Appellant sued for declaratory/injunctive relief on August 5, 2010. The trial court granted a temporary restraining order to stop the trustee’s sale. On September 7, 2010, the trial court granted a preliminary injunction on condition that appellant deposit $1,700 a month in a client trust account in lieu of a bond.

On June 2, 2011, respondent filed an ex parte application to dissolve the preliminary injunction because appellant had not made a single payment. It argued that “we’re facing a deadline under the trustee sale date of next week. And we have no reason to believe these payments . . . will be made. She has not paid anything on her mortgage in over two years. There is no reason to believe she’s going to make this payment. It’s all been simply a delay tactic.”

Appellant, represented by Mr. Estavillo, appeared at the June 3, 2011 ex parte hearing and argued that the proposed order should not issue ex parte. The trial court agreed, set a June 8, 2011 hearing date, and told appellant’s trial counsel “to scramble on this. Find out from your client what she has done or hasn’t done. And I should tell you that one of the myths that sometimes creeps into this [type of] case is that if the plaintiff is successful, they end up with a free house. It doesn’t work that way.” Counsel told the court that he would “make sure” the payments would “get made.”

On June 7, 2011, appellant filed opposition papers but failed to explain why the money was not deposited in lieu of a bond. Respondent argued that appellant has “not complied with the preliminary injunction. They have not made a payment. There is nothing in there about their ability to make the payment . . . . They have defied [the] court order since December and they continue to do so.”

The trial court dissolved the preliminary injunction and signed the proposed order. The June 8, 2011 order provides: “The foreclosure sale scheduled for June 10, 2011 may go forward as scheduled.”

On June 8, 2011, appellant filed a notice of appeal. The filing of the notice of appeal works as a “stay” of the trial court’s order and stops the trustee’s sale. (Code Civ. Proc., § 916, subd. (a); Royal Thrift & Loan Co. v. County Escrow, Inc. (2004) 123 Cal.App.4th 24, 35-36.)

Frivolous Appeal

In the opening brief appellant’s counsel feebly argues that respondent failed to make a good cause showing for ex parte relief and that her due process rights were violated. She prays for reversal of the order allowing sale of her home. But rather than granting ex parte relief, the trial court agreed to set the matter for hearing. So, the premise to the sole contention on appeal, the ex parte nature of the order, is false. Moreover, at the noticed hearing, appellant expressly waived any claim that the hearing was not properly noticed or was irregular. (Eliceche v. Federal Land Bank Assn. (2002) 103 Cal.App.4th 1349, 1375.) Waiver aside, the trial court had good cause to “fast track” the hearing. The Notice of Trustee’s Sale was about to expire and appellant had not deposited money in lieu of an injunction bond, as ordered. Code of Civil Procedure section 529, subdivision (a) required that the preliminary injunction be dissolved.

Appellant makes no showing that the trial court abused its discretion in dissolving the preliminary injunction. Nor does she even suggest that there has been a miscarriage of justice. She complains that the order has the words “ex parte” in the caption. This is “form over substance” argument. (Civ. Code, § 3528.) On appeal, the substance and effect of the order controls, not its label. (Crtizer v. Enos (2010) 187 Cal.App.4th 1242, 1250; Viejo Bancorp, Inc. v. Wood (1989) 217 Cal.App.3d 200, 205.)

Conclusion

The appellate courts take a dim view of a frivolous appeal. Here, with the misguided help of counsel, the trustee’s sale was delayed for over two years. Use of the appellate process solely for delay is an abuse of the appellate process. (In re Marriage of Flaherty(1982) 31 Cal.3d 637, 646; see also In re Marriage of Greenberg (2011) 194 Cal.App.4th 1095, 1100.) We give appellant the benefit of the doubt. But we have no doubt about appellate counsel’s decision to bring and maintain this appeal, and at the eleventh hour, seek a dismissal. No viable issue is raised on appeal and it is frivolous as a matter of law. (See e.g. In re Marriage of Greenberg, supra, 194 Cal.Ap.4th 1095.) “[R]espondent is not the only person aggrieved by this frivolous appeal. Those litigants who have nonfriviolous appeals are waiting in line while we process the instant appeal.” (Estate of Gilkison, supra, 65 Cal.App.4th at p. 1451.) Respondent has not asked for monetary sanctions. We have not issued an order to show cause seeking sanctions payable to the court. But we do not suffer lightly the abuse of the appellate process.

Appellant’s request to dismiss the appeal is denied. The June 8, 2010 order dissolving the preliminary injunction is affirmed. Respondent is awarded costs on appeal. If there is a standard clause awarding attorney fees to the prevailing party in the note and/or deed of trust, respondent is also awarded reasonable attorney fees in an amount to be determined by the trial court on noticed motion. The clerk of this court is ordered to send a copy of this opinion to the California State Bar for consideration of discipline. We express no opinion on what discipline, if any, is to be imposed. (In re Mariage of Greenberg, supra.)

CERTIFIED FOR PUBLICATION.

YEGAN, J.

We concur:

GILBERT, P.J.

PERREN, J.

Henry Walsh, Judge

Superior Court County of Ventura

______________________________

Jason W. Estavillo, for Appellant

Robert A. Bailey; Anglin, Flewell, Rasmusen, Campbell & Trytten, for Respondent.

[1] After World Savings Bank FSB issued the loan in 2006, it changed its name to Wachovia Mortgage FSB. Wachovia Mortgage merged into and became a division of Wells Fargo Bank NA.

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Brush fire continues to rage in Angeles National Forest – Los Angeles Times (latimesblogs.latimes.com)
Flooding, power outages linger in Isaac’s wake – CBS News (cbsnews.com)

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.

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,

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. At all times herein mentioned, Defendant AMERICAN HOME MORTGAGE SERVICES, INC. (hereinafter “AMERICAN”), is and was, a corporation existing by virtue of the laws of the State of Delaware, and at all times herein mentioned was conducting ongoing business in the State of California.

4. At all times herein mentioned, Defendant WELLS FARGO BANK, N.A., as Trustee for SOUNDVIEW HOME LOAN TRUST 2007-OPT2 (hereinafter referred to as “WELLS FARGO”), is and was, a member of the National Banking Association and makes an adverse claim to the Plaintiff MADRIDS’ right, title and interest in the Subject Property.

5. At all times herein mentioned, Defendant DOCX, L.L.C. (hereinafter “DOCX”), is and was, a limited liability company existing by virtue of the laws of the State of Georgia, and a subsidiary of Lender Processing Services, Inc., a Delaware corporation.

6. At all times herein mentioned, __________________, was a company existing by virtue of its relationship as a subsidiary of __________________.

7. Plaintiffs are ignorant of the true names and capacities of Defendants sued herein as DOES I through 10, inclusive, and therefore sues these Defendants by such fictitious names and all persons unknown claiming any legal or equitable right, title, estate, lien, or interest in the property described in the complaint adverse to Plaintiffs’ title, or any cloud on Plaintiffs’ title thereto. Plaintiffs will amend this complaint as required to allege said Doe Defendants’ true names and capacities when such have been fully ascertained. Plaintiffs further allege that Plaintiffs designated as ROES 1 through 5,000, are Plaintiffs who share a commonality with the same Defendants, and as the Plaintiffs listed herein.

8. Plaintiffs are informed and believe and thereon allege that at all times herein mentioned, Defendants, and each of them, were the agent and employee of each of the remaining Defendants.

9. Plaintiffs allege that each and every defendants, and each of them, allege herein ratified the conduct of each and every other Defendant.

10. Plaintiffs allege that at all times said Defendants, and each of them, were acting within the purpose and scope of such agency and employment.

11. Plaintiffs are informed and believe and thereupon allege that circa July 2004, DOCX was formed with the specific intent of manufacturing fraudulent documents in order create the false impression that various entities obtained valid, recordable interests in real

properties, when in fact they actually maintained no lawful interest in said properties.

12. Plaintiffs are informed and believe and thereupon allege that as a regular and ongoing part of the business of Defendant DOCX was to have persons sitting around a table signing names as quickly as possible, so that each person executing documents would sign approximately 2,500 documents per day. Although the persons signing the documents claimed to be a vice president of a particular bank of that document, in fact, the party signing the name was not the person named on the document, as such the signature was a forgery, that the name of the person claiming to be a vice president of a particular financial institution was not a “vice president”, did not have any prior training in finance, never worked for the company they allegedly purported to be a vice president of, and were alleged to be a vice president simultaneously with as many as twenty different banks and/or lending institutions.

13. Plaintiffs are informed and believe and thereupon allege that the actual signatories of the instruments set forth in Paragraph 12 herein, were intended to and were fraudulently notarized by a variety of notaries in the offices of DOCX in Alpharetta, GA.

14. Plaintiffs are informed and believe and thereupon allege that for all purposes the intent of Defendant DOCX was to intentionally create fraudulent documents, with forged signatures, so that said documents could be recorded in the Offices of County Recorders through the United States of America, knowing that such documents would forgeries, contained false information, and that the recordation of such documents would affect an interest in real property in violation of law.

15. Plaintiffs allege that on or about, ____________, that they conveyed a first deed of trust (hereinafter “DEED”) in favor of Option One Mortgage, Inc. with an interest of

Interested Call our offices now!!!!

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909-890-9192

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925-957-9797

60 Minutes: The Next Housing Shock (ritholtz.com)

Post Foreclosure and Reversing your CA Foreclosure Sale under new Case Law

Reversing a foreclosure sale: Avoiding the “Tender Rule”

Firm commentary:

Foreclosure auction signs (Photo credit: niallkennedy)

If you are considering suing to reverse a foreclosure sale, consider the LONA case for a better understanding on CA non-judicial sales and exceptions to the requirement that you must offer to pay off the loan to title to your home back in your name.

After a nonjudicial foreclosure sale has been completed, the traditional method by which the sale is challenged is a suit in equity to set aside the trustee’s sale. (Anderson v. Heart Federal Sav. & Loan Assn. (1989) 208 Cal.App.3d 202, 209-210.) Generally, a challenge to the validity of a trustee’s sale is an attempt to have the sale set aside and to have the title restored. (Onofrio v. Rice (1997) 55 Cal.App.4th 413, 424 (Onofrio), citing 4 Miller & Starr, Cal. Real Estate (2d ed. 1989) Deeds of Trusts & Mortgages, Â§ 9.154, pp. 507-508.)

The burden of proof is on the former owner:

A nonjudicial foreclosure sale is accompanied by a common law presumption that it â€—was conducted regularly and fairly. This presumption may only be rebutted by substantial evidence of prejudicial procedural irregularity. The mere inadequacy of price, absent some procedural irregularity that contributed to the inadequacy of price or otherwise injured the trustor, is insufficient to set aside a nonjudicial foreclosure sale.

It is the burden of the party challenging the trustee’s sale to prove such irregularity and thereby overcome the presumption of the sale’s regularity.â€– (Melendrez v. D & I Investment, Inc. (2005) 127 Cal. App.4th 1238, 1258 (Melendrez) In addition, under section 2924,6 there is a conclusive statutory presumption created in favor of a bona fide purchaser who receives a trustee’s deed that contains a recital that the trustee has fulfilled its statutory notice requirements. (Melendrez, supra, 127 Cal App.4th at p. 1250.)

Case law instructs that the elements of an equitable cause of action to set aside a foreclosure sale are: (1) the trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust;

(2) the party attacking the sale (usually but not always the trustor or mortgagor) was prejudiced or harmed; and

(3) in cases where the trustor or mortgagor challenges the sale, the trustor or mortgagor tendered the amount of the secured indebtedness or was excused from tendering. (Bank of America etc. Assn. v. Reidy, supra, 15 Cal.2d at p. 248; Saterstrom v. Glick Bros. Sash, Door & Mill Co. (1931) 118 Cal.App. 379, 383 (Saterstrom) [trustee’s sale set aside where deed of trust was void because it failed to adequately describe property]; Stockton v. Newman (1957) 148 Cal.App.2d 558, 564 (Stockton) [trustor sought rescission of the contract to purchase the property and the promissory note on grounds of fraud]; Sierra-Bay Fed. Land Bank Ass’n v. Superior Court (1991) 227 Cal.App.3d (1991) 227 Cal.App.3d 318, 337 (Sierra-Bay) [to set aside sale, â€•debtor must allege such unfairness or irregularity that, when coupled with the inadequacy of price obtained at the sale, it is appropriate to invalidate the saleâ€–; â€•debtor must offer to do equity by making a tender or otherwise offering to pay his debtâ€–]; Abadallah v. United Savings Bank (1996) 43 Cal.App.4th 1101, 1109 (Abadallah) [tender element]; Munger v. Moore (1970) 11 Cal.App.3d 1, 7 [damages action for wrongful foreclosure]; see also 1 Bernhardt, Mortgages, Deeds of Trust and Foreclosure Litigation (Cont.Ed.Bar 4th ed. 2011 supp.) § 7.67, pp. 580-581 and cases cited therein summarizing grounds for setting aside trustee sale.)

The Tender requirement

Because the action is in equity, a defaulted borrower who seeks to set aside a trustee’s sale is required to do equity before the court will exercise its equitable powers. (MCA, Inc. v. Universal Diversified Enterprises Corp. (1972) 27 Cal.App.3d 170, 177 (MCA).)

Consequently, as a condition precedent to an action by the borrower to set aside the trustee’s sale on the ground that the sale is voidable because of irregularities in the sale notice or procedure, the borrower must offer to pay the full amount of the debt for which the property was security. (Abadallah, supra, 43 Cal.App.4th at p. 1109; Onofrio, supra, at p. 424 [the borrower must pay, or offer to pay, the secured debt, or at least all of the delinquencies and costs due for redemption, before commencing the action].)

The rationale behind the rule is that if [the borrower] could not have redeemed the property had the sale procedures been proper, any irregularities in the sale did not result in damages to the [borrower].– (FPCI RE-HAB 01 v. E & G Investments, Ltd. (1989) 207 Cal.App.3d 1018, 1022.)

A series of cases have come down in the last few weeks that have some very serious ramifications for lenders.

The most dramatic case is that of Lona v. Citibank, based on a property right here in my back yard. The fact pattern in Lona is that the bank foreclosed and Lona sued the bank to void the sale on the absurd theory that the lender made him an unconscionable loan he couldn’t possibly afford therefore the loan was void. (Apparently, he’s a mushroom farmer in Hollister making $40k/yr)*.

Lona alleged that he agreed to refinance the home, on which he owed $1.24 million at the time, in response to an ad. The monthly payments were more than four times his income, so unsurprisingly, he defaulted within five months and the home was sold at a trustee’s sale in August 2008.

Lona obtained two re-financed loans: the first being $1.125 million, a 30-year term and an interest rate that was fixed at 8.25% for five years and adjustable annually after that, with a cap of 13.255 and the second loan being $375,000, with a term of 15 years, a fixed rate of 12.25%, monthly payments of nearly $4,000, and a balloon payment of $327,000 at the end of the 15 year term.

Lona testified that English was not his first language, he was 50 years old at the time of the loan and he that he did not understand the loan documents. Of course, he also did not read the loan documents.

After Citibank foreclosed, it filed an unlawful detainer action (“UD”) to evict Lona, but the UD was consolidated with Lona’s lawsuit to void and set aside the foreclosure sale. According to Citibank, Lona had been “living for free” in the house and had not posted bond or paid any “impound funds.” (since 2007!!!)

San Benito County Superior Court Judge Harry Tobias said Lona’s “bare allegations” were not enough to persuade him that the bank or the broker had engaged in misconduct and that it was “hard to believe” that the Lonas weren’t “responsible for their own conduct,” especially since they owned other property that had been foreclosed upon.

Despite the craziness of Plaintiff’s theory, the appellate court rendered a 32 page opinion that discussed in major detail that:
1) The borrower did not have to tender offer (which goes against almost a century of a legal precedent); and
2) The borrower’s allegations of the loan being unconscionable were not wholly disproven by the lenders.

The Court decision stated “Lona had received $1.5 million from the lenders and had not made any payments since June 2007. Meanwhile, he and his wife continued to live in the house for free, without paying rent or any impound funds…” and so it was quite aware of the inequities or injustice of the situation. However, the Court still concluded that the Lenders did not meet their burden of proof on summary judgment and so the case may continue at its snail pace until trial. [Lona v. Citibank No. H036140. Court of Appeals of California, Sixth District. (December 21, 2011.)]

The other case that came down a week before Lona (Dec. 21) was the Bardasian (Dec. 15) case, where the borrower sued because the lender’s trustee did not discuss loan mod options with her as required by Civil Code Section 2923.5. The court granted the borrower’s injunction and like Lona, the borrowers did not tender, nor put up an undertaking or surety for the bond. The lower court had ruled at the injunction hearing that the trustee had not complied with the code and that Bardasian must bond in the amount of $20k. When she failed to do so, the lower court dissolved the injunction.

On appeal, the appellate court concluded that since the injunction had been issued after the court had ruled on the merits stating:

“Plaintiff seeks postponement of the foreclosure sale until the defendants comply with Civil Code [section] 2923.5. Plaintiff has established that BAC Home Loan Servicing did not comply with Civil Code section 2923.5 prior to the issuance of the notice of default on September 15, 2010.” “Plaintiff states under penalty of perjury that no contact was ever made at least 30 days before the notice of default was issued…”

that the injunction was not actually “preliminary” at all, but that the plaintiffs had essentially won their argument showing that the defendants had not complied with Section 2923.5 and so no Notice of Default could successfully issue and the trustee’s sale could not take place until Section 2923.5 had been complied with. (Bardasian v. Santa Clara Partners Mortgage C068488. Court of Appeals of California, Third District. (December 15, 2011).

So in one month, two appellate cases came down where the borrower could either pursue voiding a trustee’s sale or enjoin one without tendering!

2012 will prove to be an interesting year as more decisions stemming from the subprime meltdown start coming down the pipeline.

* The decision contained a footnote that Lona’s loan application that apparently stated Lona made $20k/month, or $240k/yr. Clearly, as stated income loans go, that was a whopper!

The Exceptions to the Tender requirement under LONA

First, 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. (Stockton, supra, (1957) 148 Cal.App.2d at p. 564) [trustor sought rescission of the contract to purchase the property and the promissory note on grounds of fraud]; Onofrio, supra, 55 Cal.App.4th at p. 424.)

Second, 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. In such cases, it is deemed that the tender and the counter claim offset one another, and if the offset is equal to or greater than the amount due, a tender is not required. (Hauger, supra, (1954) 42 Cal.2d at p. 755.)

Third, a tender may not be required where it would be inequitable to impose such a condition on the party challenging the sale. (Humboldt Savings Bank v. McCleverty (1911) 161 Cal. 285, 291 (Humboldt). In Humboldt, the defendant’s deceased husband borrowed $55,300 from the plaintiff bank secured by two pieces of property. The defendant had a $5,000 homestead on one of the properties. (Id. at p. 287.) When the defendant’s husband defaulted on the debt, the bank foreclosed on both properties. In response to the bank’s argument that the defendant had to tender the entire debt as a condition precedent to having the sale set aside, the court held that it would be inequitable to require the defendant to•pay, or offer to pay, a debt of $57,000, for which she is in no way liable– to attack the sale of her $5,000 homestead.10 (Id. at p. 291.)

Fourth, 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. (Dimock, supra, 81 Cal.App.4th at p. 878 [beneficiary substituted trustees; trustee’s sale void where original trustee completed trustee’s sale after being replaced by new trustee because original trustee no longer had power to convey property].)

For a better understanding of how this new case affects your individual situation, contact the Firm and set up an appointment.

David Ambrose on James v. Recontrust (timothymccandless.wordpress.com)
WRONGFUL FORECLOSURE IN BANKRUPTCY (most bankruptcy judges won’t hear it the send you to state court) (timothymccandless.wordpress.com)
2932.5 is dead in 2nd district they can’t read “or other encumbrance” (timothymccandless.wordpress.com)
Foreclosure process is ‘utterly broken’ (timothymccandless.wordpress.com)
Audit Uncovers Extensive Flaws in Foreclosures (copy attached) (timothymccandless.wordpress.com)
Wrongful Foreclosure (massjoinderlitigation.wordpress.com)
IS the TRUSTEE a Common Agent for ALL Parties? “YES”, say the Experts at Northwest Trustee Services Inc. in Santa Ana, CA., Attny Kathy Shakibi (timothymccandless.wordpress.com)
Foreclosure in California (massjoinderlitigation.wordpress.com)

WRONGFUL FORECLOSURE IN BANKRUPTCY (most bankruptcy judges won’t hear it the send you to state court)

in RE: Macklin: Deutsche Must Answer Wrongful Foreclosure and Quiet Title

On February 17, 2012, in Information, News, Securitization, by Dan Edstrom

in RE: Macklin: Deutsche Must Answer Wrongful Foreclosure and Quiet Title

By Daniel Edstrom
DTC Systems, Inc.

Excerpts on Wrongful Foreclosure (changed by the Judge Sargis to Breach of Contract)

… a record has been created that someone not of record title purported to take action on a Deed of Trust prior to compliance with Civil Code 2932.5.

The court will not sanction conduct by this Defendant which puts into question the validity of the nonjudicial foreclosure process and California real property records. Though this issue could have been simply addressed by the recording of a new notice of default months ago, the ninety days under the new notice of default allowed to run and this creditor be on the door step of conducting a nonjudicial foreclosure sale consistent with the California statutes, it has elected to continue with the existing notice of default, subsequent substitution of trustee, and sale.

The contract between the parties is the Note and Deed of Trust.

Excerpt on Quiet Title

Though not artfully done, Macklin sufficiently explains that he asserts superior title to the Property over the Trustee’s Deed through which DBNTC asserts its interest in the Property. Given that Macklin has asserted that DBNTC cannot show that it complied with the minimal requirements for properly conducting a nonjudicial foreclosure sale, the motion to dismiss the Tenth Cause of Action is denied.

Download order here: http://dtc-systems.net/wp-content/uploads/2012/02/Macklin-222-Order.pdf

Download memorandum opinion and decision (part 1) here: http://dtc-systems.net/wp-content/uploads/2012/02/Macklin-221-Memorandum_Opinion_and_Decision_Part1.pdf

Download memorandum opinion and decision (part 2) here: http://dtc-systems.net/wp-content/uploads/2012/02/Macklin-221-Memorandum_Opinion_and_Decision_Part2.pdf

Tagged with: breach of contract • California real property records • Civil Code 2932.5 • Daniel Edstrom • DBNTC • Deed of Trust • Deutsche • DTC-Systems • in RE: Macklin • Judge Sargis • nonjudicial foreclosure process • note • Trustee’s Deed • Wrongul Foreclosure

2932.5 is dead in 2nd district they can’t read “or other encumbrance” (timothymccandless.wordpress.com)
Roger Bernhardt on Calvo -D/T assignments need not be recorded pre foreclosure (timothymccandless.wordpress.com)
Foreclosure process is ‘utterly broken’ (lansner.ocregister.com)
Audit Uncovers Extensive Flaws in Foreclosures (copy attached) (timothymccandless.wordpress.com)
The Status Of America’s Troubling Foreclosure Market (businessinsider.com)
DSnews.com: Foreclosure Sales Up for West Coast States Except Washington (foreclosure-avoidance.com)
FORECLOSURES: Here They Come (businessinsider.com)
The Trustee sale can be set aside (timothymccandless.wordpress.com)
Short Sale Company Highlights Problems with 25 Billion Dollar Foreclosure Settlement and Presents Homeowners with Additional Options to Avoid Foreclosure (prweb.com)
Judicial council meeting.You wonder about the attitude in California in particular, with regard to the problems w e’re facing…this should give you an idea. (timothymccandless.wordpress.com)

THE SAN FRANSICO “SMOKING GUN REPORT”

Audit Uncovers Extensive Flaws in Foreclosures

By GRETCHEN MORGENSON

Published: February 15, 2012

An audit by San Francisco county officials of about 400 recent foreclosures there determined that almost all involved either legal violations or suspicious documentation, according to a report released Wednesday.

Annie Tritt for The New York Times

Phil Ting, the San Francisco assessor-recorder, found widespread violations or irregularities in files of properties subject to foreclosure sales.

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Anecdotal evidence indicating foreclosure abuse has been plentiful since the mortgage boom turned to bust in 2008. But the detailed and comprehensive nature of the San Francisco findings suggest how pervasive foreclosure irregularities may be across the nation.

The improprieties range from the basic — a failure to warn borrowers that they were in default on their loans as required by law — to the arcane. For example, transfers of many loans in the foreclosure files were made by entities that had no right to assign them and institutions took back properties in auctions even though they had not proved ownership.

Commissioned by Phil Ting, the San Francisco assessor-recorder, the report examined files of properties subject to foreclosure sales in the county from January 2009 to November 2011. About 84 percent of the files contained what appear to be clear violations of law, it said, and fully two-thirds had at least four violations or irregularities.

Kathleen Engel, a professor at Suffolk University Law School in Boston said: “If there were any lingering doubts about whether the problems with loan documents in foreclosures were isolated, this study puts the question to rest.”

The report comes just days after the $26 billion settlement over foreclosure improprieties between five major banks and 49 state attorneys general, including California’s. Among other things, that settlement requires participating banks to reduce mortgage amounts outstanding on a wide array of loans and provide $1.5 billion in reparations for borrowers who were improperly removed from their homes.

But the precise terms of the states’ deal have not yet been disclosed. As the San Francisco analysis points out, “the settlement does not resolve most of the issues this report identifies nor immunizes lenders and servicers from a host of potential liabilities.” For example, it is a felony to knowingly file false documents with any public office in California.

In an interview late Tuesday, Mr. Ting said he would forward his findings and foreclosure files to the attorney general’s office and to local law enforcement officials. Kamala D. Harris, the California attorney general, announced a joint investigation into foreclosure abuses last December with the Nevada attorney general, Catherine Cortez Masto. The joint investigation spans both civil and criminal matters.

The depth of the problem raises questions about whether at least some foreclosures should be considered void, Mr. Ting said. “We’re not saying that every consumer should not have been foreclosed on or every lender is a bad actor, but there are significant and troubling issues,” he said.

California has been among the states hurt the most by the mortgage crisis. Because its laws, like those of 29 other states, do not require a judge to oversee foreclosures, the conduct of banks in the process is rarely scrutinized. Mr. Ting said his report was the first rigorous analysis of foreclosure improprieties in California and that it cast doubt on the validity of almost every foreclosure it examined.

“Clearly, we need to set up a process where lenders are following every part of the law,” Mr. Ting said in the interview. “It is very apparent that the system is broken from many different vantage points.”

The report, which was compiled by Aequitas Compliance Solutions, a mortgage regulatory compliance firm, did not identify specific banks involved in the irregularities. But among the legal violations uncovered in the analysis were cases where the loan servicer did not provide borrowers with a notice of default before beginning the eviction process; 8 percent of the audited foreclosures had that basic defect.

In a significant number of cases — 85 percent — documents recording the transfer of a defaulted property to a new trustee were not filed properly or on time, the report found. And in 45 percent of the foreclosures, properties were sold at auction to entities improperly claiming to be the beneficiary of the deeds of trust. In other words, the report said, “a ‘stranger’ to the deed of trust,” gained ownership of the property; as a result, the sale may be invalid, it said.

In 6 percent of cases, the same deed of trust to a property was assigned to two or more different entities, raising questions about which of them actually had the right to foreclose. Many of the foreclosures that were scrutinized showed gaps in the chain of title, the report said, indicating that written transfers from the original owner to the entity currently claiming to own the deed of trust have disappeared.

Banks involved in buying and selling foreclosed properties appear to be aware of potential problems if gaps in the chain of title cloud a subsequent buyer’s ownership of the home. Lou Pizante, a partner at Aequitas who worked on the audit, pointed to documents that banks now require buyers to sign holding the institution harmless if questions arise about the validity of the foreclosure sale.

The audit also raises serious questions about the accuracy of information recorded in the Mortgage Electronic Registry System, or MERS, which was set up in 1995 by Fannie Mae and Freddie Mac and major lenders. The report found that 58 percent of loans listed in the MERS database showed different owners than were reflected in other public documents like those filed with the county recorder’s office.

The report contradicted the contentions of many banks that foreclosure improprieties did little harm because the borrowers were behind on their mortgages and should have been evicted anyway. “We can deduce from the public evidence,” the report noted, “that there are indeed legitimate victims in the mortgage crisis. Whether these homeowners are systematically being deprived of legal safeguards and due process rights is an important question.”

A version of this article appeared in print on February 16, 2012, on page A1 of the New York edition with the headline: Audit Uncovers Extensive Flaws in Foreclosures.

Audit Uncovers Extensive Flaws in Foreclosures (copy attached) (timothymccandless.wordpress.com)
California Audit Finds Broad Irregularities in Foreclosures (nytimes.com)
Audit Uncovers Extensive Flaws in Foreclosures. (isellerfinance.wordpress.com)
California Audit Finds Broad Irregularities in Foreclosures (mercurynews.com)
California Audit Finds Broad Irregularities in Foreclosures (mercurynews.com)
California Audit Finds Broad Irregularities in Foreclosures – NYTimes.com (fourbluehills.com)
California Audit Finds Broad Irregularities in Foreclosures – NYTimes.com (lennyesq.wordpress.com)
San Francisco Assessor-Recorder Phil Ting Finds Widespread Mortgage Document Fraud (news.firedoglake.com)
NYT: SF audit finds foreclosures full of errors (msnbc.msn.com)

Mandelman sounds the Alert “Calling All Lawyers to 5,000,000 Crime Scenes”

It’s time for me to have an adult conversation with the experienced practicing attorneys in this country. Other grown-ups are welcome to sit in as well, but it’s time for children to be in bed or occupied elsewhere, okay?

If there’s no money to be made solving something… no profit incentive… then for the most part, we don’t quite have a handle on to solving it. For example, we’re not very good at cleaning up our oceans in general, and if there weren’t money to be made cleaning up oceans after oil spills, my guess would be that we wouldn’t be very good at doing that either.

To-date, however, BP has reportedly spent $21 billion cleaning up the Gulf of Mexico since its last mega-disaster, and guess what? The Gulf of Mexico is pretty clean again… just two years later! I remember hearing environmentalists predict that it could take 100 years to clean up the Gulf after the Deepwater Horizon catastrophe. I guess they were underestimating just how much solution $21 billion can often buy.

Well, today we have a mammoth size foreclosure problem in this country, and it’s being talked about like it’s damn near an unsolvable problem… as if solving it would require determining the chemical origins of life, or figuring out whether black holes really do exist in space.

The foreclosure crisis, thank goodness, is not a black hole-type problem as many would have us believe. It is a problem that, political constraints notwithstanding, exists at the juncture of economics and the rule of law. In other words… it’s an oil spill… perhaps the worst oil spill of which the world has ever conceived… the Exxon Valdez meets Deepwater Horizon x 100, if you will… but it’s still just an oil spill.

It’s also important to note that as an economics problem alone, the foreclosure crisis is not a particularly challenging one to solve. Some would rush to remind me that any proposed solution would be rife with “moral hazard,” and while that may be true, it doesn’t make the problem insoluble, by any means.

The elephant in the room is that what we’re facing in this country today is not just a foreclosure crisis, what we’re dealing with with is much better described as a FRAUDclosure crisis.

A couple of years ago, many would have said that my use of the word “fraud” before “closure,” is just hyperbole. Today, however, anyone voicing that sort of opinion is selling something. Even a cursory review of last year’s scathing “consent orders,” that federal regulators issued after months spent investigating mortgage servicers… or a quick perusal of the complaints filed against the servicers by attorneys general in Massachusetts, Nevada, Maryland, or Arizona… or by reading any number of published court decisions favoring homeowners… and one can only conclude that use of the word “fraud” is, if anything, understatement.

Additionally, this past year has been a turning point for the general public as far as FRAUDclosures are concerned. Television’s most venerable news magazine, “60 Minutes,” along with newspaper-of-record, “The New York Times,” joined a long list of others documenting the many ways that banks and mortgage servicers are routinely breaking numerous laws in order to take advantage of homeowners in foreclosure. It’s now widely understood to be something that’s occurring all over the country, and even though the banking industry continues to try to dismiss publicized instances as insignificant dalliances or “isolated incidents,” their sheer number has made such attempts laughable. And the levels of wholesale anger and dissatisfaction with government felt among the populace are both palpable and rising fast.

Today, even forecasts from the likes of Goldman Sachs and Amherst Securities peg the number of foreclosures between 10.4 and 14 million by year-end 2014, and those numbers could easily go higher should home prices continue to fall… which they invariably will. Add those numbers to the millions of foreclosures already water under the bridge, and were talking about a crisis that results in ONE IN FOUR Americans with mortgages losing their homes to foreclosure in the next handful of years.

What I’m describing will unquestionably devastate any hope for recovery in our broader economy for any number of reasons. For one thing, as banks are forced to recognize their losses incurred on the mortgage-backed securities and CDOs that capitalize their balance sheets, they will become insolvent… and this time many will be forced to fail. For another, home prices will continue falling pushing more and more homeowners underwater and consumer spending will continue to decline and that will lead to rising unemployment, which will in turn fuel further foreclosures. And those hopelessly underwater will begin walking away en masse, which will further exacerbate the decline in prices and become impossible to combat.

All of these factors and more will combine to reduce future demand for residential real estate dramatically… perhaps by half, but in addition, with no secondary mortgage market… no ability to securitize debt… even those wanting to buy homes going forward will find credit to be tight and tighter, destroying any potential for recovery in the housing market.

And I’m no longer in a small group of people writing about this deteriorating situation as was the case three plus years ago. Every day others are waking up to the fact that what we’ve been told about foreclosures to-date by our government and the financial services and related industries, has proven itself to be at best mistaken… at worst misdirection… or, not to put too fine a point on it, outright folderol.

As conservative columnist, Peggy Noonan, has pointed out recently, it’s simply impossible to imagine this sort of future without also seeing social unrest on a scale not seen in this country since at least the 1930s. Writing recently about the Occupy Wall Street (“OWS”) movement, Noonan echoes my sentiments on the situation to a tee…

“OWS is an expression of American discontent, and others will follow. Protests and social unrest are particularly likely if people feel they are unfairly losing their homes to support irresponsible, law-breaking institutions that have successfully disregarded the fundamental rules of capitalism and good citizenship.”

The harsh truth is that whatever is done in the future at state or federal levels to mitigate the damage caused by foreclosures, it’s simply too late to prevent our FRAUDclosure crisis from pretty much wiping out our nation’s middle class economy for more than a generation. As a practical matter, the only real question we face today is how many are wounded and how many are killed… none of us is getting out unscathed.

There should be no question in anyone’s mind… there are only two paths ahead from which to choose. Both involve fighting a war… but on one path the battle is fought by lawyers in our courts… on the other, by citizens in our streets.

Make no mistake about it… if we are to mitigate any of the damage being caused, uphold the rule of law, and protect the rights of millions of homeowners… it should be obvious to anyone that WE NEED TENS OF THOUSANDS OF LAWYERS trained in foreclosure defense, loss mitigation and bankruptcy. And yet, more than four years into the FRAUDclosure crisis, we don’t have anywhere near the number of trained, ethical attorneys required to meet the demand.

We’re all adults here, so let’s not kid ourselves about why that’s the case.

We all know why we don’t have the lawyers we need to marshall a more effective defense of homeowners engulfed by the FRAUDclosure crisis… it’s because THERE’S NO MONEY IN IT. Or, at least that’s what lawyers have been told they are supposed to believe. Not only that, but the message has been that there shouldn’t be any money in representing homeowners at risk of FRAUDclosure. It’s as if attorneys profiting from representing homeowners at risk of FRAUDclosure is somehow a bad thing.

AND THAT’S JUST 100% BANKER-INSPIRED B.S.

Don’t you see what’s happened here? We’ve allowed the banks, and the government that’s been bailing them out, to essentially criminalize the profit potential in representing homeowners at risk of foreclosure… and wonder of wonders, miracles of miracles… here we sit with what appears to be an unsolvable problem.

Consider this… bankers say that they’ve been overwhelmed by the millions of homeowners unexpectedly seeking loan modifications and that’s why applying for a loan modification has been such a nightmare. But, what about the number of foreclosures occurring in the same time frame? Haven’t there been an unprecedented and unexpected number of foreclosures too? So,why is it that the banks have no problems accommodating the millions of unexpected foreclosures, but the millions of unexpected loan modifications represent an unsolvable problem?

It’s simple… because on the foreclosure side of the equation, banks allow lawyers to be profitably compensated for handling foreclosures, and sure enough those law firms have figured out how to handle any number of foreclosures that come down the pike… in fact, the more the merrier, as they say. On the loan modification side of the house, however, profits are a dirty word… and wouldn’t you know it, the problem is unsolvable. Why am I not surprised?

Over the TWO YEARS following the Deepwater Horizon disaster, BP spent $21 billion to clean up the Gulf of Mexico. In the FOUR YEARS since the tsunami of foreclosures began, we’ve spent roughly ten percent of what BP spent cleaning up the Gulf… $2.4 billion… and the vast majority of that amount paid to mortgage servicers… and we’re wondering why the problem can’t be solved?

A MESSAGE TO OUR NATION’S LAWYERS…

It’s the biggest financial opportunity for the legal profession

SINCE THE REAR END COLLISION.

The fact is… there is a HUGE OPPORTUNITY today to build a very profitable legal practice based on the ethical and effective representation of homeowners caught in the FRAUDclosure crisis.

From the very beginning of the mortgage meltdown, banks have tried to make sure that homeowners were not represented by attorneys when trying to save their homes from FRAUDclosure. The reason is now apparent: Banks knew it was a FRAUDclosure crisis before the rest of us did because they’re the ones who put the FRAUD into FRAUDclosure. From the earliest days of the crisis, the banks and the Obama Administration have been reinforcing TWO LIES:

Homeowners at risk of foreclosure don’t need lawyers… they can just call their bank directly. That’s like the police telling someone under arrest that he or she doesn’t need a lawyer because any questions can be answered by the District Attorney. It’s a damn lie… homeowners DO NEED LAWYERS to help them save their homes because it’s not just a foreclosure crisis, it’s a FRAUDclosure crisis.
A lawyer who charges a homeowner at risk of foreclosure up front… is a “SCAMMER.” That is not only a LIE, but it’s a lie to achieve two key bank objectives. One – It stopped many homeowners from seeking legal representation, thus allowing the banks to do whatever they wanted as related to foreclosing on their homes. Two – It stopped countless attorneys from building a profitable practice based on representing homeowners at risk of foreclosure.

The California Example…

In California, the efforts to stop lawyers from representing homeowners have been more extreme than in any other state. Here the campaign to malign the legal profession has been driven by legislative committees and supported by the California State Bar Association. In October 2009, California’s SB 94 created a law that has effectively prevented lawyers from offering to represent homeowners who are seeking to avoid foreclosure through modification of their loans. Under the guise of “charging up front makes you a scammer,” SB 94 has made it illegal for a lawyer to charge a homeowner an upfront retainer for legal fees.

Quite predictably, the law has made it difficult or even impossible for California homeowners to find quality legal representation related to seeking loan modifications, forcing those at risk of foreclosure who want to be represented by an attorney into either litigation or bankruptcy. Writing for The New York Times in December 2010, David Streitfeld’s article titled, “Homes at Risk, and No Help from Lawyers,” described the situation in California related to SB 94.

In California, where foreclosures are more abundant than in any other state, homeowners trying to win a loan modification have always had a tough time.

Now they face yet another obstacle: hiring a lawyer.

Sharon Bell, a retiree who lives in Laguna Niguel, southeast of Los Angeles, needs a modification to keep her home. She says she is scared of her bank and its plentiful resources, so much so that she cannot even open its certified letters inquiring where her mortgage payments may be. Yet the half-dozen lawyers she has called have refused to represent her.

“They said they couldn’t help,” said Ms. Bell, 63. “But I’ve got to find help, because I’m dying every day.”

Lawyers throughout California say they have no choice but to reject clients like Ms. Bell because of a new state law that sharply restricts how they can be paid. Under the measure, passed overwhelmingly by the State Legislature and backed by the state bar association, lawyers who work on loan modifications cannot receive any money until the work is complete. The bar association says that under the law, clients cannot put retainers in trust accounts.

To make matters worse, SB 94 has recently become controversial. In late September 2011, Suzan Anderson, who is the supervising trial council of the state bar’s special team on loan modifications, made an unscheduled appearance at the bar’s annual conference, presenting what she purported to be the bar’s new interpretation of SB 94. Literally hundreds of attorneys and legal scholars disagree, however, and litigation has recently been filed against the bar seeking declaratory relief, so we’ll soon see the courts decide the issue.

The core issue is about when a lawyer who represents a homeowner trying to get their loan modified can be compensated. The bar claims the law requires an attorney to wait until the very end of the case, however, the actual language contained in SB 94 doesn’t say that… it says lawyers cannot be paid until completing “any and all services (the lawyer) has contracted to perform…” Up until Ms. Anderson’s presentation at the annual meeting, lawyers were dividing services into separate contractual arrangements and accepting payments from homeowners as discreet sets of services were completed.

Regardless of which side of the debate you’re on, the issue highlights how far the banking lobby will push a state legislature and state bar association in an attempt to prevent homeowners from being represented by legal council when trying to to avoid foreclosure, and it should come as absolutely no surprise that SB 94 was born in the state’s Senate Banking Committee, sponsored by Sen. Ron Calderon, who chairs that committee.

Advocates of SB 94 claim that it was needed to stop “scammers” who were preying on homeowners in distress from accepting up-front fees. As quoted from Streitfeld’s article in The New York Times…

A spokesman for the Mortgage Bankers Association said it simply wanted to protect homeowners from fraud. “Be very careful about anyone who wants you to pay them to help you get a loan modification,” said the spokesman, John Mechem.

The evidence of any sort of army of lawyers-turned-scammers ripping off homeowners has always been thin, and by “thin” I mean nonexistant. In the two years since the bill became law, the bar has taken some type of disciplinary action related to the representation of homeowners in foreclosure against two dozen lawyers, give or take a few. In a state with more than 200,000 lawyers and 2 million homeowners in foreclosure, two dozen lawyers disciplined would hardly seem justification for a law that effectively prevents lawyers from helping homeowners get their loans modified.

