Opinion
A147129
03-02-2018
JAMES DAVIS, Plaintiff and Appellant, v. U.S. BANK NATIONAL ASSOCIATION, Defendant and Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Mendocino County Super. Ct. No. SCUKCVG 13-63149)
James Davis appeals from a summary judgment granted in favor of U.S. Bank. He contends the trial court erred in finding he lacked standing to pursue his claims. We affirm.
The complaint was filed against "U.S. Bank National Association in its Individual Capacity and as Trustee for CSMC Mortgage Loan Trust 2007-3." Respondent identifies itself as "CSMC Mortgage-Backed Pass-Through Certificates, Series 2007-3, U.S. Bank National Association, as Trustee c/o Specialized Loan Servicing, LLC," and uses this name in its briefing.
STATEMENT OF THE CASE AND FACTS
On April 12, 2006, appellant executed a promissory note in the amount of $461,300 in favor of First National Bank of Arizona. The note was secured by a deed of trust, also executed on April 12, 2006, for the real property at 12481 Moonbeam Meadow Way in Potter Valley, California. The deed of trust named First American Title as trustee and Mortgage Electronic Registration Systems, Inc. (MERS), "acting solely as a nominee for Lender and Lender's successors and assigns," as beneficiary.
An "Allonge to Note" on First National Bank of Arizona letterhead references appellant's loan and reflects three indorsements, from First National Bank of Arizona to First National Bank of Nevada, from First National Bank of Nevada to Countrywide Home Loans, Inc., and a blank indorsement from Countrywide Home Loans, Inc.
On May 7, 2012, an assignment of deed of trust dated April 27, 2012, was recorded, assigning all beneficial interest in the deed of trust from MERS to Bank of America, N.A., Successor by Merger to BAC Home Loans Servicing LP FKA Countrywide Home Loans Servicing LP (Bank of America).
On July 10, 2012, three documents were recorded: A substitution of trustee dated July 6, 2012, by which Bank of America, as beneficiary, substituted Recontrust Company N.A. in place of the original trustee; an assignment of deed of trust dated July 6, 2012, transferring all beneficial interest in the deed of trust from Bank of America to U.S. Bank (USB) as Trustee for CSMC Mortgage Loan Trust 2007-3; and a notice of default and election to sell under deed of trust, stating that as of July 6, 2012, appellant was $32,035.95 in arrears, filed by Recontrust on behalf of USB. A notice of trustee's sale was recorded on October 12, 2012, which stated that the total amount of the unpaid balance of the obligation secured by the property to be sold, plus reasonable estimated costs, expenses and advances at the time of the initial publication of the Notice of Sale, was $477,358.37.
A "corrective" assignment of deed of trust subsequently recorded on July 29, 2013, changed the name of the deed of trust assignee to CSMC Mortgage-backed Pass-through Certificates, Series 2007-3, U.S. Bank National Association, as Trustee c/o Specialized Loan Servicing, LLC.
On July 15, 2013, a "Notice of Rescission of Declaration of Default and Demand for Sale and of Notice of Default and Election to Sell" was recorded.
Appellant filed his complaint in the present action on November 15, 2013, seeking to quiet title against claims by USB and stating that USB purported "without corroboration by relevant documentation" that it had interests in the property adverse to appellant's. Appellant recorded a lis pendens on November 25, 2013. The first amended complaint, filed on March 3, 2014, alleged two causes of action for quiet title, only the first of which is at issue here—the challenge to USB's purported interest in the property based on the $461,300 loan. USB filed a demurrer, which the trial court overruled on May 22, 2014, and USB filed its answer on June 19, 2014.
The complaint acknowledged the lien for an original amount of $461,300, secured by a "valid obligation" owed to First National Bank of Arizona and a lien in the original amount of $70,000 secured by a "valid obligation" owed to GreenPoint Mortgage Funding, Inc.
