Van Kirk v. Bank of America N.A. et al

Filing 34

ORDER incorporating and adopting in its entirety 28 Report and Recommendations; granting 4 Motion to Dismiss; denying 32 Objection to Report and Recommendations; granting 31 Response to Report and Recommendations. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjm)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

GAIL ANN VAN KIRK,
Plaintiff,
v.

Case No. 1:11-cv-00621-BLW-REB
ORDER

BANK OF AMERICA CORPORATION;
a corporation of unknown origin; BANK
OF AMERICA, N.A. AS SUCCESSOR
TO COUNTRYWIDE HOME LOANS,
INC., a Delaware corporation; BAC
HOME LOANS SERVICING, L.P., a
limited partnership of unknown origin and
a wholly-owned subsidiary of Bank of
America, N.A.; NORTHWEST TRUSTEE
SERVICES, INC., an Idaho Corporation;
MORTGAGE ELECTRONIC
REGISTRATION SYSTEM, INC., a
Delaware corporation; FEDERAL
NATIONAL MORTGAGE
ASSOCIATION, a Federally Chartered
Corporation; and DOES 1-10 as
individuals or entities with an interest in
the property commonly known as: 11061
West Wagon Pass Street, Boise, Idaho
83709,
Defendants.
On August 15, 2012, United States Magistrate Judge Ronald E. Bush issued a
Report and Recommendation (Dkt. 15), recommending that Defendants’ Motion to
Dismiss (Dkt. 4) be granted. Any party may challenge a magistrate judge’s proposed

ORDER - 1

recommendation by filing written objections within fourteen days after being served with
a copy of the Magistrate Judge’s Report and Recommendation. See 28 U.S.C. §
636(b)(1)(C). The district court must then “make a de novo determination of those
portions of the report or specified proposed findings or recommendations to which
objection is made.” Id. The district court may accept, reject, or modify in whole or in
part, the findings and recommendations made by the Magistrate Judge. Id.; see also Fed.
R. Civ. P. 72(b).
Plaintiff filed an objection challenging the Report and Recommendation’s
conclusion that his Complaint be dismissed in part. (Dkt. No. 32). Defendants also filed
an objection challenging the Report and Recommendation’s conclusion that the
Complaint not be dismissed in part. (Dkt. 31). The Court has considered the objections
and conducted a de novo review of the record. The Court agrees with Judge Bush’s
conclusions, except for his decision that as to Plaintiff’s declaratory relief claim, it cannot
be said as a matter of law that Northwest is a valid trustee. The Court will explain below.
I.

Plaintiff’s Objections
In his Report and Recommendation, Judge Bush recommended dismissal of all of

Plaintiff’s claims except one claim for declaratory relief. Plaintiff objects to the
recommendation to dismiss any of his claims.
The Court agrees with Judge Bush’s recommendation to dismiss the FDCPA
claim, the fraud and RICO claims, the breach of fiduciary duty claim, and the IIED claim.
Several of these claims barely deserve mention, as they are clearly baseless. On the IIED

ORDER - 2

claim, Plaintiff has not alleged the type of conduct which supports an IIED claim. On the
breach of fiduciary duty claim, the defendants did not owe Plaintiff such a duty. On the
fraud claim, Plaintiff did not plead with specificity as required by the rules. On the RICO
claim, Plaintiff’s allegations are, as Judge Bush put it, “threadbare at best as to the
particular nature of the alleged fraud or the pattern of racketeering activity.” R & R, p. 24
(Dkt. 28).
On the FDCPA claim, Judge Bush correctly determined that even if Defendants
are debt collectors, which very likely is not the case, Plaintiff’s allegations do not assert a
violation of the FDCPA. Defendants did not mislead Plaintiff with regard to collection of
debt, Northwest had the authority to sell the property pursuant to the Deed of Trust, and
any other allegations of wrongful conduct are without “factual allegations tethering such
violations to Defendants’ conduct.” Id. at 14. Accordingly, Plaintiff’s objections are
without merit.
II.

Defendants’ Objections
As noted above, in his Report and Recommendation, Judge Bush recommended

dismissal of all of Plaintiff’s claims except one claim for declaratory relief. Even as to
that claim, Judge Bush recommended that this Court reject the bulk of Plaintiff’s
arguments. However, Judge Bush recommended not dismissing the entire claim because
he questioned whether Northwest was a valid trustee. Judge Bush did not reject the
contention that Northwest was a valid trustee; instead he simply stated that it is not
apparent as a matter of law based upon the record before the Court.

