Sciarratta v. U.S. BankAnnotate this Case
In this action for wrongful foreclosure, the homeowner, Monica Sciarratta, alleged that as a result of a void assignment of her promissory note and deed of trust, the entity that conducted a nonjudicial foreclosure sale on her home had no interest in either the underlying debt or the subject property. In Yvanova v. New Century Mortgage Corp., (62 Cal.4th 919 (2016)), the California Supreme Court held that the homeowner has standing to sue for wrongful foreclosure. However, Yvanova did not address "any of the substantive elements of the wrongful foreclosure tort," and in particular did not address "prejudice . . . as an element of wrongful foreclosure." The issue this case presented was the question of "prejudice" left open in Yvanova: The Court of Appeal found that policy considerations that drove the standing analysis in Yvanova compelled a similar result in this case. "[A] homeowner who has been foreclosed on by one with no right to do so -by those facts alone- sustains prejudice or harm sufficient to constitute a cause of action for wrongful foreclosure. When a non-debtholder forecloses, a homeowner is harmed by losing her home to an entity with no legal right to take it. Therefore under those circumstances, the void assignment is the proximate cause of actual injury and all that is required to be alleged to satisfy the element of prejudice or harm in a wrongful foreclosure cause of action." The opposite rule, urged by defendants in this case, would allow an entity to foreclose with impunity on homes that were worth less than the amount of the debt, even if there were no legal justification whatsoever for the foreclosure. "The potential consequences of wrongfully evicting homeowners are too severe to allow such a result." The Court of Appeal reversed the judgment of dismissal entered after the trial court erroneously sustained a demurrer to Sciarratta's first amended complaint without leave to amend, and remanded for further proceedings.