The second cause of action pertained to a junior deed of trust recorded on June 23, 2006, in favor of GreenPoint Mortgage Funding Inc., securing a home equity credit line of $168,700. The trial court subsequently entered a decree quieting title as to this junior deed of trust, stating that USB disclaimed any interest in it and no other defendant had answered the complaint as to the second cause of action within the time allowed by law.
On February 18, 2015, a second notice of default was recorded, stating that as of February 13, 2015, appellant was in arrears in the amount of $134,156.00.
On March 20, 2015, USB filed a motion for summary judgment or summary adjudication, arguing that appellant was attempting to prevent foreclosure proceedings despite his undisputed default on the $461,300 loan. After briefing and oral argument, the trial court filed its ruling granting summary adjudication as to the first cause of action on July 9, 2015 The court's order granting summary adjudication as to the first cause of action and judgment dismissing the first cause of action were filed on October 13, 2015; notice of entry of the order and judgment was filed and served on October 29, 2015.
Appellant filed his notice of appeal on December 21, 2015.
DISCUSSION
In granting summary adjudication, the trial court followed what it described as a consistent line of California cases holding that a borrower in default on a promissory note lacks standing to challenge the right of the assigned beneficiary to conduct a non-judicial foreclosure, citing Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149 (Gomes), Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497 (Jenkins), Kan v. Guild Mortgage Co. (2014) 230 Cal.App.4th 736 (Kan) and Boyce v. T.D. Ser. Co. (2015) 235 Cal.App.4th 429 (Boyce), and noting as the single and "discredited" exception Glaski v. Bank of America (2013) 218 Cal.App.4th 1079 (Glaski). The cases the trial court relied upon reasoned that permitting such a challenge would be inconsistent with and undermine the "comprehensive" and "exhaustive" statutory procedures governing nonjudicial foreclosures (Kan, at pp. 741-742; Jenkins, at p. 513; Gomes, at p. 1154), and that the borrowers were not parties to or injured by assignments of the promissory notes and deeds of trust because they remained obligated under the promissory notes. (Boyce, at pp. 362-363; Kan, at p. 742; Jenkins, at pp. 514-515.) Glaski did not address preemptive challenges to foreclosure but held that a borrower had standing to maintain a wrongful foreclosure suit based on allegations that the transfer of his loan to a real estate investment trust was void because it was assigned to the trust after the trust's closing date. (Glaski, at pp. 1097-1098.)
The Supreme Court granted review in Boyce (S226267), then dismissed review in April 2016, after its decision in Yvanova v. New Century Mortgage Corporation (2016) 62 Cal.4th 919 (Yvanova).
Subsequent to the trial court's decision, the California Supreme Court in Yvanova, supra, 62 Cal.4th 919 held that Glaski represented the correct view of a borrower's standing to assert a wrongful foreclosure claim based on allegations that the assignment to the foreclosing entity was void. In Yvanova, the borrower, whose home had been sold in foreclosure proceedings, alleged in an action for quiet title that the assignment of the deed of trust securing his property to an investment trust was void because it was assigned after the trust's closing date. (Id. at p. 925.) The court noted that while a deed of trust may be assigned "one or multiple times over the life of the loan it secures," "if the borrower defaults on the loan, only the current beneficiary may direct the trustee to undertake the nonjudicial foreclosure process." (Id. at pp. 927-928.) "If a purported assignment necessary to the chain by which the foreclosing entity claims [the power to pursue a nonjudicial foreclosure] is absolutely void, meaning of no legal force or effect whatsoever (Colby v. Title Ins. and Trust Co. [(1911)] 160 Cal. [632,] 644; Rest. 2d Contracts, § 7, com. a, p. 20), the foreclosing entity has acted without legal authority by pursuing a trustee's sale, and such an unauthorized sale constitutes a wrongful foreclosure. (Barrioneuvo v. Chase Bank, N.A. [(N.D. Cal. 2012)] 885 F.Supp.2d [964,] 973-974.)" (Yvanova, at p. 935.)
