NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS OCT 22 2021
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
BAYVIEW LOAN SERVICING, LLC; No. 19-17544
FEDERAL HOME LOAN MORTGAGE
CORPORATION, D.C. No.
2:16-cv-02677-JAD-DJA
Plaintiffs-counter-
defendants-Appellees,
MEMORANDUM*
v.
6364 GLENOLDEN STREET TRUST,
Defendant-counter-claimant-
Appellant,
and
SHADOW SPRINGS COMMUNITY
ASSOCIATION; RED ROCK FINANCIAL
SERVICES, LLC,
Defendants.
Appeal from the United States District Court
for the District of Nevada
Jennifer A. Dorsey, District Judge, Presiding
Submitted October 20, 2021**
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
San Francisco, California
Before: WALLACE and GOULD, Circuit Judges, and VITALIANO,*** District
Judge.
Defendant-Appellant 6364 Glenolden Street Trust appeals from the district
court’s order granting summary judgment in favor of Plaintiffs-Appellees Federal
Home Loan Mortgage Corporation (“Freddie Mac”) and Bayview Loan Servicing,
LLC on the ground that the Federal Foreclosure Bar precluded the extinguishment
of their interest in a condo purchased by the Trust at a foreclosure sale. We have
jurisdiction under 28 U.S.C. § 1291. Reviewing de novo, Oswalt v. Resolute Indus.,
Inc., 642 F.3d 856, 859 (9th Cir. 2011), we affirm. We also have determined that
sanctions are warranted against the Trust and its counsel for filing a frivolous appeal,
and we refer the issue of the proper amount of sanctions to our Acting Appellate
Commissioner, Lisa Fitzgerald.
1. The Trust argues that the Federal Foreclosure Bar does not apply because
Freddie Mac failed to acquire and record in its own name the deed of trust on the
condo after buying the underlying loan. The Trust urges that as a result, the
foreclosure sale to the Trust extinguished Freddie Mac’s interest in the condo.
But this contention by the Trust is foreclosed by binding precedent in the
***
The Honorable Eric N. Vitaliano, United States District Judge for the
Eastern District of New York, sitting by designation.
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Nevada Supreme Court, which has held that “there is no requirement that the
beneficial interest in the deed of trust need[s] to be assigned or conveyed to Freddie
Mac in order for Freddie Mac to acquire ownership of the loan,” and that “Nevada’s
recording statutes d[o] not require Freddie Mac to publicly record its ownership
interest as a prerequisite for establishing that interest.” Daisy Tr. v. Wells Fargo
Bank, N.A., 445 P.3d 846, 849 (Nev. 2019).
Nevada law also states that Freddie Mac’s interest in the condo is enforceable
against the Trust if some entity recorded the deed of trust before the foreclosure sale
and Freddie Mac has an agency relationship with the deed of trust beneficiary. Id.;
accord In re Montierth, 354 P.3d 648, 650–51 (2015); see also Berezovsky v. Moniz,
869 F.3d 923, 928, 931–33 (9th Cir. 2017). Both requirements are satisfied here.
We have held that the unrecorded interest that Freddie Mac holds while its servicer
is the deed of trust beneficiary is “sufficient to invoke the Federal Foreclosure Bar.”
LN Mgmt., LLC v. JPMorgan Chase Bank N.A., 957 F.3d 943, 948 n.2, 950–51 (9th
Cir. 2020). Given this precedent, we decline to disturb the district court’s summary
judgment order on this ground.
2. In the alternative, the Trust argues that Freddie Mac cannot have owned the
loan underlying the deed of trust on the condo because it is not named in any deed
of trust assignments, thereby rendering the Federal Foreclosure Bar inapplicable to
this case.
