Mcclure v. U.S. Bank, National Association, Etc., et al

Motion for Summary Judgment . Oral Argument requested.

D. Or.September 13, 2016

Page 1 - DEFENDANT U.S. BANK, NATIONAL ASSOCIATION, AS TRUSTEE’S MOTION FOR SUMMARY JUDGMENT 88194722.2 0052161-03853 Amy Edwards, OSB No. 012492 Crystal S. Chase, OSB No. 093104 amy.edwards@stoel.com crystal.chase@stoel.com STOEL RIVES LLP 760 SW Ninth Avenue, Suite 3000 Portland, OR 97205 Telephone: (503) 224-3380 Facsimile: (503) 220-2480 Attorneys for Defendant U.S. Bank, National Association, as Trustee, in trust for registered holders of First Franklin Mortgage Loan Trust, Mortgage Loan Asset-Backed Certificates, Series 2007-FF2 UNITED STATES DISTRICT COURT DISTRICT OF OREGON EUGENE DIVISION CONNIE MCCLURE, Plaintiff, v. U.S. BANK, NATIONAL ASSOCIATION, as Trustee, in trust for registered holders of FIRST FRANKLIN MORTGAGE LOAN TRUST, MORTGAGE LOAN ASSET- BACKED CERTIFICATES, SERIES 2007- FF2, and NORTHWEST TRUSTEE SERVICES, INC., Defendants. Case No.: 6:16-cv-01516-MC DEFENDANT U.S. BANK, NATIONAL ASSOCIATION, AS TRUSTEE, IN TRUST FOR REGISTERED HOLDERS OF FIRST FRANKLIN MORTGAGE LOAN TRUST, MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2007 FF2’S MOTION FOR SUMMARY JUDGMENT (Telephonic Oral Argument Requested) Case 6:16-cv-01516-MC Document 24 Filed 09/13/16 Page 1 of 11 Page 2 - DEFENDANT U.S. BANK, NATIONAL ASSOCIATION, AS TRUSTEE’S MOTION FOR SUMMARY JUDGMENT 88194722.2 0052161-03853 LR 7-1(a) COMPLIANCE Pursuant to Local Rule 7-1(a), counsel for Defendant U.S. Bank, National Association, as Trustee, in trust for registered holders of First Franklin Mortgage Loan Trust, Mortgage Loan Asset-Backed Certificates, Series 2007 FF2 (the “Trust”) states that she conferred in good faith with counsel for Plaintiff Connie McClure (“Plaintiff” or “Borrower”) via telephone on September 13, 2016 regarding each basis for this motion, but the parties were unable to resolve the dispute. MOTION Pursuant to Federal Rule of Civil Procedure 56, the Trust moves for an order of summary judgment as to each of Plaintiff’s three claims for declaratory relief. In support of this motion for summary judgment, the Trust relies on the accompanying memorandum, the Declaration of L.C. Birkinshaw filed in support of the Trust’s Opposition to Plaintiff’s Motion for Preliminary Injunction (“Birkinshaw Decl.”), and the pleadings and papers on file. MEMORANDUM I. INTRODUCTION Borrower’s Complaint asserts two theories of relief within three declaratory judgment claims. First, Borrower asserts that the non-judicial foreclosure sale is invalid because the foreclosure trustee was not properly appointed to conduct the sale. But the undisputed facts establish that the Trust’s agent appointed Defendant Northwest Trustee Services, Inc. as successor trustee pursuant to a recorded Limited Power of Attorney granting it that authority. Accordingly, Borrower’s First and Second Claims for relief fail as a matter of law. Second, Borrower’s Complaint asserts that the challenged non-judicial foreclosure is barred by a six-year statute of limitations found in Or. Rev. Stat. § 12.080. But reading Or. Rev. Stat. § 12.080 as Case 6:16-cv-01516-MC Document 24 Filed 09/13/16 Page 2 of 11 Page 3 - DEFENDANT U.S. BANK, NATIONAL ASSOCIATION, AS TRUSTEE’S MOTION FOR SUMMARY JUDGMENT 88194722.2 0052161-03853 setting the applicable limitations period for a non-judicial foreclosure is inconsistent with the text of the applicable limitations period (Or. Rev. Stat. § 88.110), controlling Oregon case law, applicable statutory maxims, and the Oregon Trust Deed Act. Accordingly, the Court should decline the invitation to do so, and instead hold that the Trust is entitled to summary judgment on Borrower’s Third Claim for Relief because the non-judicial foreclosure is not barred by a statute of limitations. II. STATEMENT OF FACTS A. The Loan. On or about November 29, 2006, Borrower executed and delivered to First Franklin a Division of National City Bank (“First Franklin”) a note in the amount of $200,000 (“Note”). (Birkinshaw Decl. ¶ 2 & Ex. 1.) The Note was endorsed from First Franklin to First Franklin Financial Corporation, and then endorsed in blank by First