With respect to concern about allowing a borrower to challenge an assignment to which the borrower was not a party, Yvanova acknowledged that "[i]n general, California law does not give a party personal standing to assert rights or interests belonging solely to others." (Yvanova, supra, 62 Cal.4th at p. 936.) The court explained, however, that concern about enforcement of a third party's interests is "misplaced" when an assignment is alleged to be void. (Ibid.) "When an assignment is merely voidable, the power to ratify or avoid the transaction lies solely with the parties to the assignment; the transaction is not void unless and until one of the parties takes steps to make it so. A borrower who challenges a foreclosure on the ground that an assignment to the foreclosing party bore defects rendering it voidable could thus be said to assert an interest belonging solely to the parties to the assignment rather than to herself." (Ibid.)
By contrast, "[b]orrowers who challenge the foreclosing party's authority on the grounds of a void assignment 'are not attempting to enforce the terms of the instruments of assignment; to the contrary, they urge that the assignments are void ab initio.' (Reinagel [v. Deutsche Bank Nat. Trust Co. (5th Cir. 2013)] 735 F.3d [220,] 225; accord, Mruk v. Mortgage Electronic Registration System, Inc. (R.I. 2013) 82 A.3d 527, 536 [borrowers challenging an assignment as void 'are not attempting to assert the rights of one of the contracting parties; instead, the homeowners are asserting their own rights not to have their homes unlawfully foreclosed upon'].) [¶] Unlike a voidable transaction, a void one cannot be ratified or validated by the parties to it even if they so desire. (Colby v. Title Ins. and Trust Co., supra, 160 Cal. at p. 644; Aronoff v. Albanese [(1982)] 446 N.Y.S.2d [368,] 370.)" Accordingly, a borrower claiming an assignment was void "is not asserting the interests of parties to the assignment; she is asserting her own interest in limiting foreclosure on her property to those with legal authority to order a foreclosure sale. This, then, is not a situation in which standing to sue is lacking because its 'sole object . . . is to settle rights of third persons who are not parties.' (Golden Gate Bridge etc. Dist. v. Felt (1931) 214 Cal. 308, 316.)" (Yvanova, supra, 62 Cal.4th at pp. 936-937.)
The court rejected the argument that a borrower who is in default on his or her loan is not prejudiced by a foreclosure by an unauthorized party in that the actual holder of beneficial interest could have foreclosed. (Yvanova, supra, 62 Cal.4th at p. 937.) "A foreclosed-upon borrower clearly meets the general standard for standing to sue by showing an invasion of his or her legally protected interests (Angelucci v. Century Supper Club (2007) 41 Cal.4th 160, 175)—the borrower has lost ownership to the home in an allegedly illegal trustee's sale. (See Culhane [v. Aurora Loan Services of Nebraska (1st Cir. 2013)] 708 F.3d [282,] 289 [foreclosed-upon borrower has sufficient personal stake in action against foreclosing entity to meet federal standing requirement].) Moreover, the bank or other entity that ordered the foreclosure would not have done so absent the allegedly void assignment. Thus '[t]he identified harm—the foreclosure—can be traced directly to [the foreclosing entity's] exercise of the authority purportedly delegated by the assignment.' (Id. at p. 290.)" (Yvanova, at p. 937.)
Yvanova emphasized that its holding was limited: "Our ruling in this case is a narrow one. We hold only that a borrower who has suffered a nonjudicial foreclosure does not lack standing to sue for wrongful foreclosure based on an allegedly void assignment merely because he or she was in default on the loan and was not a party to the challenged assignment. We do not hold or suggest that a borrower may attempt to preempt a threatened nonjudicial foreclosure by a suit questioning the foreclosing party's right to proceed. Nor do we hold or suggest that plaintiff in this case has alleged facts showing the assignment is void . . . ." (Yvanova, supra, 62 Cal.4th at p. 924.)
