Tag Archives: Downstream Litigation

Tennessee Court Grants Defendant’s Motion for Summary Judgment as Wells Fargo Had Ownership Interest in the Note & Deed

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The court in deciding McKee v. Am. Brokers Conduit, 2013 U.S. Dist. LEXIS 152657 (W.D. Tenn. 2013) granted Wells Fargo’s motion for summary judgment.

Plaintiffs claimed that (1) Wells Fargo didn’t have lawful ownership or a security interest in the property because the note and deed of trust were unlawfully sold; (2) Leak was not authorized to execute the assignment from MERS to Wells Fargo; (3) Wells Fargo could not show possession or ownership of the original note or deed and therefore had an imperfect security interest; and (4) ABC had no authority to execute the assignment because it was in bankruptcy proceedings at the time of the assignment.

The court found the plaintiff’s line of reasoning factually incorrect. The court noted that the note was made payable to Wells Fargo and the deed was assigned to Wells Fargo. Both the endorsed note and the assignment agreement were recorded. Furthermore, counsel for Wells Fargo had the original note in his possession. Finally, both the note and the deed allowed for such an assignment. Plaintiffs had presented the court with no evidence to rebut these facts. As such, the plaintiffs had not offered enough to challenge Wells Fargo’s enforcement of the note and the court granted summary judgment.

Michigan Court Finds Plaintiff’s Claim that Foreclosure Proceedings Violated Mich. Comp. Laws §§ 600.3204(1) and (3) Unpersuasive

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The court in deciding Anderson v. Bank of Am., N.A., 2013 U.S. Dist. LEXIS 152765 (E.D. Mich. Oct. 24, 2013) dismissed plaintiff’s claims that foreclosure violated Michigan state law.

Plaintiff sought a declaratory judgment that foreclosure proceedings violated Mich. Comp. Laws §§ 600.3204(1) and (3). The basis of plaintiff’s claim was a challenge to the assignment of the mortgage from MERS to defendant. Plaintiff alleged that this assignment was invalid. Ultimately, the court found this argument has no merit.

Plaintiff contended that defendant did not have standing to foreclose on the property because the assignment of the mortgage from MERS to defendant was invalid. Plaintiff argued that TBW was no longer in business at the time MERS assigned the mortgage to the defendant. Therefore, as the plaintiff reasoned, the assignment was invalid. Additionally, plaintiff complained that the assignment was “robo-signed” and that it was insufficient to create a record chain of title.

The court concluded that the plaintiff was wrong. The court noted that the Michigan Supreme Court had made clear that, under Michigan law, a mortgage granted to MERS as nominee for lender and lender’s successors and assigns was a valid and assignable mortgage.

Washington Court Denied the Plaintiff’s Motion for Preliminary Injunction

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The court in deciding Cameron v. Acceptance Capital Mortg. Corp., 2013 U.S. Dist. LEXIS 151134 (W.D. Wash. 2013) denied the plaintiff’s motion for preliminary injunction.

Nearly all of plaintiffs’ claims turn on a single question: whether, under Washington law, Flagstar had legal authority to appoint NWTS as successor trustee. Plaintiffs first asserted that Flagstar could not have become a beneficiary with the power to appoint a successor trustee. Plaintiff reasoned that under Washington state law, MERS was an unlawful initial beneficiary and thus lacked the power to assign its interest to Flagstar.

In their reply brief plaintiffs raised an additional claim alleging that even if Flagstar held the note, it had sold it to Fannie Mae before appointing NWTS as successor trustee, thus it shed its authority to make this appointment when it did so. Ultimately, the Court finds both arguments unpersuasive.

First, the court found that this case is distinguishable from the cited Washington state case law, as Flagstar derived its authority to enforce the note from its position as the note holder, not from its position as assigned beneficiary. The court found plaintiffs’ second allegation, were raised improperly only upon reply, was similarly unconvincing as it rests on a misunderstanding of the law.

California Court Dismisses Plaintiff’s Action Alleging Violations of RESPA, HOEPA, UCL & Negligent Misrepresentation

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The court in deciding Monreal v. Deutsche Bank Nat’l Trust Co., 2013 U.S. Dist. LEXIS 151731 (S.D. Cal. Oct. 22, 2013) granted the defendants’ motion to dismiss plaintiff’s claims arising under federal law with prejudice, and declined to exercise supplemental jurisdiction over the plaintiff’s remaining state-law claims. Therefore, the remaining state-law claims are dismissed without prejudice.

