Justia California Court of Appeals Opinion Summaries

Tribeca sued after First American refunded a $1 million deposit to a real estate investor out of an escrow account that Tribeca had opened. Tribeca claimed it was entitled to the deposit and asserted claims for breach of contract, breach of fiduciary duty, fraud, and negligence. The trial judge and court of appeal ruled in favor of First American. The escrow instructions did not require that the funds, which had been deposited by a third party, be subject to Tribeca’s directions. First American’s expert witness testified that its conduct fell within the standard of care and that returning the money to the depositor was proper. The court credited the testimony of that expert above the testimony of the Tribeca expert. View "Tribeca Co. v. First American Title Ins." on Justia Law

Plaintiffs filed suit against Ocwen after their lender's purchase of their residence at a nonjudicial foreclosure sale, alleging that Ocwen violated Civil Code section 2923.6, the prohibition on "dual tracking" contained in the Homeowners Bill of Rights, when it conducted a foreclosure sale of plaintiffs' property while their loan modification application was pending. The trial court sustained Ocwen’s demurrer. However, the court concluded that by alleging the submission of the loan modification application three days after receipt of the Offer Letter, and the transmittal of the additional documents requested by Ocwen on the date of request, plaintiffs have sufficiently alleged that a complete loan modification application was pending at the time Ocwen foreclosed on their home in violation of section 2923.6. Accordingly, the court reversed the judgment of the trial court. View "Valbuena v. Ocwen Loan Servicing" on Justia Law

In 2004, CashCall, a licensed lender, issued Montgomery a consumer credit account. In 2011, CashCall sold that debt to GCFS for collection. In 2012, GCFS sold the debt to Mountain Lion. Neither GCFS nor Mountain Lion is a licensed finance lender under the Finance Lenders Law. These entities are also not institutional investors within the meaning of section 22340. Mountain Lion subsequently sued Montgomery for payment on the debt. Montgomery filed a cross-complaint challenging the validity of her debt under Financial Code section 22340(a), which provides that “A licensee may sell promissory notes evidencing the obligation to repay loans made by the licensee pursuant to this division or evidencing the obligation to repay loans purchased from and made by another licensee pursuant to this division to institutional investors, and may make agreements with institutional investors for the collection of payments or the performance of services with respect to those notes.” The court of appeal affirmed dismissal of her cross-complaint. The legislative history indicates no intent to prohibit the sale of debt to noninstitutional investors. View "Montgomery v. GCFS, Inc." on Justia Law

Salazar was born in Mexico in 1945. He speaks little English and cannot write English. His wife attended school through the second grade. She does not speak, read or write English. They operate a food truck. In 1992, they purchased commercial property on Brundage Lane in Bakersfield. Most of the businesses occupying the property were run by their children, who did not pay rent. They also had rent-paying tenants. In 2005, a deed of trust and assignment of rents was recorded, listing as collateral the Brundage Property and another parcel. The debt was a promissory note for $350,000. The proceeds bought the other property. Both purport to have been made by the Salazars, who claim that the signatures were forged (presumably by their son) and not made at their direction. Notice of default and election to sell under deed of trust were recorded in 2005. Their daughter, Marina, negotiated with the lender. When the son disappeared in 2009, Salazar started making payments. Marina signed her parents’ names to a forbearance agreement that identified the Salazars as “borrower” and released all claims. In 2012, the Salazars sought quiet title. The trial court granted summary judgment on the three-year limitations period, but did not address affirmative defenses, holding that the 2005 notices triggered the statute of limitations. The court of appeal reversed. Notices of default under a void deed of trust provided notice of a cloud on title, but did not dispute or disturb the possession of the property; the statute of limitations does not bar their action. View "Salazar v. Thomas" on Justia Law

The complaint alleged that in May 2010, a notice of default was recorded against plaintiffs’ Pasadena residence. In August 2011, a notice of trustee sale was recorded. Plaintiffs retained Rex Law to negotiate a loan modification with Wells Fargo, which agreed to continue the trustee sale scheduled to October 17, 2011. On October 17, 2011, a paralegal from the Rex Law firm spoke with Wells Fargo representative Munoz, who stated that plaintiffs were “under active review for a modification and, therefore, there no longer was a trustee [sale] date scheduled.” In fact, a sale date of December 16, 2011 was scheduled. The house was sold at that sale. On December 10, 2011, the same paralegal spoke with Munoz and told her that plaintiffs’ tax returns were available. Munoz instructed him to submit the returns, but said nothing about the upcoming sale. The trial court rejected plaintiffs’ claim of promissory estoppel. The court of appeal affirmed, noting that no promise was made and that plaintiffs had no equity in the property and, therefore, no detrimental reliance. View "Granadino v. Wells Fargo Bank, N.A." on Justia Law

