Cotrell v. Central Mortgage Company et al

Filing 15

OPINION AND ORDER: Defendants' motions for judicial notice 8 and 12 are GRANTED. Defendants' motions to dismiss 4 and 11 are also GRANTED. The parties' requests for oral argument are DENIED as unnecessary. Any motion for leave to amend the complaint shall be filed within 20 days of the date of this Opinion, otherwise the Court will enter judgment dismissing this case. See formal OPINION AND ORDER. Signed on 7/30/2015 by Chief Judge Ann L. Aiken. (rh)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

KATHERINE COTRELL,

Case No. 3:15-cv-00844-AA
OPINION AND ORDER

Plaintiff,
v.
CENTRAL MORTGAGE COMPANY,
NORTHWEST TRUSTEE SERVICES,
INC.,
Defendants.
Benjamin D. Knaupp
Garland Griffiths Knaupp
254 N. First Avenue
Hillsboro, OR 97124
Attorney for plaintiff
Lukasz I. Wozniak
Wright, Finlay & Zak, LLP
4665 MacArthur Court, Suite 200
Newport Beach, CA 92660
Attorney for defendant Central Mortgage Company
John M. Thomas
RCO Legal, P.C.
511 S.W. Tenth Avenue, Suite 400
Portland, OR 97205
Attorney for defendant Northwest Trustee Services,

Page 1 - OPINION AND ORDER

Inc.

AIKEN, Chief Judge:
Defendants Central Mortgage Company
Trustee Services, Inc.
Cotrell's

complaint

(Central)

and Northwest

(NWTS) move to dismiss plaintiff Katherine
pursuant

to

Fed.

R.

Civ.

P.

12(b) (6) . 1

Defendants also move for judicial notice of certain publicly-filed
documents. For the reasons set forth below, defendants' motions are
granted.
BACKGROUND

In November 2005, plaintiff took out a loan in the amount of
$560,000 to purchase a residential property in Portland,
(Property) .

Pursuant

to

this

transaction,

Oregon

plaintiff executed a

Promissory Note (Note), which was secured by a Deed of Trust (DOT).
The DOT identified plaintiff as the borrower,
Corporation

(Barrington)

Registration Systems, Inc.

as

the

lender,

Barrington Capital

Mortgage

Electronic

(MERS) as the beneficiary and nominee,

and Fidelity National Title Company of Oregon as the trustee. Under
the DOT,

plaintiff agreed to make monthly mortgage payments as

required under the Note. Plaintiff also agreed that she would be in
default,

and subject to foreclosure,

if she failed to make such

payments.
"Sometime during the fall of 2008," plaintiff stopped making

1

NWTS articulates alternative bases for dismissal, including
Fed. R. Civ. P. 12 (b) (1), Fed. R. Civ. P. 12 (b) (4), and Fed. R.
Civ. P. 12(b) (5). Because plaintiff's complaint fails under Fed.
R. Civ. P. 12(b) (6), and because NWTS neglected to adequately
brief these other bases, the Court declines to address them.
Page 2 - OPINION AND ORDER

loan repayments as required by the Note and DOT. Compl.
December

31,

Barrington,

2008,
to

MERS

Central.

assigned
Also

on

the

DOT,

December

as

31,

~

5. On

nominee
2008,

for

Central

appointed NWTS as successor trustee under the DOT; NWTS, in turn,
issued and recorded a Notice of Default. Plaintiff failed to cure
her default

and,

on April

20,

2009,

NWTS

issued and

recorded

Trustee's Notice of Sale.
On

May

6,

2009,

Central

purchased

the

Property

at

the

foreclosure sale. A Trustee's Deed was recorded on May 11, 2009.
Plaintiff vacated the Property in July 2009.
On April 24,

2015, plaintiff filed a complaint in Multnomah

County Circuit Court,

alleging claims

under the Oregon Trust Deed Act

for

(OTDA)

wrongful

foreclosure

and trespass. On May 15,

2015, Central removed plaintiff's case to this Court. On May 20,
2015, Central moved to dismiss plaintiff's complaint. On July 3,
2015, NWTS filed a separate motion to dismiss.
STANDARD OF REVIEW

Where the plaintiff fails to state a claim upon which relief
can be granted, the court must dismiss the action. Fed. R. Civ. P.
12 (b) (6). To survive a motion to dismiss, the complaint must allege
enough facts to state a claim for relief that is plausible on its
face. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). For
purposes

of

a

motion

to

dismiss,

the

complaint

is

liberally

construed in favor of the plaintiff and its allegations are taken
as

true.

