By: Sridavi Ganesan

Connect: Sridavi Ganesan

The California Supreme Court recently granted petitions for review in three different cases decided by the California Courts of Appeal – Yvanova v. New Century Mortg. Corp., 331 P.3d 1275 (Cal. 2014); Keshtgar v. U.S. Bank, 334 P.3d 686 (Cal. 2014) (both decided by the Second Appellate District); and Mendoza v. JP Morgan Chase Bank, 337 P.3d 493 (Cal. 2014) (decided by the Third Appellate District). All three cases concerned homeowners who challenged pending or completed trustee’s sales on the basis that the respective assignments of deeds of trust were void. The respective plaintiffs in these cases relied upon Glaski v. Bank of America, N.A., 218 Cal. App. 4th 1079 (Ct. App. 2013) (decided by the Fifth Appellate District), which held that a borrower has standing to challenge a purportedly void assignment of deed of trust, even if the borrower was not a party to or beneficiary of the assignment. In Glaski, the plaintiff alleged that the deed of trust was assigned into a securitized trust after the trust closing date, as set forth in the trust’s pooling and servicing agreement; and that such assignment was in violation of New York trust law, under which the plaintiff alleged the trust was formed. Id., at 1084, 1087. The Glaski Court held that, based on these allegations, the assignment was void, and plaintiff had standing to challenge the assignment. Id., at 1095-1097. The Yvanova, Keshtgar and Mendoza Appellate Courts all rejected the Glaski holding on the basis that a borrower lacks standing to challenge defects in an assignment to a deed of trust when the borrower is not a party to the transaction, regardless of whether the assignment is void. The Glaski defendants subsequently petitioned the California Supreme Court to have the opinion depublished, but the petition was denied. See Glaski v. Bank of America (Supreme Court No. S213814), depublication request denied Feb. 26, 2014.

The Yvanona Appellate Court ruled on several legal theories before deciding favor of the defendant. The California Supreme Court, however, has limited the issue to whether, “[i]n an action for wrongful foreclosure on a deed of trust securing a home loan, … the borrower ha[s] standing to challenge an assignment of the note and deed of trust on the basis of defects allegedly rendering the assignment void.” Yvanova, 331 P.3d at 1275. The Supreme Court deferred further action on Keshtgar and Mendoza pending disposition of Yvanova. Keshtgar, 334 P.3d at 686; Mendoza, 337 P.3d at 493.

It appears that the Supreme Court is finally ready to reach a decision on the controversial but minority Glaski decision that has created a split between the Courts of Appeal. It will be interesting to see which way the Court will decide.