Niday v. GMAC Mortgage LLC, et al – MERS Ruling in Oregon Part 2
By Daniel Edstrom
DTC Systems, Inc.
Two Oregon Supreme Court Rulings came out yesterday relating to Mortgage Electronic Registration Systems, Inc. The first was Brandrup v. ReconTrust Co. (June 6, 2013), and the subject of this post, which is Niday v. GMAC Mortgage LLC, et al. (June 6, 2013).
Note the following quotes from this ruling:
That is so because, on the present record, MERS’ involvement in the appointment of the current trustee casts doubt on the trustee’s status.
and
But, appointments of a successor trustee may only be made by the trust deed beneficiary, ORS 86.790(3), and, as discussed, MERS is not, and never has been, the beneficiary of the trust deed for purposes of the OTDA.
The ruling is listed in part as follows:
En Banc
On review from the Court of Appeals.*
Argued and submitted on January 8, 2013.
Gregory A. Chaimov, Davis Wright Tremaine LLP, Portland, argued the cause for
petitioner on review Mortgage Electronic Registration Systems, Inc. With him on the
brief were Frederick B. Burnside and Kevin H. Kono.
W. Jeffrey Barnes, pro hac vice, W. J. Barnes, PA, Beverly Hills, argued the cause
for respondent on review. With him on the brief was Elizabeth Lemoine, Makler
Lemoine & Goldberg, PC, Portland.
Hope A. Del Carlo, Portland, filed a brief on behalf of amicus curiae Oregon Trial
Lawyers Association.
Rolf C. Moan, Assistant Attorney General, Salem, filed a brief on behalf of
amicus curiae State of Oregon.
BREWER, J.
The decision of the Court of Appeals is affirmed. The judgment of the circuit
court is reversed, and the case is remanded to that court for further proceedings.
Kistler, J., concurred in part and specially concurred in part and wrote an opinion
in which Balmer, C.J. joined.
*Appeal from Clackamas County Circuit Court, Henry C. Breithaupt, Judge. 251
Or App 278, 284 P3d 1157 (2012).
BREWER, J.
This is the second of two cases this court decides today that is concerned
with the nonjudicial foreclosure of trust deeds under the Oregon Trust Deed Act (OTDA)
and the mortgage finance industry’s practice of naming the Mortgage Electronic
Recording System, Inc., (MERS), rather than the lender, as a trust deed’s “beneficiary.”
In Brandrup v. ReconTrust Co., __ Or __, ___ P3d ___ (June 6, 2013), we answered
questions certified to us by a United States District Court about whether and how that
practice comports with the OTDA’s nonjudicial foreclosure requirements. In the present
case, we apply our answers in Brandrup to a dispute that comes to this court through a
petition for review of a decision of the Court of Appeals.
[Skipping the body of this 26 page ruling, we have the following in conclusion:]
The trial court nevertheless appeared to reason that the beneficiary’s
authority in a decision to proceed with nonjudicial foreclosure is immaterial. To the
extent that the court so reasoned, we disagree. On the one hand, it is true that the trustee,
and only the trustee, is authorized to foreclose a trust deed by advertisement and sale.
ORS 86.710, ORS 86.735. However, the OTDA contemplates that the beneficiary of the
trust deed — the original lender or its successor — is entitled to determine whether and
how to foreclose a trust deed after default. For example, ORS 86.710 expressly provides
that the beneficiary can reject the nonjudicial foreclosure procedure in favor of an
ordinary judicial f 1 oreclosure. More importantly, the beneficiary has absolute authority to
appoint a successor trustee at any time after a trust deed is executed under ORS
86.790(3), an authority that all but guarantees the beneficiary’s control over any
foreclosure decision.
However, even if the beneficiary’s authority were immaterial, summary
judgment still would be improper in the present case. That is so because, on the present
record, MERS’ involvement in the appointment of the current trustee casts doubt on the
trustee’s status. The trial court concluded that ETS was the lawfully appointed trustee
(“of record, we have * * * the chain, if you will, back to the original trustee First
American Title”). The trial court apparently relied on a document in the summary
judgment record showing that MERS had appointed ETS as successor to the original
trustee, and also showing that the appointment had been recorded in the Clackamas
County real property records. But, appointments of a successor trustee may only be made
by the trust deed beneficiary, ORS 86.790(3), and, as discussed, MERS is not, and never
has been, the beneficiary of the trust deed for purposes of the OTDA. In the absence of
evidence in the record showing the identity of the lender’s successors in interest and that
MERS had authority to act for those successors in interest, an issue of fact remains as to the validity of ETS’s appointment as successor trustee, and, in consequence, its authority initiate and pursue a nonjudicial foreclosure proceeding under the OTDA. It follows that the trial court erred in granting summary judgment to defendants.
The decision of the Court of Appeals is affirmed. The judgment of the
circuit court is reversed, and the case is remanded to that court for further proceedings.
MERS disagrees with this ruling: http://www.mersinc.org/media-room/press-release/archives-2012/37-media-room/press-release-archives/2012-articles/289-mers-statement-on-oregon-court-of-appeals-ruling
