In re: MERS, No. 11-17615 (9th Cir. 2014)
Annotate this CasePlaintiffs appealed the district court's dismissal of their claims related to the formation and operation of the MERS System, an electronic mortgage registration system. The court dismissed for lack of jurisdiction appellants' appeal of the Judicial Panel on Multidistrict Litigation (JPML) Order because they have not sought a writ of mandamus; the court held that appellants have waived their argument regarding the MDL Court's remand orders; nothing in the record suggested that the MDL Court considered extraneous materials in ruling on defendants' motion to dismiss under Rule 12(b)(6); therefore, the MDL Court did not convert defendants' motion to dismiss into a motion for summary judgment; the court reversed the MDL Court's dismissal of Count I, alleged violations of Arizona's false documents statute; affirmed the MDL Court's dismissal of Count II, wrongful foreclosure; affirmed the MDL Court's dismissal of Count III, Nevada Revised Statutes 107.080; affirmed the MDL Court's dismissal of Count V, aiding and abetting wrongful foreclosure under Arizona, California, and Nevada law; affirmed the MDL Court's dismissal of Count VI, aiding and abetting predatory lending under Arizona, California, and Nevada law; and concluded that the MDL Court acted within its discretion in denying leave to amend.
Court Description: Multidistrict Litigation / Property Law. Addressing multidistrict litigation raising claims related to the formation and operation of the MERS System, a private electronic database that records the ownership of and servicing rights in home loans, the panel dismissed an appeal from an order of the Judicial Panel on Multidistrict Litigation and affirmed in part and reversed in part the Multidistrict Litigation Court’s dismissal of the plaintiffs’ consolidated amended complaint. The panel also ordered stayed a portion of the appeal in light of a defendant’s bankruptcy proceedings. The plaintiffs were borrowers who resided in Arizona, California, Nevada, Oregon, and South Carolina, and whose notes and deeds of trust were processed through the MERS System. The defendants were various financial institutions that had interests in the notes and deeds of trust or had otherwise been involved in the operation of the MERS System. The panel dismissed the plaintiffs’ appeal from the JPML’s order transferring cases to the MDL Court for consolidated pretrial litigation on the ground that mandamus is the exclusive mechanism for reviewing JPML orders. The panel held that the plaintiffs had waived their arguments regarding the MDL Court’s orders determining which claims the JPML had remanded to transferor courts, and which it had transferred to the MDL Court. The panel held that the MDL Court did not convert the defendants’ motion to dismiss into a motion for summary judgment. The panel reversed the district court’s dismissal of Count I, seeking relief based on violations of Arizona’s false documents statute when the defendants allegedly filed false notices of trustee sale, notices of substitution of trustee, and assignments of deed of trust. The plaintiffs alleged that these documents were notarized in blank and “robosigned” with forged signatures. The panel affirmed the dismissal of Count II, alleging that the defendants had committed, or would commit, the tort of wrongful foreclosure, in violation of Arizona, California, and Nevada law, because the MERS System impermissibly “splits” ownership of the note from ownership of the deed of trust, thereby making the promissory note unsecured and unenforceable in any foreclosure proceeding. The panel held that these claims failed because none of the plaintiffs alleged lack of default, tender to cure the default, or an excuse from tendering. The panel affirmed the dismissal of Count III, alleging that nonjudicial foreclosures conducted under Nev. Rev. Stat. § 107.080 were improper. The panel affirmed the dismissal of Count V, alleging aiding and abetting wrongful foreclosure under Arizona, California, and Nevada law. The panel affirmed the dismissal of Count VI, alleging aiding and abetting predatory lending under Arizona, California, and Nevada law, on the basis that claims concerning loan origination practices had been remanded to the transferor courts by the JPML. The panel affirmed the district court’s denial of leave to amend the complaint.
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