Opinion
3:18-cv-00929-JR
03-05-2021
BRIAN METKE, Plaintiff, v. THE BANK OF NEW YORK MELLON, fka The Bank of New York, as Trustee for the Certificate holders of the CWABS, Inc., Asset-Backed Certificates Series 2006-18, a New York Trust; QUALITY LOAN SERVICES CORP OF WASHINGTON, a Washington Corporation; and JOHN DOES 1-4, who are individuals or entities currently unknown to the Plaintiff, Defendants.
FINDINGS AND RECOMMENDATION
Jolie A. Russo, United States Magistrate Judge.
Defendants The Bank of New York Mellon fka The Bank of New York (“BNYM”), as trustee for the certificate holders of the CWABS, Inc., Asset-Backed Certificates, Series 2006-18 (“Loan Trust”) and Quality Loan Service Corporation of Washington (“Quality”) move for summary judgment on plaintiff Brian Metke's claims pursuant to Fed.R.Civ.P. 56. For the reasons set forth below, defendants' motions should be granted, and this case should be dismissed.
BACKGROUND
On August 24, 2006, plaintiff took out a loan from Countrywide Home Loans, Inc. (“Countrywide”), in the amount of $306,000, to refinance his residential property in Camp Sherman, Oregon (“Property”). Am. Compl. ¶¶ 3, 9 (doc. 15). Pursuant to this transaction, plaintiff executed a Promissory Note (“Note”) in favor of Countrywide. BNYM's Req. for Judicial Notice Ex. A, at 2 (doc. 24). The Note was secured by a Deed of Trust (“DOT”), which lists Countrywide as the lender, Fidelity National Insurance Company as the trustee, and Mortgage Electronic Registration Systems, Inc. (“MERS”) as the beneficiary, “acting solely as a nominee for Lender and Lender's successors and assigns.” Id. at 1.
Pursuant to the 2006 DOT, plaintiff agreed to make monthly mortgage payments as required under the Note; plaintiff also agreed that he would be in default, and subject to foreclosure, if he failed to make such payments. Id. at 2-11. Additionally, the DOT stipulated that Countrywide could sell the Note and/or change the loan servicer “one or more times without prior notice” to plaintiff. Id. at 9.
On September 17, 2007, plaintiff took out a second loan against the Property from Countrywide in the amount of $100,000, secured by a second DOT. Second Am. Compl. ¶¶ 13-15 (doc. 64, No. 3:12-cv-00384-MC).
As discussed in greater detail below, the 2006 and 2007 loans were the subject of a prior lawsuit between plaintiff, BNYM, and Specialized Loan Servicing LLC (“SLS”), amongst other parties. The pleadings in this prior lawsuit are part of the public record and not subject to reasonable dispute, and therefore capable of judicial notice. Fed.R.Evid. 201.
In July 2008, Countrywide sold its “obligations” to Red Oaks Merger Corporation, wholly owned subsidiary of Bank of America. Am. Compl. ¶ 14 (doc. 15). Countrywide also sold its “‘assets' and other obligations in the form of ‘pools of residential mortgages' to entities controlled or wholly owned by Bank of America”; this transfer included plaintiff's loan. Id. at ¶¶ 14-15.
In February 2010, MERS, as beneficiary, assigned the 2006 Note and DOT to BNYM, as trustee for the Loan Trust. Am. Compl. Ex. 3 (doc. 15).
On September 28, 2011, Recontrust Company, N.A. executed a Notice of Default and Election to Sell regarding the Property based on a purported breach of the 2006 DOT. Second Am. Compl. ¶ 20 (doc. 64, No. 3:12-cv-00384-MC).
In March 2012, plaintiff initiated a lawsuit (“First Metke Lawsuit”) against “[d]efendants or their predecessors in interest, ” alleging that they had mis-applied his payments on the 2006 and 2007 loans, which resulted in a false default in March 2010 under the 2006 DOT and wrongful foreclosure attempt pursuant to the Oregon Trust Deed Act (“OTDA”). Metke v. Bank of N.Y. Mellon (“Metke I”), 2016 WL 1724356, *1 (D. Or. Apr. 29, 2016).
