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In re Mortgage Electronic Registration Systems (Mers) Litigation

United States District Court, D. Arizona

December 21, 2015



JAMES A. TEILBORG, Senior District Judge.

Pending before the Court are two Motions for Class Certification pursuant to Rule 23 of the Federal Rules of Civil Procedure. The first motion was filed by Plaintiffs Sally Robinson-Burke, Rosa Silvas, Nicholas DeBaggis, and Thomas Bilyea.[1] (Doc. 1913). The second motion was filed by Plaintiffs Milan Stejic and Maria Hernandez (collectively, "Plaintiffs"). (Doc. 1914). The Court now rules on the Motions.

I. Factual Background

This case originally began as a multi-district litigation ("MDL") centralizing civil actions related to the formation and operation of Mortgage Electronic Registration Systems, Inc. and MERSCORP, Inc. (collectively, "MERS"). (Doc. 1). After claims in twenty of the associated cases were dismissed (Doc. 1170; Doc. 1247), the remaining Plaintiffs filed a Consolidated Amended Complaint ("CAC") on June 4, 2011. (Doc. 1424).

The CAC included twelve counts, including allegations of violations of Arizona Revised Statute ("A.R.S.") § 33-420 (Count I); wrongful foreclosure (Count II); violations of Nevada Revised Statutes § 107.080 (Count III); violations of Oregon Revised Statutes ("O.R.S.") § 86.735 (Count IV); allegations of aiding and abetting wrongful foreclosure (Count V); aiding and abetting predatory lending (Count VI); unjust enrichment (Count VII); slander of title (Count VIII); violations of O.R.S. § 646.607 (Count IX); and violations of South Carolina Code of Laws § 39-5-10 (Count X). (Doc. 1424 at 7-57). Additionally, Plaintiffs sought declaratory relief (Count XI) and injunctive relief (Count XII). (Doc. 1424 at 58-60).

The amended complaint was dismissed on October 3, 2011. (Doc. 1602). Plaintiffs appealed dismissal of Counts I-VI to the Ninth Circuit Court of Appeals. The Court of Appeals reversed the dismissal of Count I and affirmed the dismissal of Counts II-VI. In re Mortgage Elec. Registration Sys., Inc., 754 F.3d 772, 786 (9th Cir. 2014). Specifically, the Court of Appeals held that: (1) A.R.S. § 33-420 applies to Notices of Trustee Sale, Notices of Substitution of Trustee, and Assignments of a Deed of Trust, documents which Plaintiffs alleged to be fraudulent in the CAC; (2) Plaintiffs' claims are not time-barred; (3) Plaintiffs have standing to sue under A.R.S. § 33-420; and (4) Plaintiffs pleaded their robosigning claims with sufficient particularity to satisfy Federal Rule of Civil Procedure 8(a). In re Mortgage Elec. Registration Sys., Inc., 754 F.3d at 781-784.

On August 17, 2015, Plaintiffs filed motions seeking class certification for two classes for the purpose "of pursuing a statutory damages claim on behalf of Arizona property owners arising from Defendants' violation of A.R.S. § 33-420 while conducting foreclosure proceedings in the State of Arizona." (Doc. 1913 at 1; Doc. 1914 at 1). The first motion proposes a class that would be composed of property owners against whom "[MERS] claimed that it was transferring the beneficial interest under the Deed of Trust to a new beneficiary along with the Note and any payments due under the note, and caused the assignment to be recorded." (Doc. 1913 at 1). The second motion proposes a class that would be composed "of owners of residential property in Arizona who had a Substitution of Trustee and Notice of Trustee Sale recorded against their property... whereby [MERS], purportedly acting as beneficiary, substituted the trustee, and caused the substitution to be recorded." (Doc. 1914 at 1). Plaintiffs further allege that documents related to these mortgage transactions misrepresent MERS's status and authority as a beneficiary, contain false statements regarding assignments, and are robosigned. (Doc. 1913 at 3-6; Doc. 1914 at 3-5).

II. Mandate on Remand

Within the Ninth Circuit "a court will generally refuse to reconsider an issue that has already been decided by the same court or a higher court in the same case." Gonzalez v. Arizona, 677 F.3d 383, 390 (9th Cir. 2012). Thus, when "the issue in question [was] decided explicitly or by necessary implication in the previous disposition, " there is no need to revisit the decision. United States v. Thrasher, 483 F.3d 977, 981 (9th Cir. 2007) (quoting Herrington v. County of Sonoma, 12 F.3d 901, 904 (9th Cir. 1993)). Additionally, "when a court is confronted with issues that the remanding court never considered, the mandate requires respect for what the higher court decided, not for what it did not decide.'" Hall v. City of Los Angeles, 697 F.3d 1059, 1067 (9th Cir. 2012) (quoting United States v. Kellington, 217 F.3d 1084, 1093 (9th Cir. 2000)).

