Baricevic v. Mortgage Electronic Registration Services, Inc. et al
Filing
41
OPINION AND ORDER: Defendants motions to dismiss the amended complaint [25, 27] are GRANTED. As noted above, Defendants requests for judicial notice [11, 29] are GRANTED. For the reasons stated above, Ms. Baricevics Amended Complaint 24 is DISMISSED WITH PREJUDICE insofar as it seeks to unwind or nullify the nonjudicial foreclosure proceeding. The complaint is DISMISSED WITHOUT PREJUDICE as to any claim for breach of the contractual duty of goodfaith and fair dealing. Signed on 1/24/14 by Judge Michael W. Mosman. (dls)
UNITED STATES DISTRICT COURT
DISTRICT OF OREGON
PORTLAND DIVISION
MARGARET M. BARICEVIC,
No. 3:13-cv-01503-MO
Plaintiff,
OPINION AND ORDER
v.
MORTGAGE ELECTRONIC
REGISTRATION SERVICES,
INC., as nominee in favor of MORTGAGEIT,
INC., a New York corporation; BANK OF
AMERICA, N.A., successor by Merger to BAC
HOME LOANS SERVICING LP FKA
COUNTRYWIDE HOME LOANS SERVICING,
LP, a federally chartered bank; SELECT
PORTFOLIO SERVICING, INC.,a Utah
corporation, RECONTRUST COMPANY, N.A.,
a California corporation; HSBC BANK, N.A.,
AS TRUSTEE ON BEHALF OF THE
HOLDERS OF DEUTSCHE BANK ALT-A
SECURITIES MORTGAGE HOME LOAN
TRUST, MORTGAGE PASS THROUGH
CERTIFICATES, SERVICES 2007-AR2, a
Delaware corporation,
Defendants.
1 – OPINION AND ORDER
MOSMAN, J.,
BACKGROUND
Plaintiff Margaret Baricevic challenges the propriety of nonjudicial foreclosure
proceedings that resulted in the sale of her property at a trustee’s sale on August 12, 2012.
(Amend. Compl. [24] ¶ 10.) Defendants moved to dismiss [25, 27] the Amended Complaint
under Federal Rule of Civil Procedure 12(b)(6), arguing that Ms. Baricevic fails to state a claim
on which relief can be granted because the Oregon Trust Deed Act does not allow post hoc
challenges to completed foreclosure sales. I GRANT Defendants’ motions and dismiss the
complaint with prejudice insofar as it seeks to set aside the trustee’s sale and declare that Ms.
Baricevic holds legal title to the property. However, I dismiss without prejudice as to any claim
Ms. Baricevic may be able to assert for breach of the duty of good faith and fair dealing. While
no such claim is pled with sufficient detail to state a claim in the Amended Complaint [24], my
ruling does not prevent Ms. Baricevic from filing such a claim, if one can be adequately pled.
LEGAL STANDARDS
To survive a motion to dismiss for failure to state a claim under Federal Rule of Civil
Procedure 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A pleading that offers only
“labels and conclusions” or “‘naked assertion[s]’ devoid of ‘further factual enhancement’” will
not suffice. Id. (quoting Twombly, 550 U.S. at 555, 557) (alteration in original). While the
plaintiff does not need to make detailed factual allegations at the pleading stage, the allegations
must be sufficiently specific to give the defendant “fair notice” of the claim and the grounds on
which it rests. See Erickson v. Pardus, 551 U.S. 89, 93–94 (2007) (per curiam) (citing Twombly,
2 – OPINION AND ORDER
550 U.S. at 555). When reviewing a motion to dismiss, the court must “accept all factual
allegations in the complaint as true and construe the pleadings in the light most favorable to the
nonmoving party.” Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005). A court need not
accept legal conclusions as true because “[t]hreadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678. These
standards apply to suits removed from state court under 28 U.S.C. § 1441 just as they do to
complaints originally filed in federal court. Fed. R. Civ. P. 81(c).
