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Ohio Supreme Court Oral Arguments: Federal Home Loan Mortgage Corp. v. Duane Schwartzwald et al.

Ohio Supreme Court Oral Arguments: Federal Home Loan Mortgage Corp. v. Duane Schwartzwald et al.


How can you commence an action if you don’t have the proof you’re entitled to to enforce the action in the first place?

Must Lender Have Current Ownership Interest in Promissory Note or Mortgage at the Time Foreclosure Action Is Filed?

Or May Lack of Standing Be ‘Cured’ Through Mortgage Assignment Before Judgment?

Federal Home Loan Mortgage Corp. v. Duane Schwartzwald et al., Case nos. 2011-1201 and 2011-1362
Second District Court of Appeals (Greene County)

ISSUE: If a party files a lawsuit to foreclose on a mortgage and it is later shown that party did not have a current ownership interest in the mortgage or the underlying promissory note on the date the foreclosure action was filed, is the court required to dismiss the suit based on the plaintiff’s lack of standing to bring it? Or may the plaintiff “cure” a defect in standing or in naming the actual party in interest under Civil Rule 17(A) by obtaining an assignment of the mortgage prior to the court’s entry of a judgment in the case?

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Florida Supreme Court hears landmark Foreclosure Fraud suit

Florida Supreme Court hears landmark Foreclosure Fraud suit


Does the rule of law matter?

Why hasn’t David J. Stern not been disbarred? Suspended?

Is Fraud upon the court 100,000’s of time & to the face of a judge not a crime?

Why would the original judge not sanction anyone?

Will the Supreme Court allow fraud to slap it in its face 2nd time around?

Where has justice gone?

Reuters-

The Florida Supreme Court heard arguments on Thursday in a landmark lawsuit that could undo hundreds of thousands of foreclosures and open up banks to severe financial penalties in the state where they face the bulk of their foreclosure-fraud litigation.

Legal experts say the lawsuit is one of the most important foreclosure fraud cases in the country and could help resolve an issue that has vexed Florida’s foreclosure courts for the past five years: Can banks that file fraudulent documents in foreclosure proceedings voluntarily dismiss the cases only to refile them later with different paperwork?

The decision, which may take up to eight months, could influence judges in the other 26 states that require judicial approval for foreclosures.

The case at issue, known as Roman Pino v. Bank of New York Mellon, stems from the so-called robo-signing scandal that emerged in 2010 when it was revealed that banks and their law firms had hired low-wage workers to sign legal documents without checking their accuracy, as is required by law.

If the state Supreme Court rules against the banks, “a broad universe of mortgages could be rendered unenforceable,” said former U.S. Attorney Kendall Coffey, author of the book, “Foreclosures in Florida.”

[REUTERS]

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Florida foreclosure case could SLAM banks

Florida foreclosure case could SLAM banks


Reuters-

The Florida Supreme Court is set to hear oral arguments Thursday in a lawsuit that could undo hundreds of thousands of foreclosures and open up banks to severe financial liabilities in the state where they face the bulk of their foreclosure-fraud litigation.

The court is deciding whether banks who used fraudulent documents to file foreclosure lawsuits can dismiss the cases and refile them later with different paperwork.

The decision, which may take up to eight months to render, could affect hundreds of thousands of homeowners in Florida, and could also influence judges in the other 26 states that require lawsuits in foreclosures.

Of all the foreclosure filings in those states, sixty three percent, a total of 138,288, are concentrated in five states, according to RealtyTrac, an online foreclosure marketplace. Of those, nearly half are in Florida. In Congressional testimony last year, Bank of America, the U.S.’s largest mortgage servicer, said that 70 percent of its foreclosure-related lawsuits were in Florida.

The case at issue, known as Roman Pino v. Bank of New York Mellon, stems from the so-called robo-signing scandal that emerged in 2010 when it was revealed that banks and their law firms had hired low-wage workers to sign legal documents without checking their accuracy as is required by law.

This was a case of an intentionally fraudulent document fabricated to use in a court proceeding,” says former U.S. Attorney Kendall Coffey, author of the book Foreclosures in Florida.

[REUTERS]

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PINO v. BONY Oral Argument set for Thursday May 10, 2012 at 9:00 am

PINO v. BONY Oral Argument set for Thursday May 10, 2012 at 9:00 am


The Oral Arguments in Roman Pino v. Bank of New York will be heard before the Florida Supreme Court on Thursday, May 10, 2012  at 9:00 AM.  In this case the court will be addressing the circumstances under which a voluntary dismissal (a final judgment or other court action) can be set aside long after the case is over, based on underlying fraud on the court.

The Oral Arguments can be watched live on http://thefloridachannel.org/watch/web3/1336655014.

As reflected above, the Fourth District certified this issue to be one of great public importance, and in doing so, noted that “many, many mortgage foreclosures appear tainted with suspect documents” and that Pino’s requested remedy, if imposed, “may dramatically affect the mortgage foreclosure crisis in this State.” Pino, 57 So. 3d at 954-55.

Supreme Court of Florida

No. SC11-697

ROMAN PINO,
Petitioner,

vs.

THE BANK OF NEW YORK, etc., et al.,
Respondents.

[December 8, 2011]

PER CURIAM.

The issue we address is whether Florida Rule of Appellate Procedure 9.350 requires this Court to dismiss a case after we have accepted jurisdiction based on a question certified to be one of great public importance and after the petitioner has filed his initial brief on the merits.1 This narrow question arose after the parties to this action filed a joint Stipulated Dismissal, which advised that they had settled this matter and stipulated to the dismissal of the review proceeding pending before this Court. It cannot be questioned that our well-established precedent authorizes this Court to exercise its discretion to deny the requested dismissal of a review proceeding, even where both parties to the action agree to the dismissal in light of an agreed-upon settlement. The question certified to us by the Fourth District Court of Appeal in this case transcends the individual parties to this action because it has the potential to impact the mortgage foreclosure crisis throughout this state and is one on which Florida’s trial courts and litigants need guidance. The legal issue also has implications beyond mortgage foreclosure actions. Because we agree with the Fourth District that this issue is indeed one of great public importance and in need of resolution by this Court, we deny the parties’ request to dismiss this proceeding.

[…]

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Florida Supreme Court to review dismissed foreclosure lawsuit against Greenacres man

Florida Supreme Court to review dismissed foreclosure lawsuit against Greenacres man


This shouldn’t be so difficult, David J. Stern has TONS of fraudulent documents out there. Pick any County, any documents his firm filed and you’re sure to find fraud. Just read the depositions from his former employees.

“We conclude that this is a question of great public importance, as many, many mortgage foreclosures appear tainted with suspect documents,” the appeals court wrote in certification to the Supreme Court.

PALM BEACH POST-

An unassuming drywall hanger from Greenacres has banks warning of a “widespread financial crisis” if the Florida Supreme Court favors him in a landmark foreclosure case justices will hear this week.

Plucked out of the 4th District Court of Appeal, Roman Pino v. the Bank of New York is the first significant foreclosure complaint to be heard by the high court since the state’s legendary housing collapse.

It’s particularly unusual because the 41-year-old Pino had already settled the case when the Supreme Court decided in December to take up a legal question it said could affect the mortgage foreclosure crisis statewide.

At issue is whether a bank can escape punishment for filing flawed or fraudulent documents in a case by voluntarily dismissing it. (A voluntary dismissal allows the bank to refile at a later date.)

That’s what Royal Palm Beach-based foreclosure defense attorney Tom Ice said happened when he challenged a document created by the Law Offices of David J. Stern and sought to question employees about its veracity. On the eve of those depositions, the bank moved to dismiss the case, blocking the court’s ability to address any sanctions.

“The objective here was to hide from punishment for the wrongdoing,” Ice said.

[PALM BEACH POST]

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PINO vs BONY | BRIEF OF AMICUS CURIAE FLORIDA LAND TITLE ASSOCIATION AND AMERICAN LAND TITLE ASSOCIATION

PINO vs BONY | BRIEF OF AMICUS CURIAE FLORIDA LAND TITLE ASSOCIATION AND AMERICAN LAND TITLE ASSOCIATION


Via MATT WEIDNER

EXCERPT:

INTRODUCTION
The Court retained this case so that it could give needed guidance to trial courts and other litigants by its answer to a certified question arising from a mortgage foreclosure action. As the Court wrote: The question certified . . . transcends the individual parties to this action because it has the potential to impact the mortgage foreclosure crisis throughout this state and is one on which Florida’s trial courts and litigants need guidance. The legal issue also has implications beyond mortgage foreclosure actions.
Pino v. Bank of New York, 36 Fla. L. Weekly S711 (Fla. Dec. 8, 2011). Florida Land Title Association (“FLTA”) and American Land Title Association (“ALTA”) file this brief to address the need for this Court to give guidance to trial courts and litigants on the importance of protecting the rights of third parties that have justifiably relied on the finality of a prior court action when buying, extending financing on, or insuring title to real property.

