Liu et al v. Northwest Trustee Services, Inc. et al

Filing 45

Opinion and Order: The Court GRANTS FNMAs Motion 39 for Summary Judgment and DISMISSES this matter with prejudice. Signed on 02/19/2014 by Judge Anna J. Brown. See attached 11 page Opinion and Order for full text. (bb)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

RANDY LIU and MONICA CHEN,
husband and wife,
Plaintiffs,

3:12-CV-00484-BR

OPINION AND ORDER

v.
NORTHWEST TRUSTEE SERVICES,
INC., and FEDERAL NATIONAL
MORTGAGE ASSOCIATION,
Defendants.

JEFFREY A. MYERS
JOHN P. BOWLES
TIMOTHY J. ZIMMERMAN
Bowles Fernandez Law LLC
5200 S.W. Meadows Road
Suite 150
Lake Oswego, OR 97025
[phone]
Attorneys for Plaintiffs
TERESA M. SHILL
Routh Crabtree Olsen, PC
511 S.W. Tenth Avenue
Suite 400
Portland, OR 97205
[phone]
Attorneys for Defendant Northwest
Trustee Services, Inc.
1 - OPINION AND ORDER

WILLIAM G. FIG
Sussman Shank, LLP
1000 S.W. Broadway
Suite 1400
Portland, OR 97205
[phone]
Attorneys for Defendant Federal
National Mortgage Association
BROWN, Judge.
This matter comes before the Court on the Motion (#39) of
Federal National Mortgage Association (FNMA) for Summary
Judgment.
For the reasons that follow, the Court GRANTS FNMA’s Motion.

BACKGROUND
The facts in this matter are undisputed unless otherwise
noted:
On April 20, 2005, Plaintiffs Randy Liu and Monica Chen
signed a Promissory Note with Homecomings Financial Network, Inc.
(HFN) secured by property located at 7145 S.W. 142nd Avenue,
Beaverton, Oregon.

Plaintiffs also entered into a Trust Deed as

to that property with Plaintiffs as "borrowers," Transnation
Title as Trustee, and HFN as the lender and beneficiary.

It is

undisputed that GMAC Mortgage Corporation was the servicer of the
Note.
The Trust Deed was recorded in Washington County, Oregon, on

2 - OPINION AND ORDER

April 27, 2005.
“Shortly after the origination of the "loan"1 and prior to
July 25, 2005, [HFN] sold its interest in the Note” to Fannie
Mae, who retained GMAC as the servicer of the Note.

Statement of

Agreed Facts for Summ. J. at 2.
On July 25, 2005, an Assignment of Deed of Trust was
recorded in Washington County in which HFN "grant[ed], [sold],
assign[ed], transfer[red], and convey[ed] to GMAC Mortgage
Corporation" the Plaintiffs' Trust Deed.
On August 4, 2011, GMAC executed an Appointment of Successor
Trustee in which GMAC appointed Defendant Northwest Trustee
Services, Inc. (NWTS) as successor trustee of the Plaintiffs'
Trust Deed.
On August 10, 2011, the Appointment of Successor Trustee was
recorded in Washington County.

Also on August 10, 2011, NWTS

executed a Notice of Default and Election to Sell against
Plaintiffs' property in which NWTS alleged a default on the Note
and initiated a nonjudicial foreclosure of Plaintiffs' property.
On August 11, 2011, the Notice of Default and Election to
Sell was recorded in Washington County.
Notice of Sale “by August 19, 2011.”

Plaintiffs received the

Statement of Agreed Facts

for Summ. J. at 2.

1

The parties use the term "loan" when referring to the
Promissory Note.
3 - OPINION AND ORDER

On December 16, 2011, NWTS sold Plaintiffs' property to
Fannie Mae.
On March 16, 2012, Plaintiffs filed in this Court a
Complaint for Declaratory Relief Invalidating Nonjudicial
Foreclosure for Failure to Comply with ORS 86.705 to ORS 86.795
and Permanent Injunctive Relief against Defendants in which they
seek a declaratory judgment setting aside, voiding, and
invalidating the foreclosure; a permanent injunction enjoining
Defendants from conducting a subsequent nonjudicial foreclosure
without recording any assignments of the Trust Deed; and costs
and attorneys' fees.
On April 2, 2012, this Court certified four questions to the
Oregon Supreme Court pursuant to Oregon Revised Statute
§ 28.200 related to nonjudicial foreclosures in Oregon.

See

Brandrup v. ReconTrust Co., No. 3:11–CV–1390–HZ (D. Or. Apr. 2,
2012).

