Theiss et al v. Citimortgage, Inc. et al
Filing
73
ORDER: For the reasons stated, Plaintiffs' Motion to Amend the Complaint 63 is DENIED. Defendants' Motions for Summary Judgment are GRANTED. Defendant Citimortgage is directed to submit a proposed judgment within 30 days of the entry of this Order. Plaintiffs shall have 20 days to object to the form of the judgment. Ordered and Signed on 08/23/2013 by Judge Owen M. Panner. (rsm)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
MEDFORD DIVISION
CARLA L. THEISS,
RAYMOND J. THEISS,
Plaintiffs,
v.
CITIMORTGAGE, INC., as
trustee for CitiMortgage
Backed Securities 2003-17
Trust Mortgage Pass Through
Certificates, Series 2003-17,
CITIMORTAGE, INC.,
MORTGAGE ELECTRONIC
REGISTRATION SYSTEM, INC.,
Defendants.
CITIMORTtAGE, INC., as
trustee for CitiMortgage
Backed Securities 2003-17
Trust Mortgage Pass Through
Certificates, Series 2003-17,
CITIMORTGAGE, INC.
Defendants and
Counterclaim
Plaintiffs,
v.
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CHARLA L. THEISS, RAYMOND
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J. THEISS, TILLICUM VILLAGE
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HOME OWNERS ASSOCIATION, INC.,)
1 - ORDER
No.
6:12-cv-2215-PA
ORDER
OREGON AFFORDABLE HOUSING
ASSISTANCE CORPORATION,
Counterclaim
Defendants.
PANNER, J.
Plaintiffs in this action bring claims for declaratory
relief, injunctive relief, and quiet title.
CitiMortgage, Inc.
Defendant
(CitiMortgage) brings a counterclaim for
judicial foreclosure.
Before the Court are Defendants' motions
for summary judgment and Plaintiffs' motion to amend the
complaint.
For the reasons set forth below, Plaintiffs' motion
to amend the complaint is DENIED and Defendants' motions for
summary judgment are GRANTED.
Judgment is for Defendants.
Background
On August 4, 2006, Plaintiffs took out a loan for $360,000
and executed a Note and Deed of Trust on their property with
CitiMortgage.
The Note obligated Plaintiffs to make regular
payments to CitiMortgage, beginning on October 1, 2006, and
ending on September 1, 2036.
The Deed of Trust names Defendant
Mortgage Electronic Registration System, Inc.
(MERS) as the
beneficiary of the loan as nominee for CitiMortgage.
The Deed of
Trust permits CitiMortgage to foreclose on the property in the
event of default on the Note.
The Note is endorsed in blank and
is currently in the possession of CitiMortgage.
CitiMortgage has
acted as the servicer of Plaintiffs' loan since its inception.
At some point prior to June 2010,
Plaintiffs defaulted on
the Note by. failing to make the necessary payments.
2010, Plaintiffs filed for bankruptcy.
2 - ORDER
In September
The underlying debt was
discharged on January 3, 2011, and on January 7, 2011, the
Bankruptcy Court entered an Order for Relief From Stay permitting
CitiMortgage to
foreclos~re
on the property.
On February 28,
2011, MERS executed an assignment of the Deed of Trust to
CitiMortqage.
That assignment was recorded on March 2, 2011.
As of March 28, 2013, Plaintiffs owed $339,765.22 on the
loan, plus late fees of $1,704.07, appraisal fees of $303,
inspection fees of $405, previously incurred foreclosure costs
and fees of $5,690.23, previously incurred bankruptcy fees and
costs of $700, and accrued interest of $12,669.64.
exhausting other efforts to stave off foreclosure,
After
Plaintiffs
filed this action.
Plaintiffs initially hired a company called PSL, apparently
operating out of California, to perform an "audit" of their
mortgage and draft their complaint.
Plaintiffs paid PSL a
substantial sum of money for this service.
