Bloomberg reports:
- Merscorp Inc., operator of the electronic-registration system for about half of all U.S. home mortgages, got a court to set aside a bankruptcy judge’s opinion criticizing its right to transfer the mortgages among members.
- U.S. District Judge Joanna Seybert in Central Islip, New York, yesterday vacated part of U.S. Bankruptcy Judge Robert E. Grossman’s February 2011 decision in the bankruptcy of Ferrel L. Agard. Merscorp, based in Reston, Virginia, runs Mortgage Electronic Registrations Systems, or MERS.
- “The issue of whether MERS had authority to assign the mortgage was no longer before the bankruptcy court,” Seybert wrote. “There was no longer a live case or controversy.”
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- “I thought it was a poor decision because it was decided only on procedural grounds,” George E. Bassias, a lawyer for Agard in Queens, New York, said of Seybert’s ruling in a phone interview today. “In my opinion she’s wrong on the procedure too.”
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- [Bankruptcy Judge] Grossman then [said] that Select Portfolio and U.S. Bancorp, which had been assigned the mortgage by MERS, wouldn’t have been given the relief had a state court not already granted a foreclosure judgment. That was because MERS’s “nominee” status didn’t give it the authority to assign mortgages, Grossman said.
- Seybert said that that part of the order “constitutes an unconstitutional advisory opinion and must be vacated.”
- “What the judge wrote is dicta,” Bassias said, referring to Grossman. “Dicta means it’s not a binding decision. He’s specifying everything MERS does that’s wrong. This judge did not address whether what MERS does is right or wrong.” Bassias said he didn’t oppose MERS’s appeal.
- “We have long believed that those who sought to use the In re Agard decision against MERS were wrong to do so,” Janis Smith, a Merscorp spokeswoman, said in a statement. “Any future challenges to MERS’ business model will have to be done without citing to Judge Grossman’s now vacated opinion.”(1)
For the story, see MERS Judge Sets Aside Bankruptcy Court’s Critical Ruling.
(1) As Judge Seybert correctly points out, that portion of the Agard case that criticized MERS was, in fact, nothing more than an advisory opinion. As such, and since that portion of Judge Grossman's opinion was not binding on any other court anyway, there is nothing that stops any other litigant or judge in any other case from any jurisdiction from citing to Judge Grossman's original opinion in Agard for the persuasive value of Judge Grossman's logic applied in his analysis, contrary to the statements of the presumably well-paid MERS' flack. What this flack also fails to mention is that the portion of Judge Grossman's opinion that was vacated was not done so on substantive grounds (ie. Judge Seybert didn't actually disagree with anything Judge Grossman said, but merely disagreed with the fact that he said it in light of the fact that nothing he said was necessary to reach his ruling in that particular case - remember, Judge Grossman actually rejected the homeowners's challenge to MERS).
Citing to a lower (non-appellate) court ruling that may have been subsequently vacated or reversed, or to a non-binding portion of a ruling, is not unheard of and is often done. See, for example, Hooker v. Northwest Trustee Services, Inc., et al., Case 1:10-cv-03111-PA (D. Or. May 25, 2011), in which Oregon Federal District Court Judge Owen M. Panner, in ruling against MERS in a foreclosure case, quotes from the dissenting opinion of Minnesota Supreme Court Justice (and pro football Hall of Famer) Alan C. Page in Jackson v. Mortgage Electronic Registration Systems, Inc., 770 N.W.2d 487, 503-04 (Minn. 2009) (Page, J., dissenting), an earlier Minnesota Supreme Court decision ruling in favor of MERS in a foreclosure case. Specifically, Judge Panner said this about the non-binding views expressed in the Minnesota case by Justice Page in his dissent:
- Although Justice Page wrote in dissent in a case involving a Minnesota statute, his concerns apply to numerous cases pending before me. [...] Justice Page wrote in dissent, but his views are persuasive.
By the way, in quoting from a dissenting opinion from an out-of-state court ruling that has no binding legal effect in Oregon, Judge Panner's action illustrates at least one example of why appellate-level judges (ie. Justice Page) spend their time writing dissenting opinions. The fact that none of Justice Page's colleagues on the Minnesota Supreme Court shared his view in the 6-1 ruling in Jackson v. Mortgage Electronic Registration Systems, Inc. didn't mean there wouldn't be other judges from around the country (ie. Judge Panner, among possibly many others) who would find his observations and concerns useful when considering subsequent cases.
