Lona v. Citibank, N.A.
202 Cal. App. 4th 89
| Cal. Ct. App. | 2011Background
- Lona refinanced Jan 2007 after mortgage broker marketing enticement.
- Two loans totaling $1.5M: $1.125M fixed first loan and $375k second loan with balloon at 15 years.
- Monthly payments total $12,381.36, about four times Lona's income of $40k/year.
- Lona, with limited English and eighth-grade education, signed documents quickly with insufficient explanation.
- Trustee’s sale occurred Aug 2008 after default; Lona remained in the home post-sale while litigation ensued.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether summary judgment was proper on set-aside claim | Lona asserts illegality/unconscionability taints the loan. | Citibank/EMC contend no irregularity and loans valid; tender required. | No; triable issues exist on unconscionability and illegality, reversing summary judgment. |
| Whether loans were unconscionable or void ab initio | Loans were adhesive and excessively oppressive given income; illegality alleged. | Loans were not shown as unconscionable; no evidence addressed income/creditworthiness. | Triable issues exist; not decided as a matter of law. |
| Whether tender was required to set aside trustee's sale and any exceptions apply | Exceptions apply; illegality of debt and offsetting claims negate tender requirement. | Tender required; exceptions not satisfied or addressed. | Tender issue survives; exceptions to tender apply and proceeding must continue. |
| Whether irregularities in notice/sale procedures were shown | Irregularities exist via illegality of loan and conduct of foreclosure. | No proven irregularities in notice/sale; presumption of regularity stands. | Invalidated by unresolved issues on underlying debt and unconscionability; must proceed. |
Key Cases Cited
- Nguyen v. Calhoun, 105 Cal.App.4th 428 (Cal. Ct. App. 2003) (recognizes multiple grounds for setting aside nonjudicial foreclosure, including illegality and irregularities)
- Abdallah v. United Savings Bank, 43 Cal.App.4th 1101 (Cal. Ct. App. 1996) (tender requirement and exceptions in equitable set-aside actions)
- Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4th 83 (Cal. 2000) (unconscionability: procedural and substantive elements; adhesion contracts)
- Moeller v. Lien, 25 Cal.App.4th 822 (Cal. Ct. App. 1994) (nonjudicial foreclosure framework and procedures)
- Humboldt Sav. Bank v. McCleverty, 161 Cal. 285 (Cal. 1911) (tender exceptions when equitable relief is sought)