Saturday, July 9, 2011

FYI: Cal App Ct Rejects Judicial Notice of Recorded Assignment, Finds Triable Issue of Fact

The Court of Appeal of the State of California, Third Appellate District,
recently held that a trial court improperly took judicial notice of an
assignment which purported to establish a bank's interest in the subject
property, and reversed the trial court's summary judgment order in favor
of the bank defending a foreclosure sale.

A copy of the opinion is available at:

Plaintiffs lost their home in a California nonjudicial foreclosure sale,
and then brought suit to set aside the sale. Deutsche Bank National Trust
Company ("Deutsche Bank") and California Reconveyance Corporation ("CRC")
asserted that they were the beneficiary and trustee under a deed of trust
secured by the property.

Plaintiffs alleged among things that neither Deutsche Bank nor CRC had a
valid interest in the property. To support the validity of their
interests, Deutsche Bank and CRC asked the trial court to take judicial
notice of various recorded documents, including an Assignment of Deed of
Trust (the "assignment"). That document recited that Deutsche Bank was
assigned all interest in the deed of trust by an intermediate beneficiary,
and identified the original beneficiary to that deed of trust. They also
provided a declaration by an employee of CRC stating that recorded
documents indicated that Deutsche Bank had been assigned the Deed of

Deutsche Bank and CRC moved for summary judgment, which the trial court
granted. Plaintiffs appealed.

As you may recall, California law provides that "[t]aking judicial notice
of a document is not the same as accepting the truth of its contents or
accepting a particular interpretation of its meaning." Joslin v. H.A.S.
Ins. Brokerage (1986) 184 Cal. App. 3d 369, 374. Further, although a
court may take judicial notice of a recorded deed, a court may not "take
judicial notice of factual matters stated therein." Love v. Wolf (1964)
226 Cal. App. 2d 378, 403.

Although the trial court took judicial notice of the assignment that
recited that Deutsche Bank was the beneficiary under a deed of trust, the
Court noted that "this fact is hearsay and disputed." Specifically, in
the appellate court's view, Deutsche Bank and CRC offered no evidence to
establish that the purported intermediate beneficiary in fact held the
beneficial interest.

Therefore, the Court held that the assignment was not a valid basis on
which to grant summary judgment.

The Court found the declaration of the CRC employee to be similarly
inadequate, as it did not "affirmatively show that [declarant could]
competently testify" that Deutsche Bank was the beneficiary. Further, the
Court noted that the employee's declaration merely concerned what the
recorded documents "indicated," as opposed to the accuracy of the factual
contents of those documents.

Because in the appellate court's view Deutsche Bank and CRC "failed to
present facts to establish that [Deutsche Bank] was beneficiary and CRC
was trustee" under the deed of trust, the Court held that triable issues
of material fact remained as to Plaintiffs' various causes of action.
Therefore, the Court reversed the lower court's order granting summary
judgment to Deutsche Bank.

Ralph T. Wutscher
McGinnis Tessitore Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874

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