Opinion ID: 787570
Heading Depth: 2
Heading Rank: 2

Heading: Summary Judgment in Favor of Trust Defendants

Text: 45 1. The District Court Erred In Holding That The Trust Defendants Are Not Subject To Personal Jurisdiction 46 We begin a jurisdictional analysis by looking to the state statute authorizing its courts to exercise jurisdiction over out of state defendants. Washington's long-arm statute, section 4.28.185 of the Washington Revised Code, permits the exercise of jurisdiction to the full extent of the due process clause of the United States Constitution. Shute v. Carnival Cruise Lines, 113 Wash.2d 763, 783 P.2d 78, 79-80 (1989), rev'd on other grounds by Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 111 S.Ct. 1522, 113 L.Ed.2d 622 (1991). Under the due process analysis, a defendant may be subject to either general or specific personal jurisdiction. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 & n. 9, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). 47
48 A defendant is subject to general jurisdiction only where the defendant's contacts with a forum are substantial or continuous and systematic. Bancroft & Masters, Inc. v. Augusta Nat'l, Inc., 223 F.3d 1082, 1086 (9th Cir.2000). The Trust Defendants submitted uncontroverted evidence that they have no offices, employees, or bank accounts in Washington, do not conduct business in Washington, and have not contracted with any Washington resident. Accordingly, the district court correctly found that the Trust Defendants are not subject to general personal jurisdiction in Washington. 49
50 Specific jurisdiction applies if (1) the defendant has performed some act or consummated some transaction within the forum state or otherwise purposefully availed himself of the privileges of conducting activities in the forum, (2) the claim arises out of or results from the defendant's forum-related activities, and (3) the exercise of jurisdiction is reasonable. Bancroft & Masters, 223 F.3d at 1086. 51 Here, the Trust Defendants have availed themselves of the protections of Washington law because they are beneficiaries of deeds of trust, which hypothecate Washington realty to secure payments on notes owned by the Trust Defendants. The deeds of trust convey a property interest in Washington realty, which interest the Trust Defendants expect Washington law to protect. In Sher v. Johnson, 911 F.2d 1357, 1363 (9th Cir.1990), this court noted that holding a deed of trust represents a significant contact with [the forum]. 7 The Trust Defendants also receive money from Washington residents, albeit routed through the loan servicing companies who actually bill the payors. The Trust Defendants' income stream is derived from loans negotiated and executed in Washington and made to Washington residents. 52 Moreover, Borrowers' actions arise out of the Trust Defendants' contacts with the forum because the suit is for recovery of the allegedly excessive interest payments Borrowers made on their notes. Defendants bear the burden of proving that the exercise of jurisdiction would be unreasonable. Bancroft & Masters, 223 F.3d at 1088. They have produced no evidence to show that exercise of jurisdiction over them would fail to comport with fair play and substantial justice. Id. Therefore, the district court erred in finding that it lacked specific personal jurisdiction over the Trust Defendants and we reverse the district court's order on this ground. 53 2. The District Court Properly Found That Borrowers Lack Standing To Sue Some Trust Defendants 54 a. Borrowers Cannot Establish Traceability to Trust Defendants Other Than Those Who Hold A Named Plaintiff's Note 55 With respect to those Trust Defendant that do not hold a named plaintiff's note, we affirm the district court's ruling that plaintiffs have failed to link their causes of action with specific actions of the 39 Trust defendants and therefore lack standing to sue. Constitutional standing requires a plaintiff to demonstrate: (1) an injury in fact; (2) traceability, i.e., a causal connection between the injury and the actions complained of; and (3) redressability. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). 56 To satisfy the traceability requirement, a class action plaintiff must allege a distinct and palpable injury to himself, even if it is an injury shared by a large class of other possible litigants. Warth v. Seldin, 422 U.S. 490, 501, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975). Here, no named plaintiff can trace the alleged injury in fact-payment of usurious interest rates-to all of the Trust Defendants, but only to the Trust Defendant that holds or held that plaintiff's note. As to those trusts which have never held a named plaintiff's loan, Borrowers cannot allege a traceable injury and lack standing. 57 b. The District Court Properly Considered Standing Before Class Issues 58 The district court correctly addressed the issue of standing before it addressed the issue of class certification. Borrowers contend that Ortiz v. Fibreboard Corp., 527 U.S. 815, 119 S.Ct. 2295, 144 L.Ed.2d 715 (1999) requires courts to consider class certification before addressing standing issues. Although the court in Fibreboard examined class issues before the question of Article III standing, it did so in the very specific situation of a mandatory global settlement class. Fibreboard does not require courts to consider class certification before standing. See id. at 831, 119 S.Ct. 2295 (noting that a court must be sure of its own jurisdiction before getting to the merits). 59
60 Relying on LaMar v. H & B Novelty & Loan Co., 489 F.2d 461 (9th Cir.1973), Borrowers contend that the Trust Defendants are all juridically linked and therefore the named plaintiffs have standing to sue each Trust Defendant on behalf of the class. In LaMar, the Ninth Circuit held that a plaintiff having a cause of action against one defendant could not represent a class with actions against defendants who had behaved similarly but had not injured the plaintiff. 61 The court based its ruling on the requirements of Federal Rule of Civil Procedure 23, holding that such a plaintiff could not satisfy the typicality or the fair and adequate representation elements of class certification. Id. at 465-66. However, the court stated that a plaintiff might be able to satisfy the class requirements where all injuries are the result of a conspiracy or concerted schemes between the defendants or where all defendants are juridically related in a manner that suggests a single resolution of the dispute would be expeditious. Id. at 466. 62 Here, Borrowers presented no evidence that their alleged injuries were the result of a conspiracy or concerted scheme between the Trust Defendants. To the contrary, the Trust Defendants are competitors for the purchase of secured loans in the same market place. Nor are the Trust Defendants related governmental entities, the other situation contemplated by the La Mar court. La Mar, 489 F.2d at 469-70 (noting that the facts before it did not concern a common rule applied by instrumentalities of a single state). The Trust Defendants are not juridically linked, and Borrowers cannot acquire standing to sue those defendants who do not now hold and have never held a named plaintiff's loan through the juridical links doctrine. 63
64 Borrowers contend that the Home Owners Equity Protection Act of 1994 (HOEPA), 15 U.S.C. § 1641(d) confers joint and several liability on all Trust Defendants and therefore creates a juridical link between them. HOEPA states that an assignee of a mortgage shall be subject to all claims and defenses with respect to that mortgage that the consumer could assert against the creditor of the mortgage.... 15 U.S.C. § 1641(d)(1). Nothing in the language of HOEPA purports to confer standing on a plaintiff to sue a defendant against whom that plaintiff cannot otherwise assert a cause of action. Nor does the possible imposition of joint and several liability on an assignee create a juridical link between an assignee and other unrelated parties. Borrowers have failed to demonstrate that they have injuries in fact traceable to those Trust Defendants who never held a named plaintiff's loan. The district court correctly held that HOEPA does not confer standing against the Trust Defendants who did not hold their loans. 65 Borrowers also contend that the district court erred in dismissing the Trust Defendants for lack of standing because they may be permissively joined as parties under FED. R. CIV. P. 20. The Federal Rules of Civil Procedure do not create standing in a plaintiff who otherwise lacks it and this contention is without merit. FED. R. CIV. P. 82 (These rules shall not be construed to extend or limit the jurisdiction of the United States district courts....).