Last December, Suzan Anderson, who heads up the bar’s task force on loan modifications, told The New York Times…

“I wish the law had worked,” Ms. Anderson said.

It’s also telling that no other state in the country has a law anything like SB 94, in fact, the rest of the states follow the FTC’s Mortgage Assistance Relief Services rule, MARS, which was adopted on January 30, 2011, and it does allow attorneys representing homeowners seeking loan modifications to accept funds in advance into their trust accounts.

The New York Times article also offered the perspective of several California homeowners seeking legal assistance in a post SB 94 world…

Mark Stone, a 56-year-old general contractor in Sierra Madre, feels differently. A few years ago, he got sick with hepatitis C. Unable to work full time, he began to miss mortgage payments. The drugs he was taking left him “a little confused,” he said.

Mr. Stone knew that his condition put him at a disadvantage in negotiations with his bank. So he hired Gregory Royston, a real estate lawyer in Redondo Beach. It took Mr. Royston nearly a year, but he restructured the loan.

Without the lawyer, Mr. Stone said, “I’d be living under a bridge.

”The legal bill, paid in advance, was $3,500. “Worth every penny,” said Mr. Stone, who is now back at work.

“This law,” Mr. Royston said, “took the wrong people out of the game.”

A Bleak Picture in California…

California’s approach to discouraging lawyers from representing homeowners at risk of foreclosure has not served the state or its residents well at all. California is the “hardest hit” of all 50 states, accounting for one of every five foreclosures in the U.S. Almost half of California’s homeowners are either underwater or effectively underwater today. Since 2008, there have been 1.2 million foreclosures statewide, and that number is expected to exceed 2 million by the end of 2012. And, according to the report published by the California Reinvestment Coalition…

The 2 million foreclosures expected by the end of this year are forecasted to cost the state and its residents $650 billion statewide.

Today, in California alone there are roughly TWO MILLION homeowners in foreclosure. I don’t know exactly how many we have nationwide, estimates vary, but are in the 5 million range. I do know that if two million people needed just 10 hours of legal assistance, it would take 20 million man hours. Assuming a six hour work day and a 260 day work year… that’s just under 13,000 years assuming only one lawyer were involved. To help two million people, assuming 10 hours each, at best would require more than 10,000 lawyers trained and working efficiently.

How many attorneys do we have trained and ready to help loans get modified, represent homeowners in foreclosure defense matters and/or in bankruptcy. Nowhere near 13,000 that’s for sure… in fact, we might not find 1300 either… and many would say the number could be closer to 130, and with the proliferating fraudulent documents… the abuses by servicers… the number of people who are foreclosed on illegally… its become easy to see the disease, and trained ethical lawyers would seem the only cure.

