Branson et al v. ReconTrust Company, N.A. et al
Filing
18
ORDER: Granting Motion to Dismiss 4 . This action is hereby dismissed. Signed on 4/26/2012 by U.S. District Judge Michael R. Hogan. (jw)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
EUGENE DIVISION
DANIEL P. BRANSON and SHAYE
BRANSON,
Plaintiffs,
CASE NO. 3:11-cv-1526-HO
ORDER
v.
RECONTRUST CO., N.A.; BANK OF
AMERICA, N.A., successor by merger
with BAC HOME LOAN SERVICING; BANK
OF NEW YORK MELLON FKA THE BANK OF
NEW YORK as TRUSTEE for the
certificate holders CWALT INC.,
ALTERNATIVE LOAN TRUST 2007-15CB,
MORTGAGE PASS-THROUGH CERTIFICATES;
MORTGAGE CERTIFICATES; and MORTGAGE
ELECTRONIC REGISTRATION SYSTEMS
INC.;
Defendants.
INTRODUCTION
Plaintiffs Daniel Branson and Shaye Branson (plaintiffs),
bring eight claims against defendants.Recontrust Co., N.A.
(Recon); Bank of America (BoA), N.A., successor by merger with
BAC Home Loan Servicing; Bank of New York Mellon (BNYM), FKA The
Bank of New York as Trustee for the certificate holders CWALT
INC., Alternative Loan Trust 2007-15CB, Mortgage Pass-through
Certificates; and Mortgage Electronic Registration Systems Inc.
(MERS). [#1-7].
Plaintiffs filed this action in the Circuit
Court of the State of Oregon for the County of Multnomah on
November 16, 2011. [#1-Ex.7].
Defendants removed the case to
U.S. District Court on the basis of diversity jurisdiction, on
December 19, 2011.
[#1].
Plaintiffs assert six claims of wrongful foreclosure against
various defendants:
(1) because of failure of agency against BNYM
and MERS; (2) because of lack of standing against BNYM and Recon;
(3) because of unrecorded assignments against all defendants;
(4)
against Recon as an invalid successor trustee; (5) against Recon
due to defective notice of default and election to sell;
(6)
for
failure of consideration against MERS; as well as claims of (7)
constructive ouster and (8)violations of the Fair Debt
Collections Practices Act against BoA'.
[#1-Ex.7].
Plaintiffs
also seek declaratory relief stating that defendants have no
legal or equitable rights in the note or Deed of Trust (DOT) for
purposes of conducting a non-judicial foreclosure.
[#1-7, pp.
26-29].
Although plaintiff names BAC Home Loan Servicing in the
complaint, BoA is the successor by merger to BAC. [#1-7-p3].
2 - ORDER
Defendants initially moved to dismiss all plaintiff's
claims.
However, at oral argument on February 29, 2012, their
oral motion to withdraw their motion to dismiss plaintiff's
eighth claim was granted.
[#4; #16].
Currently before the court
is defendants' remaining motion to dismiss plaintiffs' first
seven claims.
[# 4] .
BACKGROUND
This action arises from an April 17, 2007, loan from
Countrywide Home Loans ("Countrywide") in the amount of $276,000,
with which plaintiffs financed the purchase of a residential
property located at 5733 SE Powell Valley Road in Gresham,
Oregon. [#1-Ex.7,p.4,!!9-10].
Plaintiffs do not dispute that
they defaulted on their loan by approximately March 1, 2009,
however, allege that their default was cured between May 1, 2009
and December 9, 2010 and so, Recon "grossly overstat[ed]" the sum
owed in the notice of default.
[#9-Ex.A,p.1; #12-p.35].
The Deed of Trust (DOT) recorded on May 18, 2007, (Mu1tnomah
County Doc. no. 2007-089298), lists Countrywide as the "lender,"
Daniel Paul Branson as the "borrower" (with "and Shaye Branson"
handwritten in following Daniel Paul Branson's name), Fidelity
National Title Insurance Co. as the "trustee" and MERS as "a
nominee for Lender and Lender's successors and assigns" and the
"beneficiary" under the deed.
