Gomes v. Countrywide Home Loans, Inc.
192 Cal. App. 4th 1149
| Cal. Ct. App. | 2011Background
- In 2004 Gomes borrowed $331,000 to purchase real estate, signing a promissory note secured by a deed of trust.
- The deed identified KB Home Mortgage Company as Lender and MERS as nominee for Lender and successors; MERS was the beneficiary under the Security Instrument.
- Gomes defaulted, received a notice of default and election to sell recorded March 10, 2009, with notice sent by ReconTrust as agent for MERS.
- In May 2009 Gomes sued Countrywide, MERS, and ReconTrust, asserting wrongful foreclosure and seeking declaratory relief; demurrers were filed.
- The trial court sustained the demurrer without leave to amend and entered judgment for Defendants.
- The appellate court affirmed the demurrer, concluding no private right to challenge MERS’s authority exists under California nonjudicial foreclosure law and Gomes had failed to plead a viable theory.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Gomes has a legal basis to challenge MERS's authority to initiate foreclosure | Gomes asserts MERS lacked authority to foreclose because the current note holder authorized the action is uncertain. | There is no statutory basis for a judicial challenge to the authority of the foreclosing party; nonjudicial foreclosure framework is comprehensive. | Demurrer upheld; no private right to challenge officer's authority |
| Whether the deed of trust authorizes MERS to initiate foreclosure | Gomes contends MERS may lack authority to foreclose despite the deed's terms. | The deed of trust expressly grants MERS the right to foreclose as nominee for Lender and successors. | Gomes’s claim fails; deed authorizes foreclosure; independent basis to affirm |
| Whether Gomes can cure the defects by amendment | Amendment could allege new theories (e.g., backdated assignments) under Ohlendorf/Weingartner. | Gomes has no factual basis or information about assignments to plead those theories; amendment would be futile. | No reasonable possibility to cure; trial court proper |
Key Cases Cited
- Moeller v. Lien, 25 Cal.App.4th 822 (Cal. Ct. App. 1994) (nonjudicial foreclosure scheme exhaustive; aims of efficiency and finality)
- Arnolds Management Corp. v. Eischen, 158 Cal.App.3d 575 (Cal. Ct. App. 1984) (tender rule for setting aside trustee's sale)
- Schifando v. City of Los Angeles, 31 Cal.4th 1074 (Cal. 2003) (burden to show amendment could cure demurrer defects)
- Lu v. Hawaiian Gardens Casino, Inc., 50 Cal.4th 592 (Cal. 2010) (legislative intent and implied private rights must be shown in statutes)
- Lane v. Vitek Real Estate Industries Group, NA (E.D. Cal. 2010) (rejects reading extra cures into nonjudicial foreclosure)
- Pantoja v. Countrywide Home Loans, Inc., 640 F.Supp.2d 1177 (D.N.J. 2009) (MERS right to foreclose under deed; MERS as nominee)
- Weingartner v. Chase Home Finance, LLC, 702 F.Supp.2d 1276 (D. Nev. 2010) (claims to challenge proper party to foreclose; persuasive)
- Ohlendorf v. American Home Mortgage Servicing, 2010 U.S.Dist. Lexis 31098 (E.D. Cal. 2010) (theory requiring improper backdating of assignments)
- Morgera v. Countrywide Home Loans, Inc., 2010 U.S.Dist. Lexis 2037 (E.D. Cal. 2010) (MERS as nominee; authority to foreclose)