Every week: one real lawsuit filed over a California foreclosure, taken apart.
The File
Case: CSPN LLC v. W Financial REIT
Court: Santa Clara County Superior Court
Filed: August 10, 2026. Represented by counsel.
Property: Two commercial parcels, Los Gatos.
Loan: First position. $14,000,000, recorded May 2023, matures August 16, 2026
Claims: Five. Declaratory relief, injunctive relief, accounting, wrongful foreclosure, lender liability
Relief sought: Restraining order, injunction, itemized accounting, damages, attorney fees
Exhibits attached: Ten. Legal description, Promissory Note, Trustee’s Deed, Deed of Trust, four loan modifications, Demand Letter, Acceleration Letter, Notice of Default, Substitution of Trustee, Notice of Trustee’s Sale
The Timeline
8/16/2022. The lender made a $14,000,000 loan. The Deed of Trust recitals say the Borrower used that money to buy a note secured by these two properties.
1/25/2023. The Borrower foreclosed on that purchased note. The Trustee’s Deed states the debt was $26,710,876.69 and the bid was $7,000,000.
2/6/2023. The Trustee’s Deed recorded. The Borrower now owned the properties.
2/17/2023. The Borrower signed a Deed of Trust on the properties in the lender’s favor. It secured the same 2022 note.
5/4/2023. The Deed of Trust recorded.
8/16/2023. First loan modification. Maturity moved to 8/16/2024.
10/22/2024. Second modification. Maturity moved to 2/16/2025.
2/11/2025. Third modification. Maturity moved to 5/16/2025.
8/25/2025. Fourth modification. Maturity moved to 8/16/2026. The Borrower paid $400,000 against principal and agreed to pay $50,000 more each month.
3/1/2026. A payment of $169,855.56 came due. The Notice of Default states it was not paid.
3/10/2026. The lender sent a Demand Letter. It says default interest started running on 3/6/2026.
3/26/2026. Counsel for the lender sent an Acceleration Letter.
4/1/2026. A second payment came due. The Notice of Default states that one was not paid either.
4/6/2026, 2:34 p.m. The Substitution of Trustee recorded as instrument 25967998. The Notice of Default recorded in the same minute as instrument 25967999.
7/15/2026. The Notice of Trustee’s Sale recorded. It set the sale for 8/17/2026.
8/10/2026. The Borrower filed this complaint.
8/13/2026. The Borrower applied for a restraining order. The lender filed its opposition the same day.
8/17/2026. The sale ran.
8/21/2026. The court order denying the restraining order application was filed.
8/26/2026. The Trustee’s Deed Upon Sale recorded.
The Money
$14,000,000. The loan, effective August 16, 2022. Promissory Note.
$20,500,000. The face amount of the note the Borrower bought with the loan money. Deed of Trust recitals.
$26,710,876.69. The debt owed on that note when the Borrower foreclosed. Trustee’s Deed, February 2023.
$7,000,000. What the Borrower bid at that sale. Same deed.
$400,000. The principal payment the Borrower made in August 2025. Fourth modification.
$13,400,000. The principal still owed in February 2026. Lender’s monthly statement.
$169,855.56. The March 1, 2026 payment. Interest of $119,855.56 plus a $50,000 principal payment. Same statement.
$705,203.58. The reinstatement figure in the Notice of Default, stated as of April 2, 2026.
$680,822.58. The reinstatement figure the complaint says the lender used in a related court filing, same date.
$24,381.00. The difference between those two numbers.
$15,198,741.65. The estimated balance in the Notice of Trustee’s Sale.
$15,406,941.65. The debt stated in the Trustee’s Deed Upon Sale.
$12,000,000. The bid at the August 17, 2026 sale.
Claim 1. Declaratory Relief (Code Civ. Proc. § 1060)
The Borrower says a wrong date in the Acceleration Letter killed the acceleration. The Promissory Note charges 24 percent default interest without any letter.
