Cardenas v. Caliber Home Loans, Inc.
5:17-cv-04382
N.D. Cal.Dec 4, 2017Background
- Plaintiff Irene Cardenas owns residential property subject to a 2004 deed of trust; multiple assignments, substitutions of trustee, and notices of default/sale were recorded between 2012–2017 involving AFC/MERS, HSBC, Caliber, LSF8 Master Participation Trust, Rushmore, U.S. Bank (RMAC Trust), Cal‑Western, and Summit.
- Plaintiff filed Chapter 13 in 2014; bankruptcy plan required mortgage payments to Caliber and Plaintiff pursued a loan modification; payments continued and Caliber did not grant or deny a modification.
- Plaintiff alleges LSF8 only held a forward servicing interest and thus lacked authority to transfer beneficial interest to U.S. Bank; she contends later assignments/transfers were void and that Rushmore/U.S. Bank and Summit recorded substitution of trustee and notice of sale in May 2017 while misidentifying the servicer.
- Plaintiff filed state court suit (amended complaint asserting violations of Cal. Civ. Code § 2924.17 and wrongful foreclosure), then removed to federal court; Caliber, LSF8, and Summit later settled and were dismissed, leaving Rushmore and U.S. Bank as defendants.
- Defendants moved to dismiss. The district court granted the motion as to both causes of action but gave Plaintiff leave to amend within 30 days.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Plaintiff stated a claim under Cal. Civ. Code § 2924.17 (accuracy of foreclosure documents) | Cardenas: substitutions, notice of sale, and servicer misidentification violated § 2924.17 and warrant injunctive relief and damages | Rushmore/U.S. Bank: no facts showing lack of competent evidence, no material violation, and § 2924.17 cannot be used to litigate pre‑foreclosure ownership/right to foreclose | Dismissed: Plaintiff failed to plead materiality (no allegation the errors affected loan obligations or modification process) and § 2924.17 cannot be used to preforeclosure challenge a party’s right to foreclose; leave to amend granted |
| Whether Plaintiff stated a wrongful foreclosure claim based on allegedly void assignment(s) | Cardenas: assignments were void (LSF8 lacked beneficial interest and transfers violated PSA/IRC § 860), so foreclosure initiation was wrongful | Rushmore/U.S. Bank: claim is premature or fails because Plaintiff did not plead prejudice (harm) or tender of amounts due | Dismissed: Plaintiff did not allege prejudice beyond the threatened foreclosure (no interference with payments, change to obligations, or other harm); leave to amend granted |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (pleading must state a plausible claim)
- Ashcroft v. Iqbal, 556 U.S. 662 (legal conclusions not entitled to factual presumption)
- Lopez v. Smith, 203 F.3d 1122 (leave to amend should be freely given)
- Yvanova v. New Century Mortg. Corp., 62 Cal.4th 919 (standing to challenge a foreclosure based on a void assignment)
- Lucioni v. Bank of America, N.A., 3 Cal. App. 5th 150 (statutory scheme does not permit preforeclosure adjudication of right to foreclose via § 2924.17)
- Fontenot v. Wells Fargo Bank, N.A., 198 Cal. App. 4th 256 (prejudice requirement: void assignment alone does not always show borrower prejudice)
- Herrera v. Federal Nat. Mortg. Ass'n, 205 Cal. App. 4th 1495 (same: borrower must allege harm beyond replacement of creditor)
- Kalnoki v. First Am. Tr. Servicing Sols., LLC, 8 Cal. App. 5th 23 (courts require additional prejudice allegations when challenging void assignments)