SUMMARY OF ARGUMENT
The Court can expressly limit its decision in this case to the setting aside of a voluntary dismissal in a case where no third party interest in real estate is implicated. Should it choose to do so, FLTA and ALTA have no issues to address. However, if the Court decides to write more broadly, we respectfully ask the Court to emphasize the need to protect the rights of affected third parties when collateral attacks are brought against otherwise final court judgments, orders, decrees or proceedings. The residential mortgage foreclosure crisis has caused a host of problems for homeowners, lenders, and Florida’s court system. The Court addressed many of these problems by forming the Task Force on Residential Mortgage Foreclosures in 2009 and by adopting its recommended amendments to the Florida Rules of Civil Procedure in 2010. However, unlike some other states, the Court has not adequately addressed the protection of third party interests when otherwise final court proceedings are collaterally attacked, especially the interest of those who have purchased foreclosed real estate.

Respectfully, if the Court is to give guidance to trial courts and litigants regarding collateral attacks against foreclosure actions (whether relief is sought under rule 1.540(b) or the use of inherent judicial powers) beyond the narrow facts of this case, it should give guidance on protecting the interests of third parties that purchase, finance and insure title to foreclosed properties. Recognition and protection of these neglected interests is vital to the integrity of our judicial system and to the ultimate resolution of the mortgage foreclosure crisis.

[…]

Download PDF Below

Down Load PDF of This Case

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ELSTON / LEETSDALE vs CWCAPITAL | FL 4DCA “did not file any evidence, affidavits or other documents, supporting…it was authorized …on behalf of the trust”

ELSTON / LEETSDALE vs CWCAPITAL | FL 4DCA “did not file any evidence, affidavits or other documents, supporting…it was authorized …on behalf of the trust”


DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

January Term 2012

ELSTON/LEETSDALE, LLC, a Delaware limited liability company,
Appellant,

v.

CWCAPITAL ASSET MANAGEMENT LLC, solely in its capacity as
Special Servicer on behalf of U.S. BANK, N.A., Successor to STATE
STREET BANK AND TRUST COMPANY, as Trustee for the registered
holders of J.P. MORGAN CHASE COMMERCIAL MORTGAGE
SECURITIES CORP., MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 2001-C1BC1,
Appellee.

No. 4D11-3151

[April 4, 2012]

POLEN, J.

Elston/Leetsdale, LLC (Elston) appeals the trial court’s non-final
order, requiring it to make payments to CWCapital Asset Management
LLC, solely in its capacity as special servicer on behalf of U.S. Bank,
N.A., successor to State Street Bank and Trust Company, as trustee for
the Registered Holders of J.P. Morgan Chase Commercial Mortgage
Securities Corp., Mortgage Pass-Through Certificates, Series 2001-
C1BC1 (CW) during the pendency of the action. Because CW did not
properly plead standing, we reverse.

The facts are as follows. Elston executed a promissory note as
evidence of a loan made by First Union National Bank; to secure
payment, Elston executed a mortgage and security agreement, along with
an assignment of leases and rents. First Union assigned its rights in the
loan documents to Morgan Guaranty Trust Company of New York, which
then assigned its right, title and interest in the loan to State Street Bank
and Trust Company, as Trustee for J.P. Morgan Chase Commercial
Mortgage Securities Corp., Series 2001-C1BC1 (the trust). Presently, the
trust is the current owner and holder of all the loan documents subject
to this appeal.

CW, the special servicer for the trust, filed a verified complaint, in its
own name, for foreclosure. The complaint alleged that Elston defaulted
on the loan, and the trust elected to accelerate and declare immediately
due and owing the entire unpaid principal balance together with accrued
interest. In response to CW’s motions, the trial court ordered Elston to
show cause as to why payments should not b e ma d e during the
pendency of the foreclosure action. Elston then moved to dismiss the
complaint, arguing that CW failed to properly allege standing to pursue
enforcement of the security instruments. CW argued that it had
standing to bring the foreclosure action because it is duly authorized by
the trust to do so and, as special servicer for the loan, it is entitled to
take all required action to protect the interests of the trust. After a
hearing,1 the trial court entered a payment order, requiring Elston to pay
CW $42,404.91 per month during the pendency of the action. This
appeal followed.

Elston argues that the trial court erred b y ordering it to make
payments to CW because CW failed to properly allege standing. CW
argues that Elston has not furnished a sufficient record for this court to
review the trial court’s ruling.2 On the merits, CW argues that, as agent
and special servicer to the trust, which owns the loan documents at
issue, it has standing to foreclose.

“Whether a party is the proper party with standing to bring an action
is a question of law to be reviewed de novo.” FCD Dev., LLC v. S. Fla.
Sports Comm., Inc., 37 So. 3d 905, 909 (Fla. 4th DCA 2010) (quoting
Westport Recovery Corp. v. Midas, 954 So. 2d 750, 752 (Fla. 4th DCA
2007)).

Every action may be prosecuted in the name of the real party
in interest, but a personal representative, administrator,
guardian, trustee of an express trust, a party with whom or
in whose name a contract has been made for the benefit of
another, or a party expressly authorized by statute may sue
in that person’s own name without joining the party for
whose benefit the action is brought.

Fla. R. Civ. P. 1.210(a). “In its broadest sense, standing is no more than
having, or representing one who has, ‘a sufficient stake in an otherwise
justiciable controversy to obtain judicial resolution of that controversy.’”
Kumar Corp. v. Nopal Lines, Ltd., 462 So. 2d 1178, 1182 (Fla. 3d DCA
1985) (quoting Sierra Club v. Morton, 405 U.S. 727, 731 (1972)).

In the mortgage foreclosure context, “standing is broader than just
actual ownership of the beneficial interest in the note.” Mortgage Elec.
Registration Sys., Inc. v. Azize, 965 So. 2d 151, 153 (Fla. 2d DCA 2007).
“The Florida real party in interest rule, Fla. R. Civ. P. 1.210(a), permits
an action to be prosecuted in the name of someone other than, but
acting for, the real party in interest.” Id. (quoting Kumar, 462 So. 2d at
1183). “Thus, where a plaintiff is either the real party in interest or is
maintaining the action on behalf of the real party in interest, its action
cannot be terminated on the ground that it lacks standing.” Kumar, 462
So. 2d at 1183. See also BAC Funding Consortium Inc. ISAOA/ATIMA v.
Jean-Jacques, 28 So. 3d 936, 938 (Fla. 2d DCA 2010) (“The proper party
with standing to foreclose a note and/or mortgage is the holder of the
note and mortgage or the holder’s representative.”).

In securitization cases, a servicer may b e considered a party in
interest to commence legal action as long as the trustee joins or
ratifies its action. In re Rosenberg, 414 B.R. 826, 842 (Bankr. S.D. Fla.
2009) (emphasis added). In CWCapital Asset Management, LLC v.
Chicago Properties, LLC, 610 F.3d 497 (7th Cir. 2010), the Seventh
Circuit found that CW, as a special servicer to a loan, had standing to
bring an action in its own name against a mortgagor and landlord for
money paid by a tenant in settlement of a suit for unpaid rent. Id. at
499-500. Significantly, however, in opposition to the defendant’s motion
for judgment on the pleadings (based on CW’s lack of standing), CW filed
an affidavit of the trustee, which was not contradicted, ratifying the
servicer’s (CW’S) commencement of the lawsuit. Id. at 502 (emphasis
added). Additionally, the pooling and servicing agreement was placed in
evidence as additional evidence that CW’s principal granted CW authority
to enforce the debt instruments that CW neither owned nor held. Id. at
501.

In Juega v. Davidson, 8 So. 3d 488 (Fla. 3d DCA 2009), relied on by
the trial court, the Third District reversed an order of dismissal for lack
of standing, finding that because the plaintiff was an agent who had been
granted full authority to act for the real party in interest, there was no
violation of rule 1.210(a). Id. at 489. However, in Juega, there was
evidence in the trial court that the agent/plaintiff had been granted full
authority to act on the real party in interest’s behalf: The real party in
interest filed an affidavit in opposition to the motion to dismiss for lack of
standing, averring that Juega was pursuing the litigation for the real
party in interest’s benefit and ratifying all actions taken by Juega since
the inception of the lawsuit. Id. at 489. Finding the affidavit filed by the
real party in interest to be indistinguishable from the affidavit filed by the
principal in Kumar, the Third District held that “the facts stated in [the
affidavit] establish that the agent, Juega, has standing.” Id. at 490
(emphasis added).

Here, the caption of the verified complaint states that the underlying
action is brought by CW “solely in its capacity as special servicer on
behalf of U.S. Bank, N.A.” In the complaint, CW alleges, and verifies as
true, that it “has been and is duly authorized by the Trust to prosecute
this action as agent and special servicer for the Trust.” However, CW did
not file any evidence, affidavits or other documents, supporting its
allegation that it was authorized to prosecute the action on behalf of the
trust, as was done in Kumar, Juega and Chicago Properties. Although
CW’s complaint is verified, it is verified by the “SVP” for CW – not by the
real party in interest, the trust. CW relies on nothing more than its own
allegations and affidavit to support its argument that it has standing to
sue on behalf of the trust. This is insufficient evidence to prove that it is
authorized to sue on the trust’s behalf.

