Developments of Interest

New Cases of Interest - March 23, 2016

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Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919.  In this case the Supreme Court addresses an issue which has been a subject of multiple appellate court decisions, whether a non-judicial foreclosure is wrongful because an assignment of the beneficial interest in the deed of trust was not merely voidable, but was in fact void.  The court describes its ultimate ruling as a narrow one, in holding that a borrower who had suffered a non-judicial foreclosure does not lack standing to sue for wrongful foreclosure based on an allegedly void assignment, merely because the borrower was in default on the loan and was not a party to the challenged assignment.

The court reasons that only an entity holding a beneficial interest under a deed of trust may instruct the trustee to commence and conduct a non-judicial foreclosure.  If the purported assignment of the beneficial interest in the deed of trust which would be necessary in the chain of documents to support the foreclosing entity's claim to foreclose is absolutely void, then the foreclosing entity is acting without legal authority and such an unauthorized sale would constitute a wrongful foreclosure.

In this case Plaintiff alleged that her deed of trust was assigned several years after the securitized trust closing date and a bankruptcy liquidation, resulting in a defect in the assignment which Plaintiff alleged rendered the assignment void.  This was sufficient to state a cause of action.

In reaching this result, the court disapproved to the extent inconsistent Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497; Siliga v. Mortgage Electronic Registration Systems, Inc. (2013) 219 Cal.App.4th 75; Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256; and Herrera v. Federal National Mortgage Assn. (2012) 205 Cal.App.4th 1495.

Sweetwater Union High School Dist. v. Gilbane Building Co. (2016) 245 Cal.App.4th 19.  This was a SLAPP case.  A school district sought to void certain contracts with the Defendants who had allegedly engaged in a pay-to-play scheme intended to influence school district officials in awarding construction contracts.  The District had also sought disgorgement of all sums that were paid under the contracts.  The Defendant filed a SLAPP motion which was denied and the denial was affirmed.  The school district demonstrated on the evidence provided a probability of prevailing on the merits.

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