What it asks for
A declaration that the acceleration never happened, that the lender could not use the power of sale, that the foreclosure trustee had no authority, and that the Borrower does not have to tender money first. (¶46)
What it alleges
The Acceleration Letter names the Deed of Trust as “dated August 16, 2022.” The real Deed of Trust is dated February 17, 2023. The Borrower says that mistake made the notice ineffective. (¶¶14, 41)
It also alleges the Substitution of Trustee and the Notice of Default recorded at the same time, which triggered a mailing requirement under section 2934a(b), and that no affidavit of mailing appears on the Substitution. (¶42)
What the record shows
The Acceleration Letter, Exhibit 7, says August 16, 2022. The Deed of Trust, Exhibit 4, is dated February 17, 2023.
The Demand Letter, Exhibit 6, is dated March 10, 2026. It names the Deed of Trust correctly. It says default interest runs from March 6, 2026. That is sixteen days before the Acceleration Letter.
Section 7.1 of the Promissory Note, Exhibit 2, charges default interest at 24 percent “regardless of whether or not there has been a notice of default issued by the Note Holder.”
The Substitution of Trustee is Exhibit 9. It carries a recorder’s stamp of April 6, 2026 at 2:34 p.m., instrument 25967998. The Notice of Default carries instrument 25967999.
Claim 2. Injunctive Relief (Code Civ. Proc. §§ 526, 527)
The Borrower asked the court to stop the August 17 sale. The court denied the application and the sale ran on schedule.
What the statute requires
A court may issue a restraining order when the plaintiff shows it is entitled to the relief it seeks and that the harm during the case would be great or irreparable. (¶48)
What it alleges
A sale to a third party would leave the Borrower with no way to undo the sale and no right to redeem, so it would lose the properties and its equity permanently. (¶49)
What the record shows
The Borrower applied for the order on August 13, 2026. The lender filed its opposition the same day.
The docket shows the application was denied. The order was entered August 21, 2026.
The sale ran August 17, 2026. The Trustee’s Deed Upon Sale recorded August 26, 2026.
Claim 3. Accounting
The Borrower asks a judge for an itemized payoff. The Notice of Default tells the Borrower how to ask the lender for one.
What it alleges
The lender holds the books and records needed to determine the true payoff. The amounts are inconsistent and complicated by default interest, deferred fees and advances. (¶¶52, 53)
What the record shows
The Notice of Default, Exhibit 8, says this on its face: “Upon your written request, the beneficiary or mortgagee will give you a written itemization of the entire amount you must pay.”
The complaint does not allege that the Borrower made that written request.
It does allege the Borrower was selling the properties around May 2026 and waited more than a month for a payoff demand. It gives no date, attaches no demand, and attaches no sale contract. (¶26)
Claim 4. Wrongful Foreclosure
The Borrower says the Notice of Trustee’s Sale overstated the debt. The Trustee’s Deed Upon Sale puts the debt $208,200.00 higher.
What it alleges
The foreclosure rests on defective notices: an inaccurate Acceleration Letter, inconsistent statements of the amount due, and a defective Substitution of Trustee. (¶55)
The loss of the properties, credit damage and legal fees followed from that conduct. (¶57)
What the record shows
The Notice of Trustee’s Sale states $15,198,741.65. It calls that number “reasonably estimated” at the time of first publication and says the amount “may be greater on the day of sale.”
The Trustee’s Deed Upon Sale, recorded August 26, 2026, states the unpaid debt with costs was $15,406,941.65.
The complaint says the size of the number is “driven in significant part by the application of default interest.” (¶25)
Claim 5. Lender Liability
This count is two paragraphs. Both are copied word for word from the accounting count.
What it alleges
The lender holds the books and records needed to determine the true payoff. The amounts are inconsistent and complicated by default interest, deferred fees and advances.
What the record shows
The count names no duty. It names no breach. It describes no conduct the accounting count does not already describe, and it asks for nothing the accounting count does not already seek.
🔒 Paid below: the takeaway and three lessons for lenders.