We affirm on the other issue raised by Elston, as we find that the trial
court properly determined that CW was not required to register as a
commercial collection agency or as a licensed mortgage broker under
Chapters 559 and 494, Florida Statutes.

Reversed and Remanded.

TAYLOR and HAZOURI, JJ., concur.
* *

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U.S. Bank v Dellarmo | NY Appellate Division, 2nd Dept. “Corrective Assignment of Mortgage”, “Transfer or ASMT of only the mortgage without the debt is a nullity”

U.S. Bank v Dellarmo | NY Appellate Division, 2nd Dept. “Corrective Assignment of Mortgage”, “Transfer or ASMT of only the mortgage without the debt is a nullity”


Decided on April 3, 2012

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE DIVISION : SECOND JUDICIAL DEPARTMENT

PETER B. SKELOS, J.P.
L. PRISCILLA HALL
LEONARD B. AUSTIN
ROBERT J. MILLER, JJ.
2010-11958
(Index No. 2986/06)

[*1]U.S. Bank National Association, etc., respondent,

v

Joseph Dellarmo, also known as Joseph Dell’Armo, appellant, et al., defendants.

Schloss & Schloss, Airmont, N.Y. (Jonathan B. Schloss of
counsel), for appellant.
Locke Lord, LLP, New York, N.Y. (R. James DeRose III of
counsel), for respondent.

DECISION & ORDER

In an action to foreclose a mortgage, the defendant Joseph Dellarmo, also known as, Joseph Dell’Armo, appeals from an order of the Supreme Court, Rockland County (Weiner, J.), entered October 5, 2010, which denied his motion pursuant to CPLR 3211(a) to dismiss the complaint insofar as asserted against him for lack of standing.

ORDERED that the order is reversed, on the law, with costs, and the motion of the defendant Joseph Dellarmo, also known as Joseph Dell’Armo, to dismiss the complaint insofar as asserted against him is granted.

In commencing this action on April 25, 2006, to foreclose a mortgage entered into by the defendant Joseph Dellarmo, also known as Joseph Dell’Armo (hereinafter Dellarmo), the plaintiff asserted in its complaint that it had been assigned the subject mortgage by assignment dated April 11, 2006, which was duly recorded with the Clerk of Rockland County. Dellarmo failed to answer or appear, but thereafter moved, inter alia, to enjoin the plaintiff from foreclosing on the property on the ground that it lacked standing, and to vacate a default judgment entered against him. On October 30, 2009, while Dellarmo’s motion was pending, a “Corrective Assignment of Mortgage” (hereinafter the corrective assignment) dated July 28, 2009, to the plaintiff was recorded with the Clerk of Rockland County, purporting to “correct and replace the April 11, 2006 assignment . . . which was sent for recording but was lost prior to being recorded” by the Clerk of Rockland County. The corrective assignment was notarized outside New York State but unaccompanied by a CPLR 2309(c) certification. By order dated January 4, 2010, the Supreme Court determined, based on the April 11, 2006, assignment, which the complaint described as having been recorded, and without referencing the corrective assignment, that the plaintiff had standing to commence this action, and directed a hearing to determine the validity of the service of process. Following the hearing, the Supreme Court vacated the default judgment entered against Dellarmo.

Dellarmo moved pursuant to CPLR 3211(a) to dismiss the complaint insofar as asserted against him, contending, among other things, that the corrective assignment was a nullity, as it had been notarized out-of-state without the required CPLR 2309(c) certification, and, even if the corrective assignment was valid, the plaintiff nevertheless lacked standing to bring this action, as it was not the holder in due course of both the mortgage and note when it commenced the action. The Supreme Court denied the motion, finding that the failure to accompany the corrective assignment with a CPLR 2309(c) certification was not a fatal defect and that Dellarmo raised merely speculative doubts about the validity of the corrective assignment. Dellarmo appeals, and we [*2]reverse.

The plaintiff’s failure to comply with CPLR 2309(c) in submitting various documents, including, among others, the corrective assignment, which were notarized outside the state but not accompanied with a certificate in conformity with CPLR 2309(c), was not a fatal defect, as such certification may be provided nunc pro tunc (see CPLR 2001; Betz v Daniel Conti, Inc., 69 AD3d 545; Matapos Tech. Ltd. v Compania Andina de Comercio Ltda, 68 AD3d 672, 673; Smith v Allstate Ins. Co., 38 AD3d 522).

“In a mortgage foreclosure action, a plaintiff has standing where it is both the holder or assignee of the subject mortgage and the holder or assignee of the underlying note at the time the action is commenced” (Bank of N.Y. v Silverberg, 86 AD3d 274, 279; see Countrywide Home Loans, Inc. v Gress, 68 AD3d 709). Where a defendant raises the issue of standing, the plaintiff must prove its standing to be entitled to relief (see CitiMortgage, Inc. v Rosenthal, 88 AD3d 759; U.S. Bank, N.A. v Collymore, 68 AD3d 752, 753). Moreover, while assignment of a promissory note also effectuates assignment of the mortgage (see Bank of N.Y. Silverberg, 86 AD3d at 280; U.S. Bank, N.A. v Collymore, 68 AD3d at 753-754; Mortgage Elec. Registration Sys., Inc. v Coakley, 41 AD3d 674), the converse is not true: since a mortgage is merely security for a debt, it cannot exist independently of the debt, and thus, a transfer or assignment of only the mortgage without the debt is a nullity and no interest is acquired by it (see Deutsche Bank Natl. Trust Co. v Barnett, 88 AD3d 636; Bank of N.Y. v Silverberg, 86 AD3d at 280). The failure to record an assignment prior to the commencement of the action is not necessarily fatal since “an assignment of a note and mortgage need not be in writing and can be effectuated by physical delivery” (Bank of N.Y. v Silverberg, 86 AD3d at 280; see Deutsche Bank Natl. Trust Co. v Barnett, 88 AD3d 636; U.S. Bank, N.A. v Collymore, 68 AD3d at 754; LaSalle Bank Natl. Assn. v Ahearn, 59 AD3d 911, 912).

Here, as the plaintiff concedes, the complaint incorrectly asserts that the April 11, 2006, assignment of the mortgage to the plaintiff had been duly recorded. Further, there is no allegation that the note or mortgage was physically delivered to the plaintiff prior to commencement of the action (compare Mortgage Elec. Registration Sys., Inc. v Coakley, 41 AD3d 674). The record also suggests that in the order dated January 4, 2010, in which the Supreme Court held that the plaintiff had standing pursuant to the April 11, 2006, assignment, the court relied upon the incorrect assertion in the complaint that the April 11, 2006, assignment had been recorded. The Supreme Court referred only to the April 11, 2006, assignment and made no reference to the corrective assignment’s purported replacement of the April 11, 2006, assignment.

The plaintiff now relies on the corrective assignment, which was recorded with the Clerk of Rockland County on October 30, 2009, to demonstrate that it was a holder of the mortgage as of the April 25, 2006, commencement of this action. The corrective assignment recites, in pertinent part, that it “is meant to correct and replace the April 11, 2006 assignment by and between the parties herein which was sent for recording but was lost prior to being recorded” in Rockland County. However, inasmuch as the complaint does not allege that the note was physically delivered to the plaintiff, and nothing in the plaintiff’s submission in opposition to Dellarmo’s motion could support a finding that such physical delivery occurred, the corrective assignment cannot be given retroactive effect (see Countrywide Home Loans, Inc. v Gress, 68 AD3d at 710; Wells Fargo Bank, N.A. v Marchione, 69 AD3d 204, 210; LaSalle Bank Natl. Assn. v Ahearn, 59 AD3d at 912-913). Moreover, both the unrecorded April 11, 2006, assignment and the recorded corrective assignment indicate only that the mortgage was assigned to the plaintiff. Since an assignment of a mortgage without the underlying debt is a nullity (see Deutsche Bank Natl. Trust Co. v Barnett, 88 AD3d 636; Bank of N.Y. v Silverberg, 86 AD3d at 280), the plaintiff has failed to demonstrate that it had standing to commence this action (see Bank of N.Y. v Silverberg, 86 AD3d at 280; U.S. Bank, N.A. v Collymore, 68 AD3d at 754).

Accordingly, the Supreme Court should have granted Dellarmo’s motion pursuant to CPLR 3211(a) to dismiss the complaint insofar as asserted against him for lack of standing.

In light of the foregoing, we need not reach Dellarmo’s remaining contentions.
SKELOS, J.P., HALL, AUSTIN and MILLER, JJ., concur.

ENTER:

Aprilanne Agostino

Clerk of the Court

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SHOUP vs. McCurdy & CANDLER, LLC | 11th Cir. Court of Appeals “MERS is NOT a CREDITOR, The complaint states a plausible claim for relief under the FDCPA”

SHOUP vs. McCurdy & CANDLER, LLC | 11th Cir. Court of Appeals “MERS is NOT a CREDITOR, The complaint states a plausible claim for relief under the FDCPA”


IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
_________________________
No. 10-14619
__________________________
D.C. Docket No. 1:09-cv-02598-JEC

JONI LEE SHOUP,
on behalf of herself and all others similarly situated,
Plaintiff – Appellant,

versus

MCCURDY & CANDLER, LLC,
Respondent – Appellee.
__________________________
Appeal from the United States District Court
for the Northern District of Georgia

___________________________
(March 30, 2012)

Before DUBINA, Chief Judge, CARNES, Circuit Judge, and FORRESTER,*
District Judge.