Mandelman out.

~~~

We need a literal army of experienced litigators, and Max Gardner’s Bankruptcy Boot Camp has trained close to 900 attorneys to protect the rights of homeowners in foreclosure. I’ve attended Max’s Boot Camp… I could never recommend it strongly enough… and often do. But, there’s more than legal training that’s required here… and if we’re going to attract the number of lawyers we need to fight this war…

The Answer is Money…

What Was Your Question?

Ohio’s former Attorney General Marc Dann is a highly experienced foreclosure defense attorney and a graduate of Max Gardner’s Boot Camp. He’s proven in his own successful practice that lawyers have the opportunity to DO GOOD… and DO WELL at the same time by learning the ins and outs of this, unfortunately, very fast growing and specialized field. And he’s developed a comprehensive training and ongoing support program that allows experienced foreclosure defense attorneys to immediately access new clients and the right clients, improve operations within their firms, and yes… increase their profitability dramatically.

Marc understands our need for an experienced army of foreclosure defense lawyers, but he also understands the reality that lawyers have to make money in order to operate effectively. In a phrase, a lawyer that can provide effective representation for homeowners at risk of foreclosure today, should not be worried about losing his or her own home to foreclosure because that benefits no one.

So, Marc has developed and employed best practices in building his own successful foreclosure defense practice, and now he’s teaching other attorneys how to make money in foreclosure defense so that ultimately he will have provided countless thousands of homeowners all over the country with access to highly capable, ethical and experienced attorneys.

Marc Dann’s LAW PROFITS program will take experienced and effective attorneys committed to foreclosure defense and protecting the rights of homeowners, and help transform them into vibrant, profitable firms or individual legal practices. Some of the innovative solutions Marc will be delivering include:

How to cut through the noise created by scammers, reaching out to homeowners in a very honest and compelling way.
When and how to sue the bad modification company or bad lawyer.
Suing the foreclosure mills for fun and profits.
Using Fair Debt Collection Practices and State Consumer Protection.
Learn about the new practices available under Dodd Frank.
Harnessing TILA and RESPA inside and outside bankruptcy court.
Unconventional approaches stay one step ahead of servicer practices.
Billing structures, methodologies, and practice accounting.
Designing compensation programs that balance the needs of homeowners with the needs of your firm.
Never lose clients – Ongoing communications program that’s turn-key and educates clients so they become fans.
Fee agreements – for contingency and hourly clients.
Become part of a highly visible network of top foreclosure defense attorneys, and strategic partners.
Communications strategies and tactics proven effective and unavailable anywhere else.

Making little or no money in foreclosure defense isn’t doing your clients any favors because you cannot be your best without it. Marc Dann’s LAW PROFITS is not a pot of gold, or a winning lottery ticket, but it is a proven process and suite of best practices that makes a law practice profitable… essentially immediately. It’s work, no question about it, but it’s important and gratifying work.

I wholeheartedly support Mar’c Dann’s LAW PROFITS initiative. And I strongly urge all of the lawyers reading this to take action now by clicking the link below, so you can find out more about what his LAW PROFITS program for foreclosure defense and bankruptcy lawyers can do for you and your firm. The FRAUDclosure crisis and its ancillary topics, I’m sorry to say, are going to be with us for a long time… a decade plus, if we’re lucky. Longer if we’re not. It’s time to settle in and start capitalizing on being one of the best at solving on of the worst case scenarios.

Click below to find out more about…

Marc Dann’s

LAW PROFITS

What is predatory Lending ( Making a loan to get the Real estate not a loan you can afford)

English: Then Secretary of Housing and Urban D... — Image via Wikipedia

DEFINING PREDATORY LENDING

Predatory lending encompasses a variety of practices. The most prevalent of these practices, however, is predatory lending in connection with home mortgage loans. These loans are targeted at homeowners who may be living on fixed or lower incomes, and those who have checkered credit histories.

Unlike most prime loans, subprime mortgage loans are generally based on the equity in a borrower’s house instead of his or her ability to make the scheduled payments. Therefore, problems meeting scheduled payments frequently arise due to the borrower’s lack of liquidity, a problem obviously foreseeable, yet ignored, by the lender. When this occurs, the predatory lender encourages the borrower to refinance the loan into another unaffordable loan, thus increasing the loan amount owed, primarily due to new finance fees. This “refinancing” severely decreases the borrower’s equity in his or her home and is a common practice referred to as “loan flipping.”

Another practice utilized by predatory lenders is “packing.” This is the practice of surreptitiously placing lender-protective credit insurance or other goods and services into consumer loans. For example, a predatory lender will state a fixed monthly payment to the borrower. Upon closure, however, the loan papers will include numerous single premium payment insurance policies which need to be added to the quoted monthly payment. These insurance policies are not mentioned during the loan negotiations as an additional cost. The lender ultimately hopes the borrower will not notice the added charges at all; if, however, the borrower is lucky enough to recognize the hidden costs, predatory lenders are equipped with numerous tactics to force the loan through despite the borrower’s misgivings. The most prevalent tactic is to threaten the closing of the loan by stating that deletion of the challenged costs will either cause delay, or effect the borrower’s loan eligibility. Given the financial situations of most of these borrowers, the threat of not receiving the loan, or even just a delay in the closing of the loan, can be enough to make the borrower forget about the added charges

Although many borrowers become aware of these hidden charges when they receive their first statement, other hidden terms and penalties are included that become apparent only when the borrower decides to get out of the loan.

One of the most potent tools used by predatory lenders to keep borrowers defenseless is the prepayment penalty. According to Standard & Poor’s, subprime loans contain prepayment penalties 80% of the time, while prime loans only 2% of the time. Since it is lower income individuals who are targeted by predatory lenders, the threat of thousands of dollars in prepayment penalties obviates the lenders fear of the borrower prepaying the balance through a more affordable prime loan. The prepayment penalties trap the individual in a long-term unaffordable loan that can only be refinanced by the lender who misrepresented the loan terms in the first place.

Predatory loans can be financially devastating. A borrower owing up to three times as much as he or she has borrowed is not an uncommon occurrence with a sub-prime predatory home mortgage loan.

MARK J. DEMUCHA AND CHERYL M. DEMUCHA, a Reply Brief that worked

No. F059476

IN THE COURT OF APPEAL FOR THE STATE OF CALIFORNIA

FIFTH APPELLATE DISTRICT

Appellants and Plaintiffs

WELLS FARGO HOME MORTGAGE, INC.; WELLS FARGO BANK, NATIONAL ASSOCIATION a.k.a. WELLS FARGO BANK, N.A.; FIRST AMERICAN LOANSTAR TRUSTEE SERVICES; FIRST AMERICAN CORPORATION; AND DOES 1 TO 45

Respondents and Defendants

Appeal from the Superior Court of the State of California, County of Kern

Case No. S-1500-CV-267074

Honorable SIDNEY P. CHAPIN, Judge

Department 4

Tele: 661.868.7205

REPLY BRIEF OF APPELLANTS MARK J. DEMUCHA AND CHERYL M. DEMUCHA

Michael D. Finley, Esq.

Law Offices of Michael D. Finley

25375 Orchard Village Road, Suite 106

Valencia, CA 91355-3000

661.964.0444

Attorneys for Plaintiffs-Appellants,

MARK J. DEMUCHA and CHERYL M. DEMUCHA

TABLE OF CONTENTS

TABLE OF AUTHORITIES ii

INTRODUCTION 1

STATEMENT OF THE FACTS 2

PROCEDURAL HISTORY 4

STANDARD OF REVIEW 4

ARGUMENT 5

A. THE DEMURRER WAS NOT PROPERLY SUSTAINED 5

B. THE COMPLAINT VERY PLAINLY CONTAINS A
TENDER, EVEN THOUGH IT IS NOT REQUIRED FOR
A QUIET TITLE ACTION 5

C. SUSTAINING OF THE DEMURRER WAS REVERSIBLE
ERROR BECAUSE CALIFORNIA LAW REQUIRES
WELLS FARGO TO POSSESS THE NOTE IN ORDER TO
ENFORCE THE LOAN 7

D. THE DEFENDANTS’/RESPONDENTS’ ARGUMENTS
REGARDING THE PROPRIETY OF SUSTAINING THE
DEMURRER ON THE CLAIMS TO QUIET TITLE AND
REMOVE CLOUD ARE BASED UPON THE DELIBERATE MISREPRESENTATION OF THE NATURE OF THE
DEMUCHAS’ COMPLAINT 8

E. THE DEFENDANTS’/RESPONDENTS’ ARGUMENTS
REGARDING THE PROPRIETY OF SUSTAINING THE
DEMURRER ON THE CLAIM FOR FRAUD AND MISREPRESENTATION ARE BASED UPON THE
DELIBERATE MISREPRESENTATION OF THE CONTENT
OF THE DEMUCHAS’ COMPLAINT 9

F. THE DEFENDANTS’/RESPONDENTS’ ARGUMENTS
REGARDING THE PROPRIETY OF SUSTAINING THE
DEMURRER ON THE CLAIM FOR INFLICTION OF
EMOTIONAL DISTRESS ARE BASED UPON THE
DELIBERATE MISREPRESENTATION OF THE CONTENT
OF THE DEMUCHAS’ COMPLAINT 9

G. THE DEFENDANTS’/RESPONDENTS’ ARGUMENTS
REGARDING THE PROPRIETY OF SUSTAINING THE
DEMURRER ON THE CLAIM FOR SLANDER OF
CREDIT ARE BASED UPON THE DELIBERATE MISREPRESENTATION OF THE CONTENT OF THE
DEMUCHAS’ COMPLAINT 10

H. THE DEFENDANTS’/RESPONDENTS’ ARGUMENTS
REGARDING THE PROPRIETY OF SUSTAINING THE
DEMURRER ON THE CLAIM FOR INFLICTION OF
EMOTIONAL DISTRESS ARE BASED UPON THE
DELIBERATE MISREPRESENTATION OF THE
CONTENT OF THE DEMUCHAS’ COMPLAINT 10

CONCLUSION 10

TABLE OF AUTHORITIES

CASES

Page

Caporale v. Saxon Mortgage, Bankr. North Dist. Cal., San Jose Case No. 07-54109. 8

In re Foreclosure Cases, 2007 WL 3232430 (Bankr. N.D. Ohio 2007). 8

Staff Mortgage v. Wilke (1980) 625 F.2d 281 8

Starr v. Bruce Farley Corp. (9^th Cir. 1980), 612 F.2d 1197. 8

Whitman v. Transtate Title Co. (1985) 165 Cal.App.3d 312, 322-323. 6

STATUTES

Commercial Code § 3301. 7, 8, 9,

INTRODUCTION

Defendants/Respondents continue to mischaracterize the Plaintiffs’/Appellants’ complaint very deliberately, apparently because they realize that the Plaintiff’s complaint as actually plead is beyond their ability to oppose it. Calling the Plaintiffs’ Complaint “inartfully drafted” because it does not state that it is a challenge to a non-judicial foreclosure is wishful thinking. The complaint is very artfully drafted as a Quiet Title action. The plaintiffs are not seeking to “stave off foreclosure of a mortgage,” but seeking to remove a false claim against their title to the property. No non-judicial foreclosure has taken place. No foreclosure sale has occurred, so there is no foreclosure sale to challenge or undo, but the Defendants/Respondents insist on arguing the case at the demurrer level and on this appeal as a complaint to challenge or set aside a non-judicial foreclosure and keep trying to apply those inapplicable pleading requirements to the complaint. The plaintiffs did seek a preliminary injunction against the foreclosure and obtained it because the Defendants/Respondents did not comply with the laws regarding non-judicial foreclosure. However, that does not make their complaint a “central defense” to non-judicial foreclosure as Defendants/Respondents argue throughout their brief. The mischaracterization of the case was a key element of the lower court’s error and continues to be a key element of the Defendants’/Respondents’ false arguments.

Further, Plaintiffs/Appellants never argued that producing the note was a preliminary requirement to non-judicial foreclosure, but Plaintiffs/Appellants have plead very specifically throughout the complaint that possessing the note is a requirement for the Defendants/Respondents to have any right to enforce the note whatsoever, which has been established California law (and in every state that has adopted the Uniform Commercial Code) for a very long time. The references to producing the note were merely offered as evidence demonstrating that the Defendants/Respondents do no possess the note because they repeatedly fail and refuse to produce it. In fact, it is important to note that the Defendants/Respondents have never yet argued that the note is in their possession as required by law.

STATEMENT OF THE FACTS

A. THE SUBJECT TRANSACTION.

The Defendants’/Respondents’ Statement of Facts has a very subtle attempt at subterfuge and misdirection in that it places a statement made about their finances during litigation after Plaintiffs/Appellants incurred legal fees in a different context as though the statement were made prior to litigation during the time that the prior (and possibly current) note holder CTX Mortgage had the loan and prior to the recording of the notice of default. Defendants/Respondents have gone to great lengths to take this statement out of context and have argued extensively that this constitutes proof that the Plaintiffs/Appellants were unable to tender payment. However, this requires the assumption that only one conclusion may be drawn from the statement rather than a range of possibilities, including the fact that the Plaintiffs/Appellants had incurred attorney’s fees by that time.

B. THE DEMUCHAS’ CONTENTIONS.

As in the underlying Demurrer, the Defendants/Respondents continue to falsely argue that there was no allegation of Tender in the Complaint. However, as demonstrated in the Appellants’ Opening Brief, there is no requirement of tender to plead Quiet Title. Even so, the Defendants/Respondents quote the allegation of tender that is in the Complaint even while arguing that there is no allegation of tender. This demonstrates the Defendants’/Respondents’ motive in deliberately mischaracterizing the complaint: they wish to apply a non-applicable standard to the complaint. Then when the non-applicable standard has been complied with anyway, they attempt to mislead the court by arguing that a plain allegation of tender is not an allegation of tender. However, as will be shown, the Defendants/Respondents have cited a case that states that tender can be offered in the complaint, and need not have been offered prior to filing the complaint.

C. DEFENDANTS’/RESPONDENTS’ ASSERTION OF NO ALLEGATION OF TENDER OF ALL AMOUNTS DUE IS BLATANTLY FALSE.

As stated above, Plaintiffs/Appellants have already demonstrated that tendering payment is not a required element of a Quiet Title action, but that they have pleaded tender anyway. The Defendants’/Respondents’ arguments that payments must be tendered “when due” misstates the law, even for cases challenging non-judicial foreclosures, which this case is not. As will be shown below, the Defendants/Respondents cited a case that indicates very clearly that even in non-judicial foreclosure cases, a tender may be made in the complaint and need not have been made prior to filing the complaint.

D. THE FORECLOSURE PROCEEDINGS AND THE DEMUCHAS’ ATTEMPTS TO DELAY OR HALT THEM.

The Defendants/Respondents’ focus on these extra proceedings within the case is a red herring to distract the court’s focus from the demurrer. The appeal is not about the ex-parte application for a preliminary injunction that was granted due to the fact that the Defendants/Respondents did not comply with California law requiring a specific declaration to be signed under penalty of perjury that was not. The Defendants/Respondents are going well outside the Complaint’s four corners to abuse the details of the ex-parte application that was not about the Complaint nor the Demurrer that are the subjects of this appeal. And once again, they are trying to argue the issue of the Plaintiffs’/Appellants’ financial situation as stated during the ex-parte proceedings after they had already incurred attorney’s fees for the false proposition that the Plaintiffs/Appellants were allegedly incapable of tendering payment prior to incurring the additional attorney’s fees of litigation when that is not the only conclusion that can be drawn from the separate ex-parte pleadings. Finally, they continue to shout endlessly about the issue of tender when it is not a required part of pleading the elements of Quiet Title and when pleading tender is required, an offer made in the complaint itself is deemed sufficient, as will be shown below.

E. THE ARGUMENTS ABOUT FAILURE TO “PRODUCE THE NOTE” ARE A RED HERRING TO DISTRACT THE COURT FROM THE LEGAL REQUIREMENT THAT THE DEFENDANTS “POSSESS THE NOTE.”

The Defendants/Respondents continue to make a big deal about the fact that in a few places, the Complaint mentions that the defendants have failed to produce the original note. However, their own arguments on this point mention that the complaint further alleges their failure to hold or possess the original note, which is the more key portion of the pleadings.

PROCEDURAL HISTORY

The parties’ explanations of the case’s procedural history are close enough that no further discussion is necessary.

STANDARD OF REVIEW

Some of the arguments contained in the Defendants’/Respondents’ Standard of Review section of their brief are specious, especially in the final paragraph arguing the subjects of tender and producing the note. The Defendants/Respondents have never demonstrated that California law requires an allegation of tender for a Quiet Title action, but have only cited as authority for this position cases that are focused on undoing a foreclosure sale after it has been completed. However, even those cases state that tender does not have to be made before filing the complaint, but the tender itself can be made within the complaint, and there cannot be any question that an offer of tender is made within the complaint. The Plaintiffs’/Appellants’ current attorney helped prepare pleadings for them in the trial court case and even made special, limited scope appearances for them, even though they were officially in pro per, so they incurred considerable legal fees during the litigation, which certainly had an effect on their financial situation at the time that they filed their ex parte application for a preliminary injunction, so the Defendants’/Respondents’ argument that the ex parte papers demonstrate that the Plaintiffs/Appellants could not tender payment is false. Further, the Defendants’/Respondents’ argument that “the central premise of each cause of action of the DeMuchas’ First Amendent Complaint [is] that a lender must ‘produce the note’ while conducting a non-judicial foreclosure” is a blatant misstatement of the Complaint’s content. The Complaint is not about non-judicial foreclosure, it is about quieting title. And the central premise is that a lender must possess the note in order to have a right to enforce the note, which is the law in California and every other state that has adopted the Uniform Commercial Code. No non-judicial foreclosure has yet taken place regarding the subject property.

ARGUMENT

A. THE DEMURRER WAS NOT PROPERLY SUSTAINED.

Defendants/Respondents are demonstrating to this court the same misdirection and deliberate mischaracterization of the pleadings that misled the trial court into committing reversible error by improperly sustaining a demurrer to a valid complaint. The Defendants/Respondents have never demonstrated that tender is a requirement for a Quiet Title action. They have mischaracterized the case as a case to undo a non-judicial foreclosure when no non-judicial foreclosure has ever been completed regarding the subject property. The cases that they cited to the trial court and to this court regarding the requirements of a tender allegation were cases in which the subject property had been sold at a non-judicial foreclosure sale, which was being challenged after the fact. They have mischaracterized the Complaint’s allegations as though they state that “producing the note” is a requirement for non-judicial foreclosure, which is a blatant misstatement. The complaint states the true fact that the defendants have failed and refused to produce the note only as evidence of the fact that they do not possess the note and therefore have no right to enforce the note under California law. It is worth noting that the Defendants’/Respondents’ 34-page Appellate Brief never claims that they are the holders of the note as required by law.

B. THE COMPLAINT VERY PLAINLY CONTAINS A TENDER, EVEN THOUGH IT IS NOT REQUIRED FOR A QUIET TITLE ACTION.

Defendants/Respondents continue their same improper tactic used with the trial court of citing irrelevant cases seeking to undo a foreclosure sale after the fact. Since no foreclosure sale has yet taken place regarding the subject property and this is a Quiet Title action, those cases are all irrelevant and inapplicable to the First Amended Complaint that is the subject of the Demurrer and this appeal. However, even under the Defendants’/Respondents’ inapplicable cases, the Defendants/Respondents have swerved into something that destroys their arguments completely: Citing Whitman v. Transtate Title Co. (1985) 165 Cal.App.3d 312, 322-323, the Defendants/Respondents correctly stated on page 11 of their brief, “therefore as a condition precedent to any action challenging a foreclosure, a plaintiff must pay or offer to pay the secured debt before an action is commenced or in the complaint.” (Emphasis added). This is not an action challenging a foreclosure, but even if those standards were inappropriately applied to this action, the tender or offer to pay can be made “in the complaint.” The Verified First Amended Complaint (“VFAC”) states, “Plaintiff offers to pay and mortgage payments on the property to the individual or entity that is the valid holder of the original note as required by California Commercial Code § 3301, et seq. and all property taxes to the appropriate government agency.” (VFAC page 3, line 28 through page 4, line 7). This is a very clear tender, made “in the complaint,” even though it is not required in a Quiet Title Action.

Since tender is not a statutory element of a Quiet Title action, the Defendants’/Respondents’ arguments regarding the difficult financial times mentioned in the Plaintiffs’/Appellants’ ex-parte application for a preliminary injunction are moot. However, it should be noted that by the time the Plaintiffs/Appellants filed their ex-parte application, they had the additional financial burden of paying for attorney’s fees to have the same attorney who now represents them on appeal prepare pleadings for them and make special, limited scope appearances for them on the trial court level, so the conclusion that the Defendants/Respondents are asking the court to make are inaccurate.

Even the Defendants’/Respondents’ arguments regarding “implicit integration” of foreclosure issues are irrelevant, because the cases that they cited specifically involved a non-judicial foreclosure in which the sale had been completed, but no non-judicial foreclosure sale has taken place regarding the subject property. The defendants’ argument that Plaintiffs’/Appellants’ have failed to cite any authority for the fact that no allegation of tender is required is another false statement. Plaintiffs have directly quoted Code of Civil Procedure § 761.020, which fully sets forth the elements of a Quiet Title Action, and there is no requirement of tender. However, even if the court somehow found that a tender allegation was required, the tender allegation has been made in the Complaint in accordance with the Defedants’/Appellants’ own citations as set forth above. Further, the Defendants’/Respondents’ arguments that “a court of equity will not order a useless act performed” (FPCI Re-Hab 01, etc. v. E&G Investments, Ltd. (1989) 207 Cal.App.3d 1018, 1022, and “equity will not interpose its remedial power in the accomplishment of what seemingly would be nothing but an idly and expensively futile act” (Leonard v. Bank of America Ass’n (1936) 16 Cal. App. 2d 341, 344) could and should just as easily be applied to the futile and useless acts that Defendants’/Respondents’ are requesting to be required and plead when they do not possess the original note and therefore have no right to expect payments, seek payments, nor threaten foreclosure because they did not receive payments that they had no right to receive in the first place, pursuant to Commercial Code § 3301. It can and should also be used to destroy their argument that plaintiff must be subjected to the requirements of case law regarding actions seeking to undo foreclosure irregularities before the foreclosure has even been completed, as though plaintiff should be able to foresee every foreclosure irregularity with a crystal ball before the process is even completed!

C. SUSTAINING OF THE DEMURRER WAS REVERSIBLE ERROR BECAUSE CALIFORNIA LAW REQUIRES WELLS FARGO TO POSSESS THE NOTE IN ORDER TO ENFORCE THE LOAN.

Plaintiffs/Appellants have cited a fully binding California Statute, Commercial Code § 3301, which specifically states that in order to be a “person entitled to enforce an instrument,” the Defendants/Respondents must have been the holder of the instrument, with very limited exceptions. In opposition, the Defendants/Respondents continue their same bad habit engaged in during the trial court proceedings of citing and relying upon federal trial court cases, which are not binding authority in any way, without disclosing to the court that they are citing non-binding authority. In addition, many of their citations do not even contain the full reference, so that it is difficult or impossible to locate and read the case. As for the federal trial court cases, all that they have demonstrated is that there is a need for a California appellate court to clear up the confusion that clearly exists regarding California’s law, and especially Commercial Code § 3301. Further, their statement that every court that has considered the issue has ruled that possessing the note is not necessary for a foreclosure is false. For example, in the U.S. Bankruptcy Court for the Northern District of California in San Jose, a federal trial court judge stopped a foreclosure because the bank could not produce the note in the case of Caporale v. Saxon Mortgage, Case No. 07-54109. Like the Defendants’/Respondents’ authorities, this case is only persuasive authority, not binding, but it was reported on by ABC News, and a copy of the news video is available to be viewed online at http://abclocal.go.com/kgo/story?section=news/7_on_your_side&id=6839404. If the court is going to consider the non-binding federal trial court decisions offered by the Defendants/Respondents, the court should also consider the non-binding persuasive authority of In re Foreclosure Cases, 2007 WL 3232430 (Bankr. N.D. Ohio 2007), wherein U.S. Bankruptcy Court Judge Christopher Boyko dismissed without prejudice fourteen judicial foreclosure actions filed by the trustees of securitized trusts against borrowers who had defaulted on their residential mortgages that had been sold into securitized trusts, based upon the application of Uniform Commercial Code § 3-301 to the mortgages in question.

As for their claim that the commercial code does not apply to a mortgage or a note secured by deed of trust, the Defendants/Respondents are willfully ignoring Staff Mortgage v. Wilke (1980) 625 F.2d 281, 6 Bankr.Ct.Dec. 1385, 29 UCC Rep.Serv. 639, cited in Plaintiffs’/Appellants’ Opening Brief, which clearly states that “notes secured by deeds of trust…were ‘instruments’ under the California Commercial Code.” This holding is repeated in Starr v. Bruce Farley Corp. (9^th Cir. 1980), 612 F.2d 1197. The Defendants/Respondents have offered nothing other than their own opinion for the proposition that the note secured by deed of trust in question is not a “negotiable instrument” within the meaning of Commercial Code § 3301, even though they claim to have purchased the note, which by definition makes it negotiable.

D. THE DEFENDANTS’/RESPONDENTS’ ARGUMENTS REGARDING THE PROPRIETY OF SUSTAINING THE DEMURRER ON THE CLAIMS TO QUIET TITLE AND REMOVE CLOUD ARE BASED UPON THE DELIBERATE MISREPRESENTATION OF THE NATURE OF THE DEMUCHAS’ COMPLAINT.

As always, the Defendants/Respondents insist upon misrepresenting the nature of the First Amended Complaint. Every element of each of these causes of action was specifically plead, as has been demonstrated. Pursuant to Commercial Code § 3301, the Defendants/Respondents have no right to enforce the note unless they possess the note. Plaintiffs/Appellants rely upon the appellate court to read the First Amended Complaint and comprehend it independently of the Defendants’/Respondents’ misrepresentations.

E. THE DEFENDANTS’/RESPONDENTS’ ARGUMENTS REGARDING THE PROPRIETY OF SUSTAINING THE DEMURRER ON THE CLAIM FOR FRAUD AND MISREPRESENTATION ARE BASED UPON THE DELIBERATE MISREPRESENTATION OF THE CONTENT OF THE DEMUCHAS’ COMPLAINT.

The content of the First Amended Complaint speaks for itself. The Defendants/Respondents continue to look right at the paragraphs of the document that contain the elements required by law for each cause of action and to falsely state that the required allegations are not there. Plaintiffs/Appellants rely upon the appellate court to read the First Amended Complaint and comprehend it independently of the Defendants’/Respondents’ misrepresentations.

F. THE DEFENDANTS’/RESPONDENTS’ ARGUMENTS REGARDING THE PROPRIETY OF SUSTAINING THE DEMURRER ON THE CLAIM FOR INFLICTION OF EMOTIONAL DISTRESS ARE BASED UPON THE DELIBERATE MISREPRESENTATION OF THE CONTENT OF THE DEMUCHAS’ COMPLAINT.

G. THE DEFENDANTS’/RESPONDENTS’ ARGUMENTS REGARDING THE PROPRIETY OF SUSTAINING THE DEMURRER ON THE CLAIM FOR SLANDER OF CREDIT ARE BASED UPON THE DELIBERATE MISREPRESENTATION OF THE CONTENT OF THE DEMUCHAS’ COMPLAINT.

H. THE DEFENDANTS’/RESPONDENTS’ ARGUMENTS REGARDING THE PROPRIETY OF SUSTAINING THE DEMURRER ON THE CLAIM FOR INFLICTION OF EMOTIONAL DISTRESS ARE BASED UPON THE DELIBERATE MISREPRESENTATION OF THE CONTENT OF THE DEMUCHAS’ COMPLAINT.

CONCLUSION

The trial court erred in sustaining the demurrer without leave to amend and entering a judgment of dismissal. The rules of a non-judicial foreclosure proceeding and litigation to set aside a non-judicial foreclosure do not apply to a quiet title action that is filed prior to a foreclosure sale. The Commercial Code’s requirements that the entity enforcing a note must possess the original note (with limited exceptions) applies to a Note Secured by Deed of Trust. Even in the context of a non-judicial foreclosure, there is no “breach” unless the entity that did not receive the mortgage payments had a right to receive the mortgage payments through possession of the original note or compliance with another recognized exception under the Commercial Code. Any other result would cause an unnecessary conflict of laws and allow fraudulent “lenders” to engage in non-judicial foreclosures and sales of property so long as they complied with the technical requirements of a non-judicial foreclosure. All of the causes of action of the Verified First Amended Complaint are properly plead, with the exception that “punitive damages” is not technically a cause of action, but that can be resolved by striking the label “Sixth Cause of Action” and just allowing the heading “Punitive Damages” to stand.

RESPECTFULLY SUBMITTED,

Dated: 23 December 2010

Michael D. Finley, Esq.

Counsel for Plaintiffs/Appellants

Mark J. DeMucha & Cheryl M. DeMucha

CERTIFICATE OF COMPLIANCE

Pursuant to rule 8.204(c) of the California Rules of Court, I hereby certify that this brief contains 3,914 words, including footnotes. In making this certification, I have relied on the word count of the computer program used to prepare the brief.

Dated: 23 December 2010

Michael D. Finley, Esq.

Counsel for Plaintiffs/Appellants

Mark J. DeMucha & Cheryl M. DeMucha

PROOF OF SERVICE

STATE OF CALIFORNIA, COUNTY OF LOS ANGELES

I am employed in the County of Los Angeles, State of California. I am over the age of 18 and not a party to the within action; my business address is: 25375 Orchard Village Road, Suite 106, Valencia, CA 91355-3000.

On 23 December 2010 I served the foregoing document described as: Appellant’s Opening Brief on the interested parties in this action by placing a true copy thereof in sealed envelopes addressed as follows:

(Attorneys for Wells Fargo Home Mortgage, Inc. & Wells Fargo Bank, N.A.): Kutak Rock LLP, 18201 Von Karman, Suite 1100, Irvine, CA 92612

(Attorneys for First American Loanstar Trustee Services & First American Corporation): Wright, Finlay & Zak, LLP, 4665 MacArthur Court, Suite 280, Newport Beach, CA 92660

Judge Sidney P. Chapin, Kern County Superior Court, Metropolitan Division, 1415 Truxtun Ave., Bakersfield, CA 93301

BY MAIL: I deposited such envelopes in the mail at Valencia, California. The envelopes were mailed with first class postage thereon fully prepaid.

ALSO, BY ELECTRONIC FILING WITH THE SUPREME COURT: In addition, I filed an electronic copy of the Appellant’s Opening Brief with the Supreme Court of California on 23 December 2010, through the Supreme Court’s website.

Dated: 23 December 2010

Michael D. Finley, Esq.

Counsel for Plaintiffs/Appellants

Mark J. DeMucha & Cheryl M. DeMucha

David and Goliath as court overturns case dissmissal (mortgageregistationsystems.wordpress.com)
David and Goliath as court overturns case dissmissal (mortgagereductionlaw.wordpress.com)
David and Goliath as court overturns case dissmissal (timothymccandless.wordpress.com)
pending lawsuits and homeowners winnning (mortgageregistationsystems.wordpress.com)
pending lawsuits and homeowners winnning (timothymccandless.wordpress.com)
pending lawsuits and homeowners winnning (mortgagereductionlaw.wordpress.com)

Challenge Your Lender… Now!

Don’t delay – Opt in to the follow Blog and gain access to over 680 ideas and posts to hold your Lender accountable new post every day!

Do you want to hold your lender responsible for their illegal actions?

Challenge Your Lender… Now!

My name is Timothy McCandless, and I’m here to tell you what most banks and mortgage loan servicers don’t want you to know: More than 65 million homes in the US may not be subject to foreclosure after all, and your home is very likely one of the “safe” homes. The reason these homes are not technically subject to foreclosure is because the lenders, mortgage companies, mortgage servicers, and title companies broke the law throughout the process of managing your loan, both at the inception of your loan and throughout the life of the loan. Because of their fraudulent actions, they are unable to produce a title for, or show ownership of, your property. This causes what we call a “defect of title”, and legally prohibits your lender or servicer from foreclosing, regardless of whether or not your loan is current.

This situation is all over the news, and now, starting today, you can learn how to protect yourself from unlawful foreclosure.

WE CAN TRAIN YOU HOW TO CHALLENGE YOUR LENDER

Most Mortgage Assignments are Illegal

In a major ruling in the Massachusetts Supreme Court today, US Bank National Association and Wells Fargo lost the “Ibanez case”, meaning that they don’t have standing to foreclose due to improper mortgage assignment. The ruling is likely to send shock waves through the entire judicial system, and seriously raise the stakes on foreclosure fraud. Bank stocks plummeted after this ruling. These assignments are what people need to challenge in their own mortgages.

I am prepared to show you the most amazing information on how you can actually Challenge Your Lender. Once you opt in for our free ebook (just enter your email address above and to the right), you’ll get immediate access to our first, very informative webinar, as well as to our free ebook. You’ll learn more about the Challenge Your Lender program, and more importantly, how the US mortgage system is rigged to take advantage of you and how to can fight back. My program will show you exactly how to get a copy of your loan documents that your lender or loan servicer currently has in their possession, and then how to begin examining these documents to learn more about how your lender, as well as other parties involved, has used your name and credit to make millions of dollars. Analyzing your loan documents is a crucial first step in beginning the Challenge Your Lender process.

Save your home from foreclosure

The information that you will be receiving in my free material and webinar will further your knowledge on what most lenders are doing to homeowners, and how you can save yourself from foreclosure. You will have the opportunity to acquire a free copy of my Challenge Your Lender workbook and learn how to begin building the paper trail that you will need to defend yourself and to prove the wrongdoings of your lender and loan servicer. Once you go through the workbook and listen in on the free webinar, you will be on top of your Challenge and ready to begin the program.

The Challenge Your Lender program will help put you in a position of power and control over your loan, and will allow you to decide what you would like to do with your property. This leverage will be advantageous when you begin negotiating your foreclosure. Most importantly, your lender or loan servicer should not be able to foreclose on you once you notify them that you have identified fraudulent activity. My program is your first step in saving your property from foreclosure.

Don’t wait – opt in today. Every day counts in the battle against your lender.

Best regards,
Tim

Foreclosure Crisis Isn’t Even Halfway Over: Study (timothymccandless.wordpress.com)
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Asset Foreclosure Services, Inc. Presents New Economic Solutions At The CMBA Conference (prweb.com)
Elizabeth Renuart Article on Ibanez (pubcit.typepad.com)

Fighting Foreclosure in California

Using the Courts to Fight a California or Other Non-Judicial Foreclosure – 3-Stage Analysis – including a Homeowner Action to “Foreclose” on the Bank’s Mortgage Security Interest – rev.

California real property foreclosures are totally different from foreclosures in New York and many other states. The reason is that more than 99% of the California foreclosures take place without a court action, in a proceeding called a “non-judicial foreclosure”. Twenty-one states do not have a non-judicial foreclosure. [These states are CT, DE, FL, IL, IN, KS, KY, LA, ME, MD, MA, NE, NJ, NM, NY, ND, OH, PA, SC, UT, VT. – Source: realtytrac.com] In California, the lending institution can go through a non-judicial foreclosure in about 4 months from the date of the filing and recording of a “Notice of Default”, ending in a sale of the property without any court getting involved. The California homeowner can stop the sale by making full payment of all alleged arrears no later than 5 days prior to the scheduled sale. Unlike a judicial foreclosure, the homeowner will have no right to redeem the property after the sale (“equity of redemption”, usually a one-year period after judicial foreclosure and sale). For a visual presentation of the timeline for California and other state non-judicial foreclosures, go to Visual Timeline for California Non-Judicial Foreclosures.

A 50-state analysis of judicial and non-judicial foreclosure procedures is available at 50-State Analysis of Judicial and Non-Judicial Foreclosure Procedures.]

The problem I am going to analyze and discuss is under what circumstances can a homeowner/mortgagor go into court to obtain some type of judicial relief for wrongful or illegal conduct by the lender or others relating to the property and mortgage. My discussion applies as to all states in which non-judicial foreclosures are permitted.

There are three distinct stages that need to be separately discussed. These stages are the borrower’s current situation. The three stages are:

Homeowner is not in any mortgage arrears [declaratory judgment action]
Homeowner is behind in mortgage payments – at least 5 days before auction [injunction action, which could even be called an action by a homeowner to “foreclose” upon or eliminate the lending institution’s mortgage security interest]
Property was sold at auction [wrongful foreclosure action]

I. Homeowner Is Not in any Mortgage Arrears [Declaratory Judgment Action]

As long as a homeowner keeps making the mortgage payments, and cures any occasional short-term default, the homeowner is in a position to commence an action in federal or state court for various types of relief relating to the mortgage and the obligations thereunder. One typical claim is a declaratory judgment action to declare that the mortgage and note are invalid or that the terms are not properly set forth. There are various other types of claims, as well. The filing of such an action would not precipitate a non-judicial foreclosure. Compare this to a regular foreclosure, in which the homeowner stops paying on the mortgage, gets sued in a foreclosure action, and then is able in the lawsuit to raise the issues (as “defenses”) which the California homeowner would raise as “claims” or “causes of action” in the lawsuit being discussed for this first stage.

II. Homeowner Is Behind in Mortgage Payments – at Least 5 Days before Auction [Injunction Action seeking TRO and Preliminary Injunction, which you might say is a homeowner’s own “foreclosure proceeding against the bank and its mortgage interest”]

This is the most difficult of the three stages for making use of the courts to oppose foreclosure. The reasons are: foreclosure and sale is apt to take place too quickly; the cost of seeking extraordinary (injunctive) relief is higher because of the litigation papers and hearing that have to be done in a very short period of time to obtain fast TRO and preliminary injunctive relief to stop the threatened sale; the cost of this expensive type of injunctive litigation is probably much higher for many homeowners than just keeping up the mortgage payments; and, finally, you would have to show a greater probability of success on the merits of the action than you would need to file a lawsuit as in Stage 1, so that the homeowner’s chances of prevailing (and getting the requested injunction) are low and the costs and risks are high.

Nevertheless, when the facts are in the homeowner’s favor, the homeowner should consider bringing his plight to the attention of the court, to obtain relief from oppressive lending procedures. The problem with most borrower-homeowners is that they do not have any idea what valid bases they may have to seek this kind of relief. What anyone should do in this case is talk with a competent lawyer as soon as possible, to prevent any further delay from causing you to lose an opportunity to fight back. You need to weigh the cost of commencing a court proceeding (which could be $5,000 more or less to commence) against the loss of the home through non-judicial foreclosure.

III. Property Was Sold at Auction [Wrongful Foreclosure Action]

If the property has already been sold, you still have the right to pursue your claims, but in the context of a “wrongful foreclosure” lawsuit, which has various legal underpinnings including tort, breach of contract and statute. This type of suit could not precipitate any foreclosure and sale of the property because the foreclosure and sale have already taken place. Your remedy would probably be monetary damages, which you would have to prove. You should commence the action as soon as possible after the wrongful foreclosure and sale, and particularly within a period of less than one year from the sale. The reason is that some of your claims could be barred by a short, 1-year statute of limitations.

If you would like to talk about any possible claims relating to your mortgage transaction, please give me a call. There are various federal and state statutes and court decisions to consider, with some claims being substantially better than others. I am available to draft a complaint in any of the 3 stages for review by your local attorney, and to be counsel on a California or other-state action “pro hac vice” (i.e., for the one case) when associating with a local lawyer.

Delaware suing MERS Video

http://www.msnbc.msn.com/id/26315908//vp/45070527#45070527

Delaware suing MERS video

The Law of Capitalism THE MASS MISS JOINDER

I attended the Attorney General and state Bar hearing as to the intervention of the state bar into the law practice of Mitchell Stein and the K2 mass Joinder cases in Los Angeles in front of Judge Johnson. The tentative was a scathing implication of Mitchell Stein and his purported involvement with the “marketing companies” and the allegations of unfair business practices all needed for the AG and the State Bar to step in and confiscate 1.6 million in various accounts.

I was there to opine the status of the case itself and the merits of the cases and as to the victims rights as against the banks. If the Bar took over the practice would they defend the cases would they protect the victims right. No they are not; right now they the State Bar are telling the victims they are on there own.

Once again these suits I have been following and hoping could get past the Demur stage the Banks would be forced to answer. Then there would be motions for Summary Judgement and if the Victims could survive the Summary Judgement and thousands of requests for admissions and interrogatories propounded on the thousands of plaintiffs. It could be done I would have to associate about 10 other lawyers and 30 paralegals but it could be done for about $700,000.00. Then I believe the Banks would enter settlement negotiations with the victims witch I calculate to be about 6500 victims to date.

Mandelman characterized the case as follows:

The case at the core of the Kramer and Kaslow mass joinder lawsuit is: Ronald vs. Bank of America. Basically, the case accuses Countrywide (subsequent cases being filed include Citibank, One West, GMAC/Ally Bank, and perhaps others) of perpetrating a massive fraud upon homeowners by knowingly inflating appraisals, creating a bubble the bank knew would pop and leave homeowner equity devastated, violate privacy statutes, and then Civil Code sections when they refused to modify… you get the idea.

The case says that Countrywide execs knew and did it anyway in order to make zillions of dollars securitizing the loans and therefore only others would incur the future losses.

Here’s an overview of what the third amended complaint says in its Introduction section:

2. This action seeks remedies for the foregoing improper activities, including a massive fraud perpetrated upon Plaintiffs and other borrowers by the Countrywide Defendants that devastated the values of their residences, in most cases resulting in Plaintiffs’ loss of all or substantially all of their net worths.

6. Hand-in-hand with its fraudulently-obtained mortgages, Mozilo and others at Countrywide hatched a plan to “pool” the foregoing mortgages and sell the pools for inflated value. Rapidly, these two intertwined schemes grew into a brazen plan to disregard underwriting standards and fraudulently inflate property values – county-by- county, city-by-city, person-by-person – in order to take business from legitimate mortgage-providers, and moved on to massive securities fraud hand-in-hand with concealment from, and deception of, Plaintiffs and other mortgagees on an unprecedented scale.

7. From as early as 2004, Countrywide’s senior management led by Mozilo knew the scheme would cause a liquidity crisis that would devastate Plaintiffs’ home values and net worths. But, they didn’t care, because their plan was based on insider trading – pumping for as long as they could and then dumping before the truth came out and Plaintiffs’ losses were locked in.

9. It is now all too clear that this was the ultimate high-stakes fraudulent investment scheme of the last decade. Couched in banking and securities jargon, the deceptive gamble with consumers’ primary assets – their homes – was nothing more than a financial fraud perpetrated by Defendants and others on a scale never before seen. This scheme led directly to a mortgage meltdown in California that was substantially worse than any economic problems facing the rest of the United States. From 2008 to the present, Californians’ home values decreased by considerably more than most other areas in the United States as a direct and proximate result of the Defendants’ scheme set forth herein.

This massive fraudulent scheme was a disaster both foreseen by Countrywide and waiting to happen. Defendants knew it, and yet Defendants still induced the Plaintiffs into their scheme without telling them.

10. As a result, Plaintiffs lost their equity in their homes, their credit ratings and histories were damaged or destroyed, and Plaintiffs incurred material other costs and expenses, described herein. At the same time, Defendants took from Plaintiffs and other borrowers billions of dollars in interest payments and fees and generated billions of dollars in profits by selling their loans at inflated values.

14. Since the time Plaintiffs filed the initial Complaint herein, Defendants’ improper acts have continued, including, inter alia: (i) issuing Notices of Default in violation of Cal. Civil Code §2923.5; (ii) misrepresenting their intention to arrange loan modifications for Plaintiffs, while in fact creating abusive roadblocks to deprive Plaintiffs of their legal rights; and (iii) engaging in intrinsic fraud in this Court and in Kentucky by stalling in addressing Plaintiffs’ legitimate requests to cancel notices of default and for loan modifications, and by refusing to respond, in any way, to Plaintiffs’ privacy causes of action.

Now, there’s no question… this is a real lawsuit. Some attorneys believe it will be a very difficult case to win, while others think it’s quite viable and likely to settle. I can see both sides of that argument.

On one hand, it would seem difficult to prove that Countrywide caused the housing bubble; there were certainly many parties involved and numerous other contributing factors as well. On the other hand, the case has numerous aspects that are unquestionably true and certainly wrong.

Then there’s what’s known as “the banker factor.” Actually, I’m making that up, but you know what I mean. The banks aren’t going to lay down for this as it would open an enormous can of litigating worms… so they have to fight… or is there no percentage in that either? Well, now you’ve seen first hand why I chose not to go to law school.

I really haven’t the foggiest idea what’s going to happen… and neither does anyone else.

But then, Columbus couldn’t exactly stop and ask for directions either, which, it’s worth noting is why, when sailing for The New World, he landed in the Bahamas and named them San Salvador, but assumed he had found the Indies so he named the native people Indians (leading me to always wonder what he would have named them had he not gotten so hopelessly lost.)

(What if his favorite word was “Jujubees,” and he had named the natives “Jujubees?” Then I would have grown up playing Cowboys & Jujubees?)

So, since no one can know what’s going to happen in the future of this case, I thought I’d take a look at where it is today. From a review of the Los Angeles Superior Court’s online records database we find these events have transpired to-date or are set for the near future…
1. Original complaint was filed in March 2009.
2. First amended complaint was in June of 2009.
3. Second amended complaint March 2010.
4. August 2010: the banks try to remove the case to federal court, but fail.
5. Third amended complaint was filed July 7, 2010.
6. The defendant banksters have demurred again, but it doesn’t appear that the demurs filed in December have been heard.
7. Status conference set for Thursday, February 3rd, 2011.
8. There is a hearing date scheduled for March 29, 2011, but it’s not clear to me what will be happening at that hearing.

So, this is their third “amended complaint.” That means the defendants… the banks… have demurred twice. That means that the banks have come to court claiming that the mass joinder plaintiffs don’t state a cause of action… or in other words saying the plaintiffs have no case… and the court has allowed the plaintiffs to amend the complaint three times so far.

Like almost everything in the law, I guess you could read that a couple of different ways. On one hand it seems positive… the case brought by the mass joinder plaintiffs has not been tossed out by the judge yet. That’s good, right?
On the other hand… the court could “sustain the demur without leave to amend,” in which case the mass joinder suit would be over and done.

And that’s why litigating is always a gamble, and by no means a sure thing.
Here’s an oversimplified look at the mass joinder’s causes of action.

First Cause of Action… Fraudulent Concealment – This is saying that the bank was hiding things from the borrowers.

Second Cause of Action… Intentional Misrepresentation – This is lying when you knew you were lying. In other words, you knew an appraisal was wrong… it came in at $500,000, but you knew it was worth $400,000 and you passed it off anyway.

Third Cause of Action… Negligent Misrepresentation – This is like saying that you’re lying but it wasn’t intentional. Let’s say that you ordered an appraisal but never really looked at the appraisal to make sure it was done correctly. You include this cause of action in case the conduct doesn’t rise to the level of intentional misrepresentation, and perhaps because some insurance policies don’t cover intentional acts.

Fourth Cause if Action… Invasion of Constitutional Right to Privacy – This is saying that the banks disclosed personal information… perhaps when selling the loans to another investor.

Fifth Cause of Action… Violation of California Financial Information Privacy Act – See above or read the actual complaint.

Sixth Cause of Action… Civil Code 2923.5 – Defendants are prohibited by statute from recording a Notice of Default against the primary residential property of any Californian without first making contact with that person as required under § 2923.5 and then interacting with that person in the manner set forth in detail under § 2923.5. Nothing special here, but its been upheld by other courts in California.

Seventh Cause of Action… Civil Code 1798 – When they gave away your private information, they didn’t tell you they did it? Defendants failed to timely disclose to Plaintiffs the disclosure of their personal information as required under California Civil Code § 1798.82

Eighth Cause of Action… Unfair Competition Against All Defendants – Defendants’ actions in implementing and perpetrating their fraudulent scheme of inducing Plaintiffs to accept mortgages for which they were not qualified based on inflated property valuations and undisclosed disregard of their own underwriting standards and the sale of overpriced collateralized mortgage pools, all the while knowing that the plan would crash and burn, taking the Plaintiffs down and costing them the equity in their homes and other damages, violates numerous federal and state statutes and common law protections enacted for consumer protection, privacy, trade disclosure, and fair trade and commerce.

In Conclusion…

Attorney Phillip Kramer, in his own words, made it quite clear that his firm was not responsible for the mailer I received or the telemarketing about which I’ve been notified. Once again, he says…

“I know of no outbound calling. If asked, I would not approve of that. I knew that some law firms wanted to send out mailers. I have insisted that everyone comply with State Bar rules and that anything with my name must be pre-approved. As of this date, no one has submitted any proposed marketing for my review. That piece was done without my knowledge.

I am happy to pay a referral fee to other law firms. I do not split fees, pay commissions, nor do I pay referral fees to non-lawyers. I do not use cappers, and have never authorized anyone to robocall, telemarket, spam email, or undertake any mass marketing on my behalf.”

With that said I was going to apply to the Bar to take over the cases if they would relinquish the 1.6 to pay for the work to be done for the victims. Before making such a wild leap into this caos I called my State bar lawyer. He informed me that I should not even go close to these cases that all lawyers involved will be DISBARRED. I said wow but what about the merits of the cases the judge in the case had already overruled the demur as to some of the causes of action. The State Bar (by their actions in not finding a lawyer to protect the victims) is recommending that case be dismissed the Attorney General IS NOT PURSUING THE RIGHTS OF THE VICTIMS . I persisted with my lawyer. To which he exclaimed ” DON’T YOU GET IT MCCANDLESS THE AG AND THE BAR ARE WORKING FOR THE BANKS”.

Three Hundred Billion to compensate homeownners “really?” no probably 50 bucks a case!!!

Millions of current and former homeowners will have a chance to get their foreclosure cases examined to determine whether they should be compensated for banks’ mistakes, under a wide-ranging review being planned by federal regulators. Ssoo let’s see 6 Million foreclosures 50,000.00 each that’s 300 BILLION I think they are going to sweep this under the carpet just like the Countrywide deal and say they fixed it. I believe that the only way to get compensated is through litigation although this is a great admission and could be used in future litigation.

The review process, which could be unveiled in the next few weeks, will be open to borrowers who were in some stage of foreclosure in 2009 or 2010. Estimates prepared by the Office of the Comptroller of the Currency, which will oversee the review, indicate that 4.5 million borrowers could be eligible for review.

John Walsh, acting head of the OCC, unveiled some aspects of the plan in a speech last month to banking executives, when he said the agency was exploring “the best means of ensuring that injured homeowners had the opportunity to seek relief,” when they were harmed by lender improprieties.

