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In re Mortgage Electronic Registration Systems Litigation

United States District Court, D. Arizona

July 29, 2016

IN RE MORTGAGE ELECTRONIC REGISTRATION SYSTEMS (MERS) LITIGATION.
v.
DSL Service CO. et al., THIS DOCUMENT RELATES TO: Bilyea CV 10-01550-PHX-JAT

          Thomas W Bilyea, represented by Valerie Robinson Edwards, Koeller Nebeker Carlson & Haluck LLP.

          Thomas W Bilyea, Plaintiff, represented by Donald O. Loeb, Donald O Loeb PLC.

          Laurie S Bilyea, Plaintiff, represented by Donald O. Loeb, Donald O Loeb PLC.

          DSL Service Company, Defendant, represented by Leonard J. McDonald, Jr., Tiffany & Bosco PA & William Morris Fischbach, III, Tiffany & Bosco PA.

          DLSA Mortgage Loan Trust 2006-AR1, Defendant, represented by Leonard J. McDonald, Jr., Tiffany & Bosco PA & William Morris Fischbach, III, Tiffany & Bosco PA.

          U.S. Bank NA, Defendant, represented by Leonard J. McDonald, Jr., Tiffany & Bosco PA & William Morris Fischbach, III, Tiffany & Bosco PA.

          Central Mortgage Company, Defendant, represented by Kevin Patrick Nelson, Tiffany & Bosco PA, Michael Joseph Rogers, Tiffany & Bosco PA & Leonard J. McDonald, Jr., Tiffany & Bosco PA.

          Central Mortgage Company, Defendant, represented by William Morris Fischbach, III, Tiffany & Bosco PA.

          Mortgage Electronic Registration Systems Incorporated, Defendant, represented by Erica Julie Stutman, Snell & Wilmer LLP, James R. Condo, Snell & Wilmer LLP, Leonard J. McDonald, Jr., Tiffany & Bosco PA, Robert M. Brochin, Morgan Lewis & Bockius LLP & William Morris Fischbach, III, Tiffany & Bosco PA.

          ORDER

          JAMES A. TEILBORG, Senior District Judge.

         I. Parties

         The parties to this member case are Plaintiffs Thomas and Laurie Bilyea, and Defendants Central Mortgage Company, MERSCORP Holdings, Inc. and Mortgage Electronic Registrations Systems, Inc. (the latter two hereinafter will be collectively referred to as MERS). (Doc. 2001-1 at 4). Central Mortgage Company moved for summary judgment at Doc. 2049. MERS moved for summary judgment at Doc. 1987.

         II. Summary Judgment Standard

         Summary judgment is appropriate when a moving part shows that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56. Initially, the movant bears the burden of pointing out to the Court the basis for the motion and the elements of the causes of action upon which the non-movant will be unable to establish a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The burden then shifts to the non-movant to establish the existence of material fact. Id. The non-movant "must do more than simply show that there is some metaphysical doubt as to the material facts" by "com[ing] forward with specific facts showing that there is a genuine issue for trial.'" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (quoting Fed.R.Civ.P. 56(e) (1963) (amended 2010)). A dispute about a fact is "genuine" if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The non-movant's bare assertions, standing alone, are insufficient to create a material issue of fact and defeat a motion for summary judgment. Id. at 247-48.

         III. Count I of the Amended Complaint

         Following the Court of Appeals reversal ( In re Mortgage Elec. Registration Sys., Inc., 754 F.3d 772 (9th Cir. 2014) at Doc. 1820) of this Court's dismissal of the consolidated amended complaint in this case, there is one Count remaining. The remaining Count is a cause of action under A.R.S. § 33-420(A). Another Court in this district has summarized this cause of action as follows:

...A.R.S. § 33-420(A) [] penalizes persons claiming an interest or lien in real property for knowingly recording a document that is "forged, groundless, contains a material misstatement or false claim or is otherwise invalid":
A. A person purporting to claim an interest in, or a lien or encumbrance against, real property, who causes a document asserting such claim to be recorded in the office of the county recorder, knowing or having reason to know that the document is forged, groundless, contains a material misstatement or false claim or is otherwise invalid is liable to the owner or beneficial title holder of the real property for the sum of not less than five thousand dollars, or for treble the actual damages caused by the recording, whichever is greater, and reasonable attorney fees and costs of the action.
(Emphasis added.) The broader statutory section, A.R.S. § 33-420, is entitled "False documents; liability; special action; damages; violation; classification."

David A. Kester v. CitiMortgage, CV 15-365, Doc. 37 (D. Ariz. March 31, 2016).

         IV. Scope of the Mandate (Forgery)

         As to their claims, this Court previously recounted,

[Plaintiffs'] 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 timebarred; (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.

         Doc. 2005 at 2.

         More specifically, the Court of Appeals held that Plaintiffs had stated a claim that "the documents at issue are invalid because they are robosigned (forged).'" In re Mortgage Elec. Registration Sys., Inc., 754 F.3d at 783.[1] As this Court discussed at length in the order denying class certification (Doc. 2005), this claim is the only claim of the 18-page Count One that was remanded to this Court. Indeed, the Court of Appeals confirmed that all other theories potentially embedded in Count One were waived by Plaintiffs by not raising them in their first appeal. (Doc. 2047) Thus, Plaintiffs must survive summary judgment on this single claim.

         As indicated above, the statute at issue creates a cause of action when someone files a document that is: 1) forged; 2) groundless; 3) contains a material misstatement or false claim; or 4) is otherwise invalid. A.R.S. § 33-420(A). However, the Court of Appeals' mandate could be construed as permitting Plaintiffs to prove only "forgery" as the means by which this statute was violated. (Doc. 1820). Indeed in a subsequent decision, the Court of Appeals stated

"This court's reversal of Count I was limited to petitioners' claims of robosigning and forgery. To the extent petitioners now seek to challenge the MDL Court's dismissal of Count I as to allegations beyond robosigning and forgery, that challenge is waived because it was not raised in the appeal in MERS I. "

(Doc. 2047 at 2) (emphasis added).

         Accordingly, the Court will analyze "forgery"[2] specifically because it is possibly the only claim remaining before this Court. The Court will then attempt to determine whether Plaintiffs are claiming A.R.S. § 33-420 was violated by Defendants in some other way.

         V. MERS' motion ...


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