The trial court erred in entering terminating and monetary sanctions against plaintiffs and their attorney for filing this suit against the bank.  Plaintiffs had a non-frivolous argument that the release clause of their settlement agreement with a third party purchaser of their home at a nonjudicial foreclosure sale did not release claims against the bank.  The release waived claims against the purchaser’s predecessor in interest.  The bank owned the foreclosed loan, not fee title to the property.  Plaintiffs’ nonfrivolous argument was that predecessor in interest referred only to a predecessor in fee title, not the prior lender.  Since the claims plaintiffs pursued in their complaint were not frivolous, they also were not pursued for an improper purpose, and so could not be a proper basis for the award of sanctions.

California Court of Appeal, Third District (Renner, J.); March 13, 2018; 2018 WL 1281681