26 Cal.App.5th 270
Cal. Ct. App.2018Background
- In 2006 Marcia Chaissions obtained an $875,000 loan secured by a deed of trust (DOT) on property at 1713–1717 Stearns Drive; the loan was conveyed into a securitized Option One trust in 2006.
- Option One later became Sand Canyon; servicing was sold to AHMSI (later Homeward). AHMSI recorded an August 21, 2008 assignment of the DOT to the Soundview trust (Deutsche Bank as trustee).
- The Chaissionses defaulted; multiple notices of default and trustee sale were recorded. A short sale agreement (Aug 2012) with Stearns failed because of "questionable title documents."
- The Chaissionses executed a grant deed on Jan 29, 2015 conveying “any and all” of their interest to Stearns (successor trustee Mark Meador). The Soundview trust purchased the property at a foreclosure sale on July 6, 2016; Hacker (Stearns’ successor trustee) recorded a grant deed July 13, 2016 and sued.
- Hacker sued defendants for wrongful foreclosure, fraud, slander of title, declaratory relief, unfair business practices, and cancellation of instruments, challenging the August 21, 2008 assignment as void. The trial court sustained demurrers to all claims without leave to amend; this appeal followed.
Issues
| Issue | Hacker's Argument | Defendants' Argument | Held |
|---|---|---|---|
| Standing/ownership to challenge chain of title | Hacker (as successor trustee) acquired property via Jan 29, 2015 grant deed and thus has standing to sue for wrongful foreclosure | Hacker lacks standing because FAC did not allege an ownership interest or that he was the borrower | Court: Trial court erred to the extent it refused leave to amend; Hacker proffered the grant deed and may have standing — remand to allow amendment |
| Effect of DOT provision on assignments | Transfer clause does not extinguish assignee’s interest; it merely allows lender to accelerate debt | DOT forbids transfer without lender consent and thus precludes Hacker’s claim | Court: DOT clause permits lender option to accelerate; it does not negate assignee’s title rights |
| Short sale agreement bar on later assignment | Short sale expired Aug 31, 2012 and did not prevent a Jan 29, 2015 grant deed | Short sale prohibited assignment to another party | Court: Short sale was expired by 2015 and thus did not bar the January 2015 conveyance |
| Whether August 21, 2008 assignment is void or merely voidable under PSA/securitization law | Assignment was void because AHMSI (successor to Option One) could not convey what Option One had already sold to the Option One trust | Alleged defects relate to the PSA and are voidable (beneficiaries may ratify); therefore Hacker lacks standing | Court: Hacker plausibly alleges the 2008 assignment was void (not merely voidable) because it purported to convey an interest the assignor no longer held; this supports a wrongful foreclosure claim |
| Fraud claim and statute of limitations | Fraud accrued at foreclosure (July 2016) allowing a timely claim | Fraud was discoverable earlier (by Aug 2012) so the 3-year limitations bar applies | Court: Fraud claim is time-barred (accrual when title problems were discovered in Aug 2012); fraud claim cannot be cured |
Key Cases Cited
- McCall v. PacifiCare of California, 25 Cal.4th 412 (2001) (standard of review for demurrer)
- Yvanova v. New Century Mortgage Corp., 62 Cal.4th 919 (2016) (wrongful foreclosure standing; distinction between void and voidable assignments)
- Blank v. Kirwan, 39 Cal.3d 311 (1985) (leave to amend — reasonable possibility standard)
- Connerly v. State of California, 229 Cal.App.4th 457 (2014) (appellate review of new theories not presented below)
- Del E. Webb Corp. v. Structural Materials Co., 123 Cal.App.3d 593 (1981) (facts in pleading are assumed true on demurrer)
- Alcorn v. Anbro Engineering, Inc., 2 Cal.3d 493 (1970) (same rule on pleading facts)
- Sciarratta v. U.S. Bank National Assn., 247 Cal.App.4th 552 (2016) (assignment void where assignor had already conveyed all beneficial interest)
- Mendoza v. JPMorgan Chase Bank, N.A., 6 Cal.App.5th 802 (2016) (assignments breaching PSA are typically voidable, not void)
- Miller v. Bechtel Corp., 33 Cal.3d 868 (1983) (fraud accrual when plaintiff has facts that would alert a reasonably prudent person to suspect fraud)
- Glaski v. Bank of America, N.A., 218 Cal.App.4th 1079 (2013) (derivative claims tied to wrongful foreclosure stance)