Justia California Court of Appeals Opinion Summaries

Plaintiff-respondent Sharon McGill sued defendant-appellant Citibank, N.A. for unfair competition and false advertising in offering a credit insurance plan she purchased to protect her Citibank credit card account. She brought claims under California’s unfair competition law (UCL), false advertising law (FAL), and Consumer Legal Remedies Act (CLRA), seeking monetary damages, restitution, and injunctive relief to prevent Citibank from engaging in its allegedly unlawful and deceptive business practices. Citibank petitioned to compel McGill to arbitrate her claims based on an arbitration provision in her account agreement. The trial court granted the petition on McGill’s claims for monetary damages and restitution, but denied the petition on the injunctive relief claims. Citibank appealed. The Court of Appeal reversed and remanded the case for the trial court to order all of McGill’s claims to arbitration. View "McGill v. Citibank" on Justia Law

Borrowers executed the Note in favor of GACC in the amount of $62,000,000, with a maturity date of August 2016. Borrowers, as trustors, executed in favor of Chicago Title Company, as trustee, a “Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing” for the benefit of GACC with respect to the real property security—the Trust Property—which included real property in Los Angeles County. The individual defendants executed a Guaranty of “all obligations, requirements, and indemnities of Borrowers under the Loan Documents.” Through various assignments and a merger, plaintiff became the holder of the Loan Documents. In 2011, plaintiffs claimed default by failure to make various required payments and purported to accelerate the loan and claim interest at the default rate. Borrowers apparently filed a voluntary bankruptcy petition under Chapter 11. The trial court granted plaintiff summary judgment of $81,850,619.33, which included a “Yield Maintenance Amount”—i.e. a prepayment fee—of $14,007,811.30. The court of appeal reversed, holding that even though the legal issue was not raised before the trial court, the documents should be interpreted so that the prepayment obligation only accrues upon payment and not on acceleration of the Note. View "U.S. Bank Nat'l Ass'n v. Yashouafar" on Justia Law

This appeal arose from a judgment entered after a demurrer by three banks to plaintiff’s second amended complaint was sustained without leave to amend. The three banks were US Metro Bank, Wilshire State Bank, and Pacific City Bank. An employee of a corporation with responsibility to gather incoming checks made payable to the corporation and deposit those checks into the corporation’s bank account (in this case, the corporation’s accounting manager) stole some of the incoming checks and took them to a check cashing service where she forged the signature of one of the officers of the corporation and received hard cash in return. After discovery of the thefts, the corporation fired the accounting manager and tried to recoup at least some of its losses. In this case, the corporation’s recoupment effort included suing its own bank, the three check cashing services where the employee took the checks, and the three banks which received those checks from the check cashing services for deposit into those companies’ own accounts. The legal issue presented in this appeal was one of first impression in California: Does the interposition of the check cashing services between (a) the employee who stole the checks and (b) the three banks who took the checks from three check cashing companies and credited the accounts of those check cashing companies, relieve the banks of all duty of care under section 3405 of California’s Commercial Code? The Court of Appeal concluded the answer was no: the three banks were the first banks to process the checks through the banking system, and, as “first banks,” they had a duty of care in the processing of those checks “‘to make certain all endorsements [were] valid; banks subsequently taking the paper have a right to rely on the forwarding bank.’” Check cashing companies are not banks, and should not be treated as banks for purposes of California’s Uniform Commercial Code.View "HH Computer Systems v. Pacific City Bank" on Justia Law

The Bank filed a judicial foreclosure action to collect a loan secured by two parcels of real estate which had been made to a husband and wife. After the husband died, the loan went into default. The Bank and wife agreed to a private sale of one of the parcels that was her separate property and Bank filed the foreclosure action on the remaining parcel to obtain a deficiency judgment. The trial court granted the Bank's motion for summary adjudication of its judicial foreclosure cause of action and determined that the Bank was entitled to obtain a deficiency judgment against the representatives of the husband's estate (appellants). The court concluded that, because the Bank failed to show the requirements of Code of Civil Procedure 726 for creditors seeking deficiency judgments by disposing of the property at issue outside of judicial foreclosure and without appellants' consent or waiver, the Bank has waived any right to a deficiency against them. Accordingly, the court reversed the judgment of the trial court.View "First CA Bank v. McDonald" on Justia Law

Plaintiffs sought damages under the doctrine of promissory estoppel after losing their home in a foreclosure sale which they understood from a phone conversation with the bank would be postponed to a date 10 days after the actual sale date. The trial court dismissed. The court of appeal affirmed, holding that the plaintiffs failed to establish a triable issue of material fact regarding detrimental reliance or injury under the doctrine of promissory estoppel. They did not relinquish any legal right to stay the bank’s foreclosureView "Jones v. Wachovia Bank" on Justia Law

Plaintiff filed a quiet title complaint against Guild and others, alleging that the loans secured by the real property at issue were securitized, resulting in defendants' interest in the real property being extinguished, relinquished or discharged. On appeal, plaintiff argued that he can state a valid cause of action for quiet title based on allegations that the attempt to transfer the first deed of trust to the mortgage-backed "investment" trust (CWALT) did not comply with the trust's servicing and pooling agreement and was therefore void. The court concluded that plaintiff's argument was addressed in Jenkins v. JPMorgan Chase Bank, N.A., and the court agreed with Jenkins that, in this case, such allegations do not give rise to a viable preemptive action that overrides California's nonjudicial foreclosure rules. Accordingly, the court affirmed the judgment and concluded that Guild's demurrer was properly sustained.View "Kan v. Guild Mortgage" on Justia Law