Franklin Financial Corporation. (Id. ¶ 7 & Ex. 1 at 6.) The Trust is in possession of the Note-endorsed in blank. (Id. ¶ 7.)1 As security for the Note, Borrower executed and delivered a deed of trust (“Trust Deed”) for residential property commonly known as 2844 NE Waller Drive, Bend, Oregon 97701 (“Property”). (Id. ¶ 3.) That Trust Deed was duly recorded in the Deschutes County real property records. (Id.) It was subsequently assigned to the Trust and the assignment was duly recorded in the real property records of Deschutes County, Oregon. (Dkt. #10-1 at 20 (Ambrose Decl. Ex. 5) (“2009 Assignment”).) Collectively, the Note and Trust Deed are referred to as the “Loan.” Select Portfolio Servicing, Inc. (“SPS”) has serviced the Loan since December 1, 2012. (Birkinshaw Decl. ¶ 1.) 1 Counsel for the Trust made the Note available for inspection by counsel for Borrower at the preliminary injunction hearing and can make it available for the Court for inspection upon request. Case 6:16-cv-01516-MC Document 24 Filed 09/13/16 Page 3 of 11 Page 4 - DEFENDANT U.S. BANK, NATIONAL ASSOCIATION, AS TRUSTEE’S MOTION FOR SUMMARY JUDGMENT 88194722.2 0052161-03853 B. The Trust Initiates This Non-Judicial Foreclosure Sale. Borrower defaulted on the Loan by failing to make monthly payments when due beginning February 1, 2009. (Ambrose Decl. Ex. 9 at 1.) On August 19, 2014, SPS, on behalf of the Trust, executed an Appointment of Successor Trustee naming Northwest Trustee Services, Inc. (“Northwest Trustee”) as successor trustee under the Trust Deed (“2014 Appointment”). (Birkinshaw Decl. ¶ 6 & Ex. 5.) At that time, SPS had been appointed to act as agent on behalf of the Trust pursuant to a Limited Power of Attorney that was duly recorded in the real property records of Salt Lake County, Utah. (Id. ¶ 4 & Ex. 3 (Limited Power of Attorney executed March 21, 2014 and recorded June 2, 2014).)2 Also at that time, the Trust was in possession of the Note endorsed in blank. (Id. ¶ 7.) Subsequently, on March 29, 2016, Northwest Trustee recorded a Notice of Default and Election to Sell the Property (“Notice of Default”), setting the sale for July 28, 2016. Borrower subsequently filed this action in state court, which the Trust subsequently removed to federal court. (Dkt. #1.) The Trust postponed the foreclosure sale to August 30, 2016. (Birkinshaw Decl. ¶ 8.) Subsequently, on Plaintiff’s motion for preliminary injunction, this Court issued an order enjoining the foreclosure sale for at least 90 days to allow the Court to file summary judgment briefing. (Dkt. #23.) III. ARGUMENT A. Summary Judgment Standard. Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 2 Although Borrower repeatedly refers to the 2009 Assignment as being made to “U.S. Bank,” the assignment was made to the Trust, as reflected on the face of the 2009 Assignment- U.S. Bank was merely the then-trustee for the Trust. Case 6:16-cv-01516-MC Document 24 Filed 09/13/16 Page 4 of 11 Page 5 - DEFENDANT U.S. BANK, NATIONAL ASSOCIATION, AS TRUSTEE’S MOTION FOR SUMMARY JUDGMENT 88194722.2 0052161-03853 56(a). No dispute exists “‘where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party.’” Hanon v. Dataproducts Corp., 976 F.2d 497, 500 (9th Cir. 1992) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). To defeat a motion for summary judgment, the non-moving party must “‘set forth specific facts’ that show a genuine issue for trial.” Leisek v. Brightwood Corp., 278 F.3d 895, 898 (9th Cir. 2002) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986)). If the evidence favoring the non-moving party “is merely colorable, or is not significantly probative, summary judgment may be granted.” Anderson v. Liberty Lobby, 477 U.S. 242, 249-50 (1986) (citations omitted). B. The Trust Is Entitled to Summary Judgment on Borrower’s Declaratory Relief Claims That Are Premised on a Purported Invalid Appointment (First and Second Claims for Relief) Because the Undisputed Facts Reveal That the Appointment Was Proper. Borrower first challenges the foreclosure sale by alleging that Northwest Trustee has not been properly appointed trustee. (Compl. ¶¶ 15-18 (First Claim for Relief), ¶¶ 19-22 (Second Claim for Relief).) Essentially, Borrower