On August 14, 2015, plaintiff settled the First Metke Lawsuit before United States Magistrate Judge Coffin and a 60-day Order of Dismissal was entered. Minutes of Proceedings (doc. 83, No. 3:12-cv-00384-MC). Judge Coffin, however, “retain[ed] jurisdiction to enforce the terms of the settlement agreement.” Id.
Plaintiff subsequently repudiated the settlement agreement. Metke I, 2016 WL 1724356 at *1. On April 29, 2016, Judge Coffin issued an order rejecting plaintiff's proposed settlement terms and instead required strict enforcement of defendants' proposed agreement, pursuant to which plaintiff would furnish an updated W-9 and globally release all claims against defendants and MERS related to the Property. Id. Finally, defendants would pay plaintiff a settlement amount and correct inaccurate information furnished to credit reporting agencies. Id. at *2. Judge Coffin reiterated that he “retain[ed] jurisdiction to enforce the terms of the agreement” following the entry of the 60-day Order of Dismissal. Id. at *1; see also Id. at *2 (“the parties unambiguously agreed on the record to the key terms of the settlement agreement, as well as to this court's continuing jurisdiction to resolve any disputes in the settlement process and enforce the settlement agreement that was reached and put on the record”).
Plaintiff's proffered terms, in relevant part, were as follows: “no payment is owed to [SLS] for the alleged arrears on the [2006 loan]” and “the principal balance of both [the 2006 and 2007] loans must be expressly set forth in the settlement agreement.” Metke I, 2016 WL 1724356 at *1. Judge Coffin rejected plaintiff's proposal, explaining that the “unambiguous” terms placed on the record in August 2015 did not effectuate a mutual release of all claims. Id. at *1-2. Rather, the parties agreed to a unilateral release of plaintiff's claims; defendants retained the right to pursue redress against plaintiff and the Property, including foreclosure, based on the approximately $90,000 then-outstanding under the 2006 Note. Id. Judge Coffin also clarified that, “although it was not expressly agreed to on the record, at the request of [plaintiff's attorney], defendants . . .agreed to keep plaintiff's account open for sixty days after the completion of the settlement and, if needed, to provide plaintiff with fresh payoff and reinstatement calculations.” Id. at *2.
On June 6, 2016, Judge Coffin issued a Show Cause Order, directing plaintiff to comply with the conditions of the settlement or face dismissal of the First Metke Lawsuit. Show Cause Order (doc. 99, No. 3:12-cv-00384-MC). At that time, Judge Coffin once again emphasized “this court's continuing jurisdiction to resolve any disputes in the settlement process and enforce the settlement agreement that was reached and put on the record.” Id.
Plaintiff's counsel responded to the Show Cause Order on July 6, 2016, arguing dismissal was a harsh penalty and that plaintiff had now proffered a W-9 to defendants, such that the appropriate remedy was for the settlement proceeds to be deposited with the Court. Pl.'s Resp. to Show Cause Order 3-6 (doc. 100, No. 3:12-cv-00384-MC). These proceeds were ultimately deposited in the court registry and withdrawn by plaintiff.
In May 2017, MERS effectuated a second assignment of the DOT. Am. Compl. ¶ 17 (doc. 15). Specifically, MERS, as nominee for Countrywide and “its successors and assigns, ” assigned the DOT to BNYM, as trustee for the Loan Trust. Id. at Ex. 3.
On December 1, 2017, Quality executed a Trustee's Notice of Sale in relation to the Property. Id. at ¶ 2. The Trustee's Notice of Sale indicated plaintiff stopped making the requisite loan repayments in August 2013 and explained that the Property would be foreclosed on April 16, 2018, unless plaintiff provided the approximately $160,000 worth of payments necessary to make his loan current. Id. at Ex. 1.