The situation in which Yvanova recognized standing thus has two prerequisites: A completed foreclosure and allegations of a void assignment. In finding standing in this situation, the Yvanova court approved Glaski, as we have said, and disapproved one of the two bases upon which Jenkins had reached the contrary conclusion. Jenkins held that a borrower lacks standing to challenge a foreclosing entity's authority both because the borrower was not a party to assignments being challenged—the ground addressed by Yvanova—and because "California law did not permit a 'preemptive judicial action[] to challenge the right, power, and authority of a foreclosing "beneficiary" or beneficiary's "agent" to initiate and pursue foreclosure," which would " ' "fundamentally undermine the nonjudicial nature" ' " of the statutory nonjudicial foreclosure process. (Yvanova, supra, 62 Cal.4th at p. 933, quoting Jenkins, supra, 216 Cal.App.4th at p. 511.) Yvanova expressly declined to address this second aspect of Jenkins. (Yvanova, at pp. 924-934.) It thus left intact the holdings of Jenkins and other cases that had held a borrower lacks standing to preemptively challenge the authority of the entity pursuing a nonjudicial foreclosure. (Gomes, supra, 192 Cal.App.4th at pp. 1154-1156; Jenkins, at pp. 512-513; Kan, supra, 230 Cal.App.4th at pp. 741-742.)
Since Yvanova, Saterbak v. JPMorgan Chase Bank, N.A. (2016) 245 Cal.App.4th 808, 814-815 (Saterbak) reiterated that California cases have consistently held a borrower does not have standing to maintain such preemptive challenges. In that case, the borrower sought to cancel the assignment of the deed of trust to her home after a notice of default and notice of trustee's sale had been recorded but before a sale occurred. The court explained: "California courts do not allow such preemptive suits because they 'would result in the impermissible interjection of the courts into a nonjudicial scheme enacted by the California Legislature.' (Jenkins[, supra,] 216 Cal.App.4th [at p.] 513, disapproved on other grounds in Yvanova, supra, 62 Cal.4th at p. 939, fn. 13; see Gomes[, supra,] 192 Cal.App.4th [at p.] 1156 ['California's nonjudicial foreclosure law does not provide for the filing of a lawsuit to determine whether MERS has been authorized by the holder of the Note to initiate a foreclosure'].) As the court reasoned in Gomes: '[The borrower] is not seeking a remedy for misconduct. He is seeking to impose the additional requirement that MERS demonstrate in court that it is authorized to initiate a foreclosure. . . . [S]uch a requirement would be inconsistent with the policy behind nonjudicial foreclosure of providing a quick, inexpensive and efficient remedy.' (Gomes, supra, at p. 1154, fn. 5.)" (Saterbak, at pp. 814-815.)
The California Supreme Court denied review in Saterbak and denied a request to depublish the opinion. (July 13, 2016, S234109.)
As Saterbak observed, Yvanova did not alter the standing issue for preforeclosure cases because its ruling that a borrower has standing to sue for wrongful foreclosure based on an allegedly void assignment was "expressly limited to the post-foreclosure context." (Saterbak, supra, 245 Cal.App.4th at p. 815.) Yvanova did not disapprove Jenkins with respect to preemptive challenges, only "to the extent [Jenkins] held borrowers lack standing to challenge an assignment of the deed of trust as void." (Yvanova, supra, 62 Cal.4th at p. 939, fn. 13.) Nor did the Supreme Court cast doubt on other cases prohibiting preemptive challenges to a foreclosing entity's authority. The court discussed Kan only to say that it was not persuaded by that case to find Glaski wrong regarding borrrowers' standing to challenge assignments as void, noting that Kan distinguished Glaski as involving a "postsale wrongful foreclosure claim, as opposed to the preemptive suits involved in Jenkins and Kan itself." (Yvanova, at p. 941.) Yvanova mentioned Gomes only in describing Jenkins and, as we have said, did "not address the distinct question of whether, or under what circumstances, a borrower may bring an action for injunctive or declaratory relief to prevent a foreclosure sale from going forward." (Yvanova, at pp. 933-934.)
