Yvanova v. New Century Mortgage Corp.
62 Cal. 4th 919
| Cal. | 2016Background
- Yvanova executed a deed of trust in 2006; New Century was beneficiary; New Century liquidated in 2008.
- A recorded assignment dated December 19, 2011 purported to assign the deed of trust to Deutsche Bank as trustee for a Morgan Stanley securitized trust; trustee sale occurred and property sold in 2012.
- Plaintiff alleged the December 2011 assignment was void because (1) New Century had been liquidated in 2008 and (2) the securitization trust closed to new loans in 2007.
- Trial court sustained defendants’ demurrer to plaintiff’s quiet title claim; Court of Appeal affirmed and held plaintiff lacked standing to challenge the assignment.
- The Supreme Court granted review limited to whether a borrower may challenge an assignment as void in a wrongful-foreclosure action and reversed the Court of Appeal on the standing issue.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a borrower has standing to challenge a challenged assignment to foreclosing party as void in a wrongful-foreclosure suit | Yvanova: borrower may challenge an assignment as void (not merely voidable) because only a valid beneficiary/assignee can direct a trustee sale | Defendants: borrower is not a party to the assignment, lacks standing; any defect only harms other contracting parties and borrower suffered no cognizable injury | Held: Yes. A borrower who suffered a nonjudicial foreclosure may challenge an assignment as void because a void assignment means the foreclosing party lacked authority to direct a trustee sale, giving the borrower a concrete injury |
| Distinction between void vs. voidable assignment — relevance to standing | Void assignments are null ab initio and may be challenged by borrower; voidable assignments are matters for parties to the assignment | Defendants: challenges involving securitization/PSA violations are third-party contract issues and only raise voidable defects | Held: The court adopts the void/voidable distinction: borrowers may challenge assignments alleged to be void but not those merely voidable |
| Whether preemptive suits to block foreclosure are permitted | Plaintiff sought damages for completed sale, not preemptive relief; argues wrongful-foreclosure claim is available post-sale | Defendants: allowing challenges undermines the nonjudicial foreclosure scheme and enables delay tactics | Held: Court does not decide preemptive-injunction question here; ruling is limited to post-sale wrongful-foreclosure standing |
| Whether the pleaded facts actually show the assignment was void | Plaintiff alleges post-closing transfer and liquidation made assignment void | Defendants: factual and documentary arguments that assignment was confirmatory or otherwise valid | Held: Court does not decide the merits of whether the assignment here is actually void; only holds plaintiff has standing to plead and try wrongful-foreclosure claim based on an alleged void assignment |
Key Cases Cited
- Glaski v. Bank of America, 218 Cal.App.4th 1079 (Cal. Ct. App.) (borrower may challenge assignment as void to support wrongful-foreclosure claim)
- Jenkins v. JPMorgan Chase Bank, N.A., 216 Cal.App.4th 497 (Cal. Ct. App.) (held borrower lacked standing to challenge assignments as nonparty; disapproved here to extent it declined to allow challenges to void assignments)
- Culhane v. Aurora Loan Servs. of Neb., 708 F.3d 282 (1st Cir.) (borrower has standing to challenge assignment as void where necessary to contest foreclosing entity’s status)
- Reinagel v. Deutsche Bank Nat. Trust Co., 735 F.3d 220 (5th Cir.) (distinguished void vs. voidable; obligor may defend against an assignment alleged to be void)
- Barrionuevo v. Chase Bank, N.A., 885 F.Supp.2d 964 (N.D. Cal.) (only true beneficiary or assignee may complete a nonjudicial foreclosure; wrongful-foreclosure remedy where unauthorized sale occurred)
- Colby v. Title Insurance & Trust Co., 160 Cal. 632 (Cal. 1911) (void acts are nullities and cannot be validated)
- Cockerell v. Title Ins. & Trust Co., 42 Cal.2d 284 (Cal. 1954) (deed of trust follows the note; assignment proof required to establish claimant’s right to enforce)