On April 11, 2018, plaintiff filed a complaint in Jefferson County Circuit Court. On May 4, 2018, the parties stipulated to enjoin the foreclosure of the Property pending resolution of this lawsuit. Notice of Removal ¶ 4 (doc. 1). Defendants subsequently removed plaintiff's case to this Court based on diversity jurisdiction.
On August 8, 2018, plaintiff filed his First Amended Complaint, asserting claims for breach of contract and declaratory judgment based on the 2006 DOT and OTDA. See generally Am. Compl. (doc. 15). Between August and October 2018, BNMY and Countrywide separately moved to dismiss the First Amended Complaint in its entirety. See generally Defs.' Mots. Dismiss (docs. 23, 31). On April 11, 2019, this Court granted defendants' motions as to plaintiff's breach of contract claim. Metke v. Bank of N.Y. Mellon (“Metke II”), 2018 WL 7131956 (D. Or. Dec. 4, 2018), adopted by 2019 WL 1590574 (D. Or. Apr. 11, 2019).
On April 26, 2019, plaintiff sought leave to amend his complaint in order to: (1) recount his original declaratory judgment and breach of contract claims based on the 2006 DOT and OTDA; (2) dismiss Countrywide as a defendant; and (3) add new claims arising out of the 2015 settlement of the First Metke Lawsuit. See generally Pl.'s Mot. to Am. Compl. (doc. 54). On August 15, 2020, this Court denied plaintiff's motion except as to the dismissal of Countrywide, leaving plaintiff's request for declaratory relief concerning defendants' right “to seize the Plaintiff's home when it or its agents have failed to comply with the law” as the sole remaining claim. Am. Compl. ¶¶ 26-27 (doc. 15); see also BNYM's Mot. Summ. J. 2 (doc. 103) (“[t]he lone remaining issue in this case is whether BNYM had authority to enforce the Note and foreclose on the Deed of trust when it initiated a nonjudicial foreclosure in 2017”).
The Court stayed this case pending resolution of plaintiff's new claims emanating from the 2015 settlement with Judge Coffin; those claims have since been resolved.
On August 25, 2020, BNYM filed the present motion for summary judgment, in which Quality subsequently joined. On September 15, 2020, plaintiff filed a Fed.R.Civ.P. 56(d) motion, requesting discovery in order to file an appropriate opposition. On September 17, 2020, this Court granted the Rule 56(d) request and deferred consideration of defendants' motions until after discovery was complete. Plaintiff filed a timely opposition and, on February 5, 2021, moved to strike the evidence submitted in support of BNYM's reply. Briefing was completed regarding these motions on February 19, 2021.
STANDARD OF REVIEW
Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, affidavits, and admissions on file, if any, show “that there is no genuine dispute as to any material fact and the [moving party] is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Substantive law on an issue determines the materiality of a fact. T.W. Elec. Servs., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987). Whether the evidence is such that a reasonable jury could return a verdict for the nonmoving party determines the authenticity of the dispute. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The moving party has the burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party shows the absence of a genuine issue of material fact, the nonmoving party must go beyond the pleadings and identify facts which show a genuine issue for trial. Id. at 324.
Special rules of construction apply when evaluating a summary judgment motion: (1) all reasonable doubts as to the existence of genuine issues of material fact should be resolved against the moving party; and (2) all inferences to be drawn from the underlying facts must be viewed in the light most favorable to the nonmoving party. T.W. Elec., 809 F.2d at 630.
DISCUSSION
Defendants argue that summary judgment is warranted because “BNYM had the requisite authority to foreclose on the Deed of Trust as a result of Plaintiff's default . . . regardless of the validity of the 2010 and 2017 assignments” given that it “has been the holder of the promissory note at issue herein since 2007, [which] is endorsed in blank.” BNYM's Mot. Summ. J. 2, 7 (doc. 103). In support of its motion, BNYM relies upon its copy of the 2006 Note and the declaration of Cynthia Wallace, Second Assistant Vice President of SLS and BNYM's attorney-in-fact. Plaintiff, in turn, contends defendants' summary judgment evidence is dubious and inadmissible, such that disputed issues of material fact exist concerning the validity of the 2006 Note and SLS's authority to act on BNYM's behalf. In addition, plaintiff asserts “there is no evidence . . . BNYM is the beneficiary under the” 2006 DOT and that only the beneficiary may properly initiate non-judicial foreclosure proceedings as a matter of law. Pl.'s Am. Resp. to Mot. Summ. J. 11 (doc. 117).
