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Security Service FCU (Federal Credit Union) v. First American Mortgage Funding, LLC

United States Court of Appeals, Tenth Circuit

November 4, 2014

SECURITY SERVICE FCU (FEDERAL CREDIT UNION), Plaintiff-Counterclaim-Defendant - Appellant,
v.
FIRST AMERICAN MORTGAGE FUNDING, LLC, Defendant-Third Party Plaintiff-Cross-Claimant-Counterclaimant - Appellee, KEVIN B. JORDAN; CONSTRUCTION DISBURSEMENT SERVICES, INC.; FIRST AMERICAN MORTGAGE, INC.; WILLIAM DOUGLAS DEPUY; JEFFREY JORDAN; SHAUN JORDAN; MARK CAMPBELL, Defendants-Cross-Claimants-Counterclaimants - Appellees, STEWART TITLE OF CALIFORNIA, INC.; LAWYERS TITLE COMPANY; ORANGE COAST TITLE COMPANY, Defendants-Third-Party-Defendants - Appellees, TERRY ANDERSON; LINDA ANDERSON; BRIAN L. BARKER; SHARLENE P. BENTLEY; GERALD CARLEO; SHARON CARLEO; GLORIA DIXON; ROBIN FREESTONE; MARGARET FREESTONE; SHILOH GRIFFITHS; DONALD GRUBB; SHARON GRUBB; DAVID P. GUZY; TERRANCE HAFLER; DONNA HAFLER; RUSSELL E. HARDIMAN; CHARLES HESS; BARBARA HESS; KENNETH INGRAM; SIMON KROON; JOANNA KROON; JOHN LAING; SUSAN LAING; TRACY LARSEN; THOMAS MITCHELL; LOUISE HAYDEN; AKA Louise Mitchell; DENNY NELSON; PETER PASO; JULIE PASO; JAMES PHILLIPS; JOANN PHILLIPS; DOUG RANGLACK; LOUIS SASSALI; JOANN MARGULIES SMITH-SUGGS; SHELIAH A. WILLIAMS; BENJAMIN B. WONG; PUA'ALA WONG, Third-Party-Defendants, and NEW CENTURY BUILDERS, INC.; KENNETH E. NORTH; PARADISE VIEW RANCH MIRAGE, LLC; GILGER HOMES, LLC, KIRK GILGER; SUNDANCE MORTGAGE; THE ARTISAN GROUP, LLC, DBA, Artisan Development Group; EHLINE CO., Defendants-Cross-Claim Defendants. NATIONAL CREDIT UNION ADMINISTRATION, as liquidating agent for New Horizons Community Credit Union, Amicus Curiae

Page 1243

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO. (D.C. No. 08-CV-00955-WYD-CBS).

Austin D. Garner, Garner Law Office, Petaluma, California (Henry A. Cirillo and Rachel M. Dollar of Smith, Dollar, PC, Santa Rosa, California, with him on the briefs), for the Plaintiff-Appellant.

Alan D. Sweetbaum, Sweetbaum, Sands, Anderson, P.C., Denver, Colorado, and Jeffrey M. Lippa, Greenberg Traurig, LLP, Denver, Colorado (Joshua D. McMahon of Sweetbaum, Sands, Anderson, P.C., Denver, Coloardo, and William Depuy, Denver, Colorado, with them on the brief), for the Appellees.

Donald D. Allen and Devi C. Yorty of Markus, Williams, Young & Zimmermann, LLC, Denver, Colorado; John K. Ianno, Associate General Counsel, National Credit Union Administration, Alexandria, Virginia; and Robert Roach, Senior Trial Attorney, Asset Management and Assistance Center, National Credit Union Administration, Austin, Texas, filed a brief for Amicus Curiae.

Before KELLY, BACHARACH, and PHILLIPS, Circuit Judges.

OPINION

Page 1244

KELLY, Circuit Judge

Plaintiff-Appellant, Security Service Federal Credit Union (" SSFCU" ), appeals from the district court's summary judgment in favor of Defendants-Appellees, including First American Mortgage Funding, LLC (" FAM" ) and First American Mortgage, Inc., (together, the " FAM Defendants" ); and Stewart Title of California, Inc., Orange Coast Title Company of Southern California, and Lawyers Title Company (together, the " Closing Agents" ). 11 Aplt. App. 3003; Sec. Serv. Fed. Credit Union v. First Am. Mortg. Funding, No. 08-cv-00955-WYD-CBS, 2013 WL 1151617 (D. Colo. Mar. 20, 2013). The district court held that SSFCU was not a proper plaintiff to assert the claims set forth in its Fourth Amended Complaint and dismissed those claims with prejudice. Sec. Serv., 2013 WL 1151617 at *6. Our jurisdiction arises under 28 U.S.C. § 1291,[1] and we reverse.

Background

In August 2003, SSFCU's predecessor in interest, New Horizons Community Credit Union (" New Horizons" ), entered into a Funding Service Agreement with FAM, under which FAM originated 26 loans to individual borrowers for the purchase and construction of residential properties in Colorado and California. The Closing Agents performed closing procedures. Briefly, SSFCU contends that the FAM Defendants and Closing Agents, through a variety of acts and omissions, wrongfully induced New Horizons to fund these loans to straw borrowers. SSFCU further contends that the loan transactions were a vehicle to misappropriate some $14 million in loan proceeds.

This appeal concerns whether SSFCU has the right to pursue those claims pursuant to a 2007 Purchase and Assumption Agreement (" PAA" ) between SSFCU and the National Credit Union Administration (" NCUA" ), as the liquidating agent for New Horizons. 5 Aplt. App. 1281-92. Both the NCUA and SSFCU contend that under the terms of the PAA, the NCUA transferred the " right, title and interest," 5 Aplt. App. 1285, ¶ 5, in the loans and various other assets to SSFCU, and this includes the claims at issue. As the parties to the agreement, the NCUA and SSFCU are united in their understanding that a transfer of " the right, title and interest" in the loans was intended to transfer any and all claims relating to those loans. 5 Aplt. App. 1317-18, ¶ 4; Aplt. Br. 28-30; Amicus (NCUA) Br. 12-13.

On the other hand, the PAA also provides that " except as ...


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