659 F. App'x 383
9th Cir.2016Background
- Debra March sued seeking declaratory relief to cancel a mortgage, remove MERS from title, and declare JPMorgan Chase not entitled to loan payments; U.S. Bank counterclaimed for foreclosure and named Hawaii Dept. of Taxation as a junior lienholder.
- District court exercised supplemental jurisdiction over U.S. Bank’s foreclosure counterclaim and third-party claim against the Taxation Department.
- U.S. Bank produced recorded assignment documents showing it held the note and mortgage; defendants moved for summary judgment and for foreclosure sale confirmation after sale.
- March challenged standing/assignment validity, MERS’s role, lender licensing, and JPMorgan Chase’s right to receive payments as servicer.
- The district court granted summary judgment for defendants, ordered foreclosure, confirmed the sale, and issued a writ of possession; March appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Supplemental jurisdiction over foreclosure and third-party claim | Foreclosure counterclaim/third-party claim should not be in federal court | Claims arise from same transaction/property as principal action, so supplemental jurisdiction proper | Supplemental jurisdiction proper; district court had authority |
| Standing to foreclose | U.S. Bank lacked proper title/assignment to note and mortgage | U.S. Bank produced chain of recorded assignments showing it held the note and mortgage | U.S. Bank had standing to foreclose |
| Validity of mortgage and lender licensing | Mortgage void because original lender not properly licensed in Hawaii | Original lender was a HUD-approved foreign lender exempt from Hawaii licensing; mortgage therefore valid | Mortgage valid; licensing exemption applies |
| MERS’s ability to assign / impact on foreclosure rights | MERS lacked title/authority so assignment improper and mortgage invalid | Mortgage expressly named MERS as nominee with power to assign; even if MERS lacked property interest, lenders retain repayment/foreclosure rights | MERS’s role did not defeat foreclosure; assignment/nominee language controls |
| JPMorgan Chase’s right to receive payments | Chase not entitled to collect without proof | Chase submitted evidence (affidavit) showing it serviced the loan for U.S. Bank | Chase entitled to receive payments as servicer; March failed to rebut evidence |
| Confirmation of sale & writ of possession | Sale confirmation improper / sale price suspect | No evidence another auction would yield higher price; U.S. Bank highest bidder | Sale confirmation and writ of possession affirmed |
| Rental income distribution argument | Commissioner miscollected/distributed rental income | Issue not raised below | Argument waived on appeal |
Key Cases Cited
- Pavoni v. Chrysler Grp., LLC, 789 F.3d 1095 (9th Cir. 2015) (standard of review for summary judgment)
- Indus. Mortg. Co. v. Smith, 17 P.3d 851 (Haw. Ct. App. 2001) (standards for confirming foreclosure sale)
- Danner v. Himmelfarb, 858 F.2d 515 (9th Cir. 1988) (supplemental jurisdiction over related claims)
- Zadrozny v. Bank of N.Y. Mellon, 720 F.3d 1163 (9th Cir. 2013) (standing to foreclose established by chain of assignments)
- Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 1034 (9th Cir. 2011) (lenders retain foreclosure rights even if nominee lacks property interest)
- Canada v. Blain's Helicopters, Inc., 831 F.2d 920 (9th Cir. 1987) (use of authenticated affidavits to establish facts at summary judgment)
- Hillis v. Heineman, 626 F.3d 1014 (9th Cir. 2010) (appellate waiver for issues not raised below)