Dernier v. Mortgage Network, Inc.

Plaintiffs Peter and Nicole Dernier appealed the dismissal of their action for: (1) a declaratory judgment that defendant U.S. Bank National Association could not enforce the mortgage and promissory note for the debt associated with plaintiffs' purchase of their house based on irregularities and fraud in the transfer of both instruments; (2) a declaration that U.S. Bank has violated Vermont's Consumer Fraud Act (CFA) by asserting its right to enforce the mortgage and note; and (3) attorney's fees and costs under the CFA. They also appealed the trial court's failure to enter a default judgment against defendant Mortgage Electronic Registration Systems, Inc. (MERS). Plaintiffs fell behind on their mortgage, and brought suit against two parties: Mortgage Network, Inc. (MNI), which is in the chain of title for both the note and the mortgage, and MERS, which is in the chain of title for the mortgage as a "nominee" for MNI. Plaintiffs sought a declaratory judgment that the mortgage was void, asserting that: (1) MERS, as a nominee, never had any beneficial interest in the mortgage; (2) MNI had assigned its interest in both instruments to others without notifying plaintiffs; and (3) no party with the right to foreclose the mortgage had recorded its interest. MNI responded that plaintiffs had named MNI as a party in error, because MNI did "not own the right to the mortgage in question." MERS did not respond. Around this time, plaintiffs received a letter in which U.S. Bank represented that it possessed the original promissory note and mortgage and that it had the right to institute foreclosure proceedings on the property. The trial court denied plaintiffs' motion to amend and dismissed plaintiffs' case for failure to state a claim. Plaintiffs appealed. After careful consideration of the trial court record, the Supreme Court concluded the trial court erred in dismissing Counts 1 and 2 of plaintiffs' amended complaint for lack of standing, to the extent that these counts alleged irregularities in the transfer of the note and mortgage unconnected to the pooling and servicing agreement. The Court affirmed as to dismissal of Counts 3 and 4 of plaintiffs' proposed amended complaint. The case was remanded for further proceedings. View "Dernier v. Mortgage Network, Inc." on Justia Law