The Fleets applied to have their Bank of America (BofA) home loan modified in 2009 under the Making Homes Affordable Act. The result of multiple telephone calls and letters to various BofA-related personnel, the Fleets were either (a) assured the Fleets that everything was proceeding smoothly or (b) told BofA had no knowledge of any loan modification application. Finally, in November 2011, BofA informed the Fleets they had been approved for a trial period plan under a Fannie Mae modification program. All they had to do, was to make three monthly payments starting on December 1, 2011. If they made the payments, then they would move to the next step (verification of financial hardship); if they passed that test, their loan would be permanently modified. The Fleets made the first two payments, for December 2011 and January 2012, which BofA acknowledged receiving, and therefore foreclosure proceedings had been suspended. Toward the end of January 2012, their house was sold at a trustee’s sale. Two days after the sale, a representative of the buyer showed up at the house with a notice to quit. The Fleets informed him that the house had significant structural problems, and he said he was going to rescind the sale. The Fleets continued to try to communicate with BofA regarding the property. A BofA representative left voice mail messages to the effect that BofA wanted to discuss a solution to the dispute, but otherwise it appeared that productive conversation between the Fleets and BofA and between the Fleets and the buyer had ceased. In light of this silence (which they interpreted to mean the buyer was trying to rescind the sale), the Fleets spent $15,000 to repair a broken sewer main, which was leaking sewage onto the front lawn. They were evicted in August 2012. In June 2012, the Fleets sued BofA, the trustee under their deed of trust, BofA officers and some of the employees who had been involved in handling their loan modification, and the buyer of the property and its representative. BofA’s demurrer to the first amended complaint was sustained without leave to amend as to the remaining causes of action promissory estoppel, breach of contract, fraud, and accounting. All of the BofA defendants were dismissed. The Court of Appeal reversed: "Although the Fleets’ amended complaint spreads the fraud allegations over three causes of action and contains a great deal of extraneous information, it also alleges the requisite elements of promissory fraud. [. . .] This cause of action may or may not be provable; what it definitely is not is demurrable." The Court sustained the demurrer to the Fleets' action for promissory estoppel, and affirmed the trial court in all other respects. The case was remanded for further proceedings. View "Fleet v. Bank of America" on Justia Law

In 2011, Wells Fargo foreclosed on the plaintiffs’ residential mortgage loan and purchased their home at a trustee sale conducted by First American. Plaintiffs sued, alleging, that defendants violated their deed of trust’s incorporation of a pre-foreclosure meeting requirement contained in National Housing Act (NHA) regulations and the Federal Debt Collection Practices Act (FDCPA). The trial court sustained demurrers and denied a preliminary injunction. The court of appeal reversed, finding that plaintiffs pled viable causes of action for equitable cancellation of the trustee’s deed obtained by Wells Fargo based on their allegation that Wells Fargo did not comply with the NHA requirements incorporated into the deed of trust. Because compliance was a condition precedent to the accrual of Wells Fargo’s contractual authority to foreclose on the property, if, as plaintiffs allege, the sale was conducted without such authority, it is either void or voidable by a court sitting in equity. Whether void or voidable, plaintiffs were not required to allege tender of the delinquent amount owed View "Fonteno v. Wells Fargo Bank, N.A." on Justia Law

Plaintiffs filed suit alleging, among other things, fraud and unfair business practices in the origination of plaintiffs' residential mortgage loans, and negligence in the subsequent servicing of the loans. On appeal, plaintiffs argued that the trial court erred in concluding that the complaint failed to allege fraud for which defendants are responsible and in concluding that defendants owed no duty of care to plaintiffs in the review of their applications for a loan modification. The court concluded that plaintiffs have alleged a cause of action for fraud against defendants where the complaint alleged that the loan documents concealed the terms of plaintiffs' loans and plaintiffs have alleged facts establishing defendants' liability for the alleged fraud. Accordingly, the court reversed as to plaintiffs' first, second, and sixth causes of action and remanded for further proceedings. View "Alvarez v. BAC Home Loans Servicing, L.P." on Justia Law

In 2007 Rufini purchased his Sonoma residence with a $600,000 loan. Rufini and his fiancée lived in the home until they separated. In June 2009, CitiMortgage approved Rufini for a loan modification and told him he would receive a permanent modification after making timely trial payments of $2787.93 in July, August and September. Rufini timely made the payments at the modified rate through December. In January, 2010, CitiMortgage informed him that his permanent loan modification agreement would be ready in three days. Three months later, with still no written agreement, he rented out his house to offset expenses In August Rufini learned that Citibank was denying his loan modification, because the home was not owner-occupied. He attempted to make timely mortgage payments at the modified level, but CitiMortgage returned his checks. Rufini received a notice of default in September 2010, followed by a notice of trustee’s sale scheduled for January 2011. He contacted CitiMortgage and obtained its agreement to delay the foreclosure. CitiMortgage assigned Semien to Rufini’s account, but Rufini was unable to contact him on the phone for three and a half weeks. On April 11 Rufini was informed his modification was “in final state of completion.” On May 4, his house was sold at auction. The trial court dismissed Rufini’s complaint alleging “breach of contract—promissory estoppel,” breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing, unfair business practices, negligence, and negligent misrepresentation. The appeals court reversed and remanded the claims of negligent representation and under Business and Professions Code section 17200, the unfair competition law. View "Rufini v. CitiMortgage" on Justia Law