WSJ’s Nick Timiraos has details of a plan by which 4.5 million homeowners who faced foreclosure in 2009 and 2010 could face a review of their foreclosure procedures due to errors by banks. Photo by John Moore/Getty Images

The process will include a broad public-outreach campaign, including direct mail to eligible borrowers and a single website and toll-free number. The reviews will be conducted by independent third-party companies that were hired earlier this year by 14 banks that signed consent orders in April with the OCC and the Federal Reserve. The regulators had to sign off on the selection of these companies.

“It’s a substantial undertaking at great expense to the banks,” said Tim Rood, a partner at Collingwood Group, a housing-finance consulting firm.

Borrowers who are determined to have suffered “financial injury” could be eligible for compensation that would be determined on a case-by-case basis by the third-party firms. Borrowers will have to request reviews before a cutoff date, likely to fall near the end of the first quarter of 2012. It hasn’t been determined whether borrowers that accept restitution would have to agree to surrender related legal claims.

Regulators declined to provide estimates of the amount of money that injured borrowers might receive or how much the program might cost lenders.

However, few if any borrowers are expected to have foreclosures overturned.

The review process is one of several continuing efforts to address disclosures that surfaced a year ago over banks’ use of “robo-signers,” bank employees who signed off on huge numbers of legal foreclosure filings daily and falsely claimed in the documents to have personally reviewed each case. The disclosures prompted some judges to question the veracity of other bank foreclosure practices.

The process is separate from the months-long talks between federal agencies, state attorneys general and banks to reach a multibillion-dollar settlement over foreclosure abuses. That effort took a big step backwards Friday, when California Attorney General Kamala D. Harris called the deal “inadequate” and pulled out of the settlement talks.

The loss of California could cripple any settlement because the state has among the nation’s highest volumes of foreclosures. Banks are less likely to agree to the $25 billion price tag pushed by federal and state officials without the participation of California. Banks, federal officials and state attorneys general are set to resume meetings in Washington on Tuesday.

Representatives for both sides said they still hope to reach an agreement despite Friday’s setback. The banks “remain committed to the dialogue and continue to believe that a global settlement would be an effective means of supporting the recovery of the housing market and helping to strengthen the economy,” said one person familiar with the banks’ thinking.

“We are still full-steam ahead,” said a spokesman for Iowa Attorney General Tom Miller, who is spearheading the 50-state negotiations. “With or without some states, we are still moving forward.”

Enlarge Image

Bloomberg NewsBorrowers who suffered ‘financial injury’ could be eligible for compensation. Here, a foreclosure sign hangs in front of a house in Canton, Mich., in March.

In the OCC review process, financial injury could cover a wide range of misrepresentations or errors committed by mortgage companies, according to people familiar with the process.

Banks could be liable if they miscalculated mortgage payments or applied impermissible fees or penalties. A handful of borrowers have alleged that mortgage-servicing companies, for example, improperly placed expensive insurance coverage onto their mortgage, pushing them into default and preventing them from becoming current with their payments.

Borrowers may be able to receive compensation if the review finds that the bank moved a borrower to foreclosure while the bank was receiving partial payments as part of a trial or permanent loan modification. Compensation might also be due if borrowers provide evidence that they provided the necessary documentation required to qualify for a modification but were denied the modification.

A separate report to be released on Tuesday raises new questions over Fannie Mae‘s oversight of the attorneys that conduct foreclosures on its behalf. The report, from the inspector general for the Federal Housing Finance Agency, faulted Fannie for inadequate oversight of those firms

Since 2008, Fannie has required its mortgage servicers to use designated law firms that are part of its “retained attorney network.” The network arrangement allows Fannie to negotiate discounted rates with approved firms, which in turn can lock in business from the nation’s largest mortgage investor.

The report said that in June 2010, the FHFA conducted a two-day field visit to Florida, where it found that “documentation problems were evident and law firms…were not devoting the time necessary to their cases due to Fannie Mae’s flat fee structure and volume-based processing model.”

FHFA staff subsequently informed senior Fannie officials that its attorneys were “increasingly unprepared when they enter the courtroom,” leading to a larger backlog of foreclosures.

Fannie Mae declined to comment on the report.

Forget Mass Joinder just use Consumer Legal Remedies Act Civil Code 1750

CALIFORNIA CIVIL CODE
SECTION 1750 et seq
Consumers Legal Remedies Act

1750. This title may be cited as the Consumers Legal Remedies Act.

1751. Any waiver by a consumer of the provisions of this title is contrary to public policy and shall be unenforceable and void.

1752. The provisions of this title are not exclusive. The remedies provided herein for violation of any section of this title or for conduct proscribed by any section of this title shall be in addition to any other procedures or remedies for any violation or conduct provided for in any other law.
Nothing in this title shall limit any other statutory or any common law rights of the Attorney General or any other person to bring class actions. Class actions by consumers brought under the specific provisions of Chapter 3 (commencing with Section 1770) of this title shall be governed exclusively by the provisions of Chapter 4 (commencing with Section 1780); however, this shall not be construed so as to deprive a consumer of any statutory or common law right to bring a class action without resort to this title. If any act or practice proscribed under this title also constitutes a cause of action in common law or a violation of another statute, the consumer may assert such common law or statutory cause of action under the procedures and with the remedies provided for in such law.

1753. If any provision of this title or the application thereof to any person or circumstance is held to be unconstitutional, the remainder of the title and the application of such provision to other persons or circumstances shall not be affected thereby.

1754. The provisions of this title shall not apply to any transaction which provides for the construction, sale, or construction and sale of an entire residence or all or part of a structure designed for commercial or industrial occupancy, with or without a parcel of real property or an interest therein, or for the sale of a lot or parcel of real property, including any site preparation incidental to such sale.

1755. Nothing in this title shall apply to the owners or employees of any advertising medium, including, but not limited to, newspapers, magazines, broadcast stations, billboards and transit ads, by whom any advertisement in violation of this title is published or disseminated, unless it is established that such owners or employees had knowledge of the deceptive methods, acts or practices declared to be unlawful by Section 1770.

1756. The substantive and procedural provisions of this title shall only apply to actions filed on or after January 1, 1971.

1760. This title shall be liberally construed and applied to promote its underlying purposes, which are to protect consumers against unfair and deceptive business practices and to provide efficient and economical procedures to secure such protection.

1761. As used in this title:

(a) “Goods” means tangible chattels bought or leased for use primarily for personal, family, or household purposes, including certificates or coupons exchangeable for these goods, and including goods which, at the time of the sale or subsequently, are to be so affixed to real property as to become a part of real property, whether or not severable therefrom.
(b) “Services” means work, labor, and services for other than a commercial or business use, including services furnished in connection with the sale or repair of goods.
(c) “Person” means an individual, partnership, corporation, limited liability company, association, or other group, however organized.
(d) “Consumer” means an individual who seeks or acquires, by purchase or lease, any goods or services for personal, family, or household purposes.
(e) “Transaction” means an agreement between a consumer and any other person, whether or not the agreement is a contract enforceable by action, and includes the making of, and the performance pursuant to, that agreement.
(f) “Senior citizen” means a person who is 65 years of age or older.
(g) “Disabled person” means any person who has a physical or mental impairment which substantially limits one or more major life activities.

(1) As used in this subdivision, “physical or mental impairment” means any of the following:

A. Any physiological disorder or condition, cosmetic disfigurement, or anatomical loss substantially affecting one or more of the following body systems: neurological; muscoloskeletal; special sense organs; respiratory, including speech organs; cardiovascular; reproductive; digestive; genitourinary; hemic and lymphatic; skin; or endocrine.
B. Any mental or psychological disorder, such as mental retardation, organic brain syndrome, emotional or mental illness, and specific learning disabilities. The term “physical or mental impairment” includes, but is not limited to, such diseases and conditions as orthopedic, visual, speech and hearing impairment, cerebral palsy, epilepsy, muscular dystrophy, multiple sclerosis, cancer, heart disease, diabetes, mental retardation, and emotional illness.

(2) “Major life activities” means functions such as caring for one’ s self, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, and working.

(h) “Home solicitation” means any transaction made at the consumer’ s primary residence, except those transactions initiated by the consumer. A consumer response to an advertisement is not a home solicitation.

1770.

(a) The following unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or which results in the sale or lease of goods or services to any consumer are unlawful:

(1) Passing off goods or services as those of another.
(2) Misrepresenting the source, sponsorship, approval, or certification of goods or services.
(3) Misrepresenting the affiliation, connection, or association with, or certification by, another. (MERS)and Securitization
(4) Using deceptive representations or designations of geographic origin in connection with goods or services.
(5) Representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities which they do not have or that a person has a sponsorship, approval, status, affiliation, or connection which he or she does not have.
(6) Representing that goods are original or new if they have deteriorated unreasonably or are altered, reconditioned, reclaimed, used, or secondhand.
(7) Representing that goods or services are of a particular standard, quality, or grade, or that goods are of a particular style or model, if they are of another.
(8) Disparaging the goods, services, or business of another by false or misleading representation of fact.
(9) Advertising goods or services with intent not to sell them as advertised.
(10) Advertising goods or services with intent not to supply reasonably expectable demand, unless the advertisement discloses a limitation of quantity.
(11) Advertising furniture without clearly indicating that it is unassembled if that is the case.
(12) Advertising the price of unassembled furniture without clearly indicating the assembled price of that furniture if the same furniture is available assembled from the seller.
(13) Making false or misleading statements of fact concerning reasons for, existence of, or amounts of price reductions.
(14) Representing that a transaction confers or involves rights, remedies, or obligations which it does not have or involve, or which are prohibited by law.
(15) Representing that a part, replacement, or repair service is needed when it is not.
(16) Representing that the subject of a transaction has been supplied in accordance with a previous representation when it has not. Sign this transaction now and when the option ARM adjusts we will refinance at no cost to you
(17) Representing that the consumer will receive a rebate, discount, or other economic benefit, if the earning of the benefit is contingent on an event to occur subsequent to the consummation of the transaction.
(18) Misrepresenting the authority of a salesperson, representative, or agent to negotiate the final terms of a transaction with a consumer.
(19) Inserting an unconscionable provision in the contract.
(20) Advertising that a product is being offered at a specific price plus a specific percentage of that price unless (1) the total price is set forth in the advertisement, which may include, but is not limited to, shelf tags, displays, and media advertising, in a size larger than any other price in that advertisement, and (2) the specific price plus a specific percentage of that price represents a markup from the seller’s costs or from the wholesale price of the product. This subdivision shall not apply to in-store advertising by businesses which are open only to members or cooperative organizations organized pursuant to Division 3 (commencing with Section 12000) of Title 1 of the Corporations Code where more than 50 percent of purchases are made at the specific price set forth in the advertisement.
(21) Selling or leasing goods in violation of Chapter 4 (commencing with Section 1797.8) of Title 1.7.
(22)

(A) Disseminating an unsolicited prerecorded message by telephone without an unrecorded, natural voice first informing the person answering the telephone of the name of the caller or the organization being represented, and either the address or the telephone number of the caller, and without obtaining the consent of that person to listen to the prerecorded message.
(B) This subdivision does not apply to a message disseminated to a business associate, customer, or other person having an established relationship with the person or organization making the call, to a call for the purpose of collecting an existing obligation, or to any call generated at the request of the recipient.

(23) The home solicitation, as defined in subdivision (h) of Section 1761, of a consumer who is a senior citizen where a loan is made encumbering the primary residence of that consumer for the purposes of paying for home improvements and where the transaction is part of a pattern or practice in violation of either subsection (h) or (i) of Section 1639 of Title 15 of the United States Code or subsection (e) of Section 226.32 of Title 12 of the Code of Federal Regulations.
A third party shall not be liable under this subdivision unless (1) there was an agency relationship between the party who engaged in home solicitation and the third party or (2) the third party had actual knowledge of, or participated in, the unfair or deceptive transaction. A third party who is a holder in due course under a home solicitation transaction shall not be liable under this subdivision.

(b)

(1) It is an unfair or deceptive act or practice for a mortgage broker or lender, directly or indirectly, to use a home improvement contractor to negotiate the terms of any loan that is secured, whether in whole or in part, by the residence of the borrower and which is used to finance a home improvement contract or any portion thereof. For purposes of this subdivision, “mortgage broker or lender” includes a finance lender licensed pursuant to the California Finance Lenders Law (Division 9 (commencing with Section 22000) of the Financial Code), a residential mortgage lender licensed pursuant to the California Residential Mortgage Lending Act (Division 20 (commencing with Section 50000) of the Financial Code), or a real estate broker licensed under the Real Estate Law (Division 4 (commencing with Section 10000) of the Business and Professions Code).
(2) This section shall not be construed to either authorize or prohibit a home improvement contractor from referring a consumer to a mortgage broker or lender by this subdivision. However, a home improvement contractor may refer a consumer to a mortgage lender or broker if that referral does not violate Section 7157 of the Business and Professions Code or any other provision of law. A mortgage lender or broker may purchase an executed home improvement contract if that purchase does not violate Section 7157 of the Business and Professions Code or any other provision of law. Nothing in this paragraph shall have any effect on the application of Chapter 1 (commencing with Section 1801) of Title 2 to a home improvement transaction or the financing thereof.

1780.

(a) Any consumer who suffers any damage as a result of the use or employment by any person of a method, act, or practice declared to be unlawful by Section 1770 may bring an action against such person to recover or obtain any of the following:

(1) Actual damages, but in no case shall the total award of damages in a class action be less than one thousand dollars ($1,000).
(2) An order enjoining such methods, acts, or practices.
(3) Restitution of property.
(4) Punitive damages.
(5) Any other relief which the court deems proper.

(b) Any consumer who is a senior citizen or a disabled person, as defined in subdivisions (f) and (g) of Section 1761, as part of an action under subdivision (a), may seek and be awarded, in addition to the remedies specified therein, up to five thousand dollars ($5,000) where the trier of fact (1) finds that the consumer has suffered substantial physical, emotional, or economic damage resulting from the defendant’s conduct, (2) makes an affirmative finding in regard to one or more of the factors set forth in subdivision (b) of Section 3345, and (3) finds that an additional award is appropriate. Judgment in a class action by senior citizens or disabled persons under Section 1781 may award each class member such an additional award where the trier of fact has made the foregoing findings.
(c) An action under subdivision (a) or (b) may be commenced in the county in which the person against whom it is brought resides, has his or her principal place of business, or is doing business, or in the county where the transaction or any substantial portion thereof occurred.
If within any such county there is a municipal or justice court, having jurisdiction of the subject matter, established in the city and county or judicial district in which the person against whom the action is brought resides, has his or her principal place of business, or is doing business, or in which the transaction or any substantial portion thereof occurred, then such court is the proper court for the trial of such action. Otherwise, any municipal or justice court in such county having jurisdiction of the subject matter is the proper court for the trial thereof.
In any action subject to the provisions of this section, concurrently with the filing of the complaint, the plaintiff shall file an affidavit stating facts showing that the action has been commenced in a county or judicial district described in this section as a proper place for the trial of the action. If a plaintiff fails to file the affidavit required by this section, the court shall, upon its own motion or upon motion of any party, dismiss any such action without prejudice.
(d) The court shall award court costs and attorney’s fees to a prevailing plaintiff in litigation filed pursuant to this section. Reasonable attorney’s fees may be awarded to a prevailing defendant upon a finding by the court that the plaintiff’s prosecution of the action was not in good faith.

1781.

(a) Any consumer entitled to bring an action under Section 1780 may, if the unlawful method, act, or practice has caused damage to other consumers similarly situated, bring an action on behalf of himself and such other consumers to recover damages or obtain other relief as provided for in Section 1780.
(b) The court shall permit the suit to be maintained on behalf of all members of the represented class if all of the following conditions exist:

(1) It is impracticable to bring all members of the class before the court.
(2) The questions of law or fact common to the class are substantially similar and predominate over the questions affecting the individual members.
(3) The claims or defenses of the representative plaintiffs are typical of the claims or defenses of the class.
(4) The representative plaintiffs will fairly and adequately protect the interests of the class.

(c) If notice of the time and place of the hearing is served upon the other parties at least 10 days prior thereto, the court shall hold a hearing, upon motion of any party to the action which is supported by affidavit of any person or persons having knowledge of the facts, to determine if any of the following apply to the action:

(1) A class action pursuant to subdivision (b) is proper.
(2) Published notice pursuant to subdivision (d) is necessary to adjudicate the claims of the class.
(3) The action is without merit or there is no defense to the action.
A motion based upon Section 437c of the Code of Civil Procedure shall not be granted in any action commenced as a class action pursuant to subdivision (a).
(d) If the action is permitted as a class action, the court may direct either party to notify each member of the class of the action.
The party required to serve notice may, with the consent of the court, if personal notification is unreasonably expensive or it appears that all members of the class cannot be notified personally, give notice as prescribed herein by publication in accordance with Section 6064 of the Government Code in a newspaper of general circulation in the county in which the transaction occurred.
(e) The notice required by subdivision (d) shall include the following:

(1) The court will exclude the member notified from the class if he so requests by a specified date.
(2) The judgment, whether favorable or not, will include all members who do not request exclusion.
(3) Any member who does not request exclusion, may, if he desires, enter an appearance through counsel.

(f) A class action shall not be dismissed, settled, or compromised without the approval of the court, and notice of the proposed dismissal, settlement, or compromise shall be given in such manner as the court directs to each member who was given notice pursuant to subdivision (d) and did not request exclusion.
(g) The judgment in a class action shall describe those to whom the notice was directed and who have not requested exclusion and those the court finds to be members of the class. The best possible notice of the judgment shall be given in such manner as the court directs to each member who was personally served with notice pursuant to subdivision (d) and did not request exclusion.

1782.

(a) Thirty days or more prior to the commencement of an action for damages pursuant to the provisions of this title, the consumer shall do the following:

(1) Notify the person alleged to have employed or committed methods, acts or practices declared unlawful by Section 1770 of the particular alleged violations of Section 1770.
(2) Demand that such person correct, repair, replace or otherwise rectify the goods or services alleged to be in violation of Section 1770.
Such notice shall be in writing and shall be sent by certified or registered mail, return receipt requested, to the place where the transaction occurred, such person’s principal place of business within California, or, if neither will effect actual notice, the office of the Secretary of State of California.

(b) Except as provided in subdivision (c), no action for damages may be maintained under the provisions of Section 1780 if an appropriate correction, repair, replacement or other remedy is given, or agreed to be given within a reasonable time, to the consumer within 30 days after receipt of such notice.
(c) No action for damages may be maintained under the provisions of Section 1781 upon a showing by a person alleged to have employed or committed methods, acts or practices declared unlawful by Section 1770 that all of the following exist:

(1) All consumers similarly situated have been identified, or a reasonable effort to identify such other consumers has been made.
(2) All consumers so identified have been notified that upon their request such person shall make the appropriate correction, repair, replacement or other remedy of the goods and services.
(3) The correction, repair, replacement or other remedy requested by such consumers has been, or, in a reasonable time, shall be, given.
(4) Such person has ceased from engaging, or if immediate cessation is impossible or unreasonably expensive under the circumstances, such person will, within a reasonable time, cease to engage, in such methods, act, or practices.

(d) An action for injunctive relief brought under the specific provisions of Section 1770 may be commenced without compliance with the provisions of subdivision (a). Not less than 30 days after the commencement of an action for injunctive relief, and after compliance with the provisions of subdivision (a), the consumer may amend his complaint without leave of court to include a request for damages. The appropriate provisions of subdivision (b) or (c) shall be applicable if the complaint for injunctive relief is amended to request damages.
(e) Attempts to comply with the provisions of this section by a person receiving a demand shall be construed to be an offer to compromise and shall be inadmissible as evidence pursuant to Section 1152 of the Evidence Code; furthermore, such attempts to comply with a demand shall not be considered an admission of engaging in an act or practice declared unlawful by Section 1770. Evidence of compliance or attempts to comply with the provisions of this section may be introduced by a defendant for the purpose of establishing good faith or to show compliance with the provisions of this section.

1783. Any action brought under the specific provisions of Section 1770 shall be commenced not more than three years from the date of the commission of such method, act, or practice.

1784. No award of damages may be given in any action based on a method, act, or practice declared to be unlawful by Section 1770 if the person alleged to have employed or committed such method, act, or practice

(a) proves that such violation was not intentional and resulted from a bona fide error notwithstanding the use of reasonable procedures adopted to avoid any such error and
(b) makes an appropriate correction, repair or replacement or other remedy of the goods and services according to the provisions of subdivisions (b) and (c) of Section 1782.

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OUR NANCY DREW BLASTS THROUGH THE DEVIL IN THE DETAILS ON NORWEST, GMAC ET AL (via Livinglies’s Weblog)

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE Submitted on 2011/08/24 at 9:08 pm Norwest and Alt-A Land Title & Fidelity National Insurance morpted into Microsoft open platform on CLOUD and portals now through which new GMAC Mortgage & State of Maryland in the pass-thru-agency state portal funded to access FIS, […]
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Bombshell Admission of Failed Securitization Process in American Home Mortgage Servicing/LPS Lawsuit (via Livinglies’s Weblog)

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE EDITOR’S NOTE: It is comforting to know that at least some people are paying attention. From one of the largest servicers in the country comes an admission that securitization of mortgage loans was an illusion. The facts alleged by AHMSI in its lawsuit […]
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KISS: KEEP IT SIMPLE STUPID from Garfield

Finality versus good and evil. In the battlefield it isn’t about good and evil. It is about winner and losers. In military battles around the world many battles have been one by the worst tyrants imaginable. Just because you are right, just because the banks did bad things, just because they have no right to […]
MANDELMAN MATTERS: DEADBEAT BORROWERS AND THIEVES WHO CALL THEM THAT

“If you’re allowed to foreclose and kick someone out of his or her home without being the party that either owns the loan or represents the person who owns the loan… if you can ignore those laws, why can’t you ignore other laws too? Which laws apply, when one of the parties didn’t make his […]
$1.2 Trillion in Secret Additional Bailout for Banks with No Collateral and No Commitments (via Livinglies’s Weblog)

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE see VIDEO $1.2 Trillion in EXTRA BAILOUT MONEY FROM FED SECRETLY GIVEN TO DOMESTIC AND FOREIGN BANKS Of course the figure is much higher, but the secrecy surrounding the money given by the Fed to the banks is something to enrage any tea […]
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GOING AFTER THE NOTARY, STEP BY STEP (via Livinglies’s Weblog)

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE EDITOR’S NOTE: Here is a good place to start — the devil is in the details. You will find that the more you probe the more people and bad documents emerge. Persistence pays. Here is a letter that one homeowner just sent to […]
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WALLS CLOSING IN ON LAW FIRMS AND SUBSTITUTE TRUSTEES AS FAKED, FORGED DOCUMENTS SURFACE IN ABUNDANCE (via Livinglies’s Weblog)

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE The boys are playing rough now, but US Bank, failing to take its queues from Deutsch is plunging ahead with CalWestern by its side, using forged, fabircated, faked documents that wouldn’t be valid even if they were properly executed. The securitizers tricked and […]
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Attorney General Kamala D. Harris Sues Law Firms Engaged in National “Mass Joinder” Mortgage Fraud

SAN FRANCISCO — Attorney General Kamala D. Harris today announced that the California Department of Justice, in conjunction with the State Bar of California, has sued multiple entities accused of fraudulently taking millions of dollars from thousands of homeowners who were led to believe they would receive relief on their mortgages. Attorney General Harris sued […]
NY POST: 92% —BANKS STILL FORECLOSING WITHOUT ANY RIGHT (via Livinglies’s Weblog)

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE IF THE BANKS DON’T OWN THE PROPERTY OR THE MORTGAGE, WHO DOES? EDITOR’S NOTE: My figures tracking thousands of foreclosures indicate the same thing that the New York Post found. There are a scattered few foreclosures that are good old-fashioned foreclosures of valid […]
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Should Borrower File Eviction Against Bank? (via Livinglies’s Weblog)

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE EDITOR’S COMMENT: I was talking with an expert in landlord tenant law and I received an interesting suggestion. The case involved someone who has just been served with a writ of restitution where the owner had to peaceably leave her home — or […]
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Gomes and the U.S. Supreme court some body had better help these attorneys argue and brief the case

Wednesday, August 17th, 2011, 2:49 pm A controversial case challenging the ability of Mortgage Electronic Registration Systems to foreclose on a California man was filed with the Supreme Court Monday, making it the first major MERS case to reach the nation’s highest court. If the Supreme Court agrees to hear Gomes v. Countrywide, Gomes’ attorney, […]
California man wants foreclosures deemed unconstitutional in the state

by KERRI PANCHUK Proposed Illinois Legislation Would Freeze Evictions for Four Months California AG Wants Pay Option ARM Answers Does the Senate’s housing bill encourage foreclosures? California Law Freezes Foreclosures, Burns Servicers Short Sales Cost Lenders $310m More Than Necessary, CoreLogic Study Finds Thursday, August 4th, 2011, 7:31 am A California man is on a […]
JUDGES: ASSUME THE BORROWER IS WRONG

So you have denied the claims of the pretenders and put that in issue. You have even alleged fraud, forgery and fabrication and the catch-word “robosigning”. But the Judge, alleging that he did not want to “make new law” (which wasn’t true) or allegedly because he didn’t want to start an avalanche of litigation interfering […]
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SAY NO TO LENDERS FRAUD!

Contact Us: MortgageReductionLaw.com Dear Homeowner, It’s been widely reported around the country, via internet, blogs and newspapers, how the lenders used the foreclosure mills and other legal ways, to fabricate fraudulent documents to record in the county recorder offices and pretend they have legal standing to initiate the foreclosure procedure. Neil Garfield in his blog […]
Keep the trustees deed out of evidence in the unlawful detainer

TIMOTHY L. MCCANDLESS, ESQ. SBN 147715 LAW OFFICES OF TIMOTHY L. MCCANDLESS 820 Main Street, Ste. 1 Martinez, CA (925) 957-9797 Telephone (909) 382-9956 Facsimile Attorney for Defendant Zenkarla S. Salazar SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SANTA CLARA GMAC MORTGAGE, LLC FKA GMAC MORTGAGE CORPORATION, Plaintiff, vs. […]
STUDY: Mortgage Assignments to Washington Mutual Trusts Are Fraudulent (via Livinglies’s Weblog)

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE EDITOR’S NOTE: We know the foreclosures were gross misrepresentations of fact to the Courts, to the Borrowers and to the Investors. This article shows the crossover between the MegaBanks — sharing and diluting the responsibility for these fabrications as they went along. If […]
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The Free House Myth

posted by Katie Porter As challenges to whether a “bank” (usually actually a securitized trust) has the right to foreclose because it owns the note and mortgage become more common, rumors swirl about the ability to use such tactics to get a “free house.” There are a few instances of consumer getting a free house, […]
MERS in California

From LivingLies: I think that everyone is missing the #1 problem MERS has in CA. MERS is a Non-Authorized Agent and cannot legally assign the Promissory Note, making any foreclosure by other than the original lender wrongful, for the following reasons. 1) Under established and binding Ca law, a Nominee can’t assign the Note. Born […]
QUIET TITLE IS NOT A DEFENSE — IT IS OFFENSE AND IT IS A HIGHLY EFFECTIVE LAWSUIT

Posted on August 1, 2011 by Neil Garfield I WRITE THIS BECAUSE WITH SO MANY PRO SE LITIGANTS AND UNINFORMED LAWYERS WEIGHING IN IT IS SOMETIMES NECESSARY TO CLARIFY THE ISSUES. Quiet Title is not a defense. If used defensively you will most likely lose your case and also unintentionally waive rights that you might […]
Its about standing

Pro Per Debtor Stops Attorneys for US Bank – in RE Deamicis Posted: 31 Jul 2011 10:21 PM PDT Pro Per Debtor Stops Attorneys for US Bank – in RE Deamicis By Daniel Edstrom DTC Systems, Inc. She has been fighting tooth and nail. Nobody was listening. The current bankruptcy judge was skeptical when she […]
Comptroler of the currecy consent orders

Recent Consent Orders Consent Order, Sovereign Bank, Wyomissing, Pennsylvania, 04410, NE-11-17, April… Order shall be directed to the Comptroller of the Currency, or to the individual, … or office designated by the Comptroller of the Currency. Sovereign Bank Consent Order Page http://www.mortgagedaily.com/forms/OccConsentOrderSovereign041311.pdf Consent Order, OneWest Bank, FSB, Pasadena, California, 18129, WN-11-011,

David and Goliath as court overturns case dissmissal

A Bakersfield homeowner is taking on a bank, in a battle that could have sweeping implications for people facing foreclosure. Mark Demucha wants Wells Fargo to prove it owns his home loan. And, if his lawsuit is successful, it could set a legal precedent that slows or even stops foreclosures across the state. “Filled out the […]
17 News Investigation: Homeowner challenges bank

17 News Investigation: Homeowner challenges bank. Filed under: Foreclosure, I Have a Plan, lis pendence, mers, Mortgage modification
pending lawsuits and homeowners winnning

Mark DeMucha v Wells Fargo Bank; Kutak Rock LLP; Homeowner Wins a California Appeal; Reversed and R http://www.scribd.com/doc/60748498/Mark-DeMucha-v-Wells-Fargo-Bank-Kutak-Rock-LLP-Loses-a-California-Appeal-Reversed-and-Remanded Added by PENDING LAWSUIT on July 24, 2011 at 9:30am — No Comments Barry Fagan v Wells Fargo re: KOSAR PETITION WHY ACTION SHOULD NOT BE DISMISSED, WITH PREJUDICE, FO…
one west bank and the consent order with admissions of wrongdoing

One West Bank click to see full order from comptroller of the currency Filed under: I Have a Plan Tagged: one west
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standing

A. Standing The party seeking to invoke federal jurisdiction has the burden of establishing standing.28 Constitutional standing analysis includes three elements: (1) the plaintiff must have suffered an injury in fact—an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical; (2) there must […]
Is the notary responsible or at least negligent or at least negligent per se !!!

(1) Notaries Public § 1–Disciplinary Proceedings–Time for Instituting. Disciplinary action taken by the Secretary of State against a notary public was not barred by the fact that the proceeding was instituted more than three years after the notary’s alleged improper act and more than one year after its discovery. Statutes of limitation barring civil actions […]
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The securitization argument a year later

SEPARATION OF DEED OF TRUST FROM NOTE: Bellistri Opinion Posted on April 28, 2010 by Neil Garfield There is a lot of conflicting opinions about this. My opinion is that the confusion arises not from the law, not from application of the law and not from what is written on the note or deed of Trust. […]
MERS and invalid assignments

Brand New, Hot Off The Presses MERS Policy Bulletin July 24th, 2011 | Author: Matthew D. Weidner, Esq. After years of claiming that assignments don’t matter and the date of assignment certainly doesn’t matter, the MERS Monster has finally changed its tune, effective July 21, 2011: The Certifying Officer must execute the assignment of the […]
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Been evicted and need more time ??Appeals from UD actions are governed by CCP §§901–923. [See CCP §1178; Anchor Marine Repair Co. v Magnan (2001) 93 CA4th 525, 528–530.]

Stay of Execution and Appeal The defendant may request a stay of execution of the judgment whether or not an appeal is taken. [CCP §918(a), (c).] You may stay execution of the judgment for up to 40 days without the landlord’s consent in a limited civil case (or up to 70 days in an unlimited […]
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Possible Counter-Attack in Unlawful Detainer (Eviction) in Fraudulent Foreclosure Cases (via Livinglies’s Weblog)

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE factual issues for Unlawful Detainer case NFG 7-15-11 Various states have two levels of jurisdiction that make it difficult to raise the proper issues in eviction even if there has been no preceding judicial action or if the preceding judicial action has been […]
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FREE HOUSE MYTH DEBUNKED BY PORTER AND LEVITIN (via Livinglies’s Weblog)

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE The Free House Myth posted by Katie Porter As challenges to whether a “bank” (usually actually a securitized trust) has the right to foreclose because it owns the note and mortgage become more common, rumors swirl about the ability to use such tactics […]
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BOA Feeling the Heat is Striking Back at Foreclosure Defense Lawyers as Lawsuits are Filed Against Firms Who Represent BOA (via Livinglies’s Weblog)

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE EDITOR’S NOTE: The battle is heating up. BOA, for example, is stepping up efforts to cause as much trouble as possible for those foreclosure defense lawyers who are getting traction in the courts. This started some time ago as some people were actually […]
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Robo-signing continues without consequences (via Livinglies’s Weblog)

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE No Punishment = Continued Misconduct Posted on July 19, 2011 by Mark Stopa Esq. http://www.stayinmyhome.com/blog/?p=1565 In Maine, a group of drug dealers was caught distributing drugs to local middle schoolers. They confessed, yet the District Attorney declined to press charges, so the drug […]
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Cloud on title forever post foreclosure {but wait the Banks own the title companies}

Recently Discovered Flaw in Recording System Clouds Titles on Previously Foreclosed Properties The modern system of mortgage refinancing and assignments created during the housing boom has left behind a wave of title defects on properties that have ever had a foreclosure in their history, due to a loophole in the property records recording system. […]
assingmment please?? 2932.5 with a side of Veal

The brief below as circulated by the California Bar’s: Insolvency Law Committee: Herrera vs. Deutsche Bank National Trust Co., 2011 Westlaw 2547979 (Cal.App.) Facts: A married couple (“the homeowners”) purchased a home at a foreclosure sale. Supposedly, unbeknownst to them, their interest in the home was subject to a prior (and perhaps unrecorded) deed […]
Ask for a 402 hearing and then dissmiss the eviction !!!

If the court follows the rules of evidence (and they do) if proper objections are filed. No eviction of a secuitized loan should ever prevail on an eviction; they cannot produce the foundation to authenticate the Trustees Deed it is based upon preliminary facts that they are unable and unwilling to bring to court. The […]
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FINALLY! BOA FACES CLAIMS FOR BOGUS MODIFICATION ACTIONS (via Livinglies’s Weblog)

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE EDITOR’S NOTE: Anyone who has entered into mortgage modification process with BOA or any other bank acting as servicer or otherwise knows the story. The Bank does everything it can to delay the process until the borrower gets into serious trouble and then […]
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AZ: TRUSTEE CAN BE SUED IF SUBSTITUTION WAS INVALID (via Livinglies’s Weblog)

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE JUDGES ARE STARTING TO EXAMINE DOCUMENTS AND THEY DON’T LIKE WHAT THEY ARE SEEING “Thus, while A.R.S. §33-807(E) may operate to dismiss a trustee in certain instances, if one of the allegations of a complaint is that the entity purporting to act as […]
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WEIDNER: IT’S THE ALLONGE!!! (via Livinglies’s Weblog)

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE The Allonge- Billions of Dollars in Commerce Hangs on A Single Scrap of Paper EDITOR’S NOTE: If you wrote a check to your next door neighbor, you would expect that he would either cash it or deposit it. But what if your neighbor […]
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Judicial Notice ?? not so fast

All banks love to use judicial notice to establish their position but with all the robo signing the evidence is being excluded. ROBERT HERRERA et al., Plaintiffs and Appellants, v. DEUTSCHE 1 BANK NATIONAL TRUST COMPANY et al., Defendants and Respondents. No. C065630. Court of Appeals of California, Third District, El Dorado.Filed May 31, 2011. […]
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One West False statements

False Statements 06/28/2011 California Bankruptcy Judge Laura Stuart Taylor has joined the ranks of judges who will not tolerate fraudulent documents produced by banks to foreclose. Judge Taylor entered an Order To Show Cause why OneWest Bank, FSB, should not incur “a significant coercive sanction intended to deter any future tender of misleading evidence to […]
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Javaheri v. JPMorgan Chase finally !!

From ChaseChase.org: Federal District Court Javaheri v. JPMorgan Chase, Case No. CV10-8185 ODW Otis D. Wright II, Judge, U.S. District Court, Central District of California, Los Angeles Douglas Gillies, attorney for Daryoush Javaheri Plaintiff sued to halt a foreclosure initiated by JPMorgan Chase and California Reconveyance Co. Chase responded with a Motion to Dismiss. Two […]
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The Banksters will get you any way they can

By Niel Garfield EDITOR’S NOTE AND COMMENT: LAWYERS BEWARE! Starting up an anti-foreclosure venture and making comments criticizing the system has reportedly caused some investigations to begin and may result in bar discipline for technical infractions. From what I can see, the Bar is focused on UPL — unauthorized practice of law. The use of […]
Beware of foreclosure scams currently under investigation by the District Atorney

Each day I get calls from desperate people hoping against hope the there is a magic document that can be filed or recorded the will magically give them their home free and clear without recourse. I tell them if it sounds to good to be true it probably is. That’s not to say that I […]
Current articles in foreclosure

Ohio Judge Steven Terry Found Guilty of Rigging Foreclosure and Mail Fraud Corruption Case AKRON, Ohio – The Cuyahoga County judge charged in the county corruption investigation for allegedly fixing a foreclosure case has been found guilty on three of the five charges he was facing. The federal jury returned the verdict

Homeowners Sue to Block BofA/BNY Deal; Details

Abigail C. Field- The $8.5 billion settlement that Bank of New York and Bank of America hope will resolve all (or almost all) mortgage backed securities claims between them has faced a lot of opposition. The attorneys general of New York and Delaware oppose the deal, as do various investors not involved […]

U.S. Is Set to Sue a Dozen Big Banks Over Mortgages

Lets not get to excited just yet as this comes as a complete surprise. What does this mean for the AG’s who are pursuing their own investigations and how will this help homeowners? Or is this another bailout waiting to happen? NYT- The federal agency that oversees the mortgage giants Fannie Mae and Freddie Mac is set […]
Robo-signed mortgage docs date back to late 1990s

In case you missed it.. I put together Special Events that Happened in 1999 …Welcome to the 99 Club. It’s incomplete but it was a start to the mess we have today. AP- By PALLAVI GOGOI, AP Business Writer Counties across the United States are discovering that illegal or questionable mortgage paperwork is far more […]
Goldman Sachs must investigate questionable lending and foreclosure practices in its mortgage unit, Fed says.

They can start here: Deposition Transcript of Litton Loan Servicing Litigation Manager Christopher Spradling CNN- NEW YORK (CNNMoney) — The Federal Reserve issued an enforcement action Thursday against Goldman Sachs, saying the investment bank must investigate questionable lending and foreclosure practices in its mortgage unit. The action orders Goldman to hire an independent consultant to investigate […]
Robo-Signing Redux: Servicers Still Fabricating Foreclosure Documents

American Banker did an outstanding, superb job with this article. Please read. American Banker- Some of the largest mortgage servicers are still fabricating documents that should have been signed years ago and submitting them as evidence to foreclose on homeowners. The practice continues nearly a year after the companies were caught cutting corners in […]
John O’Brien, Southern Essex District Register of Deeds in Salem, Massachusetts extends an invitation to banks and all attorney generals to visit his registry.

Commonwealth of Massachusetts Southern Essex District Registry of Deeds Shetland Park 45 Congress Street Suite 4100 Salem, Massachusetts 01970 NEWS FOR IMMEDIATE RELEASE Salem, MA August 30, 2011 Contact: John O’Brien, Register of Deeds 978-542-1722 jl.obrien@sec.state.ma.us . John O’Brien, Southern Essex District Register of Deeds in Salem, […]
Goldman Sachs, Litton, Ocwen reach deal on robosigning with NY regulator

WSJ– The mortgage industry will take a step toward cleaning up some of its most controversial practices under a deal between a New York regulator and three financial firms, including Goldman Sachs Group Inc. Under the agreement with the state’s financial-services superintendent, Benjamin M. Lawsky, the three firms—Goldman, its Litton Loan Servicing […]
Memo: BofA to Sell Correspondent Mortgage Business

WSJ- From: Home Loan News Sent: Wednesday, August 31, 2011 4:19am Subject: Important Message From Barbara DeSoer To All IMS Associates I wanted to provide this team with information about a strategic announcement our Home Loans business will make today that is consistent with our ongoing efforts to align the business to […]
BoNY Mellon CEO Robert Kelly steps down

Aug 31 (Reuters) – Bank of New York Mellon Corp said Robert Kelly, who has held the company’s top job since 2008, has stepped down as chairman and chief executive officer, following differences in approach to managing the company. The company, one of the world’s largest custody banks, said it named board member Gerald Hassell as chairman […]
New York Attorney General Deposed 53 in Bank of America Case Over Merrill

Bloomberg- New York Attorney General Eric Schneiderman’s office has taken testimony from 53 witnesses in its investigation into Bank of America Corp. (BAC)’s 2008 acquisition of Merrill Lynch & Co., a federal judge said. U.S. District Judge Kevin Castel in Manhattan said in an order today that “there have been 53 examinations under oath by the […]
Was president of LPS’ Loan Portfolio Solutions division just let go?

UPDATE: It was announced that he’s left to spend more time with his family. According to the Yahoo Message boards: Greg Whitworth FIRED If you do a google search under cached it brings you to his info, but when clicked on the message board link it brings you or redirects one to a 404 NOT FOUND. Mysteriously his info […]
A STATEMENT ON MORTGAGE FRAUD THAT EVERY ATTORNEY GENERAL COULD ISSUE TODAY

False Statements Limited Purpose Corporate Officers Action Date: August 31, 2011 Location: TALLAHASSEE, FL A STATEMENT ON MORTGAGE FRAUD THAT EVERY ATTORNEY GENERAL COULD ISSUE TODAY There has been widespread, well-documented abuse of corporate officer titles by banks, mortgage companies and mortgage servicing companies on mortgage-related documents. Individuals who are not corporate officers have been directed to […]
Hagens Berman Announces Securities Investigation Of Bank Of America

Hagens Berman Sobol Shapiro LLP today announced that it is investigating concerns by hedge funds and institutional investors who believe Bank of America Corp. (NYSE: BAC) may have failed to disclose to investors the risk associated with a $10 billion lawsuit threat from American International Group (“AIG”) (NYSE: AIG). According to […]
BREAKING: Bank of America to Exit Mortgage Business

It’s going to tank! WSJ- Bank of America Corp. intends to sell its correspondent mortgage business, as the troubled lender looks to narrow its focus and bolster its financial strength, said people familiar with the situation. Employees could be notified as soon as Wednesday that the lender has decided to exit the […]
The Countrywide settlement that NV AG Masto says BofA is flagrantly violating was also signed by… Tom Miller.

H/T David Dayen SURE DID! . For immediate release — Monday, October 6, 2008. Contact Bob Brammer – 515-281-6699 . Miller: AGs Reach Agreement with Countrywide Financial that Will Help Almost 400,000 Borrowers Facing Foreclosure The Iowa Attorney General says the settlement will offer mortgage loan modifications to more than 1,100 Iowans that will help many avoid […]
Bank of America Accused of Breaching Accord – Gretchen Morgenson

NEVADA vs. BANK OF AMERICA CORP. | Second Amended Complaint “The Breach, Trusts Never Became Holders of These Mortgages”” NY TIMES- The attorney general of Nevada is accusing Bank of America of repeatedly violating a broad loan modification agreement it struck with state officials in October 2008 and is seeking to rip up the deal so […]
MERS ADMITS LINDA GREEN HAD NO AUTHORITY BUT TRIES TO USE IT ANYWAY

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE SEE Corrective+Assignment[2] CHUTZPAH: Look it up if you are not familiar with the term. Here is a document that states on its face that Linda Green had no authority to to sign anything on behalf of MERS. So there goes thousands of documents […]
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Who owns the loan? Ohio Supreme Court is taking up the question

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE WHY DID THE LOAN SERVICER CLEAR THE LOAN OBLIGATION DOWN TO ZERO? Monday, August 29, 2011 Who owns the loan? The Ohio Supreme Court is taking up the question of what a bank needs to prove to force someone from his home. Story […]
EXAMPLE OF NEW TOOLS PROVIDED BY LIVINGLIES: OCC CEASE AND DESIST ORDER V US BANK

MOST POPULAR ARTICLES CLICK HERE TO RESERVE SEATING AT HAWAII WORKSHOP GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE SEE US BANK OCC ORDER AND COMMENTARY It will be up on the store soon and on the American Homeowners Cooperative at http://www.Americanhomeownerscoop.com. Based upon an in depth analysis of our title and securitization combo […]
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BLOOMBERG: HOA V BOA: Homeowner Associations Step Up the Pressure on Banks

MOST POPULAR ARTICLES CLICK HERE TO RESERVE SEATING AT HAWAII WORKSHOP GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE Homeowner Associations Wake Up to Collections and Profit!! FORECLOSING ON THE BANK!! EDITOR’S COMMENT: Becker and Poliakoff in South Florida is probably the largest law firm representing homeowner associations in the U.S. Once upon a […]
Yves Smith: BANKS HAVE INSTITUTIONALIZED STEALING HOMES

MOST POPULAR ARTICLES CLICK HERE AND RESERVE SEATING NOW AT HAWAII WORKSHOP OCTOBER 14 GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE THEY WANT YOUR HOUSE!!! “The banks don’t care whether you made your payments or not. They want your house. They don’t care if someone else made your payments. They want your house. […]
Deconsolidation Nation for Mortgages?

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE EDITOR’S NOTE: IT ALL COMES DOWN TO THIS: DO YOU WANT TO SAVE THE BANKS OR DO YOU WANT TO SAVE THE COUNTRY? Submitted on 2011/08/27 at 9:20 am by Nancy Drewe National Mortgage News sign up for your own subscription first 2 […]
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KISS: KEEP IT SIMPLE STUPID

MOST POPULAR ARTICLES CLICK HERE TO RESERVE SEATING AT HAWAII WORKSHOP GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE KISS: KEEP IT SIMPLE STUPID Finality versus good and evil. In the battlefield it isn’t about good and evil. It is about winner and losers. In military battles around the world many battles have been […]
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BOA DEATH WATCH: SETTLEMENT FALLING APART, BOA SCRAMBLES FOR DOLLARS

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE “bank is suddenly open to unlimited downside capital risk” BofA’s $8.5 Billion Settlement Could Fall Apart After Request Made To Move Mortgage Case From State To Federal Court As most know by now, the ridiculously low $8.5 billion putback settlement, which was supposed […]

Bombshell Admission of Failed Securitization Process in American Home Mortgage Servicing/LPS Lawsuit

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE EDITOR’S NOTE: It is comforting to know that at least some people are paying attention. From one of the largest servicers in the country comes an admission that securitization of mortgage loans was an illusion. The facts alleged by AHMSI in its lawsuit […]
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MANDELMAN MATTERS: DEADBEAT BORROWERS AND THIEVES WHO CALL THEM THAT

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE “If you’re allowed to foreclose and kick someone out of his or her home without being the party that either owns the loan or represents the person who owns the loan… if you can ignore those laws, why can’t you ignore other laws […]
MANDELMAN MATTERS WRITER AND DOCUMENTARY MAKER WILL JOIN NEIL GARFIELD AND OTHERS IN HAWAII WORKSHOP OCTOBER 14, 2011

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE REFUNDABLE RESERVATION NOW TO RESERVE SEATING CLICK HERE FOR ONE DAY PASS JOIN LIVINGLIES MEMBERSHIP NOW AND GET THE AUDIO-FILE ON LAST NIGHT’S 90 MINUTE BROADCAST WITH MANDELMAN MATTERS AND LIVINGLIES WRITERS. BLOG MEMBERSHIP SUBSCRIPTION We have twice monthly teleconferences, questions and answers […]
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OBAMA ADMINISTRATION PRESSURING STATE AG’S TO CAVE IN TO BANKS

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE Bank Of America’s No-Good, Very Bad Enablers By Halah Touryalai | Forbes – Mon, Aug 22, 2011 What’s the worse than Bank of America acting as if it deserves immunity from all its bad foreclosure behavior? A presidential administration that agrees. President Obama’s administration is […]
