Yuri Doering v. Veronica Diaz
2:25-cv-01700
C.D. Cal.Jul 3, 2025Background
- Sun West Mortgage Co. (Sun West) and First National Bank of Pennsylvania (FNB) were parties (as successor to First Mariner/Howard Bank) to a 2017 Settlement Agreement regarding indemnity and repurchase of certain reverse mortgage loans originally serviced and sold to FNMA.
- The dispute centered on two reverse mortgage loans (Barner Loan and Hastings Loan), both originally originated by First Mariner and later subject to title or legal defects that led FNMA to demand repurchase from Sun West.
- Sun West repurchased both loans from FNMA and sought indemnification/repurchase from FNB under the Settlement Agreement; FNB refused.
- Relevant contract provisions required Sun West to notify FNB within 10 business days of any repurchase demand and to pass through to FNB any opportunity to seek relief from FNMA (e.g., appeal a repurchase demand).
- The court conducted a bench trial, ultimately analyzing whether Sun West had performed necessary contractual obligations for indemnification, and considered FNB’s affirmative defenses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of Contract (Barner Loan) | Sun West performed, FNB must repurchase or indemnify | FNB not liable; Sun West failed to appeal or notify, breaching agreement | For FNB; Sun West did not substantially perform, barring recovery |
| Breach of Contract (Hastings Loan) | Sun West performed and properly notified; entitled to recovery | FNB not liable due to delay or insufficient notice/waiver/release | For Sun West; FNB breached by not repurchasing, Sun West entitled to damages |
| Breach of Implied Covenant (Hastings Loan) | FNB failed to act in good faith by refusing indemnification | No breach—alleged non-performance/waivers | For Sun West; FNB breached covenant with failure to repurchase |
| Affirmative Defenses (Hastings Loan) | Sun West met obligations, no mitigation/laches or estoppel | Sun West failed to mitigate, untimely notice, claims barred | For Sun West; FNB’s defenses rejected, Sun West substantially complied |
Key Cases Cited
- Aton Ctr., Inc. v. United Healthcare Ins. Co., 93 Cal. App. 5th 1214 (breach of contract elements under California law)
- Thrifty Payless, Inc. v. The Americana at Brand, LLC, 218 Cal. App. 4th 1230 (implied covenant of good faith and fair dealing standard)
- Wyler Summit P’ship v. Turner Broadcasting Syst., Inc., 235 F.3d 1184 (laches unavailable for legal claims in California)
- Waller v. Truck Ins. Exch., Inc., 11 Cal. 4th 1 (the law of waiver—requires clear, intentional relinquishment)
- Wells Fargo Bank v. Goldzband, 53 Cal. App. 4th 596 (elements of equitable estoppel in California law)