United States District Court, D. Arizona
G. Campbell United States District Judge.
March 27, 2017, the Court issued an order granting in part
and denying in part Defendants Nationstar Mortgage LLC and
Aurora Loan Services LLC's (collectively
“Defendants”) motion for summary judgment. Doc.
43. Defendants have filed a motion to reconsider (Doc. 45),
and Plaintiffs have filed a response (Doc. 48) at the
Court's request. No party requests oral argument. For the
following reasons, the Court will grant Defendants'
motion to reconsider in part.
for reconsideration are generally disfavored and are not the
place for parties to make new arguments not raised in their
original briefs. See Northwest Acceptance Corp. v.
Lynnwood Equip., Inc., 841 F.2d 918, 925-26 (9th Cir.
1988). Nor is it the time to ask the Court to rethink its
analysis. See United States v. Rezzonico, 32
F.Supp.2d 1112, 1116 (D. Ariz. 1998) (citing Above the
Belt, Inc. v. Mel Bohannon Roofing, Inc., 99 F.R.D. 99,
101 (E.D. Va. 1983)). The Court may grant such motions only
if (1) it is presented with newly discovered evidence, (2) it
committed clear error or the initial decision was manifestly
unjust, or (3) there is an intervening change in controlling
law. See Sch. Dist. No. 1J, Multnomah County, Or. v.
ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993);
Zimmerman v. City of Oakland, 255 F.3d 734, 740 (9th
Unclear note holder identity does not preclude summary
Court reached this conclusion in its previous order:
In this instance, Defendants have introduced conflicting
evidence of ownership, submitting recorded documents to the
bankruptcy court identifying both Aurora and Nationstar as
the creditor on Plaintiffs' loan, and asserting in this
litigation - with no supporting documents - that Fannie Mae
has been the owner of the loan since 2006. Furthermore,
Defendants assert that Nationstar is Fannie Mae's loan
servicer for Plaintiffs' loan, but provide no
documentation or affidavit from Fannie Mae to that effect.
The Court finds that Plaintiffs have raised a question of
fact regarding their good faith basis for disputing
Defendants' authority to conduct a trustee's sale. In
light of Defendants' conclusory argument and their
confusing and unsupported assertions regarding the role of
Fannie Mae in this case, the Court cannot grant summary
judgment in their favor on this issue.
Doc. 43 at 12.
contend that this decision is clearly erroneous because,
under Arizona law, “[t]rustee sales are not conducted
under the authority of the person who ‘owns' or
‘holds' the note, but rather, ‘are conducted
on a contract theory under the power of sale authority of the
trustee.'” Doc. 45 at 2-3 (citing In
re Krohn, 52 P.3d 774, 777 (Ariz. 2002)).
“‘[T]he dispositive question[, ]'”
Defendants argue, “is not who ‘owns' or
‘holds' the note under the Uniform Commercial Code,
but rather, ‘whether the trustee, acting
pursuant to its own power of sale or on behalf of the
beneficiary, had the statutory right to foreclose on the
deeds of trust.'” Id. at 3 (citing
Hogan, 277 P.3d at 784.). Defendants assert that
“[t]he Court rejected all of Plaintiffs' arguments
seeking to undermine the authority of the trustee. That is
dispositive of the entire case as to these issues.”
holding of Hogan is narrower than Defendants
contend. Hogan stands for the proposition that a
beneficiary is not required to “show the note” on
a challenge to the non-judicial foreclosure, unless a
borrower affirmatively alleges that the beneficiary lacks
authority to enforce the note. Hogan, 277 P.3d at
783 (citing Mansour v. Cal-Western Reconveyance
Corp., 618 F.Supp. 2d. 1178, 1181 (D. Ariz. 2009)
(“Arizona's [non]-judicial foreclosure statutes . .
. do not require presentation of the original note
before commencing foreclosure proceedings.”)
(emphasis added). The Court in Hogan was clear on
this point, stating: “[w]e agree” that “a
deed of trust . . . may be enforced only by, or in behalf of,
a person who is entitled to enforce the obligation the
mortgage secures, ” but “Hogan's complaints
do not affirmatively allege that WaMu and Deutsche Bank are
not holders of the notes in question or that they otherwise
lack authority to enforce the notes.” Id.
a situation where a borrower is current on her home loan
payments, which are made on time each month to Note Holder Y.
The note is secured by a deed of trust naming MERS the
nominal beneficiary. MERS assigns its interest to Nationstar,
which erroneously believes the note holder to be Wrong
Company Z. Because Wrong Company Z has no record of receiving
payments from the borrower, Nationstar believes the note is
in default and appoints a trustee to initiate non-judicial
foreclosure on the borrower's home. Under Defendants'
reading of Hogan, the borrower would be unable to
challenge Nationstar's erroneous belief that Wrong
Company Z held the note and that borrowers were in default.
The only question would be whether the trustee had been
assigned legal authority to act. If so, it could sell the
borrower's property even though the borrower was current
in its payments to Note Holder Y. The fact that the debt was
owed - and was current - to Note Holder Y would be
interpretation of Hogan is not correct.
Hogan held that a beneficiary has no affirmative
duty to prove its authority to proceed before initiating a
non-judicial foreclosure. 277 P.3d at 783. The Arizona
Supreme Court specifically noted, however, that the plaintiff
in Hogan did not “affirmatively allege that
WaMu and Deutsche Bank are not the holders of the notes in
question or that they otherwise lack authority to enforce the
notes.” Id. The clear implication of this
statement is that the analysis would have been different if
the plaintiff had made such an affirmative allegation.
the Court concludes that Nationstar has misread
Hogan, the Court still finds Nationstar's motion
to be well-taken. Hogan makes clear that Plaintiffs
bear the burden of affirmatively alleging in their complaint
- and proving in their case - that Nationstar lacks authority
to enforce the note. Id. Hogan placed the
burden to prove a lack of authority on the borrower, rather
than placing a burden of proving the existence of authority
on the beneficiary or trustee. Hogan specifically
held that “[n]othing in the non-judicial foreclosure