I. Preliminary Issues
The Court must resolve three evidentiary issues before reaching the substantive merits of defendants' motions. First, plaintiff contends Wallace's supplemental declaration should be struck, and attorney fees granted, under Fed.R.Civ.P. 37(c)(1). Second, plaintiff objects to Wallace's original declaration under Fed.R.Evid. 803(6). Third, plaintiff objects to the 2006 Note offered by BNYM under Fed.R.Evid. 1002.
A. Motion to Strike Wallace's Supplemental Declaration
Plaintiff contends that Wallace's supplemental declaration - which includes the power of attorney in effect at the time Wallace made her original declaration - is inadmissible because it was supplied after discovery ended and “was not substantially justified, nor harmless.” Pl.'s Mot. Strike 2 (doc. 121).
Rule 37(c)(1) provides: “If a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless.” Fed.R.Civ.P. 37(c)(1). The disclosing party bears the burden of showing that the failure to comply with Rule 26(a) or (e) was substantially justified or harmless. R & R Sails, Inc. v. Ins. Co. of Pa., 673 F.3d 1240, 1246 (9th Cir. 2012).
Supplementation under Rule 26(e) is not time-limited and can be made after discovery closes. Luke v. Family Care & Urgent Med. Clinics, 2009 WL 886350, *2 (9th Cir. Mar. 30, 2009). Post-discovery supplementation that materially changes the evidence of record should generally be excluded. See Keener v. United States, 181 F.R.D. 639, 642 (D. Mont. 1998) (granting a Rule 37(c)(1) motion where supplementation changed the expert's conclusions); Oberto v. Platypus Marine, Inc., 2017 WL 6380347, *4 (W.D. Wash. Dec. 14, 2017) (granting a Rule 37(c)(1) motion where supplementation changed the damages calculations). Conversely, post-discovery supplementation that does not cause prejudice is admissible, especially where the discovering party was reasonably on notice of the supplemental evidence. Bixby v. KBR, Inc., 282 F.R.D. 521, 532 (D. Or. 2011); see also Curley v. Wells Fargo & Co., 120 F.Supp.3d 992, 1000 (N.D. Cal. 2015), aff'd, 692 Fed.Appx. 900 (9th Cir. 2017) (failure to disclose witness was harmless where discovering party had the opportunity to depose the witness).
Here, it is undisputed that defendants produced SLS's current power of attorney during discovery, which became effective July 8, 2020. Hayes Decl. Ex. 3 (doc. 117). Further, Wallace stated under penalty of perjury in her initial declaration, which was executed on May 14, 2020, that “SLS is Attorney-in-Fact for [BNYM].” Wallace Decl. ¶ 1 (doc. 104). On January 7, 2021, plaintiff deposed Wallace, during which Wallace indicated SLS's power of attorney is updated annually, most recently in 2020. Hayes Decl. Ex. 3, at 3 (doc. 121). Plaintiff's counsel inquired whether “we [have] been provided with copies of that designation, or an annual one, since BNYM has owned the loan?” Id. BNYM's counsel responded that he believed “we included the power of attorney in our production” but would “double-check on that.” Id. at 4.
Plaintiff did not raise any issues related to the power of attorney in effect at the time of Wallace's original declaration or otherwise challenge BNYM's authority to foreclose on that basis until filing his Amended Response on January 15, 2021. BNYM therefore appropriately addressed this argument for the first time in its reply brief, filed on January 29, 2021, at which point it introduced Wallace's supplemental declaration. Indeed, the court may consider evidence, even new evidence, that rebuts arguments raised by the plaintiff in its opposition to the defendant's summary judgment motion. See, e.g., Sec. & Exchange Comm'n v. Platforms Wireless Int'l Corp., 617 F.3d 1072, 1087 n.9 (9th Cir. 2010); United States v. Taibi, 2012 WL 553143, *4 (S.D. Cal. Feb. 21, 2012); Arch Ins., Co. v. Nizar & Nuha Kalbi Family Tr., 610 Fed.Appx. 622, 623 (9th Cir. 2015).
