Debrunner v. Deutsche Bank Nat. Trust Co

In Debrunner v. Deutsche Bank Nat. Trust Co. (2012) 204 Cal.App.4th 433, the plaintiff argued that we must look to the UCC for guidance, because a promissory note is a negotiable instrument that cannot be assigned without a valid endorsement and physical delivery to the assignee. (Id. at p. 440.) As this court explained in Debrunner, "many federal courts have rejected this position, applying California law. All have noted that the procedures to be followed in a nonjudicial foreclosure are governed by sections 2924 through 2924k, which do not require that the note be in the possession of the party initiating the foreclosure. ." (Debrunner, at p. 440.) "Notably, section 2924, subdivision (a)(1), permits a notice of default to be filed by the 'trustee, mortgagee, or beneficiary, or any of their authorized agents.' The provision does not mandate physical possession of the underlying promissory note in order for this initiation of foreclosure to be valid." (Debrunner, at p. 440.) The Court rejected the theory that only the entity in possession of the promissory note may foreclose. This court saw "nothing in the applicable statutes that precludes foreclosure when the foreclosing party does not possess the original promissory note." (Id. at p. 440.) "'There is no stated requirement in California's non-judicial foreclosure scheme that requires a beneficial interest in the Note to foreclose. Rather, the statute broadly allows a trustee, mortgagee, beneficiary, or any of their agents to initiate non-judicial foreclosure.'" (Id. at p. 441.)