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DEUTSCH LOSES AGAIN: POOL DID NOT RECEIVE LOAN

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE TRANSFER TO POOL AFTER FORECLOSURE INITIATED: VOID “ The fact that Deutsche had possession of the mortgage, however, is irrelevant to its status as mortgagee. While a promissory note endorsed in blank may be enforced by the party in possession of the note, […]
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TENN FED CT ALLOWS CLAIM AGAINST BOA ON OWNERSHIP OF LOAN

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE TENNESSEE FEDERAL COURT DENIES BANK OF AMERICA’S MOTION TO DISMISS DECLARATORY JUDGMENT ACTION CHALLENGING ALLEGED OWNERSHIP OF LOAN Today, August 23, 2011, 6 hours ago | Jeff Barnes August 23, 2011 A Tennessee Federal court has issued an Order and Memorandum denying a […]
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$1.2 Trillion in Secret Additional Bailout for Banks with No Collateral and No Commitments

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE see VIDEO $1.2 Trillion in EXTRA BAILOUT MONEY FROM FED SECRETLY GIVEN TO DOMESTIC AND FOREIGN BANKS Of course the figure is much higher, but the secrecy surrounding the money given by the Fed to the banks is something to enrage any tea […]
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JUDGE MARGERET MANN (SO. CA BKR) PLUNGES INTO DETAILS AND COMES UP WITH WELL-REASONED DECISION

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE SEE 42-in_RE_Cruz_vs_Aurora AURORA LOAN SERVICES LLC, SCME MORTGAGE BANKERS INC, ING BANK FSB, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS ALL BITE THE DUST, SUBJECT TO LIABILITY AND NO ABILITY TO FORECLOSE WITHOUT COMPLYING WITH LAW. Salient points of Judge Mann’s Decision: TRUTH IN LENDING was […]
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Servicer Sues LPS-DOCX OVER ROBO-SIGNING — “SURROGATE SIGNING”

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE ROBO-SIGNING IS NOW CALLED SURROGATE SIGNING AHMSI SUIT CONFIRMS PRACTICE IS WRONG, UNAUTHORIZED AND INVALID EDITOR’S NOTE: I find it interesting that LPS continued to fabricate and forge documents after AHMSI told them to stop. It could only mean that they were really […]
After The Storm – Foreclosure Fraud & Robo-Signing Continues by Nye Lavalle

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE EDITOR’S NOTE: THE ONLY THING MISSING IS THE LARGEST QUESTION OF ALL: WERE THE MORTGAGE LIENS EVER PERFECTED? DO THEY EXIST? I also contest the issue of whether the banks were ever intending to do things right. I know from interviews I conducted […]
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AMNESTY FOR BANKS SOUGHT IN NEGOTIATIONS

MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE SETTLEMENT TARGET: LABOR DAY!! “They wanted to be released from everything, including original sin,” said a U.S. official involved in the discussions. From today’s Wall Street Journal…. FORECLOSURE TALKS SNAG ON BANK LIABILITY By RUTH SIMON, VANESSA O’CONNELL and NICK TIMIRAOS Efforts to […]

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KISS: KEEP IT SIMPLE STUPID from Garfield

Finality versus good and evil. In the battlefield it isn’t about good and evil. It is about winner and losers. In military battles around the world many battles have been one by the worst tyrants imaginable.

Just because you are right, just because the banks did bad things, just because they have no right to do what they are doing, doesn’t mean you will win. You might if you do it right, but you are up against a superior army with a dubious judge looking on thinking that this deadbeat borrower wants to get out of paying.

The court system is there to mediate disputes and bring them to a conclusion. Once a matter is decided they don’t want it to be easy to reopen a bankruptcy or issues that have already been litigated. The court presumably wants justice to prevail, but it also wants to end the dispute for better or for worse.

Otherwise NOTHING would end. Everyone who lost would come in with some excuse to have another trial. So you need to show fundamental error, gross injustice or an error that causes more problems that it solves.

These are the same issues BEFORE the matter is decided in court. Foreclosures are viewed as a clerical act or ministerial act. The outcome is generally viewed as inevitable.

And where the homeowner already admits the loan exists (a mistake), that the lien is exists and was properly filed and executed (a mistake) and admits that he didn’t make payments — he is admitting something he doesn’t even know is true — that there were payments due and he didn’t make them, which by definition puts him in default.

It’s not true that the homeowner would even know if the payment is due because the banks refuse to provide any accounting on the third party payments from bailout, insurance CDS, and credit enhancement.

That’s why you need reports on title, securitization, forensic reviews for TILA compliance and loan level accounting. If the Judges stuck to the law, they would require the proof first from the banks, but they don’t. They put the burden on the borrowers —who are the only ones who have the least information and the least access to information — to essentially make the case for the banks and then disprove it. The borrowers are litigating against themselves.

In the battlefield it isn’t about good and evil, it is about winners and losers. Name calling and vague accusations won’t cut it.

Sure you want to use the words surrogate signing, robo-signing, forgery, fabrication and misrepresentation. You also want to show that the court’s action would or did cloud title in a way that cannot be repaired without a decision on the question of whether the lien was perfected and whether the banks should be able to say they transferred bad loans to investors who don’t want them — just so they can foreclose.

But you need some proffers of real evidence — reports, exhibits and opinions from experts that will show that there is a real problem here and that this case has not been heard on the merits because of an unfair presumption: the presumption is that just because a bank’s lawyer says it in court, it must be true.

Check with the notary licensing boards, and see if the notaries on their documents have been disciplined and if not, file a grievance if you have grounds. Once you have that, maybe you have a grievance against the lawyers. After that maybe you have a lawsuit against the banks and their lawyers.

But the primary way to control the narrative or at least trip up the narrative of the banks is to object on the basis that counsel for the bank is referring to things not in the record. That is simple and the judge can understand that.

Don’t rely on name-calling, rely on the simplest legal requirements that you can find that have been violated. Was the lien perfected?

If the record shows that others were involved in the original transaction with the borrowers at the inception of the deal, then you might be able to show that there were only nominees instead of real parties in interest named on the note and mortgage.

Without disclosure of the principal, the lien is not perfected because the world doesn’t know who to go to for a satisfaction of that lien. If you know the other parties involved were part of a securitization scheme, you should say that — these parties can only be claiming an interest by virtue of a pooling and servicing agreement. And then make the point that they are only now trying to transfer what they are calling a bad loan into the pool that the investors bought — which is expressly prohibited for multiple reasons in the PSA.

This is impersonation of the investor because the investors don’t want to come forward and get countersued for the bad and illegal lending practices that were used in getting the borrower’s signature.

Point out that the auction of the property was improperly conducted where you can show that to be the case. Nearly all of the 5 million foreclosures were allowed to be conducted with a single bid from a non-creditor.

If you are not a creditor you must bid cash, put up a portion before you bid, and then pay the balance usually within 24-72 hours.

But instead they pretended to be the creditor when their own documents show they were supposed to be representing the investors who were not part of the lawsuit nor the judgment.

SO they didn’t pay cash and they didn’t tender the note. THEY PAID NOTHING. In Florida the original note must actually be filed with the court to make sure that the matter is actually concluded.

There is a whole ripe area of inquiry of inspecting the so-called original notes and bringing to the attention the fraud upon the court in submitting a false original. It invalidates the sale, by operation of law.

Attorney General Kamala D. Harris Sues Law Firms Engaged in National “Mass Joinder” Mortgage Fraud

SAN FRANCISCO — Attorney General Kamala D. Harris today announced that the California Department of Justice, in conjunction with the State Bar of California, has sued multiple entities accused of fraudulently taking millions of dollars from thousands of homeowners who were led to believe they would receive relief on their mortgages.

Attorney General Harris sued Philip Kramer, the Law Offices of Kramer & Kaslow, two other law firms, three other lawyers, and 14 other defendants who are accused of working together to defraud homeowners across the country through the deceptive marketing of “mass joinder” lawsuits. “Mass joinder” lawsuits are lawsuits with hundreds, or more, individually named plaintiffs. This is the first consumer action by the Attorney General’s Mortgage Fraud Strike Force.

Kramer’s firm and other defendants were placed into receivership on Monday, Aug. 15. The legal actions were designed to shut down a scheme operated by attorneys and their marketing partners, in which defendants used false and misleading representations to induce thousands of homeowners into joining the mass joinder lawsuits against their mortgage lenders. Defendants also had their assets seized and were enjoined from continuing their operations. Nineteen DOJ special agents participated as the firms were taken over Wednesday, Aug. 17, along with 42 agents and other personnel from HUD’s Office of Inspector General, the California State Bar, and the Office of Receiver Thomas McNamara at 14 locations in Los Angeles and Orange Counties. Sixteen bank accounts were seized.

“The defendants in this case fraudulently promised to win prompt mortgage relief for millions of vulnerable homeowners across the country,” said Attorney General Harris. “Innocent people, already battered by the housing crisis, were targeted for fraud in their moment of distress.”

“The number of lawyers who have tried to take advantage of distressed homeowners in these tough economic times is nothing short of shocking,” said State Bar President William Hebert. “By taking over the practices of four attorneys accused of fraudulent marketing practices, the State Bar can put a stop to their deplorable conduct as part of our ongoing effort to protect the public.”

It is believed that at least two million pieces of mail were sent out by defendants to victims in at least 17 states. Defendants’ revenue from this scam is estimated to be in the millions of dollars.

As alleged in the lawsuit, defendants preyed on desperate homeowners facing foreclosure by selling them participation as plaintiffs in mass joinder lawsuits against mortgage lenders. Defendants deceptively led homeowners to believe that by joining these lawsuits, they would stop pending foreclosures, reduce their loan balances or interest rates, obtain money damages, and even receive title to their homes free and clear of their existing mortgage. Defendants charged homeowners retainer fees of up to $10,000 to join as plaintiffs to a mass joinder lawsuit against their lender or loan servicer.

Consumers who paid to join the mass joinder lawsuits were frequently unable to receive answers to simple questions, such as whether they had been added to the lawsuit, or even to establish contact with defendants. Some consumers lost their homes shortly after paying the retainer fees demanded by defendants.

This mass joinder scam began with deceptive mass mailers, the lawsuit alleges. Some mailers, designed to appear as official settlement notices or government documents, informed homeowners that they were potential plaintiffs in a “national litigation settlement” against their lender. No settlements existed and in many cases no lawsuit had even been filed. Defendants also advertised through their web sites.

When consumers contacted the defendants, they were given legal advice by sales agents, not attorneys, who made additional deceptive statements and provided (often inaccurate) legal advice about the supposedly “likely” results of joining the lawsuits. Defendants unlawfully paid commissions to their sales representatives on a per client sign-up basis, a practice known as “running and capping.”

Defendants’ alleged misconduct violates the following laws:
-False advertising, in violation of section 17500 of the Business and Professions Code
-Unfair, fraudulent and unlawful business practices, in violation of section 17200 of the Business and Professions Code
-Unlawful running and capping, in violation of section 6152, subdivision (a) of the Business and Professions Code (i.e., a lawyer unlawfully paying a non-lawyer to solicit or procure business)
-Improper fee splitting (defendants unlawfully splitting legal fees with non-attorneys)
-Failing to register with the Department of Justice as a telephonic seller.

Homeowners who have paid to be added to one of the lawsuits should contact the State Bar if they feel they may be victims of this scam. They can also contact a HUD-certified housing counselor for general mortgage related assistance.

The Department of Justice has seized the practices of the following non-attorney defendants:
Attorneys Processing Center, LLC; Data Management, LLC; Gary DiGirolamo; Bill Stephenson; Mitigation Professionals, LLC; Glen Reneau; Pate Marier & Associates, Inc.; James Pate; Ryan Marier; Home Retention Division; Michael Tapia; Lewis Marketing Corp.; Clarence Butt; and Thomas Phanco.

The State Bar has seized the practices and attorney accounts of the attorney defendants:
The Law Offices of Kramer & Kaslow; Philip Kramer, Esq; Mitchell J. Stein & Associates; Mitchell Stein, Esq.; Christopher Van Son, Esq.; Mesa Law Group Corp.; and Paul Petersen, Esq.

Attorney General Harris is challenging the defendants’ alleged misconduct in marketing their mass joinder lawsuits; her office takes no position as to the legal merits of any claims asserted in the mass joinder lawsuits filed by defendants.

Victims in the following states are known to have received these mailers, or signed on to join the case. This is a preliminary list that may be updated:

Alaska, Arizona, California, Colorado, Connecticut, Florida, Hawaii, Maryland, Massachusetts, Michigan, Missouri, Nevada, New Jersey, New York, Ohio, Texas, Washington

The complaint, temporary restraining order, examples of marketing documents and photos of the enforcement action are available with the electronic version of this release at http://oag.ca.gov/news.

Gomes and the U.S. Supreme court some body had better help these attorneys argue and brief the case

Wednesday, August 17th, 2011, 2:49 pm

A controversial case challenging the ability of Mortgage Electronic Registration Systems to foreclose on a California man was filed with the Supreme Court Monday, making it the first major MERS case to reach the nation’s highest court.

If the Supreme Court agrees to hear Gomes v. Countrywide, Gomes’ attorney, Ehud Gersten, says the court will have to decide whether a lower court stripped his client, Jose Gomes, of due process by allowing MERS to foreclose without ensuring the registry had the noteholder’s authority to foreclose.

“I believe this to be the first case in the country to take MERS to our Supreme Court,” Gersten told HousingWire. His claim could not be immediately verified.

“Ultimately, what this case is saying is if you are going to be taking someone’s home away from them, do you have the proof or the right to do so?” Gersten said. “If the Supreme Court starts to question MERS, and its business structure, it is going to have an effect on every MERS case in the country.”

MERS, the electronic registry at the center of the foreclosure crisis, has been under fire nationwide as foreclosure attorneys purport the firm, and its parent company Merscorp Inc., illegally foreclosed on properties.

Gersten, meanwhile, said MERS has a brief period of time to respond before the Supreme Court decides whether it will accept the case (click here for the filing).

Attorneys familiar with the Gomes case are not optimistic about its chances of being heard by the Supreme Court.

“While recent statistics show that the Supreme Court takes on average less than 3% of cases on certiorari, it takes even a smaller percentage of those advanced by private litigants, as opposed to the government,” said Patton Boggs attorney Anthony Laura. “Also it takes fewer cases out of the state court system than it does out of the federal Courts of Appeals.”

“So, the likelihood that this case will be taken is slim indeed,” Laura adds. “I believe those slim odds are even slimmer because the argument Gomes is making to the U.S. Supreme Court is one he did not previously raise.”

Laura said that, as a premise for invoking the jurisdiction of the Supreme Court, Gomes claims that the court below abridged his 14th Amendment rights.

“My recollection is that Gomes never made a Constitutional argument below, neither in the California Court of Appeals nor in the petition for review to the California Supreme Court,” he said. “In my view, the U.S. Supreme Court will look skeptically on his just raising that argument now.”

The original plaintiff, Jose Gomes, appealed to the nation’s highest court after California’s Supreme Court decided not to review the 4th Appellate District Court of California’s decision in favor of MERS.

Gomes’ petition says he’s challenging the foreclosure because MERS “did not have the current noteholder’s authority to foreclose.”

Gersten argues his client “was entitled to proof that the loan servicer, trustee or an entity such as MERS, either named in the deed of trust or acting through assignments of interest, had legal authority on behalf of the promissory note’s current holder to foreclose.”

The 4th Appellate District Court’s decision, which Gomes wants overturned, held MERS had the authority to initiate a foreclosure on Gomes because the deed of trust “explicitly provided MERS with the authority to do so,” according to court records.

The state appellate court also ruled in favor of MERS after finding the deed of trust contained no language to suggest the “lender or its successors and assigns must provide Gomes with an assurance that MERS is authorized to proceed with a foreclosure,” according to court records.

MERS chose not to comment on the case, but a spokeswoman said the company is aware of the filing with the Supreme Court.

MERS in California

From LivingLies:
I think that everyone is missing the #1 problem MERS has in CA.
MERS is a Non-Authorized Agent and cannot legally assign the Promissory Note, making any foreclosure by other than the original lender wrongful, for the following reasons.
1) Under established and binding Ca law, a Nominee can’t assign the Note. Born V. Koop 1962 200 C. A. 2d 519[200 CalApp2d Page 527, 528
2) On most Notes, the term Nominee is not included and MERS never takes ownership, making it unenforceable and unassignable by MERS.
Ott v. Home Savings & Loan Association, 265 F. 2d 643 [647,648
3) Ca Civil Code §2924, et seq. is exhaustive and a Nominee is never included as an acceptable form of “authorized agent” in a judicial or non-judicial foreclosure.
Finally, GOMES V. COUNTRYYWIDE HOME LOANS, INC., 192 Cal.App.4th 1149, IS FLAWED!
a) The Gomes case simply failed to address and apply the established and binding definition of a nominee.
b) The first thing the Deed of Trust does is (i) take away MERS right to payments and (ii) take away the right to enforce the Note.
c) REGARDLESS WHAT A BORROWER AGREES TO, a borrower cannot legally grant MERS the right to assign the note or any of the rights of the note owner.
________________________________________
MERS Fatal Flaws
MERS cannot legally assign a Promissory Note because, MERS is a Non-Authorized Agent under Established and Binding California Real Property Law and the borrower can’t provide that power to MERS.
First, a Nominee is someone who is nominated potentially for a future position. Much like being nominated for President, yet a Presidential Nominee doesn’t receive any powers until the person actually becomes President.
Second, in the Deed of Trust MERS is identified “Solely as a Nominee” and as the Beneficiary. Which is logically and legally impossible, because a party can only be either the nominated Beneficiary or the Beneficiary. You can’t “not be” and “be” the beneficiary at the same time.
Third, Ca Civil Code §2924, et seq. is exhaustive and a Nominee is never included as an acceptable form of “authorized agent” in a judicial or non-judicial foreclosure.
Fourth, MERS acts “Solely as a Nominee” for lenders, and under Established California Law a “Nominee” is a “Non-Authorized” form of agent, which fails to comply with California Civil Code §§ 2924 through 2924k, as a nominee inherently lacks the right to enforce or assign, the Note or real property ownership rights, per the following case.
“In Cisco v. Van Lew, 60 Cal.App.2d 575, 583-584, 141 P.2d 433, 438., Cisco could not enforce the land sale contract because he was not a party to it, the court, at pages 583-584, said: “The word ‘nominee’ in its commonly accepted meaning connotes the delegation of authority to the nominee in a representative or nominal capacity only, and does not connote the transfer or assignment to the nominee of any property in or ownership of the rights of the person nominating him.”
Born V. Koop 1962 200 C. A. 2d 519[200 CalApp2d Page 527, 528], see file below
Fifth, in addition to MERS’ inherit lack of authority, MERS is not a party to the Note and the Note fails to use the words, for example “ Lehman Brothers Bank, FSB or Lehman Brothers Bank, FSB Nominee”.
“The purpose of the document in question here was to offer an obligation to Harold L. Shaw alone and not to his nominee or any other person whomsoever.”
Ott v. Home Savings & Loan Association, 265 F. 2d 643 [647,648], see file below
Finally, GOMES V. COUNTRYYWIDE HOME LOANS, INC., 192 Cal.App.4th 1149, IS FLAWED!
a) The Gomes case simply failed to address and apply the established and binding definition of a nominee.
b) The first thing the Deed of Trust does is (i) take away MERS right to payments and (ii) take away the right to enforce the Note.
c) REGARDLESS WHAT A BORROWER AGREES TO, a “Borrower” cannot legally grant MERS the right to assign the note or any of the rights of the note owner.
“It is no defense to deceit that false statement was made pursuant to some statutory scheme such as statutory procedures for trustee’s sale (§ 2924 et seq.).” Block v. Tobin (App. 1 Dist. 1975) 119 Cal.Rptr. 288, 45 Cal.App.3d 214.

“It is true, as Defendants repeatedly assert, that California Civil Code § 2924, et seq. authorizes non-judicial foreclosure in this state. It is not the case, however, that the availability of a non-judicial foreclosure process somehow exempts lenders, trustees, beneficiaries, servicers, and the numerous other (sometimes ephemeral) entities involved in dealing with Plaintiffs from following the law.” Sacchi vs. Mortgage Electronic Registration Systems, Inc. US Central District Court of California CV 11-1658 AHM (CWx), June 24, 2011
Therefore, without an endorsement on the Note and an assignment directly from the original lender, assignments by MERS; the substitution of the Trustee; and trustee sale are unlawful and void.

“The assignment of the lien without a transfer of the debt was a nullity in law.” (Polhemus v. Trainer, 30 Cal. 685; Peters v. Jamestown Box Co., 5 Cal. 334; Hyde v. Mangan, 88 Cal. 319;
Jones on Pledges, secs. 418, 419; Van Ewan v. Stanchfield, 13 Minn. 75.)
“A lien is not assignable unless by the express language of the statute.”
(Jones on Liens, sec. 982; Wingard v. Banning, 39 Cal. 343; Ruggles v. Walker, 34 Vt. 468; Wing v. Griffin, 1 Smith, E.D. 162; Holly v. Hungerford, 8 Pick. 73; Daubigny v. Duval, 5 Tenn. 604.)
CALIFORNIA SUPREME COURT, DAVIS, BELAU & CO. V. NATIONAL SUR. CO., 139 CAL 223, 224 (1903)

“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 (1872), U.S. Supreme Court
“California courts have repeatedly allowed parties to pursue additional remedies for misconduct arising out of a nonjudicial foreclosure sale when not inconsistent with the policies behind the statutes”
California Golf, L.L.C. v. Cooper (2008) 163 Cal.App.4th 1053,1070
“(2) Whenever a court becomes aware that a contract is illegal, it has a duty to refrain from entertaining an action to enforce the contract. (3) Furthermore the court will not permit the parties to maintain an action to settle or compromise a claim based on an illegal contract”
Bovard v. American Horse Enterprises, Inc., 201 Cal.App.3d 832 (1988)

On April 11th, 2011,
The Honorable Judge Margaret M. Mann made very clear the following,
based upon California Supreme Court and U.S. Supreme court cases:
• Assignments must be recorded before the foreclosure sale
• Recorded assignments are necessary despite MERS’ role
• MERS’s system is not an alternative to statutory foreclosure law
Bankruptcy No: 10-17456-MM13 re: Eleazar Salazar,

see attached below Mann_order_salazar.pdf

2) Nothing under California Civil Code §§ 2924 through 2924k applies, unless there is a legal chain of title for the Deed of Trust with the Note from the original lender to MERS, and then to the foreclosing party.

The First Fatal Flaw – MERS never takes ownership of the underlying Note, Voiding the “Original” Deed of Trust.
Under California Law, the named Beneficiary on the Deed of Trust must have ownership of the underlying Note. MERS consistently claims to be only “Holding the Note” as a Nominee for the original lender, never “Owning the Note”.

Why MERS doesn’t have ownership of the Note:
1. There is no assignment or indorsement of the Note from the original lender to MERS.
2. The Deed of Trust is not a substitute for an Assignment or legal transfer of the Note from the Original lender to MERS.
“It is well established law in the Ninth Circuit that the assignment of a trust deed does not assign the underlying promissory note and right to be paid, and that the security interest is incident of the debt.” Rickie Walker case, see attached
3. MERS is a mortgage exchange not unlike a stock exchange. It allows banks to buy and sell home mortgages much like stock. Stock exchanges don’t own the stock on their exchange, only the investors do.
4. A Nominee in California cannot own the Note,
“The word “nominee” in its commonly accepted meaning, connotes the delegation of authority to the nominee in a representative or nominal capacity only, and does not connote the transfer or assignment to the nominee of any property in or ownership of the rights of the person nominating him.”
Cisco v. Van Lew, 60 Cal.App.2d 575, 583-584, 141 P.2d 433, 438.
5. In California, a Note payable to the original lender is not a bearer instrument, the original lender must indorse or assign the Note to MERS.
See Cal Com. Code §§3109,3201,3203,3204. and Rickie Walker case Order, and P&A pg6 attached below
6. MERS requires that the owner of the Note never claim MERS as a “Note-Owner”
MERS Membership Rule 8 Foreclosure, Section 2(a)(i), page 25, 26, see attached below
7. MERS consistently argues in court that it does not own the promissory notes,
MERS v. NEBRASKA DEPARTMENT OF BANKING AND FINANCE No. S-04-786, see attached below
8. Finally, Moeller v. Lien and CCC § 2924 DOES NOT “EXPRESSLY” EXCLUDE
OR SUPERCEDE CA Comercial Code § 3301, OR ANY OTHER CA LAWS!
In the case of California Golf, L.L.C. v. Cooper, 163 Cal. App. 4th 1053, 78 Cal. Rptr. 3d 153, 2008 Cal. App. LEXIS 850 (Cal. App. 2d Dist. 2008), the Appellate Court held that the remedies of 2924h were not exclusive.
9. U.S. Supreme Court decision, Carpenter v. Longan (Carpenter v. Longan, 83 U.S. 271, 21 L.Ed. 313 [1873])):
“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. Case law in virtually every state follows Carpenter.”

Deed of Trust is also void, without a recorded assignment of the Deed of Trust for each transfer of the Note:
1. MERS Involvement in the loan effectively stripped the deed of trust lien from the land and a foreclosure is not legally possible, Bellistri v. Ocwen Loan Servicing, LLC, 284 S.W.3d 619 (Mo.App. E.D.,2009), attached below
2. Any assignment of the Deed of Trust & Note from MERS to a successor is void and fraudulent.
RICKIE WALKER CASE, see attached below
Therefore, MERS definition of “Holding the Note” is not the legal equivalent of “Owning the Note”;
California Civil Code section 2924 for foreclosure only applies if MERS owned the note.

The Second Fatal Flaw – MERS tracking system is not a legal chain of title and the debt may be uncollectible.
When a Note is sold, it has to be indorsed the same way you basically sign a check for deposit or cashing.

Under California Law the Note is not a bearer instrument, but an instrument payable only to a specifically identified person, per California Commercial Code §3109; any transfer of the Note requires a legal Negotiation, Endorsement and a physical delivery of the note to the transferee to perfect the transfer, per California Commercial Codes §§3201, 3203, 3204.
see attached Rickie Walker Order.

“MERS Basics “Registration vs. Recording. (PPT Slide)
o MERS is not a system of legal record nor a replacement for the public land records.
o Mortgages must be recorded in the county land records.
o MERS is a tracking system. No interests are transferred on the MERS® System, only tracked.”,
MERS Southeast Legal Seminar – MERS Basics slide 7,
see attached below. or http://www.mersinc.org/files/filedownload.aspx?id=63&table=DownloadFile

“A mortgage note holder can sell a mortgage note to another in what has become a gigantic secondary market. . . . For these servicing companies to perform their duties satisfactorily, the note and mortgage were bifurcated.”
MERSCORP President and CEO, R.K. Arnold, Yes, There is Life on MERS, Prob.& Prop., Aug. 1997, at p.16, see attached below

Clear Title May Not Derive From A Fraud (including a bona fide purchaser for value).
In the case of a fraudulent transaction California law is settled. The Court in Trout v. Taylor, (1934), 220 Cal. 652 at 656 made as much plain:
“Numerous authorities have established the rule that an instrument wholly void, such as an undelivered deed, a forged instrument, or a deed in blank, cannot be made the foundation of a good title, even under the equitable doctrine of bona fide purchase. Consequently, the fact that defendant Archer acted in good faith in dealing with persons who apparently held legal title, is not in itself sufficient basis for relief.” (Emphasis added, internal citations omitted).

This sentiment was clearly echoed in 6 Angels, Inc. v. Stuart-Wright Mortgage, Inc. (2001) 85 Cal.App.4th 1279 at 1286 where the Court stated:
“It is the general rule that courts have power to vacate a foreclosure sale where there has been fraud in the procurement of the foreclosure decree or where the sale has been improperly, unfairly or unlawfully conducted, or is tainted by fraud, or where there has been such a mistake that to allow it to stand would be inequitable to purchaser and parties.” (Emphasis added).

In Alliance Mortgage Co. v. Rothwell (1995) 10 Cal. 4th 1226, 1231 [44 Cal. Rptr. 2d 352, 900 P.2d 601], the California Supreme Court concluded that:
“ ‘the antideficiency laws were not intended to immunize wrongdoers from the consequences of their fraudulent acts’ ” and that, if the court applies a proper measure of damages, “ ‘fraud suits do not frustrate the antideficiency policies because there should be no double recovery for the beneficiary.’ ” (Id. at p. 1238.)
Great Article source: http://www.exclusiveforeclosures.net/real-estate-foreclosures/doan-on-%E2%80%9Cproduce-the-note%E2%80%9D/

Therefore, any attempt to collect by other than the original lender may be impossible without a legal chain of title, because MERS tracking system is not a legal chain of title.

Source: https://sites.google.com/site/mersfatalflawsincalifornia/

________________________________________
MERS Defense Flaw
Legal Disclaimer: All information contained on this website is alleged and general in nature, and should not be construed as legal advice or a substitute for legal advice. It was not written by an attorney and should only be reviewed by an attorney.

MERS alleged status as of November 18th, 2010

PROTECTION FROM VOIDABILITY IS ONLY PROVIDED FOR THE YEARS TAXES ARE PAID.

On July 21, 2010 MERS registered with the California Secretary of State.
MERS registration was necessary, and not retroactive for the following reasons:
1. MERS needed to register with the State of California, because MERS is Not a Foreign Lending Institution nor claims to be, therefore California Corporate Code § 191(d) does not exempt MERS from California Corporate Code §2105.
“the court cannot conclude that MERS falls within any of the five enumerated examples of “foreign lending institutions,” and the court declines to address sua sponte whether MERS otherwise satisfies subsection (d).”. . . “the enforcement of any loans by trustee’s sale, judicial process or deed in lieu of foreclosure or otherwise. . .” “Accordingly, section 191(c)(7) does not exempt MERS’s activity.”
CHAMPLAIE v. BAC, No. 2:09-cv-01316-LKK-DAD (E.D.Cal. 10-22-2009) pg23,24, attached below
As a result of MERS intentional failure from obtaining a certificate of qualification from the California Secretary of State as a “Beneficiary”, including filing returns and paying taxes, MERS is not allowed the right to defend a lawsuit when named as or defending its actions in a “Beneficiary” capacity, pursuant to California Revenue & Taxation Code Section §§ 23301, 23301.6, 23304.1.
“A suspended corporation is not allowed to exercise the powers and privileges of a corporation in good standing, including the right to sue or defend a lawsuit while its taxes remain unpaid”
PERFORMANCE PLASTERING v. RICHMOND AM. HOMES, 153 Cal.App.4th 659 (2007) 63 Cal.Rptr.3d 537
2. MERS must first produce a Certificate of Relief from Voidability for the time prior to July 21, 2010, California Revenue & Tax Code 23305.1 and file with this Superior Court Clerk receipt of payment to the California Secretary of State for taxes and penalties, California Corporations Code §2203(c).
“UMML qualified to transact intrastate business, but failed to pay the necessary fees, penalties and taxes.
The trial court correctly dismissed the complaint without prejudice.”
United Medical Management Ltd. v. Gatto, 49 Cal. App. 4th 1732 – Cal: Court of Appeals, 2nd Appellate
“we will dismiss a nonqualified foreign corporation’s appeal if we determine the nonqualified foreign corporation transacted
intrastate business in California.9 (Corp. Code, §§ 2105, 2203.) We believe this approach advances the policies of preventing tax evasion through the even-handed administration of the tax laws, while encouraging qualification of foreign corporations by prohibiting a delinquent corporation from enjoying the privileges of a going concern.”

“9 Pursuant to Corporations Code § 2203, subdivision (c), and as recognized in United Medical, supra, and Mediterranean Exports, Inc. v. Superior Court, supra, a nonqualified foreign corporation is prohibited from maintaining an action in state court only until it complies with Corporations Code section 2105, pays to the Secretary of State a penalty of $250 and the fees for filing the required statement, and files with the court clerk receipts substantiating payment of such fees and franchise taxes and any other business taxes. Since the tax liability will be the issue presented to us, we will allow a nonqualified foreign corporation to maintain an action before us if it presents evidence substantiating it has qualified with the Secretary of State and paid the $250 penalty pursuant to Corporations Code section 2203, subdivision (c).”
In the Matter of the Appeal of Reitman Atlantic Corporation, 2001-SBE-002-A, See attached below

3. MERS will very likely cite one of these two cases:
United Medical Management Ltd. v. Gatto 49 Cal.App.4th 1732 (1996),
or Perlas v. Mortgage Elec. Registration Systems, Inc., 2010 WL 3079262 * 7, an unpublished case as of 10/18/2010
Both of which are based upon this case:
“A nonqualified corporation subject to a misdemeanor prosecution and on conviction to a heavy fine for doing business without complying with the law, is permitted to qualify, be restored to full legal competency and have its prior transactions given full effect.” (Tucker v. Cave Springs Min. Corp. (1934) 139 Cal. App. 213, 217 [33 P.2d 871].
So demand MERS filing of receipts and that Certificate of Relief from Voidability!
191 CHAMPLAIE_v_BAC_HOME_LOANS_SERVICING_LP_E_D_Cal_10-22-2009
atto, 49 Cal. App. 4th 1732 – Cal_ Court of Appeals, 2nd Appellate Dist., 5th Div. 1996 – Google Scholar
bellistri-v-ocwen

Joseph Born v. Koop
mann-order_salazar
MERS RULES(June2009)
MERS Southeast Legal Seminar (11.10.04) final

MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC v. NEBRASKA DEPARTMENT OF BANKING AND FINANCE – NE Supreme Court
Ott v. Home Savings & Loan Association
Perlas v. MERS
R.K. Arnold, MERS Admits Bifurcation
Reitman Atlantic Corporation BOE
Reitman Atlantic Corporation BOE
Rickie_Walker_P_and_A
RickieWalkerOrder

David and Goliath as court overturns case dissmissal

A Bakersfield homeowner is taking on a bank, in a battle that could have sweeping implications for people facing foreclosure.

Mark Demucha wants Wells Fargo to prove it owns his home loan. And, if his lawsuit is successful, it could set a legal precedent that slows or even stops foreclosures across the state.

“Filled out the same paperwork over and over again.”

Mark Demucha says all he wanted was to keep his house. “Sent it to them over and over again. I couldn’t give you the exact time frame, but it’s ridiculous,” he said.

But, after a year of trying to get a loan modification from Wells Fargo… “I had to do something to protect my family. to protect my home.”

He felt all washed up. “Not yes, not no, not anything. They didn’t respond.”

Demucha turned to family friend Michael Finley who happens to be a lawyer.

“A company that does not have a legal right to collect mortgage payments should not have the right to foreclose,” said Finley.

Now, in a case that could have far-reaching implications, Demucha and Finley say they have one simple request. “If they are going to take my house, I should be able to see they have a legal right to take it from me,” said Demucha. “They come to me and want me to have every single piece of paper I was ever supposed to have. But, when I say ‘hey where is my promissory note?’ they look at me like I’m a thief.”

That’s because Wells Fargo didn’t loan Demucha the money to buy his house. Another company called CTX Mortgage, did.

Banks, at the time, seemed like they were almost using the housing market as a roulette wheel or a craps table. They were shoving debt around like it was a card game.

Like so many millions of homeowners, Demucha’s loan was sold to another lender, a common practice because it’s profitable to the banks.

In the old days, any time ownership of a property and its loan changed hands, it would be recorded at the Hall of Records at a cost of $18. For the mortgage industry, that took too long and on a large scale cost too much money. So they privatized it by creating the mortgage electronic registration system, a company headquartered in Reston, Virginia.

The sole purpose of MERS was to cut out the county clerk, allowing one mortgage company to quickly and electronically transfer a loan to another mortgage company.

On Tuesday, a spokeswoman told 17 News, MERS holds title to about 60% of the country’s home mortgages or about 32 million loans. MERS is basically an electronic handshake between banks, saying we have a deal.

But, MERS has turned into a headache for some lenders as homeowners across the country have successfully challenged the company’s legal standing in court. Others like Demucha are demanding their lender produce loan documents which may have been lost or even destroyed in the MERS shuffle.

“Why should the bank not still be required to possess a single piece of paper that they are the right place to home the consumer should make the payments?”

Earlier this month, a state appellate court agreed, overturning a Kern County judge’s ruling that Wells Fargo could foreclose on the home.

The case is headed back to our county where the same judge will have to decide if Wells Fargo can prove it legitimately holds title to the Demucha’s home.

“I wish I were David and they were Goliath. This would have been an easier fight. They are like an army of Goliaths and I’m like David with his hands tied behind his back,” said Demucha.

Wells Fargo spokesman Tom Goyda couldn’t comment on the specifics of this case but acknowledged the appellate court had sent the case back to the Kern County trial court to rule on several issues. Goyda noted the appeals court did not actually rule on the case and that Wells Fargo would continue to try the case in court.

A spokeswoman for MERS said her company said she couldn’t comment because they are not part of this lawsuit. Demucha and his attorney are basically asking for Wells Fargo to go away and to restore the couple’s credit.

“Wells Fargo essentially ignored them until the fifth district appellate court said Wells Fargo you can’t ignore Mark and Sherry Demucha any more,” said Finley.

The appellate court ruling has arrived back here in Kern County but a hearing has not yet been scheduled.

Principal reduction success !!!

Filipino Homeowners Get Principal Reduction Relief

Written by admin Featured News, News Highlights, Top StoriesJun 8, 2011

By Henni Espinosa, ABS-CBN North America Bureau

June 8, 2011

UNION CITY, Calif. – Amy and Peter Asi, who lost both their jobs in 2009, almost gave up on their home. For two years, they had asked their lender, Wachovia, to modify their loan and lower their home’s principal.

They hired the help of Attorney Timothy McCandless. Eventually, the amount of the Asi’s principal loan was reduced by 29%. Their lender cut more than $117,000 off their debt.

Peter said they can now breathe a huge sigh of relief. He said, “We’re already struggling to pay for this house, which is underwater. This is a big help.”

Atty. McCandless said since the Obama administration has put pressure on lenders to reduce the principals of struggling homeowners, lenders have been receptive…because they see how it will benefit them, as opposed to foreclosing on homes.

McCandless said, “If they put all these hours on the market all at once — values are going to go down faster and further. It’s in their best interest to work with the homeowners rather than foreclosing, evicting. It’s very destrucive to the community.”

McCandless said a third of the the homes in America are now underwater in value. He said lenders now see principal reduction as a win-win situation.

He said, “They look at the appraised value and the cost it’s going to take to liquidate the home — versus working with the homeowner. Values continue to drop and it’s making more and more sense for banks to work with the homeowners.”

McCandless said principal reduction is a more viable option for struggling homeowners than loan modification…because homeowners are encouraged to pay on time when they know their homes have value.

At its peak, the Asi’s home was valued at $600,000. It is now down to $400,000.

Now that the bank reduced the amount of their loan to reflect current values, they said they’re more encouraged to pay…especially now that they have full-time jobs.

Amy said, “Without principal reduction, you feel like there’s no sense in paying. But with it, homeowners feel motivated to pay.”

Not only was their principal reduced, the Asi’s loan was permanently modified from $4,000 a month to $2,800 a month.

The Asi’s principal reduction has a condition. They have to pay monthly payments on time for the next three years — before the $177,000 can be fully taken out of their loan — not a problem for these homeowners who are now confident in the value of their home.

You may contact Henni Espinosa at henni_espinosa@abs-cbn.com for more information.

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Quiet title by code and verified

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.

The complaint shall be verified and shall include all of the following:

(a)A description of the property that is the subject of the action. In the case of tangible personal property, the description shall include its usual location. In the case of real property, the description shall include both its legal description and its street address or common designation, if any.

(b)The title of the plaintiff as to which a determination under this chapter is sought and the basis of the title. If the title is based upon adverse possession, the complaint shall allege the specific facts constituting the adverse possession.

(c)The adverse claims to the title of the plaintiff against which a determination is sought.

(d)The date as of which the determination is sought. If the determination is sought as of a date other than the date the complaint is filed, the complaint shall include a statement of the reasons why a determination as of that date is sought.

(e)A prayer for the determination of the title of the plaintiff against the adverse claims.

Yau v. Deutsche FIRST AMENDED CLASS ACTION COMPLAINT

Yau_-_complaint_First_Amended_Pleading.78103044

FIRST AMENDED CLASS ACTION COMPLAINT
Yau v. Deutsche Bank National Trust Company Americas
Request for IMMEDIATE RELIEF:

Lenore L. Albert, Esq. SBN 210876
LAW OFFICES OF LENORE ALBERT
7755 Center Avenue, Suite #1100
Huntington Beach, CA 92647
Telephone (714) 372-2264
Facsimile (419) 831-3376
Email: lenorealbert@msn.com
Attorney for Plaintiffs and the Class
EDDIE YAU, GLORIA YAU,
ROBERT H. RHOADES, NICOLE
RHOADES, STEVE BURKE, CHEN
PI AS AN INDIVIDUAL AND AS
TRUSTEE FOR THE PI TRUST
DATED MAY 17, 2004, SALIM
BENSRHIR, KIMBERLY
CHRISTENSEN, ALICE MBAABU,
CARMEN ARBALLO, ANGELA
BROWN, ANTHONY JOHNSON,
OTIS BANKS, RICHARD
APOSTOLOS, REGAN OWEN,
JENNIFER OWEN, JOANNE
ANDERSON, JEREMY JOHN DALE,
DOUGLAS L. EDMAN, and
DOUGLAS L. EDMAN and ERIC
EDMAN as trustees of the HIGH
DESERT ENTERPRISES TRUST,
on behalf of themselves and all others
similarly situated,
Plaintiffs,
vs.
DEUTSCHE BANK NATIONAL
TRUST COMPANY, DEUTSCHE
1. Breach/Unjust Enrichment
2. HAMP Breach/Unjust Enrichment
3. Breach of Contract – Third Party Ben.
4. Declaratory Relief/Default Cured
5. Declaratory Relief/Unsecured Creditor
6. Declaratory Relief/Fees and Costs
7. Fraud
8. Injunctive Relief
9. Accounting
10.Unlawful/Unfair Acts §17200
11.Fraud
12.Declaratory Relief/Injunction
[ ]
***
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CASE NO. SACV11-0006-JVS (RNBx)
Assigned for all purposes to the honorable:
James V. Selna
FIRST AMENDED CLASS ACTION
COMPLAINT
Demand for Jury Trial
FIRST AMENDED CLASS ACTION COMPLAINT
Yau v. Deutsche Bank National Trust Company Americas
TEMPORARY RESTRAINING ORDER and
INJUNCTION filed Concurrently herewith

BANK TRUST COMPANY
AMERICAS and AURORA LOAN
SERVICES, LLC, Inclusive,
Defendants.
***
FIRST AMENDED CLASS ACTION COMPLAINT
Yau v. Deutsche Bank National Trust Company Americas
Plaintiffs, by and through their attorney, bring this action on behalf of themselves
and all others similarly situated against Deutsche Bank National Trust Company
(“DBNT” or “Defendant”). Deutsche Bank Trust Company Americas (“DBTCA” or
“Defendant”) and Aurora Loan Services, LLC. (“Aurora” or “Defendant”). Plaintiffs
allege the following on information and belief, except as to those allegations which
pertain to the named Plaintiffs:
1. Plaintiffs bring this action to challenge the defendants’ manipulation and use of
the federal and state programs surrounding the mortgage crisis, such as HAMP and other
foreclosure prevention services.
2. The defendants defaulted the plaintiffs and those similarly situated then offered
them federal and state home retention programs such as Home Affordability
Modification Program agreements (HAMP).
3. After the Plaintiffs made their post default payments as requested, the
defendants never-the-less denied the permanent modification, did not cure the default or
reinstate the plaintiffs’ loans on the grounds they couldn’t get the loan to work.
4. The program guidelines state that if the Net Present Value (“NPV”) of the loan
modification is greater than the NPV at foreclosure, then the lenders modify the
loan.
1. Introduction
5. Plaintiff is informed and believes and alleges thereon that the defendants were
already made whole upon the loans because these loans were securitized with credit
default swaps (“CDS”) and other security interests, and the CDS were factored into the
NPV and not merely the amount that the defendants may receive on a foreclosure sale.
6. The securitization of their loans with CDS was never revealed to the plaintiffs
and the Class prior to their default.
7. The Court has subject matter jurisdiction over this action under 28 USC § 1331
wherein the action arises under the Constitution, laws or treaties of the United States.
8. The Court has personal jurisdiction over the defendants in this action by the
fact that the Defendants are corporations conducting business in the state of California.
9. Venue is proper in this Court pursuant to 28 USC § 1392 because the action
involves real property located in both the Central and Southern District of California; and
pursuant to 28 USC § 1391(b) inasmuch as defendant DBNT and DBTCA reside in the
Central District of California, and a substantial part of the events or omissions on which
the claims are based occurred in this District.
10.Plaintiffs Eddie Yau and Gloria Yau (the “Yaus,” “plaintiff,” “plaintiffs” or
“borrowers”) are a married couple residing in Vista, California. Plaintiff is now, and at
all times mentioned herein relevant to this complaint was the owner of real property
2. Jurisdiction and Venue
3. The Parties
commonly known as 1307 Summer Court, Vista, California 92084 (“subject property”).
Douglas L. Edman was the borrower on the loan.
11.Plaintiffs Robert Rhoades and Nicole Rhoades (the “Rhoades,” “plaintiff,” or
“borrowers”) are a married couple residing in Chino, California. Plaintiff is now, and at
all times mentioned herein relevant to this complaint was the owner of real property
commonly known as 7746 Holland Park, Chino, California 92401 (“subject property”).
Robert Rhoades was the borrower on the loan.
12.Plaintiff Steve Burke is an adult residing in Paradise, California. Plaintiff is
now, and at all times mentioned herein relevant to this complaint was the owner of real
property commonly known as 5871 Pine Circle, Paradise, California 95969 (“subject
property”). Steve Burke was the borrower on the loan.
13.Plaintiff Chen Pi, acting on her own behalf and as trustee for the Pi Trust dated
May 17, 2004 resides in La Puente California. Plaintiff is now, and at all times
mentioned herein relevant to this complaint was the owner of real property commonly
known as17116 Samgerry Dr., La Puente, California (“subject property”). Chen Pi was
the borrower on the loan.
14.Plaintiff Otis Banks is an individual residing in Inglewood, California. Plaintiff
is now, and at all times mentioned herein relevant to this complaint was the owner of real
property commonly known as 5408-5408 ½ 8TH Avenue, Los Angeles, California 90045
(“subject property”). Otis Banks was the borrower on the loan.

15.Plaintiff Salim Bensrhir and Kimberly Christensen are a married couple
residing in Los Angeles, California. Plaintiff is now, and at all times mentioned herein
relevant to this complaint was the owner of real property commonly known as 842 N
Dillon Street, Los Angeles, California 90026 (“subject property”). Salim Bensrhir and
Kimberly Christensen were the borrowers on the loan.
16.Plaintiff Alice Mbaabu is an individual residing in Fontana, California.
Plaintiff is now, and at all times mentioned herein relevant to this complaint was the
owner of real property commonly known as 13536 Whipple Street, Fontana, California
92336 (“subject property”). Alice Mbaabu was the borrower on the loan.
17.Plaintiff Carmen Arballo is an individual residing in Chino, California.
Plaintiff is now, and at all times mentioned herein relevant to this complaint was the
owner of real property commonly known as 6952 Gloria Street, Chino, California 91710
(“subject property”). Carmen Arballo was the borrower on the loan.
18.Plaintiff Angela Brown is an individual residing in Stockton, California.
Plaintiff is now, and at all times mentioned herein relevant to this complaint was the
owner of real property commonly known as 4516 Abruzzi Circle, Stockton, California
95206 (“subject property”). Angela Brown was the borrower on the loan.
19.Plaintiff Anthony Johnson is an individual is an individual residing in Corona,
California. Plaintiff is now, and at all times mentioned herein relevant to this complaint
was the owner of real property commonly known as 382 Minaret Street, Corona, CA
92881 (“subject property”). Anthony R. Johnson was the borrower on the loan.
20.Plaintiff Richard Apostolos is an individual residing in Perris, California.
Plaintiff is now, and at all times mentioned herein relevant to this complaint was the
owner of real property commonly known as 21200 Mountain Ave., Perris, California
92570 (“subject property”). Richard Apostolos was the borrower on the loan.
21.Regan Owen and Jennifer Owen are a married couple residing in Chula Vista,
California. Plaintiff is now, and at all times mentioned herein relevant to this complaint
was the owner of real property commonly known as 2872 Ranch Gate Rd., Chula Vista,
California (“subject property”). Regan Owen was the borrower on the loan.
22.Plaintiff Joanne Anderson is an individual residing in Laguna Niguel,
California. Plaintiff is now, and at all times mentioned herein relevant to this complaint
was the owner of real property commonly known as 24291 Park Pl Dr, Laguna Niguel,
CA 92677 (“subject property”). Joanne Anderson was the borrower on the loan.
23. Jeremy John Dale is an individual residing in Paynes Creek, California.
Plaintiff is now, and at all times mentioned herein relevant to this complaint was the
owner of real property commonly known as 30510 HWY 36 East, Paynes Creek,
California 96075 (“subject property”). Jeremy John Dale was the borrower on the loan.
24.Douglas L. Edman is an individual residing in Malibu, California. Plaintiff is
now, and at all times mentioned herein relevant to this complaint was the owner of real
property commonly known as 612 Thrift Road, Malibu, California 90265 (“subject
property”). Douglas L. Edman was the borrower on the loan.
25.Douglas L. Edman and Eric Edman as trustees of the HIGH DESERT
ENTERPRISES TRUST reside in Malibu, California. Plaintiff is now, and at all times
mentioned herein relevant to this complaint was the owner of real property commonly
known as 612 Thrift Road, Malibu, California 90265 (“subject property”). Douglas L.
Edman was the borrower on the loan. Then after the loan was made, the property was
transferred by Douglas L. Edman to Douglas L. Edman, Trustee of the High Desert
Enterprises Trust.
26.Defendant DEUTSCHE BANK NATIONAL TRUST COMPANY (“DBNT”
or “Custodian”) has its principal place of business at 1761 Saint Andrews Place, Santa
Ana, CA 92705.
27.Defendant DEUTSCHE BANK TRUST COMPANY AMERICAS
(“DBTCA”) has its principal place of business at 1761 Saint Andrews Place, Santa Ana,
CA 92705. When DBNT and DBTCA are mentioned together in this complaint they
may be referred to as “Deutsche Bank.”
28.Defendant AURORA LOAN SERVICES, LLC (“Aurora” or “loan servicer”) is
headquartered in Littleton, Colorado and regularly conducts business in the state of
California.

29. Plaintiffs are informed and believe and allege thereon that their loans are in
securitized trusts where the defendants are either the Servicer, Custodian, or Trustee of
that trust.
30.Plaintiff is informed and believes and alleges thereon that DBNTC and
DBTCA act as board members and are referred to as the Company each with different
duties in the trusts.
31.DBNTC and DBTCA are both subsidiaries created by nonparty Deutsche Bank
Company (“DBC”) which has its principal place of business in Germany. Plaintiff is
informed and believes and alleges thereon DBNTC and DBTCA were either acting in
concert, instructing, adopting, ratifying, assisting DBC’s conduct as alleged in this
complaint through an agency or contractual relationship. As such, the actions or failure
to act are the actions or failure to act of each other.
32.Nonparty FANNIE MAE/FREDDIE MAC (“Fannie Mae”) entered into an
agreement with defendant Aurora of which the plaintiffs and the Class were intended
beneficiaries.
33.Plaintiff is informed and believes and alleges thereon that each defendant is
responsible in some manner for the occurrences alleged in this complaint, and that
plaintiff’s damages were proximately caused by the defendants and at all times
mentioned in this complaint, were the agents, servants, representatives, and/or employees
of their co-defendants, and in doing the things hereinafter alleged were acting in the
scope of their authority as agents, servants, representatives, family members and/or
employees, and with the permission and consent of their co-defendants.
34.Additionally, plaintiff is informed and believes and alleges thereon that each
defendant assisted, aided and abetted, adopted, ratified, approved, or condoned the
