Greenwood v. Ocwen Loan Servicing LLC
3:16-cv-00527
D. Nev.Apr 17, 2018Background
- In 2006 Jerry and Gina Greenwood took a $691,000 loan secured by a deed of trust (DOT) originally recorded in the wrong Nevada county and later re-recorded in the correct county. They defaulted in 2008.
- IndyMac failed in 2008; OneWest acquired IndyMac’s assets/servicing rights in 2009 and an assignment to OneWest was recorded in 2010.
- The Greenwoods filed Chapter 7 in September 2009; the Chapter 7 trustee filed an adversary proceeding seeking to avoid the re-recordation as a preference and later settled with OneWest in 2012 for $95,000, preserving OneWest’s interest in the DOT; the trustee waived further claims related to the DOT.
- The Greenwoods appealed various bankruptcy orders through the BAP and Ninth Circuit and lost; the bankruptcy case was closed in 2013–2014.
- In 2016 the Greenwoods sued to quiet title, alleging defective securitization and chain-of-assignment failures left no valid beneficiary or mortgagee; defendants moved for summary judgment.
- The district court granted summary judgment for defendants, concluding the claims were precluded by the bankruptcy proceedings, the Greenwoods lacked standing to challenge securitization/assignments, and the suit was frivolous enough to warrant an order to show cause on sanctions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Preclusion of relitigation of DOT validity | Greenwoods seek to invalidate OneWest’s DOT based on chain-of-assignment/securitization defects | OneWest says the trustee litigated and settled DOT validity; settlement and dismissal with prejudice precludes relitigation | Court: Issue precluded by prior bankruptcy adversary and settlement; dismissal appropriate |
| Standing to challenge securitization/assignments | Greenwoods argue securitization defects (PSA, trust breaches) void defendants’ interests | Defendants argue borrowers are not parties or intended beneficiaries of PSAs/assignment documents and lack standing under Nevada law | Court: Greenwoods lack standing to challenge securitization or post-closing assignments; claims fail |
| Requirement to show entitlement to enforce Note and DOT absent foreclosure | Greenwoods invoke Edelstein to require defendants to prove unified note/DOT at complaint time | Defendants note Edelstein governs foreclosure entitlement and does not create a pre-foreclosure cause of action here | Court: Edelstein inapplicable because no foreclosure pending; assertion is a new, unsupported argument |
| Sanctions for maintaining frivolous claims | Greenwoods contend they can amend complaint and proceed despite precedent | Defendants cite prior binding Nevada precedent (Wood) and warned counsel; maintenance of suit was unreasonable | Court: Plaintiffs must show cause why sanctions should not be imposed; defendants invited to seek fees |
Key Cases Cited
- Five Star Capital Corp. v. Ruby, 194 P.3d 709 (Nev. 2008) (issue preclusion principles applied to claims litigated by bankruptcy trustee)
- Wood v. Germann, 331 P.3d 859 (Nev. 2014) (borrowers lack standing to challenge securitization/PSA assignments)
- Edelstein v. Bank of New York Mellon, 286 P.3d 249 (Nev. 2012) (entitlement to enforce both note and deed of trust is required to foreclose)
- Anderson v. Liberty Lobby, 477 U.S. 242 (U.S. 1986) (summary judgment genuine-issue standard)
- Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (summary judgment burden-shifting framework)