CACI 4920 Wrongful Foreclosure—Essential Factual Elements

California Civil Jury Instructions CACI

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.

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.

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 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 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 Property Mortgages, § 555.54 (Matthew Bender)
23 California Points and Authorities, Ch. 230, Trust Deeds and Real Property Mortgages, § 230.72 (Matthew Bender)