RCB Bank v. Federal National Mortgage Association et al

Filing 44

ORDER granting 35 The Court GRANTS the Motion of RCB Bank for Voluntary Dismissal under FED.R.CIV.P 41(a)(2) Combined with Brief in Support [docket no. 35] and DISMISSES this action. Signed by Honorable Vicki Miles-LaGrange on 7/27/17. (ac)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
RCB BANK,
Plaintiff,
v.
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (“FANNIE MAE”),
a corporation organized and existing
under the laws of the United States
of America, and MORTGAGE
ELECTRONIC REGISTRATION
SYSTEMS, INC.,
Defendants.

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Case No. CIV-16-1305-M

ORDER
Before the Court is the Motion of RCB Bank for Voluntary Dismissal under FED.R.CIV.P
41(a)(2) Combined with Brief in Support, filed July 18, 2017. On July 19, 2017, defendants filed
their joint response, and on July 24, 2017, plaintiff replied. Based on the parties’ submissions, the
Court makes its determination.
On June 3, 2015, plaintiff RCB Bank (“RCB”) filed a foreclosure proceeding in state court
(case no. CJ-2015-3128) against Roger W. Ely and Kathleen A. Ely (collectively the “Elys”), and
on June 4, 2015, RCB filed a Notice of Pendency of Action with the County Clerk of Oklahoma
County. On August 4, 2015, RCB amended its petition, joined defendant Mortgage Electronic
Registration Systems, Inc. (“MERS”), and alleged that MERS was a party in interest in the Elys’
real property RCB sought to foreclose, as MERS also held a mortgage on the Elys’ real property.
On January 4, 2016, the state court granted RCB’s foreclosure action against the Elys; however, it
also found that MERS’s interest in the Elys’ real property was superior to that of RCB’s interest,
but did not determine the amount secured by MERS’s mortgage. On October 13, 2016, RCB filed

this declaratory action in the District Court of Oklahoma County, State of Oklahoma seeking the
court to declare the amount of MERS’s mortgage on the Elys’ real property, if any. 1
On November 15, 2016, defendant Federal National Mortgage Association, with consent
from MERS, removed this action to this Court. RCB now moves this Court for a voluntary
dismissal, pursuant to Federal Rule of Civil Procedure 41(a)(2). Specifically, RCB seeks to dismiss
this action as it has finalized a settlement with the Elys and is no longer seeking to sell the Elys’
real property in a sheriff sale. 2 As a result, RCB is no longer seeking a declaration of the amount
of the MERS’s mortgage from this Court. Defendants object to a voluntary dismissal and urge the
Court to rule on their pending joint motion for summary judgment in order to resolve the claims
in this matter and to prevent RCB from relitigating this issue. 3
Since defendants have filed their motion for summary judgment, Rule 41 only permits
voluntary dismissal by a court order. See Fed. R. Civ. P. 41(a)(2) (“an action may be dismissed at
the plaintiff’s request only by court order . . . [and] [u]nless the order states otherwise, a dismissal
under this paragraph [] is without prejudice.”). “Absent ‘legal prejudice’ to the defendant, the
district court normally should grant such a dismissal.” Ohlander v. Larson, 114 F.3d 1531, 1537
(10th Cir. 1997) (citing Andes v. Versant Corp., 788 F.2d 1033, 1036 (4th Cir. 1986)). “The

1

In its Petition, RCB challenges the validity of the assignment of the MERS’s mortgage
and alleges that it was void as to RCB. See Petition ¶ 13, attached as Exhibit 3 to Defendants’
Notice of Removal [docket no. 1].
2

Pursuant to the settlement agreement between RCB and the Elys, the Elys have agreed to
pay the balance of the mortgage owed to RCB over seven years, and RCB agrees not to sell the
Elys’ real property in a sheriff sale as long as the Elys do not default on paying the debt.
3

In the alternative, defendants request that if the Court finds dismissal is appropriate, the
Court use its discretion, pursuant to Rules 41(a)(2) and 54(d)(1)&(2), and award defendants
attorney fees and cost as the prevailing party. However, for the reasons set forth in this Order, the
Court declines to award defendants attorney fees and costs.
2

parameters of what constitutes ‘legal prejudice’ are not entirely clear, but relevant factors the
district court should consider include: the opposing party's effort and expense in preparing for trial;
excessive delay and lack of diligence on the part of the movant; insufficient explanation of the
need for a dismissal; and the present stage of litigation.” Id. (citing Phillips U.S.A., Inc. v. Allflex
U.S.A., Inc., 77 F.3d 354, 358 (10th Cir.1996)). “Each factor need not be resolved in favor of the
moving party for dismissal to be appropriate, nor need each factor be resolved in favor of the
opposing party for denial of the motion to be proper”. Id.
Having carefully reviewed the parties’ submissions, the Court finds that defendants will
not suffer any legal prejudice from this matter being voluntarily dismissed. Defendants contend
that due to the expenses incurred to date, RCB’s insufficient reason for dismissal, the present state
of the litigation, and the potential for additional claims, dismissal of this matter will legally
prejudice them. The Court disagrees. RCB has advised the Court and defendants that due to a
settlement reached with the Elys, it is no longer pursuing its claim against defendants and
defendants have not filed any counter-claims in this action, therefore, the Court finds that at this
time, there are no claims for the Court to resolve in this matter. Further, discovery in this matter
consisted exchanging 200 pages of written documents, and although defendants have filed a
motion for summary judgment, the Court finds that the discovery and pending pleadings in this
matter can be preserved in case a legal dispute arises in this matter in the future. 4 Further, RCB
did not delay in filing its motion to dismiss once the settlement with the Elys had occurred, and

4

Defendants advise that they may potentially be filing a foreclosure proceeding against the
Elys, unless the Elys resolve the default of the MERS’s mortgage and contend that RCB will be a
party to the foreclosure action and will raise the same claims as this suit as defenses if this matter
is dismissed without prejudice.
3

since the Court has yet to rule on defendants’ motion for summary judgment 5 and the pre-trial
submissions’ deadline has been extended to August 2, 2017, dismissal at this time will not be
disruptive to the judicial process. Therefore, the Court finds that this matter should be dismissed.
Accordingly, for the reasons set forth above, the Court GRANTS the Motion of RCB Bank
for Voluntary Dismissal under FED.R.CIV.P 41(a)(2) Combined with Brief in Support [docket no.
35] and DISMISSES this action.
IT IS SO ORDERED this 26th day of July, 2017.

5

Defendants filed their reply to RCB’s response to defendants’ motion for summary
judgment the same day this Order was entered.
4