Sunday, August 12, 2012

Barrionuevo et al v. Chase Bank .... “Cal Reconveyance cannot conduct a valid foreclosure sale"

 Contributed by Deontos:


Plaintiffs Jose and Flor Barrionuevo (collectively “the Barrionuevos”) sued Defendants JP Morgan Chase Bank (“Chase”) and California Reconveyance Corporation (“California Reconveyance”) on February 3, 2012, after California Reconveyance attempted to foreclose on a Deed of Trust (“DOT”) that the Barrionuevos executed for the purchase of a home in California. . …... Having considered the papers filed in support of and in opposition to the instant Motion, the Court deems the matter appropriate for decision without oral argument. ….. For the following reasons, Defendants’ motion is DENIED.
. . .
C. Wrongful Foreclosure
The Barrionuevos’ cause of action for wrongful foreclosure is based upon their belief that  Cal Reconveyance cannot conduct a valid foreclosure sale on behalf of Defendant JP Morgan because it is not the true present beneficiary under Plaintiffs’ Deed of Trust.
. . .
Related to the allegation that Chase did not acquire Plaintiffs’ DOT from Washington Mutual, the Barrionuevos further base their wrongful foreclosure claim on the grounds that the Defendants have failed to comply with California Civil Code § 2932.5 in that they have not “recorded a document in the public chain of title reflecting from whom [they] acquired the beneficial interest  . . .
Deed of Trust,” as required by the statute.

Where a power to sell real property is given to a mortgagee, or other
encumbrancer, in an instrument intended to secure the payment of
money, the power is part of the security and vests in any person who
by assignment becomes entitled to payment of the money secured by
the instrument. The power of sale may be exercised by the assignee if
the assignment is acknowledged and recorded.
. . .

Thus, insofar as Plaintiffs contend that the Notice of Default is invalid due to a lack of authority to foreclose, their wrongful foreclosure claim is similar to those advanced in Sacchi, Javaheri, Ohlendorf, Skoba, and, of course, this Court’s ruling in Tamburri.
Accordingly, this Court finds that the Plaintiffs have sufficiently stated a claim for wrongful  foreclosure. Regardless of whether § 2932.5 applies, under California law a party may not foreclose  without the legal power to do so. Plaintiff alleges that the wrong parties issued the Notice of  Default. At the 12(b)(6) stage, given the factual uncertainties underlying the parties’ arguments, Plaintiffs’ claim is sufficient to withstand a motion to dismiss.
. . .
D. Slander of Title
The California Court of Appeals for the Fifth District recently outlined the elements required
to successfully bring a cause of action for slander of title. In Sumner Hill Homeowners’ Assn., Inc.
v. Rio Mesa Holdings, LLC ... 

Accordingly, to the extent Defendants’ Motion to Dismiss reaches Plaintiffs’ action for slander of title, Plaintiffs have met their burden to plead sufficient “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
This case(Sumner) may be discussed for some time and not only because of the quandary of how to spell Kilkelly.  The case rests on some very old principles which affect navigable water issues and equitable easements for common areas of developments.  The case also blazes some new trails ruling on issues like equitable easements for off record private gated communities, equitable easements related to slander of title, and damage claims related to slander of title.  As a result, we may witness more enthusiasm for slander of title in the near future.

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