DM Residential Fund v. First Tennessee Bank, No. 13-56309 (9th Cir. 2015)Annotate this Case
FTB initiated a nonjudicial foreclosure on residential real property and sold the property at a foreclosure sale to DM. On appeal, DM challenged the district court's grant of summary judgment for FTB. The court concluded that there was a genuine issue of material fact as to whether DM could have discovered the defect at issue - lack of a utilities easement - prior to the foreclosure sale, which is the relevant inquiry under Karoutas v. HomeFed Bank. Nonetheless, the district court did not err in concluding on summary judgment that DM is not entitled to the equitable remedy of rescission where DM had a duty to investigate wrongdoing and FTB’s status as a foreclosing lender does not alter this conclusion because a foreclosing lender has the same duties of disclosure regarding the property as any other seller. Therefore, the court concluded that there is no genuine issue of material fact that DM was put on inquiry of wrongdoing at the time it discovered the lack of electricity, and therefore is deemed to know all facts that could be discovered from a reasonable investigation. Finally, the court concluded that because there is no genuine issue of material fact as to whether DM’s two-year delay deprived it of the equitable remedy of rescission, FTB is entitled to summary judgment on that issue.