Moreover, plaintiff has sustained no harm or prejudice, even assuming BNYM's production violated Rule 26(e). Critically, the power of attorney produced on January 29, 2021, is identical to the power of attorney originally produced, the only difference being the effective date. Compare Hayes Decl. Ex. 3 (doc. 117), with Suppl. Wallace Decl. Ex. C (doc. 119); see also BNYM's Reply to Mot. Summ. J. 6 (doc. 118) (BNYM previously produced “an identical power of attorney . . . in effect at the time of the declaration”). Plaintiff deposed Wallace regarding SLS's authority to act on BNYM's behalf at all relevant times. Pl.'s Mot. Strike 6 (doc. 121). Furthermore, plaintiff does not challenge or otherwise attempt to refute Wallace's direct testimony, based on her personal knowledge, that “SLS is [an] Attorney-in-Fact for [BNYM].” Wallace Decl. ¶¶ 1-2 (doc. 104); Suppl. Wallace Decl. ¶¶ 1-2 (doc. 119). In other words, the consideration of the power of attorney attached to Wallace's supplemental declaration does not change the Court's conclusion regarding this issue, although it does provide further support for Wallace's testimony.
Thus, in contrast to cases in which evidence exclusion sanctions have been granted, the supplemental declaration did not materially alter the issues in the case in a way that would prejudice plaintiff. Plaintiff was reasonably on notice of this evidence and had the opportunity to explicitly question Wallace about this matter. Additionally, plaintiff was not forced to compel the missing document from BNYM through Rule 37(c)(1) and has not requested any additional depositions or discovery. Plaintiff's motion to strike is denied. Finally, BNYM's request for attorney fees related to opposing plaintiff's motion to strike is denied; the Court does not find the imposition of sanctions or fees appropriate given the record before it.
B. Objection to Wallace's Original Declaration
Plaintiff asserts Wallace is not a “qualified witness” because she did not testify to her familiarity with BNYM's record-keeping and was not BNYM's Attorney-in-Fact when she made her declaration. Pl.'s Am. Resp. to Mot. Summ. J. 10 (doc. 117). Plaintiff alternatively argues that, even if BNYM possessed the correct power of attorney documents, they do not grant Wallace the authority to testify because Wallace stated at her deposition that the power of attorney uses the word “act” instead of “speak.” Id.
Rule 802 provides: “Hearsay is not admissible unless any of the following provides otherwise: a federal statute; these rules; or other rules provided by the Supreme Court.” Fed.R.Evid. 802. One exception to the hearsay rule are records of a regularly conducted activity. For such records to be admissible, five conditions must be met:
(A) the record was made at or near the time by--or from information transmitted by--someone with knowledge; (B) the record was kept in the course of a regularly conducted activity of a business, organization, occupation, or calling, whether or not for profit; (C) making the record was a regular practice of that activity; (D) all these conditions are shown by the testimony of the custodian or another qualified witness, or by a certification that complies with Rule 902(11) or (12) or with a statute permitting certification; and (E) the opponent does not show that the source of information or the method or circumstances of preparation indicate a lack of trustworthiness.
Records that an organization receives from another organization are admissible under Fed.R.Evid. 803(6) when they are kept in the regular course of the business, are relied upon by that organization, and a substantial interest exists in the accuracy of the records. United States v. Childs, 5 F.3d 1328, 1333-34 (9th Cir. 1993). Put simply, a business does not have to create the records for them to qualify as a regularly conducted activity. Id.