A court may take judicial notice of a fact outside the pleadings if the fact “can be
accurately and readily determined from sources whose accuracy cannot reasonably be
questioned.” Fed. R. Evid. 201. Defendants have requested [11, 29] that the court take judicial
notice of several documents, including the Deed of Trust, the Notice of Default and Election to
Sell, the Trustee’s Deed, the assignment of the Deed of Trust from Defendant MERS to
Defendant Bank of America, and the Appointment of Successor Trustee. These documents are
all public records, as each is found in the records of Multnomah County, where they were filed.
Plaintiff does not dispute the authenticity of these documents. (Pl.’s Resp. [32] at 2–3.)
Consequently, I GRANT Defendants’ requests for judicial notice [11, 29].
BACKGROUND
Ms. Baricevic alleges that she granted a Deed of Trust securing a loan of $945,000 on
November 21, 2006. The Deed of Trust named Defendant MortgageIt, Inc., as lender, Defendant
MERS as beneficiary “as nominee for the lender,” and Lawyer’s Title Insurance Corporation as
Trustee. (Amend. Compl. [24] ¶ 1; Decl. of Laurick [12] Ex. A.) Defendants represent that Ms.
Baricevic defaulted on the loan in August 2009; Ms. Baricevic does not contest her default.
(Mem. [26] at 1–2.)
3 – OPINION AND ORDER
Defendant Bank of America was assigned the Deed of Trust by Defendant MERS on
October 27, 2011. (Amend. Compl. [24] ¶ 8; Decl. of Laurick [12] Ex. B.) This assignment was
recorded in Multnomah County. Id. Defendant Bank of America appointed Defendant
Recontrust as successor trustee to institute foreclosure proceedings. (Amend. Compl. [24] ¶ 9;
Decl. of Laurick. [12] Ex. C.). Defendant Recontrust did so, filing a Notice of Default and
Election to Sell (“NODES”) in Multnomah County on October 28, 2011. Ms. Baricevic does not
dispute that she received service of the NODES, as required by the Oregon Trust Deed Act
(“OTDA”). The NODES stated that a trustee’s sale would be held on March 5, 2012. (Decl. of
Laurick [12] Ex. D.)
Ms. Baricevic alleges various defects in the nonjudicial foreclosure proceeding,
including, inter alia, that Defendant Mortgage Electronic Registration Services was improperly
named as beneficiary on the deed of trust and that Defendant Recontrust improperly named
Defendants Bank of America and BAC Home Loans in the notice of default and election to sell. 1
(Amend. Compl. ¶¶ 14–20.) She seeks a declaratory judgment that the trustee’s sale was invalid
and that she remains legal owner of the property. Id. ¶¶ 22–25.
ANALYSIS
I.
The Oregon Trust Deeds Act Bars Post Hoc Challenge to a Nonjudicial Foreclosure
Federal courts in this district have held that Or. Rev. Stat. § 86.770 bars a grantor from
challenging a nonjudicial foreclosure proceeding after the trustee’s sale has taken place and the
trustee’s deed of sale has been recorded. C.f. Roisland v. Flagstar Bank, No. 13-588, 2013 WL
6212200, at *6–7 (D. Or. Nov. 26, 2013); Nelson v. Am. Home Mortg. Serv., Inc. No. 13-306,
1
The Oregon Supreme Court held in Brandrup v. ReconTrust Co., N.A., 353 Or. 668, 682–89,
303 P.3d 301, 309–12 (2013), that under the OTDA the beneficiary of a deed of trust is the lender or its
successor in interest; consequently, MERS cannot hold this interest “as nominee.”
4 – OPINION AND ORDER
2013 WL 3834656, at *4 (D. Or. July 24, 2013); Mikityuk v. Nw. Trustee Servs., Inc., --F.Supp.2d ---, No. 12-1518, 2013 WL 3388536 (D. Or. June 26, 2013).
