Woods v. U.S. Bank, No. 13-36037 (9th Cir. 2016)
Annotate this CasePlaintiffs filed suit against USB and Recon challenging the complete foreclosure sale of their residential property. Plaintiffs sought a declaratory judgment that the trustee’s sale was invalid under the Oregon Trust Deed Act (OTDA), ORS 86.770(1), because several assignments of the Trust Deed that took place prior to the 2010 assignment to USB were never recorded. The district court granted defendants' motion to dismiss the Amended Complaint, holding that ORS 86.770(1) barred plaintiffs' claims. In this case, the only defect the foreclosure process identified by plaintiffs has to do with the content of the notice. The defect is the incorrect listing of the beneficiary in the notice they received. However, plaintiffs do not dispute that: (1) they were in default; (2) they were served in the manner required by ORS 86.740 (requiring, at a minimum, service by certified mail 120 days before the sale) and ORS 86.750 (requiring personal service on grantors who occupy the property 120 days before the sale); (3) they had no financial ability to cure the default and redeem the property; (4) they took no action to challenge the sale prior to it becoming final; and (5) they only challenged the foreclosure sale many months after the foreclosure sale was completed. Therefore, plaintiffs' post-sale claims are barred as their property interests have been terminated and foreclosed pursuant to ORS 86.770(1). Accordingly, the court affirmed the judgment.
Court Description: Oregon Trust Deed Act / Foreclosure. The panel affirmed the district court’s dismissal of plaintiff borrowers’ amended complaint challenging a completed non-judicial foreclosure sale of residential real property in Clackamas, Oregon because plaintiffs’ claims were barred by a provision of the Oregon Trust Deed Act, ORS 86.770(1). ORS 86.770(1) provides that “[i]f, under ORS 86.705 to 86.795, a trustee sells property covered by a trust deed, the trustee’s sale forecloses and terminates the interest in the property that belongs to a person to which notice of the sale was given.” The only defect in the foreclosure process identified by plaintiffs had to do with the content of the notice, which included an incorrect listing of the beneficiary in the notice the plaintiffs received. The panel held that plaintiffs’ post-sale claims were barred because their property interests were terminated and foreclosed pursuant to ORS 86.770(1). Specifically, the panel held that technical defects that do not have a substantial impact on grantors’ rights – as in this case, where the trustee’s sale notice listed the wrong beneficiary – were not significant enough to warrant upsetting the finality of a trustee’s sale. WOODS V. U.S. BANK 3
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