*Honorable J. Owen Forrester, United States District Judge for the Northern District of
Georgia, sitting by designation.

PER CURIAM:

Joni Shoup filed a lawsuit against McCurdy & Candler, LLC alleging a
violation of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692e. The
district court dismissed her complaint for failure to state a claim under Federal
Rule of Civil Procedure 12(b)(6), and Shoup appeals, contending that her
complaint stated a valid claim for statutory damages under the FDCPA because
McCurdy & Candler’s initial communication letter falsely said that its client,
Mortgage Electronic Registration Systems, Inc. (MERS), was Shoup’s “creditor.”

I.

Shoup bought a home in Georgia in 2003. To finance her new home, she
entered into a mortgage contract with America Wholesale Lender. The contract
stated that America Wholesale Lender was the “Lender,” but it also described
MERS as “the grantee under” the mortgage contract and as “a separate corporation
that is acting solely as a nominee for Lender and Lender’s successors and assigns.”
Shoup defaulted on her mortgage, and MERS’ law firm, McCurdy &
Candler, sent Shoup an initial communication letter. That letter was entitled,
“NOTICE PURSUANT TO FAIR DEBT COLLECTION PRACTICES ACT 15
USC 1692,” and stated that its purpose was “an attempt to collect a debt.” The
letter identified MERS as “the creditor on the above referenced loan.” (Emphasis
added.)

Soon after receiving that letter, Shoup filed a complaint against McCurdy &
Candler under the FDCPA. She alleged that MERS is not a “creditor” as defined
in the FDCPA because it did not offer or extend credit to Shoup and she does not
owe MERS a debt. Instead, according to the complaint, MERS is “a company that
tracks, for its clients, the sale of promissory notes and servicing rights.” Shoup,
therefore, alleged that McCurdy & Candler violated the FDCPA by falsely stating
in the initial communication letter that MERS was Shoup’s “creditor.”1
McCurdy & Candler filed a motion to dismiss under Rule 12(b)(6), which
the district court granted. Finding that MERS was a “creditor” under the FDCPA,
the court concluded that Shoup’s complaint did not state a claim for statutory
damages under the FDCPA. The court also concluded that, even if MERS was not
a “creditor,” calling MERS one was harmless. This is Shoup’s appeal.

II.

We review de novo the grant of a motion to dismiss under Rule 12(b)(6) for
failure to state a claim, “accepting the allegations in the complaint as true and
construing them in the light most favorable to the plaintiff.” Belanger v. Salvation
Army, 556 F.3d 1153, 1155 (11th Cir. 2009). “A complaint must state a plausible
claim for relief, and ‘a claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.’” Sinaltraninal v. Coca-Cola Co.,
578 F.3d 1252, 1261 (11th Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662,
129 S.Ct. 1937, 1949 (2009)) (alteration omitted). We also review de novo
matters of statutory interpretation. Belanger, 556 F.3d at 1155.

Under the FDCPA, “[a] debt collector may not use any false, deceptive, or
misleading representation or means in connection with the collection of any debt,”
15 U.S.C. § 1692e, which includes “[t]he use of any false representation or
deceptive means to collect or attempt to collect any debt or to obtain information
concerning a consumer,” id. § 1692e(10). The statute defines “creditor” as “any
person who offers or extends credit creating a debt or to whom a debt is owed, but
such term does not include any person to the extent that he receives an assignment
or transfer of a debt in default solely for the purpose of facilitating collection of
such debt for another.” Id. § 1692a(4). And “[t]he FDCPA provides that ‘any
debt collector who fails to comply with any provision of this subchapter with
respect to any person is liable to such person’ for [actual and statutory] damages
and costs.” Bourff v. Lublin, __ F.3d __, slip op. at 6, No. 10-14618 (11th Cir.
Mar. 15, 2012) (quoting 15 U.S.C. § 1692k(a)).

Our decision in this case is controlled by our recent decision in Bourff. In
that case a law firm sent a letter to the plaintiff in “AN ATTEMPT TO COLLECT
A DEBT.” Id. at __, slip op. at 3 (quotation marks omitted). That letter identified
a loan servicer as “the creditor on the above-referenced loan.” Id. at __, slip op. at
3 (quotation marks omitted). The plaintiff’s complaint alleged that the loan
servicer was not a “creditor” under the FDCPA, id., and that the law firm violated
the FDCPA’s “prohibition on false, deceptive or misleading representations by
falsely stating in its collection notice that [the servicer] was the ‘creditor’ on [the
plaintiff’s] loan,” id. at __, slip op. at 5 (some quotation marks omitted). The
allegation that the loan servicer was not a “creditor” was enough to state a
plausible claim for relief under the FDCPA. Id. at __, slip op. at 6–7.

Here, viewing the allegations in the complaint in the light most favorable to
Shoup, she has alleged that MERS did not offer or extend credit to her and that she
does not owe a debt to MERS. Because the FDCPA defines a “creditor” as “any
person who offers or extends credit creating a debt or to whom a debt is owed,” 15
U.S.C. § 1692a(4), Shoup has alleged that MERS is not a “creditor” under the
FDCPA. Finally, because the complaint alleges that McCurdy & Candler’s initial
communication letter falsely identified MERS as her “creditor,” the complaint
states a plausible claim for relief under the FDCPA. See Bourff, __ F.3d at __,
slip op. at 6–7. And because the FDCPA provides a claim for statutory damages
based on any violation of the statute, see 15 U.S.C. § 1692k(a)(2), McCurdy &
Candler’s alleged violation of the FDCPA is not harmless. See Muha v. Encore
Receivable Mgmt., Inc., 558 F.3d 623, 629 (7th Cir. 2009) (“Were the plaintiffs
seeking actual damages rather than just statutory damages, they would have to
present some evidence that they were misled to their detriment.”); Baker v. G.C.
Servs. Corp., 677 F.2d 775, 780 (9th Cir. 1982) (“The statute clearly specifies the
total damage award as the sum of the separate amounts of actual damages,
statutory damages and attorney fees. There is no indication in the statute that
award of statutory damages must be based on proof of actual damages.”). The
district court erred in dismissing Shoup’s complaint under Rule 12(b)(6).

REVERSED AND REMANDED.

footnote:

1 Shoup also brought her claim on behalf of a putative class and sought class certification.
The district court did not rule on that issue, so it is not before us on appeal.

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GUERRERO v. CHASE HOME FINANCE, LLC. | FL 3rd DCA – Chase tries to re-establish a lost note without a lost note count in its original complaint.

GUERRERO v. CHASE HOME FINANCE, LLC. | FL 3rd DCA – Chase tries to re-establish a lost note without a lost note count in its original complaint.


H/T Alina

District Court of Appeal of Florida, Third District

Juan Luis Guerrero and Patricia Guerrero, Appellants,
v.
Chase Home Finance, LLC., Appellee.
 No. 3D11-1404.

Opinion filed March 21, 2012.
An Appeal from the Circuit Court for Miami-Dade County, Eugene J.
Fierro, Judge.

Carrillo & Carrillo and Felix R. Carrillo, for appellants.

Marshall C. Watson and Robert R. Edwards, (Ft. Lauderdale), for appellee.

Before WELLS, C.J., and RAMIREZ, and LAGOA, JJ.

WELLS, Chief Judge.

Juan Luis Guerrero and Patricia Guerrero appeal from a final judgment of foreclosure complaining of a number of technical deficiencies in the record below. Faced with a record that may best be described as a “mess,” we conclude that at least one of these “technicalities” mandates reversal.

This action was commenced by Chase Home Finance, LLC as the “present designated holder of [a] note and mortgage” executed by the Guerreros. Copies of the promissory note at issue in the amount of $316,000 made payable to Freedom Mortgage Corporation and the mortgage securing that note in favor of “`MERS’ [Mortgage Electronic Registration Systems, Inc.] . . . acting solely as a nominee for Lender and Lender’s successors and assigns,” were attached to the complaint.1 The Guerreros filed their Answer and Affirmative Defenses, admitting to entering into the loan and to defaulting, but indicating they were without knowledge of the relationship between Chase and the original lender, and demanding “strict proof thereof.”

On April 27, 2011, this matter came on for trial. When the proceedings began, Chase’s counsel informed the court that the original note and mortgage at issue could not be located but that his law firm’s records custodian was present with an affidavit regarding these lost documents. The Guerreros objected arguing that no lost note claim had been alleged. The court reserved ruling on the Guerreros’ objection and proceeded to take testimony on the foreclosure claim.