actions of every other defendant and that each corporate defendant, if any, was acting as
the alter ego of the other in the acts alleged herein.
35.On March 4, 2009 President Obama signed into law the Making Home
Affordable Plan as part of the Emergency Economic Stabilization Act of 2008. It is in
two parts: the Home Affordable Refinance program (“HARP”) and the Home Affordable
Modification program (“HAMP”).
36.Under these programs, the U.S. Department of the Treasury directed the large
national bank servicers to take corrective action by providing loan modifications that
produced more sustainable loan payments.
37.On March 4, 2009 the U.S. Department of the Treasury explained,
38.With the information now available, servicers can begin immediately to modify
eligible mortgages under the Modification program so that at-risk borrowers can better
afford their payments.
39.Aurora entered into a Servicer Participation Agreement for the HAMP program
with Fannie Mae; the latter acted as Financial Agent of the United States. ( ).
3. Statutory and Regulatory Scheme
Exhibit 1

40.However, Aurora failed and refused to put Mr. Yau immediately into a
modification program until they first defaulted and gave Notice of Sale of Mr. Yau’s
home. Plaintiff is informed and believes and alleges thereon that defendant Aurora first
caused Notices of Default and Notice of Foreclosure Sale to be served on the Class prior
to placing the Class into a temporary HAMP also.
41.By March 2010, the White House fortified the HAMP program because only
borrowers out of the it was aimed at were placed in a
more affordable home loan.
42.Thereafter, the contract between Aurora and Fannie Mae was amended and
restated on or about September 1, 2010. The Amended and restated contract is attached
hereto and fully incorporated herein as .
43.The United States Treasury, Office of the Comptroller of Currency (hereinafter
the “OCC”) regulates the banking industry such as defendant Deutsche Bank. The OCC
mandated that the largest banks institute HAMP programs.
44.The Office of Thrift Supervision (hereinafter the “OTS”) regulates loan
services such as defendant Aurora.
45.According to the Aurora Loan Services – Issuer Profile dated June 24, 2008 by
Analyst Kathleen Tillwitz, Aurora Loan Services was a wholly owned subsidiary of
Lehman Brothers Bank, FSB, servicing 20,000 to 110,380 (or 21.4% of their loans) in
170,000 3 to 4 million borrowers
Exhibit 2
California. As of February 29, 2008 Aurora serviced 514,831 mortgage loans totaling
$113.2 billion dollars.
46.On 11/19/10 the OCC supplied the following written testimony:
47.HAMP guidelines now preclude the servicer from initiating a foreclosure
action until the borrower has been determined to be ineligible for a HAMP modification.
48.Aurora actions in working with the borrowers on the loans at issue in this
complaint violated and continue to violate these directives.
49.Under the contract, the Servicer of the loan must perform a Net Present Value
(NPV) Test to compare the value of the money that it would receive if the loan were
modified with the value it could expect from foreclosure.
50. If the servicer and owner of the loan can expect a greater return from modifying
the loan, the loan is considered NPV positive and the servicer and owner then
modify the loan. ( )
51. In plaintiff’s case, plaintiff is informed and believes and alleges thereon that the
defendants as the servicer and owner of the loan could have expected no more than onethird
of what the plaintiff would have paid under the HAMP loan modification which
would have been anywhere from $934,560.00 to over $1 million dollars.
52.As servicer of the loan, Aurora must modify the loan unless the contractual
agreement it has with the actual holder of the loan prohibits modification. In that case,
must
Exhibit 4
the servicer is required to use reasonable efforts to obtain waivers or approval of a
modification from the owner and/or investor
53.Plaintiff is informed and believes and alleges thereon that Aurora failed to
disclose to Fannie Mae that loans like the Yau’s which appear to nicely fit under the
program’s protected class, were actually the loans that would never become permanently
modified because these loans were backed by CDS and such. Signing up as a servicer of
the HAMP program, was a carrot to lure distressed homeowners into default.
54.The defendants signed up for exemptions with the California Commissioner for
the same reason, motive or to assist in effectuating this plan.
55.Plaintiff is informed and believes and alleges thereon defendant failed to make
these material disclosures to Fannie Mae and the California Commissioner, so the
defendants could use the guise of being able to offer these “Programs” to maximize their
own profit by luring homeowners into default, dragging out the process and obtaining
more money from the defaulted homeowner than otherwise would likely occur if the
homeowner did not have hope they may qualify for one of the foreclosure alternatives,
such as HAMP.
56. In the Yau’s case, who were initially only behind by $5,000.00, if they had
known and understood the truth to this scheme, they would have had an incentive to find
a short term loan or other capital to cure the late payment prior to default instead of
relying on their lender to place them in a foreclosure alternative program; they most
$3.86 Trillion dollars.
likely would have never entered into the mortgage in the first place; and surely would
have never paid a dime to the defendants after they gave notice of default and
foreclosure.
57.The impact of Aurora’s practice of defaulting before processing a foreclosure
alternative request by a homeowner, then dragging out the process while the homeowner
is making monthly payments and denying blocks of HAMP modifications after obtaining
a temporary modification is nothing more than a financial “Death Spiral” for the
homeowner.
58.At all times herein mentioned, plaintiff and the Class believed that they were
eligible for HAMP.
59.Although the plaintiffs and the Class complied with the terms of the post
default program agreements, Defendants refused to cure the default, offer such a
permanent modification under the program or to take corrective action by providing loan
modifications that produced more sustainable loan payments to plaintiff.
60.The market size for credit default swaps by 2008 in the United States was
estimated to be Dodd- Frank Wall Street Reform and Consumer Protection Act
Critics assert that naked CDS should be banned, comparing them to
buying fire insurance on your neighbor’s house, which creates a huge
incentive for arson.1 [emphasis added]
61. In essence the defendants bet against the borrower from the beginning then
used the Federal Government through the federal HAMP program to take even more
money from the defaulting homeowner in this class knowing that they would never grant
this class of homeowners a permanent loan modification or any other type of relief. The
defendants never fully disclosed or adequately explained this to Fannie Mae/Freddie
Mac. The entire program failed to the assist the very class of homeowners it was
intended to protect.
62.On or about February 2, 2011 the Securities and Exchange Commission started
accepting comment on creating an exchange called “Swap Execution Facilities” under
the in order to create
greater transparency with Credit Default Swaps which the SEC refers to as “Security
Based Swaps.”
63.The plaintiffs and the Class in this Complaint are the class of homeowners
these federal and state programs, including the HAMP program were intended to protect.
64.The plaintiffs and the Class were led to believe that they would have the
opportunity to cure their default and be reinstated, but no matter how much they paid the
defendants each month or what they signed, it never happened and they were kept in
constant foreclosure status the entire time while doling out money and their private
financial information to the defendants.
65.Plaintiff alleges defendants intended to, did and still continue to use these
Programs to manipulate more money from the Plaintiffs and the Class.
66.After obtaining the agreements with Fannie Mae and the California
Commissioner, the defendants used the guise of offering these “Programs” to lure
homeowners into default, drag out the process and confuse the homeowners on the type
of alternative temporary program they were placing the homeowner in just to get them to
shell out more money to the defendants after a Notice of Default and Notice of Sale was
filed and served.
67.Plaintiff is informed and believes and alleges thereon that defendant Aurora
knew or had reason to know that defendant Deutsche Bank bought credit default swaps
or other types investment security/insurance that were either worth more than making the
loan modifications permanent prior to default on these blocks of homes when entering to
the contract with Fannie Mae or defendants failed to properly calculate the Net Present
Value (“NPV”) on these loan modifications. But Aurora never disclosed these facts to
Fannie Mae/Freddie Mac.
68.Plaintiff is informed and believes and alleges thereon that these CD swaps and
other financial arrangements and the NPV calculations as applied to these asset-backed
loans were material facts and as such Defendants had a duty to disclose these material
facts under the agreement with Fannie Mae/Freddie Mac or comply with the terms with
regard to NPV calculations.
69.Even if such material facts were disclosed to Fannie Mae/Freddie Mac, these
material facts were never disclosed to the intended beneficiaries of the agreements
between Fannie Mae/Freddie Mac and Aurora, the plaintiffs and the Class.
70. If it is later interpreted that the facts were disclosed to Fannie Mae/Freddie Mac
but the defendants were forbidden from using the gains they could expect to receive from
the CDS by defaulting the homeowners, then the plaintiffs allege that the defendants
breached that covenant to the injury of the plaintiffs.
71.As intended beneficiaries of the agreements between Fannie Mae/Freddie Mac
and Aurora, the Plaintiffs and the Class were injured due to the failure to disclose these
material facts and/or comply with the terms of the agreement.
72. The impact of defendants’ practice and/or scheme as more fully described
below was nothing more than a financial “Death Spiral” to the borrower resulting in
making extortion like payments after giving a complete disclosure of their remaining
financial assets, and allowing their credit to be decimated or face foreclosure sale.
73.And even if these borrowers had the ability to reinstate their loans, under this
scheme the proceeds the defendants received on default would not be applied to the loan
but become a windfall to the defendants, still leaving the homeowner’s credit and
financial health badly battered, making the entire scheme outrageous, despicable and
deserving of punitive or exemplary damages.
74.The plaintiffs each received a written agreement such as a temporary HAMP
agreement after default appearing to give the plaintiffs an opportunity to save their home
if they made the requested payments.
75.Plaintiffs and those similarly situated made all payments, however the
defendants did not cure the default, reinstate the loan or permanently modify the loan.
76.Plaintiff is informed and believes and alleges thereon that at all times
mentioned in this complaint, the defendants knew California was not a deficiency
judgment state and understood their actions of collecting payment after default without
cure or reinstatement was unlawful.
77.Yet, the defendants collected money from the plaintiffs before satisfying the
debt with the security.
78.Mr. Burke has paid the defendants approximately $20,279.00 since the Notice
of Default dated 9/16/08 originally for $6,312.74.
79.Plaintiff, Mr. Apostolos has paid $27,928.00 after his Notice of Default dated
6/7/10 in the amount of $33,014.53 and turned over approximately $7,000.00 payments
to his attorney to be held in trust for payments on his home.
4. General Factual Allegations
80.Plaintiff Ms. Brown has paid the defendants approximately $24,728.00 after
her Notice of Default dated 2/14/09 in the amount of $5,899.60 and also placed
additional payments in trust with her attorney and/or deposited with the court.
81.Plaintiff Mr. Salem Benshir and Kimberly Christensen has paid the defendants
approximately $51,991.25 after their Notice of Default dated 11/16/08 in the amount of
$10,495.23.
82.Plaintiff Regan Owens and Jennifer Owens paid the defendants approximately
$38,059.00 after their Notice of Default dated 3/10/09 in the amount of $27,371.99.
83.Plaintiff Ms. Chen Pi has paid the defendants approximately $24,728.00 after
her Notice of Default dated 2/14/09 in the amount of $5,899.60 and also placed
additional payments in trust with her attorney and/or deposited with the court.
84.Plaintiff Ms. Alice Mbaabu has paid the defendants approximately $24,728.00
after her Notice of Default dated 2/14/09 in the amount of $5,899.60 and also placed
additional payments in trust with her attorney and/or deposited with the court.
85.Plaintiff Ms. Carmen Arballo has paid the defendants approximately
$24,728.00 after her Notice of Default dated 2/14/09 in the amount of $5,899.60 and also
placed additional payments in trust with her attorney and/or deposited with the court.
86.Plaintiff Mr. Anthony Johnson has paid the defendants approximately
$24,728.00 after her Notice of Default dated 2/14/09 in the amount of $5,899.60 and also
placed additional payments in trust with her attorney and/or deposited with the court.
87.Plaintiff Mr. Otis Banks has paid the defendants approximately $24,728.00
after her Notice of Default dated 2/14/09 in the amount of $5,899.60 and also placed
additional payments in trust with her attorney and/or deposited with the court.
88. In fact, each of the named plaintiffs and those similarly situated have entered
into agreements with the defendants after default and tendered payments as requested.
89. In 2009, 632,573 California properties had some type of foreclosure filed on its
property record.2
90.According to a California Consumer Banking article dated December 13, 2010,
the outlook for 2011 is worse.
91.The number of foreclosures is expected to increase in 2011 as more mortgage
defaults work their way through the pipeline. Rick Sharga, a senior vice president for
RealtyTrac, said there were approximately 1.2 million bank repossessions in 2010,
900,000 in 2009, and “We expect we will top both of those numbers in 2011,” he said.3
92.Quality Loan Service Corporation, agent of defendant Aurora Loan Services,
LLC recorded over foreclosure type filings in in 2010
alone.
93.Recently, the Attorney General of Arizona was quoted by Business Week as
stating
What I’m most angry about is the simultaneous modifications and
foreclosures… We need to look for a stipulated judgment in all 50 states,
that if someone is in modification, they can’t be foreclosed.
(www.businessweek.com/news/2010-10-28/arizona-seeks-changes-tobanks-
home-loan-modification-process.html).
94.The plaintiffs and the Class were led to believe that they would have an
opportunity to cure their default, receive a modification and have their loan reinstated,
but no matter how much they paid the defendants each month or what they signed, it
never happened. Attached hereto and fully incorporated herein as is a true and
correct copy of the Yaus’ Temporary HAMP Agreement.
95.Some plaintiffs signed temporary modification agreements, others were
actually placed in limited modification Special Forbearance agreements, and some were
placed in both after notice of default.
96. Defendant Aurora contracted with Fannie Mae to provide foreclosure
prevention services intending to benefit homeowners with affordable loan modifications.
In return Aurora would be compensated over in taxpayer funds as
incentive to do so. Attached hereto and fully incorporated herein as is a true
and correct copy of the original Agreement between Aurora and Fannie Mae.
Exhibit 3
$2.873 Billion dollars
Exhibit 1
97.Plaintiff is informed and believes and alleges thereon that Aurora Loan
Services made and/or is making more money on defaults and/or foreclosures than on the
loan modifications and knew it would do so when entering into the contract with Fannie
Mae.
98.Plaintiff is informed and believes and alleges thereon that defendant Aurora
knew or had reason to know that defendant Deutsche Bank bought credit default swaps
or other types investment security/insurance that were either worth more than making the
loan modifications permanent prior to default on these blocks of homes when entering to
the contract with Fannie Mae or they failed to report the way they were calculating NPV
under the agreement. But Aurora never disclosed these facts to Fannie Mae.
99.Plaintiff is informed and believes and alleges thereon that these CDS and other
financial arrangements were material facts and as such Defendants had a duty to disclose
these material facts under the agreement or the NPV calculations violated the terms of
the agreement with Fannie Mae/Freddie Mac. Attached hereto and fully incorporated
herein as is a true and correct copy of the March 4, 2009 Home Affordable
Modification Program Guidelines including the NPV calculations.
100. But defendants never disclosed or adequately explained these material facts.
101. Assistant Treasury Secretary Herbert M. Allison admitted that modifying
mortgages has been more difficult than administration officials had anticipated.”
Exhibit 4
FIRST AMENDED CLASS ACTION COMPLAINT
Yau v. Deutsche Bank National Trust Company Americas

“Certainly we’ve seen a lot of frustration with this program since its
inception,” he told lawmakers. “We did not fully envision the
challenges we would encounter.” (http://rismedia.com/2010-03-
28/white-house-to-adjust-troubled-mortgage-modification-program/)
102. Section 5 of the Servicer agreement between Aurora and Fannie Mae
contains the representations, warranties and covenants which state in part:
(b) Servicer is in compliance with, and covenants that all
Services will be performed in compliance with all applicable
Federal, state and local law, regulations, regulatory guidance,
statutes, ordinances, codes and requirements, including, but not
limited to, the Truth in Lending Act, 15 USC 1601 et seq., the
home Ownership and Equity Protection Act, 15 USC 1639, the
Federal Trade Commission Act, 15 USC 41 et seq., the Equal
Credit Opportunity Act, 15 USC 701 et seq., the Fair Credit
Reporting Act, 15 USC 1681 et seq., the fair Housing Act and
other Federal and state laws designed to prevent unfair,
discriminatory or predatory lending practices and all applicable
laws governing tenant rights…Servicer is not aware of any
other legal or financial impediments to performing its
obligations under the Program in which Servicer participates or
the Agreement and shall promptly notify Fannie Mae of any
financial and/or operational impediments which may impair its
ability to perform its obligations under such Programs or the
Agreement…
(c) Servicer covenants that:…all data …that is relied upon by
Fannie Mae or Freddie Mac in calculating the Purchase Price or
in performing any compliance review will be true, complete and
accurate in all material respects, and consistent with all relevant
business records, as and when provided.
(d) Servicer covenants that it will(i) perform the Services
required under the Program Documentation and the Agreement
in accordance with the practices, high professional standards of
care, and degree of attention used in a well-managed
operation…

(f) Servicer acknowledges that the provision of false or
misleading information to Fannie Mae or Freddie mac in
connection with any of the Programs or pursuant to the
Agreement may constitute a violation of: (a) Federal criminal
law involving fraud, conflict of interest, bribery, or gratuity
violations found in Title 18 of the United States Code; or (b) the
civil False Claims Act (31 USC § 3729-3733). Servicer
covenants to disclose to Fannie Mae and Freddie Mac any
credible evidence, in connection with the Servicers, that a
management official, employee, or contractor of Servicer has
committed, or may have committed, a violation of the
referenced statutes.
(g) Servicer covenants to disclose to Fannie Mae and Freddie
Mac any other facts or information that the Treasury, Fannie
Mae or Freddie Mac should reasonably expect to know about
Servicer and its contractors to help protect the reputational
interests of the Treasury, Fannie Mae and Freddie Mac in
managing and monitoring the Programs in which Servicer
participates.” ( page A-2 to A-4 ; Exhibit 2 page B-3
to B-4)
103. Plaintiff alleges that defendants breached these covenents.
104. Defendants used the offering of the federal HAMP Program as an incentive
to get the homeowners to default on their loans which would trigger payment on the CDS
without any care about placing the homeowners at risk of a foreclosure sale and then
have the homeowners like the plaintiffs in this case continue to make monthly payments
on them while in default facing a foreclosure sale all to the defendants’ financial benefit.
105. On July 7, 2007 plaintiff Eddie Yau borrowed $608,000.00 from
Homecomings Financial, LLC on a 30 year negative adjustable rate note to purchase his
Exhibit 1
8. Factual Allegations of the Yaus Repesenting the HAMP Subclass
home where he lives with his wife. His payments were supposed to be fixed at $2,402.34
per month for the first five years of the loan.
106. Mr. Yau, a retired military veteran and mechanic, has no mortgage or home
lending financial experience beyond basic financial matters.
107. Plaintiff, as trustor, executed and delivered a deed of trust, conveying the
real property described herein to secure payment of the principal sum and interest as
provided in the note and as part of the same transaction to Homecomings Financial, LLC
which was then later assigned, sold or transferred by the lender to either DBNT or
DBTCA as beneficiary and serviced by defendant Aurora.
108. Mr. Yau missed his July 2008 payment and telephoned defendant Aurora
Loan Services and explained he was experiencing financial difficulties due to a decrease
in his income and inquired as to alternatives to foreclosure.
109. On or about September 24, 2008 defendant Aurora Loan Services sent a
letter explaining the following programs it offered and that by entering into the programs
the borrower “will avoid the loss of your home through foreclosure or further impairment
on your credit.”
“Repayment Plan: If you recently experienced a temporary reduction
in income or an increase in living expenses, a repayment plan will
allow you to repay the past due amount over a specified period of
time.
Forbearance Plan: You may be able to suspend or reduce your
mortgage payments for a short period of time. Thereafter, we would
review your current financial situation and determine what home
retention option would best assist you in bringing your loan current.
Loan Modification: A loan modification may offer you the ability to
change on or more of the terms of your mortgage. This may assist
you with providing an affordable payment and avoiding foreclosure.
Again, we would need to review your financial situation and ability to
pay. If your loan is current and you anticipate that you may have
difficulty in making the increased monthly payment, we may be able
to assist you with a loan modification that will provide you with an
affordable payment based on your current financial information.
110. Then on December 02, 2008 defendant Aurora Loan Services wrote Mr.
Yau which stated:
“Based upon the information that you provided during your telephone
conversation with Aurora, your loan may qualify for a loan
modification….You must provide documentation to support your
inability to reinstate the mortgage loan in one lump sum…under some
circumstances,
111. Then on December 19, 2008 Aurora Loan Services sent Mr. Yau a letter
noting Mr. Yau’s was in default in the amount of $4,828.68 and that
“If you do not bring your loan current within thirty (30) days of the
date of this letter, Aurora Loan Services may demand the entire
balance outstanding under the terms of your Mortgage/Deed of Trust.”
112. Aurora then followed up with the same letter of September 24, 2008 again
on December 24, 2008 and January 20, 2009.
113. Instead of sending Mr. Yau a loan modification plan, defendant Aurora
Loan Services sent him a Repayment Agreement expecting him to pay an additional
$802.78 per month ($3,207.12 per month for 6 months) which equaled a 33% increase in
you may be expected to pay a loan modification fee.”
[Emphasis added]
his monthly mortgage payment. This payment plan did not create a “more sustainable
payment plan.”
114. In 2009 the Yau’s financial situation became worse as their investments
were depleted from what was later characterized as a “Ponzi scheme.”
115. From that time up to June 2009, plaintiff would telephone defendant Aurora
seeking a modification and Aurora would take down information representing the
defendants would start the process, but the process was never started.
116. Mrs. Yau spoke to a person at Aurora Loan Services named Steve who
promised that someone from Aurora Loan Services would call them back no later than
June 1st about the Making Home Affordable Loan Program.
117. On June 16, 2009 defendant caused to be served and recorded a purported
Notice of Default and Election to Sell under Deed of Trust (NOD) alleging (a) that a
breach of the obligation secured by the deed of trust had occurred, consisting of Mr.
Yau’s failure to pay $12,655.67 as of 6/15/09, and (b) that the defendant, as beneficiary,
elected to sell, or to cause to be sold, the property to satisfy that obligation.4
4 However, that Notice of Default was outside the chain of title because Lawyers Title Company, as
the original trustee and Mortgage Electronic Registration Systems, Inc. as the nominee did not
assign this right until June 24, 2009. Attached hereto and fully incorporated herein as is a
true and correct copy of the Assignment to Quality Loan Service which was not notarized until
6/24/09.
Exhibit 8

118. A few months later defendant Aurora Loan Services faxed a “customized
Home Affordable Modification Trial Period Plan (“Trial Period Plan”)” under HAMP
wherein Mr. Yau was supposed to make payments of $1,943.70 on 10/01/09, 11/01/09,
and 12/01/09.
119. The temporary HAMP agreement which is incorporated herein stated in part
“If I comply with the requirements in Section 2 and my
representations in Section 1 continue to be true in all material
respects, the Lender will send me a Modification Agreement for my
signature which will modify my Loan Documents as necessary to
reflect this new payment amount and waive any unpaid late charges
accrued to date.”
120. Aurora promised:
“If you qualify under the federal government’s Home Affordable
Modification program and comply with the terms of the Trial Period
Plan, we will modify your mortgage loan and you can avoid
foreclosure.”
121. These terms are boilerplate in all such agreements received by the coplaintiffs
and the class.
122. Mr. Yau believed he was eligible for HAMP and made the payments as laid
out in the agreement under Section 2, provided the necessary documents and his
representations in Section 1 continued to be true in all material respects, yet defendant
Aurora Loan Services failed and refused to send the Modification Agreement for him to
sign, or to cure the default and reinstate the loan.
123. On or about March 6, 2010 defendant Aurora Loan Services sent a letter to
Mr. Yau explaining,
“Unfortunately, we are unable to offer you a Home Affordable
Modification for the following reasons: Excessive Forbearance. We
are unable to offer you a Home Affordable Modification because we
are unable to create an affordable payment equal to 31% of your
reported monthly gross income without changing the terms loan
beyond the requirements of the program.”
124. Defendant’s representation in that letter was false. According to Aurora
Loan Service’s Customer Account Activity Statement the principal balance on the loan
was at $643,178.83 when he entered the temporary payment plan.
125. The contract required Aurora to place the Yaus into a permanent
modification if the NPV was greater under modification than a foreclosure sale. Plaintiffs
allege the defendants breached by failing to place them in the permanent modification.
126. Plaintiff is informed and believes and alleges thereon that Plaintiff’s home
at foreclosure would not have resulted in a sale in excess of the NPV of the modification.
127. Plaintiff through counsel, demanded defendant’s calculations used to deny
plaintiff’s modification and NPV. To date, defendant failed to provide plaintiff with a
HAMP-compliant modification or any documentation showing its calculations to justify
why a permanent modification was not offered to Plaintiff.
128. Mr. Yau’s loan accelerated from $643,178.83 to $649,482.15 during the
interim.
129. Along with the notice that Mr. Yau did not qualify for the loan modification,
defendant Aurora stated that Mr. Yau may qualify for other foreclosure alternatives such
as “Repayment Plan: allows you to repay the past due amount over a
specified period of time.
Forbearance Plan: allows you to suspend or reduce your mortgage
payments for a short period of time until a long term solution is
available.
Loan Modification: allows us to modify one or more of your original
mortgage terms which will provide you with an affordable payment
based on your current financial information.
Pre-foreclosure Sale (short sale): allows you to sell your property,
pay off your mortgage for an amount less than total pay off to avoid
foreclosure and minimize damage to your credit rating.
Deed in lieu of foreclosure: allows you to voluntarily deed your
property to Aurora Loan Services to payoff your mortgage. Taking
this action may not save your home, but it may help your ability to
qualify for another mortgage in the future.”
130. The Yaus telephoned Aurora and were assured that the defendants would
work with the Yaus and that they could cure their default by having the lender
temporarily forebear the terms of the agreement so that the Yaus could catch up.
131. Consequently, Mr. Yau continued making monthly payments on his home
and entered into a Special Forbearance Plan with defendant Aurora when they sent him
the application to sign.
132. On or about April 7. 2010 Defendant Aurora sent Plaintiffs a letter stating it
had enclosed a “Special Forbearance Agreement which has been prepared on your
behalf.” On page 2 of the agreement it stated “WHEREAS, customer has requested and
Lender has agreed to allow Customer to repay the Arrearage pursuant to a loan work-out
arrangement on the terms set forth herein.”
133. However, there was no real consideration and the agreement was illusory
because the Lender had been given the right to proceed with a foreclosure sale during the
term of the agreement at its discretion and the terms never gave the Yaus an opportunity
to repay the arrearage.
134. The Plan was not the same as advertised in its prior letters to Mr. Yau or as
represented on the telephone. The forbearance Plan did not allow Mr. Yau to suspend or
reduce his mortgage payments for a short period of time until a long term solution was
available.
135. Mr. Yau made the required $4,804.72 initial payment and monthly
payments of $2,875.00 but he was only getting further in debt.
136. The true facts were that his payments were increased to $2,875.00 per
month and no other terms of his loan were modified or suspended during the forbearance
period. He was still in default and the foreclosure sales were still pending.
137. Furthermore, the terms of the Agreement violated California law.
138. Mr.Yau continued to make the $2,875.00 monthly payments until this action
was filed.
139. Instead of putting Mr. Yau into a temporary modification, they delayed
processing, requesting the same documents they already had over and over again.
140. As a result of defendants’ unlawful practices, unfair acts and failure to place
Mr. Yau into a permanent HAMP loan modification on December 1, 2009, his loan as of
October 10, 2010 approached the HAMP cap.
Total Unpaid principal $664,711.59
Interest from 12/1/09 to 10/10/10 47,916.49
Escrow/Impound Overdraft 12,983.09
Corporate advance 3,652.84
Unpaid Late Charges 120.12
Recording Fee 37.00
Suspense Balance -2,345.75
Total: $727,075.38
141. On November 5, 2010 defendant Aurora sent notice that it intended on
increasing Mr. Yau’s monthly loan payment to $5,466.57 on 3/01/11.
142. Defendant then notified Mr. Yau it intended to sell his home on 12/13/10.
143. From September 2008 when Mr. Yau was behind by approximately
$5,000.00 through present plaintiff has paid defendants approximately $54,293.08. This
is very close to the amount he would have paid the defendants if he had never defaulted
on the loan in the first place ($2402.34*24 months = $57,656.16).
144. Plaintiff further alleges the defendants were deceptive and unlawful in their
handling of the loans and business practices. Examples in the Yaus’ case, include but are
not limited to the fact that defendant has not rescinded the Notice of Default or Notice of
foreclosure sale although the Notice was filed before Quality Loan Services received
assignment and as such is outside the chain of title. Failing to send the plaintiffs a loan
modification application until after they filed a Notice of Default. Additionally, flood
hazard insurance was not required on the Yaus loan but the defendants charged Mr. Yau
$1592.00 for flood hazard insurance after the loan went into default in addition to other
fees and charges for allegedly driving by the home and such. Also, Defendant obtained
an exemption to allow defendant Aurora to offer modifications and other programs in
excess of 38% of the borrower’s income from the California Commissioner but
defendant never notified plaintiff of that fact as required under California law and never
took the foreclosure off of the home when it was notified of this failure to notify.
Defendants failed and refused to request partition even after being notified only Mr. Yau
was on the Note and Mrs. Yau at most was a trustee and was given no consideration for
her name to be placed on their filed recordings as a “co-borrower” for non-judicial
foreclosure purposes.
5. Factual Allegations of Mr. Edman representing the Forebearance Class
145. Mr. Edman obtained a loan to build a home on his land in Malibu,
California.
146. On or about 12/07/06, for valuable consideration, plaintiff, as borrower
made, executed and delivered to his original lender a written promissory note in the
amount of $850,000.00, a true and correct copy of which is attached as and
incorporated by reference herein.
147. According to the terms of the Note, Mr. Edman was required to pay
$3,141.77 per month for the first five (5) years.
148. Plaintiff, as trustor, executed and delivered a deed of trust, conveying the
real property described herein to secure payment of the principal sum and interest as
provided in the note and as part of the same transaction which was then transferred to
defendant, as beneficiary.
149. Said deed of trust was recorded against the subject property in the Official
Records in Los Angeles County, California, a true and correct copy of which is attached
as and incorporated by reference herein.
150. On or about 1/14/09, defendant caused to be recorded a notice of default
and election to sell in the Official Records in Los Angeles, County, California alleging
(a) that a breach of the obligation secured by the deed of trust had occurred, consisting
of plaintiff’s alleged failure to pay $14,267.35 as of 1/13/09, and (b) that the defendant,
as beneficiary, elected to sell, or to cause to be sold, the trust property to satisfy that
Exhibit 10
Exhibit B

obligation, a true and correct copy of which is attached as and incorporated
by reference herein.
151. A week later on or about 1/23/09, defendants delivered a document to Mr.
Edman which represented a “Special Forbearance Agreement [] has been prepared on
your behalf.”
“WHEREAS, customer has requested and Lender has agreed to allow Customer to
repay the Arrearage pursuant to a loan work-out arrangement on the terms set forth
herein…NOW, THEREFORE…Lender shall forbear from exercising any or all of its
rights and remedies..” [pg 2]
“The amount of each Plan payment specified above includes both (1) the regularly
scheduled monthly payment, plus (2) the portion of the Arrearage specified above…
in the event Customer cures the Arrearage by making all Plan payments on or before
the Expiration Date, and is current with the payments then due, and no default then
exists under the Loan Documents and Agreement, Lender shall consider the Note
and Security Instrument to be current and in effect according to their original terms
and conditions.” Attached hereto and fully incorporated herein as is a
true and correct copy of the Special Forbearance Agreement entered into postdefault.
152. Consequently, Mr. Edman made the monthly payments on his home and
entered into a Special Forbearance Plan with defendant Aurora.
Exhibit 11
Exhibit 12

concert therewith after default, but whose default was not cured and loan was not
reinstated by defendants after plaintiff tendered the requested payments.
California homeowners who were denied permanent HAMP loan
agreements after entering in a temporary HAMP agreement with
defendant Aurora whose loans are held by DBNT as Custodian, and
making their payments as requested under the temporary HAMP
agreement.
California homeowners who were denied permanent HAMP loan
agreements after entering in a temporary limited modification Special
Forbearance agreement with defendant Aurora whose loans are held
by DBNT as Custodian, and making their payments as requested
under the temporary HAMP agreement.
159. Excluded from the Class are governmental entities, defendants, and their
affiliates, subsidiaries, current or former employees, officers, directors, agents,
representatives, their family members, the members of this Court and its staff.
160. Defendants subjected plaintiffs and each of their respective Classes to the
same unfair, unlawful and deceptive practices and harmed them in the same manner.
Now plaintiffs and each of their respective Classes seek to enforce the same rights and
remedies under the same substantive law.
161. Plaintiffs do not know the exact size or identities of the members of the
proposed class, since such information is in the exclusive control of the Defendants.
Plaintiffs believe that the Class encompasses over 41 individuals California homeowners
HAMP Subclass:
Forbearance Subclass:

which could reach into the thousands whose identities can be readily ascertained from
Defendant’s books and records. Defendants filed over 4,000 foreclosure documents with
the Orange County Recorder’s office in 2010 alone. Therefore, the proposed Class are so
numerous that joinder of all members is impracticable.
162. Based on the market value of these homes in foreclosure and the size of the
payments made by the Class members under the temporary HAMP agreements and
thereafter, plaintiffs believe the amount in controversy could range anywhere from
$1,250,000 for the first 25 members to over $2 billion dollars for the entire anticipated
class.
163. All members of the Class have been subject to and affected by the same
conduct. The claims are based on wrongfully forcing the Class into default before
implementing a written foreclosure alternative program then wrongfully failing to cure
the default, reinstate the loan or permanently modifying the loan under HAMP and other
government programs after the Class made the payments as requested.
164. There are questions of law and fact that are common to the Class, and
predominate over any questions affecting only individual members of the Class. These
questions include, but are not limited to the following:
a. The validity of the contracts at issue in this case (
(5th Cir 1985) 759 F2d 466, 471);
See, Black Gold Marine,
Inc. v Jackson Marine Co.
b. The nature, scope and operation of defendants’ obligations to the borrowers
under the Servicer Participation Agreements entered into between Aurora
and Fannie Mae ( . (2nd Cir
1986) 799 F.2d 851, 856);
c. Whether the defendants must now be reclassified as unsecured creditors.
d. Whether the plaintiffs have cured their defaults and are entitled to
reconveyance upon payments of subsequent sums due and owing, if any.
e. Whether plaintiffs are entitled to reconveyance of their deeds.
f. The defendants’ obligations to the borrowers when the borrower holds a
CDS or some similar type of security/insurance against default on the
borrower’s loan;
g. Whether the existence of a CDS or similar type of security/insurance to a
borrower should be disclosed at the time the borrower signs the promissory
note and mortgage or as soon as the lender obtains a CDS contract that
could cover the loan.
h. Whether the failure to disclose the existence of a CDS or similar type of
security/insurance to a borrower before default is a breach of good faith and
fair dealing;
See, Topps Chewing Gum, Inc. v Fleer Corp
i. The Class’ right to terminate and rescind the contracts at issue in this action
( . (2nd
Cir. 1994) 17 F3d 38, 39-40).
j. The nature, scope and operation of defendants’ obligations to the borrowers
under the temporary HAMP agreements;
k. Whether the temporary HAMP agreements created any legally binding
obligation on the defendants;
l. Whether the agreements entered into by the borrowers after they were
denied a permanent HAMP agreement were void ab initio for failure or
partial failure of consideration;
m. Whether the agreements entered into by the borrowers after they were
denied a permanent HAMP agreement were illusory;
n. Whether the promissory note and mortgage agreements entered into by the
borrowers after the owner purchased a CDS or similar security/insurance
were void ab initio for failure to disclose this adverse interest or partial
failure of consideration;
o. Whether defendants actions failed to take corrective action by providing
loan modifications that produced more sustainable loan payments;
p. Whether the plaintiffs and the Class (“borrowers’”) payments after the
Notice of Default were the result of fraud of duress;
See, Leisure Time Productions, B.V. v Columbia Pictures Indus. Inc

q. Whether Aurora violated California law by using false, deceptive, and
misleading statements and omission in connection their collection of
Plaintiffs’ and the Class’s mortgage debt;
r. Whether defendants actions or failure to act constituted a breach of their
obligation of good faith and fair dealing;
s. Whether contracts implied in fact were created when Aurora required the
borrowers to continue to make payments after the temporary HAMP
agreement expired;
t. Whether Aurora was required to rescind or otherwise nullify the pending
foreclosure proceedings for all borrowers who were still being considered
for a HAMP modification after the OCC stated “HAMP guidelines now
preclude a servicer from initiating a foreclosure action until the borrower
has been deemed ineligible for a HAMP modification.”
u. Whether the disclosure of the credit default swaps or other types of
investment security/insurance were “material” under federal law;
v. Whether the plaintiff and the Class members are intended beneficiaries of
the agreement between defendant Aurora and Fannie Mae/Freddie Mac;
w. Whether defendant Aurora breached its agreement with Fannie Mae/Freddie
Mac;
x. Whether defendant Aurora failed to disclose a material fact to Fannie
Mae/Freddie Mac as required under its contract with them to the detriment
of its intended beneficiaries;
y. Whether defendants conduct as described in this Complaint constituted
fraud or duress;
z. Whether defendants were unjustly enriched;
aa.Whether defendants acts and practices described herein constitute unfair or
deceptive business practices under California Unfair Competition Law
(“UCL”)
bb.Whether injunctive relief is appropriate
cc.Whether specific performance is appropriate
dd.Whether punitive or exemplary damages are appropriate
165. The claims of the individual named Plaintiffs are typical of the claims of the
Class and do not conflict with the interests of any other members of the Class in that both
the Plaintiffs and the other members of the Class’ loans were all securitized in vehicles
that had default and other types of swaps placed on them, they were subjected to the
same conduct, the same terms, and tendered payments to the defendants after being
served with a Notice of Default pursuant to a post default foreclosure alternative
program.
166. The individually named Plaintiffs will fairly and adequately protect the
interests of the Class. They are committed to the vigorous prosecution of the Class’
claims and have retained attorneys who are qualified to pursue this litigation.
167. A class action is superior to other methods for the fast and efficient
adjudication of this controversy. A class action regarding the issues in this case does not
create any problems of manageability.
168. The putative class action meets the requirements of Federal Rules of Civil
Procedure 23(b)(2) and 23(b)(3).
169. The nature of notice to the proposed class required and/or contemplated is
the best practicable method possible and contemplated the defendant’s list when
disclosed would most likely be mailing to the property addresses affected by the filed
foreclosures and internet and other general notices are contemplated to ensure notice.
170. Defendants have acted or refused to act on grounds that apply generally to
the Class so that final injunctive relief or corresponding declaratory relief is appropriate
respecting the Class as a whole.
7. Claims for Relief
FIRST CAUSE OF ACTION
Breach of Contract/Unjust Enrichment
(All Plaintiffs and Classes against All Defendants)
171. Plaintiff incorporates the allegations in paragraphs 1 through 170 in this
cause of action as though fully set forth herein.
172. Plaintiffs bring this claim on their own behalf and on behalf of each
member of the Class and Subclass described above.
173. Defendant represented to plaintiff that by entering into the Special
Forbearance Agreement, the temporary HAMP agreement, or other written post-default
agreement, plaintiff would be able to save his home in that defendant would not sell
plaintiff’s home, and plaintiff would be able to either cure their default or receive a
permanent loan modification.
174. In reliance on defendants’ representations, plaintiff paid the defendants
after Notice of Default was served and recorded.
175. All of the terms in the forbearance agreements, temporary HAMP
agreements or other post-default agreements were drafted by the defendant, and not
negotiable.
176. Plaintiff had no bargaining power in negotiating the terms of these
agreements or the amounts of payments requested.
177. Defendants took the money then elected to sell the property through
foreclosure.
178. Plaintiff alleges said conduct constituted a breach of good faith and fair
dealing, was unconscionable, unjust and/or coercive.

179. As a result of defendant’s conduct, plaintiff was damaged financially.
180. Plaintiff seeks damages according to proof and reserves the right to seek
equitable remedies of unjust enrichment and disgorgement of profit made on the
Plaintiff under guise of performance of this agreement.
181. Plaintiff incorporates in this cause of action all of the allegations in
paragraphs 1 through 180 as though set forth in full herein.
182. Plaintiffs bring this claim on their own behalf and on behalf of each
member of the Class and the Subclass described above.
183. Defendant Aurora and the Plaintiffs and Class entered into a Temporary
HAMP agreement as alleged above, a true and correct copy of the Mr. Yau’s agreement
is attached hereto and fully incorporated herein as
184. Defendant Aurora agreed to permanently modify plaintiff and each
members of the Class’s loan if plaintiffs and the Class complied with the terms of the
temporary modification.
SECOND CAUSE OF ACTION
Unjust Enrichment/Breach of Temporary HAMP Agreement
(Plaintiffs, Eddie Yau, Gloria Yau, Rob Rhoades, Nicole Rhoades, Steve Burke,
Otis Banks, Richard Apostolos, Joanne Anderson and the HAMP Class against
all Defendants)
Exhibit 3.

185. Plaintiff and the Class complied with the terms of the temporary
modification, except for those terms and conditions that were excused or waived.
186. Defendant unjustifiably and inexcusably breached the contract by failing to
perform its obligations thereunder as described above.
187. As a result of defendant’s breach, plaintiff’s loan was not permanently
modified causing injury to the plaintiff and Class.
188. As a result of Defendants’ unjust enrichment, Plaintiffs and the Class have
sustained damages in an amount to be determined at trial (which include legal and other
fees in excess of the principal and interest due on their loans) and seek full
disgorgement and restitution of Defendants’ enrichments, benefits, and ill-gotten gains
acquired as a result of the wrongful conduct alleged above. Alternatively, Plaintiffs and
the Class seek specific performance or if specific performance cannot be granted,
reformation of the contract from temporary to permanent under the same monthly
payment terms for a term of 30 years or if reformation of the contract cannot be granted,
damages according to proof and reserve the right to seek equitable remedies to rescind
the payments made to defendants under guise of performance of this contract and
disgorgement of profits made on the Plaintiffs and the Class loans above reasonable
rental value of their homes from the time the loans originated.
THIRD CAUSE OF ACTION
Breach of Written Contracts – Third Party Beneficiary
(All Plaintiffs and Classes against all Defendants)
Exhibit 1
Exhibit 2
189. Plaintiffs repeat and re-allege every allegation in paragraphs 1 through 188
as though set forth in full herein.
190. Plaintiffs bring this claim on their own behalf and on behalf of each
member of the Class and Subclass described above.
191. Plaintiffs and the Class members are third party beneficiaries to the
contract attached hereto and fully incorporated herein as and to the Amended
and Restated contract attached hereto and fully incorporated herein as .
192. Plaintiff and the Class are intended beneficiaries under the contracts.
193. Defendants Aurora and DBTCA and DBNTC, jointly and severally,
unjustifiably and inexcusably breached the Contract by failing to perform their
obligations thereunder as described above.
194. Defendants’ breach of the contract resulted in harm to plaintiff.
195. Pursuant to California Civil Code §1559 and/or federal law, plaintiff may
enforce the contract’s provisions.
196. Plaintiffs and the Class seek specific performance or if specific
performance cannot be granted, reformation of the contract from temporary to
permanent under the same monthly payment terms for a term of 30 years or if
reformation of the contract cannot be granted, damages according to proof and reserve
the right to seek equitable remedies to rescind the payments made to defendants under
phs 1 through 196 as though fully set forth herein.
198. Plaintiffs bring this claim on their own behalf and on behalf of each
member of the Class and Subclass described above.
199. An actual controversy exists between plaintiff and defendant concerning
their respective rights and duties pertaining to the subject property and described
transactions because plaintiff alleges there was a cure and reinstatement by mutual
consent.
200. As a result, plaintiff desires a judicial determination and declaration that
the default was cured, plaintiff is entitled to reconveyance upon payment of subsequent
sums and the defendant has no ability to foreclose on plaintiff’s home.
201. Such a declaration is appropriate at this time so that plaintiff may
determine his or her rights and duties before the subject property is sold at a foreclosure
sale.
FOURTH CAUSE OF ACTION
Declaratory Relief – Cure and Reinstatement by Mutual Consent
(All plaintiffs and classes against all defendants)
FIFTH CAUSE OF ACTION
Declaratory Relief – One Action Rule
(All plaintiffs and classes against all defendants)
202. Plaintiff incorporated in this cause of action all of the allegations in
paragraphs 1 through 201 and the allegations in the Second cause of action as though
fully set forth herein.
203. Plaintiffs bring this claim on their own behalf and on behalf of each
member of the Class and Subclass described above.
204. An actual controversy exists between plaintiff and defendant concerning
their respective rights and duties pertaining to the subject property and described
transactions because plaintiff alleges the defendant violated the One Action Rule so
defendant is reduced to the status of unsecured creditor, entitling plaintiff to injunctive
relief, attorney fees and costs of suit.
205. As a result, plaintiff desires a judicial determination and declaration the
defendants are reduced to the status of unsecured creditor(s), the defendants have no
ability to foreclose on plaintiff’s home as unsecured creditors, and plaintiff is entitled to
reasonable attorney’s fees and costs of suit.
206. Such a declaration is appropriate at this time so that plaintiff may
determine his or her rights and duties before the subject property is sold at a foreclosure
sale.
SIXTH CAUSE OF ACTION
Declaratory Relief
Improper Application and/or Calculation of Payments, Fees and Costs
(All plaintiffs and classes against all defendants)
207. Plaintiff incorporates in this cause of action all of the allegations in
paragraphs 1 through 206 as though fully set forth herein.
208. Plaintiffs bring this claim on their own behalf and on behalf of each
member of the Class and Subclass described above.
209. An actual controversy exists between plaintiff and defendant concerning
their respective rights and duties pertaining to the subject property and described
transactions because plaintiff alleges a breach of the obligation for which the deed of
trust is security has not occurred or is excused because the beneficiary improperly
applied and/or calculated plaintiff’s payments, costs, fees, insurance, taxes and other
charges prior to, during, and/or after default.
210. As a result, plaintiff desires a judicial determination and declaration of
plaintiff’s and defendant’s respective rights and duties; specifically that plaintiff did not
breach his or her obligations and as such the Notice of default and election to sell was
null and void.
211. Such a declaration is appropriate at this time so that plaintiff may
determine his or her rights and duties before the subject property is sold at a foreclosure
sale.
212. Plaintiff incorporates by reference the allegations in paragraphs 1 through
211 as though fully set out herein.
213. Plaintiffs bring this claim on their own behalf and on behalf of each
member of the Class and Subclass described above.
214. Consent to the special forbearance was not real or free in that it was
obtained solely through fraud and misrepresentations as herein alleged.
215. Plaintiffs thus seek to rescind the agreements under California Civil Code
section 1689(b)(1). Plaintiffs have retained no consideration provided by defendants
Aurora or Deutsche Bank that can be tendered back to Aurora or Deutsche Bank prior to
rescission.
216. Aurora led plaintiff to believe that it wanted to help Plaintiff maintain
ownership of their homes.
217. Aurora represented it wanted to help Plaintiff maintain ownership of his
home through the language of the special forbearance agreement which states
SEVENTH CAUSE OF ACTION
(Fraud/Misrepresentation of Material Fact)
[By all plaintiffs and classes against all defendants)
“WHEREAS, Customer has requested and Lender has agreed to allow Customer to
repay the Arrearage pursuant to a loan work-out arrangement on the terms set forth
herein.” Aurora led Plaintiff to believe that their arrearage in payments that led to
default would be repaid if they made the payments under the special forbearance
agreement.
218. Plaintiff reasonably relied on defendant’s representations which led
Plaintiff to believe that the default on his home would be cured and his loan would
eventually be reinstated under the agreement.
219. At the time that Aurora made these representations, Aurora know or should
have known that they were not true.
220. Plaintiff is informed and believes and alleges thereon that Aurora would
ensure that the requested payments were never enough to repay the arrearage due to the
way the payments were applied.
221. Plaintiff is informed and believes and further alleges thereon that the notice
of default was on file before the special forbearance was offered so that Aurora could
execute the Trustee’s sale and foreclose after obtaining the payments knowing that the
arrearage would not be repaid.
222. Aurora made these representations with the purpose of persuading Plaintiff
to enter into the Special Forbearance agreements and to continue to make payments of
thousands of dollars.
223. Plaintiff reasonably relied on these representations.
224. Plaintiff would not have entered into the special forbearance agreement and
paid thousands of dollars to defendants Aurora and Deutsch Bank after default had he
known that he would not have had a genuine opportunity to save his home.
225. As a proximate result of defendant’s conduct plaintiff has been financially
injured in an amount to be proven at trial and his credit has been damaged.
226. Plaintiff incorporates in this cause of action all of the allegations in
paragraphs 1 through 225 as though fully set forth herein.
227. Plaintiffs bring this claim on their own behalf and on behalf of each
member of the Class and Subclass described above.
228. Defendants beneficiary and trustee intend to sell and unless restrained will
sell or cause to be sold, the subject property, all to plaintiff’s great and irreparable injury
in that defendant has given notice that the trustee sale of the property will take place on
March 11, 2011 or anytime thereafter, and if the sales take place as scheduled, plaintiff
will forfeit it.