Appellant's statement that Yvanova "conclusively establishes that the trial court erred in relying upon Boyce, Jenkins, and Kan for determining lack of [appellant's] standing as a matter of law" is thus unwarranted. The California Supreme Court did not overrule Jenkins with regard to standing in the preemptive context, only to the extent Jenkins would preclude standing even as to a borrower challenging a completed foreclosure sale on the grounds that the assignment by which the defendant claimed authority to foreclose was void; did not overrule Kan or Gomes; and did not mention Boyce, supra, 245 Cal.App.4th 429. (Jenkins, supra, 62 Cal.4th at pp. 934, 939, fn. 13.)
Appellant argues, however, that the present case is different from those above because he filed suit before foreclosure proceedings were instituted. At the time appellant filed his complaint, a previously recorded notice of default had been rescinded and no foreclosure proceedings were pending; such proceedings were instituted with the recording of a second notice of default over a year after the initial complaint in the present case was filed, after USB's demurrer to the amended complaint was overruled and a month before it filed its motion for summary judgment. Not only was there no pending nonjudicial foreclosure proceeding to interfere with, appellant argues, but the determination that he lacked standing to pursue the present case allowed USB to divest the superior court of jurisdiction by instituting a nonjudicial foreclosure.
To our knowledge, no published case has yet addressed the question whether "pre-initiation" suits challenging an entity's authority to foreclose should be treated differently from preemptive suits filed after foreclosure proceedings have been instituted. At least one federal district court has applied the prohibition against preemptive challenges in such a situation. (Watson v. Bank of America, N.A. (S.D.Cal., Nov. 7, 2016, 16CV513-GPC (MDD)) 2016 WL 6581846 (Watson).) In Watson, at the time the lawsuit was filed, a previously scheduled trustee's sale had been cancelled, a trial loan modification agreement had been offered and accepted, and a permanent loan modification agreement had not yet been determined. Reviewing California law, Watson noted that cases prior to Yvanova had held a borrower lacked standing to file wrongful foreclosure actions based on claims that assignments of the note and deed of trust were void; that Yvanova held to the contrary but expressly "did not hold or suggest that a borrower may attempt to preempt a threatened nonjudicial foreclosure by a suit questioning the foreclosing party's right to proceed"; and that Saterbak held Yvanova was limited to the post-foreclosure context. (Watson, at p. *14.) After reviewing several federal district court and unpublished state court opinions, from which the court derived the rule that "in order to establish standing to challenge an assignment in either a pre-foreclosure or post-foreclosure case, a plaintiff must assert harm that produces 'an invasion of his or her legally protected interest,' prejudice or injury," Watson concluded that unlike the post-foreclosure situation, in which Yvanova found that the foreclosure sale satisfied injury requirement, or cases in which a threatened foreclosure might establish sufficient injury, standing to challenge an assignment "is not established where there has been no initiation of non-judicial foreclosure proceedings." (Watson, at p. *16.)
Watson noted that the California Supreme Court had granted review in a case in which the borrower sought to prevent the initiation of foreclosure proceedings (Keshtgar v. U.S. Bank, N.A. (2014) 226 Cal.App.4th 1201), then transferred the case to the court of appeal for reconsideration in light of Yvanova, and that the court of appeal, in an unpublished opinion, again found the plaintiff did not have standing to bring a preforeclosure action to challenge the foreclosing entity's authority (Keshtgar v. U.S. Bank, N.A. (Aug. 8, 2016, B246193) 2016 WL 4183750). (Watson, supra, 2016 WL 6581846, p. *15.) Watson cited several other unpublished California cases, one of which (Torres v. U.S. Bank National Association (June 23, 2016, G051406) 2016 WL 3571014) also found the plaintiff lacked standing to challenge authority to foreclose prior to the initiation of foreclosure proceedings. (Watson, at p. *15.)