As to this claim, Chase called a representative from IBM, Lender Business Process Services Company, who testified that IBM was now the servicing agent for Fannie Mae, the most recent assignee of the Guerrero note and mortgage. According to this witness, because no payments had been made by the Guerreros since August 1, 2007 on the $316,000 note and mortgage at issue, the Guerreros were in default thereby entitling Chase/IBM/Fannie Mae (for convenience “Chase” throughout) to a foreclosure judgment.

The second witness called by Chase was the records custodian/document supervisor at the law firm now representing Chase in the foreclosure action. The Guerreros promptly objected to this witness because he was not listed on Chase’s witness list. When Chase’s counsel advised the court that this witness was going to testify that the mortgage and note were missing for the purpose of reestablishing them, the Guerreros objected again, arguing that “there is no lost note count.”

At this juncture, Chase’s counsel asked the court to permit it to amend its pleadings to conform to the evidence it was going to present, to which the court responded:

THE COURT: That we would do at the conclusion of the case, not as a preemptive motion.

The records custodian was permitted to testify.

According to this witness, the original note and mortgage had been delivered to the law firm where he worked (the firm representing Chase) and had been placed in a limited access safe. He also testified that despite these precautions, when he went to look for the mortgage and note the day before the trial began, they were not in the safe and search as he might he had not been able to locate them.

In conjunction with this testimony, this witness proffered an affidavit in which he represented that “[Chase] . . . holds the Defend[ants] obligor (s) of the note harmless and agrees to indemnify them from any loss they may incur by reason of a claim by any other person/entity to enforce the lost note.” However, on cross examination the witness admitted that he neither knew what this representation meant nor knew if Chase (much less IBM/Fannie Mae) agreed to it:

Q. [BY COUNSEL FOR CHASE]: Is it true that, according to this affidavit . . . the plaintiff is willing to indemnify . . . ?

A. I’m not sure what you mean by that.

. . . .

THE COURT: Counselor’s cross examination was getting right to the heart of it. If this note is found, and after this proceeding . . . would the plaintiff be in a position to indemnify anybody for that note that was lost, now found? . . .

[A.]: I apologize, I’m not sure what the word “indemnify” means.

. . . .

Q. [BY COUNSEL FOR THE GUERREROS]: By the way, are you authorized to indemnify the defendants by the servicer or the holder of this note? Can you make that statement in this courtroom?

A. Again, I don’t really understand exactly.

. . . .

Q. Did you understand what you were signing?

A. I understood the parts about the — that have to do with the searches that we did and when the notes came in. I guess my answer is, No. [This statement] is not completely understood.

The affidavit was stricken. There was no other testimony on the subject of indemnification.

At the close of the testimony, the Guerreros unsuccessfully requested entry of judgment in their favor claiming that Chase could not prevail (1) because Chase could not surrender the original mortgage and note and (2) because Chase could not reestablish the mortgage and note without having asserted a lost note claim and without having introduced sufficient evidence to satisfy the requirements of such a claim. See § 673.3091 (2), Fla. Stat. (2010) (stating “[t]he court may not enter judgment in favor of the person seeking enforcement [of a lost, destroyed, or stolen instrument] unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument”). A final judgment of foreclosure nonetheless was entered.

The Guerreros repeat the same arguments they made below here. We agree with their argument that in this case no foreclosure could be ordered unless the mortgage and note were reestablished. See Emerald Plaza West v. Salter, 466 So.2d 1129, 1129 (Fla. 3d DCA 1985) (“Agreeing with appellant that the trial court erred in granting foreclosure of a mortgage without requiring either production of the original promissory note and assignment of mortgage or reestablishment of those documents.”) (Citations omitted). We cannot, however, agree that the court below was without authority to allow Chase to amend to assert a lost note claim. While it is well established that a trial court lacks jurisdiction to adjudicate matters outside the pleadings, Rule 1.190(b) of the Florida Rules of Civil Procedure expressly authorizes amendments to conform to the evidence when an unpled matter has been tried—even over objection—when “the merits of the cause are more effectually presented thereby and the objecting party fails to satisfy the court that the admission of such evidence will prejudice the objecting party in maintaining an action or defense upon the merits.” Fla. R. Civ. P. 1.190(b); Instituto Partiotico Y Docente San Carlos, Inc. v Cuban Am. Nat’l Found., 667 So.2d 490,492 (Fla. 3d DCA 1996) (“[T]he law in Florida is well established that a trial court lacks jurisdiction to entertain and adjudge matters which have not been the subject of proper pleadings and notice.”); see also Cortina v. Cortina, 98 So.2d 334, 337 (Fla. 1957) (same); Freshwater v. Vetter, 511 So.2d 1114, 1115 (Fla. 2d DCA 1987) (same).

The sole purpose of the instant action was to foreclose a mortgage securing a promissory note (copies of which were attached to the complaint) on which the Guerreros concededly had made no payment for years. The undisputed testimony was that IBM was the current servicing agent for Fannie Mae the current owner and holder of these instruments and that the Guerreros were in default. Since the evidence confirmed the current owner/holder’s entitlement to foreclose the mortgage attached to the complaint, submission of the original documents or alternatively reestablishment of them was all that remained. In light of the undisputed testimony that the originals of these documents had been received by the law firm representing Chase, stored carefully by that firm, but ultimately misplaced, we see no error in allowing Chase to amend to state a claim to reestablish these lost documents.

We cannot, however, agree that the burden of reestablishing these documents was met. Other than representations made in the records custodian’s stricken affidavit, there is no evidence that the Guerreros will be “adequately protected against loss that might occur by reason of a claim by another person to enforce the[se] instrument[s]” as required by section 673.3091 of the Florida Statutes. See § 673.3091(2), Fla. Stat. (2010)2.

We therefore reverse the final judgment of foreclosure and remand for reestablishment of the lost mortgage and note, this time on a proper pleading, naming the appropriate parties, and upon competent evidence—all of which we believe may be accomplished expeditiously. We do not, by virtue of this determination, invite frivolous claims or the addition of frivolous defenses and do not preclude imposition of sanctions authorized by section 57.105 of the Florida Statutes, as a consequence of same, if appropriate.

Reversed and remanded with instructions.

Not final until disposition of timely filed motion for rehearing.

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Byrd v. MorEQUITY, INC., Ala: Court of Civil Appeals | “The conflict as to the date of (MERS) assignment materially impacts the standing issue”

Byrd v. MorEQUITY, INC., Ala: Court of Civil Appeals | “The conflict as to the date of (MERS) assignment materially impacts the standing issue”


 

Stephen A. Byrd and Cynthia B. Byrd,
v.
MorEquity, Inc.

No. 2100734.
Court of Civil Appeals of Alabama.
Decided March 16, 2012.
MOORE, Judge.

Stephen A. Byrd and Cynthia B. Byrd appeal from a summary judgment entered by the Mobile Circuit Court (“the trial court”) in an ejectment action filed by MorEquity, Inc. We reverse.

Procedural History

On April 20, 2010, MorEquity filed an action seeking possession of certain real property that was in the possession of the Byrds, who were using it as their residence. MorEquity alleged that it had acquired title to the real property through a foreclosure sale and that the Byrds had unlawfully detained the real property following the termination of their possessory interest in the property and a written demand to vacate the premises. The Byrds filed a pro se answer generally denying the allegations in the complaint and asserting that “we can show that our property was foreclosed on without just cause.”

On June 8, 2010, MorEquity filed a motion for a summary judgment with supporting materials. The Byrds thereafter retained attorneys, who filed an amended answer on the Byrds’ behalf on August 25, 2010. In the amended answer, the Byrds denied that MorEquity had a right to possession of the property, asserting, among other affirmative defenses, that MorEquity had conducted a foreclosure sale without first acquiring any ownership interest in the mortgage covering the property. The Byrds’ attorneys subsequently filed documents in opposition to MorEquity’s summary-judgment motion, to which MorEquity replied, attaching supplemental materials.

On December 9, 2010, the Byrds moved to strike some of the evidence submitted by MorEquity in support of its motion for a summary judgment. The trial court conducted a hearing on the motions on December 10, 2010. Following the hearing, MorEquity filed a supplemental evidentiary submission. On December 17, 2010, the trial court denied the motion to strike and entered a summary judgment in favor of MorEquity. The trial court entered a writ of possession in favor of MorEquity on January 5, 2011. The Byrds filed a timely motion to alter, amend, or vacate the summary judgment, which the trial court denied on March 15, 2011. The trial court stayed enforcement of its judgment on April 6, 2011, and the Byrds appealed on April 22, 2011.