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This contention is incorrect as a matter of Nevada law, under which recorded
instruments need not identify the owner of underlying loans because it is permissible
to instead list a beneficiary who is the owner’s agent. Daisy Tr., 445 P.3d at 849; In
re Montierth, 354 P.3d at 650–51; accord Berezovsky, 869 F.3d at 932–33. The loan
owner “remains a secured creditor with a property interest in the collateral even if
the recorded deed of trust names only the owner’s agent.” Berezovsky, 869 F.3d at
932; accord Freddie Mac v. SFR Invs. Pool 1, LLC, 893 F.3d 1136, 1149 (9th Cir.
2018), cert denied, --- U.S. ---, 139 S. Ct. 1618 (2019). For these reasons, the deed
of trust assignments upon which the Trust relies are not probative of who owns the
underlying loan secured by the condo. See Daisy Tr., 445 P.3d at 849; Berezovsky,
869 F.3d at 932. And Freddie Mac offered uncontroverted evidence that it owns this
loan. We hold that the Trust has failed to set out any genuine dispute of material
fact as to ownership of the loan underlying the deed of trust on the condo, so reversal
is not warranted here. See Frudden v. Pilling, 877 F.3d 821, 828 (9th Cir. 2017)
(setting out summary judgment standard).
3. The Trust filed a Federal Rule of Appellate Procedure 28(j) letter arguing that
the United States Supreme Court’s recent decision in Collins v. Yellen, --- U.S. ---,
141 S. Ct. 1761 (2021), requires us to remand this case for calculation of damages
arising from the unconstitutional structure of the Federal Housing Finance Agency
(“FHFA”). This letter is improper because it tries to inject a new issue into the case
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so we will not consider it. See United States v. LaPierre, 998 F.2d 1460, 1466 n.5
(9th Cir. 1993).
At any rate, the Trust’s Rule 28(j) letter is not persuasive for several reasons.
Because FHFA is not a party to this case, it is unclear how we could even order the
damages proceedings that the Trust requests on remand. The Trust also incorrectly
interprets Collins, which concerns whether Congress violated the constitutional
separation of powers doctrine by imposing a “for cause” restriction on the
President’s power to remove the director of FHFA. See 141 S. Ct. at 1783–87.
Although the Supreme Court answered this question in the affirmative, it explained
that this holding did not invalidate any FHFA actions because the agency’s directors
were properly appointed by the President and thereby had the authority to carry out
the functions of that office. Id. at 1787. The Trust’s suggestion that Collins voided
FHFA’s actions with regard to the condo loan owned by Freddie Mac is baseless.
Nor does Collins support the Trust’s claim that it has standing to recover damages
from FHFA. Collins is the product of a shareholder derivative lawsuit and states
that FHFA shareholders have standing to seek damages resulting from FHFA’s
unconstitutional structure. See id. at 1778–81. The Trust offers no evidence that it
owns shares in FHFA, so Collins is irrelevant with regard to the issue of the Trust’s
standing to sue FHFA. See id. In addition, the Trust could pursue a Collins-style
damages claim against FHFA only by causally linking a specific, tangible harm to
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the for-cause removal provision, but it failed to do so in any of its filings. See id. at
1788–89. For these reasons, we decline to grant the Trust’s improper request for
remand with instructions to conduct damages proceedings.
4. Freddie Mac and Bayview filed a motion for sanctions against the Trust and
its counsel on the basis that the Trust’s appeal exclusively consists of frivolous legal
positions foreclosed by binding caselaw. We grant this motion and sanction the
Trust and its counsel on the grounds set out below. We however refer the issue of
the proper amount of sanctions to this court’s Acting Appellate Commissioner.
We have the discretion to impose sanctions on parties and counsel who file
frivolous appeals. 28 U.S.C. § 1912 (“[If] a judgment is affirmed by the Supreme
Court or a court of appeals, the court in its discretion may adjudge to the prevailing
party damages for his delay, and single or double costs.”); Fed. R. App. P. 38 (same).
