Robinson v. American Home Mortgage Servicing, Inc.
2014 U.S. App. LEXIS 10934
| 9th Cir. | 2014Background
- MERS operates a private electronic database (the "MERS System") that records which entity holds and services residential promissory notes; MERS is often named as beneficiary/nominee in deeds of trust while ownership of the note moves among members.
- Numerous putative class actions about MERS-related practices were centralized by the JPML and partly transferred to an MDL in the District of Arizona; the JPML remanded claims unrelated to formation/operation of MERS to transferor courts.
- Plaintiffs (borrowers from AZ, CA, NV, OR, SC) filed a Consolidated Amended Complaint (CAC) alleging various state-law claims tied to MERS-related foreclosures, assignments, and loan practices; the MDL court dismissed the CAC with prejudice.
- On appeal, the Ninth Circuit dismissed plaintiffs’ challenge to the JPML transfer (mandamus is exclusive), affirmed most dismissals, reversed dismissal of Count I (Arizona false documents claim), and remanded Count I for further proceedings.
- Key contested legal questions included: reviewability of JPML orders, whether the MDL court converted a Rule 12(b)(6) motion into summary judgment, and the merits of multiple state-law claims (AZ §33-420 false documents; wrongful foreclosure; Nevada nonjudicial foreclosure rules; aiding/abetting claims; loan-origination predatory-lending counts).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Review of JPML transfer | JPML erred in centralizing/transfer | JPML order is not reviewable on appeal | Dismissed challenge for lack of jurisdiction; mandamus is exclusive review mechanism |
| MDL remand orders | MDL court exceeded authority/was inconsistent in remand determinations | MDL court properly applied JPML remand scope | Plaintiffs waived these arguments by not raising them below; court refused to consider them |
| Conversion to summary judgment | MDL court relied on materials outside pleadings, converting Rule 12(b)(6) motion to Rule 56 | Dismissal rested solely on pleading deficiencies | No conversion; dismissal reviewed as Rule 12(b)(6) |
| Count I (AZ §33-420 false documents) | Documents (notices of trustee sale, substitutions, assignments) were forged/robosigned and cloud title; Gov. relief and damages available | Defs argued statute didn’t apply, claims time-barred, lack of standing, deficient pleading | Reversed dismissal: Arizona appellate decisions (e.g., Stauffer) show §33-420 covers these documents, claims timely, plaintiffs have standing, and pleading was adequate |
| Count II (wrongful foreclosure AZ/CA/NV) | MERS "split" note and deed making foreclosures wrongful | State law permits reunification/foreclosure; plaintiffs are in default | Affirmed dismissal: plaintiffs failed to allege lack of default, tender, or acceptable excuse from tender required by CA/NV rules |
| Count III (Nev. nonjudicial foreclosure NRS 107.080) | Foreclosures invalid because MERS was not true beneficiary and deeds/notes were irreparably split | Nevada law allows reunification; MERS can assign beneficial interest to noteholder | Affirmed dismissal: Edelstein establishes MERS may assign to reunify note and deed; nonjudicial foreclosure rules satisfied |
| Counts V & VI (aiding/abetting wrongful foreclosure and predatory lending) | Various defendants aided MERS-related wrongdoing and predatory origination | Aiding liability depends on underlying tort / origination claims remanded | Affirmed dismissal: aiding-and-abetting fails without valid underlying wrongful-foreclosure claim; predatory-origination claims were remanded by JPML |
| Leave to amend | Plaintiffs should be allowed another amendment | MDL court: amendment futile and plaintiffs had multiple prior chances; prejudice to defendants | Affirmed denial of leave to amend as within district court discretion |
Key Cases Cited
- Cervantes v. Countrywide Home Loans, 656 F.3d 1034 (9th Cir. 2011) (describing operation of the MERS System and prior MDL dismissal affirmed)
- Iqbal v. Ashcroft, 556 U.S. 662 (U.S. 2009) (pleading standard: allegations must plausibly suggest entitlement to relief)
- Carpenter v. Longan, 83 U.S. 271 (U.S. 1872) (common-law principle that assignment of a note carries the mortgage)
- Stauffer v. U.S. Bank National Ass'n, 308 P.3d 1173 (Ariz. Ct. App. 2013) (Arizona Court of Appeals holds §33-420 covers notices of trustee sale, substitution, and assignments; plaintiffs have standing)
- Edelstein v. Bank of New York Mellon, 286 P.3d 249 (Nev. 2012) (Nevada Supreme Court holds MERS designation can initially "split" note and deed but assignment by MERS can reunify them for nonjudicial foreclosure)