Analysis

The threshold and dispositive issue on appeal is whether MorEquity had standing to prosecute the ejectment action. See Sturdivant v. BAC Home Loans Servicing, LP, [Ms. 2100245, Dec. 16, 2011] ___ So. 3d ___ (Ala. Civ. App. 2011); see also Cadle Co. v. Shabani, 950 So. 2d 277, 279 (Ala. 2006) (accord). MorEquity filed its action under the authority of § 6-6-280(b), Ala. Code 1975. See EB Invs., L.L.C. v. Atlantis Dev., Inc., 930 So. 2d 502 (Ala. 2005) (holding that § 6-6-280(b) applied when the complainant alleged that it was entitled to possession of land through foreclosure deed and that the defendant was unlawfully detaining the land); Muller v. Seeds, 919 So. 2d 1174 (Ala. 2005) (same), overruled on other grounds by Steele v. Federal Nat’l Mortg. Ass’n, 69 So. 3d 89 (Ala. 2010); and Earnest v. First Fed. Sav. & Loan Ass’n of Alabama, 494 So. 2d 80 (Ala. Civ. App. 1986) (same). Under § 6-6-280(b), a complaint in an ejectment action must be “commenced in the name of the real owner of the land or in the name of the person entitled to the possession thereof,” and a complaint is sufficient if, among other things, it alleges “that the plaintiff was possessed of the premises or has the legal title thereto.”

Like any other fact essential to recovery, the plaintiff has the burden of proving standing. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992). At the summary-judgment stage, a plaintiff asserting standing cannot rest on mere allegations in the complaint, see Dover Historical Soc’y v. City of Dover Planning Comm’n, 838 A.2d 1103 (Del. 2003), but must prove standing through specific facts set forth by affidavit or other evidence. Grayson v. AT & T Corp., 15 A.3d 219 (D.C. 2011). To prevail on a motion for a summary judgment, the plaintiff must present a prima facie case that there is no genuine issue of material fact and that the plaintiff is entitled to a judgment as a matter of law. Armstrong v. McGee, 579 So. 2d 1310, 1312 (Ala. 1991). In making a determination whether the plaintiff has satisfied that burden, this court, de novo, reviews the evidence in a light most favorable to the nonmovant, Robinson v. Alabama Cent. Credit Union, 964 So. 2d 1225, 1228 (Ala. 2007), and “entertains such reasonable inferences as the jury would have been free to draw.” Bell v. T.R. Miller Mill Co., 768 So. 2d 953, 956 (Ala. 2000). “`”The burden does not shift to the opposing party to establish a genuine issue of material fact until the moving party has made a prima facie showing that there is no such issue of material fact.”‘” McClendon v. Mountain Top Indoor Flea Market, Inc., 601 So. 2d 957, 958 (Ala. 1992) (quoting Berner v. Caldwell, 543 So. 2d 686, 688 (Ala. 1988), quoting in turn Schoen v. Gulledge, 481 So. 2d 1094, 1096 (Ala. 1985)).

In this case, MorEquity asserts that it had standing to maintain the ejectment action against the Byrds because, it says, it held a foreclosure deed to the property, which it submitted to the trial court. The Byrds maintain, however, that the foreclosure deed is void because it was procured through foreclosure proceedings that were conducted by MorEquity without authority. In Sturdivant, supra, this court held that a foreclosure deed was void, ___ So. 3d at ___ (quoting § 35-10-9, Ala. Code 1975, which provides that “[a]ll sales of real estate, made under powers contained in mortgages or deeds of trust contrary to the provisions of [statutory law governing the power of sale pursuant to the terms of a mortgage], shall be null and void….”), and would not sustain an ejectment action when the evidence showed that the foreclosure proceedings had been initiated by the plaintiff without a valid assignment of the power of sale. Under Sturdivant, the vendee to a void foreclosure deed would not be considered a “real owner of the land” with “legal title thereto” within the meaning of § 6-6-280(b). ___ So. 3d at ___.

MorEquity submitted evidence indicating that the Byrds executed a promissory note in favor of Wilmington Finance, Inc., in the principal amount of $85,000 on July 19, 2007. That same date, to secure the note, the Byrds entered into a mortgage covering the subject property. Section 22 of that mortgage provides that, in the event of a default and failure to cure, and after appropriate notices are provided to the Byrds,

“Lender at its option may require immediate payment in full of all sums secured by this Security Instrument without further demand and may invoke the power of sale and any other remedies permitted by Applicable Law.”

“Lender” is defined in the mortgage solely as Wilmington Finance, Inc.; however, the mortgage provides that Mortgage Electronic Registration Systems, Inc. (“MERS”), is the nominee for Wilmington Finance, Inc., and that MERS is the designated mortgagee with all legal rights of a mortgagee, including “the right … to foreclose and sell the Property.”

Pursuant to § 35-10-12, Ala. Code 1975,

“[w]here a power to sell lands is given in any mortgage, the power is part of the security and may be executed by any person, or the personal representative of any person who, by assignment or otherwise, becomes entitled to the money thus secured.”

MorEquity submitted evidence indicating that MERS assigned the mortgage, complete with its power of sale,[1] to MorEquity so that it could execute that power under § 35-10-12. We agree with the Byrds, however, that MorEquity’s evidence is conflicting as to the date of the assignment.

MorEquity attached to the affidavit of Kenneth Scheller, an assistant vice president of MorEquity, a document entitled “ASSIGNMENT OF MORTGAGE” (capitalization and italics in original), which states:

“FOR VALUE RECEIVED, Mortgage Electronic Registration Systems, Inc. (`MERS’) as Nominee for WILMINGTON FINANCE, INC., its successors and assigns, hereby assign and transfer to MOREQUITY, INC., 7116 EAGLE CREST BLVD., EVANSVILLE, IN 47715, its successors and assigns, all its right, title and interest in and to a certain MORTGAGE executed by: STEPHEN A. BYRD AND CYNTHIA B. BYRD, in the original principal amount of $85,000.00 and bearing the date of … 07/19/2007 and recorded on 07/25/2007 in the office of the Recorder of MOBILE County, State of ALABAMA in Instrument Number XXXXXXXXXX in BOOK 6227 and PAGE 205.”

(Capitalization and underlining in original.) A notary certified that that document was signed on April 20, 2009. On the other hand, MorEquity attached to the affidavit of Jeff Schutte, its associate director, a document entitled “NOTIFICATION OF SALE, TRANSFER OR ASSIGNMENT OF YOUR MORTGAGE LOAN,” (capitalization and bold typeface in original), indicating that MorEquity had acquired the mortgage via a sale effective December 30, 2009.[2]

The conflict as to the date of assignment materially impacts the standing issue. In Sturdivant, this court held that, in order to conduct a foreclosure sale, a party must have the power to foreclose and sell the property as of the date of the initiation of the foreclosure proceedings, ___ So. 3d at ___, which is the date the party “accelerates the maturity date of the indebtedness and publishes notice of a foreclosure sale,” Perry v. Federal Nat’l Mortg. Ass’n, [Ms. 2100235, Dec. 30, 2011] ___ So. 3d ___, ___ (Ala. Civ. App. 2011), impliedly overruled on other grounds by Ex parte Secretary of Veterans Affairs, [Ms. 1101171, Feb. 10, 2012] ___ So. 3d ___ (Ala. 2012). The undisputed evidence in this case shows that the debt had been accelerated as of December 11, 2009, and that the notice of the foreclosure sale was first published on December 15, 2009, which was long after the alleged April 20, 2009, assignment date but over two weeks before the alleged December 30, 2009, assignment date. If the latter date is accurate, MorEquity would not have had authority to initiate the foreclosure proceedings; only Wilmington Finance, Inc., or MERS could have started foreclosure proceedings at that time. Pointedly, two December 11, 2009, letters submitted by MorEquity, notifying the Byrds individually of the acceleration of the debt,[3] and the notices of foreclosure sale published beginning on December 15, 2009,[4] all indicate that Wilmington Finance, Inc., had invoked the foreclosure process, implying that the assignment had not yet occurred by mid-December, as the document attached to Schutte’s affidavit reflects.

MorEquity did not present a prima facie case of standing because its own evidence creates a genuine issue of material fact as to whether it had the power to foreclose and sell the property when the foreclosure proceedings were initiated on December 15, 2009.

The Byrds seek reversal of the summary judgment on numerous other grounds, including the alleged failure of MorEquity to provide notice of default and acceleration of the debt, see Jackson v. Wells Fargo Bank, N.A., [Ms.1100594, Feb. 17, 2012] ___ So. 3d ___, ___ (Ala. 2012) (holding that failure of notice of default and acceleration of debt may invalidate foreclosure sale); the alleged failure of MorEquity to prove that it provided contractual notice of the foreclosure sale, see Thompson v. Wachovia Bank, Nat’l Ass’n, 39 So. 3d 1153 (Ala. Civ. App. 2009), overruled on other grounds by Steele v. Federal Nat’l Mortg. Ass’n, 69 So. 3d 89 (Ala. 2010) (genuine issue of material fact existed where borrowers denied receipt of notice of the foreclosure sale and mortgagee failed to submit admissible evidence indicating that it sent required notice), and Kennedy v. Wells Fargo Home Mtg., 853 So. 2d 1009 (Ala. Civ. App. 2003) (accord); the existence of alleged irregularities in the published notice of the foreclosure sale, see § 35-10-8, Ala. Code 1975 (establishing contents of notice of foreclosure sale); the alleged agreement of MorEquity to forego foreclosure while the Byrds participated in its loss-mitigation program, but see Coleman v. BAC Servicing, [Ms. 2100453, Feb. 3, 2012] ___ So. 3d ___, ___ (Ala. Civ. App. 2012) (holding that oral agreements to forebear foreclosure are not valid under the Statute of Frauds); the alleged failure of MorEquity to comply with the loss-mitigation regulations of the National Housing Act, 12 U.S.C. § 1701x(c)(5); and MorEquity’s alleged breach of its fiduciary duty by underbidding on the property at the foreclosure sale. See Berry v. Deutsche Bank Nat’l Trust Co., 57 So. 3d 142, 147-48 (Ala. Civ. App. 2010). Without commenting on the merits of those grounds, we note that they all may be characterized as affirmative defenses to an ejectment action pertaining to the proper exercise of the power of sale or irregularities in the manner of the sale itself, which errors may render a foreclosure deed voidable. See Sturdivant, ___ So. 3d at ___ (Moore, J., concurring specially). Because we are reversing the trial court’s judgment on a more fundamental issue — a genuine dispute as to the lack of MorEquity’s authority to initiate the foreclosure proceedings, which would render the foreclosure deed void — we pretermit discussion of those issues.

