Perez v. Mortgage Electronic Registration Systems, Inc., No. 18-16584 (9th Cir. 2020)
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Plaintiffs filed two pre-foreclosure actions against MERS and the banks holding their mortages, challenging their authority to foreclose on plaintiffs' properties. The Ninth Circuit affirmed the district courts' dismissal of the complaints for failure to state plausible claims for relief under California law. The panel followed the decisions of the California appellate courts in holding that California law does not permit preemptive actions to challenge a party's authority to pursue foreclosure before a foreclosure has taken place.
The panel held that plaintiffs' pre-foreclosure judicial actions preemptively challenging the banks' authority to foreclose on the their properties in the future are not viable under California law. The panel also held that the district court did not abuse its discretion by denying plaintiffs leave to amend where the proposed amendments would not have changed the determination.
Court Description: California Law / Foreclosure. The panel affirmed the district court’s dismissals for failure to state claims of two actions brought by plaintiff homeowners against the Mortgage Electronic Registration Systems, Inc. and banks, challenging the banks’ authority to foreclose on their properties. * The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). ** The Honorable Gary Feinerman, United States District Judge for the Northern District of Illinois, sitting by designation. PEREZ V. MERS 3 Plaintiffs owned properties in Sacramento and San Pablo, and neither of the properties were ultimately foreclosed. Plaintiffs sought declaratory relief and cancellation of instruments as to the banks and MERS, and quiet title as to only the banks. The panel held that California law does not permit borrowers to bring judicial actions to challenge a foreclosing party’s authority to foreclose on the borrower’s property before a foreclosure has taken place. Because the California Supreme Court had not yet addressed the question of whether preemptive, pre-foreclosure actions were viable under California law, the panel looked to the relevant decisions of the California intermediate appellate courts. The panel held that plaintiffs did not state any valid claims under California law, and affirmed the district court’s dismissal of plaintiffs’ complaints. The panel held that the district court did not abuse its discretion by denying plaintiffs leave to amend because the proposed amendments would not have changed the determination that the action was impermissible under California law.
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