Crossroads Investors, L.P. v. Fed. Nat'l Mortg. Ass'n
13 Cal. App. 5th 757
| Cal. Ct. App. 5th | 2017Background
- Crossroads Investors defaulted on a $9M note secured by a deed of trust; Fannie Mae initiated nonjudicial foreclosure and recorded notice of default and trustee’s sale.
- Crossroads entered Chapter 11 on July 18, 2011 seeking to restructure the loan and sell the property to Ezralow, who would assume/restructure the loan and sought waiver of a prepayment premium; Fannie Mae refused.
- In bankruptcy Fannie Mae filed a proof of claim including a prepayment premium; the bankruptcy court allowed the premium and later granted Fannie Mae relief from the automatic stay effective May 15, 2012.
- Crossroads alleges it repeatedly requested payoff/reinstatement accountings (per Civ. Code §2924c) and offered to tender payment (including settlement offers) but Fannie Mae failed to provide amounts, refused tenders, and (after relief from stay) promised then failed to give advance notice of the trustee’s sale; trustee sold on May 24, 2012.
- Crossroads sued for wrongful foreclosure, breach of contract (deed of trust), breach of the covenant of good faith, negligence, fraud, promissory estoppel, and intentional interference; Fannie Mae moved under the anti‑SLAPP statute §425.16 and the trial court denied the motion.
- On appeal (after California Supreme Court directed reconsideration in light of Baral), the Court of Appeal reversed and directed the trial court to grant the anti‑SLAPP motion as to all claims except those based on Fannie Mae’s alleged oral promise to give advance notice of sale.
Issues
| Issue | Crossroads' Argument | Fannie Mae's Argument | Held |
|---|---|---|---|
| Do the challenged acts arise from protected petition/speech activity under §425.16? | Crossroads: claims challenge nonjudicial foreclosure and statutory duties under §2924c, not protected litigation activity. | Fannie Mae: responses/omissions and rejections of tenders occurred in bankruptcy or settlement communications and are protected (speech/petition). | Held: Mostly arise from protected activity (interrogatory, settlement/settlement‑related communications, omissions tied to bankruptcy); only claims based on rejection of the May 2011 settlement (as originally framed) were excluded. |
| Are Fannie Mae’s statements/omissions privileged (litigation privilege §47) so plaintiff cannot prevail on tort claims? | Crossroads: privilege shouldn’t bar tort claims based on wrongful foreclosure/statutory violations in a nonjudicial foreclosure context. | Fannie Mae: communications/omissions tied to bankruptcy and settlement are protected by the absolute litigation privilege. | Held: Litigation privilege applies to the bankruptcy/settlement‑linked statements and omissions; therefore tort claims arising from those activities lack merit and are barred (except claims based on the oral promise to notify sale). |
| Did Crossroads make valid, unconditional tenders or otherwise adequately plead/produce evidence to support contract and wrongful foreclosure claims? | Crossroads: it repeatedly offered to cure or pay off the loan and had Ezralow ready to fund; Fannie Mae refused to accept. | Fannie Mae: Crossroads’ alleged tenders were conditional or not full performance (e.g., conditioned on waiver of prepayment premium), and Crossroads produced no evidence of an actual specific tender. | Held: Most alleged tenders were invalid as a matter of law (conditional or not full); Crossroads did not show a valid tender or specific payment (e.g., notice‑of‑default or proof‑of‑claim amounts), so contract/wrongful foreclosure claims based on those tenders fail. |
| Did Crossroads present a prima facie case of damages causally caused by Fannie Mae’s failure to provide accountings under §2924c? | Crossroads: Fannie Mae’s refusal to provide amounts prevented reinstatement or redemption and caused loss. | Fannie Mae: Crossroads had the statutory right to tender and had enough information (notice of default, proof of claim) to make a specific tender; failure to act, not Fannie Mae’s silence, caused the loss. | Held: Crossroads failed to show proximate causation/damages from the accounting omissions because it never tendered specific amounts it knew were minimums; contract damages claims based on omissions were eliminated. |
Key Cases Cited
- Baral v. Schnitt, 1 Cal.5th 376 (Cal. 2016) (clarifies anti‑SLAPP two‑step analysis and that defendant must show the plaintiff’s cause of action arises from protected activity)
- Park v. Board of Trustees of California State University, 2 Cal.5th 1057 (Cal. 2017) (explains "arising from" requirement — protected activity must supply elements of the challenged claim)
- Silberg v. Anderson, 50 Cal.3d 205 (Cal. 1990) (sets out scope of the litigation privilege under Civ. Code §47)
- Flatley v. Mauro, 39 Cal.4th 299 (Cal. 2006) (anti‑SLAPP standard of review; privilege is a substantive defense in second prong)
- Anderson v. Heart Fed. Sav. & Loan Assn., 208 Cal.App.3d 202 (Cal. Ct. App. 1989) (discusses adequacy of tender where beneficiary failed to provide accurate payoff information)