Rosen

v.

Walters,

Page 3 - OPINION AND ORDER

719

F.2d

1422,

1424

(9th

Cir.

1983). Bare assertions, however, that amount to nothing more than
a formulaic recitation of the elements of a claim are conclusory
and not entitled to be assumed true. Ashcroft v.

Iqbal,

556 U.S.

662, 681 (2009). Rather, to state a plausible claim for relief, the
complaint must contain sufficient allegations of underlying facts
to support its legal conclusions.

Starr v.

Baca,

652 F.3d 1202,

1216 (9th Cir. 2011), cert. denied, 132 S.Ct. 2101 (2012).
DISCUSSION

Defendants

argue

that

plaintiff's

complaint

should

be

dismissed because she is statutorily barred from challenging the
underlying non-judicial foreclosure, which was completed nearly six
years before this lawsuit was commenced.
contend that MERS'

In addition,

defendants

status as beneficiary did not invalidate the

foreclosure. According to defendants, plaintiff's trespass claim
fails because the DOT expressly permitted them to physically access
the

Property

and

a

judgment

of

eviction

was

entered

against

plaintiff.
Conversely, plaintiff asserts that "[p]ost foreclosure sale
challenges are recognized by the Oregon [C]ourt of Appeals." Pl.'s
Resp. to Central's Mot. Dismiss 3. Plaintiff also argues that the
recorded documents do not establish Central's beneficial ownership
of the Note, or defendants' right to enter the Property, such that
her claims are sufficiently alleged to survive dismissal.

Page 4 - OPINION AND ORDER

I.

Preliminary Matters
The Court must address two issues before reaching whether

dismissal is warranted.
A.

Requests for Judicial Notice

Central moves for

judicial notice of the DOT,

Multnomah County on November

9,

2005.

recorded in

NWTS moves

for

judicial

notice of the General Judgement of Eviction it received against
plaintiff in relation to the Property, dated July 2, 2009, from the
Multnomah County Circuit Court. The documents at issue are part of
the public record, such that their accuracy cannot reasonably be
questioned.

Fed. R. Evid. 201(b); Santa Monica Food Not Bombs v.

City of Santa Monica,

450 F.3d 1022,

1025 n.2

(9th Cir.

2006).

Indeed, plaintiff attached portions of the DOT to her complaint and
otherwise does not dispute the authenticity of these materials.
Defendants' requests for judicial notice are granted.
B.

Requests to Amend

Plaintiff seeks leave to amend her complaint via her response
briefs. Plaintiff's requests are denied because they do not comply
with the Local Rules. LR 7-1(b); LR 15.
II.

Plaintiff's First Claim Under the OTDA
Plaintiff alleges that NWTS "lacked any legal authority to

foreclose on the lien against

[her]

property" because the non-

judicial foreclosure "did not comply with the Oregon law."Compl.
i 14. Plaintiff also alleges that MERS "lacked any right, title or

interest

of

its

own

in

the mortgage,"

Page 5 - OPINION AND ORDER

such that

the

recorded

assignment of the
interest

to

DOT failed to convey Barrington's beneficial

Central.

Id.

at

~

12.

Plaintiff

concludes

that

defendants' wrongful actions caused her to lose her home and suffer
monetary damages in the form of lost rent. Id. at

~

15.

The Court finds that plaintiff fails to state a claim upon
which

relief can be

granted.

Courts

within this

District

have

consistently found that the OTDA precludes challenges to completed
non-judicial foreclosures where timely statutory notice was served,
even where the plaintiff asserts procedural defects due to MERS'
involvement.

See,

e.g.,

Mikityuk v.

N.W.

Tr.

Servs.,

Inc.,

952

F.Supp.2d 958, 962-70 (D.Or. 2013); Morkal v. Fed. Home Loan Mortg.
Corp.,

2014

WL

2041364,

*4

(D.Or.

May

Homesales, Inc., 2014 WL 1744991, *3-4
v.

N.W.

Tr.

Servs.,

Inc.,

8,

2014);

Mitchell

v.

(D.Or. Apr. 30, 2014); Liu

2014 WL 657000,

*3-4

(D.Or.

Feb.

19,

2014); Baricevic v. Mortg. Elec. Registration Servs., Inc., 2014 WL
297091, *2-3 (D.Or. Jan. 24, 2014); Collette v. Sutherland, 2014 WL
203922, *1-2 (D.Or. Jan. 15, 2014).
Plaintiff does not dispute that:

(1) she was in default at the

time of the non-judicial foreclosure;

(2) she lacked the ability to

cure her default;
the

OTDA;

and

( 4)

(3) she received adequate statutory notice under
the

sale

of the

Property was

completed and

recorded years before she filed this lawsuit. Further, plaintiff's
reliance on forcible entry and detainer proceedings, including U.S.
Bank,

NA v.

