Developments of Interest

New Cases of Interest - May 21, 2012

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Bank of America N.A. v. Mitchell (2012) 204 Cal.App.4th 1199.  This was a case in which a mortgage loan was split into two parts, a first and a second deed of trust secured the two parts of the loan and the loans went into default.  The first deed of trust was foreclosed nonjudicially, and the second deed of trust was then assigned.  The assignee attempted to seek a deficiency on the second deed of trust.  The court found that such a deficiency was not available, although generally a sold out junior creditor can recover a deficiency following a nonjudicial foreclosure sale.  The exception which allows such a deficiency does not apply the court determined when the junior lien was also created by the same party who held the senior lien and then foreclosed.  That lender could not have obtained a deficiency judgment if the two loans had been part of a single loan, and should not as a matter of public policy be allowed to avoid the statutory result by the structure of the loan transaction.

Donovan v. Dan Murphy Foundation (2012) 204 Cal.App.4th 1500.  A former director of a non-profit charitable organization sued the organization and its current directors alleging that he was wrongfully removed after he had raised concerns about financial oversight and governance.  The defendants brought a SLAPP motion which the trial court granted.  The court of appeal however reversed the order of the trial court finding that the conduct which gave rise to the plaintiff’s cause of action was not encompassed within the SLAPP statute.  The court found that the plaintiff’s allegation that his removal as a director was illegal and in retaliation for his efforts seeking compliance with California corporation and trust laws was not an act simply in furtherance of a person’s right to free speech or petition.  The court also concluded that a board of director’s meeting by a non-profit charitable organization is not an official proceeding with the meaning of the SLAPP statute, and a vote by that board, including the vote here to remove the plaintiff from the board, was not in furtherance of the exercise of the Constitutional right of petition or of free speech in connection with a public issue or an issue of public interest.  The defendants presented no evidence of widespread public interest in the financial oversight or governance of their organization and did not show that the complaint challenged any statement or writing by a director. 

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