Nativi v. Deutsche Bank National Trust Co.
223 Cal. App. 4th 261
Cal. Ct. App.2014Background
- In Aug. 2009 Deutsche Bank (trustee/purchaser at nonjudicial foreclosure) acquired title to a Sunnyvale property whose converted garage unit was leased by Rosario Nativi and her son under a fixed one‑year lease through June 1, 2010.
- After the foreclosure respondents engaged a servicer (AHMSI) and a vendor (Advisors) to prepare the property for sale; occupants later found the garage unit emptied and their belongings dumped in the yard and were refused re‑entry when they tried to return.
- Appellants sued for wrongful eviction, breach of the covenant of quiet enjoyment, trespass/conversion, and related claims; the trial court granted summary judgment for respondents, concluding the foreclosure extinguished the lease and the PTFA only required a 90‑day notice.
- The federal Protecting Tenants at Foreclosure Act of 2009 (PTFA) (as amended) requires an immediate successor in interest to provide bona fide tenants a 90‑day vacate notice and preserves the remaining term of bona fide fixed‑term leases except where the purchaser will occupy as a primary residence.
- The Court of Appeal held, as a matter of statutory interpretation, that the PTFA causes bona fide fixed‑term leases to survive foreclosure and binds the immediate successor in interest as a landlord (subject to the PTFA termination exception), reversing summary judgment and also reversing a broad protective order issued for servicer documents.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the PTFA make a bona fide fixed‑term lease survive foreclosure and create a landlord–tenant relationship with the successor in interest? | PTFA causes a landlord–tenant relationship for remaining lease term and successor owes landlord duties under state law. | PTFA only provides an eviction defense in court and at most requires a 90‑day notice; it does not make the purchaser a landlord. | PTFA impliedly causes bona fide fixed‑term leases to survive foreclosure; successor takes subject to the lease (but may terminate if purchaser will occupy), creating landlord–tenant relations for lease term. |
| Does PTFA preempt less‑protective state law that would extinguish a subordinate lease at foreclosure? | PTFA preempts contrary state law and preserves tenant rights unless state law provides greater protections. | Foreclosure law traditionally extinguishes subordinate leases; state rules should control. | PTFA supplants less protective state law; states may provide greater protections but not lesser. |
| Can tenants enforce PTFA protections via state law remedies (e.g., quiet enjoyment, wrongful eviction) despite no federal private right of action? | Tenants may seek state law remedies for successor conduct that interferes with possession/quiet enjoyment. | Because PTFA has no federal private right of action, it only functions as a defense in eviction proceedings. | Tenants may pursue state law claims; lack of federal private right does not preclude state remedies to enforce PTFA‑created rights. |
| Was summary judgment proper given disputed facts about respondents’ conduct (removal of belongings, denial of access) and servicer/vendor communications? | Evidence showed belongings dumped, police prevented reentry after servicer communications, and counsel’s letter refusing reinstatement — creating triable issues on constructive/actual eviction and breach of quiet enjoyment. | Respondents produced declarations denying they removed property, changed locks, or instructed police; no direct proof linking bank to dispossession. | Reversed summary judgment: triable issues exist (notably whether servicer/vendor conduct attributable to the bank contributed to third‑party interference and whether bank failed to identify/protect bona fide tenants). |
Key Cases Cited
- Peterson v. Superior Court, 10 Cal.4th 1185 (Cal. 1995) (landlord obligations—including implied warranty of habitability—apply to leased dwellings)
- Dover Mobile Estates v. Fiber Form Products, Inc., 220 Cal.App.3d 1494 (Cal. Ct. App. 1990) (trustee's deed passes title as of recording; subordinate leases extinguished by foreclosure under traditional law)
- Hohn v. Riverside County Flood Control etc. Dist., 228 Cal.App.2d 605 (Cal. Ct. App. 1964) (foreclosure of senior encumbrance terminates subordinate leases)
- Standard Live Stock Co. v. Pentz, 204 Cal. 618 (Cal. 1928) (covenant of quiet possession breached only upon actual or constructive eviction)
- Tooke v. Allen, 85 Cal.App.2d 230 (Cal. Ct. App. 1948) (tort of wrongful eviction for landlord’s campaign of acts depriving tenant of peaceful possession)
- Guntert v. City of Stockton, 55 Cal.App.3d 131 (Cal. Ct. App. 1976) (landlord’s obligation to avoid interference with tenant’s enjoyment; remedies for interference)
- Spinks v. Equity Residential Briarwood Apartments, 171 Cal.App.4th 1004 (Cal. Ct. App. 2009) (landlord liability where landlords acquiesced in removal of tenant’s property and changed locks)