Duffy v. Bank of America, N.A.
2014 WL 340711
D.C. Cir.2014Background
- Duffy owns property in DC and signed an Adjustable Rate Note to Aegis in 2006, with a Deed of Trust naming MERS as nominee for Lender and assigns.
- Aegis went bankrupt; its note and deed of trust remained encumbering the property.
- MERS assigned the Deed to Bank of America on September 29, 2011; this assignment was recorded.
- Bank of America subsequently assigned the Deed to HSBC as Trustee for Deutsche Bank; this assignment was recorded.
- Bank of America now services the loan and informed Duffy of an impending foreclosure in 2013.
- Duffy filed suit in DC Superior Court; Defendants removed and moved to dismiss; court granted dismissal and denied leave to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Duffy owns the property free and clear. | Duffy seeks a declaration of clear title. | Encumbrances exist; a power of sale is enforceable. | Dismissed; encumbrance undisputed, no plausible free-and-clear claim. |
| Whether MERS had authority to transfer the Deed. | MERS did not have rights to the Deed or foreclosure. | Deed grants MERS power to foreclose and transfer rights. | MERS had rights under the Deed; transfers to Bank of America and then HSBC were valid. |
| Whether the assignments were void or note/ deed transfer invalid for recording issues. | Assignments were not properly recorded and were void. | Recording not required for validity of transfer; DC law allows non-judicial foreclosure with power of sale. | Assignments valid; failure to record not dispositive; forecloseable rights exist. |
| Whether the note must be held by the foreclosing entity to foreclose in DC. | Holder of the note necessary to foreclose. | Holder status not dispositive; power of sale resides in the Deed. | DC non-judicial foreclosure allows foreclose by lender or successor; no standing issue for foreclosure. |
| Whether the Note transfer/export violated DC statute § 47-1431 because not recorded. | Note transfer lacked recording. | Recording not required for validity of transfer. | Unavailing; not required for validity of transfer. |
Key Cases Cited
- Leake v. Prensky, 798 F.Supp.2d 254 (D.D.C.2011) (transfer of instrument vests enforcement rights in transferee)
- Robinson v. Deutsche Bank Nat'l Trust Co., 932 F.Supp.2d 95 (D.D.C.2013) (recording not required for validity of transfer)
- Diaby v. Bierman, 795 F.Supp.2d 108 (D.D.C.2011) (foreclosure rights may be enforced without holding the note)
- Carter v. Bank of America, NA., 888 F.Supp.2d 1 (D.D.C.2012) (nonjudicial foreclosure under DC law via power of sale)
- Twombly, 550 U.S. 544 (S. Ct. 2007) (pleading standard: plausibility required for relief)