Sciarratta v. U.S. Bank National Ass'n
247 Cal. App. 4th 552
| Cal. Ct. App. | 2016Background
- In 2005 Sciarratta obtained a $620,000 loan secured by a deed of trust; Washington Mutual (WaMu) was the original lender and CRC the trustee.
- Chase (successor to WaMu) recorded an assignment to Deutsche Bank in April 2009. CRC recorded a notice of default and then a notice of trustee’s sale for August 2009.
- In November 2009 Chase recorded an assignment purporting to transfer the deed of trust to Bank of America; Bank of America conducted the trustee’s sale and acquired the property by credit bid.
- Sciarratta sued in federal court before the sale; that action was dismissed with prejudice in 2012. She later filed a state action alleging wrongful foreclosure, quiet title, and cancellation of instruments, claiming the Bank of America assignment was void because Chase had already assigned the loan to Deutsche Bank.
- The trial court sustained a demurrer to her first amended complaint (held to require pleading prejudice) without leave to amend and dismissed. The Court of Appeal reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a homeowner pleads sufficient prejudice for wrongful foreclosure when foreclosure was conducted by an entity with no right due to a void assignment | Sciarratta: the fact that a non-debtholder foreclosed (void assignment) is itself prejudicial; no further allegation of ability to avoid foreclosure is required | Defendants: plaintiff must plead specific prejudice showing she could have avoided foreclosure (e.g., ability to tender or that original holder would not have foreclosed) | Held: Allegation that a non-debtholder foreclosed (void assignment) suffices to plead prejudice for wrongful foreclosure; the void assignment proximately caused the injury |
| Whether assignment to Bank of America was void or merely voidable | Sciarratta: Chase had already assigned the loan to Deutsche Bank in April 2009, so the November 2009 assignment to Bank of America was void (Chase had nothing to assign) | Defendants: corrective assignment and record evidence show Bank of America was beneficiary; any errors were procedural and correctable | Held: On demurrer, the recorded April assignment supports plaintiff’s allegation that the November assignment was void; defendants’ contrary factual framing rejected for pleading-stage review |
| Whether tender is required for wrongful foreclosure, quiet title, and cancellation where assignment is alleged void | Sciarratta: tender is excused when the foreclosure is alleged to be void (not voidable) | Defendants: tender is necessary to challenge foreclosure/sue for quiet title | Held: Where the assignment is alleged void (not voidable), tender is not required for wrongful foreclosure, quiet title, or cancellation causes of action |
| Whether Yvanova permits borrower standing to challenge void assignments | Sciarratta: Yvanova supports borrower standing and implies prejudice from void assignments | Defendants: argue narrower reading requiring additional prejudice allegations | Held: Yvanova’s policy rationale supports allowing wrongful foreclosure claims based on void assignments and treating foreclosure itself as sufficient prejudice |
Key Cases Cited
- Yvanova v. New Century Mortg. Corp., 62 Cal.4th 919 (2016) (borrower has standing to challenge a nonjudicial foreclosure based on a void assignment)
- Glaski v. Bank of Am., 218 Cal.App.4th 1079 (2013) (assignment void where assignor had nothing to assign; tender excused when foreclosure is void)
- Miles v. Deutsche Bank Nat’l Tr. Co., 236 Cal.App.4th 394 (2015) (policy reasons to allow challenges to wrongful foreclosures and measure of damages)
- Culhane v. Aurora Loan Servs., 708 F.3d 282 (1st Cir. 2013) (assignment is void where assignor had no interest to assign)
- Wilson v. HSBC Mortg. Servs., 744 F.3d 1 (1st Cir. 2014) (same principle on void assignments)
- Fontenot v. Wells Fargo Bank, N.A., 198 Cal.App.4th 256 (2011) (interprets prejudice narrowly; disapproved on standing by Yvanova)
- Herrera v. Fed. Nat. Mortg. Ass’n, 205 Cal.App.4th 1495 (2012) (narrow view of prejudice where borrower defaulted; disapproved on standing by Yvanova)