[#1-Ex.1] .
The DOT was assigned by MERS to BNYM on February 19, 2010,
3 - ORDER
and that assignment was recorded on February 24, 2010 (Multnomah
County Doc. no. 2010-025236).
[#1-Ex.2).
Also on February 19,
2010, BNYM appointed Recon as successor trustee. [#1-Ex.4).
The
assignment to Recon was also recorded on February 24, 2010,
(Multnomah County Doc. no 2010-025237), as was Recon's Notice of
Default and Election to Sell (Multnomah County Doc. no 2010025238) .
[ #1- Ex. 3 ; Ex. 7 , P . 8] .
Through a Rescission of Notice of Default dated December 7,
2010, and recorded December 9, 2010,
(Multnomah County Doc. no.
2010-155885), Recon withdrew its Notice of Default and Election
to Sell.
[#1-Ex.5; Ex.7,p.9).
However, in February of 2011, BoA
changed the locks to the property without the Bransons' consent2..
[#12,p.7;
#1-Ex.7,p.23,~82].
Recon issued a second Notice of
Default and Election to Sell the property, recorded on April 22,
2011 (Multnomah County doc. no. 2011-048643). [#9-Ex.A).
On June
21, 2011, the City of Gresham issued plaintiffs a notice of civil
penalty in the amount of $700 for failing to secure a derelict
building.
[#1-Ex.6].
The property scheduled for a trustee's
sale on August 22, 2011, has been sold.
[Id.; #5-p.4].
Subsequent to the property's sale, BoA continued to make
efforts to collect the loan deficiency from plaintiffs. [#12p.7].
On September 26, 2011, the Bransons advised BoA in writing
The parties disagree about whether plaintiffs were
residing at least part-time at the property at that time. [#12p.7; #5-pp.18-19].
4 - ORDER
(by fax) that they were represented by counsel and did not want
to be contacted directly in connection with the debt.
rd.
The
Bransons followed up by telephone that same day, however, BoA
continued to contact the Bransons directly concerning the
deficiency.
[#1-Ex. 7, '][92; #12-p. 7] .
DISCUSSION
1.
Motions to Dismiss
A Motion to Dismiss under Fed.R.Civ.P. l2(b) (6) is proper
only where there is a lack of a cognizable legal theory or the
absence of sufficient facts alleged under a cognizable theory.
Balisteri v. Pacific Police Dept., 901 F. 2d 696,699 (9 th
Cir.1990).
The issue is not whether the plaintiff is likely to
succeed on the merits but if the complaint is sufficient to
entitle the plaintiff to proceed beyond the pleadings in an
attempt to establish his claim.
De La Cruz v. Torrey, 582 F.2d
45, 48 (9 th Cir 1978).
To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to "state a claim to
relief that is plausible on its face."
550 U.S. 554, 570 (2007).
Bell Atlantic v. Twombly,
A claim has facial plausibility when
the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable for
the misconduct alleged.
rd. at 556.
The plausibility standard
is not akin to a "probability requirement," but it asks for more
5 - ORDER
than a sheer possibility that a defendant has acted unlawfully.
Id.
Thus, the court must accept as true the allegations in the
complaint and construe them in favor of the plaintiff.
Intri-
Plex tech., Inc. V. Crest Group, Inc., 499 F.3d 1048, 1050 n.2
(9th Cir.2007).
The court's reliance on judicially-noticed
documents does not convert a motion to dismiss into a summary
judgment motion.
Id. at 1052.
Generally when ruling on a 12(b) (6) motion, a court may only
consider allegations contained in the pleadings, exhibits
attached to the complaint, and matters properly subject to
judicial notice.
Cir. 2000).
Shwarz v. United States, 234 F.3d 428, 435 (9th
However, the court need not accept as true,
allegations that contradict facts that may be judicially noticed
by the court.
Shwartz v. KPMG, LLP, 476 F.3d 756, 763 (9th Cir
2007) .
