Crossroads Investors v. Federal National Mortgage Assn.
C072585A
| Cal. Ct. App. | Jul 26, 2017Background
- Crossroads Investors, L.P. owned an apartment building subject to a $9M loan secured by deed of trust; Crossroads defaulted and Fannie Mae initiated nonjudicial foreclosure and recorded notices under Civil Code §2924c.
- Crossroads entered a sale agreement with Ezralow and filed Chapter 11 to pursue a reorganization plan that would have Ezralow assume/restructure the loan and eliminate a contract prepayment premium Fannie Mae claimed.
- Bankruptcy court overruled Crossroads’ objection to Fannie Mae’s proof of claim (which included the prepayment premium), found Crossroads’ plan unlikely to be confirmed, and granted Fannie Mae relief from the automatic stay effective May 15, 2012.
- Crossroads alleges it repeatedly requested payoff/reinstatement amounts under §2924c and tendered performance (some offers conditioned on excluding the premium); Fannie Mae allegedly failed to provide accountings, refused tenders, and (after agreeing to do so) failed to give advance notice of the trustee’s sale; sale occurred May 24, 2012.
- Crossroads sued for wrongful foreclosure, breach of contract (deed of trust), fraud, negligence, promissory estoppel, interference, and breach of the implied covenant; Fannie Mae moved to strike under the anti-SLAPP statute and the trial court denied the motion.
- On remand after Baral, the Court of Appeal reversed, directing the trial court to grant Fannie Mae’s anti-SLAPP motion except for claims based on an alleged oral promise to give advance notice of sale.
Issues
| Issue | Crossroads' Argument | Fannie Mae's Argument | Held |
|---|---|---|---|
| Whether claims arise from protected petition/speech (anti‑SLAPP first prong) | Fannie Mae’s out‑of‑court nonjudicial foreclosure conduct is unprotected and is the gravamen of the suit | Requests, interrogatory responses, omissions and settlement/tender communications occurred in bankruptcy litigation and are protected petition/speech | Majority: Except for claims based on Fannie Mae’s alleged separate oral promise about notice, the challenged acts arose from protected activity in the bankruptcy context and satisfy the first prong |
| Whether plaintiff showed probability of prevailing on tort claims given litigation privilege (second prong) | Crossroads says omissions and misstatements are actionable torts (fraud, negligence, etc.) | Communications/omissions in connection with litigation are absolutely privileged under Civ. Code §47 and bar tort liability | Held: Litigation privilege bars Crossroads’ tort claims arising from the protected bankruptcy‑related communications/omissions (except the notice promise claim) |
| Whether contract claims survive anti‑SLAPP (privilege and causation) | Deed of trust required foreclosure compliant with California law; breach by failing to provide §2924c accountings and refusing tenders caused loss | Many of the contract‑based acts stem from litigation/settlement communications and are either privileged as to interrogatory response or legally deficient as tenders; Crossroads failed to prove valid tender or causation | Held: Contract claims arising from the interrogatory response are subject to privilege and were stricken; other contract claims based on failure to provide accounting and invalid/conditional tenders were dismissed for failure to show valid tender and causation. The oral notice promise claim survives. |
| Validity of tenders and effect on wrongful foreclosure claim | Crossroads contends it repeatedly tendered or offered to tender sufficient amounts to reinstate/redeem | Fannie Mae argues those offers were conditional or not full performance (invalid tender); Crossroads presented no evidence of a specific valid tender (e.g., amounts in notice of default or proof of claim) | Held: Tenders were invalid (conditional or not full) and Crossroads presented no evidence of an adequate unconditioned tender; claims based on rejected tenders were stricken |
Key Cases Cited
- Baral v. Schnitt, 1 Cal.5th 376 (Cal. 2016) (clarifies anti‑SLAPP two‑step analysis and that the statute targets allegations of protected activity that supply elements of the challenged claim)
- 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 claim)
- Flatley v. Mauro, 39 Cal.4th 299 (Cal. 2006) (anti‑SLAPP standards and treatment of litigation privilege as a substantive defense in the second prong)
- City of Cotati v. Cashman, 29 Cal.4th 69 (Cal. 2002) (focuses anti‑SLAPP analysis on whether the defendant’s act underlying the cause of action was protected petition/speech)
- Navellier v. Sletten, 29 Cal.4th 82 (Cal. 2002) (treats communications and omissions in litigation as potentially protected activity)
- Silberg v. Anderson, 50 Cal.3d 205 (Cal. 1990) (defines the scope of Civil Code §47 litigation privilege)