NOT FOR PUBLICATION
FILED
APR 27 2017
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
BARRY HALAJIAN, No. 15-15236
Plaintiff-Appellant, D.C. No. 1:12-cv-00814-AWI
v.
MEMORANDUM*
DEUTSCHE BANK NATIONAL TRUST
CO., NDEX WEST LLC, JPMORGAN
CHASE BANK, N.A., and WHITNEY K.
COOK,
Defendants-Appellees.
Appeal from the United States District Court
for the Eastern District of California
Anthony W. Ishii, District Judge, Presiding
Argued and Submitted February 16, 2017
San Francisco, California
Before: GOULD and BERZON, Circuit Judges, and GARBIS,** District Judge.
In 2005, appellant Barry Halajian obtained a $175,200 home loan from
Fremont Investment & Loan (“Fremont”), secured by a promissory note and deed
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Marvin J. Garbis, United States District Judge for the
District of Maryland, sitting by designation.
of trust against his home in Fresno, California. Mortgage Electronic Registration
Systems, Inc. (“MERS”) was designated nominee for Fremont and its successors
and assigns, beneficiary of the deed of trust, and holder of legal title to the loan. At
some point thereafter, MERS assigned the loan to the GSAMP Trust 2005-HE4,
Mortgage Pass-Through Certificate, Series 2005-HE4 Trust (“the Trust”), for
which defendant Deutsche Bank National Trust Co. (“Deutsche Bank”) served as
trustee. After suffering financial setbacks starting in 2008, Halajian eventually
ceased making mortgage payments. Halajian’s property was sold at a foreclosure
sale on February 14, 2011.
Halajian filed suit against Deutsche Bank, JPMorgan Chase Bank, N.A.
(“Chase”), NDEx West LLC, and Chase employee Whitney Cook, alleging (as
relevant here) claims for wrongful foreclosure, quiet title, and a violation of Cal.
Civ. Code § 2923.5. The nucleus of Halajian’s legal theory was that Deutsche
Bank lacked the power to foreclose because (1) Fremont was out of business at the
time the loan was assigned to Deutsche Bank as trustee for the Trust; (2) the loan
and deed of trust were assigned to Deutsche Bank after the closing date of the
Pooling and Servicing Agreement (PSA), and were therefore void; and (3) Halajian
never received proper notice of the loan, and did not have an adequate opportunity
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to discuss alternatives to foreclosure, as required by California law.1 The district
court dismissed most of Halajian’s claims, and after discovery, granted summary
judgment to all defendants on Halajian’s sole remaining claim, for wrongful
foreclosure. We affirm.
1. The district court did not err in granting summary judgment on
Halajian’s wrongful foreclosure claim.
Halajian first contends that Deutsche Bank lacked authority to foreclose on
his loan because the loan was assigned to the Trust after the closing date specified
in the PSA governing the Trust. The district court held that Halajian lacked
authority to enforce the terms of the PSA, including the closing date, because
Halajian was not a party to that agreement.
The California Supreme Court, applying New York law, has since held that
where an alleged defect renders the assignment void – wherein it “binds no one and
is a mere nullity” – the borrower may challenge the assignment in court regardless
of whether the borrower was a party to the pooling and servicing agreement under
which the assignment was made. Yvanova v. New Century Mortg. Corp., 62 Cal.
1
Under Cal. Civ. Code § 2923.5, a mortgage servicer must contact a
borrower (or exercise due diligence in attempting to contact the borrower) at least
thirty days before issuing any notice of default to assess the borrower’s financial
situation and explore any potential alternatives to foreclosure.
3
4th 919, 929, 942–43 (Cal. 2016) (citation omitted). When an alleged defect
merely renders the agreement “voidable,” and the parties to the assignment may
ratify it, the borrower may not challenge the assignment. Id. at 936.
Yvanova did not address whether the particular defect alleged by Halajian
renders the assignment voidable, rather than void. Nor has the New York Court of
Appeals. But the Second Circuit has held that the weight of New York authority
indicates that it is voidable rather than void. See Rajamin v. Deutsche Bank Nat’l
Tr. Co., 757 F.3d 79, 88–89 (2d Cir. 2014). “In the absence of compelling reasons,
we would not create a circuit split with the circuit that encompasses New York
regarding the meaning of New York law.” United States v. Rivera-Ramos, 578
F.3d 1111, 1113 (9th Cir. 2009). No compelling reasons have been presented. We
therefore conclude that even if Halajian’s loan was assigned to the Trust after the
designated closing date, that defect in the assignment was voidable rather than
void. Consequently, Halajian lacks the authority to challenge that defect.2
Halajian next proposes that the defendants failed to prove an unbroken chain
of title between Fremont and Deutsche Bank, and that Deutsche Bank therefore had
2
To the extent that Halajian argues that language in the deed of trust (to
which he was a party) conferred on him the right to enforce the terms of a separate
agreement (the PSA), that argument is not supported by the text of the deed of
trust, nor by our case law.
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no authority to foreclose. He contends that Fremont, the originator of his loan, was
out of business before Deutsche Bank became trustee. But in a wrongful
foreclosure action, the burden rests with the plaintiff to demonstrate a break in the
chain of title under California law. See Yhudai v. Impac Funding Corp., 205 Cal.
Rptr. 3d 680, 686 (Cal. Ct. App. 2016). Halajian has failed to meet that burden.
At most, Halajian has demonstrated that Fremont ceased doing business as a bank,
but the same documents he cites indicate that it continued to exist as a legal entity
thereafter. Moreover, the deed of trust expressly confers on MERS the power to
act on behalf of Fremont’s “successors and assigns.” Therefore, even if the loan
passed to Fremont’s corporate successor, MERS was still authorized to sell the
loan to the Trust, with Deutsche Bank as trustee.3
2. The district court did not err in dismissing Halajian’s claim under Cal.
Civ. Code § 2923.5. Under California law, when a mortgage servicer fails to
comply with the terms of Section 2923.5, the remedy is a delay of the foreclosure
sale. Mabry v. Superior Court, 185 Cal. App. 4th 208, 231–32 (Cal. Ct. App.
2010). This rule exists in large part “to ensure stability of title after a trustee’s
3
Halajian argued in the district court that Cook was a “known robosigner”
who lacked authority to act on MERS’s behalf, but the defendants presented
uncontroverted evidence in the district court establishing that Cook was a MERS
officer. Halajian does not press this argument on appeal.
5
sale,” and to preserve the general rule that a foreclosure sale is final and binding.
Id. at 215, 235. As the relevant foreclosure sale had already occurred by the time
Halajian brought this action, he cannot state a claim under Section 2923.5.
3. The district court did not err in dismissing Halajian’s claim for quiet
title. As a general principle, a plaintiff may not state a claim for quiet title unless
he or she is prepared to tender the full amount of the outstanding debt. Chavez v.
Indymac Mortg. Servs., 162 Cal. Rptr. 3d 382, 390 (Cal. Ct. App. 2013). Halajian
concedes that he never alleged tender at any point, but argues that an exception
exists where a foreclosure sale is “void” rather than voidable. As discussed above,
however, Halajian has failed to demonstrate a genuine issue of material fact
regarding whether the assignment of his loan, and by extension the foreclosure
sale, was void.
AFFIRMED.
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