Cook et al v. Beneficial HSBC Mortgage Corporation

Filing 81

ORDER: Granting defendants' Motion for Summary Judgment 26 , 27 . Striking January 25, 2011 temporary restraining order setting aside the January 5, 2011 foreclosure sale. Reinstating the January 5, 2011 foreclosure sale. Denying plaintiffs' Motion for Summary Judgment 37 ; Any pending motions are DENIED as moot. Plaintiffs may reside at the residence for one year, paying $1000.00 per month in rent to Beneficial. Signed on 6/1/2011 by Judge Owen M. Panner. (dkj)

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1

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

DENISE AND KENNETH COOK,
Plaintiffs,

Civ. No. lO-3121-PA
ORDER

v.

BENEFICIAL HSBC MORT. CORP,
et al.,
Defendants.

PANNER, J.

Defendants Beneficial Oregon, INC (Benefi
Sutherland, LLC (Shapiro) move

al) and Shapiro &

summary judgment against the

claims of plaintiffs Denise and Kenneth Cook. Plaintiffs also
move for summary judgment. For the reasons stated below, I GRANT
defendants' motions for summary judgment (## 26, 27). I DENY
pIa

1

iffs' motion for summary judgment (#37).

- ORDER

BACKGROUND

On March 8, 2007, plaintiffs signed a fixed-rate,
Loan Agreement with Beneficial.

30-year

(March 8, 2011 Johnston Decl.,

Ex. 1.) Beneficial is a wholly owned subsidiary of HSBC Finance
Corporation.
Benefic

(Johnston Decl.,

~

2.) The Loan Agreement names

I as "Lender" and plaintif

as "Borrowers." (March 8,

2011 Johnston Decl., Ex. 5, 1.) As security for the loan,
plaintiffs executed a Deed of Trust for real property located at
300 Newt Gulch Road, Wilde

lIe, Oregon 97543. The trust deed

lists Bene

cial as the beneficiary and Regional Trustee Se

as trustee.

(March 8, 2011 Johnston Decl., Ex. 2, 1.) The trust

deed allows for

osure by the trustee if plaintiffs default

under the loan agreement.
5,

~

ces

(March 8, 2011 Johnston Decl., Ex. 2,

17.)
In September 2009, pIa

iffs defaulted under the loan

agreement. On July 20, 2010, Beneficial appointed Shapiro
successor trustee of the trust deed. On July 27, defendants
recorded the July 20, 2010 appointment of Shaprio as successor
trustee.

(Ma

8, 2011 Johnston Decl., Ex. 5.) Shapiro recorded

a Notice of De

and Intent to Sell, setting a sale date of

December 2, 2010.
A dispute of fact exists over whether defendants prope

y

postponed the December 17, 2010 sale. Defendants state they
postponed

2

- ORDER

sale twice, first on December 2, 2010, and again on

December 17, 2010. Plaintiffs challenge the December 17
postponement. Specifically, Kenneth Cook fi1
stating that although he was at

an affidavit

Courthouse on December 17 and

actively inquired about the Newt Gulch property, no crier
publicly pronounced a postponement of the Newt Gulch sale.
23, 2011 Cook

f.)

fact is not mater

For the reasons stat

below, this

(March

spute of

1.

On November 4, 2010, plaintiffs filed a complaint against
Benefic

1, challenging Beneficial's non-judic

1 foreclosure

proceedings under the trust deed. Plaintiffs also moved
preliminary injunction enjoining the schedul

a

non-judicial

foreclosure sale. On January 5, 2011, Shapiro sold the Newt Gulch
property to Benef

ial at a trustee's sale. On January 12, 2011,

defendants recorded the Trustee's Deed conveying tit
Beneficial.

to

(March 8, 2011 Johnston Decl., Ex. 6.)

