Fitzgerald v. Quality Loan Service Corporation et al

Filing 79

ORDER granting 71 Motion for Summary Judgment. Hearing set 11/07/11 vacated. Signed by Chief Judge Robert C. Jones on 10/13/11. (Copies have been distributed pursuant to the NEF - LG)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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ROBERT L. FITZGERALD,

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This is a residential foreclosure case involving one property. The Complaint is a MERS-

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Plaintiff,
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vs.
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QUALITY LOAN SERVICE CORP et al.,
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Defendants.

3:10-cv-00001-RCJ-VPC
ORDER

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conspiracy-type complaint listing six causes of action. Judge Teilborg partially remanded the

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case from MDL Case No. 2119 (the “MDL Case”). The Court dismissed the remanded unjust

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enrichment and reformation claims on the merits. The Court found that the foreclosure may

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have been statutorily invalid because of a questionable transfer of the beneficial interest by

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MERS. The Court therefore dismissed as against the lender, CTX Mortgage Co., Inc. but

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dismissed only in part as to Defendant Quality Loan Services Corp. (“QLS”), permitting a claim

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for injunctive relief to proceed as against QLS because of the potential defect in foreclosure.

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Defendants QLS and OneWest Bank, BSB (“OneWest”), f.k.a. IndyMac Bank, have now moved

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for summary judgment against the claim for injunctive relief insofar as it rests on an allegation of

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statutorily defective foreclosure. For the reasons given herein, the Court grants the motion.

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Charles Boyle, a Vice President and records custodian of OneWest attests that Mortgage

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Electronic Registration Systems (“MERS”), as nominee for CTX, assigned the subject

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promissory note (the “Note”) to IndyMac by endorsing it in blank and transferring it to IndyMac.

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(Boyle Aff. ¶¶ 1, 4, 7, Mar. 18, 2011, ECF No. 71-1). Defendants adduce a copy of the Note,

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which is signed by Plaintiff. (See Note, Feb. 9, 2005, ECF No. 71-4). It is a $650,000

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promissory note given by Plaintiff to CTX, and it has been endorsed in blank by CTX, without

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recourse. (See id. 4). A separate assignment of the Note to IndyMac is also adduced. (See

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Assignment, Dec. 22, 2008, ECF No. 71-3). This was sufficient to transfer the beneficial interest

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in Nevada if at least one of two things is also true: (1) CTX delivered or caused to be delivered

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the blank-endorsed Note to IndyMac; or (2) MERS had the authority separately to transfer the

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Note on behalf of CTX. See Leyva v. Nat’l Default Servicing Corp., 127 Nev. Adv. Op. No. 40

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(Nev. 2011) (holding that in Nevada a promissory note may be transferred either via a traditional

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negotiation or by otherwise giving the transferee “possession of the note for the purpose of

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enforcing it” (citing Nev. Rev. Stat. §§ 104.3109 et seq.)).

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In Leyva, the Nevada Supreme Court reversed a state district court’s order concerning a

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beneficiary’s compliance with the state foreclosure mediation program. See id. The Court ruled

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that the beneficiary had failed to provide all required documents at the mediation by failing to

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produce proof of either the endorsed promissory note or other assignment of the beneficial

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interest. See id. Here, Defendants have produced both. The copy of the blank-endorsed Note,

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coupled with CTX’s attestation that the Note was delivered to IndyMac shows a proper

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traditional negotiation of the Note, see id., so the Court need not in this case examine the

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propriety of MERS’ purported separate assignment of the interest in the Note, see Leyva (citing

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Nev. Rev. Stat. § 104.3203(2)); see also Smith v. Cmty. Lending, Inc., 773 F. Supp. 2d 941,

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942–43 (D. Nev. 2011) (finding that such a transfer can be proper depending on the scope of

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MERS’ agency under the language of the deed of trust).

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Boyle next attests that OneWest then acquired the assets of IndyMac, including the Note,
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and transferred the Note to Deutsche Bank as trustee for a mortgage-backed security. (Id. ¶ 8).

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Defendants also adduce a copy of this assignment. (See Assignment, Dec. 22, 2008, ECF No. 71-

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5). Because the Note was still blank-endorsed at this time—there is no evidence that IndyMac or

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any other putative intermediate holder specifically endorsed the Note in the meantime—delivery

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to Deutsche Bank (as trustee for a mortgage-backed security) would have effected a traditional

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negotiation under section 104.3201 without any separate assignment under section 104.3203(2).

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The separate assignment from OneWest to Deutsche Bank was therefore sufficient, but

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unnecessary.

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In summary, Defendants have accounted for the potential defect the Court identified

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when ruling on the previous motions to dismiss. Plaintiff has not adduced any contrary evidence

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showing a genuine issue of material fact. The Court will therefore grant summary judgment to

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QLS and OneWest as to the remainder of the sixth claim insofar as it has been remanded from

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the MDL Case.

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CONCLUSION
IT IS HEREBY ORDERED that the Motion for Summary Judgment (ECF No. 71) is
GRANTED.

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IT IS FURTHER ORDERED that the hearing set for November 7, 2011 is VACATED.

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IT IS SO ORDERED.

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Dated this 13th day of October, 2011.

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_____________________________________
ROBERT C. JONES
United States District Judge

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