Editor: David Reiss
Brooklyn Law School

April 7, 2013

District Court for the Northern District of Illinois Finds No Wrongdoing in MERS’s Assignment & Deutsche Bank’s Ensuing Foreclosure

By Joseph Kelly

In Long v. One West Bank, No. 11 C 703 (N.D. Ill. 2011), the District Court for the Northern District of Illinois denied OneWest Bank, MERS & Deutsche Bank’s motion to dismiss in part as moot, and granted the motion in part. Additionally, the court denied defendant Albertelli’s motion to dismiss as moot.

Plaintiff Tammy Jo Long entered into a residential mortgage loan with Taylor, Bean, & Whitaker (TBW) in 2005 for property located in Georgia. Plaintiff Castle Home Builder’s, Inc. allegedly invested in improving the property and maintained a claim against the property. After numerous requests to identify the current lawful owner and holder of the Note and Security Deed, Ms. Long stopped making payments. While Deutsche represented that it was the owner in a non-judicial foreclosure proceeding, plaintiffs contended that TBW’s bankruptcy had precluded any transfer of interest in the Note to Deutsche. Plaintiffs also contended that Deutsche used a fabricated copy of the Note and Assignment to support their foreclosure action.

Plaintiffs’ amended complaint alleged six separate counts:

  1. Violations of the Fair Dept Collection Practices Act (FDCPA)
  2. Violation of the Illinois Uniform Deceptive Trade Practices Act
  3. Violations of the Illinois Consumer Fraud and Deceptive Business Practices Act (Fraud Act)
  4. Violations of the Fair Credit Reporting Act
  5. Wrongful foreclosure
  6. Quiet title claim

Plaintiffs consented to voluntarily dismiss all claims against defendant Albertelli. Plaintiffs also consented to dismissing counts 2, 4, and 6 against OneWest Bank, MERS and Deutsche Bank without prejudice.

The court discussed TBW’s bankruptcy, and the validity of the copy of the Note and Assignment of Deed. First, the court concluded TBW’s bankruptcy was irrelevant to the assignment since MERS was the grantee under the Security Deed. Second, the court rejected the claim that a copy of the note was insufficient, stating “[t]here is no requirement…that an original promissory note be produced in order to execute a valid assignment, and Plaintiffs have failed to point to any law providing such a requirement.” Third, the court rejected claims that the assignment violated the Pooling and Servicing Agreement (PSA), concluding plaintiffs lacked standing to assert the claims as they were not parties to the PSA nor had they cited any precedent holding that an assignment is invalid because it conflicts with the PSA.

Wrongful foreclosure

The court concluded that plaintiffs had not “alleged any facts that would plausibility [sic] suggest that Defendants engaged in a wrongful foreclosure action or that Plaintiffs were damaged by any unlawful conduct by Defendants relating to the foreclosure.” Therefore, they granted defendant’s motion to dismiss the wrongful foreclosure claim.

FDCPA Claims

The court concluded that the FDCPA was inapplicable in this case because the debt related to commercial debt rather than consumer debt. Additionally, the court noted plaintiffs “failed to point to precedent indicating that a non-judicial foreclosure is considered debt collection activity protected by the FDCPA.” Therefore, they granted defendant’s motion to dismiss the FDCPA claims.

Fraud Act

The court also rejected plaintiffs’ fraud claims, concluding that “Deutsche was assigned the power of sale and there [were] no allegations that plausibly suggest that the foreclosure sale was unlawful.” Accordingly, the court concluded plaintiffs failed to meet FRCP Rule 9(b) particularity requirements.

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