For the foregoing reasons, the summary judgment entered by the trial court in favor of MorEquity is reversed, and the cause is remanded for further proceedings consistent with this opinion.

REVERSED AND REMANDED.

Thomas, J., concurs.

Pittman and Bryan, JJ., concur in the rationale in part and concur in the result, with writings.

Thompson, P.J., concurs in the result, without writing.

PITTMAN, Judge, concurring in the rationale in part and concurring in the result.

I agree that the summary judgment in favor of MorEquity, Inc., is due to be reversed and the cause remanded because MorEquity failed to establish that there was no factual dispute as to whether it was the assignee of the mortgage before it initiated the foreclosure proceedings against the Byrds. In my judgment, that failure simply means that MorEquity did not make a prima facie showing that it could satisfy one of the elements of its ejectment claim, not that MorEquity failed to demonstrate that it had standing to sue.

I believe that this case and others like it, see, e.g., Ex parte McKinney, [Ms. 1090904, May 27, 2011] ___ So. 3d ___ (Ala. 2011); Cadle Co. v. Shabani, 950 So. 2d 277 (Ala. 2006); and Sturdivant v. BAC Home Loans Servicing, LP, [Ms. 2100245, Dec. 16, 2011] ___ So. 3d ___ (Ala. Civ. App. 2011), present questions of an ejectment plaintiff’s inability to prove the allegations of its complaint rather than questions of standing. See Ex parte McKinney, ___ So. 3d at ___ (Murdock, J., dissenting); and Sturdivant, ___ So. 3d at ___ (Pittman, J., dissenting).

“As [our supreme court] recently observed: `[O]ur courts too often have fallen into the trap of treating as an issue of “standing” that which is merely a failure to state a cognizable cause of action or legal theory, or a failure to satisfy [an] element of a cause of action.’ Wyeth, Inc. v. Blue Cross & Blue Shield of Alabama, 42 So. 3d 1216, 1219 (Ala. 2010). Compare Steele v. Federal Nat’l Mortg. Ass’n, 69 So. 3d 89, 91 n.2 (Ala. 2010) (citing Wyeth as authority for rejecting the appellant’s suggestion that a plaintiff’s failure to have made a demand for possession before bringing an ejectment action presented an issue of standing).”

Ex parte McKinney, ___ So. 3d at ___ (Murdock, J., dissenting).

Our supreme court has determined that standing “implicates [a trial court’s] subject-matter jurisdiction.” Ex parte Howell Eng’g & Surveying, Inc., 981 So. 2d 413, 418 (Ala. 2006); see also Hamm v. Norfolk Southern Ry Co., 52 So. 3d 484, 499 (Ala. 2010) (Lyons, J., concurring specially) (citing Riley v. Pate, 3 So. 3d 835, 838 (Ala. 2008), and State v. Property at ` Rainbow Drive, 740 So. 2d 1025, 1028 (Ala. 1999)). That court has also explained that subject-matter jurisdiction “concerns a court’s power to decide certain types of cases,” Ex parte Seymour, 946 So. 2d 536, 538 (Ala. 2006), which power is derived from the constitution and statutes of Alabama. Id. Can it seriously be doubted that a circuit court derives its power to decide an ejectment case from § 6-6-280, Ala. Code 1975, rather than from the allegations of the plaintiff who seeks relief pursuant to that statute?

BRYAN, Judge, concurring in the rationale in part and concurring in the result.

I agree that the summary judgment in favor of MorEquity, Inc. (“MorEquity”), is due to be reversed and the cause remanded because there was evidence establishing a genuine issue of material fact regarding whether MorEquity had been assigned the mortgage before it initiated the foreclosure proceedings. However, I disagree with the main opinion’s conclusion regarding the significance of that disputed factual issue. As indicated by my dissent in Sturdivant v. BAC Home Loans Servicing, LP, [Ms. 2100245, Dec. 16, 2011] ___ So. 3d ___ (Ala. Civ. App. 2011), I am of the opinion that, when an ejectment-action plaintiff bases his or her claim to legal title to the property on a foreclosure deed, evidence tending to prove that the foreclosing party had not been assigned the mortgage before he or she initiated the foreclosure proceedings does not implicate the ejectment-action plaintiff’s standing to bring the ejectment action. Rather, such evidence tends to prove an affirmative defense to the ejectment-action plaintiff’s claim. See Berry v. Deutsche Bank Nat’l Trust Co., 57 So. 3d 142, 149-50 (Ala. Civ. App. 2010) (holding that, when an ejectment-action plaintiff bases his or her claim to legal title on a foreclosure deed, evidence tending to prove that the foreclosure sale and resulting foreclosure deed were invalid tends to prove an affirmative defense to the ejectment claim rather than tending to prove that the ejectment-action plaintiff lacked standing to bring the ejectment action). Thus, in the present case, I am of the opinion that the evidence tending to prove that MorEquity had not been assigned the mortgage before it initiated the foreclosure proceedings established the existence of a genuine issue of material fact with respect to Stephen A. Byrd and Cynthia B. Byrd’s affirmative defense asserting that MorEquity was not entitled to prevail on its ejectment claim because, they said, the foreclosure was invalid, but it did not establish a genuine issue of material fact with respect to MorEquity’s standing to bring the ejectment action.

[1] The Byrds contend in their brief to this court that any assignment of the mortgage did not convey the underlying note, which serves as the basis for the power of sale. See Coleman v. BAC Servicing, [Ms. 2100453, Feb. 3, 2012] ___ So. 3d ___, ___ (Ala. Civ. App. 2012) (holding that, under § 35-10-12, Ala. Code 1975, power of sale resides in the party with the right to the money secured by the mortgage, which would be the note holder). However, the Byrds did not raise that issue at or before the summary-judgment hearing, instead asserting it for the first time in one sentence in their postjudgment motion. Because a trial court need not consider a legal argument raised for the first time in a postjudgment motion, Green Tree Acceptance, Inc. v. Blalock, 525 So. 2d 1366, 1369-70 (Ala. 1988), and considering further the sparse nature of the argument below, we decline to address the Byrds’ now fully formed legal argument on appeal.

[2] The Byrds raise issues regarding the admissibility of both the alleged April 20, 2009, assignment and Schutte’s affidavit testimony relating to the alleged December 30, 2009, assignment. The Byrds also argue that the trial court erred in considering new evidence regarding the notarization of the alleged April, 20, 2009, assignment submitted by MorEquity after the summary-judgment hearing. Because of our disposition of the standing issue, we find no need to address those issues.

[3] Those letters both state: “Re: Wilmington Finance, Inc. v. Stephen A. Byrd and Cynthia B. Byrd, Husband and Wife.” The letters also state “cc: MorEquity Inc.” MorEquity does not explain why the caption indicates Wilmington Finance, Inc., is pursuing the Byrds for the mortgage debt, but the letter is copied to MorEquity.

[4] The notice of foreclosure sale states:

“Default having been made in the payment of the indebtedness secured by that certain mortgage executed to [MERS], acting solely as Nominee for Wilmington Finance Inc. on July 19, 2007, by Stephen A. Byrd and Cynthia B. Byrd, Husband and Wife, and recorded in Book 6227 Page 205; said mortgage transferred and assigned to Wilmington Finance Inc. et seq., in the Office of the Judge of Probate of Mobile County, Alabama, the undersigned, as Mortgagee or Transferee, under and by virtue of the power of sale contained in the said mortgage will sell at public outcry to the highest bidder for cash in front of the main entrance of the Mobile County, Alabama, Courthouse in the City of Mobile, Mobile County, Alabama, on January 14, 2010 ….”

The “undersigned” is designated as “Wilmington Finance, Inc., its successors and assigns, Mortgagee or Transferee.” MorEquity is not mentioned.

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Ruiz v. 1st FIDELITY LOAN SERVICING, LLC, Minn: Court of Appeals “foreclosure by advertisement is void for failure to strictly comply with sections 580.02 and 580.032″

Ruiz v. 1st FIDELITY LOAN SERVICING, LLC, Minn: Court of Appeals “foreclosure by advertisement is void for failure to strictly comply with sections 580.02 and 580.032″


Doris Ruiz, Appellant,
v.
1st Fidelity Loan Servicing, LLC, Respondent.

