Saterbak v. JP Morgan Chase Bank CA4/1
245 Cal. App. 4th 808
| Cal. Ct. App. | 2016Background
- In 2007 Saterbak borrowed $1,000,000 secured by a deed of trust (DOT) naming MERS as nominee; the loan could be sold and MERS could exercise lender rights.
- The 2007-AR7 REMIC trust (governed by a PSA) had a closing date of September 18, 2007, by which loans had to be transferred into the trust.
- MERS executed an assignment of the DOT to Citibank as trustee for the 2007-AR7 trust on December 27, 2011, recorded December 17, 2012; Saterbak later defaulted.
- Saterbak sued (pre-foreclosure) alleging the assignment was invalid because it occurred after the trust closing date and the assignment was forged/robo-signed; she sought cancellation under Civ. Code §3412 and declaratory relief.
- The trial court sustained the demurrer without leave to amend for lack of standing; Saterbak appealed and the Court of Appeal affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does a borrower have standing to challenge a DOT assignment as violating a REMIC PSA (untimely securitization)? | Saterbak: assignment was void under the PSA because transfer occurred after trust closing; she can cancel the assignment. | 2007-AR7/Chase: borrower is a nonparty to the PSA and lacks standing; only transferor/transferee are injured by improper assignment. | Held: No standing — borrower is an unrelated third party; Jenkins controls. |
| Can borrower challenge assignment as forged/robo-signed (pre-foreclosure) without showing reliance or prejudice? | Saterbak: signature was forged/robo-signed, rendering assignment void; title clouded under §3412. | Defendant: borrower did not rely on assignment and suffered no prejudice; assignment did not change payment obligations. | Held: No standing — no allegation of reliance/prejudice; obligations unchanged. |
| Does the DOT's language or presuit notice provisions give borrower standing to attack assignments? | Saterbak: DOT wording and adhesion-contract protections imply borrower can challenge invalid assignments. | Defendant: DOT expressly allowed sale/assignment and MERS to act as nominee; no reasonable expectation borrower could challenge unrelated assignments. | Held: DOT does not confer standing; language contemplates transferability. |
| Do HBOR (Cal. Civ. Code §2924.17/2924.12) or §3412 permit borrower to cancel assignment pre-foreclosure? | Saterbak: HBOR and §3412 authorize challenge and cancellation for inaccurate assignment; HBOR grants remedies for material violations. | Defendant: HBOR effective Jan 1, 2013 and does not retroactively reach a 2011 assignment; §3412 requires instrument be void/voidable against the party and show serious injury. | Held: HBOR not retroactive to the assignment date; §3412 does not change standing — plaintiff failed to allege the assignment was void as to her or that she suffered serious injury. |
Key Cases Cited
- Fontenot v. Wells Fargo Bank, N.A., 198 Cal.App.4th 256 (2011) (borrower bears burden to plead facts showing assignment impropriety; assignment typically does not change borrower obligations)
- Jenkins v. JPMorgan Chase Bank, N.A., 216 Cal.App.4th 497 (2013) (borrower, as nonparty to securitization, lacks standing to enforce PSA or challenge assignment pre-foreclosure)
- Siliga v. Mortgage Electronic Registration Systems, Inc., 219 Cal.App.4th 75 (2013) (no standing where borrower showed no prejudice and did not dispute default)
- Gomes v. Countrywide Home Loans, Inc., 192 Cal.App.4th 1149 (2011) (preemptive court challenges to MERS's authority to initiate nonjudicial foreclosure are disfavored)
- Herrera v. Federal Nat. Mortg. Assn., 205 Cal.App.4th 1495 (2012) (assignments do not necessarily alter borrower obligations; no prejudice from assignment)
- Ram v. OneWest Bank, FSB, 234 Cal.App.4th 1 (2015) (substantial defects in procedure or authority can void a foreclosure sale; distinguishes void vs. voidable instruments)
- Folgelstrom v. Lamps Plus, Inc., 195 Cal.App.4th 986 (2011) (standard of review on demurrer; assume truth of pleaded facts)