Asturias et al v. Nationstar Mortgage LLC et al

Filing 76

ORDER DENYING PLAINTIFFS' MOTION FOR RELIEF FROM THE JUDGMENT AND A NEW TRIAL. Signed by Judge Richard Seeborg on 7/8/16. (cl, COURT STAFF) (Filed on 7/8/2016)

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1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 NORTHERN DISTRICT OF CALIFORNIA 9 10 ELENA ASTURIAS, et al., Case No. 15-cv-03861-RS Plaintiffs, 11 United States District Court Northern District of California v. 12 13 NATIONSTAR MORTGAGE LLC, et al., ORDER DENYING PLAINTIFFS' MOTION FOR RELIEF FROM THE JUDGMENT AND A NEW TRIAL Defendants. 14 15 16 17 I. INTRODUCTION Plaintiffs Elena Asturias and Carlota Del Portillo have a mortgage secured by real property 18 at 176 Randall Street in San Francisco. Defendants Nationstar Mortgage LLC, Veriprise 19 Processing Solutions LLC, and U.S. Bank National Association (collectively “defendants”) have 20 obtained judgment in their favor after plaintiffs failed to state claims for relief despite having three 21 opportunities to do so. Plaintiffs now seek relief from judgment and a fourth chance to amend 22 their complaint based on an alleged intervening change in the law brought about by Yvanova v. 23 New Century Mortgage Corp., 62 Cal. 4th 919, 925 (2016). 24 Yet, the “change” plaintiffs identified is insufficient to warrant relief from the judgment 25 because it did not provide a new avenue of relief. At all times leading to their final judgment, 26 plaintiffs could have advanced this claim and relied upon the theory of standing articulated in 27 Glaski v. Bank of Am., Nat’l Ass’n, 218 Cal. App. 4th 1079, 1082 (2013)—the very case the 28 Yvanova court affirmed. Plaintiffs have not articulated sufficient reason to set aside the judgment 1 or to order a new trial, and therefore their motions must be denied. 2 II. FACTUAL AND PROCEDURAL BACKGROUND 3 In October 2005, plaintiffs sought to acquire the real property 176 Randall St., San 4 Francisco, California. To finance the purchase, Del Portillo and Asturias entered into a mortgage 5 agreement with All California, Inc. in the amount of $1,000,000. She was required to begin 6 making monthly payments of $5,833.33 in December 2005. The promissory Note underlying the 7 transaction listed only Del Portillo as the borrower. The Deed of Trust, which was recorded in 8 October 2005, identified All American Mortgage as the lender, Fidelity National Title as the 9 trustee, Bank of America, N.A. as the Loan Servicer, and MERS as the beneficiary. In December 2005, the relevant securitized trust was formed under New York law. The 10 United States District Court Northern District of California 11 loans pooled for the Trust were, with certain exceptions, used to create Real Estate Mortgage 12 Investment Conduits (each individually referred to as a “REMIC”); its terms were set forth in a 13 Pooling and Servicing Agreement (“Trust Agreement”) for the trust, which was governed under 14 New York law. Under the trust agreement and REMIC provisions, all loans intended to be part of 15 the Trust were to be acquired by the closing date on December 31, 2005, or within 90 days 16 thereafter. Plaintiffs claim the transfer of the Note and Deed of Trust did not occur by the closing 17 date, or 90 days thereafter. Instead, the assignment occurred four years later—on April 22, 18 2010—when MERS replaced Fidelity with Reconstrust as the trustee and assigned all beneficiary 19 interest in the Note and Deed of Trust to US Bank. Plaintiffs believe this document entitled 20 “Substitution of Trustee and Assignment” was the first recordation of an assignment since October 21 2005. 22 In early 2015, plaintiffs defaulted on the loan and failed to cure the default. Therefore, 23 defendants ultimately proceeded to sale in July 2015. That same month, plaintiffs filed their 24 original complaint in San Francisco County Superior Court alleging claims arising under 25 California’s Homeowner Bill of Rights. Defendants removed the case to federal court and filed a 26 motion to dismiss the complaint. That motion to dismiss was granted, but plaintiffs received an 27 opportunity to amend the complaint. Subsequently, plaintiffs filed their first amended complaint, 28 ORDER DENYING PLAINTIFFS’ MOTION FOR RELIEF FROM THE JUDGMENT AND A NEW TRIAL CASE NO. 15-cv-03861-RS 2 1 which also failed adequately to plead claims for relief. Plaintiffs had one final opportunity to 2 plead their claims sufficiently, but the second amended complaint was also inadequate, and 3 therefore dismissed with prejudice in April 2016. 4 About a month later, with the benefit of new counsel, plaintiffs filed ex parte application 5 for relief from the judgment and for an extension of time to file a notice of appeal. Good cause 6 existed to grant plaintiffs’ request for extension of time, but plaintiffs had not properly noticed 7 their motion for relief from the judgment or a new trial, and it was accordingly stricken. The very 8 next day, plaintiffs noticed the motion for relief from the judgment and a new trial and refiled the 9 same papers submitted in support of their ex parte application. Despite the fact plaintiffs have already received an extension to file a notice of appeal, they apparently request another extension. 