The OTDA provides that if “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.” Or. Rev. Stat. § 86.770(1). In Mikityuk, the court analyzed this provision
in light of the joint purposes of the OTDA: (1) to “provide ‘creditors with a quick and efficient
remedy against a defaulting grantor;’” and (2) to “‘protect the grantor against the unauthorized
loss of its property and to give the grantor sufficient opportunity to cure any default.’” 2013 WL
3388536 at *6 (quoting Staffordshire Invs., Inc. v. Cal-Western Reconveyance Corp., 209 Or.
App. 528, 542, 149 P.3d 150, 157–58 (2006)). The court noted that a “statutory presumption of
finality” arises under the OTDA where the grantor received the statutorily required notice. Id. at
*6 (citing Staffordshire, 209 Or. App. at 543, 149 P.3d at 158). The statute requires 120 days’
notice before any trustee’s sale; this is the time period afforded as protection against improper
foreclosure proceedings. Id. at *7. If a grantor fails to challenge the nonjudicial foreclosure
proceeding, their interest may be “foreclosed and terminated” by the trustee’s sale and
recordation of the trustee’s deed. Id. at *7 (quoting Or. Rev. Stat. § 86.770(1)).
I find the Mikityuk court’s conclusion to be a sound interpretation of the OTDA. The
OTDA protects grantors such as Ms. Baricevic by requiring at least 120 days’ notice—ample
time to seek judicial intervention in order to challenge any alleged improprieties in the
nonjudicial foreclosure proceedings. Ms. Baricevic does not dispute that she received service of
the NODES, as required under Or. Rev. Stat. § 86.740. This notice, which she received in
October of 2011, informed her that a trustee’s sale would be held in March of 2012. (Decl. of
Laurick [12] Ex. D.) Ultimately, the sale was held in August of 2012—well within the 180 days
5 – OPINION AND ORDER
from the original date of sale allowed by Or. Rev. Stat. § 86.755(2)(a). (Amend. Compl. [24]
¶ 10.)
Consequently, I find that Ms. Baricevic cannot state a claim to unwind the foreclosure
proceedings. The time to challenge Defendant MERS’s involvement or Defendant Bank of
America’s interest as transferee of the deed of trust was during the statutory time period, prior to
the foreclosure sale. Ms. Baricevic’s Amended Complaint is DISMISSED with prejudice as to
any claim to unwind or cancel the foreclosure sale.
II.
The Remedy for Defective Notice is the Right of Redemption
Ms. Baricevic alleges that she did not receive actual notice that the postponed trustee’s
sale would take place on August 12, 2012. (Amend. Compl. [24] ¶ 31.) I need not determine
whether a lack of actual notice of a postponement would have violated the OTDA, 2 however,
because the remedy for defects in notice under Or. Rev. Stat. § 86.740 is a right of redemption,
not rescission of the foreclosure sale.
A grantor is entitled to notice under § 86.737 and
§ 86.740(2)(a). A failure of the notice required by these provisions gives the person to whom
notice was due “the same rights possessed by the holder of a junior lien or interest who was
omitted as a party defendant in a judicial foreclosure proceeding.” Or. Rev. Stat. § 86.739(a). A
junior lienholder would be required to exercise their right of redemption within 60 days after the
2
Prior to April of 2012 the OTDA did not require a trustee to give notice of postponement other
than by making a public announcement at the time and place of the scheduled trustee’s sale. See 2012 Or.
Laws Ch. 112 § 9. This provision was amended in April 2012 to require the trustee to send a notification
to the grantor. Or. Rev. Stat. § 86.755(2)(b). The first postponement of the trustee’s sale necessarily took
place on or before March 5, 2012—the original date for the trustee’s sale—and at this time no personal
notice was required. It is unclear from the Amended Complaint [24] whether there were any subsequent
postponements and whether they occurred before or after the effective date of the amendment to § 86.775.
Because the legislature added the personal notice requirement found § 86.775(2)(b) without
adding additional remedies or referring to those found in § 86.739 or § 86.742, it is unclear whether even
the right of redemption would attach where a grantor did not receive personal notice of a postponement.