As the dismissal of the CAC explained, Plaintiffs' claims concerning the operation of MERS have already been found not to state a claim, either by the Arizona courts or the Ninth Circuit Court of Appeals. (Doc. 1602 at 5-8). In its opinion, the Court of Appeals did not reverse or even address Plaintiffs' claims pertaining to MERS' status as a beneficiary or the validity of MERS assignments. Instead, the Ninth Circuit Court of Appeals addressed claims of robosigning and noted specific examples of documents allegedly fraudulently signed or notarized within the CAC. In re Mortgage Elec. Registration Sys., Inc., 754 F.3d at 783-84. The Court of Appeals' opinion did not reference any of Plaintiffs' other claims or factual assertions from Count I. Id. at 781-84.[2] This omission indicates the Court of Appeals' intentions concerning the scope of its mandate on remand. See Fid. Nat'l Fin., Inc. v. Friedman, 855 F.Supp.2d 948, 956 (D. Ariz. 2012) (holding that "[b]ecause the mandate is silent as to its scope, the court will look at the Ninth Circuit's opinion" to ensure that the consideration of an issue does not "impermissibly exceed[] the scope of the mandate").

Plaintiffs' motions for class certification cannot be used to resurrect a dismissed theory. The Court of Appeals' reversal was limited to Plaintiffs' claims of robosigning and forgery under A.R.S. § 33-420. Thus, this Court will consider only those portions of Plaintiffs' motions which address these claims.

III. Class Certification Legal Standard

The district courts have broad discretion to grant or deny class certification. Bateman v. Am. Multi-Cinema, Inc., 623 F.3d 708, 712 (9th Cir. 2010) (citing Yamamoto v. Omiya, 564 F.2d 1319, 1325 (9th Cir. 1977)). However, the United States Supreme Court requires that such a determination should be made only after the district court has "engage[d] in a rigorous analysis' of each Rule 23(a) factor when determining whether plaintiffs seeking class certification have met the requirements of Rule 23." Ellis v. Costco Wholesale Corp., 657 F.3d 970, 980 (9th Cir. 2011) (citing Gen. Tel. Co. of the Sw. v. Falcon, 457 U.S. 147, 161 (1982)). Under Rule 23, it is the party seeking class certification that "bears the burden of showing that each of Rule 23(a)'s requirements and at least one of Rule 23(b)'s requirements" are satisfied. Juvera v. Salcido, 294 F.R.D. 516, 520 (D. Ariz. 2013) (citing Dukes v. Wal-Mart, Inc., 509 F.3d 1168, 1176 (9th Cir. 2007), rev'd on other grounds, ___ U.S. ___, 131 S.Ct. 2541, 180 L.Ed.2d 374 (2011)).

Rule 23 has two implicit prerequisites that Plaintiffs must satisfy for the Court to grant certification. Clay v. Am. Tobacco Co., 188 F.R.D. 483, 490 (S.D. Ill. 1999); Singleton v. Adick, No. CV 09-486-PHX-JAT, 2009 WL 3710717, at *2 (D. Ariz. Nov. 2, 2009). First, in order to maintain a class action, the class must be adequately defined and clearly ascertainable. DeBremaecker v. Short, 433 F.2d 733, 734 (5th Cir. 1970); see also Lozano v. AT & T Wireless Ser., Inc., 504 F.3d 718 (9th Cir. 2007) ("The district court's failure to analyze the Rule 23(a) factors in determining whether to grant class certification... resulted in its certifying a theory with no definable class."). The class cannot be overbroad, amorphous, or vague, but must be susceptible to a precise definition. Clay, 188 F.R.D. at 490. A class must be precisely defined so the Court can determine who will be bound by the judgment. McHan v. Grandbouche, 99 F.R.D. 260, 265 (D. Kan. 1983).

Second, the named representative must be a member of the class. Bailey v. Patterson, 369 U.S. 31, 32-33 (1962). Plaintiffs must also prove that their proposed class meets all of the four requirements of Rule 23(a):

(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law and fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.

Pulaski & Middleman, LLC v. Google, Inc., 802 F.3d 979, 985 (9th Cir. 2015) (quoting Fed.R.Civ.P. 23(a)).

Finally, Plaintiffs must also prove that at least one of the following Rule 23(b) requirements is met:

(1) the prosecution of separate actions would create a risk of: (a) inconsistent or varying adjudications or (b) individual adjudications dispositive of the interests of other members not a party to those adjudications; (2) the party opposing the class has acted or refused to act on grounds generally applicable to the class; or (3) the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and a class action is superior to other available methods for the fair and efficient adjudication of the controversy.

Fed. R. Civ. P. 23(b).

IV. Discussion

A. Adequately Defined and Clearly Ascertainable

Plaintiffs claim the proposed classes for each motion would number in excess of 50, 000 members, based on a sample of documents from three counties in Arizona. (Doc. 1913 at 7; Doc. 1914 at 7). Plaintiffs Sally Robinson-Burke, Rosa Silvas and Thomas Bilyea propose certification of a class defined as:

owners of residential property in Arizona who had an Assignment of Deed of Trust recorded against their property between February 21, 2008 and the present whereby [MERS] claimed that it was transferring the beneficial interest under the Deed of Trust to a new beneficiary along with the Note and ...

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