No employee of PSL
ever appeared in this case and it does not appear that PSL is
licensed to practice law in Oregon.
Plaintiffs admit in their
depositions that they had no personal knowledge of the facts or
law referenced in their complaint and that they relied entirely
on PSL to provide that information.
discovery,
Shortly before the close of
Plaintiffs determined that PSL had cheated them and
hired a different consultant to assist them.
Discussion
Plaintiffs have filed a motion to amend their complaint.
Defendants have filed motions for summary judgment on both the
original claims of the complaint and on CitiMortgage's
counterclaim for judicial foreclosure.
3 - ORDER
I will address each of
these issues in turn.
I. Plaintiffs' Motion to Amend the Complaint
On June 28, 2013,
Plaintiffs filed a motion to amend their
complaint and submitted a proposed amended complaint (PAC).
The
PAC adds a number of new defendants and several new claims,
including claims for monetary damages.
The PAC also includes
voluminous exhibits, mostly having to do with MERS.
The time for Plaintiffs to file an amended complaint as
matter of course under Fed. R. Civ. P. 15 (a) (1) has passed.
Plaintiffs may therefore only amend with the written consent of
Defendants or with the court's leave.
leave when justice so requires.
Cou-rts should freely give
Fed. R. Civ. P. 15 (a) (2).
Leave to amend is not automatic, however.
directed to consider 1) bad faith,
to the opposing party, 4)
Courts are
2) undue delay, 3) prejudice
futility of amendment, and 5) whether
plaintiff has previously amended his complaint.
In Re W. States
Wholesale Natural Gas Antitrust Litig., 715 F.3d 716, 738
(9th
Cir. 2013).
The Ninth Circuit has held that the consideration of
prejudice to the opposing party carries the greatest weight and
is the "touchstone" of the inquiry.
Aspeon,
Eminence Capital, LLC v.
Inc., 316 F.3d 1048, 1052 (9th Cir. 2003).
A need to
reopen discovery, a delay in the proceedings, or the addition of
complaints or parties are indicators of prejudice.
See
~
Solomon v. N. Am. Life and Cas. Ins. Co., 151 F.3d 1132, 1139
/'
(9th Cir. 1998) (affirming the district court; s finding of
prejudice when the motion to amend was made on the eve of the
discovery deadline); Zivkovic v. S. Cal. Edison Co., 302 F.3d
4 - ORDER
1080, 1087
(9th Cir. 2002) (affirming the district court's finding
of prejudice when the proposed amendments would have added new
claims, necessitating the re-opening of discovery).
In this case, Plaintiffs filed their motion to amend on the
day discovery closed.
In Plaintiffs' motion, they acknowledge
that they were aware that discovery was closed and that
Defendants intended to file a motion for summary judgment on the
same day.
The PAC adds both new claims and new defendants.
Granting Plaintiffs' motion would necessitate significant delays,
as well as requiring the re-opening of discovery.
I conclude,
therefore, that granting Plaintiffs' motion to amend their
complaint would significantly prejudice Defendants.
Plaintiffs'
motion to amend the complaint is DENIED.
II. Defendants' Motion for Summary Judgment
Defendants move for summary judgment on the original
complaint and CitiMortgage's counterclaim for judicial
foreclosure.
Plaintiffs have not responded to Defendants'
motion.
A. Legal Standard
Summary judgment shall be granted when the record shows that
there is no genuine dispute as to any material of fact and that
the moving party is entitled to judgment as a matter of law.
R. Civ. P. 56(a); Anderson v. Liberty Lobby,
247
(1986).
Fed
Inc., 477 U.S. 242,
The moving party has the initial burden of showing
that no genuine issue of material fact exists.
Celotex Corp. V.
Catrett, 477 U.S. 317, 323 (1986); Devereaux v. Abbey, 263 F. 3d
1070, 1076 (9th Cir. 2001)
(en bane).
