CACI No. 4920. Wrongful Foreclosure - Essential Factual Elements

Judicial Council of California Civil Jury Instructions (2020 edition)

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4920.Wrongful Foreclosure - Essential Factual Elements
[Name of plaintiff] claims that [name of defendant] wrongly foreclosed on
[name of plaintiff]’s [home/specify other real property]. In order to
establish a wrongful foreclosure, [name of plaintiff] must prove all of the
following:
1. That [name of defendant] caused a foreclosure sale of [name of
plaintiff]’s [home/specify other real property] under a power of sale
in a [mortgage/deed of trust];
2. That this sale was wrongful because [specify reason(s) supporting
illegality, fraud, or willful oppression];
3. That [name of plaintiff] [tendered all amounts that were due under
the loan secured by the [mortgage/deed of trust], but [name of
defendant] [refused the tender]/[was excused from tendering all
amounts that were due under loan secured by the [mortgage/deed
of trust]];
4. [That [name of plaintiff] was not materially in breach of any other
condition and had not failed to perform any other material
requirement of the loan agreement that would otherwise justify
the foreclosure;]
5. That [name of plaintiff] was harmed; and
6. That [name of defendant]’s actions were a substantial factor in
causing [name of plaintiff]’s harm.
New May 2020
Directions for Use
Use this instruction for a claim for wrongful foreclosure.
For element 3, use the optional language depending on the circumstances. If plaintiff
claims that tender is excused, give CACI No. 4921, Wrongful Foreclosure - Tender
Excused.
There is a split in authority as to whether the plaintiff must prove element 4.
(Compare Turner v. Seterus, Inc. (2018) 27 Cal.App.5th 516, 525 [238 Cal.Rptr.3d
528] [stating the elements of a wrongful foreclosure claim without element 4] with
Majd v. Bank of America, N.A. (2015) 243 Cal.App.4th 1293, 1306-1307 [197
Cal.Rptr.3d 151] [including element 4 as a basic element of a wrongful foreclosure
claim].) If the defendant does not claim that the plaintiff is in material breach of
some loan condition, however, omit element 4.
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Sources and Authority
• Curing Default. Civil Code section 2924c.
• “The elements of the tort of wrongful foreclosure are: ‘ “(1) the trustee or
mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real
property pursuant to a power of sale in a mortgage or deed of trust; (2) the party
attacking the sale (usually but not always the trustor or mortgagor) was
prejudiced or harmed; and (3) in cases where the trustor or mortgagor challenges
the sale, the trustor or mortgagor tendered the amount of the secured
indebtedness or was excused from tendering” ’; and (4) ‘ “no breach of condition
or failure of performance existed on the mortgagor’s or trustor’s part which
would have authorized the foreclosure or exercise of the power of sale.” ’ ”
(Majd, supra, 243 Cal.App.4th at pp. 1306-1307 [197 Cal.Rptr.3d 151].)
• “ ‘The basic elements of a tort cause of action for wrongful foreclosure track the
elements of an equitable cause of action to set aside a foreclosure sale. They are:
“(1) the trustee or mortgagee caused an illegal, fraudulent, or willfully
oppressive sale of real property pursuant to a power of sale in a mortgage or
deed of trust; (2) the party attacking the sale (usually but not always the trustor
or mortgagor) was prejudiced or harmed; and (3) in cases where the trustor or
mortgagor challenges the sale, the trustor or mortgagor tendered the amount of
the secured indebtedness or was excused from tendering.” ’ ” (Daniels v. Select
Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1184-1185 [201
Cal.Rptr.3d 390].)
• “Justifications for setting aside a trustee’s sale from the reported cases, which
satisfy the first element, include the trustee’s or the beneficiary’s failure to
comply with the statutory procedural requirements for the notice or conduct of
the sale. Other grounds include proof that (1) the trustee did not have the power
to foreclose; (2) the trustor was not in default, no breach had occurred, or the
lender had waived the breach; or (3) the deed of trust was void.” (Lona v.
Citibank, N.A. (2011) 202 Cal.App.4th 89, 104-105 [134 Cal.Rptr.3d 622],
internal citations omitted.)
• “Wrongful foreclosure is a common law tort claim.” (Turner, supra, 27
Cal.App.5th at p. 525.)
• “[A] trustee or mortgagee may be liable to the trustor or mortgagor for damages
sustained where there has been an illegal, fraudulent or wil[l]fully oppressive
sale of property under a power of sale contained in a mortgage or deed of trust.
[Citations.] This rule of liability is also applicable in California, we believe,
upon the basic principle of tort liability declared in the Civil Code that every
person is bound by law not to injure the person or property of another or
infringe on any of his rights.” (Miles v. Deutsche Bank National Trust Co.
(2015) 236 Cal.App.4th 394, 408 [186 Cal.Rptr.3d 625].)
• “To successfully challenge a foreclosure sale based on a procedural irregularity,
the plaintiff must show both that there was a failure to comply with the
procedural requirements for the foreclosure sale and that the irregularity
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prejudiced the plaintiff.” (Citrus El Dorado, LLC v. Chicago Title Co. (2019) 32
Cal.App.5th 943, 950 [244 Cal.Rptr.3d 372].)
• “[M]ere technical violations of the foreclosure process will not give rise to a tort
claim; the foreclosure must have been entirely unauthorized on the facts of the
case. This is a sound addition.” (Miles, supra, 236 Cal.App.4th at p. 409.)
