November 25, 2013

In a 21-page opinion issued today, the Supreme Court of Montana held that MERS is not the “beneficiary” under Montana’s Small Tract Financing Act (Montana’s non-judicial foreclosure statute). Jeff Barnes, Esq. represented the homeowners in the appeal, assisted by local Montana counsel Eric Hummel, Esq. Mr. Barnes wrote the Briefs and argued the matter before the full panel of Justices on September 25, 2013. The decision is now the law in the State of Montana.

The Court relied upon the Brandrup decision from Oregon (the companion case to the Niday decision from the Supreme Court of Oregon which also held that MERS is not the “beneficiary” under Oregon’s non-judicial foreclosure statute), and other cases cited by Mr. Barnes (who successfully argued the Niday decision in Oregon as well at both the Court of Appeals and Supreme Court levels).

In concluding that MERS is not the beneficiary under the statute, the Court quoted the homeowners’ argument ┬áthat “MERS was not the lender, did not extend any credit, and is nothing more than an electronic tracking entity”. Thus, the DOT was not and could not have been executed “for the benefit” of MERS. The Montana statute, which is practically identical to Oregon’s, requires that the “beneficiary” under the statute be the person “for whose benefit a trust indenture is given”.

The Court also rejected MERS’ argument that it is a “special agent” of the lender, finding no evidence to support this argument which the Court found that MERS wrongfully attempted for the first time on appeal. The Court held that there are no extenuating circumstances or new developments in the law to justify MERS’ not asserting an agency theory at the trial level. The Court further held that even if it had decided the agency issue using the language in the DOT, that evidence is reasonably susceptible to more than one inference and thus the legal relationship between MERS and the lender is not purely a question of law, with the term “nominee” being subject to more than one interpretation based on the context of its use.

The Court stated: “MERS relies on the same vague and confusing claim of authority as dispositive for the agency issue in this case”, referring to the Supreme Court of Oregon’s finding in Brandrup that the DOT only obfuscates MERS’ status by first granting the narrow designation of “nominee” holding “only legal title”, but then grants MERS the right to exercise “any and all” interests of the lender “as necessary”. The Court concluded that the facts of the case are susceptible to a determination that MERS was the kind of nominee that is not an agent.

The summary judgment entered by the trial court was thus also reversed.

Jeff Barnes, Esq.,