2017-00224073-CU-OR

Tatyana Krivoshey vs. MCI Financial, Inc.

Nature of Proceeding: Hearing on Demurrer to the 1st Amended Complaint

Filed By: Yang, Elaine

Defendant Cam XVIII Trust’s (“CAM”) demurrer to plaintiff Tatyana and Viktor Krivoshey’s (collectively, “Plaintiffs”) First Amended Complaint (“FAC”) is DENIED.

CAM’s request for judicial notice is granted. However, in taking judicial notice of the recorded land documents, the court accepts the fact of their existence, not the truth of their contents. (Herrera v. Deutsche Bank Nat’l Trust Co. (2011) 196 Cal.App.4th 1366, 1375.)

In this wrongful foreclosure action, plaintiff Tatyana Krivoshey (“Tatyana”) obtained a loan from America’s Wholesale Lender (“AWL”) in the amount of $277,600 (the “Loan”), and a deed of trust secured by the property was recorded on February 28, 2005 (“DOT”). (FAC ¶ 153.) Mortgage Electronic System, Inc. (“MERS”) was the beneficiary under the DOT. Various assignments of the DOT were then recorded, which purport to assign the DOT to Countrywide, then to PROF-2013-M4, and then

finally to CAM. (FAC ¶¶ 22, 77, 86, 88-95; RJN Exhs. C, E, G.) CTC Real Estate Services was recorded as the original trustee under the DOT. Thereafter, two Substitutions of Trustee were recorded, which purport to substitute Recontrust Company, N.A. as the trustee and then, later, MTC Financial Inc. dba Trustee Corps. as the trustee. (RJN, Exhs. A, B, and D.)

CAM now demurs to the only cause of action alleged against it for wrongful foreclosure on the ground that Plaintiffs have failed to allege the required element of tender.

The elements of an equitable cause of action to set aside a foreclosure sale are: (1) the trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust; (2) the party attacking the sale was prejudiced or harmed; and (3) in cases where the trustor or mortgagor challenges the sale, the trustor or mortgagor tendered the amount of the secured indebtedness or was excused from tendering. (Lona v. Citibank, N.A. (Cal.App.6th Dist. 2011) 202 Cal.App.4th 89, 104.)

Tender is a required allegation for any cause of action for irregularity in the non-judicial foreclosure sale procedure. (Abdallah v. United Sav. Bank (1996) 43 Cal.App.4th 1101, 1109.) “The rationale behind the [tender] rule is that if [the borrower] could not have redeemed the property had the sale procedures been proper, any irregularities in the sale did not result in damages to the [borrower].” (FPCI RE-HAB 01 v. E & G Investments, Ltd. (1989) 207 Cal.App.3d 1018, 1022.)

There are four exceptions, however, to the tender requirement. “First, if the borrower’s action attacks the validity of the underlying debt, a tender is not required since it would constitute an affirmation of the debt. [Citation.] Second, a tender will not be required when the person who seeks to set aside the trustee’s sale has a counterclaim or setoff against the beneficiary. In such cases, it is deemed that the tender and the counterclaim offset one another, and if the offset is equal to or greater than the amount due, a tender is not required. [Citation.] Third, a tender may not be required where it would be inequitable to impose such a condition on the party challenging the sale. [Citation.]” (Lona, supra, 202 Cal. App. 4th at 112-113 [Citations omitted.].) Fourth, no tender will be required when the trustor is not required to rely on equity to attack the deed because the trustee’s deed is void on its face. [Citation.] [beneficiary substituted trustees; trustee’s sale void where original trustee completed trustee’s sale after being replaced by new trustee because original trustee no longer had power to convey property].)” (Lona, supra, 202 Cal. App. 4th at 112-113 [Citations omitted.] (emphasis added).)

Plaintiffs contend they are excused from alleging tender because they are alleging that the trustee’s deed is void on its face. Plaintiffs allege throughout the FAC that the first Assignment of Deed of Trust (“ADOT1”) and first Substitution of Trustee (“SOT1”) are void on their face because the persons executing the documents did not have the requisite authority to do so and the notary signature is forged. In turn, the FAC alleges the resulting assignments and substitutions are void as well. (FAC ¶¶ 21, 28, 33, 36, 42, 48, 50, 78-95.) CAM contends the FAC is premised on an attack on CAM’s authority under the DOT and ignores the judicially noticeable public record, which establishes CAM’s authority to foreclose on the property. As noted above, however, in taking judicial notice of the recorded documents, the Court simply accepts the fact of their existence, not the truth of their contents. (Herrera v. Deutsche Bank Nat’l Trust Co. (2011) 196 Cal.App.4th 1366, 1375.) Therefore, the contents of the recorded

documents have not been accepted by the Court.

For pleading purposes, the Court finds the FAC states a claim against CAM for wrongful foreclosure as Plaintiffs have alleged the assignments of the DOT and that the substitutions are void on their face and, therefore, CAM allegedly lacked the authority to foreclose on the property. A demurrer admits the truth of all material facts properly pled and the sole issue raised by a general demurrer is whether the facts pled state a valid cause of action – not whether they are true. (Serrano v. Priest (1971) 5 Cal. 3d 584, 591.) Taking Plaintiff’s allegations as true, Plaintiff has sufficiently alleged an exception to the tender rule.

The demurrer is OVERRULED.

This minute order is effective immediately. No formal order pursuant to CRC rule 3.1312 or other notice is required.