A California appellate court has upheld a decision in favor of a major financial institution in a complex real estate dispute, emphasizing the intricacies of mortgage securitization and foreclosure laws. On October 3, 2024, Cherie Brown filed an appeal against Deutsche Bank National Trust Co. in the Court of Appeal of the State of California, Second Appellate District, Division Seven.
The case revolves around Cherie Brown's purchase of a property from Youval Zive in 2007. The transaction involved multiple promissory notes and deeds of trust tied to loans initially issued by Washington Mutual Bank. After Zive foreclosed on the property in 2011, Brown initiated legal action against him and other parties for fraud, wrongful foreclosure, and quiet title. Her complaint against Deutsche Bank was specifically for quiet title, challenging their claim over the property due to alleged procedural errors during the transfer of loan ownership.
Brown's argument hinged on her assertion that Deutsche Bank improperly acquired rights to enforce a deed of trust originally held by Washington Mutual. She claimed that procedural missteps during the loan's transfer into a securitized trust rendered Deutsche Bank's claim invalid. However, the court found that any irregularities in this process were voidable rather than void and could not be contested by Brown as she lacked standing.
The trial court granted summary judgment to Deutsche Bank, ruling that they held superior title due to prior recorded liens and proper possession of original loan documents. The appellate court affirmed this decision, noting that Brown had actual notice of existing encumbrances when acquiring her interest in the property.
Throughout the proceedings, both parties presented extensive documentation and testimony regarding the chain of ownership for the disputed loans. Deutsche Bank relied on declarations from representatives at Select Portfolio Servicing (SPS), who maintained records on behalf of Deutsche Bank as trustee for WaMu Pass-Through Certificates Series 2006-AR5 Trust.
Ultimately, Brown sought additional time for discovery to challenge these claims but was denied by the court. The appellate judges concluded that further evidence would not alter the outcome since any potential defects in assignment processes did not affect Deutsche Bank’s right to enforce its lien.
Representing Cherie Brown was John D. Rowell from JDR Law Inc., while Steven M. Dailey and Jennifer L. Andrews from Kutak Rock defended Deutsche Bank National Trust Co. The case was presided over by Judge Malcolm H. Mackey with Acting Presiding Justice Segal delivering the opinion alongside Justices Feuer and Stone under Case ID B324911.