Robinson v. American Home Mortgage Servicing, Inc. (In re Mortgage Electronic Registration Systems, Inc.)

Summarized by Lovee Sarenas , Sklar Hirsh
11 years 8 months ago

Citation:

not available as of yet. cite as: Robinson v. Am. Home Mortg. Servicing, Inc. (In re Mortg. Elec. Registration Sys.), 2014 U.S. App. LEXIS 10934 (9th Cir. Ariz. June 12, 2014)

Tag(s):

Ruling:

With the exception of Count I, which sought damages under Arizona's false documents statute, the Ninth Circuit upheld the dismissal of all causes of action on appeal that were raised in the Plaintiffs' Consolidated Amended Complaint ("CAC"). The denial of Plaintiff's request for leave to amend the CAC was also affirmed. The district court's dismissal of Count I was reversed and remanded for further proceeding.

Procedural context:

This was a multijurisdictional litigation that involved plaintiffs who were homeowners in California, Arizona, Nevada, Oregon and South Carolina. The Defendants were Mortgage Electronic Registration Systems, Inc. (othewise known as MERS), its parent company, and ser\veral of its members and servicing agents who were involved in processing the notes and deeds of trust of the Plaintiffs or have had interests in said notes and deeds of trust. The case involved several consolidated lawsuits that challenged the formation and operation of the MERS System. The case was decided by a Multidistrict Litigation Court ("MLC") in Arizona. All other causes of action not involving the formation and operation of the MERS System were remanded back to their respective trial courts. On appeal to the Ninth Circuit was the MLC's dismissal of all of the Plaintiffs' causes of action relating to the formation and operation of the MERS System.

Facts:

At issue was the dismissal of the following: Count I: Arizona's false documents statute (Ariz. Rev. Stat. sec. 33-420) Count II: Wrongful Foreclosure Count III: Wrongful Foreclosure under Nevada's nonjudicial foreclosure statute (Nev. Rev. Stat. sec. 107.080) Count V: Aiding and Abetting Wrongful Foreclosure Under Arizona, California and Nevada Laws and Count VI: Aiding and Abetting Predatory Lending Under Arizona, California and Nevada Laws. With respect to Count I, the Ninth Circuit held that the Plaintiff's stated a claim under Ariz. Rev. Stat. sec. 33-420 on grounds that (i) the CAC set forth facts showing that the notices of trustee sale, notices of substitution of trustee and assignments of deed of trust were "robosigned" with forged signatures; (ii) the CAC was filed timely and within the applicable statute of limitation; (iii) defaulting homeowners are entitled to damages notwithstanding their default based on a "distinct and palpable injury" under the statute; and (iv) the action was pled with sufficient particularity as required by Ashcroft v. Iqbal, 556 U.S. 662 (2009), As for Counts II and III, the appellate court found that Arizona, California and Nevada laws against wrongful foreclosure require the Plaintiffs to demonstrate they tendered the amount of the secured indebtedness or were excused from tendering (i.e., not in default or have cured the default). Because the Plaintiffs failed to allege the lack of default, the claim failed. More interesting from the opinion is the Ninth Circuit's decision to avoid addressing the validity of "splitting" the note from the deed of trust which practice seems to go against the long-standing principle that "the note and the mortgage are inseparable; the former as essential, the latter as an incident" (Carpenter v. Longan, 83 U.S. 271 (1872)) despite recognizing the states' different treatment of the issue. The Ninth Circuit noted that the assignment of the note carries the mortgage with it while an assignment of the latter alone is a nullity. Because the Plaintiffs could not sustain a claim for wrongful foreclosure, Count V for aiding and abetting a wrongful foreclosure necessarily failed as well. Dismissal of Count V was affirmed. Lastly, dismissal of Count VI was affirmed because the appellate court found the claim to be outside the issue of the "formation and operation of the MERS System". The claim was remanded to the trial court level along with the other claims that did not involve the formation and operation of the MERS System.

Judge(s):

Circuit Judges A. Wallace Tashima, William A. Fletcher, and Jacqueline H. Nguyen.

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