• “ ‘[O]nly the entity currently entitled to enforce a debt may foreclose on the
mortgage or deed of trust securing that debt . . . .’ ‘It is no mere “procedural
nicety,” from a contractual point of view, to insist that only those with authority
to foreclose on a borrower be permitted to do so.’ ” (Sciarratta v. U.S. Bank
National Assn. (2016) 247 Cal.App.4th 552, 562 [202 Cal.Rptr.3d 219], internal
citation omitted.)
• “[W]here a mortgagee or trustee makes an unauthorized sale under a power of
sale he and his principal are liable to the mortgagor for the value of the property
at the time of the sale in excess of the mortgages and liens against said
property.” (Miles, supra, 236 Cal.App.4th at p. 409.)
• “[L]ost equity in the property . . . is a recoverable item of damages. It is not,
however, the only recoverable item of damages. Wrongfully foreclosing on
someone’s home is likely to cause other sorts of damages, such as moving
expenses, lost rental income (which plaintiff claims here), and damage to credit.
It may also result in emotional distress (which plaintiff also claims here). As is
the case in a wrongful eviction cause of action, ‘ “The recovery includes all
consequential damages occasioned by the wrongful eviction (personal injury,
including infliction of emotional distress, and property damage) . . . and, upon a
proper showing . . . , punitive damages.” ’ ” (Miles, supra, 236 Cal.App.4th at p.
409.)
• “Civil Code section 2924c thus limits the beneficiary’s contractual power of sale
by giving the trustor a right to cure a default and reinstate the loan within the
stated time, even if the beneficiary does not voluntarily agree. ‘ “The law does
not require plaintiff to tender the purchase price to a trustee who has no right to
sell the property at all.” ’ To adequately plead a cause of action for wrongful
foreclosure, all plaintiffs had to allege was that they met their statutory
obligation by timely tendering the amount required by Civil Code section 2924c
to stop the foreclosure sale, but [defendant] refused that tender and thus allowed
the foreclosure sale to go forward when [defendant] should have accepted their
tender and canceled the sale. Plaintiffs did so. If [defendant] had accepted the
tender, which [defendant’s employee] stated was sufficient to cure the default, a
rescission of the foreclosure sale and reinstatement of the loan was mandatory,
and the subsequent sale was without legal basis and void . . . .” (Turner, supra,
27 Cal.App.5th at pp. 530-531, original italics, internal citations omitted.)
• “ ‘[A] tender is an offer of performance . . . .’ Subdivision (a)(1) of Civil Code
section 2924c provides in pertinent part that ‘[w]henever all or a portion of the
principal sum of any obligation secured by deed of trust . . . has . . . been
declared due by reason of default in payment of interest or of any installment of
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principal . . . , the trustor . . . may pay to the beneficiary . . . the entire
amount due, at the time payment is tendered . . . other than the portion of
principal as would not then be due had no default occurred, and thereby cure the
default theretofore existing, and thereupon, all proceedings theretofore had or
instituted shall be dismissed or discontinued and the obligation and deed of trust
. . . shall be reinstated and shall be and remain in force and effect . . . .’ Here,
for purposes of Civil Code section 2924c, [plaintiff] effectively tendered
payment of the amount then due when he told [an agent of defendant] that he
would like to pay off the entire amount of the default. Actual submission of a
payment was not required.” (Turner, supra, 27 Cal.App.5th pp. 531-532.)
• “A tender is an unconditional offer to perform an order to extinguish an
obligation.” (Crossroads Investors, L.P. v. Federal National Mortgage
Association (2017) 13 Cal.App.5th 757, 783 [222 Cal.Rptr.3d 1].)
• “The third element - tender - requires the trustor to make ‘an offer to pay the
full amount of the debt for which the property was security.’ ” (Ram v. OneWest
Bank, FSB (2015) 234 Cal.App.4th 1, 11 [183 Cal.Rptr.3d 638].)
• “ ‘A full tender must be made to set aside a foreclosure sale, based on equitable
principles.’ Courts, however, have not required tender when the lender has not
yet foreclosed and has allegedly violated laws related to avoiding the necessity
for a foreclosure.” (Pfeifer v. Countrywide Home Loans, Inc. (2012) 211
Cal.App.4th 1250, 1280 [150 Cal.Rptr.3d 673], original italics.)
•“Pfeifer[, supra, 211 Cal.App.4th 1250] and the other tender cases are
inapplicable here because [plaintiff] has not sued to set aside or prevent a
foreclosure sale. In the sixth cause of action, he sought to quiet title to the
property, which he cannot do without paying the outstanding indebtedness.”
(Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 87 [163
Cal.Rptr.3d 804].)
• “Here, neither the deed of trust nor the governing statutes expressly create a duty
on the part of [defendant] to verify that the beneficiary received a valid
assignment of the loan or to verify the authority of the person who signed the
substitution of trustee. [Plaintiff] has not cited, and we have not discovered, any
authority holding a trustee liable for wrongful foreclosure or any other cause of
action based on similar purported failures to investigate. To the contrary, the
trustee generally ‘has no duty to take any action except on the express
instructions of the parties or as expressly provided in the deed of trust and the
applicable statutes.’ ” (Citrus El Dorado, LLC, supra, 32 Cal.App.5th at pp.
948-949.)
Secondary Sources
4 Witkin, Summary of California Law (11th ed. 2017) Secured Transactions in Real
Property, § 153 et seq.
5 California Real Estate Law and Practice, Ch. 123, Nonjudicial Foreclosure,
§ 123.14 (Matthew Bender)
48 California Forms of Pleading and Practice, Ch. 555, Trust Deeds and Real
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Property Mortgages, § 555.54 (Matthew Bender)
23 California Points and Authorities, Ch. 230, Trust Deeds and Real Property
Mortgages, § 230.72 (Matthew Bender)
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