Commonwealth Prop. Advocates, LLC v. Mortg. Elec. Registration Sys. Inc.

Decision Date23 December 2011
Docket NumberNo. 10-4193,No. 10-4215,D.C. No. 2:10-CV-0375-DB (D. Utah),D.C. No. 2:09-CV-01146-DB (D. Utah),D.C. No. 2:10-CV-00340-TS (D. Utah),No. 10-4182,10-4182,10-4193,10-4215
CourtUnited States Courts of Appeals. United States Court of Appeals (10th Circuit)

Before LUCERO, BALDOCK, and HARTZ, Circuit Judges.**

Plaintiff Commonwealth Property Advocates, LLC, acquired title to three pieces of real property in Utah from three defaulting borrowers. Plaintiff then filed three suits in diversity against various Defendants which held interests in the property, seeking to prevent foreclosure. Plaintiff argued Defendants had no authority to foreclose because the notes in each case had been securitized and sold on the open market. Because the security follows the debt, Plaintiff argued, once Defendants sold the security they could not foreclose absent authorization from every investor who had purchased an interest in the securitized note. Defendants in all three cases filed motions to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), and the district court granted those motions. Plaintiff appealed, and we now consolidate these cases for purposes of opinion. Exercising jurisdiction pursuant to 28 U.S.C. § 1291, we affirm.


The following facts are found in Plaintiff's complaints and the attached exhibits. In appeal 10-4182, the original borrower received two loans totaling $309,000 from American Sterling Bank, secured by real property in Bountiful, Utah. Each security interest was memorialized by a promissory note and a deed of trust naming as beneficiary Defendant Mortgage Electronic Registration Systems ("MERS") in its capacity as nominee for American Sterling.1 Each deed of trust also contained a provision giving MERS "the right to foreclose and sell the Property" and to take other actions on behalf of the lender. The complaint alleges that "[t]he obligations on the Notes were pooled and sold by Lender . . . as securities to numerous investors unknown."2 The original borrower defaulted and MERS served a notice of default on the property. Subsequently, Plaintiff acquired title to the property by way of quitclaim deed. Plaintiff filed suit against MERS alleging "causes of action" for (1) "stay of pending sale," (2) "estoppel/declaratory judgment," (3) declaratory judgment, (4) quiet title, and (5)"refund, fees and costs." Defendant MERS moved to dismiss for failure to state a claim, and the district court granted the motion. Plaintiff appealed.

In appeal 10-4193, the original borrower received $1,135,400 from GreenPoint Mortgage Funding to acquire real property in Sandy, Utah. In exchange, the borrower executed a promissory note in favor of GreenPoint. The borrower also executed a deed of trust in favor of Meridian Title Company. The trust deed named MERS as both the beneficiary and GreenPoint's nominee and expressly gave MERS the right "to foreclose and sell the property." Defendant BAC Home Loans Servicing later became the servicer of the note, and Defendant ReconTrust was named as substitute trustee. According to the complaint, "the obligation under the Note was pooled and sold by Lender . . . as securities to numerous investors unknown." When the original borrower defaulted, ReconTrust served a notice of default and intent to sell. Plaintiff acquired title to the property via quitclaim deed about seven weeks later. Plaintiff then filed suit against BAC Home Loans and ReconTrust asserting four "causes of action" labeled (1) "estoppel/declaratory judgment," (2) declaratory judgment, (3) quiet title, and (4) "refund, fees and costs." Defendants filed a motion to dismiss for failure to state a claim, and the district court granted the motion. Plaintiff then filed a "motion to reconsider" pursuant to "Rules 59 and 60, FRCP" because the district court "appears to have overlooked the applicable statute and the facts as admitted herein." The district court denied this motion as well, concluding Plaintiff had not shown obvious error or introduced new, previously undiscoverable evidence. Instead, the court said, Plaintiff's motion "raise[d] new arguments not addressed in the briefing to the court and rehashe[d] arguments alreadyconsidered by the court." The court entered its order denying the "motion to reconsider" on October 1, 2010. On October 29, 2010, Plaintiff filed a notice of appeal, stating that "defendant [sic] appeals . . . the decision of the District Court herein entered October 1, 2010."