On July 19, 2012, the Oregon Supreme Court accepted

certification.
On September 25, 2012, FNMA filed a Motion for Summary
Judgment as to all of Plaintiffs' claims.

On October 4, 2012,

NWTS filed a Motion for Summary Judgment as to all of Plaintiffs'
claims.
On December 19, 2012, the Court issued an Opinion and Order
granting NWTS's Motion for Summary Judgment, staying this matter
as to Plaintiffs' remaining claims against FNMA for declaratory

4 - OPINION AND ORDER

and injunctive relief, and denying with leave to renew FNMA's
Motion for Summary Judgment.
On June 6, 2013, the Oregon Supreme Court issued a decision
on the questions certified by this Court in Brandrup v.
ReconTrust Company.
On July 29, 2013, Plaintiffs filed a Motion to Amend
Complaint in which they sought leave to amend their Complaint "to
comport with" the ruling in Brandrup.
On October 10, 2013, the Court issued an Opinion and Order
denying Plaintiffs’ Motion to Amend Complaint on the ground that
Plaintiffs’ amendment would be futile because their claims
against FNMA are barred by Oregon Revised Statute § 86.770 in
light of the fact that Plaintiffs “received notice of the
foreclosure sale . . ., the property was sold to a bona fide
purchaser, and . . . the sale of the property was recorded before
Plaintiffs filed this action seeking to set aside the sale.”
Opin. and Order (#33) at 10.

The Court noted courts in this

district have denied plaintiffs’ requests for leave to amend
their complaints to conform to Brandrup as futile because
Brandrup “dealt with pre-sale challenges to non-judicial
foreclosure sales.”

See, e.g., Chen v. Bank of Am., N.A.,

No. 3:12-CV-00194-PA, 2013 WL 3929854, at *2 (D. Or. July 25,
2013)(“[H]ere . . . the plaintiff[s'] claims are barred due to
ORS 86.770(1)" because the plaintiffs filed those claims after
5 - OPINION AND ORDER

foreclosure.
On October 29, 2013, the Court held a Rule 16 conference and
entered an Order permitting FNMA to renew its Motion for Summary
Judgment.
On November 15, 2013, FNMA filed a Motion for Summary
Judgment as to all of Plaintiffs' claims.

The Court took FNMA’s

Motion under advisement on December 19, 2013.

STANDARDS
Summary judgment is appropriate when “there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.”

Washington Mut. Ins. v. United

States, 636 F.3d 1207, 1216 (9th Cir. 2011).
Civ. P. 56(a).

See also Fed. R.

The moving party must show the absence of a

dispute as to a material fact.

Rivera v. Philip Morris, Inc.,

395 F.3d 1142, 1146 (9th Cir. 2005).

In response to a properly

supported motion for summary judgment, the nonmoving party must
go beyond the pleadings and show there is a genuine dispute as to
a material fact for trial.
. . .

Id.

"This burden is not a light one.

The non-moving party must do more than show there is some

'metaphysical doubt' as to the material facts at issue."

In re

Oracle Corp. Sec. Litig., 627 F.3d 376, 387 (9th Cir. 2010)
(citation omitted).
A dispute as to a material fact is genuine "if the evidence
6 - OPINION AND ORDER

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 must draw all

reasonable inferences in favor of the nonmoving party.
v. Verity, Inc., 606 F.3d 584, 587 (9th Cir. 2010).

Sluimer

"Summary

judgment cannot be granted where contrary inferences may be drawn
from the evidence as to material issues."

Easter v. Am. W. Fin.,

381 F.3d 948, 957 (9th Cir. 2004)(citation omitted).

A “mere

disagreement or bald assertion” that a genuine dispute as to a
material fact exists “will not preclude the grant of summary
judgment.”

Deering v. Lassen Cmty. Coll. Dist., No. 2:07-CV-

1521-JAM-DAD, 2011 WL 202797, at *2 (E.D. Cal., Jan. 20, 2011)
(citing Harper v. Wallingford, 877 F.2d 728, 731 (9th Cir.
1989)).

When the nonmoving party's claims are factually

implausible, that party must "come forward with more persuasive
evidence than otherwise would be necessary."

LVRC Holdings LLC

v. Brekka, 581 F.3d 1127, 1137 (9th Cir. 2009)(citation omitted).
The substantive law governing a claim or a defense
determines whether a fact is material.

Miller v. Glenn Miller

Prod., Inc., 454 F.3d 975, 987 (9th Cir. 2006).

If the

resolution of a factual dispute would not affect the outcome of
the claim, the court may grant summary judgment.

7 - OPINION AND ORDER

Id.

