Morgan v. Ocwen Loan Servicing, LLC
795 F. Supp. 2d 1370
N.D. Ga.2011Background
- Morgan sued Ocwen, MERS, and Merscorp in 2010 for state-law claims including declaratory judgment, injunctive relief, and title-based relief, plus a RICO claim.
- Mortgage loan originated with Guaranteed Rate; note to Guaranteed Rate and security deed to MERS as nominee; note later transferred to Taylor, Bean & Whitaker.
- MERS purportedly assigned the security deed to Ocwen; Ocwen has never held the note.
- Ocwen allegedly foreclosed nonjudicially without proper notice; plaintiff sought injunctive relief and damages.
- Defendants waived service of summons; dispositive motion to dismiss was filed; several counts challenged as void or moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of the security deed given MERS as nominee | Morgan argues the security deed is void because MERS had no pecuniary interest | Ocwen argues the deed remains valid despite MERS’s nominee status | Counts I, III, IV, V dismissed as to void security deed |
| Whether Ocwen could foreclose when it did not hold the note | Morgan claims Ocwen cannot foreclose absent note/holder | Ocwen contends it may foreclose as the holder of the security instrument | Counts II, VI, VIII survive for injunctive relief, wrongful foreclosure, and negligence at this stage |
| Whether failure to send foreclosure notice is moot | Plaintiff argues improper notice could still affect rights | Foreclosure occurred or was canceled, making moot | Not moot; claims preserved for potential repetition and appeal |
| Remaining claims (emotional distress, RICO) viability | Claims should proceed given alleged misconduct | Not challenged beyond foreclosure authority | Counts VII and IX denied dismissal; considered viable at this stage |
Key Cases Cited
- United Steelworkers of America v. Bishop, 598 F.2d 408 (5th Cir.1979) (capable repetition, yet evading review doctrine applies to mootness)
- Weems v. Coker, 70 Ga. 746 (1883) (foreclosure defenses tied to holder of debt)
- Bowen v. Tucker Fed. Sav. & Loan Assoc., 210 Ga.App. 764, 438 S.E.2d 121 (1993) (holder of note rights to exercise power of sale)
- Boaz v. Latson, 260 Ga. App. 752, 580 S.E.2d 572 (2003) (integration of note and security deed; foreclosure rights depend on default)
- Taylor, Bean & Whitaker v. Brown, 276 Ga. 848, 583 S.E.2d 844 (2003) (describes MERS system and nominee status)
- Landmark Nat'l Bank v. Kesler, 216 P.3d 158 (Kan. 2009) (MERS ownership/record-keeping implications)