Frivolous appeals are “contrary to specific and unambiguous statutory provisions
and to clearly established principles of law,” Grimes v. CIR., 806 F.2d 1451, 1454
(9th Cir. 1986), “in direct conflict with firmly established rules of law for which
there is no arguably reasonable expectation of reversal or favorable modification,”
In re Becraft, 885 F.2d 547, 549 (9th Cir. 1989), or such that “the results are obvious,
or the arguments of error are wholly without merit,” Maisano v. United States, 908
F.2d 408, 411 (9th Cir. 1990). Bad faith is not required for sanctions. See Becraft,
885 F.2d at 549. And the reach of § 1912 and Rule 38 is not limited to the parties—
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they too “permit the imposition of personal sanctions against counsel,” In re Girardi,
611 F.3d 1027, 1065 (9th Cir. 2010), who files a frivolous appeal, Becraft, 885 F.2d
at 548; Grimes, 806 F.2d at 1454.
This appeal is frivolous because, as explained above, both contentions set out
in the Trust’s Opening Brief are foreclosed by binding precedent from the Nevada
Supreme Court and our court. See Daisy Tr., 445 P.3d at 849; In re Montierth, 354
P.3d at 650–51; accord LN Mgmt., 957 F.3d at 948 n.2, 950; SFR Invs., 893 F.3d at
1149; Berezovsky, 869 F.3d at 932. The Trust cannot escape the fact that sanctions
are appropriate because it “raised totally meritless arguments which have repeatedly
been rejected,” Nunley v. CIR, 758 F.2d 372, 373 (9th Cir. 1985), and “[n]either of
its claims possess[es] a foundation in fact or law,” Glanzman v. Uniroyal, Inc., 892
F.2d 58, 61 (9th Cir. 1989). The frivolous nature of these contentions should be
obvious to counsel for the Trust. Citing Daisy Trust, the Nevada Supreme Court has
rejected arguments identical to those set out by the Trust in at least four cases where
those contentions were presented by the Trust’s counsel.1 This repeated misconduct
1
Three Palms Invs. Grp., LLC v. Bank of Am., N.A., No. 78225, 2020
WL 3469173 (Nev. June 24, 2020); Premier One Holdings, Inc. v. Ditech Fin. LLC,
No. 77526, 2020 WL 2526070 (Nev. May 15, 2020); RH Kids, LLC v. Nationstar
Mortg., LLC, No. 77760, 2020 WL 407053 (Nev. Jan. 23, 2020); Perecin v.
Nationstar Mortg., LLC, No. 77597, 2020 WL 407132 (Nev. Jan. 23, 2020). See
also RH Kids LLC v. Ditech Fin. LLC, No. 79620-COA, 2020 WL 7238319, at *2
n.1 (Nev. Ct. App. Dec. 8, 2020) (explicitly admonishing counsel for the Trust for
improperly disregarding “his obligations under R.P.C. 3.1 to only advance
arguments if there is a basis in law and fact for doing so and, when [the] existing
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merits the imposition of sanctions. See Coastal Transfer Co. v. Toyota Motor Sales,
USA, 833 F.2d 208, 210212 (9th Cir. 1987).
That this appeal is frivolous is reinforced by the independent reason that the
evidence submitted in this case—Freddie Mac business records, employee
declarations, and the relevant excerpts from Freddie Mac’s Loan Servicer Guide—
has consistently been deemed sufficient to establish Freddie Mac’s ownership of a
loan and agency relationship with its servicer. See Daisy Tr., 445 P.3d at 850–51;
accord SFR, 893 F.3d at 1149–50; Berezovsky, 869 F.3d at 932; Maisano, 908 F.2d
at 411 (explaining that, for sanctions purposes, a frivolous appeal is defined as one
in which the end result is obvious).
We AFFIRM the district court’s order granting summary judgment in
favor of Freddie Mac and Bayview on Federal Foreclosure Bar grounds,
GRANT in part the motion for sanctions against both the Trust and its counsel
for filing a frivolous appeal foreclosed by binding precedent, and REFER the
issue of the proper amount of sanctions to the Acting Appellate Commissioner.
precedent does not align with his clients’ interests, to present good-faith arguments
for its modification or reversal.”).
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