Wong v. Wells Fargo Bank N.A.

• Decision Date: 18 June 2015
• Docket Number: No. 14–1921.,14–1921.
• Parties: James G. WONG ; Daniel R. Jenson; Wanda D. Jenson; Terry Lovett, formerly known as Terry M. Brooks; Bradley Beal; Paula Beal ; Alfred Celia; Vicki Musgrave; Patrick Nasi; Natalie Nasi; David Plocek; Stacy Plocek; Terry Rapiach; Lesa Rapiach, Plaintiffs–Appellants v. WELLS FARGO BANK N.A., formerly and/or as successor to Norwest Bank Minnesota, N.A., First Union National Bank and/or First Union Trust Company; Bann–Cor Mortgage; Master Financial, Inc.; Master Financial Asset Securitization Trust 1997–1 ; Master Financial Asset Securitization Trust 1998–1; Master Financial Asset Securitization Trust 1998–2, Defendants–Appellees US Bank NA, ND, Defendant Wilmington Trust Company, in its individual capacity, and as trustee of the Country Wide Home Loan Trust 2001–HLV1, PSB Lending Home Loan Trust 1997–3 and 1997–4, and Master Financial Asset Securitization Trust 1997–1, 1998–1, and 1998–2, Defendant–Appellee Countrywide Home Loans, Inc., Defendant Countrywide Home Loan Trust 2001–HLV1, Defendant–Appellee Cityscape Home Loan Owner Trust 1997–2; Cityscape Home Loan Owner Trust 1997–3; Cityscape Home Loan Owner Trust 1997–4, Defendants PSB Lending Corporation; PSB Lending Home Loan Owner Trust 1997–3 ; PSB Lending Home Loan Owner Trust 1997–4, Defendants–Appellees Residential Funding Company, LLC, Defendant Amaximis Lending, LP ; The Bank of New York Mellon, formerly known as The Bank of New York; Citimortgage, Inc.; Comstar Mortgage Corporation, formerly known as Accubanc Mortgage Corp.; Franklin Credit Management Company, Defendants–Appellees Ocwen Loan Servicing, LLC, Defendant Old Republic Financial Acceptance Corporation ; Real Time Resolutions, Inc., Defendants–Appellees GMAC Mortgage, LLC, Defendant J.P. Morgan Chase Bank, NA, individually and/or formerly or as successor to Bank One, NA and Chase Manhattan Bank; Home Loan Trust 1997–HI3 ; Amaximis Company, LLC ; JPMorgan Chase Bank, N.A. as successor by merger to Banc One Financial Services, Inc.; JPMorgan Chase Bank, as successor by merger to Bank One, N.A., Defendants–Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

789 F.3d 889

James G. WONG ; Daniel R. Jenson; Wanda D. Jenson; Terry Lovett, formerly known as Terry M. Brooks; Bradley Beal; Paula Beal ; Alfred Celia; Vicki Musgrave; Patrick Nasi; Natalie Nasi; David Plocek; Stacy Plocek; Terry Rapiach; Lesa Rapiach, Plaintiffs–Appellants
v.
WELLS FARGO BANK N.A., formerly and/or as successor to Norwest Bank Minnesota, N.A., First Union National Bank and/or First Union Trust Company; Bann–Cor Mortgage; Master Financial, Inc.; Master Financial Asset Securitization Trust 1997–1 ; Master Financial Asset Securitization Trust 1998–1; Master Financial Asset Securitization Trust 1998–2, Defendants–Appellees
US Bank NA, ND, Defendant
Wilmington Trust Company, in its individual capacity, and as trustee of the Country Wide Home Loan Trust 2001–HLV1, PSB Lending Home Loan Trust 1997–3 and 1997–4, and Master Financial Asset Securitization Trust 1997–1, 1998–1, and 1998–2, Defendant–Appellee
Countrywide Home Loans, Inc., Defendant
Countrywide Home Loan Trust 2001–HLV1, Defendant–Appellee
Cityscape Home Loan Owner Trust 1997–2; Cityscape Home Loan Owner Trust 1997–3; Cityscape Home Loan Owner Trust 1997–4, Defendants
PSB Lending Corporation; PSB Lending Home Loan Owner Trust 1997–3 ; PSB Lending Home Loan Owner Trust 1997–4, Defendants–Appellees
Residential Funding Company, LLC, Defendant
Amaximis Lending, LP ; The Bank of New York Mellon, formerly known as The Bank of New York; Citimortgage, Inc.; Comstar Mortgage Corporation, formerly known as Accubanc Mortgage Corp.; Franklin Credit Management Company, Defendants–Appellees
Ocwen Loan Servicing, LLC, Defendant
Old Republic Financial Acceptance Corporation ; Real Time Resolutions, Inc., Defendants–Appellees
GMAC Mortgage, LLC, Defendant
J.P. Morgan Chase Bank, NA, individually and/or formerly or as successor to Bank One, NA and Chase Manhattan Bank; Home Loan Trust 1997–HI3 ; Amaximis Company, LLC ; JPMorgan Chase Bank, N.A. as successor by merger to Banc One Financial Services, Inc.; JPMorgan Chase Bank, as successor by merger to Bank One, N.A., Defendants–Appellees.