11 United States District Court Northern District of California 10 III. LEGAL STANDARD 12 Plaintiffs seek to reopen the judgment under two separate motions: (1) motion for relief 13 from judgment under Federal Rule of Civil Procedure 60(b)(6), and (2) motion for new trial under 14 Rule 59(a)(2). In the alternative, they seek a second extension of time to file an appeal with time 15 starting from a ruling on these motions. 16 In the instant case, however, Rule 59(a)(2) is inapplicable because neither jury nor bench 17 trial has taken place. Rule 59(e) allows parties to seek alteration or amendment of a judgment 18 within 28 days after the entry of judgment, whether or not it was entered as a result of trial. 19 Plaintiffs, however, do not seek to alter or to amend the judgment; they wish to vacate the 20 judgment. Accordingly, Rule 59(e) is wholly inapplicable, and plaintiffs’ motion for a new trial 21 must be denied for that reason. 22 Rule 60(b)(6) provides that “the court may relieve a party or a party’s legal representative 23 from a final judgment, order, or proceeding for . . . any other reason justifying relief from the 24 operation of the judgment.” Relief from the judgment is appropriate only when it is necessary “to 25 prevent manifest injustice.” Latshaw v. Trainer Wortham & Co., 452 F.3d 1097, 1103 (9th Cir. 26 2006). Parties moving for relief from a judgment therefore face a high burden to show both 27 “injury and circumstances,” beyond their control, that prevented them from taking “timely action 28 ORDER DENYING PLAINTIFFS’ MOTION FOR RELIEF FROM THE JUDGMENT AND A NEW TRIAL CASE NO. 15-cv-03861-RS 3 1 2 3 to prevent or correct an erroneous judgment.” Id. (internal quotation marks omitted). IV. DISCUSSION Plaintiffs seek to add a claim for wrongful foreclosure on the basis that there was a defect 4 in the securitization process, and therefore the foreclosing beneficiary, U.S. Bank, did not have the 5 right to initiate foreclosure proceedings. The specific defect they assert is that MERS failed to 6 transfer the Note and Deed of Trust to the trust before the closing date, thereby violating the terms 7 of the trust agreement. Plaintiffs contend this violation ruptured the chain of title, rendering the 8 assignment and, by extension, their foreclosure void. 9 Acknowledging the burden to set aside a judgment is high, plaintiffs contend Yvanova changed the legal landscape and made available claims for relief they could not have asserted in 11 United States District Court Northern District of California 10 their three complaints. Before the California Supreme Court issued its opinion in Yvanova, the 12 California courts of appeal were split over the question of whether plaintiffs had standing to assert 13 claims based on defects in the assignment. Lundy v. Selene Fin., LP, No. 15-CV-05676-JST, 2016 14 WL 1059423, at *8 (N.D. Cal. Mar. 17, 2016). On the majority side of the split was Jenkins v. JP 15 Morgan Chase Bank, N.A., 216 Cal. App. 4th 497, 507-10 (2013), which held loan borrowers were 16 barred from asserting claims related to a securitization transaction because they were not direct 17 victims to a defect in that transaction. Occupying a minority position was Glaski, which 18 concluded in the opposite—a borrower has standing to sue for wrongful foreclosure, if the 19 assignment by which it became beneficiary was void, and not merely voidable. Id. 20 Yvanova specifically overruled those courts that held the majority position. 62 Cal. 4th at 21 924. Specifically, the California Supreme Court concluded the distinction between void deeds and 22 those merely voidable particularly important because “[w]hen an assignment is merely voidable, 23 the power to ratify or avoid the transaction lies solely with the parties to the assignment.” 62 Cal. 24 4th at 936. When an assignment is void, however, borrowers do not assert the right of the 25 contracting parties; instead, they assert their own right to challenge a wrongful foreclosure of their 26 home. Id. at 936-37. Based on this reasoning, Yvanova resolved the split over standing and sided 27 with the Glaski court: California borrowers have standing to file claims for wrongful foreclosure 28 ORDER DENYING PLAINTIFFS’ MOTION FOR RELIEF FROM THE JUDGMENT AND A NEW TRIAL CASE NO. 15-cv-03861-RS 4 1 if the assignment underlying the foreclosure was void at the time of the transfer. Id. at 939. 2 Although Yvanova resolved a split of authority, it did not fundamentally change the 3 substantive law governing the claims plaintiffs now assert. At all times before entry of judgment 4 in this case, there remained the possibility the California Supreme Court would affirm Glaski and 5 reject Jenkins. Plaintiffs could have and should have made the argument they had standing to 6 pursue the claims they now seek to add. That they assumed they would not prevail is simply not 7 the sort of extraordinary circumstance that warrants relief from the judgment under Rule 60(b)(6). 8 IV. CONCLUSION 9 10 Plaintiffs’ motion for relief under Rule 60(b)(6) is denied. If plaintiffs wish to appeal the judgment, they must file their notice of appeal within the next forty-five days. United States District Court Northern District of California 11 12 IT IS SO ORDERED. 13 14 15 16 Dated: July 8, 2016 ______________________________________ RICHARD SEEBORG United States District Judge 17 18 19 20 21 22 23 24 25 26 27 28 ORDER DENYING PLAINTIFFS’ MOTION FOR RELIEF FROM THE JUDGMENT AND A NEW TRIAL CASE NO. 15-cv-03861-RS 5

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