Watson thus determined that where statutory foreclosure proceedings have not yet been instituted, borrowers have not suffered the kind of invasion of their own legal rights that would justify allowing them to challenge assignments to which they were not parties. With respect to the injury giving rise to standing, Yvanova discussed not only the actual loss of the home in the post-foreclosure context but also the fact that the plaintiff's obligations under the loan and deed of trust were owed only to the actual mortgagee or valid assignee. This latter aspect of Yvanova's discussion has led some federal courts to predict that the California Supreme Court will ultimately permit a pre-foreclosure challenge to a void assignment. (e.g., Powell v. Wells Fargo Home Mortgage (N.D. Cal. April 29, 2016, 14-cv-04248-MEJ) 2016 WL 1718189 (Powell); Lundy v. Selene Finance, LP (N.D. Cal. Mar. 17, 2016, 15-cv-05676-JST) 2016 WL 1059423 (Lundy).)
The following is illustrative of these courts' reasoning: "The prejudice in the post-foreclosure context is, of course, more obvious than in pre-foreclosure, since a plaintiff has suffered the definable injury of the loss of her property. But it is clear that Yvanova's prejudice analysis does not depend on the existence of a completed foreclosure sale—rather, it focuses more broadly on the unfairness of requiring a plaintiff to be subjected to foreclosure proceedings by an entity that has no right to initiate those proceedings. For this reason, the Court concludes that Yvanova's reasoning applies just as strongly to pre-foreclosure plaintiffs. Just as with post-foreclosure plaintiffs, the 'identified harm'—initiation of foreclosure proceedings—can 'be traced directly to [the foreclosing entity's] exercise of the authority purportedly delegated by the assignment.' [(Lundy, supra, 2016 WL 1059423, p. *11.)] The prejudice is self-evident given that 'the bank or other entity that ordered the foreclosure would not have done so absent the allegedly void assignment,' regardless of whether the plaintiff still has title or possession of her home. [(Ibid.)] A plaintiff who has already lost her home has undoubtedly suffered prejudice; but so has a plaintiff who is at imminent risk of doing so. In sum, Yvanova provides strong guidance that in Keshtgar and Mendoza, the California Supreme Court will again reject Jenkins's conclusion that pre-foreclosure plaintiffs are not prejudiced by initiation of foreclosure proceedings based on an allegedly void assignment." (Powell, supra, 2016 WL 1718189, p. *7.)
At the time Lundy and Powell were decided, the California Supreme Court had granted review in Keshtgar v. U.S. Bank, N.A., supra, 226 Cal.App.4th 1201and Mendoza v. JPMorgan Chase Bank, N.A. (2014) 228 Cal.App.4th 1020, and was holding the cases pending decision in Yvanova. Keshtgar is discussed in footnote 9, ante. Mendoza was a post-foreclosure case in which the court of appeal had found the borrower lacked standing to challenge the securitization of her loan. When the case was transferred back for reconsideration in light of Yvanova, the court of appeal again found no standing, this time because the defect raised by the plaintiff would render the challenged assignment voidable, not void. Mendoza v. JPMorgan Chase Bank, N.A. (2016) 6 Cal.App.5th 802, 811-817.
