Sandri v. Capital One, N.A. (In re Sandri)
501 B.R. 369
Bankr. N.D. Cal.2013Background
- Debtor Cheryl Sandri executed a 2005 promissory note and deed of trust (DOT) in favor of Chevy Chase; MERS was named beneficiary/nominee. Debtor defaulted on the loan.
- Chevy Chase allegedly sold the loan into the CCFM 2006-1 securitization trust (PSA closed March 17, 2007); U.S. Bank acted as trustee; Capital One later succeeded Chevy Chase.
- In 2011 an assignment from MERS to Capital One and a notice of default were recorded; a substitution of trustee was later recorded. No trustee’s sale has occurred.
- Debtor filed Chapter 13 after the notice of default and brought an adversary complaint alleging slander of title, wrongful foreclosure, breach of agreement, violation of Cal. Civ. Code § 2923.5, and unfair competition based largely on alleged improper securitization, post-PSA assignments, and robo-signing.
- Defendants moved to dismiss under Rule 7012 (Rule 12(b)(6) standards); court took judicial notice of bankruptcy filings and considered documents referenced in the complaint.
- The court granted the motion to dismiss (without leave to amend) as to the securitization-related claims, finding lack of cognizable claim, lack of prejudice, prematurity, and lack of standing to enforce the PSA; the § 2923.5 claim could not obtain effective relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Robo-signing | Assignment/substitution signed by Charity Henson was invalid robo-signing that voids documents | Robo-signing does not invalidate notices or foreclosures where borrower defaulted | Robo-signing allegations do not state a claim because Debtor does not dispute default; no effect on validity here |
| Challenge to assignments based on PSA (post-closing transfers) | Assignments after PSA closing are invalid/void and render DOT unenforceable (relying on Glaski) | Borrower lacks standing to enforce PSA; securitization does not alter borrower’s obligations; post-closing transfers are voidable, not void | Court rejects Glaski; majority rule applies: borrower lacks standing to attack PSA/assignments and cannot void obligations |
| Prejudice / Prematurity of relief | Debtor seeks preemptive declaration preventing foreclosure due to defective assignments | No foreclosure sale occurred; borrower must show prejudice and cannot obtain preemptive relief | Claims are premature and fail for lack of prejudice; injunctive relief would improperly interfere with nonjudicial foreclosure process |
| Cal. Civ. Code § 2923.5 violation | Lender/servicer failed to contact Debtor 30 days before recording NOD | Even if violation occurred, remedy is limited to postponing an impending foreclosure sale | § 2923.5 claim cannot obtain effective relief because no foreclosure sale is pending |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard: plausibility required)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (antitrust pleading standard; plausibility framework)
- Swartz v. KPMG LLP, 476 F.3d 756 (9th Cir. 2007) (courts may consider documents referenced in complaint and judicially noticed records on 12(b)(6))
- Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (2007) (standard for accepting allegations in pleadings)
- Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 1034 (9th Cir. 2011) (MERS can assign DOT and securitization does not eliminate power of sale)
- Zadrozny v. Bank of N.Y. Mellon, 720 F.3d 1163 (9th Cir. 2013) (mortgage instrument terms can preclude borrower’s standing challenge after securitization)
- Glaski v. Bank of America, 218 Cal.App.4th 1079 (Cal. Ct. App. 2013) (outlier holding that post-closing transfers could be void under trust law)
- Siliga v. Mortgage Elec. Registration Sys., Inc., 219 Cal.App.4th 75 (Cal. Ct. App. 2013) (borrowers lack standing to challenge assignee’s authority where borrower in default)
- Nordeen v. Bank of America, N.A. (In re Nordeen), 495 B.R. 468 (9th Cir. BAP 2013) (securitization does not alter enforceability of note/DEED; plaintiffs lacked standing)
- Calderon v. Bank of Am. N.A., 941 F. Supp. 2d 753 (W.D. Tex. 2013) (New York trust law treats transfers in violation of PSA as voidable, not void)