Unreported / Non-Citable
Background
James and Tamara Dolan took out a 2006 adjustable-rate loan secured by a deed of trust. They allege the loan was sold into the HarborView Mortgage Loan Trust 2006-4, for which U.S. Bank is trustee. They also allege that five recorded assignments between 2011 and 2024 moved the beneficial interest among MERS, Bank of America's predecessor, U.S. Bank and Nationstar. In 2024 Trustee Corps recorded a notice of default stating about $678,915 in default, followed by a notice of trustee's sale stating about $1.16 million. The sale took place on July 23, 2025, and the Dolans allege U.S. Bank took the property through an inflated credit bid.
After removal on federal question grounds, the second amended complaint pleaded wrongful foreclosure, violations of Civil Code sections 2924.17 and 2923.55, fraud, quiet title against U.S. Bank, and a Fair Debt Collection Practices Act claim against Nationstar. Nationstar and U.S. Bank, and separately Trustee Corps, moved to dismiss under Rule 12(b)(6). The court noticed the recorded instruments for their existence and legal effect, not for the truth of disputed statements in them. It also relied on its earlier order rejecting several of the same theories.
The Court’s Holding
Wrongful foreclosure was dismissed without leave to amend. The court held that pooling and servicing agreement violations make a transfer voidable rather than void, so they gave the Dolans no basis to challenge the foreclosing party's authority. It again rejected the theory that a deed of trust cannot be assigned without the note. It also found that the recorded chain led to U.S. Bank despite flaws in Assignment 3. The claimed losses of the home, equity and credit flowed from the foreclosure itself. The Dolans did not allege changed payment obligations, a denied modification, or that the true owner would have refrained from foreclosing, and they alleged neither tender nor an exception. The inflated-bid theory failed because the trustee's deed showed a bid equal to the stated unpaid debt. The section 2923.55 theory lacked prejudice. Trustee Corps was also protected by the qualified privilege of section 2924(d), because the amount discrepancy suggested at most negligence rather than malice.
Quiet title was dismissed without leave because the Dolans did not plausibly allege a continuing interest after the sale. The section 2924.17 claim was dismissed with leave. The gap between the notice amounts might raise a factual question about competent and reliable evidence, but the Dolans did not allege a material violation. The section 2923.55 claim survived because the Dolans affirmatively alleged no contact and disputed the declaration of compliance, and judicial notice does not establish that declaration's truth. The FDCPA claim was dismissed. The section 1692g(b) theory did not allege when the initial communication occurred or a timely dispute. The section 1692f(6) theory depended on the rejected authority argument, and section 1692e had been dismissed earlier. The fraud claim was dismissed without leave. The court declined to resolve limitations at this stage. It found non-defendant statements not actionable, found no pleaded falsity, justifiable reliance or damages for the rest, and noted the alleged notice-of-sale misstatement does not appear in the notice.
The decretal paragraph bars amendment only as to wrongful foreclosure, quiet title and fraud, and allows a third amended complaint on the remaining claims within thirty days. The discussion calls some FDCPA theories dismissed without leave, so the order is not perfectly aligned on that point.
Key Takeaways
- Alleged pooling and servicing agreement violations make a securitization transfer voidable rather than void, so borrowers generally cannot use them to attack the foreclosing party's authority.
- A wrongful foreclosure plaintiff relying on a defective assignment must plead prejudice beyond the foreclosure itself, plus tender or an exception to the tender rule.
- A servicer's due diligence declaration does not defeat a section 2923.55 claim at the pleading stage where the borrower affirmatively alleges no contact.
- A section 2924.17 claim requires a material violation, so a discrepancy between notice amounts alone is not enough.
Why It Matters
This is an unreported district court order and carries no binding precedential weight. It shows how one Southern District of California judge applies the void-versus-voidable rule, the prejudice requirement and the tender rule to securitization-based attacks on a foreclosure.
The case remains open. The section 2923.55 claim continues, and the Dolans may file a third amended complaint within thirty days on the remaining claims, which could include a repleaded section 2924.17 claim. The court has not found that the contact certification was false.