Nullify Foreclosure Sale in California

A Foreclosure Sale may be set aside in California

Case Law
GIANNOTTA PROPERTIES, INC., a California corporation,
Plaintiff-Appellant v. CYRIL BARBACCIA; LENA M. BARBACCIA; SAN JOSE NATIONAL BANK,
Defendants-Appellees, GIANNOTTA PROPERTIES, INC., a California corporation, Debtor

No. 03-17008
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
146 Fed. Appx. 97; 2005 U.S. App. LEXIS 16729
June 13, 2005, Argued and Submitted, San Francisco, California
August 9, 2005, Filed

Facts: Mortgagor-debtor A defaulted in the payment of his obligation prompting mortgagee bank B to commence foreclosure action. The scheduled foreclosure sale did not push through on January 15, 1995 as in fact, said date was extended from a Sunday to the following Tuesday, January 17. Monday was a holiday. The sale pushed through on the extended date.

Mortgagor A now seeks judicial relief to set aside the sale on the ground that no notice was sent regarding the extended date of sale which made him incapable of not attending the sale. Mortgagor A argues that the postponement did not comply with the statutory requirement that a notice of postponement must be given by public declaration by the trustee at the time and place last appointed for sale in accordance with CAL. CIV. CODE § 2924g(d) (West 2004).

Issue: Whether or not a foreclosure sale can be set aside on the ground that mortgagor was not sent a notice extending the date and time of sale?

Ruling: No. Even assuming that mortgagor was not sent a notice of postponement regarding the time and place of the scheduled foreclosure, he still fails to show that this technical violation resulted in any surprise or prejudice. Mortgagor A was indisputably aware that the foreclosure had been rescheduled because his attorney showed up at the foreclosure agent's office on that Tuesday and further requested for a postponement to give A more to seek a TRO. Additionally, a new notice of sale was not required under Cal. Civ. Code § 2924g(c)(1).Where the borrower received adequate notice of the foreclosure sale, a slight procedural irregularity in the foreclosure process that does not prejudice the borrower and does not entitle him to set aside the foreclosure.

Lesson Learned: If a mortgagor intends to nullify a foreclosure sale, his cause of action should be grounded on clear and compelling evidence that no notice at all was sent to him on the auction date. It is incumbent upon him to present that much needed proof. To nullify a foreclosure sale, mortgagor must prove substantial violation in the procedural conduct of the foreclosure sale which prejudiced him.

Written by Kevin Levonas and Jerry L.