In appeal 10-4215, the original borrower executed two promissory notes totaling $1,250,000 in favor of Defendant First Horizon Home Loan Corporation. The borrower secured these notes by two deeds of trust in property in Alpine, Utah. The trust deeds named Meridian Title Company as trustee. Both deeds of trust designated MERS as the beneficiary and as First Horizon's nominee, and both gave MERS the right to foreclose and sell the property on First Horizon's behalf. First Horizon pooled the obligations on the notes and sold them as securities to various investors. First Horizon also substituted eTitle as the trustee, but did not initially record the substitution. The original borrower defaulted on the loan, and trustee eTitle filed a notice of default. The original borrower then quitclaimed the property to Plaintiff. Plaintiff sued First Horizon and MERS, asserting "causes of action" for (1) "stay of pending sale," (2) "estoppel/declaratory judgment," (3) declaratory judgment, (4) quiet title, and (5) "refund, fees and costs." The district court granted Defendants' motion to dismiss, and Plaintiff appealed.

Plaintiff's complaints are difficult to construe, but they appear to raise three substantive claims for relief.3 First, under the heading of "Estoppel/DeclaratoryJudgment," Plaintiff alleges Defendants failed to provide information regarding the interests of "persons to whom the Note and/or Trust Deed may be assigned" when requested to do so by Plaintiff. Plaintiff alleges the failure to provide this information subjects it "to risks, abuses, and prejudice" and "render[s] impossible proper discharge of the obligation on the Note." Thus, Plaintiff seeks to estop Defendants from asserting that the notes are in default or that they hold the power of sale under the trust deeds. Plaintiff also requests a declaratory judgment that Defendants "lack any [enforceable] interest in the trust deed." In 10-4215, Plaintiff makes several additional allegations under this cause of action. Plaintiff alleges Defendants violated a number of Utah statutory provisions, Utah Code Ann. §§ 57-1-22(3)(a); 57-1-22(1)(a); 57-1-23; and 57-1-21(4). Plaintiff also alleges, "First Horizon is attempting to foreclose on the subject property without being the Beneficiary of record for the first position Trust Deed."

In its second substantive claim, Plaintiff seeks a declaratory judgment that Defendants "lack any interest under the Trust Deed which may be enforced by . . . sale of the subject property." Plaintiff alleges that, because Defendants transferred the notes to subsequent assignees, Defendants "lacked authority to declare a default" or to sell the subject property and distribute any proceeds. The complaints allege that because the investors in each securitized note were not assigned the corresponding trust deed, "the obligation under the Note has . . . become unsecured, and the Note and Trust Deed, may not be foreclosed." Plaintiff further claims it is "a bona fide purchaser for value of thesubject property without notice of any claim" by persons to whom Defendants assigned the notes.

Plaintiff's third claim, seeking to quiet title, rests upon two grounds. First, Plaintiff asserts that Defendants' failure "to retain any interest in the obligation under the Note voided any title or power they might have under the Trust Deed, and rendered said Trust deed unenforceable by them." Second, Plaintiff alleges that "[r]ecordation of the plaintiff's deed to the subject property prior to the recordation of any assignment of the Trust Deed, renders any such assignments void and unenforceable against the subject property" under Utah Code Ann. §§ 57-3-102 and 57-3-103. Plaintiff seeks to quiet title in its favor, thus "freeing title to the subject property of the lien of the Trust Deed and leaving any obligation under the Note unsecured . . . ."4

Plaintiff appears to raise only one issue on appeal.5 Plaintiff argues securitizationof a note renders the holder of the underlying trust deed and its nominees unable to foreclose absent authorization by every investor holding an interest in the securitized note. Plaintiff contends that any authorization to foreclose contained in the trust deeds is invalidated by Utah Code Ann. § 57-1-35. This claim appears to relate to Plaintiff's second and third substantive claims for relief, both of which challenged Defendants' authority to foreclose, but which sought different forms of relief (a declaratory judgment and quiet title). Although Plaintiff's complaints appeared to raise several other claims, Plaintiff has not raised those claims on appeal. An appellant's opening brief must set forth "appellant's contentions and the reasons for them, with citations to the authorities and parts of the record on which the appellant relies." Fed. R. App. P. 28(a)(9)(A). Consequently, "[a]n issue or argument insufficiently raised in the opening brief is deemed waived." Becker v. Kroll, 494 F.3d 904, 913 n.6 (10th Cir. 2007). Because Plaintiff has only appealed with respect to Def...

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