Commonwealth Property v. Mortgage Electronic, No. 11-4118 (10th Cir. 2012)

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FILED United States Court of Appeals Tenth Circuit UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT March 29, 2012 Elisabeth A. Shumaker Clerk of Court COMMONWEALTH PROPERTY ADVOCATES, LLC; JENNIFER MATHIS-HUBER; BRYAN HUBER, Plaintiffs-Appellants, v. No. 11-4118 (D.C. No. 2:11-CV-00214-TS) (D. Utah) MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; AMERICA S WHOLESALE LENDER; BANK OF NEW YORK MELLON, Defendants-Appellees. ORDER AND JUDGMENT * Before TYMKOVICH and BALDOCK, Circuit Judges, and BRORBY, Senior Circuit Judge. Plaintiffs Commonwealth Property Advocates, LLC ( Commonwealth ), Jennifer Mathis-Huber, and Bryan Huber (collectively plaintiffs ) appeal the * After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist the determination of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument. This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. It may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1. district court s dismissal of their amended complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Plaintiffs alleged that defendant Mortgage Electronic Registration Systems, Inc. ( MERS ), acting as nominee for defendant America s Wholesale Lenders, had no authority to foreclose on their home because the obligation had been securitized and the investors, who actually own the debt, are unknown. According to plaintiffs, the securitization process severed the debt from its security, which, under Utah Code Ann. § 57-1-35, rendered the trust deed unenforceable. The district court rejected this split-note theory, observing that the trust deed specifically established MERS as beneficiary and nominee for Lender and Lender s successors and assigns. Aplt. App. at 404 (internal quotation marks omitted). We review the district court s dismissal de novo, accepting as true all well-pleaded factual allegations and looking for plausibility in the complaint. Smith v. United States, 561 F.3d 1090, 1098 (10th Cir. 2009). Plaintiffs appeal is foreclosed by our recent decision in Commonwealth Property Advocates, LLC v. Mortgage Electronic Registration Systems, Inc., ___ F.3d ___, 2011 WL 6739431 (10th Cir. Dec. 23, 2011), where we rejected Commonwealth s nearly identical argument under substantially similar factual circumstances. In that case, we examined identical trust deeds providing that MERS (as nominee for Lender and Lender s successors and assigns) has the right . . . to foreclose, id. at *5, and explained that the Utah Court of Appeals, in yet another of Commonwealth s -2- actions, had already determined that this language authorized MERS to initiate foreclosure proceedings, see id. at *6 (citing Commonwealth Prop. Advocates v. Mortg. Elec. Registration Sys., Inc., 263 P.3d 397, 399 (Utah Ct. App.), cert. denied, 268 P.3d 192 (Utah 2011)). The Utah Court of Appeals had likewise rejected Commonwealth s argument that § 57-1-35 invalidated MERS authority to foreclose, reasoning that the statute simply describes the long-applied principle . . . that when a debt is transferred, the underlying security continues to secure the debt. Id. (quoting Commonwealth Prop. Advocates, 263 P.3d at 403). 1 Deferring to the Utah Court of Appeals, we concluded that Commonwealth s argument had no legal basis under Utah law because even assuming the securitization scheme divested defendants of their implicit authority to foreclose as holders of the trust deeds, the trust deeds explicitly granted Defendants the authority to foreclose and § 57-1-35 in no way prohibits such an authorization. Id. at 7. Our decision in Commonwealth Property Advocates, 2011 WL 6739431, controls this appeal and demonstrates that the district court properly dismissed this action for failure to state a claim. Accordingly, the judgment of the district court is AFFIRMED. Entered for the Court Bobby R. Baldock Circuit Judge 1 Utah Code Ann. § 57-1-35 states: The transfer of any debt secured by a trust deed shall operate as a transfer of the security therefor. -3-

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