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