MILLER SWIFT v. MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC (2019)

MEMORANDUM ***

Julie Miller-Swift (“Miller-Swift”) appeals from the district court’s judgment dismissing her wrongful foreclosure claim with prejudice.¹ We affirm.

As an initial matter, Miller-Swift failed to adequately plead a basis for subject matter jurisdiction. Specifically, Miller-Swift did not plead a basis for diversity jurisdiction insofar as she described herself as the “former owner” of property in California rather than as a resident or citizen of California, or of any other state. Miller-Swift filed a declaration with this court clarifying that she is and has been a resident of California throughout this litigation.² In the interest of judicial economy, we deem Miller-Swift’s declaration to be a curative amendment to her First Amended Complaint under 28 U.S.C. § 1653 and will proceed to consider the merits. See Blue Ridge Ins. Co. v. Stanewich, 142 F.3d 1145, 1148 (9th Cir. 1998) (“As the ‘defect may be cured by amendment and nothing is to be gained by sending the case back for that purpose,’ we deem the pleadings amended and the jurisdictional defect cured.” (citation omitted)); NewGen, LLC v. Safe Cig, LLC, 840 F.3d 606, 612-13 (9th Cir. 2016).

We have jurisdiction under 28 U.S.C. § 1291. The court applies de novo review to a district court’s dismissal for failure to state a claim. Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010). To state a claim for wrongful foreclosure, a plaintiff must allege facts showing, at a minimum, that “defendants caused an illegal, fraudulent, or willfully oppressive sale of the property pursuant to a power of sale in a mortgage or deed of trust․” Chavez v. Indymac Mortg. Servs., 219 Cal.App.4th 1052, 162 Cal. Rptr. 3d 382, 390 (2013).

Each of Miller-Swift’s wrongful foreclosure theories fails under California law. First, the district court correctly held that Miller-Swift failed to plausibly allege that Mortgage Electronic Registration System, Inc. (“MERS”) “exited the chain of title” as a result of an assignment of the note to a non-MERS member. As a matter of California law, MERS had authority to assign the deed of trust. Herrera v. Fed. Nat’l Mortg. Ass’n, 205 Cal.App.4th 1495, 141 Cal. Rptr. 3d 326, 334 (2012) (concluding that the absence of an express agency agreement between MERS and the eventual noteholder was inconsequential “because [homeowner] agreed in the [deed of trust] that MERS had the right to exercise all rights of the lender,” including the right to assign the deed of trust), disapproved on other grounds by Yvanova v. New Century Mortg. Corp., 62 Cal.4th 919, 199 Cal.Rptr.3d 66, 365 P.3d 845 (2016).

Second, Miller-Swift’s argument that MERS’s assignment of the deed of trust was void fails. Miller-Swift’s allegations that someone forged the signature or that the signatory lacked authority to sign the assignment documents do nothing more than attack the assignment as voidable. See Cal. Com. Code § 3403(a) (“An unauthorized signature may be ratified”—meaning that the assignment is voidable, not void.). Because voidable assignments can be ratified, a borrower cannot use a voidable assignment to challenge the validity of a foreclosure. See Yvanova, 199 Cal.Rptr.3d 66, 365 P.3d at 856-59.

Third, Miller-Swift’s argument that Fannie Mae lacked the authority to direct the foreclosure fails because she must plead facts alleging that it did not receive an assignment of the debt. Fannie Mae held the note—and MERS was the nominee—at least until the Notice of Default was executed. On that day, MERS assigned its interest “together with the note” to the loan servicer. Because the loan servicer could have assigned the note back to Fannie Mae in a private, unrecorded transaction, California courts have required plaintiffs like Miller-Swift to plead facts alleging that Fannie Mae did not receive an assignment of the note “in any manner.” Fontenot v. Wells Fargo Bank, N.A., 198 Cal.App.4th 256, 129 Cal. Rptr. 3d 467, 480 (2011), disapproved on other grounds by Yvanova, 62 Cal.4th 919, 199 Cal.Rptr.3d 66, 365 P.3d 845; Herrera, 141 Cal. Rptr. 3d at 334-35. Miller-Swift fails to plead such facts.

AFFIRMED.

FOOTNOTES

1.   Miller-Swift’s briefing makes no reference to her cancellation of instruments or slander of title claims.

2.   We grant Miller-Swift’s unopposed motion for leave to attach the declaration to her supplemental brief.