2.
Plaintiffs' Claims:
Defendants move to dismiss plaintiffs' claims because: their
claims for wrongful foreclosure are "flawed and without merit;"
their claims for constructive ouster are inadequately pleaded;
BoA was authorized under the Deed of Trust (DOT) to secure the
property; BoA does not qualify under the Fair Debt Collection
Practices Act (FDCPA) as a debt collector and there is no
justiciable controversy requiring declaratory relief.
Plaintiffs allege that MERS, and BNYM violated the
6 - ORDER
[#4; #5J.
provisions of ORS 86.705-795, and conducted a wrongful
foreclosure in that "MERS could not act as nominee/agent for a
principal to effect an assignment because the principal for whom
MERS purported to act as "beneficiary" did not hold Plaintiffs' []
loan on that date."
[#1-Ex.7-p.ll,n5; #12-p.13].
Plaintiffs
contend that because they do not owe MERS anything, MERS cannot
be a beneficiary to their DOT and argue that to find otherwise
violates the ORS 86.705(5) definition of a trust deed.
pp.11-12,
~~
36-37].
[#1-Ex.7-
Further, plaintiffs assert that nothing in
the DOT gives MERS the power to assign security interests because
the DOT limits MERS role to acting where "necessary to comply
with law or custom" and nothing about their loan makes it
necessary for MERS to effect such an assignment. [#1-Ex.7,-p.ll,
~36;
#12-pp.18-19].
However, this court has previously found that the DOT (as
here), in specifying MERS as a beneficiary and authorizing MERS
to act as nominee for the lender, does not violate the Oregon
Trust Deed Act (OTDA).
Burgett v. MERS, 09-6244-HO (dated
October 19, 2010) (quoting letter decision in Parkin Elec. Inc. v.
Safetencu, No. LV08040727, dated March 12, 2009).
In fact, the
majority of Oregon trial courts 3 have concluded that because MERS
The issue of whether MERS is a valid beneficiary under
the Trust Deed has been addressed in a number of cases within the
District of Oregon. Because judges have reached different
conclusions, the judges in this District, have certified this and
(continued ... )
3
7 - ORDER
is named in the trust deed as a beneficiary, it is a beneficiary
as defined by Oregon statutes.
3841558, *8 (listing cases).
James v. Recontrust Co., 2011, WL
In this instance, plaintiffs
executed their trust deed naming MERS as beneficiary. [#1-Ex.1pp.2, 11].
In doing 'so, plaintiffs granted MERS the authority to
enforce the terms of the DOT on behalf of the Lender including
assignment of the beneficial interest to BNYM.
[#1-Ex.1-p.3; #1-
Ex. 2].
Plaintiffs' second claim alleges that the "Lender did not
hold Plaintiffs' loan on February 24, 2010 and thus there was
nothing for MERS to assign on its behalf.- (#1-Ex.7-p.12,!39].
Plaintiffs argue that even if MERS' status as beneficiary were
enforceable it cannot survive assignment of the lender's original
interest to new successors in interest in the absence of renewed
assignment of beneficial interest from the lender's assignee to
MERS.
However, plaintiffs' claim that MERS is a sham beneficiary
is fatally undercut by the plain language of plaintiffs' DOT
which describes MERS role and authorizes the transfer of
interests in their loan.
Similarly, plaintiffs' contention that even if MERS did
validly assign the note and DOT to the real Estate Mortgage
3( ...continued)
related issues to the Oregon Supreme Court. In the meantime, it
was decided not to stay pending cases addressing MERS issues.
See Graham v. Recontrust Co., N.A., et al., 3:11-CV-01339-BR at
10 n. 1 (Mar. 27, 2012)
8 - ORDER
Investment Conduit (REMIC) for which BNYM acts as trustee, the
transfer took place after the closing date described in the
Pooling and Service Agreement (PSA), and so violated both the PSA
and New York law, is unprevailing (which plaintiffs' briefing
appears to have recognized), and fails given that plaintiffs lack
standing to enforce the PSA argument.
