Robinson et al v. GE Money Bank et al

Filing 96

ORDER RE BRIEFING SUPPLEMENTAL BRIEFING - That U.S. Bank (as Trustee of the Trust which holds the Robinsons' loan) and Wells Fargo (whose exact relationship to this transaction has yet to be identified by either party, but who joined U.S. Ban k's motion) shall file a supplemental brief on the issues discussed above not to exceed five pages by April 25, 2016. Plaintiffs and/or the MERS defendants may each respond, in a brief not to exceed five pages by April 29, 2016. FURTHER ORDERED that the Clerk of the Court must file a copy of this Order in both the MDL case number and the one member case listed. Signed by Senior Judge James A Teilborg on 4/20/16. (MDL-09-2119) (MAP)

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UNITED STATES DISTRICT COURT

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DISTRICT OF ARIZONA

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IN RE MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS (MERS)
LITIGATION

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THIS DOCUMENT RELATES TO:

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Robinson v. GE Money Bank et al.,
CV 10-00630-PHX-JAT

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) MDL 09-02119-PHX-JAT
) CV 10-630-PHX-JAT
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ORDER Re SUPPLEMENTAL
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BRIEFING
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The Court will order supplemental briefing as specified below. Each brief may

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not exceed FIVE (5) pages. This five pages includes the caption and the signature and is

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inclusive of exhibits.

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Regarding the Robinson case, in the motion at Doc. 1923, pages 4-6, Defendant
U.S. Bank makes the following argument:
The Court should enter summary judgment in favor of U.S. Bank, as
Trustee for SASCO Series 2006-GEL3, because the undisputed evidence of
record establishes that it had no involvement in the foreclosure action or the
documents the Robinsons attached to the CAC. U.S. Bank, as Trustee for
SASCO Series 2006-GEL3, merely held the Robinsons’ loan as trustee.
SOF ¶¶ 5-6. U.S. Bank, as Trustee for SASCO Series 2006- GEL3, had no
involvement in the foreclosure process: it did not service the loan or initiate
the foreclosure proceedings, it did not execute or cause the recording of the
documents at issue, it did not communicate with the foreclosure trustee
about the documents or the foreclosure, and it never saw the challenged
documents before they were recorded. See id. ¶¶ 6-7.
Defendant U.S. Bank (as Trustee) makes no argument about who did undertake
the foreclosure of the Robinsons’ house. Arizona agency law is as follows:

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Arizona courts generally follow the Restatement of Agency. Fidelity
& Deposit Co. of Md. v. Bondwriter of Sw., Inc., 228 Ariz. 84, 263 P.3d
633, 639 (Ariz. Ct. App.2011). The Restatement defines “agency” as “a
consensual and fiduciary relationship” that “creates a [fiduciary] duty upon
the agent to act in good faith and according to the terms of the agency
agreement.” Maricopa P'ships, Inc. v. Petyak, 163 Ariz. 624, 790 P.2d 279,
281 (Ariz.Ct.App.1989); see Restatement (Third) of Agency § 1.01 (2006)
(“Agency is the fiduciary relationship that arises when one person (a
‘principal’) manifests assent to another person (an ‘agent’) that the agent
shall act on the principal’s behalf and subject to the principal’s control, and
the agent manifests assent or otherwise consents so to act.”).

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KnightBrook Ins. Co. v. Payless Car Rental Sys., Inc., 43 F. Supp. 3d 965, 978 (D. Ariz.

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2014).
A principal is subject to liability to a third party harmed by an
agent’s conduct when the agent’s conduct is within the scope of the agent’s
actual authority or ratified by the principal; and

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(1) the agent’s conduct is tortious, or
(2) the agent’s conduct, if that of the principal, would subject the principal
to tort liability.

Restatement (Third) Of Agency § 7.04 (2006).

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This Court and other courts have held that MERS and the MERS system do not

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per se violate Arizona law. See e.g. Cervantes v. Countrywide Home Loans, Inc., 656

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F.3d 1034, 1044 (9th Cir. 2011) (“Further, the notes and deeds are not irreparably split:

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the split only renders the mortgage unenforceable if MERS or the trustee, as nominal

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holders of the deeds, are not agents of the lenders. See Landmark Nat'l Bank, 216 P.3d at

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167.”).

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Thus, while Courts have held that MERS (or a servicer) is permitted to be the

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agent of the lender, in any particular case, the lender could disavow that any such

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relationship exists and that MERS (and/or the servicer) is a rogue actor. In this case, that

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appears to be the only logical conclusion to U.S. Bank’s argument.

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In other words, U.S. Bank argues that IT took no action. By implication, U.S.

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Bank must also be arguing that it is not the principal of any agent (acting within its

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authority) who took such action, otherwise, as principal, U.S. Bank would still be liable.

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However, U.S. Bank never affirmatively, factually, disavows that MERS or the

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servicer are agents of U.S. Bank (U.S. Bank admits the Trust for which it is Trustee holds

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the Robinsons’ loan and is seeking repayment of said loan through the collection of this

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collateral). Further, later in their motion for summary judgment at footnote 9 (page 10)

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and page 14-16; U.S. Bank discusses MERS as if it is an agent or nominee of U.S. Bank.

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These positions represent such material factual inconsistencies, the Court cannot

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determine whether U.S. Bank is arguing this it IS the principal of its agent (MERS and

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the loan servicer), but that those agents did nothing wrong; or if U.S. Bank is factually

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disavowing any agency relationship; thus, U.S. Bank could potentially escape liability if

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it personally took no action with respect to the Robinsons’ loan.

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Accordingly,

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IT IS ORDERED that U.S. Bank (as Trustee of the Trust which holds the

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Robinsons’ loan) and Wells Fargo (whose exact relationship to this transaction has yet to

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be identified by either party, but who joined U.S. Bank’s motion) shall file a

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supplemental brief on the issues discussed above not to exceed five pages by April 25,

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2016. Plaintiffs and/or the MERS defendants may each respond, in a brief not to exceed

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five pages by April 29, 2016.1

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IT IS FURTHER ORDERED that the Clerk of the Court must file a copy of this
Order in both the MDL case number and the one member case listed above.

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Dated this 20th day of April, 2016.

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Both MERS and U.S. Bank also make an argument that each of them is not the person
or entity who physically recorded that document. Each of them should also address
whether, under Arizona law, a person who records a document for them, at their direction
is their agent.

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