ORDER - 3

In reaching his recommendation, Judge Bush correctly rejected Plaintiff’s
argument that because MERS is not a valid beneficiary, it necessarily lacked the ability to
transfer the beneficial interest to Bank of America (“BOFA”) and, therefore, BOFA also
does not have the authority to appoint Northwest as the trustee. MERS is a valid
beneficiary, as explained in section C2 of the Report and Recommendation. Any
argument to the contrary has been rejected by multiple jurisdictions, including the
District of Idaho and the Ninth Circuit. See e.g., Cherian v. Countrywide Home Loans,
Inc., 2012 WL 2865979, *4 (D.Idaho); Cervantes v. Countrywide Home Loans, Inc., 656
F.3d 1034 (9th Cir. 2011).
Judge Bush therefore correctly reasoned that as a valid beneficiary, MERS
properly assigned its interest in the Deed of Trust to BOFA which, in turn, appropriately
appointed Northwest successor trustee. However, Judge Bush explained that this assumes
that BOFA had the beneficial interest necessary in order to appoint a successor trustee.
Judge Bush explained that the record is unclear in this respect, particularly where the
record appears to reflect that Fannie Mae maintains some interest in the Property. See
Exs. D & E to Pl.’s Compl. (Dkt. 1, Atts. 4 & 5). The extent of that interest, Judge Bush
noted, or when such an interest came into focus, is also unclear. Judge Bush explained
that it may indeed be the case, but he could only conclude that Northwest may be a valid
trustee.
Judge Bush also indicated that he could only conclude that Defendants may have
properly recorded title and assignment documents in compliance with Idaho’s foreclosure

ORDER - 4

statutes, but that too is not apparent as a matter of law on the record. Judge Bush
explained that on its face, it would seem that Defendants complied with Idaho’s
foreclosure statutes by recording the Deed of Trust’s assignment, but as with the
questions surrounding whether Northwest is a valid trustee, Fannie Mae’s role in this
action “muddies the waters” on the issue of whether Defendants ultimately satisfied their
recording obligations.
Considering the record and the myriad of arguments thrown at the Court by
Plaintiff, it is no wonder Judge Bush felt reluctant to make such a definitive finding on
these two narrow issues. This is especially true given the fact that counsel did not focus
on them. However, after reviewing Defendants’ objection, which is essentially a
clarification answering Judge Bush’s questions, and noting that Plaintiff did not respond
to the explanation, the Court concludes that the claim for declaratory relief should be
dismissed.
As Judge Bush explained, BOFA became the beneficiary when MERS assigned its
interest in the Deed of Trust to BOFA. As the trust deed beneficiary, BOFA appointed
Northwest Trustee successor trustee. Idaho Code 45-1504(2) gives BOFA the authority to
do that, stating that “[t]he trustee may . . . be replaced by the beneficiary.” I.C. 451504(2).
Moreover, the Ninth Circuit has recently held that a deed of trust will only become
unenforceable where the note and deed are irreparably split when “MERS or the trustee,
as nominal holders of the deeds, are not agents of the lenders.” Cervantes v. Countrywide

ORDER - 5

Home Loans, Inc., 656 F.3d 1034, 1044 (9th Cir. 2011). The fact that MERS is identified
as the beneficiary under the Deed of Trust for the benefit of the lender, its successors and
assigns, does not create a split between the Note and the Deed of Trust. The Deed of
Trust follows the Note, and the agency relationship remains for subsequent parties to
whom the note is properly assigned. Thus, Northwest Trustee was properly appointed and
is a valid Trustee of the Deed of Trust. In turn, there is no ambiguity regarding
Defendants’ compliance with Idaho foreclosure statutes. Registration of the transfer of
the Note from the original lender to Fannie Mae via the MERS electronic registration
system was proper. Cervantes, 656 F.3d at1039. Accordingly, Defendants’ objection is
sustained and the case will be dismissed in its entirety.
ORDER
IT IS ORDERED:
1. Having conducted a de novo review of the Report and Recommendation, the
Court finds that Magistrate Judge Bush’s Report and Recommendation is well
founded in law and consistent with the Court’s own view of the record, except
for the very narrow issue on declaratory relief. Therefore, acting on the
recommendation of Magistrate Judge Bush, and this Court being fully advised
in the premises, IT IS HEREBY ORDERED that the Report and
Recommendation entered on August 15, 2012, (Dkt. 28), shall be, and is
hereby, INCORPORATED by reference and ADOPTED in its entirety,

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except with respect to the narrow issue on declaratory relief. With respect to
that issue, the Court will grant Defendants’ objection as explained above.
2. Plaintiff’s Objection to Report and Recommendation (Dkt. 32) is DENIED.
3. Defendants’ Response to Report and Recommendation Re: Defendants’
Motion to Dismiss Complaint (Dkt. 31) is GRANTED.
4. The Court will enter a separate judgment in accordance with Federal Rule of
Civil Procedure 58.

DATED: October 1, 2012

_________________________
B. Lynn Winmill
Chief Judge
United States District Court

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