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California Court Denies Plaintiffs’ Claims for Breach of Express Agreements, Breach of Implied Agreements, Slander of Title, Wrongful Foreclosure, and Violations of California Civil Codes

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The court in deciding Zapata v. Wells Fargo Bank, N.A., 2013 U.S. Dist. (N.D. Cal. Dec., 2013) dismissed the plaintiff’s action for failure to state a claim.

This action boiled down to an attempt made by the plaintiff to avoid foreclosure by attacking the mortgage securitization process. Plaintiffs Christopher and Elaine Zapata took out a promissory note and deed of trust with Family Lending Services, Inc. The deed of trust named S.P.S. Affiliates as trustee and MERS as nominee for the lender and as beneficiary.

Plaintiffs alleged a host of violations, including the claim that the defendants allegedly violated the terms of the deed of trust by executing an invalid and false notice of default because they were not the true lender or trustee.

Plaintiffs also alleged that the defendants violated the pooling and service agreement for the ARM Trust by failing to record the assignments. Also, Wells Fargo allegedly failed to sign the loan modification agreement or provide plaintiffs with a copy Wells Fargo had signed.

According to plaintiff, defendants also allegedly recorded invalid substitution of trustee, assignment of the deed of trust, and notice of default because of various alleged recording errors and delays. Plaintiffs also allege that defendants intentionally confused them.

Plaintiffs sought declaratory relief and claim breach of express agreements, breach of implied agreements, slander of title, wrongful foreclosure, violation of California Civil Code Section 2923.5, violation of California Civil Code Section 2923.55, violation of 18 U.S.C. 1962, and violation of California Business and Professions Code Section 17200 of California’s Unfair Competition Law.

As an initial matter the court noted that, courts in this district as well as the undersigned have rejected plaintiffs’ central underlying theory. Further, the court noted that neither their court of appeals nor the California Supreme Court had ruled on whether plaintiffs may challenge the mortgage securitization process, but the undersigned has held, in agreement with persuasive authority from this district, that there was no standing to challenge foreclosure based on a loan’s having been securitized.

Accordingly, after considering the plaintiff’s litany of claims, the court ultimately granted the defendant’s motion to dismiss.