The court cannot weigh the
evidence or determine the truth but may only determine whether
5 - ORDER
there is a genuine issue of fact ..
Welles, 279 F.3d 796, 800
Playboy Enters., Inc. v.
(9th Cir. 2002).
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,
477 U.S. at 248).
When a properly supported motion for summary judgment is
made, the burden shifts to the opposing party to set forth
specific facts showing that there is a genuine issue for trial.
Anderson,
477 U.S. at 256.
Conclusory allegations, unsupported
by factual material, are insufficient to defeat a motion for
summary judgment.
1989).
Taylor v. List, 880 F.2d 1040, 1045 (9th Cir.
Instead, the opposing party must, by affidavit or as
otherwise provided by Rule 56, designate specific facts which
show there is a genuine issue for trial.
1076.
Devereaux, 263 F.3d at
In assessing whether a party has met its burden, the court
views this 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).
B. Plaintiff's Claim for Declaratory Relief
Plaintiffs seek a declaratory judgment determining the
rights, obligations, and interests of the parties with regard to
the property, particularly as to the validity of the Deed of
Trust and Defendants' right to foreclose on the property.
A trust deed may, at the option of the beneficiary, be
foreclosed in the same manner as a mortgage.
ORS 86.710.
The
right to foreclose a mortgage accrues when a covenant is
breached, the performance of which the mortgage was given to
6 - ORDER
secure and the breach of which the parties agreed would authorize
foreclosure.
Churchill v. Meade, 88 Or. 120, 124
(1918).
Although a deed of trust may purport to name MERS as the
beneficiary, the true beneficiary is the party entitled to
collect payment under the note.
353 Or. 668,
691-92
(2013).
Brandrup v. ReconTrust Co., NA
When a note is transferred by
endorsement of the beneficiary, the deed of trust transfers with
it by operation of law and it is not necessary to record such
transfers.
See Barringer v. Loder, 47 Or. 223, 228-29 (1905);
Brandrup, 353 Or. at 697-99.
An instrument, such as a promissory note, may be enforced by
1) the holder of the instrument, 2) a non-holder in possession of
the instrument, who has the rights of a holder, or 3) a person
not in possession of the instrument who is entitled to enforce
under other provisions.
ORS 73.0301.
A person may be entitled
to enforce the instrument even if they are not the owner or are
in wrongful possession of the instrument.
Id.
A party in
possession of an instrument payable to bearer is the holder of
that instrument.
ORS 71.2010 (2) (u) (A).
In this case, Plaintiffs admit that they executed the Note
and Deed of Trust when they took out a loan from CitiMortgage.
There is no dispute that the Deed of Trust entitles the
beneficiary to foreclose on the property in the event of default.
The record establishes that Plaintiffs defaulted on the Note by
failing to pay the sums due.
Although the Deed of Trust purports to name MERS as the
beneficiary, CitiMortgage is the party entitled to collect
payment and is therefore the beneficiary.
7 - ORDER
The record shows that
CitiMortgage is in possession of the Note, which is endorsed in
blank.
CitiMortgage is•therefore the holder of the Note under
ORS 71.2010(2) (u) (A).
As the Oregon Supreme Court made clear in
Brandruo, there is no obligation for Defendants to record
assignments of the Deed of Trust that occur by operation of law.
Any previous unrecorded assignments of the Note do not,
therefore, affect either the validity of the Note and Deed of
Trust or CitiMortgage's rights as the holder and beneficiary of
the Note.
I conclude that the Note and Deed of Trust are
~alid.
I
conclude that, as holder and beneficiary of the Note,
CitiMortgage is entitled to enforce both the Note and the Deed of
Trust.
As Plaintiffs have defaulted on their obligations under
the Note, I conclude that CitiMortgage's right to enforce
includes the right to foreclose.
judgment on this claim is GRANTED.
Defendants' motion for summary
Judgment is for Defendants.