229. The scheduled sales should be enjoined by virtue of the facts alleged that
said sale is wrongful.
EIGHTH CAUSE OF ACTION
Injunctive Relief
(All Plaintiffs and Classes against all Defendants)
230. Plaintiff has no other plain, speedy, or adequate remedy, and the injunction
relief prayed for below is necessary and appropriate at this time to prevent irreparable
loss to plaintiff’s interests.
231. Plaintiff incorporates in this cause of action all of the allegations in
paragraphs 1 through 230 as though fully set forth herein.
232. Plaintiffs bring this claim on their own behalf and on behalf of each
member of the Class and Subclass described above.
233. The amount of money defendant owes to plaintiff or vice versa is unknown
and cannot be determined without an accounting.
234. Plaintiff incorporates in this cause of action all of the allegations in
paragraphs 1 through 233 as though set forth in full herein.
235. Plaintiffs bring this claim on their own behalf and on behalf of each
member of the Class and Subclass described above.
NINTH CAUSE OF ACTION
Accounting
(All Plaintiffs and Classes against all Defendants)
TENTH CAUSE OF ACTION
Unfair and Unlawful Practices
(All plaintiffs and Classes against All Defendants)
236. California’s Unfair Competition Law (UCL) defines unfair competition to
include any “unlawful, unfair, or fraudulent” business act or practice. Cal Bus & Prof
Code 17200 et seq.
237. By its terms, the statute is broad in scope. “It governs „anti-competitive
business practices? as well as injuries to consumers, and has as a major purpose “the
preservation of fair business competition.” [Citations.]” (
(1999) 20 Cal.4th 163, 180.) “By defining
unfair competition to include any „ . . . business act or practice? [citation], the
UCL permits violations of other laws to be treated as unfair competition that is
independently actionable. [Citation.]” ( (2002) 27 Cal.4th 939, 949.)
In addition, under the UCL, “„a practice may be deemed unfair even if not specifically
proscribed by some other law.? [Citation.]” (
(2003) 29 Cal.4th 1134, 1143.) The remedies available under the UCL are
“cumulative . . . to the remedies or penalties available under all other laws of this state.”
(Bus. & Prof. Code, § 17205.) (2010)
238. Defendants have violated Cal Bus & Prof Code §17200 et seq with the
conduct as alleged above.
239. Such acts include but are not limited to:
a. Defendants have a pattern and practice of refusing to provide permanent
loan modifications to those borrowers who loans were placed in temporary
Cel-Tech Communications,
Inc. v. Los Angeles Cellular Telephone Co.
unlawful
Kasky v. Nike, Inc.
Korea Supply Co. v. Lockheed Martin
Corp.
Arce v Kaiser Foundations Health Plan, Inc.
HAMP plans but were covered by CDS or other securities/insurance, and
this refusal to provide permanent loan modifications constitutes an
unlawful, unfair or fraudulent business act or practice in violation of UCL,
and/or
b. Defendant Aurora engaged in “fraudulent” business practices under the
UCL because its temporary HAMP Agreements and post temporary HAMP
Agreements were intended and likely to mislead the public into believing
that if they made the additional payments that Aurora required they would
have an opportunity to cure their loan defaults with a permanent HAMP
modification or similar type of agreement prior to foreclosure. A true
opportunity to cure their defaults was “material” to Plaintiffs and the Class
within the meaning of , (2009) 46 Cal 4th 298, 325,
and/or
c. Aurora engaged in “unlawful” business practices under the UCL based on
its violations of the Security First Rule, Cal Code Civ Pro 726 which states
in pertinent part:
(a) There can be but one form of action for the recovery of any debt or
the enforcement of any right secured by mortgage upon real property
or an estate for years therein, which action shall be in accordance with
the provisions of this chapter. n the action the court may, by its
judgment, direct the sale of the encumbered real property or estate for
years therein (or so much of the real property or estate for years as
may be necessary), and the application of the proceeds of the sale to
In re Tobacco II Cases
the payment of the costs of court, the expenses of levy and sale, and
the amount due plaintiff, including, where the mortgage provides for
the payment of attorney’s fees, the sum for attorney’s fees as the court
shall find reasonable, not exceeding the amount named in the
mortgage.
(b) The decree for the foreclosure of a mortgage or deed of trust
secured by real property or estate for years therein shall declare the
amount of the indebtedness or right so secured and, unless judgment
for any deficiency there may be between the sale price and the amount
due with costs is waived by the judgment creditor or a deficiency
judgment is prohibited by Section 580b, shall determine the personal
liability of any defendant for the payment of the debt secured by the
mortgage or deed of trust and shall name the defendants against whom
a deficiency judgment may be ordered following the proceedings
prescribed in this section….
d. Aurora engaged in “unfair” business practices under the UCL because it
violated the laws and underlying legislative policies concerning: (1)
foreclosure prevention; (2) the unavailability of deficiency judgments after
a lender exercised its election to sell under non-judicial foreclosure; and (3)
the rights of contracting parties to enjoy the benefits of their agreements
after having paid valuable consideration for such benefits.
240. As a proximate result of defendant Aurora’s conduct, plaintiff was injured
financially and/or to his property rights. Aurora’s conduct as set forth herein resulted in
loss of money or property to Plaintiff.
241. Plaintiff seeks damages, disgorgement of profits on the CD Swaps,
injunctive relief in the form of correction of his/her, their damaged credit, cure of
default and reconveyance of the deed, and any other equitable relief that the court deems
appropriate.
242. Plaintiff incorporates by reference the allegations in paragraphs 1 through
241 as though fully set out herein.
243. Plaintiffs bring this claim on their own behalf and on behalf of each
member of the Class and Subclass described above.
244. As more fully described above defendants concealed the following material
facts that they had a duty disclose:
e. Defendants Deutsche Bank and Aurora concealed the material fact that
Deutsche Bank National Trust Company Americas as trustee was the
owner of the note and mortgage loan until after the plaintiffs and Class
were thrown into default on their loans.
f. Defendant Deutsche Bank concealed the material fact that the plaintiffs and
Class’s loans were covered with CDS or other similar security/insurance
after the defendant defaulted the plaintiffs and Class’s loans.
g. Defendant Aurora concealed a material fact that the way the contract was
written between Fannie Mae and Aurora, there was a substantial amount of
ELEVENTH CAUSE OF ACTION
(Fraud/Concealment of Material Fact)
(All Plaintiffs and Classes against All Defendants)
loans aimed at receiving a more sustainable and affordable mortgage under
HAMP that would not pass the NPV test because the lenders such as
defendant Deutsche Bank had purchased credit default swaps or other types
of investment security/insurance against these mortgages.
245. In plain language, the very types of mortgages the federal HAMP program
was designed to protect were the very types of mortgages that were not being protected
by the terms of the agreement between Aurora and Fannie Mae. The lenders like
defendant Deutsche Bank knew it. The servicers such like defendant Aurora knew or
should have known it and the plaintiffs and the Class in this action didn’t have a clue.
246. Aurora was under a duty by the terms of the contract with Fannie Mae to
disclose this material fact to Fannie Mae when it entered into this Agreement or when it
learned of this material fact from defendant Deutsche Bank. The defendants were under
a duty to disclose the owner of the loan.
247. The suppression of this fact was likely to mislead and did mislead Fannie
Mae, the plaintiffs and the Class.
248. The representations and failure to disclose information and suppression of
the information herein alleged to have been made by defendant were made with the
intent to induce plaintiffs and the Class to act in the manner herein alleged in reliance
thereon.
249. In reliance upon the representation that defendants were qualified to offer
the HAMP program to plaintiffs and the Class and without knowing that their loans
were asset-backed pass-through securities held by Deutsche Bank who bought credit
default swaps or other types of investment security/insurance or what that really meant,
the plaintiffs and the members of the Class continued to make payments on their
mortgage after they were in default and entered into the temporary HAMP agreements
as described above believing if they continued to make their payments they would be
accepted into a permanent HAMP modification.
250. Plaintiffs and the members of the Class, at the time these failures to
disclose and suppressions of facts occurred, and at the time plaintiff took the actions
herein alleged, was ignorant of the existence of the facts which defendant suppressed
and failed to disclose. If plaintiff had been aware of the existence of the facts not
disclosed by defendant, plaintiff would not have paid these additional amounts to the
defendants after default; may not have even signed the note or mortgage loan; and most
likely would not have relied on defendant Aurora’s representations which lulled them
into default without looking beyond the servicer for an alternate solution.
251. As a proximate result of Defendants’ fraudulent conduct as herein alleged,
plaintiffs and the Class were induced to disclose all of their private financial information
and pay Aurora additional monies without any real consideration by reason of which
plaintiffs and the Class have been damaged in the sum of their payments so made.
252. Plaintiffs and the Class seek specific performance or if specific
performance cannot be granted, reformation or if reformation cannot be granted, offset,
equitable remedies to rescind the payments made to defendants under guise of
performance of this contract and disgorgement of profits made on the Plaintiffs and the
Class loans above reasonable rental value of their homes from the time the loans
originated.
253. The aforementioned conduct of defendant(s) was an intentional
misrepresentation, deceit, or concealment of a material fact known to the defendant(s)
with the intention on the part of the defendant(s) of thereby depriving plaintiff of
property or legal rights or otherwise causing injury, and was despicable conduct that
subjected plaintiff to a cruel and unjust hardship in conscious disregard of plaintiff’s
rights, so as to justify an award of exemplary and punitive damages.
254. Plaintiffs and the Class seek specific performance of the temporary HAMP
agreement by converting it to a permanent modification on the same terms and if
specific performance cannot be granted; rescission of all of the agreements as a result of
these failures of consideration. Plaintiffs have no other adequate remedy at law and will
suffer irreparable harm if the agreements are not rescinded and if the fees paid (which
included legal and other fees not required to be paid under their notes) are not returned.
TWELFTH CAUSE OF ACTION
Declaratory Relief/Injunction
FIRST AMENDED CLASS ACTION COMPLAINT
Yau v. Deutsche Bank National Trust Company Americas
(As between plaintiff Gloria Yau and all those similarly situated and all
defendants)
8. PRAYER FOR RELIEF
255. Plaintiff incorporates in this cause of action all of the allegations in
paragraphs 1 through 254 as though set forth in full herein.
256. Plaintiff Gloria Yau and all those similarly situated always held title in the
home described in the complaint and in the Notice of Default and Foreclosure Sale
attached hereto as exhibits.
257. Plaintiff Gloria Yau was not a signer on the Note and was not a coborrower
on the loan, in fact.
258. Defendants contend that they have the right to non-judicially foreclose on
plaintiff Gloria Yau’s home, and conduct a trustee’s sale relative to that property and
evict her.
259. Plaintiff contends that Defendants do not have a right to foreclose on her
portion of the home.
260. An actual controversy presently exists between Plaintiff Gloria Yau and
Defendants as to the existence of the ability or right to foreclose on her home and evict
her. A judicial decision is necessary and appropriate at this time so that Plaintiff Gloria
Yau and Defendants may ascertain their respective rights relative to Plaintiffs and the
Class’s homes and the appropriate injunction issued.

WHEREFORE, Plaintiffs pray for judgment
against defendants, Aurora Loan
Services, LLC, DBNTC, DBTCA and each of them, jointly and severally, as
follows:
A judicial determination and decree that:
the plaintiffs have cured their default and plaintiff is entitled to
reconveyance upon payment of subsequent sums;
the defendants, and each of them, have no legal right or authority to
foreclose on plaintiff’s home,
that the defendant is reduced to the status of an unsecured creditor,
that defendant improperly applied and/or calculated plaintiff’s payments
requiring a full accounting;
B. An accounting;
C. A permanent or final injunction to force defendants to request immediate
removal of default or foreclosure status and all other derogatory/negative
information from the Plaintiff’s credit reports and to refrain such derogatory
reporting in the future;
A permanent or final injunction, to effect full and fair relief consistent with the
law, including but not limited to forcing defendants to reconvey the deed of the
trust to the plaintiffs and Class and refrain from holding the debt out as
“secured” to any other creditors. Such injunctive relief could include, case
dismissals, rescissions of sales, reconveyance of deeds, cures of defaults,
reinstatement of loans at the principal and rate consistent with the rest of the
relief afforded by way of this Complaint.
Restitution to the Plaintiffs and the Class in amounts to be proven at trial;
Statutory damages and civil penalties;
Disgorgement of profits;
Costs of this action, including the fees and costs of experts;
Attorneys’ fees;
Prejudgment interest at the statutory rate;
Post-judgment interest;
Exemplary and Punitive Damages; and
Grant plaintiffs and the class such other and further relief as this Court finds
necessary and proper.
Plaintiffs hereby demand a jury trial.
Dated: March 11, 2011 LAW OFFICES OF LENORE ALBERT
By _______________
LENORE ALBERT, ESQ.
Attorney for the Plaintiffs and the Class

Yau_-_complaint_First_Amended_Pleading.78103044

Wrongfull foreclosure lawsuit vallejo

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CA Class Action gets a TRO; Credit Default Swaps addressed; HAMP’s bogus nature addressed

This complaint from California is remarkable in its treatment of HAMP as well as Credit Default Swaps (CDS) and the rest of the securitization scam. For research buffs, the complaint can be found here.The federal government is either utterly stupid or in cahoots with the rip-offs on Wall Street. I tend to believe it is the latter. Too many “mistakes” lately, especially those related to the “bail-outs.” The complaint sets forth a clear demonstration of how all the players in the chain (primarily the Servicer and the Securitization Trustee) are incentivized NOT to modify loans, but to foreclose. To add insult to injury, these rip-offs collect homeowners’ last money, collect the money from the government for MERELY making an ILLUSORY promise of a modification, and collect their own “insurance” (CDSs) on the loans designed to fail (“Subprime”/”Alt-A”).

As the complaint rightly points out, CDSs are line fire insurance on a neighbor’s house: the incentive for arson is too great.

Most of the claim are CA-specific because, apparently, in that state foreclosers need not re-notice a sale once it’s been postponed for pretend-loan-mod efforts, and can sell the property without further notice, notwithstanding apparent loan mod “review.”

This again goes to show: don’t rely on any loan mod promises; instead — modify, but also nullify.

Posted by Attorney Gregory Bryl at 11:44 PM

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How To Handle Bank of America Loan Modification Denials

April 30, 2011 by Filed under Loan modification advice Leave a comment One of the most tough financial institutions to deal with, it seems, when it comes to Loan Modification is Bank of America, here is the experience of successful mortgage owners when dealing with Bank of America: “For the last year I have been working with a good friend of mine in order to get her Bank of America first mortgage modified. And they finally approved the modification. Payments are going from around $1800 to $1300. To make a long story short, your income, how much you owe and other factors doesn’t determine whether you get a modification or not. Persistance is key with dealing with these people. Another thing key is putting pressure on the bank, through complaints, repeated phone calls and letters. You have to realize that Bank of America really doesn’t want to approve any modificiations, at least in California and most of the ones they do approve are completely inadequate. So it requires a lot in order to get them to approve an adequate one.” Here is Another advice: “You are going to have to play very hard ball with Bank of America. Be prepared for to call them at least twice a week for some months. The loan modification for my friend took a year. Never take no for an answer from B of A. Continue to pressure the bank and you will achieve victory. Start by calling the office of the CEO. The phone number is 704-386-5687 begin_of_the_skype_highlighting 704-386-5687 end_of_the_skype_highlighting. If that number is busy, you can call the numbers for Bank of America headquarters. The number is 704-386-5972 begin_of_the_skype_highlighting 704-386-5972 end_of_the_skype_highlighting. When you get the operator, you ask for the office of the CEO. When you get someone on the phone, explain that you need someone to help you modify the mortgage and nobody else was willing to work with you. You have been a customer with the bank for a long time and really want to work with them, but in all honesty, you are facing financial issues and you don’t want to be forced to file for bankruptcy. You also have to explain that you want to stay in your home but you need a heavy reduction in the payment, at least 50%. I know that they most likely aren’t going to give that to you, but you have to propose something. They will transfer you to a manager who should start the ball rolling. However, even with a manager helping you, it is best, at the same time to reach out to government officials and agencies so that they can apply pressure on Bank of America. You should start by reaching out to your senator and congressperson about this situation. Write them letters and request assistance. Also file a complaint on Bank of America with the OCC, Office of the Comptroller of the Currency which is the regulator of Bank of America. One tactic which I used while helping my friend is in addition to filling a complaint myself, I reached out to one of the aide’s to her congressman. I got that person to complain to the OCC about Bank of America and our situation. Drumming up external pressure on this bank is KEY. As I said before, they do not want to help you or any homeowner but if you generate enough pressure through complaints they will eventually act. But be prepared for a battle.” For those who are finding hard to get loan modification from Bank of America, try to implement these strategies, and best of luck.

Foreclosure Trustee duties and obligations

Because of the significant increase in defaults and foreclosures, mortgage servicers need to understand the duties and liabilities the law imposes upon foreclosure trustees.

Litigation based upon trustee error can slow, stop or invalidate foreclosures and impair the servicer’s ability to dispose of properties following foreclosure. When borrowers refinance or pay off during foreclosure, trustees are often responsible for the payoffs and reconveyances. After foreclosure, the trustee is responsible for distribution of surplus funds – the funds in excess of the debt due under the foreclosed deed of trust. All these responsibilities are sources of claims against trustees.

Foreclosure litigation plaintiffs often name and seek to hold lenders and servicers responsible for trustee errors on the theory that the trustee is the agent of the lender and servicer. According to Miller & Starr’s “California Real Estate,” this claim is particularly easy to make when the lender or servicer uses an in-house trustee and especially when the trustee acquires the property by credit bid for the lender or servicer at its own foreclosure sale. This article examines a trustee’s liability for damages under California law for conduct of the foreclosure sale, payoffs, reconveyances and distribution of surplus funds. The scope of a trustee’s duties differs for each of these services, and a breach of one of these duties can subject the trustee, lender and servicer to substantial compensatory damages, punitive damages and even criminal sanctions. Foreclosure sales In the I.E. Associates v. Safeco case, the California Supreme Court limited the scope of the trustee’s duties in conducting foreclosure sales. The issue in that case was whether a trustee breached its duty to a trustor by failing to ascertain the current address of the trustor where the current address was different from the address of record. The trustee did not have actual knowledge of the current address, but through reasonable diligence could have discovered it. The Supreme Court held that the trustee did not have a duty to find the current address. The court found that a foreclosure trustee is not a true trustee, such as a trustee of a person or a trustee under a trust agreement. Instead, a foreclosure trustee is merely “a middleman” between the beneficiary and the trustor who only carries out the specific duties that the deed of trust and foreclosure law specifically impose upon it.

The deed of trust and the statute are the exclusive source of the rights, duties and liabilities governing notice of nonjudicial foreclosure sales. Because neither the deed of trust nor the statute required the trustee to search for an address it did not have, the court held that the trustee had no duty to do so. The Stephens v. Hollis case reiterated the rule that a foreclosure trustee is not a true trustee: “Just as a panda is not an ordinary bear, a trustee of a deed of trust is not an ordinary trustee. ‘A trustee under a deed of trust has neither the powers nor the obligations of a strict trustee. He serves as a kind of common agent for the parties.’”

It is critical to recognize, however, that these rules of limited duty only apply to the trustee’s duty to provide proper notice of the sale. The trustee also has a broad common law duty to conduct a sale that is fair in all respects. In Hatch v. Collins, the court noted that “A trustee has a general duty to conduct the sale ‘fairly, openly, reasonably and with due diligence,’ exercising sound discretion to protect the rights of the mortgagor and others…A breach of the trustee’s duty to conduct an open, fair and honest sale may give rise to a cause of action for professional negligence, breach of an obligation created by statute, or fraud.” Examples of such a breach could be conspiring to “chill the bidding” by overstating the debt, thereby dissuading others from appearing and bidding at the sale. California Civil Code Section 2924h(g) states that it is “unlawful for any person, acting alone or in concert with others, (1) to offer to accept or accept from another any consideration of any type not to bid, or (2) to fix or restrain bidding in any manner at a sale of property conducted pursuant to a power of sale in a deed of trust or mortgage.” The code continues: “In addition to any other remedies, any person committing any act declared unlawful by this subdivision or any act which would operate as a fraud or deceit upon any beneficiary, trustor or junior [lien holder] shall, upon conviction, be fined not more than $10,000 or imprisoned in the county jail for not more than one year, or be punished by both that fine and imprisonment.” In addition to imposing criminal penalties, this section also imposes civil liability upon the trustee.

The courts will review foreclosure sale proceedings to make sure they have been fair in all respects. A trustee who violates its contractual duties under the deed of trust or its statutory or common law duties is liable to the trustor or to an affected junior lien holder for such person’s lost equity in the property. This is measured by the difference between the fair market value of the property and the liens senior to the affected person’s interest at the time of the sale. In addition, pursuant to Civil Code Section 3333, the trustee has liability for all other damages proximately caused by its wrongful conduct, whether those damages were foreseeable or not. A willful violation of these duties can subject the trustee to punitive damages under Civil Code Section 3294. Payoffs and reconveyances Civil Code Section 2943(c) requires a beneficiary or its representative, which is frequently the trustee, to provide a payoff statement to an “entitled person” within 21 days after a written request for a payoff demand. An “entitled person” means the trustor, a junior lien holder, their successors or assigns, or an escrow. Failure to provide a timely payoff demand makes the beneficiary or its representative liable to the entitled person for all actual damages such a person may sustain due to a failure to provide a timely payoff demand, plus $300 in statutory damages. Failure to provide an accurate payoff demand can have dire consequences. If the entitled person closes a sale or refinance in reliance upon a payoff demand that understates the payoff, the beneficiary must reconvey its lien. The beneficiary is then left with only an unsecured claim against the entitled person. A trustee who is responsible for such an error could have substantial liability to its beneficiary. After the note and deed of trust are paid off, Civil Code Section 2941 requires the beneficiary to deliver the original note, the deed of trust and a request for reconveyance to the trustee. Within 21 days thereafter, the trustee must record the reconveyance and deliver the original note to the trustor. If the reconveyance has not been recorded within 60 days after the payoff, upon the trustee’s written request, the beneficiary must substitute himself as trustee and record the reconveyance. If the reconveyance is not recorded within 75 days after payoff, any title company may prepare and record a release of the obligation. A person who violates any of these provisions is liable for $500 in statutory damages and all actual damages caused by the violation. These can include damages for emotional distress. A willful violation of these requirements is a misdemeanor which can subject the violator to a $400 fine, plus six months’ imprisonment in the county jail. Surplus funds Civil Code Sections 2924j and 2924k impose upon the trustee a duty to distribute surplus funds that the trustee receives at a sale to lien holders and trustors whose interests are junior to the foreclosed deed of trust. Surplus funds are defined as funds in excess of the debt due to the holder of the foreclosed lien and the costs of the foreclosure sale. As previously referenced in the I. E. Associates and Stephens cases, those courts held that with respect to the conduct of the foreclosure sale, a foreclosure trustee is not a true trustee – only a middleman. Further, in Hatch v. Collins, the court held that a breach of the trustee’s duties in the conduct of the sale does not constitute a breach of a fiduciary duty. While no case holds that a trustee is a fiduciary with respect to surplus funds, a trustee’s surplus funds duties closely resemble those of a fiduciary – a fiduciary is one who holds and manages property for the benefit of another. Fiduciaries are held to a higher standard of care than others in discharging their duties. If a trustee has a fiduciary duty in handling surplus funds, a trustee may have a duty to do more than simply follow the statute with respect to giving notice of and distributing the surplus funds. For instance, a trustee may have a duty to take reasonable steps to find an interested party whose address is unknown to the trustee if the trustee has reason to believe such an address can be found. This is particularly so because the trustee can pay for the expense of the investigation from the surplus funds. Also, a trustee as a fiduciary may face greater exposure to punitive damages, which can be awarded for breach of fiduciary duty when coupled with fraud, malice or oppression. Servicers Using In-House Foreclosure Trustees Must Beware in Mortgage Servicing > Foreclosure by John Clark Brown Jr. on Tuesday 19 June 2007 email the content item print the content item comments: 0 Servicing Management, June 2007. Because of the significant increase in defaults and foreclosures, mortgage servicers need to understand the duties and liabilities the law imposes upon foreclosure trustees. Litigation based upon trustee error can slow, stop or invalidate foreclosures and impair the servicer’s ability to dispose of properties following foreclosure. When borrowers refinance or pay off during foreclosure, trustees are often responsible for the payoffs and reconveyances. After foreclosure, the trustee is responsible for distribution of surplus funds – the funds in excess of the debt due under the foreclosed deed of trust. All these responsibilities are sources of claims against trustees. Foreclosure litigation plaintiffs often name and seek to hold lenders and servicers responsible for trustee errors on the theory that the trustee is the agent of the lender and servicer. According to Miller & Starr’s “California Real Estate,” this claim is particularly easy to make when the lender or servicer uses an in-house trustee and especially when the trustee acquires the property by credit bid for the lender or servicer at its own foreclosure sale. This article examines a trustee’s liability for damages under California law for conduct of the foreclosure sale, payoffs, reconveyances and distribution of surplus funds. The scope of a trustee’s duties differs for each of these services, and a breach of one of these duties can subject the trustee, lender and servicer to substantial compensatory damages, punitive damages and even criminal sanctions. Foreclosure sales In the I.E. Associates v. Safeco case, the California Supreme Court limited the scope of the trustee’s duties in conducting foreclosure sales. The issue in that case was whether a trustee breached its duty to a trustor by failing to ascertain the current address of the trustor where the current address was different from the address of record. The trustee did not have actual knowledge of the current address, but through reasonable diligence could have discovered it. The Supreme Court held that the trustee did not have a duty to find the current address. The court found that a foreclosure trustee is not a true trustee, such as a trustee of a person or a trustee under a trust agreement. Instead, a foreclosure trustee is merely “a middleman” between the beneficiary and the trustor who only carries out the specific duties that the deed of trust and foreclosure law specifically impose upon it. The deed of trust and the statute are the exclusive source of the rights, duties and liabilities governing notice of nonjudicial foreclosure sales. Because neither the deed of trust nor the statute required the trustee to search for an address it did not have, the court held that the trustee had no duty to do so. The Stephens v. Hollis case reiterated the rule that a foreclosure trustee is not a true trustee: “Just as a panda is not an ordinary bear, a trustee of a deed of trust is not an ordinary trustee. ‘A trustee under a deed of trust has neither the powers nor the obligations of a strict trustee. He serves as a kind of common agent for the parties.’” It is critical to recognize, however, that these rules of limited duty only apply to the trustee’s duty to provide proper notice of the sale. The trustee also has a broad common law duty to conduct a sale that is fair in all respects. In Hatch v. Collins, the court noted that “A trustee has a general duty to conduct the sale ‘fairly, openly, reasonably and with due diligence,’ exercising sound discretion to protect the rights of the mortgagor and others…A breach of the trustee’s duty to conduct an open, fair and honest sale may give rise to a cause of action for professional negligence, breach of an obligation created by statute, or fraud.” Examples of such a breach could be conspiring to “chill the bidding” by overstating the debt, thereby dissuading others from appearing and bidding at the sale. California Civil Code Section 2924h(g) states that it is “unlawful for any person, acting alone or in concert with others, (1) to offer to accept or accept from another any consideration of any type not to bid, or (2) to fix or restrain bidding in any manner at a sale of property conducted pursuant to a power of sale in a deed of trust or mortgage.” The code continues: “In addition to any other remedies, any person committing any act declared unlawful by this subdivision or any act which would operate as a fraud or deceit upon any beneficiary, trustor or junior [lien holder] shall, upon conviction, be fined not more than $10,000 or imprisoned in the county jail for not more than one year, or be punished by both that fine and imprisonment.” In addition to imposing criminal penalties, this section also imposes civil liability upon the trustee. The courts will review foreclosure sale proceedings to make sure they have been fair in all respects. A trustee who violates its contractual duties under the deed of trust or its statutory or common law duties is liable to the trustor or to an affected junior lien holder for such person’s lost equity in the property. This is measured by the difference between the fair market value of the property and the liens senior to the affected person’s interest at the time of the sale. In addition, pursuant to Civil Code Section 3333, the trustee has liability for all other damages proximately caused by its wrongful conduct, whether those damages were foreseeable or not. A willful violation of these duties can subject the trustee to punitive damages under Civil Code Section 3294. Payoffs and reconveyances Civil Code Section 2943(c) requires a beneficiary or its representative, which is frequently the trustee, to provide a payoff statement to an “entitled person” within 21 days after a written request for a payoff demand. An “entitled person” means the trustor, a junior lien holder, their successors or assigns, or an escrow. Failure to provide a timely payoff demand makes the beneficiary or its representative liable to the entitled person for all actual damages such a person may sustain due to a failure to provide a timely payoff demand, plus $300 in statutory damages. Failure to provide an accurate payoff demand can have dire consequences. If the entitled person closes a sale or refinance in reliance upon a payoff demand that understates the payoff, the beneficiary must reconvey its lien. The beneficiary is then left with only an unsecured claim against the entitled person. A trustee who is responsible for such an error could have substantial liability to its beneficiary. After the note and deed of trust are paid off, Civil Code Section 2941 requires the beneficiary to deliver the original note, the deed of trust and a request for reconveyance to the trustee. Within 21 days thereafter, the trustee must record the reconveyance and deliver the original note to the trustor. If the reconveyance has not been recorded within 60 days after the payoff, upon the trustee’s written request, the beneficiary must substitute himself as trustee and record the reconveyance. If the reconveyance is not recorded within 75 days after payoff, any title company may prepare and record a release of the obligation. A person who violates any of these provisions is liable for $500 in statutory damages and all actual damages caused by the violation. These can include damages for emotional distress. A willful violation of these requirements is a misdemeanor which can subject the violator to a $400 fine, plus six months’ imprisonment in the county jail. Surplus funds Civil Code Sections 2924j and 2924k impose upon the trustee a duty to distribute surplus funds that the trustee receives at a sale to lien holders and trustors whose interests are junior to the foreclosed deed of trust. Surplus funds are defined as funds in excess of the debt due to the holder of the foreclosed lien and the costs of the foreclosure sale. As previously referenced in the I. E. Associates and Stephens cases, those courts held that with respect to the conduct of the foreclosure sale, a foreclosure trustee is not a true trustee – only a middleman. Further, in Hatch v. Collins, the court held that a breach of the trustee’s duties in the conduct of the sale does not constitute a breach of a fiduciary duty. While no case holds that a trustee is a fiduciary with respect to surplus funds, a trustee’s surplus funds duties closely resemble those of a fiduciary – a fiduciary is one who holds and manages property for the benefit of another. Fiduciaries are held to a higher standard of care than others in discharging their duties. If a trustee has a fiduciary duty in handling surplus funds, a trustee may have a duty to do more than simply follow the statute with respect to giving notice of and distributing the surplus funds. For instance, a trustee may have a duty to take reasonable steps to find an interested party whose address is unknown to the trustee if the trustee has reason to believe such an address can be found. This is particularly so because the trustee can pay for the expense of the investigation from the surplus funds. Also, a trustee as a fiduciary may face greater exposure to punitive damages, which can be awarded for breach of fiduciary duty when coupled with fraud, malice or oppression.

Pooling and servicing agreements PSA how it works in Judicial foreclosure states like Florida

THE ROOT OF FORECLOSURE DEFENSE The Pooling and Servicing Agreement (PSA) is the document that actually creates a residential mortgage backed securitized trust and establishes the obligations and authority of the Master Servicer and the Primary Servicer. The PSA is the heart and root of all securitized based foreclosure action defenses. The PSA establishes that mandatory rules and procedures for the sales and transfers of the mortgages and mortgage notes from the originators to the Trust. It is this unbroken chain of assignments and negotiations that creates what is called “The Alphabet Problem.” In order to understand the “Alphabet Problem,” you must keep in mind that the primary purpose of securitization is to make sure the assets (e.g., mortgage notes) are both FDIC and Bankruptcy “remote” from the originator. As a result, the common structures seek to create at least two “true sales” between the originator and the Trust. One of the defenses used by the famous Foreclosure Defender, April Charney is the following: PLAINTIFF FAILED TO COMPLY WITH APPLICABLE POOLING AND SERVICING AGREEMENT LOAN SERVICING REQUIREMENTS: Plaintiff failed to provide separate Defendants with legitimate and non predatory access to the debt management and relief that must be made available to borrowers, including this Defendant pursuant to and in accordance with the Pooling and Servicing Agreement filed by the plaintiff with the Securities and Exchange Commission that controls and applies to the subject mortgage loan. Plaintiff’s non-compliance with the conditions precedent to foreclosure imposed on the plaintiff pursuant to the applicable pooling and servicing agreement is an actionable event that makes the filing of this foreclosure premature based on a failure of a contractual and/or equitable condition precedent to foreclosure which denies Plaintiff’s ability to carry out this foreclosure. You therefore have in the most basic securitized structure the originator, the sponsor, the depositor and the Trust. I refer to these parties as the A (originator), B (sponsor), C (depositor) and D (Trust) alphabet players. The other primary but non-designated player in my alphabet game is the Master Document Custodian for the Trust. The MDC is entrusted with the physical custody of all of the “original” notes and mortgages and the assignment, sales and purchase agreements. The MDC must also execute representations and attestations that all of the transfers really and truly occurred “on time” and in the required “order” and that “true sales” occurred at each link in the chain. Section 2.01 of most PSAs includes the mandatory conveyancing rules for the Trust and the representations and warranties. The basic terms of this Section of the standard PSA is set-forth below: 2.01 Conveyance of Mortgage Loans. (a) The Depositor, concurrently with the execution and delivery hereof, hereby sells, transfers, assigns, sets over and otherwise conveys to the Trustee for the benefit of the Certificateholders, without recourse, all the right, title and interest of the Depositor in and to the Trust Fund, and the Trustee, on behalf of the Trust, hereby accepts the Trust Fund. (b) In connection with the transfer and assignment of each Mortgage Loan, the Depositor has delivered or caused to be delivered to the Trustee for the benefit of the Certificateholders the following documents or instruments with respect to each Mortgage Loan so assigned: (i) the original Mortgage Note (except for no more than up to 0.02% of the mortgage Notes for which there is a lost note affidavit and the copy of the Mortgage Note) bearing all intervening endorsements showing a complete chain of endorsement from the originator to the last endorsee, endorsed “Pay to the order of _____________, without recourse” and signed in the name of the last endorsee. To the extent that there is no room on the face of any Mortgage Note for an endorsement, the endorsement may be contained on an allonge, unless state law does not so allow and the Trustee is advised by the Responsible Party that state law does not so allow. If the Mortgage Loan was acquired by the Responsible Party in a merger, the endorsement must be by “[last endorsee], successor by merger to [name of predecessor]“. If the Mortgage Loan was acquired or originated by the last endorsee while doing business under another name, the endorsement must be by “[last endorsee], formerly known as [previous name]“; A review of all of the recent “standing” and “real party in interest” cases decided by the bankruptcy courts and the state courts in judicial foreclosure states all arise out of the inability of the mortgage servicer or the Trust to “prove up” an unbroken chain of “assignments and transfers” of the mortgage notes and the mortgages from the originators to the sponsors to the depositors to the trust and to the master document custodian for the trust. As stated in the referenced PSA, the parties have represented and warranted that there is “a complete chain of endorsements from the originator to the last endorsee” for the note. And, the Master Document Custodian must file verified reports that it in fact holds such documents with all “intervening” documents that confirm true sales at each link in the chain. The complete inability of the mortgage servicers and the Trusts to produce such unbroken chains of proof along with the original documents is the genesis for all of the recent court rulings. One would think that a simple request to the Master Document Custodian would solve these problems. However, a review of the cases reveals a massive volume of transfers and assignments executed long after the “closing date” for the Trust from the “originator” directly to the “trust.” I refer to these documents as “A to D” transfers and assignments. There are some serious problems with the A to D documents. First, at the time these documents are executed the A party has nothing to sell or transfer since the PSA provides such a sale and transfer occurred years ago. Second, the documents completely circumvent the primary objective of securitization by ignoring the “true sales” to the Sponsor (the B party) and the Depositor (the C party). In a true securitization, you would never have any direct transfers (A to D) from the originator to the trust. Third, these A to D transfers are totally inconsistent with the representations and warranties made in the PSA to the Securities and Exchange Commission and to the holders of the bonds (the “Certificateholders”) issued by the Trust. Fourth, in many cases the A to D documents are executed by parties who are not employed by the originator but who claim to have “signing authority” or some type of “agency authority” from the originator. Finally, in many of these A to D document cases the originator is legally defunct at the time the document is in fact signed or the document is signed with a current date but then states that it has an “effective date” that was one or two years earlier. Hence, we have what I call the Alphabet Problem.

AFFIRMATIVE DEFENSES AND COUNTRCLAIMS RELATED TO POOLING & SERVICING AGREEMENTS 1. Plaintiff failed to comply with the foreclosure prevention loan servicing requirement imposed on Plaintiff pursuant to the National Housing Act, 12 U.S.C. 1701x(c)(5) which requires all private lenders servicing non-federally insured home loans, including the Plaintiff, to advise borrowers, including this separate Defendant, of any home ownership counseling Plaintiff offers together with information about counseling offered by the U.S. Department of Housing and Urban Development. 2. Plaintiff cannot legally pursue foreclosure unless and until Plaintiff demonstrates compliance with 12 U.S.C. 1701x(c)(5). 3. Plaintiff failed to provide separate Defendants with legitimate and non predatory access to the debt management and relief that must be made available to borrowers, including this Defendant pursuant to and in accordance with the Pooling and Servicing Agreement filed by the plaintiff with the Securities and Exchange Commission that controls and applies to the subject mortgage loan. 4. Plaintiff’s non-compliance with the conditions precedent to foreclosure imposed on the plaintiff pursuant to the applicable pooling and servicing agreement is an actionable event that makes the filing of this foreclosure premature based on a failure of a contractual and/or equitable condition precedent to foreclosure which denies Plaintiff’s ability to carry out this foreclosure. 5. The special default loan servicing requirements contained in the subject pooling and servicing agreement are incorporated into the terms of the mortgage contract between the parties as if written therein word for word and the defendants are entitled to rely upon the servicing terms set out in that agreement. 6. Defendants are third party beneficiaries of the Plaintiff’s pooling and servicing agreement and entitled to enforce the special default servicing obligations of the plaintiff specified therein. 7. Plaintiff cannot legally pursue foreclosure unless and until Plaintiff demonstrates compliance with the foreclosure prevention servicing imposed by the subject pooling and servicing agreement under which the plaintiff owns the subject mortgage loan. 8. The section of the Pooling and Servicing Agreement (PSA) is a public document on file and online at http://www.secinfo.com and the entire pooling and servicing agreement is incorporated herein. 9. The Plaintiff failed, refused or neglected to comply, prior to the commencement of this action, with the servicing obligations specifically imposed on the plaintiff by the PSA in many particulars, including, but not limited to: a. Plaintiff failed to service and administer the subject mortgage loan in compliance with all applicable federal state and local laws. b. Plaintiff failed to service and administer the subject loan in accordance with the customary an usual standards of practice of mortgage lenders and servicers. c. Plaintiff failed to extend to defendants the opportunity and failed to permit a modification, waiver, forbearance or amendment of the terms of the subject loan or to in any way exercise the requisite judgment as is reasonably required pursuant to the PSA. 10. The Plaintiff has no right to pursue this foreclosure because the Plaintiff has failed to provide servicing of this residential mortgage loan in accordance with the controlling servicing requirements prior to filing this foreclosure action. 11. Defendants have a right to receive foreclosure prevention loan servicing from the Plaintiff before the commencement or initiation of this foreclosure action. 12. Defendants are in doubt regarding their rights and status as borrowers under the National Housing Act and also under the Pooling and Servicing Agreement filed by the plaintiff with the Securities and Exchange Commission. Defendants are now subject to this foreclosure action by reason of the above described illegal acts and omissions of the Plaintiff. 13. Defendants are being denied and deprived by Plaintiff of their right to access the required troubled mortgage loan servicing imposed on the plaintiff and applicable to the subject mortgage loan by the National Housing Act and also under the Pooling and Servicing Agreement filed by the plaintiff with the Securities and Exchange Commission. 14. Defendants are being illegally subjected by the Plaintiff to this foreclosure action, being forced to defend the same and they are being charged illegal predatory court costs and related fees, and attorney fees. Defendants are having their credit slandered and negatively affected, all of which constitutes irreparable harm to Defendants for the purpose of injunctive relief. 15. As a proximate result of the Plaintiff’s unlawful actions set forth herein, Defendants continue to suffer the irreparable harm described above for which monetary compensation is inadequate. 18. Defendants have a right to access the foreclosure prevention servicing prescribed by the National Housing Act and under the Pooling and Servicing Agreement filed by the plaintiff with the Securities and Exchange Commission which right is being denied to them by the Plaintiff. 16. These acts were wrongful and predatory acts by the plaintiff, through its predecessor in interest, and were intentional and deceptive. 17. There is a substantial likelihood that Defendants will prevail on the merits of the case.

CONSUMER ALERT FRAUD WARNING REGARDING LAWSUIT MARKETERS REQUESTING UPFRONT FEES FOR SO-CALLED “MASS JOINDER” OR CLASS LITIGATION PROMISING EXTRAORDINARY HOME MORTGAGE RELIEF

The California Department of Real Estate has issued the following
“CONSUMER ALERT” warning consumers about claims being made by marketers
of “Mass Joinder” Lawsuits. I have provided two links to the California
Department’s Website containing the text of the “Alert,” but have also
re-posted it in its entirety to help broaden the distribution of the
document. Mandelman

California Department of Real Estate ** CONSUMER ALERT **
FRAUD WARNING REGARDING LAWSUIT MARKETERS REQUESTING UPFRONT FEES FOR
SO-CALLED “MASS JOINDER” OR CLASS LITIGATION PROMISING EXTRAORDINARY
HOME MORTGAGE RELIEF
By Wayne S. Bell, Chief Counsel, California Department of Real Estate
I. HOME MORTGAGE RELIEF THROUGH LITIGATION (and “Too Good to Be True”
Claims Regarding Its Use to Avoid and/or Stop Foreclosure, Obtain Loan
Principal Reduction, and to Let You Have Your Home “Free and Clear” of
Any Mortgage).
This alert is written to warn consumers about marketing companies,
unlicensed entities, lawyers, and so-called attorney-backed,
attorney-affiliated, and lawyer referral entities that offer and sell
false hope and request the payment of upfront fees for so-called “mass
joinder” or class litigation that will supposedly result in
extraordinary home mortgage relief.
The California Department of Real Estate (“DRE” or “Department”)
previously issued a consumer alert and fraud warning on loan
modification and foreclosure rescue scams in California. That alert was
followed by warnings and alerts regarding forensic loan audit fraud,
scams in connection with short sale transactions, false and misleading
designations and claims of special expertise, certifications and
credentials in connection with home loan relief services, and other real
estate and home loan relief scams.

The Department continues to administratively prosecute those who engage
in such fraud and to work in collaboration with the California State
Bar, the Federal Trade Commission, and federal, State and local criminal
law enforcement authorities to bring such frauds to justice.
On October 11, 2009, Senate Bill 94 was signed into law in California,
and it became effective that day. It prohibited any person, including
real estate licensees and attorneys, from charging, claiming, demanding,
collecting or receiving an upfront fee from a homeowner borrower in
connection with a promise to modify the borrower’s residential loan or
some other form of mortgage loan forbearance.
Senate Bill 94’s prohibitions seem to have significantly impacted the
rampant fraud that was occurring and escalating with respect to the
payment of upfront fees for loan modification work.
Also, forensic loan auditors must now register with the California
Department of Justice and cannot accept payments in advance for their
services under California law once a Notice of Default has been
recorded. There are certain exceptions for lawyers and real estate
brokers.
On January 31, 2011, an important and broad advance fee ban issued by
the Federal Trade Commission became effective and outlaws providers of
mortgage assistance relief services from requesting or collecting
advance fees from a homeowner.
Discussions about Senate Bill 94, the Federal advance fee ban, and the
Consumer Alerts of the DRE, are available on the DRE’s website at
www.dre.ca.gov.
Lawyer Exemption from the Federal Advance Fee Ban –
The advance fee ban issued by the Federal Trade Commission includes a
narrow and conditional carve out for attorneys.
If lawyers meet the following four conditions, they are generally exempt
from the rule:
1. They are engaged in the practice of law, and mortgage assistance
relief is part of their practice.
2. They are licensed in the State where the consumer or the
dwelling is located.
3. They are complying with State laws and regulations governing the
“same type of conduct the [FTC] rule requires”.
4. They place any advance fees they collect in a client trust
account and comply with State laws and regulations covering such
accounts. This requires that client funds be kept separate from the
lawyers’ personal and/or business funds until such time as the funds
have been earned.
It is important to note that the exemption for lawyers discussed above
does not allow lawyers to collect money upfront for loan modifications
or loan forbearance services, which advance fees are banned by the more
restrictive California Senate Bill 94.
But those who continue to prey on and victimize vulnerable homeowners
have not given up. They just change their tactics and modify their
sales pitches to keep taking advantage of those who are desperate to
save their homes. And some of the frauds seeking to rip off desperate
homeowners are trying to use the lawyer exemption above to collect
advance fees for mortgage assistance relief litigation.
This alert and warning is issued to call to your attention the often
overblown and exaggerated “sales pitch(es)” regarding the supposed value
of questionable “Mass Joinder” or Class Action Litigation.
Whether they call themselves Foreclosure Defense Experts, Mortgage Loan
Litigators, Living Free and Clear experts, or some other official,
important or impressive sounding title(s), individuals and companies are
marketing their services in the State of California and on the Internet.
They are making a wide variety of claims and sales pitches, and offering
impressive sounding legal and litigation services, with quite
extraordinary remedies promised, with the goal of taking and getting
some of your money.
While there are lawyers and law firms which are legitimate and
qualified to handle complex class action or joinder litigation, you must
be cautious and BEWARE. And certainly check out the lawyers on the
State Bar website and via other means, as discussed below in Section
III. II.
QUESTIONABLE AND/OR FALSE CLAIMS OF THE SO-CALLED MORTGAGE LOAN DEFENSE
OR “MASS JOINDER” AND CLASS LITIGATORS.
A. What are the Claims/Sales Pitches? They are many and varied, and
include:
1. You can join in a mass joinder or class action lawsuit already
filed against your lender and stay in your home. You can stop paying
your lender.
2. The mortgage loans can be stripped entirely from your home.
3. Your payment obligation and foreclosure against your home can be
stopped when the lawsuit is filed.
4. The litigation will take the power away from your lender.
5. A jury will side with you and against your lender.
6. The lawsuit will give you the leverage you need to stay in your
home.
7. The lawsuit may give you the right to rescind your home loan,
or to reduce your principal.
8. The lawsuit will help you modify your home loan. It will give
you a step up in the loan modification process.
9. The litigation will be performed through “powerful” litigation
attorney representation.
10. Litigation attorneys are “turning the tables on lenders and
getting cash settlements for homeowners”. In one Internet advertisement,
the marketing materials say, “the damages sought in your behalf are
nothing less than a full lien strip or in otherwords [sic] a free and
clear house if the bank can’t produce the documents they own the note on
your home. Or at the very least, damages could be awarded that would
