Commonwealth Property Advocates, LLC v. Mortgage Electronic Registration Systems, Inc. ( 2012 )


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  •                                                                       FILED
    United States Court of Appeals
    Tenth Circuit
    UNITED STATES COURT OF APPEALS
    March 29, 2012
    FOR THE TENTH CIRCUIT              Elisabeth A. Shumaker
    Clerk of Court
    COMMONWEALTH PROPERTY
    ADVOCATES, LLC; JENNIFER
    MATHIS-HUBER; BRYAN HUBER,
    Plaintiffs-Appellants,                  No. 11-4118
    (D.C. No. 2:11-CV-00214-TS)
    v.                                                   (D. Utah)
    MORTGAGE ELECTRONIC
    REGISTRATION SYSTEMS, INC.;
    AMERICA’S WHOLESALE
    LENDER; BANK OF NEW YORK
    MELLON,
    Defendants-Appellees.
    ORDER AND JUDGMENT *
    Before TYMKOVICH and BALDOCK, Circuit Judges, and BRORBY, Senior
    Circuit Judge.
    Plaintiffs Commonwealth Property Advocates, LLC (“Commonwealth”),
    Jennifer Mathis-Huber, and Bryan Huber (collectively “plaintiffs”) appeal the
    *
    After examining the briefs and appellate record, this panel has determined
    unanimously that oral argument would not materially assist the determination of
    this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
    therefore ordered submitted without oral argument. This order and judgment is
    not binding precedent, except under the doctrines of law of the case, res judicata,
    and collateral estoppel. It may be cited, however, for its persuasive value
    consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
    district court’s dismissal of their amended complaint for failure to state a claim
    under Federal Rule of Civil Procedure 12(b)(6). Plaintiffs alleged that defendant
    Mortgage Electronic Registration Systems, Inc. (“MERS”), acting as nominee for
    defendant America’s Wholesale Lenders, had no authority to foreclose on their
    home because the obligation had been securitized and the investors, who actually
    own the debt, are unknown. According to plaintiffs, the securitization process
    severed the debt from its security, which, under 
    Utah Code Ann. § 57-1-35
    ,
    rendered the trust deed unenforceable. The district court rejected this “split-note”
    theory, observing that the trust deed specifically established MERS as beneficiary
    and “nominee for Lender and Lender’s successors and assigns.” Aplt. App. at
    404 (internal quotation marks omitted).
    We review the district court’s dismissal de novo, accepting as true all
    well-pleaded factual allegations and looking for plausibility in the complaint.
    Smith v. United States, 
    561 F.3d 1090
    , 1098 (10th Cir. 2009). Plaintiffs’ appeal
    is foreclosed by our recent decision in Commonwealth Property Advocates, LLC
    v. Mortgage Electronic Registration Systems, Inc., ___ F.3d ___, 
    2011 WL 6739431
     (10th Cir. Dec. 23, 2011), where we rejected Commonwealth’s nearly
    identical argument under substantially similar factual circumstances. In that case,
    we examined identical trust deeds providing that “MERS (as nominee for Lender
    and Lender’s successors and assigns) has the right . . . to foreclose,” 
    id. at *5
    , and
    explained that the Utah Court of Appeals, in yet another of Commonwealth’s
    -2-
    actions, had already determined that this language authorized MERS to initiate
    foreclosure proceedings, see 
    id.
     at *6 (citing Commonwealth Prop. Advocates v.
    Mortg. Elec. Registration Sys., Inc., 
    263 P.3d 397
    , 399 (Utah Ct. App.), cert.
    denied, 
    268 P.3d 192
     (Utah 2011)). The Utah Court of Appeals had likewise
    rejected Commonwealth’s argument that § 57-1-35 invalidated MERS’ authority
    to foreclose, reasoning that the statute “‘simply describes the long-applied
    principle . . . that when a debt is transferred, the underlying security continues to
    secure the debt.’” Id. (quoting Commonwealth Prop. Advocates, 
    263 P.3d at 403
    ). 1 Deferring to the Utah Court of Appeals, we concluded that
    Commonwealth’s argument “had no legal basis under Utah law” because even
    assuming the securitization scheme divested defendants of their implicit authority
    to foreclose as holders of the trust deeds, “the trust deeds explicitly granted
    Defendants the authority to foreclose” and “§ 57-1-35 in no way prohibits such an
    authorization.” Id. at 7. Our decision in Commonwealth Property Advocates,
    
    2011 WL 6739431
    , controls this appeal and demonstrates that the district court
    properly dismissed this action for failure to state a claim.
    Accordingly, the judgment of the district court is AFFIRMED.
    Entered for the Court
    Bobby R. Baldock
    Circuit Judge
    1
    
    Utah Code Ann. § 57-1-35
     states: “The transfer of any debt secured by a
    trust deed shall operate as a transfer of the security therefor.”
    -3-
    

Document Info

Docket Number: 11-4118

Judges: Tymkovich, Baldock, Brorby

Filed Date: 3/29/2012

Precedential Status: Non-Precedential

Modified Date: 11/5/2024