Tuesday, May 12, 2020
Page 1
Ninth Circuit:
California Law Precludes Pre-Foreclosure Suits Challenging Mortgage-Holder’s Standing
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals held yesterday that California law does not permit actions to block foreclosures, with relief available, if at all, only after the real property has been foreclosed upon.
Circuit Judge Ronald M. Gould wrote the opinion which affirms two dismissals with prejudice of actions against banks brought by Bella Perez and Enrique Perez. One dismissal was by District Court Judge Troy L. Nunley of the Eastern District of California and the other by District Court Judge James Donato of the Northern District of California.
The Perezes contended in each case that a bank was powerless to foreclose on a property because the assignment of the deed of trust to it was invalid.
State Supreme Court
Gould made note of the California Supreme Court’s 2016 decision in Yvanova v. New Century Mortgage Corp. where it was held that a borrower, in an action for a wrongful foreclosure, may challenge the assignment on the ground that it was void. That decision, he said, was limited to post-foreclosure proceedings.
The state’s high court, the jurist noted, has not addressed the question of whether a pre-foreclosure action may be brought on the same basis. However, he pointed to state cases that have declined to so extend Yvanova, and declared:
“[T]he existing California appellate cases demonstrate that, both before and after Yvanova, California appellate courts have dismissed preemptive, pre-foreclosure actions. There is no convincing evidence the California Supreme Court would Thus, we follow the decisions of the California appellate courts in holding that California law does not permit preemptive actions to challenge a party’s authority to pursue foreclosure before a foreclosure has taken place.”
Not Viable Actions
Gould went on to say:
“Because no foreclosures have taken place, Appellants’ suits are pre-foreclosure judicial actions that preemptively challenge the banks’ authority to foreclose on their properties in the future. Such actions are not viable under California law.”
He said that the Ninth Circuit has, in unpublished memorandum opinions in other diversity cases applying California law, found pre-foreclosure actions barred. One of two cases to which Gould drew attention was Yagman v. Nationstar Mortgage, LLC, decided in 2016.
There, disbarred lawyer Stephen Yagman was the plaintiff/appellant. A three-judge panel said:
“Yvanova provides no assistance to Yagman; his property has not been subject to a nonjudicial foreclosure. As we have in the past, we join the majority of courts that have declined to extend Yvanova.”
Gould explained the decision to publish the opinion, saying:
“Because of the number of such similar litigations and appeals, we now write for publication to describe currently applicable California law.”
The case is Perez v. MERS, 2020 S.O.S. 18-16584.
Copyright 2020, Metropolitan News Company