On January 24, 2011, pla

iffs moved

a temporary

restraining order. On January 25, 2011, unaware of the January 5,
2011 trustee's sale, I

issued a temporary restraining order

preventing a foreclosure sale. After plaintiffs notified the
clerk

the trustee's sa

, I

issued a temporary restraining

order setting aside the trustee's sale.
Following a show-cause hearing, I issued a prelimina
unction enjoining Beneficial from evicting plaintiffs. I also
granted plaintif

3

- ORDER

leave to

le an amended comp

into On

February 28, 2011, plainti

s

led an amended complaint. The

amended complaint names Beneficial and Shapiro as defendants. All
parties then moved for summary judgment. Pursuant to my order,
Beneficial submitted the original Loan Agreement and Deed of
Trust for my review. Plaintiffs moved for sanctions against
Beneficial and moved to strike Beneficial's submission of the
original loan documents. On May 26, I heard oral arguments.
STANDARDS

The court must grant summary judgment if there are no
genuine issues of material fact and the moving party is entitled
to judgment as a matter of law. Fed. R. Civ. P. 56(c). An issue
of fact is genuine "if the evidence is such that a reasonable
jury could return a verdict for the nonmoving party." Villiarimo
v. Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th Cir. 2002)
(quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986)). The court views the evidence in the light most favorable
to the non-moving party. Allen v. City of Los Angeles, 66 F.3d
1052, 1056 (9th Cir. 1995). All reasonable inferences are drawn
in favor of the non-movant. Gibson v. County of Washoe, 290 F.3d
1175, 1180 (9th Cir. 2002). If the moving party shows that there
are no genuine issues of material fact,

the nonmoving party must

go beyond the pleadings and designate facts showing an issue for
tri

. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).

IIII

4

- ORDER

DISCUSSION

In Oregon, a trustee may initiate non-judicial

reclosure

proceedings if:
(1) The trust deed, any assignments of the trust deed
by the trustee or
bene
ary and
appointment
of a successor trustee are recorded
the mortgage
records in the counties in which
property described
in
deed is situated .
O.R.S. § 86.735 (1) .
Regarding Benefic

l's right to foreclose, plaintiffs rna

multiple arguments. Each argument is premised around the
allegation that Benef

1 sold

s interest in the loan. In

support of this theory, plaintiffs submit numerous documents
purporting to demonstrate that Beneficial securitized the loan at
issue. Benefic

1 submitted affidavits stat

loan, and that Beneficial continual
Additionally, Beneficial submitted
pI

that it never sold

serviced the loan.
payment file on

iffs' loan. The documents submitted demonstrate Benefi

1:

originated the loan; appointed Shapiro as successor trustee;
authorized Shapiro to initiate non-judicial foreclosure
proceedings in accordance with the trust
hold the note and

trust

; and continues to

ed.

Attempting to show Beneficial sold or securitized the loan
at issue, plaintiffs submit numerous documents. Plaintiffs
submitt

a descr

ion of a "Loan Pool." Plaintiffs submitted a

230-page prospectus for HSBC Home Equity Loan Trust 2007-2.

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- ORDER

(Am.

Compl., Ex. A.)

rently, plaintiffs believe Beneficial (or

HSBC) deposited plaintiffs' loan into t

trust. It is

pro se plaintiffs

understandable

lieved HSBC was

involved. Plaintiffs allege, "Defendant Bene
home equity loans to HSBC-HELC during this
[J.n

~

(Am. Compl.,

home equity loans.

cialsold about 70
riod, spring 2007

9.) The trust, however, consists of 7,169
(Am. Compl., Ex. A, S-4.) As noted,

plaintiffs' loan is not a home equity loan, but a fixed-rate,
year mortgage.

(Loan Agreement, 4.i Johnston Decl.,

~

30

5.) That

HSBC may securitize some loans does not create a genuine issue of
material fact

rding whether Benefic

1 sold or securitized

plaintiffs' loan.
Plaintiffs submitted the checking statement from pIa

iff

Kenneth Cook's bank account. This statement shows "HSBC CL-HS n
withdrew mortgage payments from Kenneth Cook's account.
Plaintiffs argue t
statement, Bene

because Beneficial is not listed on the

cial must have sold (and securitized) the loan

at issue. As noted, Beneficial is a wholly-owned subsidiary of
HSBC Financial Co
appears on pIa

ration. That a subs
if

ary's parent company

'bank statements

not demonstrate

Beneficial sold or securitized pIa

iffs' loan. Considering all

of the above, and considering HSBC's history of securitizing
loans, plaintiffs' allegations regarding HSBC were understandable
here. The evidence, however, demonstrates Beneficial never sold

6

- ORDER

or securitized plaintiffs' loan.
Bene

cial submitted the account servicing record regarding

plaintiffs loan.