The “phrase ‘other qualified witness' is broadly interpreted to require only that the witness understand the record-keeping system.” Id. (quoting United States v. Ray, 930 F.2d 1368, 1370 (9th Cir. 1991)). Testimony from an individual regarding the accuracy of the records received relating to a regularly conducted activity is generally all that is required “unless there are sufficient negative factors to indicate a lack of trustworthiness.” United States v. Guardado-Diaz, 737 Fed.Appx. 119, 122 (4th Cir. 2018) (quoting Zeus Enters., Inc. v. Alphin Aircraft, Inc., 190 F.3d 238, 241 (4th Cir. 1999)). The party alleging untrustworthiness bears the burden of establishing the untrustworthiness. Id.
Wallace's declaration satisfies the requirements of Rule 803(6). It is undisputed that SLS receives and relies upon records from BNYM and other entities in the regular course of SLS's business, and Wallace testified to her personal knowledge regarding the processing of BNYM's loan files. Wallace Decl. ¶ 4 (doc. 104). Further, as this Court previously noted, the 2006 Note contains “no facial indicia of tampering or forgery, ” and plaintiff does not argue that Wallace's preparation or handling of that document, or general motive, is untrustworthy or otherwise suspect in any way. Minute Order (Sept. 17, 2020) (doc. 112). As discussed in Section I(A), irrespective of whether Wallace's supplemental declaration is admissible, BNYM has adequately established SLS as Attorney-in-Fact.
Plaintiff cites to Bank of N.Y. Mellon v. Weber, 169 A.D.3d 981, 94 N.Y.S.3d 582 (2019), in support of the proposition that Wallace's testimony is inadmissible hearsay. In Weber, the court dismissed Wallace's declaration under state law because it did not attest to any personal knowledge of SLS's record-keeping procedures or indicate whether such procedures occurred in the regular course of SLS's business. Id. at 984. The present case is therefore distinguishable.
Plaintiff's alternative argument regarding Wallace's authority to give testimony is unpersuasive. As BNYM points out, the power of attorney grants Wallace the authority to engage in the “preparation and execution of such other documents and performance of such other actions as may be necessary, including the defense of any claims related to the Mortgage.” BNYM's Reply to Mot. Summ. J. 7 (doc. 118) (quoting Suppl. Wallace Decl. Ex. C, at 2 (doc. 119)). Thus, Wallace has broad authority in regard to actions that may be necessary in relation to the 2006 Note. Wallace Decl. ¶ 3 (doc. 104). Plaintiff's evidentiary objection as to this issue is denied.
C. Objection to the Note
Plaintiff argues that the Note produced by BNYM “lacks authentication and does not comply with the original document rule, ” and “differed materially” from plaintiff's copy. Pl.'s Am. Resp. to Mot. Summ. J. 7 (doc. 117).
Rule 1002 requires “[an] original writing, recording, or photograph . . . in order to prove its content unless these rules or a federal statute provides otherwise.” Fed.R.Evid. 1002. This rule is qualified by Fed.R.Evid. 1003, which provides that a photocopy “is admissible to the same extent as an original unless (1) a genuine question is raised as to the authenticity of the original or (2) in the circumstances it would be unfair to admit the duplicate in lieu of the original.” Fed.R.Evid. 1001(e), 1003.
BNYM's copy of the 2006 Note satisfies the requirements of Rule 1003. Plaintiff does not dispute the foundation of BNYM's Note, nor can he. While the discovery process may have produced many slightly varying iterations of the Note, BNYM is only offering one version into evidence. Wallace Decl. Ex. A (doc. 104). Significantly, plaintiff does not dispute the substantive terms, barcodes, endorsement, and/or signature on this version, and the only difference between BNYM's Note and the one plaintiff offers is the presence of an endorsement stamp. Compare Id. with Metke Decl. Ex. 1 (doc. 110).