Plaintiff alleged four causes of action against Deutsche Bank, GMAC, ETS, and MERS, including: (1) violation of the UCL; (2) negligent misrepresentation; (3) violation of RESPA; and (4) violation of HOEPA. In total plaintiff alleged two claims arising under federal law, RESPA and HOEPA, and two claims arising under state law, negligent misrepresentation and violation of the UCL.

In deciding the matter at hand, the court decided that their subject matter jurisdiction was premised on federal question jurisdiction over the claims arising under federal law, and supplemental jurisdiction over the pendent state-law claims.

Accordingly, because the court found that plaintiff failed to state a viable cause of action under either RESPA or HOEPA, the court dismissed the federal causes of action with prejudice, and declined to exercise supplemental jurisdiction over the remaining state-law claims.

As a result, the Court did not address the merits of the plaintiffs’ state-law causes of action.

Texas Court Finds Plaintiff’s “Split-the-Note” Theory Without Merit

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The court in deciding Morlock, L.L.C. v. JPMorgan Chase Bank, N.A., 2013 U.S. Dist. LEXIS 153386 (S.D. Tex. Oct. 25, 2013) ultimately dismissed plaintiff’s bifurcation theory based complaint.

Plaintiff alleged that the deed of trust had been “executed and delivered . . . to secure MERS” and that it “was allegedly assigned to defendant Chase by MERS.” Plaintiff further alleged, the deed of trust and assignment, although appearing valid on its face, was invalid and of no force or effect because, MERS was not the holder of the original note that was secured by the deed of trust.

Accordingly, the plaintiff argued, the assignment by MERS was not valid and defendant Chase was not the owner and holder of the note. Therefore, Chase had no right or authority to post the property for a trustee’s Sale.

Chase alleged that the plaintiff’s argument against the validity of the assignment came from the theory that the ‘bifurcation’ of the note and deed of trust renders the deed of trust invalid. Chase argued that Texas courts have rejected the “bifurcation theory” and that plaintiff had therefore failed to state a claim.

The court ultimately granted Chase’s Rule 12(b)(6) motion to dismiss and dismissed the action with prejudice.

California Court Denies Petition for Preliminary Injunction on Foreclosure Proceeding

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The court in deciding Vazquez v. Select Portfolio Servicing, 2013 U.S. Dist. LEXIS 152454 (N.D. Cal. Oct. 23, 2013) denied the plaintiff’s petition for a preliminary injunction prohibiting defendants from proceeding with the foreclosure sale of his home.

Plaintiff alleged that MERS claimed to have a legal and effective lien on the property, and that it owned the note and mortgage without providing the plaintiff proof of those claims. Plaintiff asserted that he had the right to inspect the original note and deed of trust, pursuant to the Truth in Lending Act, 15 U.S.C. §§ 1601–1667f, and U.C.C. § 3-501.

The plaintiff further alleged that he had proof that the foreclosing entities did not have standing to foreclose. Id. Plaintiff asserted that defendants did not hold any instrument, note, or deed that would entitle them to foreclose.

The court denied the plaintiff’s verified petition for injunction, concluding that plaintiff failed to establish a likelihood of success on the merits of any of his potential claims.

California Court Dismisses Plaintiff’s Claims of Federal and State Law Violation

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The court in deciding Brashears v. Bank of Am. Home Loans, 2013 U.S. Dist. LEXIS 152478 (C.D. Cal. Oct. 22, 2013) dismissed the plaintiff’s complaint, which alleged violations of federal and state law in connection with the issuance of a mortgage loan.

Plaintiff filed a complaint against defendants Bank of America, Countrywide Home Loans, The Bank of New York Mellon, ReconTrust Company, CWALT, Inc., and MERS alleging violations of federal and state law in connection with the issuance of a mortgage loan and the subsequent foreclosure of plaintiff’s property.

Plaintiff’s complaint alleged: (1) slander of title; (2) violation of California Penal Code § 470(b), (d); (3) violation of the California Civil Code §§ 2923.55, 2924.12 and 2924.17;  (4) intentional and negligent misrepresentation; (5) fraud, deceit and concealment; (6) violation of California Civil Code § 1572; (7) violation of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692g; (10) quiet title; (11) violation of California Business and Professions Code § 17200; (12) violation of the Unruh Civil Rights Act, California Civil Code § 51; and (13) declaratory relief.

After considering the arguments alleged by the plaintiff, the court ultimately granted the defendants’ motion to dismiss.