Dominguez v. Selene Finance, LP

Background

Dominguez signed an adjustable-rate note in July 2004 promising to pay $257,000 plus interest to Gateway Bank, FSB. He also signed a deed of trust naming Gateway Bank as the lender. The deed of trust was later assigned several times, most recently to U.S. Bank Trust National Association, acting solely as owner trustee for RCF 2 Acquisition Trust. The opinion states that RCF 2 owned the loan during the relevant period, with U.S. Bank acting as owner trustee.

In December 2020, Selene and RCF 2 entered a Base Servicing Agreement. U.S. Bank later gave Selene a limited power of attorney to perform specified tasks relating to loans Selene serviced. In August 2022, Dominguez received notices that Selene would become the mortgage servicer. The notices described a transfer of servicing and stated that the transfer would not affect the mortgage’s terms or conditions.

Dominguez’s second amended complaint alleges that Selene used form letters threatening acceleration and foreclosure to collect mortgage debt. He alleges violations of the Fair Debt Collection Practices Act and the Rosenthal Fair Debt Collection Practices Act, and filed the complaint on behalf of himself and others similarly situated.

The deed of trust requires the borrower and lender to provide notice and a reasonable opportunity to correct an alleged breach before starting certain lawsuits arising from the deed of trust. Although Selene was not named as the lender, Selene argued that it was an “assign” of the lender under Section 13, which says the deed’s agreements benefit the lender’s successors and assigns. The court previously denied Selene’s motion to dismiss because Selene had not shown that it was an assign and allowed discovery on that issue. The parties then filed cross-motions for partial summary judgment.

Legal Standard

Summary judgment is granted when the evidence shows that no genuine dispute about an important fact requires a trial and the moving party is entitled to judgment under the law. When both parties move for summary judgment on the same issue, the court must consider the evidence supporting and opposing both motions before ruling on each motion.

Meaning of “Assign”

The court applied California law because the deed of trust says it is governed by federal law and the law of the jurisdiction where the property is located, and both parties agreed California law governed the dispute. Relying on California authority, the court held that “assign” ordinarily means a person or entity that receives a transfer of title or ownership of property. An assignment requires the owner to show an intent to make a present transfer of rights, although no particular formalities are required.

The court rejected Selene’s argument that receiving powers or authority automatically made it an assign. The court reasoned that this interpretation would produce extreme results, such as treating an independent contractor hired to perform a task as an assign. The court also held that it was bound by the California Supreme Court’s definition and could not replace it with a broader dictionary definition.

Whether Selene Was an Assign

The court held that Selene had the burden of proving that it was an assign under the deed of trust. Selene relied primarily on the Base Servicing Agreement and limited power of attorney. The court found that neither document showed an intent to transfer servicing rights to Selene.

The Base Servicing Agreement expressly stated that it was only a contract for servicing assets and that the owner remained the sole and absolute owner of the assets and all related rights, including servicing rights. It described Selene as an independent contractor that would service and administer the assets. The agreement did not state that Selene was an assign or that it created an assignment. The agreement also allowed U.S. Bank to terminate Selene, after which the authority and power of the servicer would pass to a successor servicer appointed by the owner or manager.

The limited power of attorney appointed Selene to perform specified tasks, such as demanding and recovering funds, executing documents, and transacting business regarding loans Selene serviced. It did not state that U.S. Bank assigned rights to Selene. The court concluded that, because the power of attorney was limited by the Base Servicing Agreement, it could not assign rights that the servicing agreement did not assign.

The court also considered Selene’s conduct. Selene’s notice to Dominguez said that servicing was transferring to Selene and that the transfer would not affect the mortgage’s terms or conditions except for terms directly related to servicing. The court reasoned that, if Selene had received an assignment as it argued, the transfer would affect the deed of trust by making its notice-and-cure provisions applicable to lawsuits against Selene. The notice therefore supported the conclusion that Selene did not view itself as an assign.

The court compared these documents with other documents involving Dominguez’s loan that were expressly titled assignments and identified assignors and assignees. The court found that the servicing agreement and power of attorney contained no comparable expression of an intent to assign rights.

The court distinguished cases cited by Selene because those cases involved evidence of an express transfer of servicing rights, agreements treating a servicer as covered by the term “lender,” or different governing law. The court also disregarded legal conclusions in a declaration asserting that RCF 2 had assigned the servicing rights to Selene, explaining that such conclusions did not create a genuine dispute of material fact.

Ruling on Summary Judgment

The court concluded that every reasonable juror would find that U.S. Bank did not intend to transfer its servicing rights to Selene. It therefore GRANTED Plaintiff’s motion for partial summary judgment and DENIED Selene’s motion for partial summary judgment on whether Selene was an assign under the deed of trust. This ruling resolved the “assign as a matter of law” issue, not the underlying debt-collection claims.

Sealing

The court GRANTED in part and DENIED in part Selene’s motion to seal the Base Servicing Agreement. The court found compelling reasons to seal portions concerning Selene’s compensation structure and proprietary servicing procedures, but held that Selene had not provided compelling reasons to seal Sections 8.01, 8.02, and 9.10. The court therefore DENIED the request to seal those provisions and otherwise GRANTED Selene’s request to seal the agreement in accordance with the referenced docket filing.

Further Proceedings

The court set a further case-management conference for November 5, 2025, with a joint statement due one week beforehand. The order states that it disposes of Docket Nos. 93, 94, 95, and 99.