Downie v. Rama Fund, LLC (Mar. 3, 2023, E078068) 2023 WL 2340619

A rental property owner with a mortgage from GMSR’s client defaulted on the mortgage.  GMSR’s client tried to foreclose on the property, but the owner resisted at every turn.  He and his agents filed four bankruptcy actions ultimately deemed to be bad faith efforts to delay the foreclosure.  To stop the endless bankruptcy actions, GMSR’s client agreed to a settlement:  The property owner would timely pay off the loan in four installments or, on the failure to do so, allow foreclosure to proceed “uncontested.”

The property owner failed to make the second installment, so GMSR’s client restarted foreclosure proceedings.  The property owner’s agents responded by suing for wrongful foreclosure, breach of contract, and quiet title, despite the prior agreement to let the foreclosure proceed uncontested.  The suit alleged that GMSR’s client failed to provide a payoff demand that would have allowed the owner to refinance the Property and stop the foreclosure.  The trial court ultimately sustained a demurrer without leave to amend.

On appeal, GMSR argued that the property owner and his agents could not state a claim because, among other things, they had already agreed not to contest the foreclosure—and because the complaint’s exhibits showed that they had not asked GMSR’s client for the one thing they allegedly needed to stop the foreclosure:  a payoff demand.

The Court of Appeal affirmed, holding that all of the claims failed as a matter of law.

To read the Court of Appeal opinion, click HERE.

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