Commonwealth Property Advocates, LLC v. Mortgage Electronic Registration Systems, Inc.
2011 U.S. App. LEXIS 25753
| 10th Cir. | 2011Background
- Commonwealth Property Advocates acquired three Utah properties from defaulting borrowers and filed three diversity suits to prevent foreclosure.
- Plaintiff argued securitization and sale of notes foreclosed rights, so mortgage entities (MERS, ReconTrust, etc.) could foreclose only with authorization from all securitized-note investors.
- In 10-4182 (Bountiful), MERS was nominee for lender; plaintiff acquired title by quitclaim and sued for stay, estoppel/declaratory relief, declaratory relief, quiet title, and fees/costs; district court dismissed.
- In 10-4193 (Sandy), ReconTrust/BAC served defaults; plaintiff acquired title by quitclaim and sued for stay, estoppel/declaratory relief, declaratory relief, quiet title, and fees/costs; district court dismissed.
- In 10-4215 (Alpine), two notes secured by deeds of trust; MERS as beneficiary; First Horizon pooled notes and securities; plaintiff asserted similar relief and standing challenges; district court dismissed.
- Court affirmed, holding no viable Utah-law basis for challenging foreclosures in diversity and that trust-deed language authorized foreclosures despite securitization.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to challenge foreclosures | Plaintiff asserts Article III and prudential standing as current owner. | Defendants argue injuries are self-imposed or third-party rights; lack of standing. | Plaintiff has Article III and prudential standing; proceed to merits. |
| Authority to foreclose under Utah law amid securitization | Securitization strips foreclosure authority unless all investors authorize. | Trust deeds authorize foreclose; §57-1-35 does not remove authority; securitization does not void power. | Utah Court of Appeals’ reading of authority prevails; foreclosures valid under the deeds. |
Key Cases Cited
- Smith v. United States, 561 F.3d 1090 (10th Cir. 2009) (standard for evaluating Rule 12(b)(6) dismissals in context of pleading)
- Sikkenga v. Regence BlueCross Blueshield of Utah, 472 F.3d 702 (10th Cir. 2006) (rec Lodging; use of complaint exhibits in 12(b)(6) review)
- Jennings v. Rivers, 394 F.3d 850 (10th Cir. 2005) (Rule 59(e) and Rule 60(b) distinctions in reconsideration)
- Hawkins v. Evans, 64 F.3d 543 (10th Cir. 1995) (timeliness and interpretation of motions to reconsider)
- Smith v. Cummings, 445 F.3d 1254 (10th Cir. 2006) (pleading requirements and cognizable claims under Rule 12(b)(6))