Berhe v. Federal National Mortgage Association et al
Filing
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ORDER Denying 17 Plaintiff's Motion for District Judge to Reconsider 11 Order. Signed by Chief Judge Robert C. Jones on 09/16/2013. (Copies have been distributed pursuant to the NEF - AC)
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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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MEHERET G. BERHE,
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Plaintiff,
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vs.
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FEDERAL NATIONAL MORTGAGE
ASSOCIATION et al.,
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Defendants.
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2:13-cv-00552-RCJ-PAL
ORDER
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This is a residential foreclosure avoidance case involving one property. Pending befoe
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the Court is a Motion to Reconsider (ECF No. 17). For the reasons given herein, the Court
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denies the motion.
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Plaintiff Meheret G. Berhe gave lender Northern Pacific Mortgage Co. a $274,000
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promissory note to purchase or refinance real property at 9107 Black Maple Ave., Las Vegas, NV
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89148 (the “Property”), secured by a deed of trust (the “DOT”) against the Property. (See DOT
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1–3, Aug. 25, 2005, ECF No. 5-1). Fidelity National Title was the trustee on the DOT, and
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Mortgage Electronic Registration Systems, Inc. (“MERS”) was the lender’s “nominee” and the
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beneficiary of the DOT. (See id. 2). MERS later assigned both the note and DOT to Bank of
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America, N.A., (see Assignment, Sept. 24, 2011, ECF No. 5-2), which it was empowered to do in
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its dual capacity as the lender’s nominee and beneficiary of the DOT, and which assignment
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cured any split between the note and security that existed under the terms of the DOT itself, see
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Edelstein v. Bank of N.Y. Mellon, 286 P.3d 249, 258–60 (Nev. 2012). Bank of America then
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assigned both the note and DOT—only the assignment of one instrument was necessary at this
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point, because Bank of America owned both instruments such that one instrument would follow
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the other as a matter of law, see id. at 257–58 (citing Restatement (Third) of Property: Mortgages
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§ 5.4(a)–(b))—to Defendant Federal National Mortgage Association (“Fannie Mae”).
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(See Assignment, Sept. 11, 2012, ECF No. 5-3). Seterus, Inc. then purported, as attorney-in-fact
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for Fannie Mae, to substitute Defendant Quality Loan Service Corp. (“QLS”) as trustee on the
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DOT. (See Substitution, Oct. 25, 2012, ECF No. 5-4). QLS then filed a Notice of Default (the
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“NOD”), along with the required Affidavit of Compliance (the “AC”), which appears to be
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complete. (See NOD and AC, Dec. 3, 2012, ECF No. 5-5). The Director of the Nevada
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Foreclosure Mediation Program (“FMP”) issued an FMP Certificate indicating the Property was
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not eligible for mediation, which indicates Plaintiff was either not an owner-occupier, had
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surrendered the Property, or was in bankruptcy. (See FMP Certificate, Feb. 11, 2013, ECF No. 5-
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6). QLS scheduled a trustee’s sale for April 2, 2013. (See Notice of Sale, Mar. 7, 2013, ECF No.
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5-7).
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Plaintiff sued Fannie Mae and QLS in this Court on four causes of action that the Court
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will characterize as follows: (1) quiet title based upon statutorily defective foreclosure under
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section 107.080; (2) declaratory relief as to alleged securities violations; (3) a qui tam action
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based upon anti-trust violations by MERS; (3) mortgage fraud under section 207.470.
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Defendants moved to dismiss. The Court granted the motion as to all claims except the first
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claim for quiet title based upon statutorily defective foreclosure, because the substitution of QLS
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as trustee was executed by an entity (non-party Seterus, Inc.) purporting to be an agent of the
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beneficiary (Fannie Mae), but there was no evidence that it was in fact an agent of Fannie Mae
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apart from Seterus’s own claim of agency on the Substitution. Where this is the case, the Court
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typically requires defendants to provide evidence of the agency at the summary judgment stage.
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The Court noted that the second and third claims for declaratory relief concerning securities
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violations and anti-trust violations were mostly unintelligible and that to the extent they were
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intelligible, they consisted of generalized grievances against the mortgage industry. The Court
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granted Plaintiff leave to amend those claims to intelligibly plead a viable cause of action. The
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Court dismissed the fourth claim without leave to amend, because Plaintiff may not privately
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prosecute the criminal mortgage fraud statutes. Plaintiff does not allege any error by the Court or
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ask the Court to reconsider any of its rulings but simply attempts to rebut certain arguments made
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by Defendants in their original motion and reply.
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CONCLUSION
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IT IS HEREBY ORDERED that the Motion to Reconsider (ECF No. 17) is DENIED.
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IT IS SO ORDERED.
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Dated this 2nd day of of September, 2013.
Dated this 16th day August, 2013.
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_____________________________________
ROBERT C. JONES
United States District Judge
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