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NOT FOR PUBLICATION JUL 06 2015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).
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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.
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and, as such, AAG is now precluded from challenging the sale.
AFFIRMED.
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