DISCUSSION
FNMA asserts Plaintiffs' claims are barred by Oregon Revised
Statute § 86.770 because Plaintiffs do not and cannot allege they
did not receive the notice required under Oregon Revised Statute
§ 86.740, the foreclosure sale was completed, and the property
was sold to a bona fide purchaser.
Oregon Revised Statute § 86.770(1) provides:
If, under ORS 86.705 to 86.795, a trustee sells
property covered by a trust deed, the trustee's
sale forecloses and terminates the interest in the
property that belongs to a person to which notice
of the sale was given under ORS 86.740 and 86.750
or to a person that claims an interest by, through
or under the person to which notice was given. A
person whose interest the trustee's sale
foreclosed and terminated may not redeem the
property from the purchaser at the trustee's sale.
A failure to give notice to a person entitled to
notice does not affect the validity of the sale as
to persons that were notified.
As the Court noted in its October 10, 2013, Opinion and
Order, this Court, other courts in this District, and Oregon
state courts have held § 86.770 bars rescission of a foreclosure
sale when a borrower has received the notice required under
§ 86.740 and the property is sold to a bona fide purchaser.

See,

e.g., Mikityuk v. Nw. Tr Serv., Inc., No. 3:12-CV-1518-PA, 2013
WL 3388536, at *10 (D. Or. June 26, 2013)(The court concluded
§ 86.770(1) bars challenges to the validity of a trustee's sale
after the sale is completed and the purchase of the property by a
bona fide purchaser is recorded.); Chen, 2013 WL 3929854, at *2
8 - OPINION AND ORDER

(“Like the plaintiffs in Mikityuk, plaintiff's challenges to the
non-judicial foreclosure sale here are barred.

As plaintiff

received advance notice of the sale, his interest in the property
was ‘foreclosed and terminated.’

ORS 86.770(1).

Plaintiff's

argument that notice here was ineffective because it was not
signed and dated by a notorial officer is meritless.
make such a challenge is long passed. . . .

The time to

Although plaintiff

here had sufficient time to raise any of the current challenges
before the sale, he chose instead to raise such challenges after
the trustee's sale and recording of the trustee's deed.
Plaintiff's challenges to the trustee's sale are barred, as
plaintiff's interest in the property was foreclosed and
terminated.”); Nelson v. Am. Home Mortg. Svc., Inc., No. 3:13-CV00306-BR, 2013 WL 3834656, at *4 (D. Or. July 24, 2013)(same);
Hart v. Pac. Trust Bank, No. 1:12-CV-705-PA, 2013 WL 4829172, at
*2 (D. Or. Sept. 9, 2013); Offenbacher-Afolau v. ReconTrust,
Multnomah County Circuit Court Case No. 1202-02429, at 2
("[P]laintiff is statutorily barred under ORS 86.770 from
challenging a completed foreclosure sale of which she had notice.
No amendment will cure this jurisdiction defect, and,
accordingly, the Court finds the dismissal shall be with
prejudice.").
Here Plaintiffs concede they received notice of the
foreclosure sale within the time required under the Oregon Trust

9 - OPINION AND ORDER

Deed Act (OTDA), that the property was sold to a bona fide
purchaser, and that the sale of the property was recorded before
Plaintiffs filed this action seeking to set aside the sale.

The

Court concludes on this record that Plaintiff's claim for
declaratory judgment based on the failure to list Fannie Mae as
beneficiary on the Notice is barred under § 86.770(1).
The Court also concludes Plaintiffs were required to raise
their proposed claim based on unspecified, "unrecorded written
assignments of the Trust Deed" before the foreclosure sale of
their property to a bona fide purchaser was recorded.

Thus,

Plaintiffs' claims based on alleged unrecorded assignments is now
barred by § 86.770.
In their Response Plaintiffs concede their Complaint is
“subject to Summary Judgment.”

Plaintiffs, however, seek

reconsideration of the Court’s October 10, 2013, Opinion and
Order denying Plaintiffs leave to file an Amended Complaint.

In

support of their request for reconsideration Plaintiffs reiterate
the arguments contained in their Motion for Leave to File an
Amended Complaint and their Reply in support of their Motion.
The Court has considered Plaintiffs’ arguments, but adheres to
its October 10, 2013, decision.

Accordingly, the Court grants

FNMA’s Motion for Summary Judgment.

10 - OPINION AND ORDER

CONCLUSION
For these reasons, the Court GRANTS FNMA’s Motion (#39) for
Summary Judgment and DISMISSES this matter with prejudice.
IT IS SO ORDERED.
DATED this 19th day of February, 2014.

/s/ Anna J. Brown
ANNA J. BROWN
United States District Judge

11 - OPINION AND ORDER