C. Plaintiff's Claim for Injunctive Relief
Plaintiffs seek an injunction to prevent Defendants from
foreclosing on the property.
As I have concluded that
CitiMortgage is the holder of the Note and entitled to enforce
it, injunctive relief is not appropriate.
summary judgment on this claim is GRANTED.
Defendants' motion for
Judgment is for
Defendants.
D. Plaintiff's Claim for Quiet Title
Plaintiffs request a determination that Defendants' claims
and encumbrances on the property are void.
In order to prevail on a claim for quiet title, plaintiffs
"must prove that they have a substantial interest in, or claim
8 - ORDER
to, the disputed property and that their title is superior to
that of defendants."
Coussens v. Stevens, 200 Or. App. 165, 171
(2005) .
In this case, Plaintiffs admit that they executed the Note
and Deed of Trust.
As discussed above, CitiMortgage is the
holder of the Note and is entitled to enforce it.
The record
demonstrates that Plaintiffs have defaulted on the Note and there
is nothing to suggest that they have cured the default or that
they are able to do so.
There is nothing in the record to
support the contention that Defendants' interest in the property
is, or should be, void.
Nor is there anything in the record
which would support a claim that Plaintiffs possess an interest
in, or claim to, the property superior to that of Defendants.
Defendants' motion for summary judgment on this claim is GRANTED.
Judgment on this claim is for Defendants.
E.
Cit~ortgage's
Counterclaim for Foreclosure
CitiMortgage counterclaims for a judgment of judicial
foreclosure on the property.
The plain terms of the Note and Deed of Trust permit
foreclosure in the event of default.
As discussed above,
CitiMortgage, as holder of the Note, is entitled to enforce both
the Note and Deed of Trust.
The record establishes that
Plaintiffs were in default on the Note when they declared
bankruptcy in 2010.
The Bankruptcy Court granted CitiMortgage
relief from the bankruptcy stay in order for them to pursue the
foreclosure of the subject property.
The record demonstrates
that Plaintiffs have not cured the default and there is nothing
in the record to suggest that they are able to cure.
9 - ORDER
CitiMortgage is therefore entitled to a judgment of
foreclosure.
CitiMortgage is directed to submit a proposed
judgment within 30 days of entry of this order.
Plaintiffs shall
file any objections to the form of the judgment within 20 days of
service of the proposed judgment.
III. Plaintiffs Use of "Consultants"
Although they were not represented by counsel, Plaintiffs
have hired at least two "consultants" to assis~ them in this
case, particularly in drafting their complaints.
It does not
appear from the record that either consultant is licensed to
practice law in Oregon.
Plaintiffs' benefit.
Nor have their efforts been to
Both the original complaint and the PAC are
riddled with factual errors, internal inconsistencies, and
irrelevant, confused assertions.
The volume and sloppiness of
Plaintiffs' filings greatly extended the time necessary decipher
what is, at its core, a fairly simple and straightforward case.
I do not consider Plaintiffs' use of "consultants" in
reaching my ruling in this case.
Indeed, it would be unfair to
place the blame entirely on Plaintiffs.
It is often the case
that when people like Plaintiffs are placed in desperate
circumstances, someone will appear to attempt to cheat them out
of what they have.
This is not the first case where I have
encouotered "consultants," and I do not expect that it will be
the last, although I hope this case will serve as a warning that
hiring such companies is a wasteful, expensive, and pointless
endeavor.
Conclusion
For the reasons set forth above, Plaintiffs' motion to amend
10 - ORDER
the complaint is DENIED.
judgment are GRANTED.
Defendants' motions for summary
Defendant Citimortgage is directed to
submit a proposed judgment within 30 days of entry of this order.
Plaintiffs shall have 20 days to object to the form of the
judgment.
IT IS SO ORDERED.
DATED this
~;f day of August, 2013.
Owen M. Panner
United States District Judge
11 - ORDER
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