alleges that the 2014 Appointment is invalid because U.S. Bank had no authority to make that appointment. (Id. ¶ 16.) Borrower cannot prevail on this theory because the documents make clear that the Trust holds the right to enforce both the Note and Trust Deed. The Note was endorsed in blank and the Trust is in possession of the Note. (Birkinshaw Decl. ¶¶ 2, 7 & Ex. 1.) Therefore, the Trust is the holder of the Note with standing to initiate and complete the challenged non-judicial foreclosure. Or. Rev. Stat. § 71.2010(2)(e) (“bearer” means “a person in possession of a negotiable instrument”); Or. Rev. Stat. § 73.0205(2) (“When Case 6:16-cv-01516-MC Document 24 Filed 09/13/16 Page 5 of 11 Page 6 - DEFENDANT U.S. BANK, NATIONAL ASSOCIATION, AS TRUSTEE’S MOTION FOR SUMMARY JUDGMENT 88194722.2 0052161-03853 endorsed in blank, an instrument becomes payable to bearer and may be negotiated by transfer of possession alone . . . .”); Or. Rev. Stat. § 73.0301. As the holder of the Note endorsed in blank, the Trust is also entitled to enforce the Trust Deed. West v. White, 307 Or. 296, 300, 768 P.2d 383 (1988) (“Assignment of a note carries with it a security interest because the security is merely an incident to the debt.”). It is “well-settled” under Oregon law that a party who holds a note endorsed in blank has the right to enforce the note and that the successor to the original lender becomes the beneficiary of the trust deed. Nationstar Mortgage, LLC v. Peper, 278 Or. App. 594, 596, 598, __ P.3d __ (2016). An Assignment of Trust Deed has also been recorded. (Ambrose Decl. Ex. 5 (2009 Assignment).) Lastly, SPS, which executed the 2014 Appointment, was acting on behalf of the Trust pursuant to a recorded Limited Power of Attorney. (Birkinshaw Decl. ¶ 4 & Ex. 3.) These undisputed facts defeat Borrower’s first and second claims for relief. C. The Trust Is Entitled to Summary Judgment on Borrower’s Statute of Limitations Claim (Third Claim for Relief) Because the Applicable Limitations Period Has Not Expired. Borrower also argues that the non-judicial foreclosure is barred by Or. Rev. Stat. § 12.080, which Borrower contends contains the applicable six-year statute of limitations. But, as explained below, the applicable limitations period is actually the 10-year statute of limitations found in Or. Rev. Stat. § 88.110. Because it is undisputed that the non-judicial foreclosure at issue is not outside that statute of limitations, the Trust is entitled to summary judgment on Borrower’s third claim for relief. Case 6:16-cv-01516-MC Document 24 Filed 09/13/16 Page 6 of 11 Page 7 - DEFENDANT U.S. BANK, NATIONAL ASSOCIATION, AS TRUSTEE’S MOTION FOR SUMMARY JUDGMENT 88194722.2 0052161-03853 Or. Rev. Stat. § 88.110, found within the chapter governing foreclosure of mortgages, provides, in relevant part: ORS 88.110. Expiration of real property mortgage lien, foreclosure suit barred. Except as provided in ORS 88.120, no mortgage upon real property shall be a lien upon such property after the expiration of 10 years from the later of the date of the maturity of the mortgage debt, the expiration of the term of the mortgage debt or the date to which the payment thereof has been extended by agreement of record; and after such 10 years the mortgage shall be conclusively presumed paid and discharged, and no suit shall be maintainable for its foreclosure. (Emphasis added.) On its face, Or. Rev. Stat. § 88.110 provides the applicable limitations period for non- judicial foreclosure of a trust deed on real property. In interpreting an Oregon statute, the court “begin[s] with the text and context of the statute, which are the best indications of the legislature’s intent.” State v. Walker, 356 Or. 4, 13, 333 P.3d 316 (2014). The plain reading of the statutory text is also supported by the enactment history of its predecessor statute. State v. Williams, 232 Or. App. 303, 306, 222 P.3d 31 (2009) (any doubt regarding meaning of statute is “conclusively dispelled by the history behind the enactment of the statute”); Warburton v. Harney County, 174 Or. App. 322, 25 P.3d 978 (2001) (“general purpose statement may serve as a contextual guide for the meaning of a particular statute”). When