Because I dismiss on other grounds unaffected by the meaning of the amendments to § 86.775(2), I
decline to address this question of statutory interpretation here.
6 – OPINION AND ORDER
date of sale. Or. Rev. Stat. §§ 18.964(2); 88.080. It is clear that this time period has passed in
this case, and Ms. Baricevic does not allege that she would have or could have redeemed the
property.
Consequently, even if the statutory notice requirements found in § 86.737 and
§ 86.740 were not met, Ms. Baricevic could not state a claim for wrongful foreclosure. See
Domingo v. Anderson, 138 Or. App. 521, 525–26, 910 P.2d 402, 404–05 (1996) (holding that the
lack of notice did not cause the plaintiffs’ damages because they could not have redeemed the
property), rev. in part on other grounds, 325 Or. 385, 938 P.2d 206 (1997).
III.
Any Claim for Breach of Contract Fails to Satisfy Federal Pleading Standards
Some of Ms. Roisland’s factual allegations suggest that she may be attempting to bring
claims for breach of the duty of good faith and fair dealing implied in Oregon contracts. For
instance, she alleges that Defendant Recontrust “has committed unfair and deceptive acts and
violated its duty of good faith by noticing and conducting this trustee sale while failing to
perform statutory requisites for conducting such sales.” (Amend. Compl. [24] ¶ 20.) She alleges
that after she received the NODES she entered into modification negotiations with Defendant
Bank of America, but that Bank of America “acted in bad faith in foreclosing on the mortgage at
the same time as continually assuring plaintiff that the modification of the mortgage was under
active consideration.” (Amend. Compl. [24] ¶ 27–32.)
A duty of good faith and fair dealing is implied in every contract in Oregon. Klamath
Off-Project Water Users. Inc. v. Pacificorp, 237 Or. App. 434, 445, 240 P.3d 94, 101 (2010).
Claims for breach of the duty of good faith and fair dealing “may be pursued independently of a
claim for breach of the express terms of the contract” and do not depend on a showing that the
express provisions of the contract have been breached. Id. (quoting McKenzie v. Pac. Health &
Life Ins. Co., 118 Or. App. 377, 381, 847 P.2d 879, 881 (1993). The operation of the duty in any
7 – OPINION AND ORDER
particular case focuses on the “agreed common purpose,” or the reasonable expectations, of the
parties. Id. (citing Or. Univ. Sys. v. OPEU, 185 Or. App. 506, 516, 60 P.3d 567, 572 (2002).
Ms. Baricevic’s allegations are insufficient to state a claim for breach of the contractual
duty of good faith and fair dealing, primarily because Ms. Baricevic requests only equitable
relief. (Amend. Compl. [24] ¶ 32.) The Amended Complaint makes clear that the relief sought is
the unwinding of the foreclosure proceeding and a declaration that Ms. Baricevic holds title to
the property. Ms. Baricevic does not seek contract damages for any breach of the duty of good
faith and fair dealing. Furthermore, the allegations fail to identify how the actions alleged
diverged from the reasonable expectations of Ms. Baricevic and another party to a contract. Ms.
Baricevic must do more in order to state a plausible claim on which relief can be granted.
CONCLUSION
Defendants’ motions to dismiss the amended complaint [25, 27] are GRANTED. As
noted above, Defendants’ requests for judicial notice [11, 29] are GRANTED. For the reasons
stated above, Ms. Baricevic’s Amended Complaint [24] is DISMISSED WITH PREJUDICE
insofar as it seeks to unwind or nullify the nonjudicial foreclosure proceeding. The complaint is
DISMISSED WITHOUT PREJUDICE as to any claim for breach of the contractual duty of good
faith and fair dealing.
IT IS SO ORDERED.
DATED this
24th
day of January, 2014.
/s/ Michael W. Mosman ___
MICHAEL W. MOSMAN
United States District Judge
8 – OPINION AND ORDER
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