Commonwealth Property Advocates, LLC v. Mortgage Electronic Registration System, Inc.
2011 UT App 232
| Utah Ct. App. | 2011Background
- Home Buyer signed a promissory note for $417,000 secured by a Deed of Trust naming MERS as nominee for Lender and Lender's successors and assigns and as beneficiary.
- Lender assigned servicing rights to Citi; Home Buyer made payments to Citi and Citi remained servicer of the Note.
- Notice of Default and Election to Sell recorded December 8, 2009; MERS assigned its beneficial interest to Citi on December 6, 2009 (recorded January 6, 2010).
- Home Buyer quitclaims the Eagle Mountain property to CPA on December 31, 2009.
- CPA filed February 2010 alleging the Deed of Trust was separated from the Note after execution and securitization left the debt unsecured; CPA sought estoppel, declaratory judgments, quiet title, and refunds.
- District court converted MERS/Citi’s dismissal motion to summary judgment and granted judgment to MERS and Citi; CPA appeals the dismissal/conversion and underlying securitization theory.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does securitization strip MERS/Citi of foreclose rights under the Deed of Trust? | CPA argues securitization separated debt from security, nullifying foreclosure rights. | MERS/Citi retain rights under the Deed of Trust despite securitization. | No; securitization does not erase foreclosure rights; Deed of Trust language prevails. |
| Was the district court's conversion of a motion to dismiss to summary judgment reversible error? | CPA contends conversion was improper and prejudiced the case. | Conversion was permissible; even if improper, result would be the same. | Harmless error; outcome would have been the same notwithstanding the conversion. |
Key Cases Cited
- Chapman ex rel. Chapman v. Primary Children's Hosp., 784 P.2d 1181 (Utah 1989) (pleading standards; conclusory allegations insufficient to preclude dismissal or summary judgment)
- Berneau v. Martino, 223 P.3d 1128 (Utah 2009) (claims must be actionable and supported by facts to survive dismissal)
- Osguthorpe v. Wolf Mountain Resorts, L.C., 232 P.3d 999 (Utah 2010) (court may disregard nonfactual legal conclusions on motion to dismiss)