Eckert,

267

Page 6 - OPINION AND ORDER

Or.App.

721,

341

P.3d 173

(2014),

is

misplaced. Eckert explicitly declined to reach the bank's argument,
raised for the first time upon reconsideration, that the property's
occupant

was

not

permitted

to

challenge

the

validity

of

the

underlying trustee's sale. Eckert, 267 Or.App. at 722-24. In other
words,

Eckert

therefore
detainer

did

not

not

reach

instructive.

proceedings

are

the

issue

Id.

presented

Moreover,

fundamentally

here

forcible

different

and

entry

is
and

from wrongful

foreclosure actions, as they are governed by a separate statutory
scheme and serve a discrete purpose. Compare U.S. Bank Nat'l Ass'n
v.

Wright,

253 Or.App.

very nature,

207,

213,

289 P.3d 361

(2012)

an action for ejectment requires the plaintiff to

prove the nature of its legal estate in the property")
Rev. Stat.
284,

72

§§

P.

(summarizing

("[b]y its

(citing Or.

105.005(1), 105.010(1); Hoover v. King, 43 Or. 281,

880
the

(1903));
OTDA

with Mikityuk,
and

Oregon

case

952 F.Supp.2d at
law

regarding

962-70

wrongful

foreclosure actions and holding that the former version of Or. Rev.
Stat.

§

86.797 bars post-sale challenges by parties to whom proper

notice is given, because such a bar is consistent with the OTDA's
purpose of providing lenders an efficient and final remedy against
defaulting borrowers).
This is not to say that courts lack authority to set aside a
trustee's sale "on equitable grounds, or upon any acts of bad faith
by the trustee or creditor." Mikityuk, 952 F.Supp.2d at 970 n. 10.
Plaintiff, however,

alleges no facts implicating defendants'

Page 7 - OPINION AND ORDER

bad

faith or any other equitable concerns.
legal

or

factual

established
actions.

basis

precedent

for

this

regarding

She likewise provides no

Court

to

post-sale

diverge
wrongful

from

well-

foreclosure

Defendants' motions are granted as to plaintiff's first

claim.
III. Plaintiff's Second Claim for Trespass
Plaintiff alleges that defendants trespassed by "unlawfully
possessing and selling the property without legal title to the
property because the trustee's sale was invalid." Compl.
Plaintiff
expressly

fails

to

authorized

state

a

defendants

claim
to

for

enter

~

trespass.
the

16.

The

Property

DOT
upon

plaintiff's 2008 default. Central's Mot. Jud. Notice Ex. 1, at 9;
Compl.

~

5; see also Verizon N.W., Inc. v. Main St. Dev., Inc., 693

F.Supp.2d 1265,
landowner's
purpose,

1278

consent

(D.Or.
to

2010)

enter

("[i]f a

upon

the

trespasser had the

land

for

a

particular

the landowner cannot maintain an action for trespass")

( citation omitted) .
defendants

entered

Regardless,
the

Property

plaintiff does
at

any

point

not allege
and

the

that

record

demonstrates the foreclosure sale "was held at the Multnomah County
Courthouse." Central's Reply to Mot. Dismiss 8; Compl. Ex. 5, at 2.
Furthermore, NWTS obtained a judgment of eviction against plaintiff
after the non-judicial foreclosure was completed via a forcible
entry and detainer proceeding. NWTS' Mot. Judicial Not. Ex. 1, at
1.

As

noted above,

plaintiff had an

Page 8 - OPINION AND ORDER

opportunity to

raise

any

defects

inherent

to the

foreclosure

process

at

that

time;

she

elected not to appear and instead filed this action nearly six
years later. Id. Defendants' motions are granted as to plaintiff's
second claim.
CONCLUSION

Defendants'

motions

GRANTED.

Defendants'

GRANTED.

The parties'

for

motions

judicial

notice

to dismiss

(doc.

(doc.
4,

8,
11)

12)
are

are
also

requests for oral argument are DENIED as

unnecessary. Any motion for leave to amend the complaint shall be
filed within 20 days of the date of this Opinion, otherwise the
Court will enter judgment dismissing this case.
IT IS SO ORDERED.
Dated this ~day of July 2015.

Ann Aiken
United States District Judge

Page 9 - OPINION AND ORDER