19 Cal. App. 5th 1208
Cal. Ct. App. 5th2018Background
- Plaintiff Larry Brown obtained assignments from 1,117 borrowers: 100% of their causes of action and a 5% ownership interest in the secured real property; he sued multiple loan-related defendants for claims including wrongful foreclosure and requests to void deeds of trust.
- Many borrowers had differing foreclosure statuses (no foreclosure, notice of default, or post-sale); Brown alleged he sues only as assignee.
- Defendants moved to compel joinder under Cal. Code Civ. Proc. § 389, arguing borrower‑assignors are necessary/indispensable parties because the complaint seeks declarations that could affect borrower protections (e.g., antideficiency immunity).
- Trial court ordered joinder of borrower‑assignors who had conveyed a partial ownership interest; Brown petitioned for writ of mandate to overturn that order and obtained a temporary stay.
- Brown argued an exception in § 369(a)(3) permits him to sue without joining the beneficiaries because (he claimed) contracts were made for the borrowers’ benefit; defendants argued § 369 is limited to fiduciaries/trustees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether borrowers are necessary/indispensable parties under CCP § 389 | Brown: Assignments make him the real party in interest; joinder not required | Defendants: Borrowers retain interests (e.g., antideficiency protections) that could be impaired; joinder required | Court (unpublished portion): § 389(a)(2)(i) joinder warranted because borrowers’ interests in antideficiency protection could be impaired |
| Whether § 369(a)(3) allows Brown to proceed without joining borrower‑assignors | Brown: § 369(a)(3) (person with whom a contract is made for benefit of another) authorizes him to sue alone as prosecuting for borrowers’ benefit | Defendants: § 369 is a narrow exception for fiduciaries/trustees, not for assignees holding mutual interests | Court: § 369(a)(3) is ambiguous but properly read as applying where plaintiff acts for the sole benefit of others (i.e., fiduciary/trustee); it does not cover mutual/partial‑benefit assignees, so Brown cannot avoid joinder |
| Proper interpretive approach to § 369’s phrase “for whose benefit the action is prosecuted” | Brown: Broad reading covers persons who obtain some benefit (including partial) | Defendants: Narrow reading—focus on sole beneficiaries/fiduciaries | Court: Ambiguity resolved by legislative purpose—§ 369 is an exception to real‑party‑in‑interest rule for fiduciaries; therefore it means sole benefit/fiduciary situations |
| Disposition of writ and stay | Brown: Petition should be granted to permit litigation without joinder | Defendants: Petition denied; joinder order should stand | Court: Petition for writ of mandate denied; trial court joinder order affirmed (stay lifted) |
Key Cases Cited
- Western States Petroleum Assn. v. Board of Equalization, 57 Cal.4th 401 (statutory interpretation principles)
- Even Zohar Construction & Remodeling, Inc. v. Bellaire Townhouses, LLC, 61 Cal.4th 830 (statutory text as primary indicator of legislative intent)
- Smiley v. Citibank, 11 Cal.4th 138 (statutory construction in historical context)
- California Housing Finance Agency v. Patitucci, 22 Cal.3d 171 (use of historical context in statutory interpretation)
- Beal Bank, SSB v. Arter & Hadden, LLP, 42 Cal.4th 503 (identify interpretation that best effectuates legislative intent)
- Wikstrom v. Yolo Fliers Club, 206 Cal. 461 (assignability of causes of action)