BNYM represents that any variations that arose across copies were generated before the signature or endorsement were placed on the Note. BNYM's Reply to Mot. Summ. J. 4 (doc. 118); see also United States v. Skillman, 922 F.2d 1370, 1375 (9th Cir. 1990) (extraneous additions to a duplicate, without anything more, do not disqualify a document from being authentic). Plaintiff does not allege tampering or forgery of the proffered Note, and unsupported assertions of disbelief regarding authenticity are not sufficient to raise a “genuine question” of authenticity. Kassel v. United States, 319 Fed.Appx. 558, 561 (9th Cir. 2009). In the very few cases in which a “genuine question” has been raised, there has usually been a confluence of factors that cast serious doubt as to the authenticity of a document. See United States v. Haddock, 956 F.2d 1534, 1545-46 (10th Cir. 1992) (“genuine question” existed where the defendant offered multiple duplicates that contained several markings and statements not used in the ordinary course of business). Plaintiff's evidentiary objection to BNYM's copy of the 2006 Note is denied.
While not dispositive, the Court notes that plaintiff previously relied on Countrywide/Bank of America testimony explaining why his copy may not bear an endorsement stamp - i.e., an endorsement stamp is not placed on a note until “the collateral is received from the branch into collateral processing.” Pl.'s FRCP 56(d) Mot. 4 (doc. 108) (quoting Hayes Decl. Ex. 1, at 16 (doc. 111)).
II. Summary Judgment Analysis
The propriety of summary judgment hinges on whether the holder of the note in a nonjudicial foreclosure has the authority to foreclose. BNYM contends that summary judgment is proper because plaintiff fails to raise any genuine issue regarding BNYM's possession of the Note. BNYM's Reply to Mot. Summ. J. 2 (doc. 118). In contrast, plaintiff argues only the beneficiary of a deed of trust may non-judicially foreclose and that BNYM has not demonstrated beneficiary status. Pl.'s Am. Resp. to Mot. Summ. J. 2 (doc. 117).
It is well-established that the holder of the promissory note may foreclose on a property during a judicial foreclosure. Bank of N.Y. Mellon v. Brantingham, 303 Or.App. 649, 660, 464 P.3d 1143 (2020). Stated differently, during a judicial foreclosure, the “person entitled to enforce” the Note is the “person in possession” of the Note who is entitled to payment. Id.; Or. Rev. Stat. §§ 71.2010(2)(u)(A), 73.0301.
Under the OTDA, the statutory “beneficiary” possesses the right to foreclose. Brandrup v. ReconTrust Co., N.A., 353 Or. 668, 687, 303 P.3d 301 (2013). The beneficiary is the “lender to whom the obligation that the trust deed secures is owed or the lender's successor in interest.” Id. at 689. More specifically, the beneficiary is the “person entitled to repayment of the note obligation.” Niday v. GMAC Mortg., LLC, 353 Or. 648, 664, 302 P.3d 444 (2013).
Where a note is endorsed in blank, the holder of the note is the person entitled to both repayment and enforcement. Or. Rev. Stat. § 73.0205(2); Blanton v. Fed. Home Loan Mortg. Co., 2016 WL 1158591, *4 (D. Or. Feb. 29), adopted by 2016 WL 1192663 (D. Or. Mar. 21, 2016). This is because, when a note changes hands, the beneficial interest in a deed of trust “follows the promissory note that it secures” by operation of law. Brandrup, 353 Or. at 694; Nationstar Mortg., LLC v. Peper, 278 Or.App. 594, 596, 377 P.3d 678 (2016).
In sum, whoever possesses a note endorsed in blank holds the beneficial interest in the note and deed of trust, and may non-judicially foreclose. See, e.g., Blanton, 2016 WL 1158591 at *4; Romani v. Northwest Trs. Servs., 2013 WL 6530583, *3 (D. Or. Dec. 12, 2013), aff'd, 656 Fed.Appx. 356 (9th Cir. 2016); Tadros v. Wilmington Tr., Nat'l Ass'n, 2018 WL 1924464, *5 (D. Or. Apr. 23, 2018); see also McLean v. Fed. Nat'l Mortg. Ass'n, 2019 WL 99275, *4-5 (D. Or. Jan. 3, 2019) (“the person who holds the note . . . is the beneficiary” for the purposes of the OTDA); Deutsche Bank Tr. Co. Ams. v. Walmsley, 277 Or.App. 690, 696, 374 P.3d 937 (2016) (noteholder is not required to prove that it properly came into possession of the note).