No. 14–1921.

United States Court of Appeals, Eighth Circuit.

Submitted: March 10, 2015.
Filed: June 18, 2015.

789 F.3d 893

Kip D. Richards, Walters Bender Strohbehn & Vaughan, P.C., Kansas City, MO, argued (R. Frederick Walters, J. Michael Vaughan, David M. Skeens, on the brief), for appellants.

Peter W. Carter, Dorsey & Whitney LLP, Minneapolis, MN, argued, (Paul R. Dieseth, Dorsey & Whitney LLP, Minneapolis, MN, Mark A. Olthoff, Polsinelli PC, Kansas City, MO, on the brief), for appellee Wilmington Trust Co.

Andrew R. Kasnetz, Timothy C. Sansone, Natalie J. Kussart, Sandberg Phoenix & von Gontard P.C., St. Louis, MO, for appellee Franklin Credit Management Corp.

Leslie A. Greathouse, J. Loyd Gattis, Spencer Fane Britt & Browne LLP, Kansas City, MO, for appellees Old Republic Financial Acceptance Corp., and Real Time Resolutions, Inc.

Michael G. Biggers, Bryan Cave LLP, St. Louis, MO, for appellee JPMorgan Chase Bank, N.A., as successor to Chase Manhattan Bank.

Peter W. Carter, Paul R. Dieseth, Minneapolis, MN, Mark A. Olthoff, Kansas City, Mo, on the brief, for appellee Wilmington Trust Company.

W. David Wells, Maria G. Zschoche, Brian A. Lamping, Thompson Coburn LLP, for appellees Wells Fargo Bank, N.A., PSB Lending Home Loan Owner Trust 1997–3, PSB Home Loan Owner Trust 1997–4, and Countrywide Home Loan Trust 2001–HLV1.

789 F.3d 894

Louis F. Bonacorsi, Bryan Cave LLP, St. Louis, MO, Jennifer A. Donnelli, Bryan Cave LLP, Kansas City, MO, for appellee Citimortgage, Inc.

Daniel L. McClain, The McClain Law Firm, LLC, Kansas City, MO, for appellees PSB Lending Corp., and JPMorgan Chase Bank, N.A., as successor to Bank One, N.A.

W. Perry Brandt, Thomas F. Nanney, Bryan Cave LLP, Kansas City, MO, for appellee The Bank of New York Mellon Corp.

Before MURPHY and SHEPHERD, Circuit Judges, and BROOKS,¹ District Judge.

Opinion

SHEPHERD, Circuit Judge.

This class action was filed by borrowers in Missouri who took out second mortgages on their homes through Bann–Cor Mortgage, Inc. (Bann–Cor), and allege that Bann–Cor and various assignees and purchasers violated the Missouri Second Mortgage Loan Act (MSMLA) by charging or collecting impermissible fees. The district court² dismissed the borrowers' complaint, holding that they lacked standing to pursue their claims against the defendants who did not personally service their loans and that a three-year statute of limitations barred the action against the remaining defendants. The district court also found alternate grounds for dismissal with respect to some defendants, including improper service and failure to state a claim. The borrowers appeal, and we affirm.

