Court Opinion

ID: 4520375
Source: CourtListenerOpinion
Date Created: 2020-03-27 20:00:25.812898+00
Date Added: 2024-06-11T09:24:45.857878
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                              MAR 27 2020
                    UNITED STATES COURT OF APPEALS                         MOLLY C. DWYER, CLERK
                                                                            U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

EDWARD HURT,                                     No. 18-16515

              Plaintiff-Appellant,               D.C. No. 2:17-cv-01122-JAD-CWH

 v.

DEUTSCHE BANK NATIONAL TRUST                     MEMORANDUM*
COMPANY, as Trustee for IXIS Real
Estate Capital Trust 2005-HE3 Mortgage
Pass Through Certificates, Series 2005-
HE3,

              Defendant-Appellee.

                    Appeal from the United States District Court
                              for the District of Nevada
                    Jennifer A. Dorsey, District Judge, Presiding

                            Submitted March 23, 2020**
                               Las Vegas, Nevada

Before: W. FLETCHER, BYBEE, and WATFORD, Circuit Judges.

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
      Edward Hurt appeals the dismissal of his claims against Deutsche Bank

National Trust Company (“DBNTC”) based on non-party Deutsche Bank AG’s

manipulation of the London Interbank Offered Rate (“LIBOR”). We affirm.

      In 2005, Hurt purchased a home in Las Vegas, Nevada, with a loan secured

by a deed of trust held by Lime Financial Services, Ltd. The deed of trust included

an adjustable rate rider tied to the LIBOR. Lime assigned the deed of trust to a real

estate trust for which DBNTC serves as trustee. On at least three occasions since

2005, Hurt has become delinquent on his payments under the deed of trust, and

DBNTC or its predecessors in interest have initiated foreclosure proceedings

against him, most recently in January 2017.

      Hurt filed this action in April 2017 alleging that “Deutsche Bank”

fraudulently induced him to enter into the deed of trust and demanded interest

payments based on the LIBOR while manipulating the LIBOR for its own benefit.

As the sole basis for this allegation, Hurt cited an order of the Commodities

Futures Trading Commission (“CFTC”) that found that Deutsche Bank AG had

engaged in misconduct designed to influence financial benchmarks including the

LIBOR. Deutsche Bank AG is the parent corporation of DBNTC. The CFTC

order does not refer to or otherwise implicate DBNTC in misconduct related to the

LIBOR.

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      The district court held that Hurt had failed to state a plausible claim against

DBNTC because he did not identify any connection between DBNTC and

Deutsche Bank AG’s misconduct. It therefore dismissed his first amended

complaint without leave to amend. On appeal, Hurt argues that he could have

cured any defect in his complaint by alleging that DBNTC knew or should have

known of Deutsche Bank AG’s misconduct because Deutsche Bank AG is

DBNTC’s parent corporation.

      We agree with the district court that Hurt has failed to state a plausible claim

for relief against DBNTC and that any further amendment would be futile. “A

basic tenet of American corporate law is that the corporation and its shareholders

are distinct entities.” Ranza v. Nike, Inc., 793 F.3d 1059, 1070 (9th Cir. 2015)

(quoting Dole Food Co. v. Patrickson, 538 U.S. 468, 474 (2003)). “[T]he mere

fact that there exists a parent–subsidiary relationship between two corporations

[does not] make the one liable for the torts of its affiliate.” United States v.

Bestfoods, 524 U.S. 51, 61 (1998) (quoting 1 Fletcher Cyclopedia of Private

Corporations § 33 (rev. ed. 1990)). Hurt offers nothing more than this relationship

to tie DBNTC to any alleged LIBOR manipulation.

      We also reject Hurt’s argument that DBNTC failed to provide Hurt with an

accurate statement of “[t]he amount in default,” Nev. Rev. Stat.

                                            3
§ 107.0805(1)(b)(3), before initiating foreclosure proceedings because it based its

interest rate calculations on the published LIBOR rather than what the LIBOR

might have been absent manipulation by third-party banks. The deed of trust

required the interest rate to be set based on the LIBOR six-month index as

published in The Wall Street Journal. DBNTC complied with that requirement.

      AFFIRMED.

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