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Another win for the homeowner in the Appellate Court

May 6, 2016


Oscar Bustamante appeals from a judgment dismissing his lawsuit against respondents U.S. Bank, N.A., and Wells Fargo Bank, N.A., after the trial court sustained their demurrer to his second amended complaint without leave to amend. Bustamante’s complaint followed a well-worn path trodden by many former homeowners who lost their homes in the wave of foreclosures during the recession. As had many before him, he alleged a defective transfer of his note and deed of trust to a real estate trust, robo-signed recorded documents, and other causes of action typical of these lawsuits. In the past, these complaints have not fared well. In February, however, the California Supreme Court issued its opinion in Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919 (Yvanova), which altered the legal landscape to some extent. Although declining to decide some important and vexing questions in this area, the court held that a borrower could base a cause of action for wrongful foreclosure on a void (but not voidable) trustee’s sale. The court sent the case back to give the plaintiff a chance to amend the complaint to see whether she could allege the necessary facts.

We believe Bustamante should be given the same chance. What makes the record in this case unusual is the number of times – three, to be exact – Wells Fargo apparently transferred its interest in Bustamante’s deed of trust to U.S. Bank. It is thus entirely possible that the trustee’s sale was noticed, conducted, and recorded by an unauthorized party. If it was, then the trustee’s sale would have been void, and Yvanova would apply; that is, Bustamante could state a cause of action for wrongful foreclosure. Likewise, if the trustee’s sale was void, the deed upon sale may have to be cancelled. Accordingly the order sustaining the demurrer without leave to amend, issued before the decision in Yvanova, is reversed as to these two causes of action, and Bustamante may amend them to allege facts necessary to establish wrongful foreclosure and cancellation of instruments.

The demurrer to the rest of the second amended complaint, however, was correctly sustained without leave to amend. Bustamante had three chances to state causes of action for negligence, unfair business practices and the like, and he has been unable to do so. The order sustaining the demurrer to these causes of action without leave to amend is affirmed.

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CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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