[#1-Ex.7,
pp.14-18,~~44-
56; #1-Ex.1-p.9].
The DOT provides that the lender can transfer its interest
in the note [#1-Ex.1-p.9], and thus, MERS as designated DOT
beneficiary could assign its interest to BNYM.
was recorded in accordance with ORS 86.735.
This assignment
[#1-Ex.2].
law does not require the note's transfer to be recorded.
Oregon
~
e.g., Crowden v. Fed.Nat'l Mortgage Assoc., 2011 WL 6740741, *8
(D.Or. Dec. 22, 2011); see also James, 2011 WL 3841558 at *11.
Plaintiffs argue that Recon is an invalid successor trustee
and thus is unqualified to issue a Notion of Default and Election
to Sell because MERS lacked the authority to appoint Recon and
Recon issued its Notice of Default prior to its appointment.
[#1-Ex.7,
However, the record shows that MERS assigned the DOT
(and recorded that assignation), to BNYM and it was BNYM not MERS
that appointed Recon as successor trustee.
[#1-Exs.2 and 4].
Similarly, the record demonstrates that although the documents
are attached out of order, the events were recorded in immediate
but correct sequence - on February 24, 2010, the Assignment of
9 - ORDER
the DOT was recorded first, Multnomah County Record No. 2010025236, [#1-Ex.2]; then the Appointment of Successor Trustee,
second, No. 2010-025237, [#1-Ex.4]; and finally the Notice of
Default third, No. 2010-025238, [#1-Ex.3].
Plaintiffs allege that Recon's second Notice of Default
overstated the sum they owed because the previous rescission of
the default calculated the alleged default amount from March 2009
rather than December 2010 (the month in which the rescission was
recorded).
[#1-Ex.7-p.21,~~69-70l.
However, plaintiff's
allegation ignores the Rescission's plain language which states:
"This rescission shall not be construed as waiving or
affecting any breach or default (past, present or future)
under said Trust Deed or as impairing any right or remedy
thereunder . . . but is . . only an election without
prejudice, not to cause a sale to be made pursuant to said
notice so recorded."
#1- Ex . 2 , P . 1] .
Under Oregon law, a non-judicial foreclosure may only take
place if all assignments of beneficial interest in the DOT have
been properly recorded.
(D.Or. October 20, 2010).
Burgett v. MERS Inc., 2010 WL 4282105
The foreclosure statute specifically
requires recording of "any assignments of the trust deed by the
trustee or the beneficiary and any appointment of a successor
trustee."
ORS 86.735(1).
In this instance, all transfers of the DOT have been
recorded in compliance with ORS 86.735(1).
MERS was the proper
beneficiary under the DOT and transferred (and recorded that
10 - ORDER
transfer), its interest to BNYM who appointed (and recorded that
appointment), Recon as successor trustee.
Recon filed proper
notice of default and election to sell twice, properly recording
in both instances and including the appropriate proof of
compliance (also recorded).
[#9-Ex.B] .
Plaintiffs attempt to bolster their claim of constructive
ouster asserting in their briefing that they
~still
resided at
the property several days out of the week . . . were actively
maintaining the property" and had "substantial amounts of
furniture, equipment and personal items at the property" and
they, not BoA, were the record owners of the property at the time
BoA changed the locks.
[#1-Ex.7-pp.23-24; #12-p.37].
However,
plaintiffs' allegations ignore the language of their DOT which
provides;
~If (a) Borrower fails to perform the covenants and
agreements.
. or (c) Borrower has abandoned the Property, then
the Lender may do and pay for whatever is reasonable or
appropriate to protect Lender's property including . . . securing
the Property [which] includes . . . entering to make repairs,
change locks .
"
[#1-Ex.l-p.6].
While the details of the lock-changing incident
are unclear from the complaint, plaintiffs' allegations regarding
this issue are insufficient to overturn the foreclosure sale
resulting from plaintiffs' default (prior to the incident), on
their obligation.