the predecessor statute to Or. Rev. Stat. § 88.110 was originally enacted in 1913, the legislature identified the statutory purpose, in part, as “[t]o limit the time within which suit may be maintained for the foreclosure of mortgages on real estate.” Gen. L. of Or. 1913, ch. 304 (introductory statement). That statement reflects the legislature’s clear intent to create a statute of limitations specific to the foreclosure of real property mortgages. In sum, the text and context establish that Or. Rev. Stat. § 88.110 is the controlling statute here. Case 6:16-cv-01516-MC Document 24 Filed 09/13/16 Page 7 of 11 Page 8 - DEFENDANT U.S. BANK, NATIONAL ASSOCIATION, AS TRUSTEE’S MOTION FOR SUMMARY JUDGMENT 88194722.2 0052161-03853 Borrower’s argument is also foreclosed by controlling case law from the Oregon Supreme Court. In Security State Bank v. Luebke, 303 Or. 418, 421, 303 P.3d 418 (1987), the Court expressly held that Or. Rev. Stat. § 88.110 provides the applicable statute of limitations for these types of proceedings: By enacting ORS 88.110, the legislature created a conclusive presumption, which, in turn, creates a 10-year statute of limitations (“* * * and no suit shall be maintainable for its foreclosure.”) (Emphasis added; ellipsis in original.) Other Oregon case law is in accord. Zaninetta v. McCulloch, 130 Or. 396, 280 P. 328 (1929) (applying predecessor statute to Or. Rev. Stat. § 88.110 to conclude that first position mortgage was no longer enforceable). Nor do general maxims of Oregon statutory construction support the conclusion that Or. Rev. Stat. § 12.080(1)-which applies generally to “action[s] upon a contract or liability, express or implied”-should govern here over the plain and express terms of Or. Rev. Stat. § 88.110. A well-established maxim of Oregon statutory construction is that the more specific statute controls over the general. E.g., State ex rel. Juvenile Dep’t v. M.T., 321 Or. 419, 426, 899 P.2d 1192 (1995) (“When a general statute and a specific statute both purport to control an area of law, this court considers the specific statute to take precedence over an inconsistent general statute related to the same subject.”). Or. Rev. Stat. § 12.010, the introductory provision to Or. Rev. Stat. chapter 12, provides that “[a]ctions shall only be commenced within the periods prescribed in this chapter, after the cause of action shall have accrued, except where a different limitation is prescribed by statute.” Here, by its terms, Or. Rev. Stat. § 88.110 provides “a different limitation” period. Applying the general statutory maxim and Or. Rev. Stat. § 12.010, the specific dictates of Or. Rev. Stat. § 88.110 control over the more general dictates of Or. Rev. Stat. § 12.080. Case 6:16-cv-01516-MC Document 24 Filed 09/13/16 Page 8 of 11 Page 9 - DEFENDANT U.S. BANK, NATIONAL ASSOCIATION, AS TRUSTEE’S MOTION FOR SUMMARY JUDGMENT 88194722.2 0052161-03853 Kambury v. DaimlerChrysler Corp., 334 Or. 367, 374, 50 P.3d 1163 (2002), is also illustrative of this point. There, the Oregon Supreme Court was asked to determine “which limitations period applies in a civil action seeking damages for the death of a person killed by a defective product.” Id. at 370. The first possible statute of limitations concerned wrongful death actions generally and the second addressed product liability civil actions involving death, injury, or property damage. Id. at 371 (Or. Rev. Stat. §§ 30.020 and 39.920). The Oregon Supreme Court concluded that the latter statute of limitations governed the plaintiff’s claim for death from a product default because “the product liability statute of limitations is the more specific statute and must control over the more general wrongful death statute of limitations.” Id. The principle from Kambury applies with equal force here: as the more specific statute of limitations, Or. Rev. Stat. § 88.110 controls over the more general Or. Rev. Stat. § 12.080. Applying Or. Rev. Stat. § 88.110, rather than Or. Rev. Stat. § 12.080, to non-judicial foreclosures also better harmonizes with the Oregon Trust Deed Act (“OTDA”). Since 1959, the OTDA has permitted foreclosure of a trust deed by advertisement and sale (i.e., a non-judicial