Mary Strong v. Countrywide Home Loans, Inc.
700 F. App'x 664
| 9th Cir. | 2017Background
- Mary Strong, pro se, sued multiple mortgage-related defendants in diversity court over loans and foreclosures affecting her property; district court dismissed her complaint and she appealed.
- Claims included intentional infliction of emotional distress, fraud, rescission, wrongful foreclosure, quiet title, slander of title, and declaratory relief against various lenders, trustees, and loan servicers.
- District court dismissed several claims for failure to plead plausible facts (emotional distress, fraud, rescission) and dismissed wrongful-foreclosure and title-related claims as to multiple defendants based on lack of Article III standing because the property had already been sold in a junior-loan foreclosure.
- Strong alleged the junior-loan foreclosure sale was not conducted by the trustee or an authorized agent, raising a post-sale challenge under Oregon law alleging a fundamental flaw in the foreclosure proceedings.
- The appellate court found intervening Ninth Circuit and Oregon authority relevant to post-sale challenges and vacated/remanded some title and wrongful-foreclosure dismissals for further proceedings; it also noted possible defective service/personal-jurisdiction issues as to some defendants and denied Strong’s default-judgment motion without prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether intentional infliction of emotional distress stated a claim | Strong alleged defendants’ conduct caused severe emotional distress | Defendants: pleadings lack facts meeting elements of claim | Dismissed for failure to state a plausible claim |
| Whether fraud claim stated a claim | Strong alleged fraudulent inducement around loan/deed transactions | Defendants: allegations insufficiently specific to plead fraud | Dismissed for failure to state a plausible claim |
| Whether rescission based on fraudulent inducement was available | Strong claimed she was fraudulently induced into deeds of trust | Defendants: insufficient factual allegations to show inducement | Dismissed for failure to plead rescission elements |
| Article III standing for wrongful-foreclosure/title claims (senior defendants) | Strong asserted injury from foreclosure-related acts | Defendants: no actual or imminent injury because sale already occurred | Dismissed for lack of Article III standing as to those defendants |
| Post-sale challenge to junior-loan foreclosure (trustee authority) | Strong alleged sale was not conducted by trustee or authorized agent, a fundamental defect | Defendants: relied on bar to post-sale challenges because sale occurred | Vacated and remanded — borrower has standing to bring post-sale challenge alleging lack of notice or fundamental flaw under Oregon law |
| Personal jurisdiction/service over certain defendants | Strong proceeded against GMAC, Stratagem, Residential Asset | Defendants: service/jurisdiction may be deficient | Remanded for district court to consider whether service and personal jurisdiction were proper; default denied without prejudice |
Key Cases Cited
- Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 1034 (9th Cir.) (standard of review for Rule 12(b)(6) dismissal)
- Woods v. U.S. Bank, N.A., 831 F.3d 1159 (9th Cir.) (borrower may bring post-sale challenge based on lack of notice or fundamental flaw)
- Wolf v. GMAC Mortg., LLC, 370 P.3d 1254 (Or. Ct. App.) (trustee participation is fundamental to trustee’s sale; post-sale challenge not barred when sale not by duly authorized trustee)
- Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC) Inc., 528 U.S. 167 (U.S.) (Article III injury must be actual or imminent)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (U.S.) (elements required for Article III standing)
- Babick v. Oregon Arena Corp., 40 P.3d 1059 (Or.) (elements of intentional infliction of emotional distress under Oregon law)
- First W. Mortg. Co. v. Hotel Gearhart, Inc., 488 P.2d 450 (Or.) (elements governing rescission for fraud)
- Omni Capital Int'l, Ltd. v. Rudolf Wolff & Co., 484 U.S. 97 (U.S.) (service of summons is prerequisite to personal jurisdiction)
- Padgett v. Wright, 587 F.3d 983 (9th Cir.) (appellate court will not consider arguments raised first on appeal)