(Johnston Decl., Ex. 4.) The exhibit details the

complete billing and fee history for plaintiffs' loan. As noted,
Beneficial submitted an affidavit stating Bene
or securitized plaintiffs loan.
~

cial never sold

(March 8, 2011 Johnston Decl., 2,

5.) Pursuant to my order, Beneficial also submitted plaintiffs'

original Loan Agreement and Deed of Trust for my review. Exactly
like the copies of the Loan Agreement previously submitted by
Beneficial, the original shows a handwritten edit of the last six
digits of the loan number. Plaintiffs appear to argue that
because the change is not initialed, the Loan Agreement is
somehow invalid. The handwritten change of the "Loan Number,"
however, does not create a factual issue over whether the Loan
Agreement submitted is plaintiffs' own Loan Agreement.
The Loan Agreement submitted contains signatures of both
plaintiffs. Plaintiffs' name and address, and the applicable
Truth In Lending Act disclosures appear on the same page as the
edited "Loan Number." Nothing suggests the Loan Agreement is not
genuine. I conclude the Loan Agreement submitted is the original
Loan Agreement for the loan at issue. Plaintiffs' argument that
Beneficial is not the holder of the note is meritless.
Oregon Revised Statute 86.735(1) allows a trustee to
initiate non-judicial foreclosure proceedings if the trust deed,

7

- ORDER

any assignments of the trust deed, and any appointments of a
successor trustee are recorded in the county land records. As
noted,

undisputed evidence demonstrates Beneficial never

assigned the trust deed. Defendants recorded the only appointment
of a successor trustee

the land records. Additionally, the

undisputed evidence demonstrates Beneficial continually held the
note. Bene

cial never sold or secur

ized this loan. Unlike

other recent cases before me, defendants demonstrate they
complied with

recording requirements of Oregon Trust Deed

Act. Compare with Hooker v. Northwest Trustee Services, Inc., CV­
10-3111-PA (D. Or. May 25, 2011 Order).
The general practices of HSBC are not at issue. Plaintiffs
challenge only the non-judicial

losure proceedings regarding

the Newt Gulch property. As demonstrated, defendants complied
with the recording requirements of ORS 86.735(1). To the extent
plaintiffs challenge Bene

cial's purchase of the property at the

trustee's sale, this argument is merit
bene

ss. ORS 86.755(1)

(the

ciary of the trust deed may bid on the property at the

trustee's sale).
Plaintiffs also challenge the December 17, 2010 postponement
of the trustee's sale. Plaintiffs submitted Kenneth Cook's
af

davit stating no one publicly pronounced a postponement of

the trustee's sale. Shapiro submitted affidavits stating that
Shapiro's agent properly postponed the trustee's sale first on

8

- ORDER

December 2, 2010, and again on December 17, 2010. Although the
question of whether defendants properly postponed the trustee's
sa

is a disputed question of fact, the dispute is not material.

Assuming defendants did not properly postpone the trustee's sale,
I conclude plaintiffs were in no way harmed by any alleged
impropriety.
Plaintiffs do not dispute they are in default under the loan
agreement. Plaintiffs do not dispute the trust deed allows for
foreclosure of the Newt Gulch property if plaintiffs are in
default. Plaintiffs do not allege that they attempted to cure the
default. In Oregon, a non-judicial foreclosure sale such as the
one at issue here does not allow a lender to proceed against a
borrower for a deficiency. ORS 86.770. Assuming an improper
postponement of the trustee's sale 1

to a lower sale price,

plaintiffs were not harmed by the lower sale price. I conclude
that any improprieties in the postponements, under these facts,
did not harm plaintiffs.
CONCLUSION
I GRANT defendants' motions for summary judgment (## 26,
27).

I strike my January 25, 2011 temporary restraining order

setting aside the January 5, 2011 foreclosure sa

. I reinstate

the January 5, 2011 foreclosure sale. I DENY plaintiffs' motion
for summary judgment (#37). Any pending motions are DENIED as
moot. As ordered at oral argument, plaintiffs may reside at the

9

- ORDER

Newt Gulch property for one year, paying $1,000 per month in rent
to Beneficial.
IT IS SO ORDERED.

DATED this

/'

---'--­

day of June, 2011.

OWEN M. PANNER
U.S. DISTRICT JUDGE

10 - ORDER