Finally, plaintiffs argue that BoA violated the Fair Debt
Collection Practices Act (FDCPA) when it continued to contact
11 - ORDER
them after they had informed it that they were represented by
counsel.
[#1-Ex.7-pp24-26].
While it is inappropriate for BoA
to continue to call consumers directly (even when attempting to
collect a deficiency), after learning that the consumers are
represented by counsel, the remedy for such inappropriate
behavior does not lie in the FDCPA because BoA is specifically
excluded by the statutory definition of a debt collector.
U.S.C.
§
15
1692a(6) (F) (iii).
The FDCPA defines "debt collector" as:
"any person who uses any instrumentality of interstate
commerce or the mails in any business the principal purpose
of which is the collection of any debts, or who regularly
collects or attempts to collect, directly or indirectly,
debts owed or due or asserted to be due another."
15 U.S.C.
§
1692a(6).
Exempted from the definition of "debt
collector" is:
"any person collecting or attempting to collect any debt
owed or due or asserted owed or due another to the extent
such activity ... (ii) concerns a debt owed which was
originated by such person . . . "
15 U.S.C.
§
1692a(6) (F) (ii).
The definition also excludes
"any officer or employee of a creditor while, in the name of
the creditor, collecting debts for such creditor,"
15 U.S.C.
§
1692a(6) (A).
"Creditor" is defined as:
"any person who offers or extends credit creating a debt or
to whom a debt is owed."
Id. at 1692a (4) .
Thus, under the FDCPA, a debt collector is one whose
"principal purpose" is the collection of debts, or who "regularly
12 - ORDER
collects or attempt to collect ... debts."
15
u.s.c.
§
1692a(6).
The definition explicitly excludes persons who collect debts "to
the extent such activity ...
(ii) concerns a debt which was
originated by such person; [or]
(iii) concerns a debt which was
not in default at the time it was obtained by such person."
u.s.c.
§
15
1692a(6) (F).
It is clear from the face of the complaint that BoA was the
loan servicer of plaintiffs' loan.
[#1-Ex.7-p.3,!5].
collector" does not include a consumer's creditors.
A "debt
Reed v.
American Honda Fin. Corp., 2005 WL 1398214 *3 (D. Or. June 10,
2005).
Nor are mortgage servicers debt collectors under the Act.
Stewart v. MERS, 2010 WL 1054384 *9 (D.Or. Feb. 18, 2010).
Accordingly, Plaintiff's FDCPA claims against the BoA fail to
state a claim.
Plaintiffs seek declaratory relief requesting that this
court find the "purported power of sale contained in the loan of
no force and effect because Defendants actions in the processing,
handling, and attempted foreclosure of this loan has contained
numerous violations of state and federal law."
[#1-pp.9-10].
Plaintiffs further request that the court "cause the title of the
properties to remain in the plaintiffs name . . . during the
pendency of this litigation."
rd.
In other words, plaintiffs seek an equitable remedy -the
overturning of a non-judicial foreclosure sale - without any
indication that they were prepared to cure their default.
13 - ORDER
As
this court has previously noted, while a mortgage is said to
carry with it an equity of redemption, that right exists only
until the foreclosure sale and only if the mortgagor reimburses
the mortgagee and cures the default.
(7th
Blacks Law Dictionary, 561
Ed. 1999).
The record before the court indicates that plaintiffs have
been given legally sufficient notice, are in default on their
loan and plaintiffs have not offered anything to indicate that
they were able to tender the debt in order to disrupt the nonjudicial foreclosure sale.
In an instance such as this where the
foreclosure sale was due to plaintiffs' failure to make their
loan payments and subsequently to cure their default, there is
nothing to suggest that the declaratory relief they seek is
equitable.
Plaintiffs' request for declaratory judgment is
therefore denied.
CONCLUSION
Based on the foregoing reasoning, defendants Motion to
Dismiss [#4] is GRANTED.
This action is hereby dismissed.
IT IS SO ORDERED.
DATED this
z
ay of April, 2012.
United
14 - ORDER
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