Ram v. OneWest Bank, FSB
234 Cal. App. 4th 1
| Cal. Ct. App. | 2015Background
- In 2005 Ram and Hafiz obtained a deed-of-trust loan; the loan was assigned to OneWest after First Federal closed and the FDIC transferred assets.
- On Sept. 7, 2010 Aztec Foreclosure Corporation recorded a notice of default signed “as trustee”; OneWest executed a substitution naming Aztec trustee on Sept. 24, 2010 and that substitution was recorded Dec. 9, 2010.
- Aztec recorded a notice of trustee’s sale Dec. 9, 2010; the sale ultimately occurred June 6, 2011 and OneWest purchased the property.
- Ram and Hafiz sued OneWest (and others) asserting wrongful foreclosure and related claims, arguing the foreclosure was void because Aztec lacked authority when it recorded the notice of default.
- The trial court sustained OneWest’s demurrer (with leave to amend some claims), plaintiffs did not amend, and the court dismissed OneWest; plaintiffs appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of foreclosure where notice of default was recorded by Aztec before formal substitution recorded | Ram: sale is void because Aztec recorded NOD as “trustee” before OneWest signed/recorded substitution, breaking chain of title | OneWest: statutes permit substitution after NOD if procedure followed; Aztec acted as agent and was later ratified; any defect is procedural | The court held the statutory scheme authorizes the procedure used; substitution and later recording gave Aztec authority and any defect was not jurisdictional |
| Whether Aztec lacked authority because it was not trustee when NOD recorded | Ram: Aztec had no authority as trustee (or agent) at time of NOD | OneWest: Aztec acted as OneWest’s agent and OneWest later ratified its actions by substituting Aztec as trustee; statutes and deed-of-trust procedures validated substitution | Court held plaintiffs alleged Aztec was agent but failed to plead facts showing lack of agency or prejudice; ratification and substitution conferred authority |
| Whether the sale is void (no tender/prejudice required) or voidable (tender/prejudice required) | Ram: alleged statutory defects rendered sale void so tender need not be pleaded | OneWest: any defect was at most voidable; plaintiffs must plead tender and prejudice | Court held defect, if any, was voidable, not void; plaintiffs were required to plead tender and prejudice and did not do so |
| Pleading requirement to set aside trustee’s sale | Ram: not required because sale void; alternatively argued procedural defect excused tender | OneWest: because sale was at worst voidable, equity requires tender and proof of prejudice | Court affirmed demurrer because plaintiffs failed to allege tender or prejudice; dismissal affirmed |
Key Cases Cited
- Moeller v. Lien, 25 Cal.App.4th 822 (1994) (describing nonjudicial foreclosure framework)
- Little v. CFS Service Corp., 188 Cal.App.3d 1354 (1987) (discussing void vs. voidable trustee’s sales)
- Dimock v. Emerald Props., 81 Cal.App.4th 868 (2000) (sale void where conducting entity lacked title/ability to convey)
- West v. JPMorgan Chase Bank, N.A., 214 Cal.App.4th 780 (2013) (procedural defects render sale voidable; tender required)
- Fontenot v. Wells Fargo Bank, N.A., 198 Cal.App.4th 256 (2011) (prejudice not presumed from mere irregularities)
- Debrunner v. Deutsche Bank Nat’l Trust Co., 204 Cal.App.4th 433 (2012) (delayed substitution of trustee did not warrant relief absent prejudice)
- Rossberg v. Bank of Am., N.A., 219 Cal.App.4th 1481 (2013) (to challenge NOD authority, plaintiff must allege lack of trustee and lack of agency)
- Arnolds Mgmt. Corp. v. Eischen, 158 Cal.App.3d 575 (1984) (equity requires tender to set aside trustee’s sale)