foreclosure). See Or. Laws 1959, ch. 625, § 2 (original provision); Or. Rev. Stat. § 86.752 (current provision). Accordingly, under the OTDA, a non-judicial foreclosure may be commenced and completed without any institution of an “action.” See Burns v. White Swan Mining Co., 35 Or. 305, 312, 57 P. 637 (1899) (“In Oregon an action is deemed commenced, within the meaning of the statute of limitations, when the complaint is filed and the summons is served on the defendant.” (internal citation and quotation marks omitted)). Because Or. Rev. Stat. § 12.080 applies only as a limitation to commencement of to “action[s],” it logically has no application in the context of a non-judicial foreclosure: In such circumstances, there is no “action” to “commence” because there is no complaint to file and no summons to serve. See Or. Case 6:16-cv-01516-MC Document 24 Filed 09/13/16 Page 9 of 11 Page 10 - DEFENDANT U.S. BANK, NATIONAL ASSOCIATION, AS TRUSTEE’S MOTION FOR SUMMARY JUDGMENT 88194722.2 0052161-03853 Rev. Stat. § 12.010 (“Actions shall only be commenced within the periods prescribed in this chapter . . . .” (emphasis added)); Or. Rev. Stat. § 12.020 (“[F]or the purpose of determining whether an action has been commenced within the time limit[], an action shall be deemed commenced as to each defendant, when the complaint is filed, and the summons served on the defendant . . . .”).3 In contrast, reading Or. Rev. Stat. § 88.110 as setting the applicable limitations on a non-judicial foreclosure is consistent with the OTDA because Or. Rev. Stat. § 88.110 addresses not only the time for maintaining a “suit” (i.e., commencing a judicial foreclosure), but also the duration of time for which a mortgage remains valid (i.e., through which a non-judicial foreclosure may be conducted). In sum, as a matter of law, the statute of limitations in Or. Rev. Stat. § 88.110 is the applicable limitation period for initiating a non-judicial foreclosure proceeding on a trust deed. Because it is undisputed that such statute of limitations has not expired-indeed, the Trust initiated foreclosure before 10 years after Borrower signed the Note-Plaintiff’s Third Claim for Relief fails as a matter of law and the Trust is entitled to summary judgment. IV. CONCLUSION For all of the reasons stated above, the Trust respectfully requests the Court grant its motion for summary judgment. DATED: September 13, 2016. STOEL RIVES LLP s/ Crystal S. Chase AMY EDWARDS, OSB No. 012492 CRYSTAL S. CHASE, OSB No. 093104 Telephone: (503) 224-3380 Attorneys for Defendant U.S. Bank, National Association, as Trustee 3 This case does not present the issue of what the applicable statute of limitations would be for a judicial foreclosure action. Case 6:16-cv-01516-MC Document 24 Filed 09/13/16 Page 10 of 11 Page 1 - CERTIFICATE OF SERVICE 88194722.2 0052161-03853 CERTIFICATE OF SERVICE I hereby certify that I served the foregoing DEFENDANT U.S. BANK, NATIONAL ASSOCIATION, AS TRUSTEE, IN TRUST FOR REGISTERED HOLDERS OF FIRST FRANKLIN MORTGAGE TRUST LOAN, MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2007 FF2’S MOTION FOR SUMMARY JUDGMENT on the following named person(s) on the date indicated below by  mailing with postage prepaid  email  notice of electronic filing using the CM/ECF system to said person(s) a true copy thereof, contained in a sealed envelope, addressed to said person(s) at his or her last-known address(es) indicated below. David R. Ambrose Cristopher R. Ambrose Stephen Pettey AMBROSE LAW GROUP LLC 200 Buddha Building 312 NW 10th Ave. Portland, OR 97209-3121 drambrose@ambroselaw.com sbpettey@ambroselaw.com crambrose@ambroselaw.com Attorneys for Plaintiff Connie McClure John M. Thomas RCO Legal, P.C. 511 SW 10th Ave., Suite 400 Portland, OR 97205 jthomas@rcolegal.com Attorney for Defendant Northwest Trustee Services, Inc. DATED: September 13, 2016. STOEL RIVES LLP s/ Crystal S. Chase CRYSTAL S. CHASE, OSB No. 093104 Telephone: (503) 224-3380 Attorneys for Defendant U.S. Bank, National Association, as Trustee, in trust for registered holders of First Franklin Mortgage Loan Trust, Mortgage Loan Asset-Backed Certificates, Series 2007-FF2 Case 6:16-cv-01516-MC Document 24 Filed 09/13/16 Page 11 of 11