Court Opinion

ID: 2814664
Source: CourtListenerOpinion
Date Created: 2015-07-06 20:01:52.433403+00
Date Added: 2024-06-11T11:30:32.723104
License: Public Domain

FILED
                           NOT FOR PUBLICATION                              JUL 06 2015

                                                                       MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

ANGELS ALLIANCE GROUP, LLC,                      No. 13-35632

              Plaintiff - Appellant,
                                                 D.C. No. 3:11-cv-01382-MO
  v.
                                                 MEMORANDUM*
RECONTRUST COMPANY, NA;
BANK OF AMERICA, NA, successor by
merger with BAC Home Loan Servicing,
LP, f/k/a Countrywide Home Loans
Servicing, NA; FEDERAL NATIONAL
MORTGAGE ASSOCIATION; and
MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC.,

              Defendants - Appellees

                  Appeal from the United States District Court
                       for the District of Oregon, Portland
                  Michael W. Mosman, District Judge, Presiding

                        Argued and Submitted May 4, 2015
                                Portland, Oregon

Before: FLETCHER and HURWITZ, Circuit Judges, and WALTER, Senior

       *     This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
District Judge.**

          Angels Alliance Group, LLC (“AAG”) appeals the dismissal of its lawsuit

challenging a completed nonjudicial foreclosure of real property. In December

2005, Anayansi Sprague (“Sprague”) obtained a loan for the purchase price of

residential property situated in Milwaukie, Oregon (“the Property”). As security

for the loan, Sprague executed a deed of trust, which provided that, in the event of

default, the Property would be sold at a nonjudicial foreclosure sale, in accordance

with the terms of the Oregon Trust Deed Act, Or. Rev. Stat. §§ 86.705–86.815

(“OTDA”).1 In July 2007, Sprague transferred her interest in the Property, via

bargain and sale deed, to AAG, a now-defunct Nevada LLC with a principal place

of business in Oregon. Sprague was the sole member of AAG.

      The deed of trust delineated the following entities and their respective

capacities: (1) Sprague was the “Borrower”; (2) Hyperion Capital Group was the

“Lender”; (3) Ticor Title Insurance Company was the “Trustee”; and (4) Mortgage

Electronic Recordation Systems, Inc. (“MERS”) was the “Beneficiary.” MERS

later appointed ReconTrust Company, N.A. (“ReconTrust”) as successor trustee in

     ** The Honorable Donald E. Walter, Senior United States District Judge for
Western Louisiana, sitting by designation.
      1
        After this case was filed, the Oregon legislature renumbered most of the
statutes within OTDA but made no substantive changes. This memorandum cites to
the relevant statutes as they were numbered when the case was filed.
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place of Ticor. Thereafter, MERS assigned all of its interests as beneficiary to

Bank of America, N.A. In turn, Bank of America assigned its interests to the

Federal National Mortgage Association.

      On April 6, 2011, ReconTrust, in its capacity as trustee, recorded a “Notice

of Default and Election to Sell” in the Clackamas County property records. The

notice specified that Sprague had been in default on her loan since June 2008, and

that the Property would be sold pursuant to the terms of the deed of trust. Although

AAG received timely and proper notice of the proposed foreclosure sale as

required by the OTDA, it made no effort to cure the default and did not seek

judicial intervention in order to prevent the sale. Accordingly, the sale was

completed on August 16, 2011.

      After the sale, AAG filed the instant suit to invalidate the foreclosure,

arguing that MERS could not be designated as a beneficiary of a deed of trust

under Oregon law. Therefore, AAG asserted, MERS could not appoint ReconTrust

as a successor trustee or assign the deed of trust to Bank of America, and the

recorded documents memorializing these transfers were without effect. As such,

AAG argued that the foreclosure was not authorized under the OTDA, because it

was commenced without the foreclosing parties’ legally valid interests first being

recorded, as required under section 86.735(1).

                                          -3-
        The district court found that the foreclosure was proper under the OTDA and

dismissed AAG’s claims on the merits. AAG later filed a motion to reconsider,

which the court denied. AAG timely appealed.

        The OTDA provides that

        [i]f, under ORS 86.705 to 86.815, a trustee sells property covered by a
        trust deed, the trustee’s sale forecloses and terminates the interest in the
        property that belongs to a person to which notice of the sale was
        given . . . or to a person that claims an interest by, through or under the
        person to which notice was given. A person whose interest the trustee’s
        sale foreclosed and terminated may not redeem the property from the
        purchaser at the trustee’s sale. A failure to give notice to a person
        entitled to notice does not affect the validity of the sale as to persons that
        were notified.

Or. Rev. Stat. § 86.770(1) (emphasis added). Based upon the plain language

section 86.770(1), the completed trustee sale “foreclosed and terminated” AAG’s

interests in the Property, such that AAG is now precluded from challenging the

sale.

        Our analysis is aided by Mikityuk v. Northwest Trustee Services, Inc., 952 F.

Supp. 2d 958 (D. Or. 2013), decided shortly after reconsideration was denied in the

instant case. Mikityuk involved a post-sale challenge, based largely on the role of

MERS in the foreclosure process, brought by the grantors of a residential deed of

trust. Id. at 960–61. After analyzing the legislative history and statutory framework

of the OTDA, the Mikityuk court held that section 86.770(1) bars post-sale

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challenges by parties to whom proper notice is given, because such a post-sale bar

is consistent with the OTDA’s purpose of providing lenders an efficient and final

remedy against defaulting borrowers. Id. at 964–70. In reaching this conclusion,

the court emphasized that the OTDA’s notice and reinstatement provisions provide

ample opportunities for interested parties to attempt to protect their respective

interests before the sale takes place.2 Id. at 965–66.

      We find the reasoning in Mikityuk compelling and its holding equally

appropriate in the instant case. AAG received timely and adequate notice of the

foreclosure sale. As was the case in Mikityuk, AAG’s post-sale arguments are

based largely on MERS’s role as a named beneficiary, and such challenges are not

available after the sale takes place. See Or. Rev. Stat. § 86.770(1). Rather, a

post-sale challenge must be based on lack of notice or on some other fundamental

flaw in the foreclosure proceedings, such as the sale being completed without the

borrower actually being in default. See Mikityuk, 952 F. Supp. 2d at 964. Here, no

such circumstances exist. Therefore, AAG’s interests in the property were

“foreclosed and terminated” when the sale was completed under section 86.770(1),

      2
         The Mikityuk court noted that its reasoning would not limit courts’ ability
to set aside a trustee’s sale “on equitable grounds, or upon any acts of bad faith by
the trustee or creditor.” 952 F. Supp. 2d at 970 n. 10. However, the court did not
find any such circumstances before it, nor did it speculate on when such
circumstances might arise.
                                           -5-
and, as such, AAG is now precluded from challenging the sale.

AFFIRMED.

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