This focus on fairness in determining whether a plaintiff has alleged sufficient harm to establish standing necessarily conflicts with the other basis upon which Jenkins and other California courts have prohibited preemptive challenges—that they are inconsistent with the state's comprehensive statutory scheme for nonjudicial foreclosure. On this latter issue—which Yvanova did not address—Lundy noted that Jenkins drew a distinction between suits alleging lack of authority to foreclose "on information and belief," as occurred in Gomes, and those alleging a specific factual basis for the challenge. Lundy stated, "Jenkins and its progeny clearly impose some kind of bar on pre-foreclosure challenges to the foreclosing entity's alleged lack of authority, and do so because of those challenges' 'preemptive' effect on California's nonjudicial foreclosure scheme. What is less clear is whether that bar is limited to only those challenges that lack any 'specific factual basis' in support." (Powell, supra, 2016 WL 1718189, p. *8, quoting Lundy, supra, 2016 WL 1059423, p. *13.) Lundy and Powell predicted that " 'if the California Supreme Court decides to adopt Jenkins's bar to pre-foreclosure challenges, it will limit that bar only to claims that lack any "specific factual basis," as in Gomes.'. . . [Citation.] '[B]arring such claims is sensible, since otherwise any borrower could stall a foreclosure sale merely by declaring, "upon information and belief," that the foreclosing entity lacked the proper authority[,]' which would 'effectively "create an additional requirement for the foreclosing party" to prove its authority to foreclose, which does not exist in California's current statutory framework.' " (Powell, at p. *8, quoting Lundy, at, p. *13.) Also, "to impose a bar on such claims 'even if a plaintiff offers plausible support for the claim that the entity foreclosing on her property lacks authority to do so,' would lead to a situation where a plaintiff must 'sit by idly until an allegedly improper foreclosure sale was completed before bringing her otherwise valid challenge in court.' " (Reed v. Wilmington Trust, N.A. (N.D. Cal. 2016, 16-cv-01933-JSW) 2016 WL 3124611, p. *4, quoting Lundy, at p. *13; Powell, at p. *8, fn. 10.)
Lundy was decided before Saterbak declined to apply Yvanova to the pre-foreclosure context, and Lundy, Powell, and Reed have since been described as representing a minority view among federal courts in this circuit. (Lewis v. U.S. Bank National Association (N.D. Cal., Apr. 5, 2017, 16-cv-05490-JSW) 2017 WL 2903192, p. *4.) "With the exception of four decisions, every decision by our court of appeals and district courts in our circuit has declined to extend Yvanova to pre-foreclosure challenges, thereby adopting Saterbak and its progeny." (Wyman v. First American Title Insurance Company (N.D. Cal. 2017, C 16-07079 WHA) 2017 WL 512869, p. *3 (Wyman), citing Dagres v. Countrywide Bank, N.A. (9th Cir. Jan. 26, 2017, 14-56799) 2017 WL 371972, p. *1; Bryant v. J.P. Morgan Chase Bank, N.A., (9th Cir. Dec. 22, 2016, 14-55299) 2016 WL 7407271, p. *1; Huweih v. US Bank Trust, N.A. (N.D. Cal. Jan. 30, 2017, 16-cv-00421-MMC) 2017 WL 396143, p. *3; Kaurloto v. U.S. Bank, N.A (C.D. Cal. Nov. 17, 2016, 16-cv-06652-JFW-GJSx) 2016 WL 6808117, p. *4; Karunaratne v. US Bank National Association (S.D. Cal. Nov. 15, 2016, 16-cv-843-JLS-KSC) 2016 WL 6698940, p. *4; Watson, supra, 2016 WL 6581846, p. *17; Tobin v. Nationstar Mortgage, Inc. (C.D. Cal. May 2, 2016, 2:16-cv-00836-CAS(ASx) 2016 WL 1948786, p. *7; see also, Tjaden v. HSBC Bank USA, N.A. (9th Cir. 2017) 681 Fed. Appx. 641.)
The four exceptions noted in Wyman were Lundy, Powell, Reed, and Hinrichsen v. Quality Loan Service Corp. (S.D. Cal. 2016, 16cv0690 DMS (NLS)) 2016 WL 4542753. (Wyman, supra, 2017 WL 512869, p. *3.)
The majority of cases, then, have in essence concluded that the need to allow California's statutory nonjudicial foreclosure process to run its course as designed, without judicial interference, outweighs the concerns discussed by Lundy until the point of actual foreclosure. Notably, the foreclosure statutes expressly provide for injunctive actions to prevent foreclosure in certain circumstances—but these do not include actions to challenge a foreclosing entity's authority, indicating the Legislature did not intend to authorize such challenges. (Lucioni v. Bank of America, N.A. (2016) 3 Cal.App.5th 150, 158-159.) While permitting a judicial challenge to an entity's authority to foreclose prior to initiation of the statutory procedures would not interrupt a pending proceeding, it would nevertheless "interject the courts into this comprehensive nonjudicial scheme" (Gomes, supra, 192 Cal.App.4th at p. 1154) by imposing a burden the Legislature did not include in the comprehensive statutory scheme it created—a pre-foreclosure judicial determination of authority to proceed with the nonjudicial foreclosure process.
