Editor: David Reiss
Brooklyn Law School

December 20, 2012

9th Circuit Affirms Dismissal of Homeowner’s Challenges to Non-judicial Foreclosure in Arizona

By Joseph Kelly

In Buchna v. Bank of Am., NA, 478 F. App’x 425 (9th Cir. 2012), the court affirmed the District Court of Arizona’s dismissal of plaintiffs/homeowners Mariusz and Julita Buchna’s action against Bank of America, MERS, and Bank of New York Melon Corp. Amongst other allegations challenging the propriety of the foreclosure proceedings, the court found the Buchnas had failed to state a claim on four different grounds.

First, the Buchnas claimed that splitting the note and deed of trust rendered the non-judicial foreclosure provisions in the deed unenforceable. The court found this argument failed to state a claim and noted it was “conclusory speculation” that the parties exercising power under a deed of trust were not the note holders or agents of the holder. Particularly as the plaintiffs did not dispute the default nor the trustee’s right to foreclose.

Second, the court rejected the Buchnas claim that the beneficiary was required to prove ownership of the note before commencing a non-judicial foreclosure for the same reasons.

Third, and most interestingly, the Buchna’s argued defendants were not permitted to enforce the power of sale provision in the deed because they were not “persons entitled to enforce a negotiable instrument” under Sec. 47-3301 of Arizona’s UCC. The court again found this argument failed to state a claim as Arizona law does not require compliance with the UCC before a trustee commences a non-judicial foreclosure.

Fourth, the court found the Buchna’s argument that MERS was not a valid beneficiary also failed to state a claim.

Finally, the court affirmed the district court on all other grounds, and affirmed the implicit denial for the Buchnas to amend their complaint, as “amendment would have been futile.”

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