Plaintiffs are trustees under “Coogan Trust Accounts,” which are statutorily required accounts to preserve 15 percent of a minor’s gross earnings for artistic or creative services for the benefit of the minor until the minor turns 18 or is emancipated (Fam. Code, 6750.) They filed a class action lawsuit on behalf of themselves and others against Bank of America, alleging breach of written contract, breach of the implied covenant of good faith and fair dealing, conversion, and unlawful and unfair business practices. The complaint claimed that the bank made withdrawals from Cogan Trust Accounts, including for monthly service fees, without court approval. The trial court dismissed. The court of appeal reversed. A bank may not debit a Coogan Trust Account for service fees without court approval (section 6753 (b)). The state law prohibition on a debit by a national bank is not preempted by federal law. View "Phillips v. Bank of America" on Justia Law

After an LLC defaulted on a loan that had been used to purchase property for a section 1031 exchange, the lender’s successor brought a deficiency action to enforce commercial guaranty agreements executed by defendants Bradley and Yates, the managers of the LLC. They argued the guaranties were shams, and therefore unenforceable, due to their close relationship with the borrower on the subject loan, the LLC. Defendants filed a counterclaim, asserting that attempts to enforce the guaranties constituted an unfair business practice in violation of the Unfair Competition Law (UCL) (Bus. & Prof. Code, 17200). Under California law, a lender may not pursue a deficiency judgment against a borrower where the sale of property securing a debt produces proceeds insufficient to cover the amount of the debt. Lenders may pursue deficiency judgments against guarantors, but only true guarantors. Where the borrower and the guarantor are the same, the guaranty is considered an unenforceable sham. The jury found in favor of defendants on the sham issue, but the court rejected defendants’ UCL counterclaim. The court of appeal reversed, holding that substantial evidence did not support the finding that the guaranties were shams. View "CADC/RAD Venture v. Bradley" on Justia Law

The Boyces signed a $1.155 million promissory note payable to Pacific Mortgage, secured by a deed of trust on their Santa Barbara house. Pacific Mortgage endorsed the note to Option One, which endorsed the note in blank and put it in a mortgage investment pool, of which Wells Fargo was trustee. Pacific Mortgage assigned the deed of trust to Option One. The trust deed was later assigned to Wells Fargo. Boyces stopped making payments and filed an emergency bankruptcy petition to stay foreclosure. Wells Fargo moved for relief from the automatic stay. The bankruptcy court inspected the note and allonges; found a valid "chain of control and title of the note,” rejecting a claim that the assignment was invalid; and granted relief from the stay. The district court affirmed. Wells Fargo purchased the property at the trustee's sale and filed suit to evict the Boyces. The court rejected claims that the mortgage was invalid and that Wells Fargo did not perfect title and granted summary judgment for Wells Fargo, which sold the property. The Boyces filed claims for wrongful foreclosure, violation of the Unfair Practices Act (Bus. & Prof. Code, 17200), and quiet title. The court of appeal affirmed dismissal, citing res judicata and collateral estoppel. View "Boyce v. T.D. Serv. Co." on Justia Law

Plaintiffs obtained loans to purchase their home in 2005, each secured by a deed of trust. Wells Fargo had the senior lien, and Chase had the junior lien. Wells Fargo foreclosed on the property, but the proceeds were not enough to pay off Chase’s loan. About a year later, Chase sent plaintiffs a letter, stating that plaintiffs still “owe[d]” $67,002.04 and offering to accept $16,750.56 “as settlement for [their] loan balance.” The letter purported to offer a short window of opportunity to resolve the] delinquency before the debt was accelerated. In its final sentence, the letter disavowed any “attempt to collect a debt or to impose personal liability” that “was discharged.” Chase sent a similar second letter. Chase and PRS also made collection calls to plaintiffs. Plaintiffs sued Chase and PRS on behalf of a potential class, claiming that Chase’s right to enforce its loan against them personally had been extinguished and that defendants’ letters and calls were misleading for implying that the debt was still owed. Plaintiffs cited California’s Rosenthal Act, Consumer Legal Remedies Act (CLRA), and Unfair Competition Law (UCL), and the federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692. The trial court dismissed. The court of appeal held that a borrower may sue the debt collector under the FDCPA and may sue the junior lienholder or its debt collector under the Rosenthal Act and UCL, but may not sue for violations of CLRA. View "Alborzian v. JPMorgan Chase Bank, N.A." on Justia Law

Plaintiffs purchased a home subject to a deed of trust. After they defaulted on their loan, nonjudicial foreclosure proceedings were initiated, and the beneficiary of the deed of trust, OneWest, purchased the property at the foreclosure sale. Plaintiffs sued, alleging that the sale was void due to irregularities in the foreclosure proceedings: the predicate notice of default was executed and recorded by an entity claiming to be the trustee of OneWest several weeks before OneWest signed and recorded documents formally designating that entity as such. The trial court dismissed. The court of appeal affirmed. There was no statutory defect in the manner or timing of the trustee substitution, but even if so, the entity was otherwise authorized to act for OneWest in filing the notice of default because it was alleged that the entity was at all times acting as the agent of OneWest. Alternatively, any alleged defect or omission was not substantial within the meaning of the law of foreclosure, making the subsequent sale at most voidable, and not void. Because the sale was, at worst, only voidable, the borrowers in default were required to allege tender and prejudice, which they did not do. View "Ram v. OneWest Bank" on Justia Law