FILED
NOT FOR PUBLICATION
AUG 09 2016
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
DEBRA L. MARCH, Nos. 14-17136
15-16171
Plaintiff-counter-claim-
defendant-Appellant, D.C. No.
1:12-cv-00306-DKW-BMK
v.
MORTGAGE ELECTRONIC MEMORANDUM*
REGISTRATION SYSTEMS, INC. And
J.P. MORGAN CHASE BANK, N.A.,
Defendants-Appellees,
U.S. BANK, N.A., Successor in Interest to
Bank of America, National Association as
Successor by Merger to La Salle Bank
National Association, as Trustee for
Certificate Holders of Bear Stearns Asset
Backed Securities I LLC, Asset-Backed
Certificates, Series 2005-HE8's,
Defendant-counter-claim-3rd-
party-plaintiff-Appellee,
v.
U.S. DEPARTMENT OF TREASURY
(INTERNAL REVENUE SERVICE
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
AGENCY) and STATE OF HAWAII,
DEPARTMENT OF TAXATION,
Third-party-defendant-
Appellees.
Appeal from the United States District Court
for the District of Hawaii
Derrick Kahala Watson, District Judge, Presiding
Submitted August 8, 2016**
San Francisco, California
Before: THOMAS, Chief Judge, and HAWKINS and McKEOWN, Circuit Judges.
Debra March appeals from the district court’s order granting the defendants
summary judgment and ordering foreclosure, and subsequent order confirming the
foreclosure sale. We review a grant of summary judgment de novo, Pavoni v.
Chrysler Grp., LLC, 789 F.3d 1095, 1098 (9th Cir. 2015), and a sale confirmation
order for abuse of discretion, Indus. Mortg. Co. v. Smith, 17 P.3d 851, 859 (Haw.
Ct. App. 2001). We have jurisdiction over this diversity suit pursuant to 28 U.S.C.
§ 1291, and affirm.
I
The district court had supplemental jurisdiction over U.S. Bank’s
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
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counterclaim for foreclosure and third-party complaint against the Hawaii
Department of Taxation, a junior lienholder. Both claims arose “out of the same
transaction or occurrence” and “relate[d] to the property that [was] the subject
matter of the principal action.” Danner v. Himmelfarb, 858 F.2d 515, 521 (9th Cir.
1988); see 28 U.S.C. § 1367(a) (permitting courts to exercise supplemental
jurisdiction over claims that are “so related to claims in the action . . . that they
form part of the same case or controversy”); see also Molina v. OneWest Bank,
FSH, 903 F. Supp. 2d 1008, 1016 (D. Haw. 2012) (upholding supplemental
jurisdiction where “the Complaint seeks to enjoin [lender] from foreclosing and
conducting a foreclosure auction sale of the Property. The Counterclaim
Complaint involves the same parties, the same Property, and the overlapping
question as to [lender’s] right to foreclose on the Property.”).
II
U.S. Bank had standing to bring the foreclosure counterclaim. U.S. Bank
provided a chain of properly recorded assignments, and thus established that it
legally held the note and mortgage and was entitled to foreclose. Zadrozny v. Bank
of N.Y. Mellon, 720 F.3d 1163, 1167–69 (9th Cir. 2013) (concluding that party had
standing to foreclose, and distinguishing In re Veal, 450 B.R. 897 (9th Cir. B.A.P.
2011), as case in which lender failed to provide reliable evidence that they held the
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note). March is not a third-party beneficiary to the assignment contract, and thus
lacks standing to challenge the sufficiency of the consideration provided by U.S.
Bank. Ass’n of Apartment Owners of Newtown Meadows v. Venture 15, Inc., 167
P.3d 225, 262–63 (Haw. 2007).
III
The defendants were entitled to summary judgment on March’s declaratory
judgment action seeking to cancel the mortgage, remove MERS from the title, and
declare the JP Morgan Chase was not entitled to mortgage payments.
Defendants established that the mortgage was not void. Although, at the
time March executed the note and mortgage, lenders had to be licensed in the state
of Hawaii, Beneficial Haw., Inc. v. Kida, 30 P.3d 895, 917–18 (Haw. 2001), state
law exempted foreign lenders from the licensing requirement, Haw. Rev. Stat.
§ 454-2 (2010). Defendants established that the original lender was such a valid
“foreign lender” approved by the U.S. Department of Housing and Urban
Development.1 Haw. Rev. Stat. § 207-11 (2010).
1
Defendants did not engage in discovery misconduct by providing proof of
the lender’s HUD status with their summary judgment motion. Defendants
provided the information as soon as they received a response from the government
to their Freedom of Information Act request. Thus, their delay was beyond their
control and “substantially justified.” Fed. R. Civ. P. 37(c)(1).
4
March’s arguments that MERS lacked valid title and an ability to assign the
mortgage “cannot elide the express provisions in the [mortgage],” which described
MERS’s role as a nominee of the lender, and ability to assign the note and
mortgage without prior notice to March. Zadrozny, 720 F.3d at 1167–68. Further,
even if MERS lacked a real interest in the property, “the lenders would still be
entitled to repayment of the loans and would be the proper parties to initiate
foreclosure.” Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 1034, 1044
(9th Cir. 2011).
JP Morgan Chase established that it was entitled to receive loan payments as
the servicer of March’s loan on behalf of U.S. Bank. Canada v. Blain’s
Helicopters, Inc., 831 F.2d 920, 925 (9th Cir. 1987) (relying on authenticated
affidavit to establish material fact at summary judgment).2 March failed to provide
any evidence to rebut the defendants’ evidence that JP Morgan Chase serviced the
loan, and therefore failed to create a genuine issue of material fact warranting the
denial of summary judgment. See Fed. R. Civ. P. 56(c)(1)(A) (stating that a “party
asserting that a fact cannot be or is genuinely disputed must support the assertion”
with reliable evidence).
2
JP Morgan Chase’s failure to provide this affidavit in an initial discovery
disclosure was harmless. See Fed. R. Civ. P. 37(c)(1).
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IV
The district court did not abuse its discretion by approving the
Commissioner’s report and confirming the sale of the foreclosed property. See
Indus. Mortg. Co., 17 P.3d at 854, 861 (affirming sale confirmation where there
was no evidence another auction may have resulted in a higher sale price, even
though the lender was the only party to bid on the foreclosed property). Because
the district court confirmed the sale, U.S. Bank, as the highest bidder, was entitled
to a writ of possession. See, e.g., IndyMac Bank v. Miguel, 184 P.3d 821, 836–37
(Haw. Ct. App. 2008) (affirming order confirming foreclosure sale and granting
writ of possession); Indus. Mortg. Co., 17 P.3d at 861 (same).
V
March’s argument regarding the Commissioner’s collection and distribution
of rental income is raised for the first time on appeal and we deem it waived. Hillis
v. Heineman, 626 F.3d 1014, 1019 (9th Cir. 2010).
AFFIRMED.
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