Siliga v. Mortgage Electronic Registration Systems, Inc.
219 Cal. App. 4th 75
| Cal. Ct. App. | 2013Background
- Siligas executed a June 2004 deed of trust on their residence securing a $280,000 loan from Accredited Home Lenders, with MERS named as nominee and beneficiary.
- QLS recorded a notice of default in March 2010; a corporate assignment in April 2010 purported to assign the deed of trust from MERS to Deutsche Bank, and a substitution of trustee naming QLS occurred in May 2010.
- Trustee's sale notices were recorded in August 2010, but the sale apparently has not occurred; the record shows ongoing foreclosure activity.
- The Siligas filed a complaint in 2011 alleging MERS lacked authority to assign and QLS lacked authority to record the notice of default, plus statutory and UCL/quiet title claims.
- The trial court sustained a demurrer without leave to amend as to most counts, concluding MERS had authority to assign the deed of trust and the complaint failed on other theories.
- On appeal, the court affirmed, concluding the foreclosure framework precludes preemptive challenges to authority and that the Siligas failed to plead prejudice or viable claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether MERS lacked authority to assign the deed of trust and note. | Siligas: MERS had no authority to assign. | MERS as nominee had authority under the deed of trust and Fontenot/Herrera support this. | MERS had authority; demurrer proper. |
| Whether the deed of trust provision granting MERS authority is unconscionable. | Provision is unconscionable and overbroad. | Provision is not unconscionable; does not authorize illegal foreclosures. | Provision not unconscionable; not a basis to void foreclosure. |
| Whether QLS could validly record a notice of default when not trustee in possession. | QLS had no authority to record. | Civ. Code § 2924 allows trustee, mortgagee, or beneficiary or their agents to record a notice of default. | QLS had authority; notice of default valid. |
| Whether Siligas adequately plead prejudice from alleged irregularities in foreclosure. | Irregularities caused prejudice and injury. | No showing of prejudice; no standing to challenge lack of authority absent prejudice. | No adequate prejudice shown; claims fail. |
| Whether Siligas should be granted leave to amend their breach, UCL, and quiet title claims. | Leave to amend to allege damages and other defects should be granted. | Demurrer proper; amendment unlikely to cure defects; preemptive action barred. | No reversible error; amendment not warranted. |
Key Cases Cited
- Fontenot v. Wells Fargo Bank, N.A., 198 Cal.App.4th 256 (Cal. Ct. App. 2011) (MERS authority as nominee defined; authority to assign depends on agency agreement)
- Gomes v. Countrywide Home Loans, Inc., 192 Cal.App.4th 1149 (Cal. Ct. App. 2011) (MERS authority to foreclose as stated in deed of trust; assignment authority implied)
- Herrera v. Federal National Mortgage Ass’n, 205 Cal.App.4th 1495 (Cal. Ct. App. 2012) (MERS authority to exercise lender rights including foreclose)
- Jenkins v. JPMorgan Chase Bank, N.A., 216 Cal.App.4th 497 (Cal. Ct. App. 2013) (Preemptive foreclosure suits barred absent specific factual basis)
- Moeller v. Lien, 25 Cal.App.4th 822 (Cal. Ct. App. 1994) (Nonjudicial foreclosure framework; purposes and exhaustion of statutory scheme)
- Debrunner v. Deutsche Bank National Trust Co., 204 Cal.App.4th 433 (Cal. Ct. App. 2012) (No requirement that foreclosing party possess original note)