United States District Court, D. Montana, Missoula Division
W. Molloy, District Judge.
matter is before the Court on Defendants' Motion for
Judgment on the Pleadings. (Doc. 48.) United States
Magistrate Judge Jeremiah Lynch entered an amended Findings
and Recommendation on April 26, 2017, recommending granting
the motion. (Doc. 56.) Plaintiff filed objections, (Doc. 58),
and Defendants filed a response, (Doc. 60). For the reasons
given below, the Court adopts the Findings and Recommendation
parties are entitled to de novo review of the specific
findings or recommendations to which they object. 28 U.S.C.
§ 636(b)(1); McDonnell Douglas Corp. v. Commodore
Bus. Mach., Inc., 656 F.2d 1309, 1313 (9th Cir. 1981).
Where there are no objections this Court reviews for clear
error. Thomas V. Am, 414 U.S. 140, 150 (1985). Clear
error exists if a court is left with a "definite and
firm conviction that a mistake has been committed."
Concrete Pipe & Prods. of Cal, Inc. v. Constr.
Laborers Pension Trust for S. Cal., Inc., 508 U.S. 602,
623 (1993) (internal quotation marks omitted).
objects to the dismissal of his sole remaining claim, which
requests a declaratory judgment that neither Ocwen nor U.S.
Bank possess the right to foreclose upon his real property or
to service his loan. (Doc. 58.) Specifically, Burrington
argues Judge Lynch erroneously relied on In re King,
565 B.R. 429 (Bankr. D. Mont. 2017), Paatalo v. J.P.
Morgan Chase Bank, N.A., 2012 WL 2505742 (D. Mont. June
28, 2012), and Dick Anderson Construction Inc. v. Monroe
Construction Co., LLC, 221 P.3d 675 (Mont. 2009).
(Id. at 7.)
this is a diversity action, this Court applies the
substantive law of Montana, the forum state. Medical Lab.
Mgmt. Consultants v. Am. Broad. Cos., Inc., 306 F.3d
806, 812 (9th Cir. 2002). As Judge Lynch correctly noted, in
Montana a person or entity which is neither party to a
contract nor a third-party beneficiary of the contract, lacks
standing to challenge the validity of the contract. Dick
Anderson Constr. Inc., Ill. P.3d 675 at 685-86.
Burrington is such a person here.
Lynch's also properly relied on In re King and
Paatalo. Taken together, these cases stand for the
proposition that, where a borrower is not a party to an
assignment of a lender's beneficial interests, or
transfers of those interests, the borrower lacks standing to
challenge such assignments. Paatalo, 2012 WL 2505742
at *7; King, 565 B.R. at 434. Finally, Judge Lynch
correctly concluded that Burrington's reliance on
Pilgeram v. Greenpoint, 313 P.3d 389 (Mont. 2013) and
Ruby Valley National Bank v. Wells Fargo Delaware Trust
Co., N.A., 317 P.3d 174 (Mont. 2014) was misplaced. The
issue in Pilegram was not whether a third-party had
standing to challenge a subsequent assignment of a beneficial
interest, but whether MERS, a private electronic database,
qualified as a beneficiary under Montana's Small Tract
Financing Act. 313 P.3d at 841-43. As such, it provides no
holding to counter the standing rule articulated in Dick
Anderson Construction. Ruby Valley in turn concerned the
priority of competing beneficial interests in real property,
and noted in a footnote the possibility that a property owner
might challenge the validity of an interest flowing through a
MERS transaction. 317 P.3d at 176 n.l. Thus, contrary to
Burrington's assertion that the Montana Supreme Court has
addressed the question of whether a borrower has standing to
reach the merits of whether a loan was properly assigned,
neither case does so. (Doc. 58 at 7.)
Burrington points to a footnote in Bank of America v.
Alexander which notes that the borrower in that case had
not "raise[d] the issue of a defect in the Loan's
assignment." 389 P.3d 1020, 1024 n.l (Mont. 2017). This
footnote simply describes the history of the case, and does
not establish, as the footnote in Ruby Valley did
not, that a borrower possesses standing to mount the
challenge Burrington attempted here.
Court finds no clear error in the remainder of the Findings
IT IS ORDERED that the Findings and Recommendation (Doc. 56)
is ADOPTED IN FULL.
FURTHER ORDERED that Defendants' Motion for Judgment on
the Pleadings (Doc. 48) is GRANTED.
FURTHER ORDERED that this case is DISMISSED WITH PREJUDICE.
The trial set for May 30, 2017 is VACATED. All other dates
are VACATED and all pending motions are MOOT.
FURTHER ORDERED that the Clerk of Court is directed to enter