Morris v. Northwest Trustee Services, Inc.

FILED
NOT FOR PUBLICATION
MAY 15 2017
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

LEE W. MORRIS and DOROTHY J. No. 14-35962
MORRIS, individuals,
D.C. No. 3:12-cv-01183-SI
Plaintiffs - Appellants,

v. MEMORANDUM*

NORTHWEST TRUSTEE SERVICES,
INC., a Washington state profit
corporation; JPMORGAN CHASE
BANK, N.A., a nationally chartered bank
and by purchase aka WASHINGTON
MUTUAL BANK, FA, a federal savings
bank,

Defendants - Appellees.

Appeal from the United States District Court
for the District of Oregon
Michael Simon, District Judge, Presiding

Argued and Submitted May 8, 2017
Portland, Oregon

Before: BYBEE and HURWITZ, Circuit Judges, and RAKOFF,** Senior District
Judge.

*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The Honorable Jed S. Rakoff, Senior District Judge for the U.S.
District Court for the Southern District of New York, sitting by designation.
Plaintiffs-Appellants Lee and Dorothy Morris appeal from the district

court’s summary judgment in favor of Defendants-Appellees Northwest Trustee

Services, Inc. and JPMorgan Chase Bank, N.A. In light of recent decisions by this

Court and the Oregon Court of Appeals bearing on the question of statutory

construction that this appeal raises, we vacate the decision and remand the case to

the district court.

In 2008, Appellants defaulted on a loan used to purchase their home, which

was secured by a deed of trust. They were served with a notice of foreclosure, and

their home was sold at a non-judicial foreclosure sale on January 11, 2012.

Thereafter, Appellants brought this action challenging the validity of the sale under

the Oregon Trust Deed Act (“OTDA”), which governs the non-judicial foreclosure

and sale of property by a trustee. The district court concluded that, because

appellants had notice of the sale and raised their challenge only after the sale was

completed, their challenge was barred by the OTDA. See Or. Rev. Stat. § 86.797(1)

(providing that “[i]f, under [the provisions of the OTDA], 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”).1

1
Before the renumbering of several provisions of the OTDA in 2013, this
section was numbered Or. Rev. Stat. § 86.770. We refer to it by its current citation.
2
Since the district court rendered its decision, we have decided that a post-

sale challenge is not barred by Or. Rev. Stat. § 86.797(1) if, and only if, it is “based

on lack of notice or some other fundamental flaw in the foreclosure proceedings,

such as the sale being completed without the borrower actually being in default.”

Woods v. U.S. Bank N.A., 831 F.3d 1159, 1166 (9th Cir. 2016) (citation omitted).

In addition, the Oregon Court of Appeals recently held that “the participation of a

‘trustee’ is so fundamental to a ‘trustee’s sale’” that Or. Rev. Stat. § 86.797(1) does

not bar a post-sale challenge alleging that the sale of property was not conducted

by a trustee. Wolf v. GMAC Mortg., LLC, 370 P.3d 1254, 1256 (Or. Ct. App.

2016); see also Bank of Am. v. Payne, 379 P.3d 816, 819 (Or. Ct. App. 2016)

(adopting Wolf’s holding); DiGregorio v. Bayview Loan Servicing, LLC, 381 P.3d

961, 965-67 (Or. Ct. App. 2016) (holding that Or. Rev. Stat. § 86.797 “does not

mandate strict compliance with every provision of the OTDA for a trustee’s sale to

be valid,” but re-affirming Wolf’s holding).

We therefore vacate the decision below and remand the case to the district

court, which should re-evaluate, in light of the decisions in Woods, Wolf, Payne,

and DiGregorio, whether Or. Rev. Stat. § 86.797 bars Appellants’ challenge to the

validity of the sale of their home.

VACATED AND REMANDED.