Appellant asserts that his quiet title action was not "a preemptive action to interfere with the statutory process, a process which was not pending or even known to have [been] contemplated at the time of his filing the complaint." But appellant could not have been unaware that foreclosure proceedings were within contemplation when he was undisputedly in default on his loan and a notice of default had previously been recorded and then rescinded. The obvious purpose of attempting to obtain a judicial determination that USB did not have a valid interest in the property was to preclude USB from foreclosing on the property. Appellant's assertion that he has a right to pay money only to the entity to which it is actually owed, and which can reconvey the deed of trust once his obligation is satisfied, ignores his default on the loan, which necessarily subjected appellant to the risk of foreclosure. Appellant did not file this action to ensure he was making loan payments to the correct entity; he pursued an action to extinguish USB's interest in property after allowing his loan to go into default. If appellant's characterization of his suit is correct, a borrower in default on his or her loan would be able to forestall foreclosure proceedings by bringing an action challenging the interest of the holder of the note and deed of trust before that entity filed a notice of default, thereby interfering with the statutory foreclosure scheme just as effectively as with a preemptive action filed after foreclosure proceedings have been instituted.
According to USB, appellant admits he has not made a payment under the loan or deed of trust since his default in 2012. In support of this statement, USB cites nearly 500 pages of the record without indicating where, within these pages, such an admission may be found. Our own perusal reveals only that appellant admitted in requests for admissions that he was in default on the loan in July 2012 and October 2012. In discovery responses, appellant disputed USB's statement that appellant "admits that he has not made a payment under the Loan or DOT since his default in 2012," citing a paragraph in his declaration in which he stated that when he became "temporarily unable to keep up with the mortgage payments due to financial conditions," he unsuccessfully sought to apply for a loan modification and "came to suspect that the defendant did not have the right to receive the payments under the note, to process a loan modification in that capacity, or to reconvey the deed of trust when the note was paid in full." In May 2015, appellant began to deposit his monthly payment of $2,787.02 into a trust account "pending the determination of the Holder of the Note"; the record on appeal documents payments for May 2015, through January 2016. The parties' briefs do not mention or explain the significance of these payments.
Aside from the above arguments, appellant maintains the terms of the deed of trust provided him with an independent basis for standing. His entire argument is as follows: "The Deed of Trust itself confers standing upon [appellant] to defend the security interest, 'Borrower warrants and will defend generally the title to the property against all claims and demands, subject to any encumbrances of record' (Appendix 60-61). Although this provision was likely intended to require the Borrower to avoid sufferance of mechanics liens and the sort, it is broad enough to impose upon him a duty to defend the integrity of the security against one who through void assignments purports to assign away the security interest."
The language appellant relies upon is not reasonably susceptible to the interpretation he advances. "The overriding goal of contract interpretation is to give effect to the mutual intention of the parties at the time of contracting." (Poseiden Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal.App.4th 1106, 1113.) "Specific provisions of a contract should not be considered in isolation. 'The whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other.' " (Id. at p. 1114, quoting Civ. Code, § 1641.)
The purpose of the deed of trust was to provide the lender/beneficiary and its successors and assigns with security for the loan extended to appellant. The provision appellant relies upon was obviously intended, as appellant himself states, to protect the lender/beneficiary's interest against third party claims to the property. It is absurd to infer that the parties intended to impose an obligation on appellant to defend title to the property against demands by the lender/beneficiary.
We conclude summary judgment was properly granted because appellant failed to demonstrate that he has standing to challenge the assignments of the promissory note and deed of trust.
DISPOSITION
The judgment is affirmed.
Costs are awarded to respondent.
/s/_________
Kline, P.J. We concur: /s/_________
Richman, J. /s/_________
Stewart, J.