Plaintiff disputes McLean's reasoning, asserting that McLean conflates the lines between judicial and non-judicial foreclosures, and does not adequately explain how a bank that possesses a promissory note has the beneficial interest. Pl.'s Am. Resp. to Mot. Summ. J. 3-5 (doc. 117). Yet plaintiff has not cited to, and the Court is not aware of, any authority indicating that there is a meaningful distinction for the purposes of this case between the “note holder” in the context of a judicial foreclosure and the “beneficiary” in the context of a non-judicial foreclosure. See generally id. Indeed, the Oregon Supreme Court has defined “beneficiary” as the “person entitled to repayment” and, as Brandrup explained, the transfer of a Note transfers the beneficial interest in the DOT by operation of law. Brandrup, 353 Or. at 694; Niday, 353 Or. at 664. While not binding on this Court, McLean explicitly relies on Brandrup and other relevant authority. McLean, 2019 WL 99275 at *4.
As addressed in Section I, although plaintiff broadly challenges the admissibility of BNYM's evidence, he does not meaningfully refute the fact that BNYM is the holder of the 2006 Note and, by extension, possesses a beneficial interest in the DOT. Likewise, plaintiff does not dispute that he is in default under the 2006 Note. It is equally undisputed that BNYM “has been in continuous possession of the Note, which is indorsed in blank, since February 16, 2007.” Wallace Decl. ¶ 5 (doc. 104). In sum, based on the uncontradicted record before the Court, BNYM did not violate the OTDA by initiating the 2017 non-judicial foreclosure of the Property.
This is especially true given that the central premise of plaintiff's declaratory judgment claim - i.e., that “[a] Deed of Trust Which Names MERS as a ‘Beneficiary' Cannot be Foreclosed on Non-Judicially in Oregon” - is legally inaccurate. Am. Compl. pg. 3 (doc. 15). Namely, MERS' involvement in the lending process “does not invalidate the DOT or negate the trustee's ability to seek non judicial foreclosure if it complies with the statutory requirements.” Olmstead v. ReconTrust Co., N.A., 852 F.Supp.2d 1318, 1324 (D. Or. 2012); see also Nationstar Mortg., LLC v. Peper, 278 Or.App. 594, 596, 598, 377 P.3d 678 (2016) (rejecting the homeowner's argument that the DOT was unenforceable given MERS' wrongful designation as beneficiary thereunder, explaining “the original lender (and any successor) is the beneficiary notwithstanding what the deed of trust purports to designate”) (emphasis removed). If there is evidence that MERS was acting as the agent for the lender at the time of a challenged assignment, the non-judicial foreclosure may proceed. Niday, 353 Or. at 664. Therefore, although not dispositive, the Court notes that declaratory judgment claims are generally dismissed where, as here, MERS' assignment of the DOT was on behalf of the original lender and explicitly in its capacity as nominee. See, e.g., Van Nguyen v. Specialized Loan Servicing LLC, 2018 WL 4059292, *2-3 (D. Or. Aug. 24, 2018).
RECOMMENDATION
For the foregoing reasons, defendants' Motions for Summary Judgment (docs. 103, 106) should be granted. Plaintiffs' Motion to Strike (doc. 121) is denied. Plaintiff's request for oral argument is denied as unnecessary. Judgment should be prepared dismissing this case.
This recommendation is not an order that is immediately appealable to the Ninth Circuit Court of Appeals. Any notice of appeal pursuant to Rule 4(a)(1), Federal Rules of Appellate Procedure, should not be filed until entry of the district court's judgment or appealable order. The parties shall have fourteen (14) days from the date of service of a copy of this recommendation within which to file specific written objections with the court. Thereafter, the parties shall have fourteen (14) days within which to file a response to the objections. Failure to timely file objections to any factual determination of the Magistrate Judge will be considered as a waiver of a party's right to de novo consideration of the factual issues and will constitute a waiver of a party's right to appellate review of the findings of fact in an order or judgment entered pursuant to this recommendation.