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Thepvongsa v. Regional Trustee Services Corporation

United States District Court, Ninth Circuit

September 25, 2013

PHIMPHA THEPVONGSA, Plaintiff,
v.
REGIONAL TRUSTEE SERVICES CORPORATION, et al., Defendants.

ORDER GRANTING DEFENDANTS OCWEN, MERS, AND DEUTSCHE BANK'S MOTION FOR SUMMARY JUDGMENT

ROBERT S. LASNIK, District Judge.

This matter comes before the Court on "Ocwen, [] MERS and DBNTC as Trustee's Motion for Summary Judgment." Dkt. # 88. Plaintiff asserts that defendants Mortgage Electronic Services, Inc. ("MERS"), Deutsche Bank National Trust Company ("Deutsche Bank"), and Ocwen Loan Servicing, LLC ("Ocwen") violated various state and federal laws in connection with attempts to foreclose on plaintiff's property. Plaintiff seeks damages as well as declaratory and injunctive relief. Having reviewed the memoranda, declarations, and exhibits submitted by the parties[1] and having heard the arguments of counsel, the Court finds as follows:

BACKGROUND

On January 19, 2007, plaintiff obtained two loans from defendant New Century Mortgage Corporation ("New Century"). Only the larger of the two loans is at issue in this litigation. Plaintiff executed a deed of trust[2] in favor of New Century, identifying plaintiff as the borrower, New Century as the lender, Old Republic Title as the trustee, and MERS as the "beneficiary" and the lender's "nominee."

Although MERS remained the designated "beneficiary" of the debt instrument, defendant Deutsche Bank took actual, physical possession of the original promissory note on January 29, 2007. Plaintiff defaulted on the loan in mid-2008. On November 5, 2008, an "Assignment of Deed of Trust" was recorded, purporting to transfer whatever beneficial interest MERS had in the loan to Deutsche Bank National Trust Company "as Trustee for Morgan Stanley ABS Capital I Inc., MSAC 2007-NC4." Plaintiff alleges that this assignment was invalid for a number of reasons, including MERS' lack of any beneficial interest in the loan, the lack of authority on the part of the signer, and the impossibility that Deutsche Bank was acting as trustee for the identified fund.[3] On the same day of the purported transfer from MERS to Deutsche Bank, Deutsche Bank appointed Regional Trustee Services ("RTS") as the successor trustee. The day before the assignment and appointment were executed, RTS had issued a Notice of Default to plaintiff, representing itself as "Trustee and/or Agent for the Beneficiary."

RTS recorded a Notice of Trustee's Sale on December 5, 2008, which identified Deutsche Bank as the beneficiary and asserted that the outstanding debt was $16, 956.35, including $346.17 in "Beneficiary Advances." Plaintiff alleges that this first Notice of Trustee's Sale was invalid because Deutsche Bank was not properly assigned the beneficial interest in the loan, that RTS had not been properly appointed as successor trustee, that the "Beneficiary Advances" are unjustified fees, and that the pay-off amount was incorrect. The sale was discontinued and ultimately cancelled.

Effective November 16, 2009, the servicing of plaintiff's loan was transferred from Saxon Mortgage Services, Inc., to Ocwen. Ocwen notified plaintiff of the transfer within two days. At the time of the transfer, Saxon reported that it had accrued fees in the amount of $4, 749.77 while servicing the loan.

A second Notice of Trustee's Sale was recorded on December 31, 2009. RTS again identified Deutsche Bank as the beneficiary, but this time the outstanding amount had increased to $51, 518.09 including $4, 749, 77 in "Beneficiary Advances." Plaintiff contests RTS' power to issue the Notice, the validity of the "Beneficiary Advances" charge, and the total amount due.

In March 2010, plaintiff served a combined Qualified Written Request, dispute of debt, and debt validation request on Ocwen, RTS, and New Century. Plaintiff also recorded the document in the King County property records. On April 20, 2010, Ocwen confirmed that it was the loan servicer, indicated that no payments had been made since November 2009 and that the loan was in foreclosure, and provided a copy of the note and loan application as well as a settlement statement. Ocwen declined to respond to any of the other inquiries because "[t]he additional information you requested is not required to be provided...." Dkt. # 57-3. Ocwen invited plaintiff to request information again, in writing, if he believed Ocwen had improperly failed to provide information relating to loan servicing. In light of the plaintiff's demand for debt validation, RTS postponed and ultimately canceled the foreclosure sale. No additional steps to foreclose on plaintiff's property have been taken.

DISCUSSION

Summary judgment is appropriate when, viewing the facts in the light most favorable to the nonmoving party, there is no genuine dispute as to any material fact that would preclude the entry of judgment as a matter of law. L.A. Printex Indus., Inc. v. Aeropostale, Inc. , 676 F.3d 841, 846 (9th Cir. 2012). The party seeking summary dismissal of the case "bears the initial responsibility of informing the district court of the basis for its motion" ( Celotex Corp. v. Catrett , 477 U.S. 317, 323 (1986)) and identifying those portions of the materials in the record that show the absence of a genuine issue of material fact (Fed. R. Civ. P. 56(c)(1)). Once the moving party has satisfied its burden, it is entitled to summary judgment if the non-moving party fails to identify specific factual disputes that must be resolved at trial. Hexcel Corp. v. Ineos Polymers, Inc. , 681 F.3d 1055, 1059 (9th Cir. 2012). The mere existence of a scintilla of evidence in support of the non-moving party's position will not preclude summary judgment, however, unless a reasonable jury viewing the evidence in the light most favorable to the non-moving party could return a verdict in its favor. U.S. v. Arango , 670 F.3d 988, 992 (9th Cir. 2012).

A. Deed of Trust Act, RCW 61.24.005 et seq.

Plaintiff alleges that MERS and Deutsche Bank violated the DTA by causing RTS to issue faulty notices of default and trustee's sale. Plaintiff also alleges that the deed of trust was an illegal and unenforceable contract because MERS was identified as the beneficiary. Each contention is considered below.

1. RTS' Actions

Pursuant to the DTA, the written notice of default must be provided by the beneficiary or the trustee (RCW 61.24.030(8)), and only the beneficiary has the power to appoint a trustee or successor trustee (RCW 61.24.010(2)). Deutsche Bank obtained physical possession of the promissory note shortly after the closing date in January 2007[4] and was therefore the "beneficiary" for purposes of the DTA on November 5, 2008, when RTS issued the original notice of default. At the time, RTS was acting as Deutsche Bank's agent. RTS was subsequently appointed as successor trustee, in which capacity it was authorized to issue the two ...


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