Vega v. CTX MORTG. CO., LLC
761 F. Supp. 2d 1095
D. Nev.2011Background
- Plaintiffs Vega, Sr. and Mele Vega mortgaged property at 4079 Talladega Dr., Sparks, NV to CTX for $369,900 and $100,000 to secure a loan and line of credit.
- NOD filed December 2009 by LSI as agent for Cal-Western Reconveyance Corp., trustee substitution by Chase on December 24, 2009.
- Trustee's sale scheduled for June 23, 2010; Foreclosure proceedings challenged as potentially statutorily defective under Nevada law.
- MERS purported to transfer beneficial interest to Chase on December 24, 2009, raising questions about who holds the note and can foreclose.
- Court discusses whether Nevada follows the traditional rule that the mortgage follows the note or the Restatement (Third) of Property (Mortgages) § 5.4, and what that means for validity of foreclosure in this case.
- Court grants in part and denies in part the motions to dismiss; injunctive relief against foreclosure is left as the surviving claim, and a 100-day injunction with mediation is ordered.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether foreclosure was statutorily defective under NRS 107.080(2)(c). | Vega argues MERS assignment/Trustee chain undermines enforceability. | Defendants contend the transfer/agency followed proper channels and is enforceable. | Statutory defect persists; injunctive relief may apply. |
| Whether MERS could transfer the debt and mortgage to Chase affecting foreclose ability. | Restatement approach may permit transfer of debt and mortgage via MERS. | MERS' ability to transfer the note is uncertain; traditional chain may be insufficient. | Court agrees Restatement approach could apply but notes practical uncertainty; injunctive relief remains.”},{ |
Key Cases Cited
- Rodney v. Ariz. Bank, 172 Ariz. 221 (Ariz.App. 1992) (mortgage follows the debt; transfer of note affects mortgage)
- Ord v. McKee, 5 Cal. 515 (1855) (mortgage follows the debt as an incident to the secured obligation)
- Collins v. Union Fed. Sav. & Loan Ass'n, 99 Nev. 284 (Nev. 1983) (genuineness of usury/inducement issues; contract governs remedy)
- Topaz Mut. Co., Inc. v. Marsh, 108 Nev. 845 (Nev. 1992) (restitution not available when contract exists)
- Lipshie v. Tracy Inv. Co., 93 Nev. 370 (Nev. 1977) (restitution principles in contract context)
- U.S. Bank Nat'l Ass'n v. Ibanez, 458 Mass. 637 (Mass. Sup. Ct. 2011) (foreclosing entity must hold mortgage at notice and sale)