In the aftermath of the Great Recession, a Stockton “church” arranged for more than 1,000 members who had lost their homes through foreclosure to assign their claims against their lenders to the church along with a 5% equity interest in their foreclosed properties.  The church then further assigned the claims and real property interests to Brown who filed suit on the assigned claims against many lenders in a single case.  In an unpublished portion of the opinion, the court holds that the assignor-borrowers were indispensable parties, whose joinder was required because voiding their deeds of trust (part of the relief Brown sought) would expose the borrowers to personal liability on the loans by making the loans unsecured and thus depriving the borrowers of the protection of the anti-deficiency statutes.  In the published portion of the opinion, the court interprets Code of Civil Procedure section 369(a)(3) which permits suit without joining the parties for whose benefit suit is brought by “a person with whom or in whose name a contract is made for the benefit of another.”  The court says that the statute refers only to contracts, like trusts, which are made for the sole benefit of another for whom the person bringing the suit acts as a fiduciary.  Brown didn’t qualify under that statute since the assignments to him were partially for his benefit as well as for the assignor-borrowers’ benefit.

California Court of Appeal, Fifth District (Pena, J.); January 30, 2018; 2018 WL 618876.