reduce the principal balance of the note on your home to 80% of market
value, and give you a 2% interest rate for the life of the loan”.
B. Discussion.
Please don’t be fooled by slick come-ons by scammers who just want your
money. Some of the claims above might be true in a particular case,
based on the facts and evidence presented before a Court or a jury, or
have a ring or hint of truth, but you must carefully examine and analyze
each and every one of them to determine if filing a lawsuit against your
lender or joining a class or mass joinder lawsuit will have any value
for you and your situation. Be particularly skeptical of all such
claims, since agreeing to participate in 4 such litigation may require
you to pay for legal or other services, often before any legal work is
performed (e.g., a significant upfront retainer fee is required).
The reality is that litigation is time-consuming (with formal discovery
such as depositions, interrogatories, requests for documents, requests
for admissions, motions, and the like), expensive, and usually
vigorously defended. There can be no guarantees or assurances with
respect to the outcome of a lawsuit.
Even if a lender or loan owner defendant were to lose at trial, it can
appeal, and the entire process can take years. Also, there is no
statistical or other competent data that supports the claims that a mass
joinder and class action lawsuit, even if performed by a licensed,
legitimate and trained lawyer(s), will provide the remedies that the
marketers promise.
There are two other important points to be made here:
First, even assuming that the lawyers can identify fraud or other legal
violations performed by your lender in the loan origination process,
your loan may be owned by an investor – that is, someone other than your
lender. The investor will most assuredly argue that your claims against
your originating lender do not apply against the investor (the purchaser
of your loan). And even if your lender still owns the loan, they are not
legally required, absent a court judgment or order, to modify your loan
or to halt the foreclosure process if you are behind in your payments.
If they happen to lose the lawsuit, they can appeal, as noted above.
Also, the violations discovered may be minor or inconsequential, which
will not provide for any helpful remedies.
Second, and very importantly, loan modifications and other types of
foreclosure relief are simply not possible for every homeowner, and the
“success rate” is currently very low in California. This is where the
lawsuit marketing scammers come in and try to convince you that they
offer you “a leg up”. They falsely claim or suggest that they can
guarantee to stop a foreclosure in its tracks, leave you with a home
“free and clear” of any mortgage loan(s), make lofty sounding but
hollow promises, exaggerate or make bold statements regarding their
litigation successes, charge you for a retainer, and leave you with less
money.
III. THE KEY HERE IS FOR YOU TO BE ON GUARD AND CHECK THE LAWYERS OUT
(Know Who You Are or May Be Dealing With) – Do Your Own Homework (Avoid
The Traps Set by the Litigation Marketing Frauds).
Before entering into an attorney-client relationship, or paying for
“legal” or litigation services, ascertain the name of the lawyer or
lawyers who will be providing the services. Then check them out on the
State Bar’s website, at www.calbar.ca.gov. Make certain that they are
licensed by the State Bar of California. If they are licensed, see if
they have been disciplined.
Check them out through the Better Business Bureau to see if the Bureau
has received any complaints about the lawyer, law firm or marketing firm
offering the services (and remember that only lawyers can provide legal
services). And please understand that this is just another resource for
you to check, as the litigation services provider might be so new that
the Better Business Bureau may have little or nothing on them (or
something positive because of insufficient public input).
Check them out through a Google or related search on the Internet. You
may be amazed at what you can and will find out doing such a search.
Often consumers who have been scammed will post their experiences,
insights, and warnings long
before any criminal, civil or administrative action has been brought
against the scammers.
Also, ask them lots of specific, detailed questions about their
litigation experience, clients and successful results. For example, you
should ask them how many mortgage-related joinder or class lawsuits they
have filed and handled through settlement or trial. Ask them for
pleadings they have filed and news stories about their so-called
successes. Ask them for a list of current and past “satisfied” clients.
If they provide you with a list, call those people and ask those former
clients if they would use the lawyer or law firm again.
Ask the lawyers if they are class action or joinder litigation
specialists and ask them what specialist qualifications they have. Then
ask what they will actually do for you (what specific services they will
be providing and for what fees and costs). Get that in writing, and take
the time to fully understand what the attorney-client contract says and
what the end result will be before proceeding with the services.
Remember to always ask for and demand copies of all documents that you
sign.
IV. CONCLUSION.
Mortgage rescue frauds are extremely good at selling false hope to
consumers in trouble with regard to home loans. The scammers continue
to adapt and to modify their schemes as soon as their last ones became
ineffective. Promises of successes through mass joinder or class
litigation are now being marketed. Please be careful, do your own
diligence to protect yourself, and be highly suspect if anyone asks you
for money up front before doing any service on your behalf. Most
importantly, DON’T LET FRAUDS TAKE YOUR HARD EARNED MONEY.
###########
Here’s another link to the California Department of Real Estate’s page
containing this fraud warning:
FRAUD WARNING REGARDING LAWSUIT MARKETERS REQUESTING UPFRONT FEES FOR
SO-CALLED “MASS JOINDER” OR CLASS LITIGATION PROMISING EXTRAORDINARY
HOME MORTGAGE RELIEF

Obama End Run To Force deal with Banks

Administration accused of bypassing Congress in negotiating deal with banks

By Dina ElBoghdady

Washington Post Staff Writer
Wednesday, March 9, 2011; 8:55 PM

Republican lawmakers on Wednesday accused the Obama administration of trying to make an end run around Congress as it negotiates a large settlement with banks involved in shoddy foreclosure practices.

In a letter to Treasury Secretary Timothy F. Geithner, Republicans criticized the scope of a 27-page draft term sheet that was recently submitted to five of the nation’s largest banks by state attorneys general and a handful of federal agencies, including the Justice Department and the new Consumer Financial Protection Bureau.

“The settlement agreement not only legislates new standards and practices for the servicing industry, it also resuscitates programs and policies that have not worked or that Congress has explicitly rejected,” the letter said. It was signed by nearly half a dozen Republicans, including Rep. Scott Garrett (N.J.), the lead sponsor.

The term sheet, which attempts to overhaul mortgage servicing practices, is part of broader settlement discussions that came under attack Wednesday by Sen. Richard C. Shelby (Ala.), who said the administration is politicizing the negotiations.

Shelby, the Senate banking committee’s ranking Republican, requested that the banking panel look into the discussions and asked that the administration refrain from entering into a settlement until Congress examines the matter.

“This proposed settlement appears to be an attempt to advance the administration’s political agenda, rather than an effort to help homeowners who were harmed by a servicer’s actual conduct,” he said at a Senate hearing on Wednesday.

The broad global settlement attempts to deal with the extensive foreclosure problems – including flawed or fraudulent paperwork and questions about improper or incomplete loan transfers – that surfaced in September and prompted some of the nation’s largest banks to temporarily halt foreclosures.

Although the administration has not publicly commented on the specifics, sources familiar with the negotiations have chronicled some of the details under consideration, including a push to fine the banks $20 billion or more and force them to modify troubled mortgages.

Under serious discussion is a proposal that would require banks to reduce the principal on loans of “underwater” borrowers – those who owe more on their mortgages than their homes are worth. House Republicans balked at the idea, arguing that Congress has rejected similar efforts that would have enabled bankruptcy judges to allow principal reductions.

They also questioned why the administration is considering forcing banks to use the fines to help such borrowers when the foreclosure paperwork errors that led to the settlement talks were unrelated to underwater loans. They asked Geithner to explain the legal basis “for using funds collected in an enforcement action to benefit parties who have not been harmed by the purported wrongdoing.”

Shelby singled out as problematic news reports about the role of the Consumer Financial Protection Bureau in these discussions. The bureau, led by Elizabeth Warren, has not officially opened its doors. But sources familiar with the matter say Warren is involved in negotiations with the banks.

“What is occurring appears to be nothing less than a regulatory shakedown by the new Bureau for Consumer Financial Protection, the FDIC, the Fed, certain attorneys general, and the administration,” Shelby said.

House Republicans also took issue with the bureau’s role. Without mentioning Warren, their letter asked Geithner to explain why an official from an agency that lacks regulatory or enforcement authority is part of the negotiations.

A spokeswoman for the bureau declined to comment.

The Republicans are echoing the view of many in the banking industry. On Wednesday, the Independent Community Bankers of America said in a statement that some of the proposals are a backdoor form of regulation and that they probably will “cause additional upheaval and confusion.”

To highlight their differences, House Republicans singled out part of the administration’s proposal that would improve its main foreclosure-prevention effort: the Home Affordable Modification Program. The initiative is far from reaching its initial goal of helping 3 million to 4 million borrowers. Next week, the House is expected to vote on a Republican-led bill that would kill the program.

Now they have to admit it they violated the law and will be liable for Billions

BofA, Wells, Citi see foreclosure probe fines

By Joe Rauch and Clare Baldwin
CHARLOTTE, N.C./NEW YORK | Fri Feb 25, 2011 9:20pm EST
CHARLOTTE, N.C./NEW YORK (Reuters) – Bank of America, Citigroup and Wells Fargo — three of the biggest banks in the United States — said they could face fines from a regulatory probe into the industry’s foreclosure practices.
The statements, made in regulatory filings on Friday, are the most direct admission yet from major banks that they could have to pay significant amounts of money to settle probes and lawsuits alleging that they improperly foreclosed on homes.
Bank of America Corp (BAC.N), the largest U.S. bank by assets, said the probe could lead to “material fines” and “significant” legal expenses in 2011.
Wells Fargo & Co (WFC.N), the largest U.S. mortgage lender, said it is likely to face fines or sanctions, such as a foreclosure moratorium or suspension, imposed by federal or state regulators. It said some government agency enforcement action was likely and could include civil money penalties.
Citigroup Inc (C.N) said it could pay fines or set up principal reduction programs.
The biggest U.S. mortgage lenders are being investigated by 50 state attorneys general and U.S. regulators for foreclosing on homes without having proper paperwork in place or without having properly reviewed paperwork before signing it.
The bad documentation threatens to slow down the foreclosure process and invalidate some repossessions.
Sources familiar with discussions among federal authorities have said they could seek as much as $20 billion in total from lenders to settle the foreclosure probe, which began last fall.
Analysts said the acknowledgment of potential foreclosure liabilities highlights the continuing struggles of the largest U.S. banks after the world financial crisis.
“Are they trying? Sure, but this is not an easy fix and these kinds of problems are going to hang around the banks for years,” said Matt McCormick, a portfolio manager with Cincinnati-based Bahl & Gaynor Investment Counsel.
McCormick said he has sold nearly all of his U.S. bank holdings because of concerns over foreclosures and other losses.
Beyond direct fines due to regulators, banks may also end up paying government-controlled mortgage giants Freddie Mac and Fannie Mae for the foreclosure delays.
Bank of America said it recorded $230 million in compensatory fees in the fourth quarter that it expects to owe the government mortgage companies.
The bank said its projected costs for settlements for all legal matters it is facing, including mortgage issues, could be $145 million to $1.5 billion beyond what it has already reserved.
Wells Fargo said that in the worst-case scenario, as of the end of 2010, it could have to pay $1.2 billion more than it has set aside to cover legal matters.
Citigroup said it could face up to about $4 billion more in losses from all sorts of lawsuits, including but not limited to those relating to mortgages and foreclosures.
Wells Fargo said in October that it plans to amend 55,000 foreclosure filings nationwide, amid signs that documentation for some foreclosures was incomplete or incorrect. Other banks made similar moves.
Other banks echoed the concern over foreclosures in a wave of annual report filings with the Securities and Exchange Commission on Friday.
Atlanta-based SunTrust said it expects regulators may issue a consent order, which will require the largest mortgage lenders to fix problems with their foreclosure processes, and potentially levy fines.
Wells Fargo shares closed 3.1 percent higher at $32.40 on the New York Stock Exchange. Bank of America shares closed 1.6 percent higher at $14.20 and Citi shares closed 0.2 percent higher at $4.70, also on the New York Stock Exchange.
(Reporting by Joe Rauch, Clare Baldwin and Maria Aspan; Editing by Gary Hill)

The law of capitalism

The Impact of Citizens United on Judicial Elections. Further why can’t I find a judge willing to follow the law. It is clear that the concerned citizen or dispossessed homeowner has no dog in the fight. The result is clear judges will support the banks the FDIC because there support and bias is now tied to the law of Capitalism. As can be seen in the sweetheart deal that One West Bank gets when they agree to buy Inymac Bank they get 90% buyback guarantee for paper they only pay a fraction of face value. Then we look to see who the major stockholders are and it becomes clear who benefits at the expense of the taxpayer. Oh whops i went to find the major stock holders where on yahoo only to find they are not publicly held that explains a lot.It’s privately held by a “consortium of private investors.” That means there’s no public stock, and presumably no stock symbol. This privacy is presumably why it gets away with being one of only four major mortgage companies who have not signed on to the “Making Home Affordable” Plan, as of 6/30/09.Read more: http://wiki.answers.com Q/OneWest_Bank_Group_LLC_stock_symbol#ixzz1E8b8GmYj
In enforcing its rights under the loans purchased from IndyMac, OneWest Bank has taken a much more aggressive approach to foreclosing on properties.

In Citizens United v. FEC,[1] the United States Supreme Court struck down the long-standing federal ban on corporate independent expenditures in elections.[ii] The transformational effect that unrestricted corporate and union spending will have on elections for legislative and executive offices has been widely denounced.[iii] But the most severe impact of Citizens United may be felt in state judicial elections.

Just last year, the Supreme Court ordered a West Virginia judge disqualified from hearing the case of a campaign supporter who had spent extravagantly to elect the judge. It did so after concluding that, by refusing to step aside from hearing his benefactor’s case, the judge had violated the opposing party’s constitutional right to a fair hearing before an impartial court.[iv] Yet, by opening the door to expanded corporate spending in judicial races, Citizens United is likely to make this type of conflict of interest more common, and to increase pressures on judges who seek to remain independent and impartial.

Equally important, heightened spending in judicial races will almost certainly exacerbate existing public concerns that justice is for sale to the highest bidder. As Justice John Paul Stevens noted in dissent, the Citizens United decision came at a time “when concerns about the conduct of judicial elections have reached a fever pitch.”[v] And after Citizens United, if retired Justice Sandra Day O’Connor’s predictions are correct, “the problem of campaign contributions in judicial elections might get considerably worse and quite soon.”[vi]

This paper examines the damage that runaway spending in judicial elections is having on our state judiciaries, and offers several policy recommendations that states should consider in responding to the threat that outsized campaign spending poses to fair and independent courts. It first summarizes recent trends in judicial election spending and documents the impact that escalating spending is having on public confidence in the courts. Next, the paper highlights seven states in which Citizens United’s impact on judicial campaigns is likely to be significant, and explains why the decision is likely to spur increased special interest spending in judicial elections. The paper concludes with proposals for responding to our increasingly expensive judicial elections: public financing for judicial campaigns; enhanced disclosure and disqualification rules; and replacing judicial elections with merit selection systems in which bipartisan committees nominate the most qualified applicants, governors appoint judges from the nominees, and voters choose whether to retain the judges at the ballot box.
Introduction

Retired Justice Sandra Day O’Connor recently explained the risks that unlimited campaign spending poses to fair and independent courts — and the likelihood that Citizens United will intensify these risks:

If you’re a litigant appearing before a judge, it makes sense to invest in that judge’s campaign. No states can possibly benefit from having that much money injected into a political judicial campaign. The appearance of bias is high, and it destroys any credibility in the courts.

[After Citizens United], we can anticipate labor unions’ trial lawyers might have the means to win one kind of an election, and that a tobacco company or other corporation might win in another election. If both sides open up their spending, mutually assured destruction is probably the most likely outcome. It would end both judicial impartiality and public perception of impartiality.[vii]

The threat to our state courts is real — and serious. Thirty-nine states use elections to select some or all of their judges.[viii] According to the National Center on State Courts, nearly 9 in 10 — fully 87% — of all state judges run in elections, either to gain a seat on the bench in the first place, or to keep the seat once there.[ix] In a 2001 poll of state and local judges, more than 90% of all elected judges nationwide said they are under pressure to raise money in election years, and almost every elected judge on a state high court — 97% — said they were under a “great deal” or at least some pressure to raise money in the years they faced election.[x]

Corporations and special interests are already major spenders in judicial campaigns. As repeat players in high-stakes litigation, these groups have strong incentives to support judges they believe are likely to favor their interests. This is particularly true on state high courts, where electing a majority or a crucial swing vote can make the difference in litigation involving multi-million dollar claims. As a result, business interests and lawyers account for nearly two-thirds of all contributions to state supreme court candidates. Pro-business groups have a distinct advantage: in 2005-2006, for example, they were responsible for 44% of all contributions to supreme court candidates, compared with 21% for lawyers.[xi] In 2006, pro-business groups were responsible for more than 90% of all spending by interest groups on television advertising in supreme court campaigns.[xii]

This special interest spending has occurred in judicial elections despite the fact that approximately half the states previously banned or sharply restricted corporations from using treasury funds for campaign advocacy. None of these restrictions is permissible after Citizens United. The inevitable result will be increased corporate spending in judicial elections — and increased threats to independent and impartial courts.

Commercial Mortgage Modification: Modify Your Small Business Mortgage to Avoid Commercial Bankruptcy

Timothy McCandless Esq. and Associates
Offices Statewide

(909)890-9192
(925)957-9797
FAX (909) 382-9956
tim@Prodefenders.com

http://www.timothymccandless.com

Introduction

If you are a small business owner facing a large balloon payment you can not refinance or payments which are becoming increasingly less affordable, you may be considering closing your doors, filing bankruptcy, or just letting it all go. But there may be another alternative for you, which is being heavily encouraged by the government: Commercial Mortgage Modification. (A commercial mortgage modification is an alteration to your existing loan that would make the terms easier for you to afford.)

What is your best option?

It depends on several factors. They are: the cause of the problem, whether a modification will “work,” your long term goals, and the pros and cons of applying for a commercial mortgage modification.

1) What is the Cause of Your Cashflow Problem?

Commercial mortgage defaults fall into one of two categories: 1) debt service default and 2) balloon payment default. The latter of these categories is a bit easy to explain; i.e., after 3 years of payments on your commercial mortgage, you do not have a lump sum principal payment per the loan agreement and cannot refinance for one reason or another (these days, the economy has practically halted all lending so it should be no surprise). However, a debt service default arises from another problem: insufficient cash flow.

As a business owner and a commercial borrower interested in a commercial mortgage modification, it will serve you best to identify when your cash flow problem began, whether it was from a) drop in business, b) increased defaults on your own receivables, c) an increase in other recurring expenses, d) a single event, such as a lawsuit or partner’s bankruptcy, e) some combination of the above, or f) some other circumstance. Identifying the cause of the problem will help you and your lender to identify the most fitting solution.

2) Will mortgage modification work?

The importance of this second consideration to commercial mortgage modification cannot be overstated. It is neither in the lenders’ best interest, nor many times your own, to delay the inevitable: foreclosure. Some factors are:

a. Prospects for your business. Have you landed new contracts? Is business picking up? Is something set to happen in the industry that will help your business? Are you expanding into another more lucrative area? What are your prospects and how will they help to resolve the cause identified in your response to #1 above?

b. Debt Service Coverage Ratio after modification. Your “debt service coverage ratio” is a calculation of whether the money coming into your business is sufficient to cover the outflow, and by how much (or if not, by how much?) A DSCR of below 1 is desired, with a DSCR of over 1 indicating insufficient cash flow. The question the bank is most interested in is, if the loan is modified, will your coverage ratio be low enough to service your debt without default, and is the new proposed ratio sustainable based on your prospects (see 2.a. above)?

c. What is your exit plan? Finally, to determine whether the plan will work, you must be able to identify an exit strategy, or a plan for what happens at the end of the loan. If the term is only set out for a few more years, where will the next balloon payment come from? If the interest is reduced sufficiently to ix your current cash flow situation, what will happen if/when the interest rate goes back up, or when the balloon payment comes due? Your exit plan (and the bank’s) should never be overlooked when considering a commercial mortgage modification.

3) What are your long term goals?

For the business owner considering a commercial mortgage modification, an assessment of the company’s future, and the mortgage holder’s own goals can help in deciding whether a modification is the answer to your problems, or an exercise in futility. For some business owners, mortgage default and allowing the bank to exercise its interest in the security may be financially superior to the alternative of fighting to keep the business going. If your long terms goals do not sync with the mortgage modification plan, then even if you obtain a commercial mortgage modification, it is likely to fail sometime later down the road.

4) Consider the pros and cons of bankruptcy

The United States commercial bankruptcy statutes including Chapter 11 are specifically aimed to aid persons who are unable to pay business debt. The filing fee for a chapter 11 is $1000.00, and a debt management plan must accompany your filing. Keep in mind, Chapter 11 does not discharge business debt. Rather, the assets of the business will be used to repay its obligations over a specified period of time, commonly 3 years. Additionally, the attorney fees are high. So high that often the bankruptcy judge will order your firm liquidated to pay the fees.

Conclusion:

Commercial bankruptcy may be able to be avoided, if you still have some cash flow into the business and you can restructure your debts, including commercial mortgage modification, to improve your debt service coverage ratio (i.e., so you are back in the black every month). Commercial mortgage modification should be considered part of a long term, serious plan, and not a quick fix or a temporary way to stall an eventually unavoidable foreclosure. The cause of the problem, whether modification will work, your long term goals, and the pros and cons of bankruptcy should be among your major considerations.

Modifying a Land Loan

Timothy McCandless Esq. and Associates
Offices Statewide

(909)890-9192
(925)957-9797
FAX (909) 382-9956
tim@Prodefenders.com

http://www.timothymccandless.com

(Adapted from the October 30, 2009 Policy Statement on Prudent Commercial Real Estate Loan Workouts)

Introduction

In response to the residential mortgage crisis, and in anticipation of the looming commercial mortgage crisis of much greater potential magnitude, the federal banking regulators got together and issued a policy statement to encourage lenders to modify commercial mortgages and other loans secured by commercial real estate. Attachment 1 to the Policy Statement featured six example scenarios to help lenders to understand that the question isn’t whether you modify a loan, but rather how you modify a loan, that may result in regulatory penalization.

From the statement: “[t]he regulators have found that prudent CRE loan workouts are often in the best interest of the financial institution and the borrower. Examiners are expected to take a balanced approach in assessing the adequacy of an institution’s risk management practices for loan workout activity. Financial institutions that implement prudent CRE loan workout arrangements after performing a comprehensive review of a borrower’s financial condition will not be subject to criticism for engaging in these efforts even if the restructured loans have weaknesses that result in adverse credit classification. In addition, renewed or restructured loans to borrowers who have the ability to repay their debts according to reasonable modified terms will not be subject to adverse classification solely because the value of the underlying collateral has declined to an amount that is less than the loan balance. ”

What follows is the regulator’s example of modifying a Land Loan.

Note:

* The financial regulators consist of the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), the Office of Thrift Supervision (OTS), and the Federal Financial Institutions Examination Council (FFIEC) State Liaison Committee (collectively, the regulators).

BASE CASE: Three years ago, the lender originated a $3.25 million loan to a borrower for the purchase of raw land that the borrower was seeking to have zoned for residential use. The loan had a three-year term and required monthly interest-only payments at a market rate that the borrower has paid from existing financial resources. An appraisal obtained at origination reflected an “as is” market value of $5 million, which resulted in a 65 percent LTV. The borrower was successful in obtaining the zoning change and has been seeking construction financing for a townhouse development and to repay the land loan. At maturity, the borrower requested an extension to provide additional time to secure construction financing that would include repayment of the land loan.

SCENARIO 1: The borrower provided the lender with current financial information, demonstrating the ability to make principal and interest payments. Further, the borrower made a principal payment of $250,000 in exchange for an extension of the maturity date of the loan. The borrower also pledged additional unencumbered collateral, granting the lender a first lien on an office building with an “as stabilized” market value of $1 million. The financial information also demonstrates that cash flow from the borrower’s personal assets and the office building generate sufficient stable cash flow to amortize the land loan over a reasonable period of time. A recent appraisal of the raw land reflects an “as is” market value of $3 million, which results in a 75 percent LTV when combined with the additional collateral and the principal reduction. The lender restructured a $3 million loan with monthly principal and interest payments for another year at a market rate that provides for the incremental credit risk.

*
Classification: The lender internally graded the loan as pass due to the adequate cash flow to pay principal and interest from the borrower’s personal assets and the office building. Also the borrower provided a curtailment and additional collateral to maintain a reasonable LTV. The examiner agreed with the lender’s internal grade.
*
Nonaccrual Treatment: The lender maintained the loan on accrual status, as the borrower has sufficient funds to cover the debt service requirements for the next year. Full repayment of principal and interest is reasonably assured from the collateral and the borrower’s financial resources. The examiner concurred with the lender’s accrual treatment.
*
TDR Treatment: The lender concluded that while the borrower has been affected by declining economic conditions, the level of deterioration does not warrant TDR treatment. The borrower was not experiencing financial difficulties because the borrower has the ability to service the renewed loan, which was prudently underwritten and has a market rate of interest. The examiner concurred with the lender’s rationale and TDR treatment.

SCENARIO 2: The borrower provided the lender with current financial information that indicated the borrower is unable to continue to make interest-only payments. The borrower has been sporadically delinquent up to 60 days on payments. The borrower is still seeking a loan to finance construction of the townhouse development, but has not been able to obtain a takeout commitment. A recent appraisal of the property reflects an “as is” market value of $3 million, which results in a 108 percent LTV. The lender extended a $3.25 million loan at a market rate of interest for one year with principal and interest due at maturity.

*
Classification: The lender internally graded the loan as pass because the loan is currently not past due and at a market rate of interest. Also, the borrower is trying to obtain takeout construction financing. The examiner disagreed with the internal grade and adversely classified the loan. The examiner concluded that the loan was not restructured on reasonable repayment terms because the borrower does not have the capacity to service the debt and full repayment of principal and interest is not assured. The examiner classified $550,000 loss ($3.25 million loan balance less $2.7 million, based on the current appraisal of $3 million less estimated cost to sell of 10 percent or $300,000). The examiner classified the remaining $2.7 million balance substandard. This classification treatment recognizes the credit risk in the collateral dependent loan based on the property’s market value less costs to sell.
*
Nonaccrual Treatment: The lender maintained the loan on accrual status. The examiner did not concur with this treatment and advised the lender to place the loan on nonaccrual because the loan was not restructured on reasonable repayment terms, the borrower does not have the capacity to service the debt, and full repayment of principal and interest is not assured.
* TDR Treatment: The lender reported the restructured loan as a TDR. The borrower is experiencing financial difficulties as indicated by the inability to refinance this debt and the inability to repay the loan at maturity in a manner consistent with the original exit strategy. A concession was provided by renewing the loan with a deferral of principal and interest payments for an additional year when the borrower was unable to obtain takeout financing. The examiner concurred with the lender’s TDR treatment.

Modifying a Commercial Operating Line of Credit in Connection with Owner-Occupied Real Estate

Timothy McCandless Esq. and Associates
Offices Statewide

(909)890-9192
(925)957-9797
FAX (909) 382-9956
tim@Prodefenders.com

http://www.timothymccandless.com

(Adapted from the October 30, 2009 Policy Statement on Prudent Commercial Real Estate Loan Workouts)

Introduction

What follows is the regulator’s example of modifying a C.O.L.O.C.

Note:

BASE CASE: Two years ago, the lender originated a CRE loan at a market rate to a borrower whose business occupies the property. The loan was based on a 20-year amortization period with a balloon payment due in three years. The LTV equaled 70 percent at origination. A year ago, the lender financed a $5 million interest-only operating line of credit for seasonal business operations at a market rate. The operating line of credit had a one-year maturity and was secured with a blanket lien on all the business assets. To better monitor the ongoing overall collateral position, the lender established a borrowing base reporting system, which included monthly accounts receivable aging reports. At maturity of the operating line of credit, the borrower’s accounts receivable aging report reflects a growing trend of delinquency, which is causing the borrower some temporary cash flow difficulties. The borrower has recently initiated more aggressive collection efforts.

SCENARIO 1: The lender renewed the $5 million operating line of credit for another year, requiring monthly interest payments at a market rate of interest. The borrower’s liquidity position has tightened but remains satisfactory, cash flow to service all debt is 1.2x, and both loans have been paid according to the contractual terms. The primary repayment source is from business operations, which remain satisfactory and an updated appraisal is not considered necessary.

Classification: The lender internally graded both loans as pass and is monitoring the credits. The examiner agreed with the lender’s analysis and the internal grades with the understanding that the lender is monitoring the trend in the accounts receivables aging report, and the borrower’s ongoing collection efforts.

Nonaccrual Treatment: The lender determined that both the real estate loan and the renewed operating line of credit may remain on accrual status as the borrower has demonstrated an ongoing ability to perform, has the financial capacity to pay a market rate of interest, and full repayment of principal and interest is reasonably assured. The examiner concurred with the lender’s accrual treatment.

TDR Treatment: The lender concluded that while the borrower has been affected by declining economic conditions, the renewal of the operating line of credit did not result in a TDR because the borrower is not experiencing financial difficulties and has the ability to repay both loans (which represent most of its outstanding obligations) at a market rate of interest. The lender expects full collection of principal and interest from the borrower’s operating income. The examiner concurred with the lender’s rationale and TDR treatment.

SCENARIO 2: The lender reduced the operating line of credit to $4 million and restructured the terms onto monthly interest-only payments at a below market rate. This action is expected to alleviate the business’ cash flow problem. The borrower’s company is still considered to be a going concern even though the borrower’s financial performance has continued to deteriorate and sales and profitability are declining. The trend in delinquencies in accounts receivable is worsening and has resulted in reduced liquidity for the borrower.

Cash flow problems have resulted in sporadic delinquencies on the operating line of credit. The borrower’s net operating income has declined, but reflects the capacity to generate a 1.08x debt service coverage ratio for both loans, based on the reduced rate of interest for the operating line of credit. The terms on the real estate loan remained unchanged. The lender internally updated the assumptions in the original appraisal and estimated the LTV on the real estate loan was 90 percent. The operating line of credit has an LTV of 80 percent with an overall LTV for the relationship of 85 percent for the relationship.

Classification: The lender internally graded both loans substandard due to deterioration in the borrower’s business operations and insufficient cash flow to repay all debt. The examiner agreed with the lender’s analysis and the internal grades with the understanding that the lender will monitor the trend in the business operations profitability and cash flow. The lender may need to order a new appraisal if the debt service coverage ratio continues to fall and the overall collateral margin further declines.

Nonaccrual Treatment: The lender reported both the restructured operating line of credit and the real estate loan on a nonaccrual basis. The operating line of credit was not renewed on market rate repayment terms, the borrower has an increasingly limited capacity to service the below market rate on an interest-only basis and there is insufficient support to demonstrate an ability to meet the new payment requirements. Since debt service for both loans is dependent on business operations, the borrower’s ability to continue to perform on the real estate loan is not assured. In addition, the collateral margin indicates that full repayment of all of the borrower’s indebtedness is questionable, particularly if the company fails to continue being a going concern. The examiner concurred with the lender’s nonaccrual treatment.

TDR Treatment: The lender reported the restructured operating line of credit as a TDR because (a) the borrower is experiencing financial difficulties (as evidenced by the borrower’s sporadic payment history, an increasing trend in accounts receivable delinquencies, and uncertain ability to repay the loans); and (b) the lender granted a concession on the line of credit through a below market interest rate. The lender concluded that the real estate loan should not be reported as TDR since that loan had not been restructured. The examiner concurred with the lender’s TDR treatment.

Modifying a Land Acquisition, Condominium Construction and Conversion Mortgage

Timothy McCandless Esq. and Associates
Offices Statewide

(909)890-9192
(925)957-9797
FAX (909) 382-9956
tim@Prodefenders.com

http://www.timothymccandless.com

(Adapted from the October 30, 2009 Policy Statement on Prudent Commercial Real Estate Loan Workouts)

Introduction

What follows is the regulator’s example of modifying a land acquisition, Condominium Construction and Conversion Mortgage.

Note:

BASE CASE: The lender originally extended a $50 million loan for the purchase of vacant land and the construction of a condominium project. The loan was interest-only and included an interest reserve to cover the monthly payments. The developer bought the land and began construction after obtaining purchase commitments for about a third of the planned units. Many of these pending sales were with speculative buyers who committed to buy multiple units with minimal down payments. As the real estate market softened, most of the speculative buyers failed to perform on their purchase contracts and only a limited number of the other planned units have been pre-sold.

The developer subsequently determined it was in the best interest to halt construction with the property 80 percent complete. The loan balance was drawn to $44 million to pay construction costs (including cost overruns) and interest and the borrower estimates another $10 million is needed to complete construction. Current financial information reflects that the developer does not have sufficient cash flow to service the debt; and while the developer does have equity in other assets, there is a question about the borrower’s ability to complete the project.

SCENARIO 1: The borrower agrees to grant the lender a second lien on certain assets, which provides about $5 million in additional collateral support. In return, the lender advanced the borrower $10 million to finish construction and the condominium was completed. The lender also agreed to extend the $54 million loan for 12 months at a market rate of interest that provides for the incremental credit risk to give the borrower time to market the property. The borrower agreed to pay interest whenever a unit was sold with any outstanding balance due at maturity.

The lender obtained a recent appraisal on the condominium building that reported a prospective “as complete” market value of $65 million, reflecting a 24-month sell-out period and projected selling costs of 15 percent. The $65 million prospective “as complete” market value plus the $5 million in other collateral results in a LTV of 77 percent. The lender used the prospective “as complete” market value in its analysis and decision to fund the completion and sale of the units, and to maximize its recovery on the loan.

*
Classification: The lender internally graded the $54 million loan as substandard due to the project’s limited ability to service the debt despite the 1.3x gross collateral margin. The examiner agreed with the lender’s internal grade.
*
Nonaccrual Treatment: The lender maintained the loan on an accrual status due to the protection afforded by the collateral margin. The examiner did not concur with this treatment and determined the loan should be placed on nonaccrual due to the borrower’s questionable ability to sell the units and service the debt, raising concerns as to the full repayment of principal and interest.
*
TDR Treatment: The lender reported the restructured loan as a TDR because the borrower is experiencing financial difficulties, as demonstrated by the insufficient cash flow to service the debt, concerns about the project’s viability, and the borrower’s inability to obtain financing from other sources. In addition, the lender provided a concession by advancing additional funds to finish construction and deferring payments except from sold units until the maturity date when any remaining accrued interest plus principal are due. The examiner concurred with the lender’s TDR treatment.

SCENARIO 2: A recent appraisal of the property reflects that the highest and best use would be conversion to an apartment building. The appraisal reports a prospective “as complete” market value of $60 million upon conversion to an apartment building and a $67 million prospective “as stabilized” market value upon the property reaching stabilized occupancy. The borrower agrees to grant the lender a second lien on certain assets, which provides about $5 million in additional collateral support.

In return, the lender advanced the borrower $10 million, which is needed to convert the project to an apartment complex and finish construction. The lender also agreed to extend the $54 million loan for 12 months at a market rate of interest that provides for the incremental credit risk to give the borrower time to lease the apartments. The $60 million “as complete” market value plus the $5 million in other collateral results in a LTV of 83 percent. The prospective “as complete” market value is used because the loan is funding the construction of the apartment building. The lender may utilize the prospective “as stabilized” market value when funding is provided for the lease-up period.

*
Classification: The lender internally graded the $54 million loan as substandard due to the project’s limited ability to service the debt despite the 1.2x gross collateral margin. The examiner agreed with the lender’s internal grade.
*
Nonaccrual Treatment: The lender determined the loan should be placed on nonaccrual due to the borrower’s untested ability to lease the units and service the debt, raising concerns as to the full repayment of principal and interest. The examiner concurred with the lender’s nonaccrual treatment.
* TDR Treatment: The lender reported the restructured loan as a TDR because the borrower is experiencing financial difficulties, as demonstrated by the insufficient cash flow to service the debt, concerns about the project’s viability, and the borrower’s inability to obtain financing from other sources. In addition, the lender provided a concession by advancing additional funds to finish construction and deferring payments until the maturity date without a defined exit strategy. The examiner concurred with the lender’s TDR treatment.

Modifying A Construction Loan on a Single Family Residence

Timothy McCandless Esq. and Associates
Offices Statewide

(909)890-9192
(925)957-9797
FAX (909) 382-9956
tim@Prodefenders.com

http://www.timothymccandless.com

(Adapted from the October 30, 2009 Policy Statement on Prudent Commercial Real Estate Loan Workouts)

Introduction

What follows is the regulator’s example of modifying a construction loan on a single family residence.

Note:

BASE CASE: The lender originated a $400,000 construction loan on a single family “spec” residence with a 15-month maturity to allow for completion and sale of the property. The loan required monthly interest-only payments at a market rate and was based on a LTV of 70 percent at origination. During the original loan construction phase, the borrower made all interest payments from personal funds. At maturity, the home had not sold and the borrower was unable to find another lender willing to finance this property under similar terms.

SCENARIO 1: At maturity, the lender restructured the loan for one year on an interest-only basis at a below market rate to give the borrower more time to sell the “spec” home. Current financial information indicates the borrower has limited ability to continue to pay interest from personal funds. If the residence does not sell by the revised maturity date, the borrower plans to rent the home. In this event, the lender will consider modifying the debt into an amortizing loan with a 20-year maturity, which would be consistent with this type of income-producing investment property. Any shortfall between the net rental income and loan payments would be paid by the borrower. Due to declining home values, the LTV at the renewal date was 90 percent.

*
Classification: The lender internally graded the loan substandard and is monitoring the credit. The examiner agreed with the lender’s treatment due to the borrower’s diminished ongoing ability to make payments and the reduced collateral position.
* Nonaccrual Treatment: The lender maintained the loan on an accrual basis because the borrower demonstrated an ability to make interest payments during the construction phase. The examiner did not concur with this treatment because the loan was not restructured on reasonable repayment terms, the borrower has limited capacity to service a below market rate on an interest-only basis, and the reduced collateral margin indicates that full repayment of principal and interest is questionable.
* TDR Treatment: The lender reported the restructured loan as a TDR. The borrower is experiencing financial difficulties as indicated by depleted cash reserves, inability to refinance this debt from other sources with similar terms, and the inability to repay the loan at maturity in a manner consistent with the original exit strategy. A concession was provided by renewing the loan with a deferral of principal payments, at a below market rate (compared to the rate charged on an investment property) for an additional year when the loan was no longer in the construction phase. The examiner concurred with the lender’s TDR treatment.

SCENARIO 2: At maturity of the original loan, the lender restructured the debt for one year on an interest-only basis at a below market rate to give the borrower more time to sell the “spec” home. Eight months later, the borrower rented the property. At that time, the borrower and the lender agreed to restructure the loan again with monthly payments that amortize the debt over 20 years at a market rate for a residential investment property. Since the date of the second restructuring, the borrower has made all payments for over six consecutive months.

*
Classification: The lender internally graded the restructured loan substandard. The examiner agreed with the lender’s initial substandard grade at the time of the restructuring, but now considered the loan as a pass due to the borrower’s demonstrated ability to make payments according to the modified terms for over six consecutive months.
*
Nonaccrual Treatment: The lender initially maintained the loan on nonaccrual, but returned it to an accruing status after the borrower made six consecutive monthly payments. The lender expects full repayment of principal and interest from the rental income. The examiner concurred with the lender’s accrual treatment.
*
TDR Treatment: The lender reported the first restructuring as a TDR. However, the second restructuring would not be reported as a TDR. The lender determined that the borrower is experiencing financial difficulties as indicated by depleted cash resources and a weak financial condition; however, the lender did not grant a concession on the second restructuring as the loan is at market rate and terms. The examiner concurred with the lender.

SCENARIO 3: The lender restructured the loan for one year on an interest-only basis at a below market rate to give the borrower more time to sell the “spec” home. The restructured loan has become 90+ days past due and the borrower has not been able to rent the property. Based on current financial information, the borrower does not have the capacity to service the debt. The lender considers repayment to be contingent upon the sale of the property. Current market data reflects few sales and similar new homes in this property’s neighborhood are selling within a range of $250,000 to $300,000 with selling costs equaling 10 percent, resulting in anticipated net sales proceeds between $225,000 and $270,000.

*
Classification: The lender graded $130,000 loss ($400,000 loan balance less estimated net sales proceeds of $270,000), $45,000 doubtful based on the range in the anticipated net sales proceeds, and the remaining balance of $225,000 substandard. The examiner agreed, as this classification treatment results in the recognition of the credit risk in the collateral dependent loan based on the property’s value less costs to sell. The examiner instructed management to obtain a current valuation on the property.
*
Nonaccrual Treatment: The lender placed the loan on nonaccrual when it became 60 days past due (reversing all accrued but unpaid interest) because the lender determined that full repayment of principal and interest was not reasonably assured. The examiner concurred with the lender’s nonaccrual treatment.
*
TDR Treatment: The lender plans to continue reporting this loan as a TDR until the lender forecloses on the property, and transfers the asset to the other real estate owned category. The lender determined that the borrower was continuing to experience financial difficulties as indicated by depleted cash resources, inability to refinance this debt from other sources with similar terms, and the inability to repay the loan at maturity in a manner consistent with the original exit strategy. In addition, the lender granted a concession by reducing the interest rate to a below market level. The examiner concurred with the lender’s TDR treatment.

SCENARIO 4: The lender committed an additional $16,000 for an interest reserve and extended the $400,000 loan for 12 months at a below market rate of interest with monthly interest-only payments. At the time of the examination, $6,000 of the interest reserve had been added to the loan balance. Current financial information that the lender obtained at examiner request reflects the borrower has no other repayment sources and has not been able to sell or rent the property. An updated appraisal supports an “as is” value of $317,650. Selling costs are estimated at 15 percent, resulting in anticipated net sales proceeds of $270,000.

*
Classification: The lender internally graded the loan as pass and is monitoring the credit. The examiner disagreed with the internal grade and instructed the lender to reverse the $6,000 interest capitalized out of the loan balance and interest income, and adversely classified the loan. The examiner concluded that the loan was not restructured on reasonable repayment terms because the borrower has limited capacity to service the debt and the reduced collateral margin indicated that full repayment of principal and interest is not assured. The examiner classified $130,000 loss based on the adjusted $400,000 loan balance less estimated net sales proceeds of $270,000, which was classified substandard. This classification treatment recognizes the credit risk in the collateral dependent loan based on the property’s market value less costs to sell. The examiner also criticized management for the inappropriate use of interest reserves. The remaining interest reserve of $10,000 is not subject to adverse classification because the loan should be placed on nonaccrual.
*
Nonaccrual Treatment: The lender maintained the loan on accrual status. The examiner did not concur with this treatment. The loan was not restructured on reasonable repayment terms, the borrower has limited capacity to service a below market rate on an interest-only basis, and the reduced collateral margin indicates that full repayment of principal and interest is not assured. The examiner advised the lender that the loan should be placed on nonaccrual. The lender’s decision to advance a $16,000 interest reserve was inappropriate given the borrower’s inability to repay it. The lender should reverse the capitalized interest in a manner consistent with regulatory reporting instructions and should not recognize any further interest income from the interest reserve.
* TDR Treatment: The lender reported the restructured loan as a TDR. The borrower is experiencing financial difficulties as indicated by depleted cash reserves, inability to refinance this debt from other sources with similar terms, and the inability to repay the loan at maturity in a manner consistent with the original exit strategy. A concession was provided by renewing the loan with a deferral of principal payments, at a below market rate (compared to investment property) for an additional year when the loan was no longer in the construction phase. The examiner concurred with the lender’s TDR treatment.

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Judge Rules Against Bank In Mortgage Modification Suit

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Facts and Procedural History

Frivolous Appeal

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

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Audit Uncovers Extensive Flaws in Foreclosures

By GRETCHEN MORGENSON

Published: February 15, 2012

Annie Tritt for The New York Times

Readers’ Comments

A version of this article appeared in print on February 16, 2012, on page A1 of the New York edition with the headline: Audit Uncovers Extensive Flaws in Foreclosures.

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The elephant in the room is that what we’re facing in this country today is not just a foreclosure crisis, what we’re dealing with with is much better described as a FRAUDclosure crisis.

There should be no question in anyone’s mind… there are only two paths ahead from which to choose. Both involve fighting a war… but on one path the battle is fought by lawyers in our courts… on the other, by citizens in our streets.

A MESSAGE TO OUR NATION’S LAWYERS…

It’s the biggest financial opportunity for the legal profession

SINCE THE REAR END COLLISION.

The California Example…

A Bleak Picture in California…

~~~

The Answer is Money…

What Was Your Question?

Marc Dann’s

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