Court Opinion

ID: 626310
Source: CourtListenerOpinion
Date Created: 2012-03-29 16:24:21+00
Date Added: 2024-06-11T17:51:15.180113
License: Public Domain

FILED
                                                          United States Court of Appeals
                                                                  Tenth Circuit
                    UNITED STATES COURT OF APPEALS
                                                                 March 29, 2012
                           FOR THE TENTH CIRCUIT              Elisabeth A. Shumaker
                                                                  Clerk of Court

    COMMONWEALTH PROPERTY
    ADVOCATES, LLC; JENNIFER
    MATHIS-HUBER; BRYAN HUBER,

               Plaintiffs-Appellants,                  No. 11-4118
                                               (D.C. No. 2:11-CV-00214-TS)
    v.                                                   (D. Utah)

    MORTGAGE ELECTRONIC
    REGISTRATION SYSTEMS, INC.;
    AMERICA’S WHOLESALE
    LENDER; BANK OF NEW YORK
    MELLON,

               Defendants-Appellees.

                            ORDER AND JUDGMENT *

Before TYMKOVICH and BALDOCK, Circuit Judges, and BRORBY, Senior
Circuit Judge.

         Plaintiffs Commonwealth Property Advocates, LLC (“Commonwealth”),

Jennifer Mathis-Huber, and Bryan Huber (collectively “plaintiffs”) appeal the

*
       After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument. This order and judgment is
not binding precedent, except under the doctrines of law of the case, res judicata,
and collateral estoppel. It may be cited, however, for its persuasive value
consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
district court’s dismissal of their amended complaint for failure to state a claim

under Federal Rule of Civil Procedure 12(b)(6). Plaintiffs alleged that defendant

Mortgage Electronic Registration Systems, Inc. (“MERS”), acting as nominee for

defendant America’s Wholesale Lenders, had no authority to foreclose on their

home because the obligation had been securitized and the investors, who actually

own the debt, are unknown. According to plaintiffs, the securitization process

severed the debt from its security, which, under Utah Code Ann. § 57-1-35,

rendered the trust deed unenforceable. The district court rejected this “split-note”

theory, observing that the trust deed specifically established MERS as beneficiary

and “nominee for Lender and Lender’s successors and assigns.” Aplt. App. at

404 (internal quotation marks omitted).

      We review the district court’s dismissal de novo, accepting as true all

well-pleaded factual allegations and looking for plausibility in the complaint.

Smith v. United States, 561 F.3d 1090, 1098 (10th Cir. 2009). Plaintiffs’ appeal

is foreclosed by our recent decision in Commonwealth Property Advocates, LLC

v. Mortgage Electronic Registration Systems, Inc., ___ F.3d ___, 2011 WL

6739431 (10th Cir. Dec. 23, 2011), where we rejected Commonwealth’s nearly

identical argument under substantially similar factual circumstances. In that case,

we examined identical trust deeds providing that “MERS (as nominee for Lender

and Lender’s successors and assigns) has the right . . . to foreclose,” id. at *5, and

explained that the Utah Court of Appeals, in yet another of Commonwealth’s

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actions, had already determined that this language authorized MERS to initiate

foreclosure proceedings, see id. at *6 (citing Commonwealth Prop. Advocates v.

Mortg. Elec. Registration Sys., Inc., 263 P.3d 397, 399 (Utah Ct. App.), cert.

denied, 268 P.3d 192 (Utah 2011)). The Utah Court of Appeals had likewise

rejected Commonwealth’s argument that § 57-1-35 invalidated MERS’ authority

to foreclose, reasoning that the statute “‘simply describes the long-applied

principle . . . that when a debt is transferred, the underlying security continues to

secure the debt.’” Id. (quoting Commonwealth Prop. Advocates, 263 P.3d at

403). 1 Deferring to the Utah Court of Appeals, we concluded that

Commonwealth’s argument “had no legal basis under Utah law” because even

assuming the securitization scheme divested defendants of their implicit authority

to foreclose as holders of the trust deeds, “the trust deeds explicitly granted

Defendants the authority to foreclose” and “§ 57-1-35 in no way prohibits such an

authorization.” Id. at 7. Our decision in Commonwealth Property Advocates,

2011 WL 6739431, controls this appeal and demonstrates that the district court

properly dismissed this action for failure to state a claim.

      Accordingly, the judgment of the district court is AFFIRMED.

                                                      Entered for the Court

                                                      Bobby R. Baldock
                                                      Circuit Judge

1
       Utah Code Ann. § 57-1-35 states: “The transfer of any debt secured by a
trust deed shall operate as a transfer of the security therefor.”

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