Rencher et al v. PNC Bank N.A. et al

Filing 13

MEMORANDUM DECISION AND ORDER. In accordance with the Memorandum Decision set forth above, NOW THEREFORE IT IS HEREBY ORDERED, that the motion to dismiss 3 is GRANTED and defendant PNC Bank is hereby DISMISSED from this action. 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 (st)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
TAMLA RENCHER, individually;
CRAIG RENCHER, individually; and
RENCHER/AMERICAN MANOR, a
limited liability company,

Case No. 4:12-CV-200-BLW
MEMORANDUM DECISION
AND ORDER

Plaintiffs,
v.
PNC BANK, N.A., individually; LA
SALLE BANK NATIONAL
ASSOCIATION, AS TRUSTEE FOR
THE CERTIFICATE HOLDERS OF
ML-CFC COMMERCIAL MORTGAGE
TRUST 2007-7, COMMERCIAL
MORTGAGE PASSTHROUGH
CERTIFICATES, SERIES 20077 individually; ALLIANCE TITLE AND
ESCROW COMPANY, individually; and
DOES 1 through 250, inclusive,
Defendants.

INTRODUCTION
The Court has before it a motion to dismiss filed by defendant PNC Bank. The
motion is fully briefed and at issue. For the reasons explained below, the Court will grant
the motion.
LITIGATION BACKGROUND
Plaintiffs Tamla Rencher and Rencher/American Manor LLC filed this action
seeking to unwind a foreclosure sale of property in Rexburg, Idaho, and to obtain a

Memorandum Decision & Order – page 1

declaration that title to the property is vested in them.1 They sued three defendants: (1)
PNC Bank; (2) La Salle Bank, and (3) Alliance Title and Escrow Company. Plaintiffs
claim that prior to the foreclosure sale in 2010, the defendants had lost any interest in the
note and deed of trust, making the foreclosure sale void. Plaintiffs ask the Court for a
declaration that they have title to the property, that the defendants have no interest, and
that the property must be re-conveyed to the plaintiffs.
Plaintiffs originally financed the purchase of the Rexburg property through PNC
Bank. The loan was secured with a promissory note and deed of trust. About three years
later, following plaintiffs’ default, PNC Bank started non-judicial foreclosure
proceedings. Tamla Rencher and Rencher/American Manor both filed bankruptcies in an
effort to stay the foreclosure. The Bankruptcy Court lifted the stays to allow the
foreclosure to proceed. In a later decision, reviewing those two bankruptcy actions, the
Bankruptcy Judge stated that “Ms. Rencher’s sole motive for filing the . . . bankruptcy
cases was to invoke the automatic stay in favor of her entities so as to obstruct and
prevent creditors from exercising their lawful collection rights under applicable law,
including the right to foreclose . . . .” See Memorandum Decision in Rencher/American
Manor Bankruptcy Case No. 12-41257-JDP (Feb. 27, 2013).
The foreclosure sale was held on December 30, 2010, and PNC Bank purchased
the property. PNC then conveyed the property to Land Holding LLC.

1

Craig Rencher was another original plaintiff but he has settled and been
dismissed.

Memorandum Decision & Order – page 2

When Tamla Rencher filed liens clouding Land Holding’s title, Land Holding
sued her and Rencher/American Manor in the state district court for Madison County
seeking quiet title to the property. Tamla Rencher and Rencher/American Manor filed a
counterclaim against Land Holding and a third-party complaint against PNC Bank,
claiming that the promissory note had been “securitized” and that PNC Bank no longer
had any interest in the note when it foreclosed. She also denied being in default and
asked that title be quieted to her and Rencher/American Manor.
In response, PNC Bank and Land Holding filed motions for summary judgment
that were granted by the court. In a Judgment, the court found that Tamla Rencher and
Rencher/American Manor “have no right, title, or interest in the property.” See Exhibit F
(Dkt. No. 4-6). The court also stated that “fee simple title to the property . . . is quieted
and confirmed in [PNC Bank’s successors-in-interest].” Id. The Judgment was filed on
February 2, 2012.
About two months later, Tamla Rencher and Rencher/American Manor filed this
lawsuit. PNC Bank has filed a motion to dismiss, arguing that the issues here have all
been resolved by the Judgment issued by the Madison County court. The Court will
resolve the motion after reviewing the effect of a bankruptcy filed by Rencher/American
Manor.
ANALYSIS
Effect of Bankruptcy
About 5 months after it filed this action, plaintiff Rencher/American Manor filed a
Chapter 7 bankruptcy action that is currently pending. The automatic stay provisions of
Memorandum Decision & Order – page 3

the Bankruptcy Code “prohibit the continuation of a judicial action against the debtor
that was commenced before the bankruptcy.” In re White, 186 B.R. 700, 703 (B.A.P. 9th
Cir.1995) (emphasis added). However, “[t]he automatic stay is inapplicable to suits by
the . . . debtor . . . .” Id. at 704 (emphasis in original) (citation omitted).
Thus, any stay imposed by the bankruptcy of plaintiff Rencher/American Manor
does not prevent the Court from resolving PNC’s motion to dismiss in this case.
Moreover, the Bankruptcy Judge has held that Rencher/American Manor’s bankruptcy –
this most recent bankruptcy filing – was filed in bad faith to delay foreclosures, and he
imposed monetary sanctions on Tamla Rencher for filing the company’s bankruptcy. See
Memorandum Decision in Rencher/American Manor Bankruptcy Case No. 12-41257JDP (Feb. 27, 2013). The Court therefore finds that any stay does not apply to PNC’s
motion.
Motion to Dismiss
The central issues raised by Plaintiffs in this case are whether the foreclosure sale
of the Rexburg property was proper and whether title to that land should be vested in
Plaintiffs. These are the same issues resolved in the Madison County action. There,
Tamla Rencher and Rencher/American Manor made the following arguments: (1) PNC
Bank lost any interest in the Rexburg property when it securitized the promissory note;
(2) the deed of trust is void; (3) the foreclosure sale to PNC Bank is void; (4) title should
be quieted in plaintiffs; and (5) the Rexburg property should be re-conveyed to Plaintiffs.
Those issues were fully litigated in the Madison County action and were all resolved
against Plaintiffs by that court’s Judgment, quoted above.
Memorandum Decision & Order – page 4

Res judicata is applicable whenever there is (1) an identity of claims, (2) a final
judgment on the merits, and (3) privity between parties. Stratosphere Litig. LLC v.
Grand Casinos, Inc., 298 F.3d 1137, 1143 n. 3 (9th Cir.2002). In cases involving
interests in real property the Supreme Court has recognized, “[t]he policies advanced by
the doctrine of res judicata perhaps are at their zenith in cases concerning real property,
land and water.” Nevada v. United States, 463 U.S. 110, 129 n. 10 (1983).
The issues here all center on the same parcel of real property, and have been fully
litigated and resolved in a final Judgment by the state district court for Madison County
against both of the Plaintiffs to this action, Tamla Rencher and Rencher/American
Manor. These circumstances satisfy all the criteria for applying res judicata, and PNC
Bank’s motion to dismiss must be granted.
ORDER
In accordance with the Memorandum Decision set forth above,
NOW THEREFORE IT IS HEREBY ORDERED, that the motion to dismiss
(docket no. 3) is GRANTED and defendant PNC Bank is hereby DISMISSED from this
action.

DATED: March 24, 2014

_________________________
B. Lynn Winmill
Chief Judge
United States District Court

Memorandum Decision & Order – page 5