http://xa.yimg.com/kq/groups/21961710/2146019722/name/Lona+v.+Citibank.pdf

Firm commentary:

If you wait long enough, some court state will eventually get it.  Finally, a California appellate court has rejected the tender rule in  Lona v. Citibank, a case from the Sixth District Court of Appeal in San Jose. 

The decision reverses a summary judgment granted to Citibank.  On pages 24-29, it discusses the tender rule and four exceptions to the tender rule, including the argument that the loan was invalid in the first place because it was procured by fraud or was unconscionable. 

Here, the borrower alleged tender was not required either because the loan was based on fraud or was unconscionable.  Because the lender did not rebut these exceptions to the tender rule in its motion for summary judgment, summary judgment was reversed. 

This is a groundbreaking state court case that contains great language we will use in opposing demurrers, motions to dismiss and motions for summary judgment.  You also should use it in drafting complaints, where you should expressly allege one or more of the exceptions to the tender rule. 

The offset rule may be lifesaver for homeowners in financial distress.  If the borrower is suing for damages, he or she can allege that the potential damages exceed the amount of the tender required.  That then invokes the offset exception to the tender rule. 

Contact the office to discuss how this case affects you.

Filed 12/21/11