Attention attorneys practicing in the area of California mortgage foreclosure litigation.

You may be interested in the recently published decision of Ragland v. U.S. Bank, G045580, September 11, 2012. [The Fourth District Court of Appeal, Division 3]. (See linked opinion below) Since a Petition for Review has not been filed, this decision is now final.

The court concluded that a private right of action exists under California Civil Code Section 2924g(d), and it was not preempted by federal law. The court also concluded that a cause of action for intentional infliction of emotional distress may be brought, arising out of a wrongful foreclosure where the lender’s conduct was so extreme as to be beyond the bounds of decency. The court concluded that sufficient facts/evidence were presented to survive a motion for summary judgment, and reversed the trial court on several causes of action.

Re Civil Code Section 2924g(d):

Section 2924g(d) requires a seven-day waiting period for resetting a foreclosure sale date. In Raglund, the foreclosure sale was held one day after the expiration of a court order that would have postponed a foreclose sale date, had certain conditions occurred. The purpose of the statute was to allow the Trustor [home owner – debtor] notice of the new sale date and to allow them time to make arrangement to attend the sale to make sure their interests are protected.

“In their summary judgment motion, Defendants argued section 2924g(d) does not create a private right of action and is preempted by federal law. Although Defendants do not make those arguments on appeal, we address, due to their significance, the issues whether section 2924g(d) creates a private right of action and whether it is preempted by federal law. Following the reasoning of Mabry v. Superior Court (2010) 185 Cal.App.4th 208 (Mabry), we conclude section 2924g(d) creates a private right of action and is not preempted.”

Slip Opinion at p. 20.

“The purpose of the seven-day waiting period under section 2924g(d) was not, however, to permit reinstatement of the loan, “but to ‘provide sufficient time for a trustor to find out when a foreclosure sale is going to occur following the expiration of a court order which required the sale’s postponement’ and ‘provide the trustor with the opportunity to attend the sale and to ensure that his or her interests are protected.’ [Citation].” (Hicks v. E.T. Legg & Associates (2001) 89 Cal.App.4th 496, 505.) “The bill [amending section 2924g(d) to add the waiting period] was sponsored by the Western Center on Law and Poverty in response to an incident in which a foreclosure sale was held one day after a TRO was dissolved. The property was sold substantially below fair market value. The trustor, who had obtained a purchaser for the property, did not learn of the new sale date and was unable to protect his interests at the sale.” (Ibid.)

"Thus, in obtaining relief under section 2924g(d), the issue is not whether Ragland could have reinstated her loan within the seven-day waiting period but whether the failure of Downey Savings to comply with the statute impaired her ability to protect her interests at a foreclosure sale. Defendants did not raise that issue as ground for summary adjudication of the fourth cause of action.”

Slip Opinion, pp. 22 – 23.

Re Cause of Action for Intentional Inflectional Emotional Distress:

“Ragland created triable issues of fact on her causes of action for negligent misrepresentation, fraud, and violation of section 2924g(d). Defendants do not argue Downey Savings would have had the right to foreclose if any of those causes of action were meritorious. Ragland’s treatment by Downey Savings, if proven, was at least as bad as the conduct of the defendants in Spinks and was so extreme as to exceed all bounds of decency in our society."

Slip Opinion p. 26.

I hope you find this useful in your practice.

Tagged: Foreclosure Practice, Litigation, Real Estate


 
 

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