I.

The plaintiffs in this action are a class of borrowers who obtained second mortgage loans on their homes through Bann–Cor. After Bann–Cor executed the loan agreements with the borrowers, it sold or assigned the loans and the accompanying mortgage liens to various purchasers and assignees, the defendants in this action. The borrowers allege that the defendants, either directly or indirectly, charged, contracted for, or received fees in the second mortgage loan transactions that were impermissible under the MSMLA.

This action began nearly 15 years ago when the borrowers first filed this suit in Missouri state court against Bann–Cor. The borrowers periodically sought leave to amend the complaint and add additional defendants. After two removals to federal court and two remands back to state court, the state court granted the defendants' motion for summary judgment on the grounds that a three-year statute of limitations barred the borrowers' claims. The borrowers appealed to the Missouri Court of Appeals, which, in Schwartz v. Bann–Cor Mortgage, 197 S.W.3d 168 (Mo.Ct.App.2006), reversed the trial court and held that a six-year limitations period applied and remanded the case back to the trial court. In 2010, the borrowers filed their sixth amended complaint, which for the first time added Wells Fargo Bank as a party. Wells Fargo removed the case to federal court under the Class Action Fairness Act, and in 2011, the district court denied the borrowers' motion to remand.

In 2012, the district court granted a motion to dismiss filed by Citimortgage and Wells Fargo with respect to loans held by the entity itself and by the entity in its capacity as trustee, finding the borrowers serving as the named plaintiffs did not have standing to assert their claims against these defendants. The district court also granted Old Republic's motion

789 F.3d 895

to dismiss based on a six-year statute of limitations and granted PSB Lending's motion to dismiss with respect to one loan based on the statute of limitations. The court denied the remaining motions to dismiss based on the statute of limitations.

Shortly thereafter, the district court informed the remaining parties that it believed the Eighth Circuit decision in Rashaw v. United Consumers Credit Union, 685 F.3d 739 (8th Cir.2012), cert. denied, ––– U.S. ––––, 133 S.Ct. 1250, 185 L.Ed.2d 180 (2013), which held that a three-year statute of limitations applied to MSMLA claims, could significantly impact the case. After reviewing additional briefing from the parties, the district court reconsidered the statute-of-limitations argument and dismissed the majority of the borrowers' claims as barred by a three-year statute of limitations, finding Rashaw to be the most thorough and relevant interpretation of Missouri law. This included all claims against PSB Lending, Real Time, Franklin Credit Management, Bank of New York Mellon, and the claims of named plaintiffs Wong, Jenson, Lovett, Celia, Musgrave, and Plocek. With respect to defendant Bank One, the court ordered the borrowers to file a motion for leave to file an eighth amended complaint stating why the claims against Bank One were not time barred. The borrowers filed the motion, which the district court denied based on futility before dismissing the complaint as time barred.

In a separate order, the district court granted Wilmington Trust Company's motion to dismiss, finding the borrowers lacked standing to assert their claims, failed to state a claim under Federal Rule of Civil Procedure 12(b)(6), and failed to effect proper service with respect to two trusts for which Wilmington Trust Company served as a trustee. In yet another order, the district court granted JP Morgan Chase's motion for summary judgment and U.S. Bank's motion to dismiss, both based on the statute of limitations. Finally, the district court granted a motion to dismiss by Residential Funding and GMAC Mortgage upon conclusion of their bankruptcy proceedings and in accordance with their reorganization plans. The district court also dismissed the complaint against all remaining non-participatory defendants, including Bann–Cor. The borrowers appeal.

II.

“Federal courts must address questions of standing before addressing the merits of a case where standing is called into question.” Brown v. Medtronic, Inc., 628 F.3d 451, 455 (8th Cir.2010). As such, we first address whether the district court erred in holding that the named borrowers did not have standing to pursue their claims against defendants...