No. A11-1081.
Court of Appeals of Minnesota.
Filed March 12, 2012.
 

Jonathan L. R. Drewes, Michael J. Wang, Drewes Law, PLLC, Minneapolis, Minnesota, for appellant.

David R. Mortensen, Christina Weber, Wilford, Geske & Cook, P.A., Woodbury, Minnesota, for respondent.

Considered and decided by Peterson, Presiding Judge; Larkin, Judge; and Cleary, Judge.

UNPUBLISHED OPINION

LARKIN, Judge.

Appellant challenges the district court’s award of summary judgment for respondent, arguing that the district court erroneously concluded that respondent’s foreclosure by advertisement was valid despite respondent’s failure to strictly comply with certain statutory requirements. Because Minnesota Supreme Court precedent requires strict compliance with statutory requirements in a foreclosure by advertisement and because there are genuine issues of material fact regarding appellant’s unlawful-eviction claim, we reverse and remand.

FACTS

On June 30, 2005, appellant Doris Ruiz executed a mortgage on a duplex located in Minneapolis. By September 2008, appellant had failed to make payments on the underlying debt and defaulted on the mortgage. On September 21, 2009, the mortgage was assigned to respondent 1st Fidelity Loan Servicing, LLC. Respondent recorded the mortgage assignment on November 17. But the recording identified respondent as 1st Fidelity instead of 1st Fidelity Loan Servicing, LLC. Later, respondent initiated a foreclosure by advertisement.

Beginning on May 18, 2010, respondent published a notice of foreclosure sale for six consecutive weeks in a designated legal newspaper. On that same day, respondent filed a foreclosure-pendency notice with the Hennepin County Recorder and re-recorded the September 2009 mortgage assignment to accurately state respondent’s legal name as 1st Fidelity Loan Servicing, LLC. A foreclosure sale was held on November 30,[1] and respondent purchased the property. Appellant failed to redeem the property, and the redemption period expired on January 4, 2011.

After the redemption period expired, a real estate agent visited the property at respondent’s request. The agent concluded that although appellant continued to occupy the lower unit of the duplex, the upper unit was vacant. The agent executed an affidavit stating that the upper unit was dark and free of typical signs of occupancy, such as items in the window.

Based on the agent’s representations, respondent hired a handyman to change the locks to the upper unit. The handyman executed an affidavit stating that he changed the locks on the front and back doors. The affidavit states that he only saw a chair, a plant stand, and a few miscellaneous items in the unit; he did not observe a television, entertainment center, dishes in the kitchen, or any of the “usual items one would see in an occupied residence”; the items that were in the unit were disorganized; the counters were clear of items associated with residency such as soap dispensers; and no mail or newspapers were visible in the unit. Based on his observations, he concluded that no one resided in the upper unit.

After discovering that the locks to the upper unit had been changed, appellant called the real estate agent. The agent asserts that appellant was “quite angry” and would not allow him “to get a word in to the conversation.” The agent called appellant back and left her a voicemail, offering to provide her with a key to the upper unit. Appellant did not respond to the voicemail. Instead, appellant forcibly entered the upper unit, damaging the door and doorframe in the process.

Appellant filed suit against respondent on February 3, seeking a declaration that the foreclosure sale was “null and void” because respondent failed to strictly comply with the statutes that govern a foreclosure by advertisement. Appellant asserted three instances of inadequate compliance: failure to accurately record the September 2009 mortgage assignment prior to publication of the foreclosure notice; failure to record the foreclosure-pendency notice prior to publication of the foreclosure notice; and failure to provide appellant with a pre-foreclosure counseling notice. Appellant also asserted wrongful-eviction and quiet-title claims, seeking monetary damages on the wrongful-eviction claim and “[j]udgment quieting title to the Subject Property in [appellant]’s name” on the quiet-title claim. Respondent moved to dismiss, or in the alternative for summary judgment, all of appellant’s claims. Appellant moved for summary judgment on her invalid-foreclosure and quiet-title claims. The district court denied appellant’s motion but awarded summary judgment for respondent, dismissing all of appellant’s claims with prejudice. This appeal follows.

DECISION

“A motion for summary judgment shall be granted when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that either party is entitled to a judgment as a matter of law.” Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). “[T]here is no genuine issue of material fact for trial when the nonmoving party presents evidence which merely creates a metaphysical doubt as to a factual issue and which is not sufficiently probative with respect to an essential element of the nonmoving party’s case to permit reasonable persons to draw different conclusions.” DLH, Inc. v. Russ, 566 N.W.2d 60, 71 (Minn. 1997). “[T]he party resisting summary judgment must do more than rest on mere averments.” Id.

“[Appellate courts] review a district court’s summary judgment decision de novo. In doing so, we determine whether the district court properly applied the law and whether there are genuine issues of material fact that preclude summary judgment.” Riverview Muir Doran, LLC v. JADT Dev. Grp., LLC, 790 N.W.2d 167, 170 (Minn. 2010) (citation omitted). “On appeal, the reviewing court must view the evidence in the light most favorable to the party against whom judgment was granted.” Fabio, 504 N.W.2d at 761.

I.

Appellant argues that the foreclosure is void because respondent failed to strictly comply with certain statutory requirements. Respondent argues, and the district court agreed, that respondent substantially complied with the statutes and that substantial compliance is sufficient. We disagree.

In 1910, the Minnesota Supreme Court adopted a strict-compliance standard in foreclosure-by-advertisement proceedings, stating:

Foreclosure by advertisement is purely a statutory creation. One who avails himself of its provisions must show an exact and literal compliance with its terms; otherwise he is bound to profess without authority of law. If what he does failed to comply with the requirements of the statute, it is void.

Moore v. Carlson, 112 Minn. 433, 434, 128 N.W. 578, 579 (1910). The supreme court has recently reiterated this strict-compliance requirement, citing Moore for the principle that “[u]nder Minnesota law, a foreclosure by advertisement—non-judicial mortgage foreclosure—is only valid if the party seeking to foreclose the mortgage meets certain statutory requirements.” Jackson v. Mortg. Elec. Registration Sys., Inc., 770 N.W.2d 487, 492 (Minn. 2009). The legal question in Jackson was “what constitutes an assignment of a mortgage within the meaning of Minnesota’s foreclosure by advertisement statutory scheme.” Id. at 489. In resolving this question, the supreme court reviewed the history of Minnesota’s foreclosure-by-advertisement statutes and explained that:

Foreclosure by advertisement was developed as a non-judicial form of foreclosure designed to avoid the delay and expense of judicial proceedings. Because foreclosure by advertisement is a purely statutory creation, the statutes are strictly construed. We require a foreclosing party to show exact compliance with the terms of the statutes. If the foreclosing party fails to strictly comply with the statutory requirements, the foreclosure proceeding is void.

Id. at 494 (emphasis added) (quotations and citations omitted).

Jackson concluded with a statement that “[a]s a court that reviews and interprets the laws of this state, we must apply the foreclosure by advertisement statutes as they have been written by the legislature and as they have been applied and interpreted in the past.” Id. at 502-03. The supreme court’s statements regarding the strict-compliance standard, although dicta, are entitled to “great weight.” In re Wylde, 454 N.W.2d 423, 425 (Minn. 1990); see Simons v. Shiltz, 741 N.W.2d 907, 910 (Minn. App. 2007) (relying on dicta in a supreme court opinion), review denied (Minn. Feb. 19, 2008). Moreover, the statements provide no indication that the court is willing to depart from the standard that it adopted in 1910.

Despite the supreme court’s recent reiteration of the strict-compliance requirement, the district court accepted respondent’s arguments that substantial compliance with foreclosure-by-advertisement statutory requirements is nonetheless sufficient. The district court reasoned: “Although [appellant]’s reading of Jackson is technically correct, [appellant] does not take into account the entire context of decisions concerning foreclosure and real property, and that minor errors should not and do not invalidate a foreclosure.”

In concluding that substantial compliance is sufficient, the district court relied on Hudson v. Upper Mich. Land Co., 165 Minn. 172, 206 N.W. 44 (1925), Sieve v. Rosar, 613 N.W.2d 789 (Minn. App. 2000), and State by Spannaus v. Dangers, 368 N.W.2d 384 (Minn. App. 1985), review denied (Minn. Aug. 20, 1985). This reliance was misplaced. Although language in Hudson is inconsistent with the strict-compliance standard, see Hudson, 165 Minn. at 174, 206 N.W. at 45 (“Whether a sale on the foreclosure of a mortgage pursuant to a power of sale is void or voidable by reason of an irregularity in the proceedings depends upon the nature of the irregularity.”), Hudson does not provide a basis to reject the supreme court’s much more recent reiteration of the strict-compliance standard in Jackson. And Rosar and Dangers are factually distinguishable and therefore not on point. See Rosar, 613 N.W.2d at 793 (requiring only substantial compliance to effect a valid redemption after a foreclosure sale); Dangers, 368 N.W.2d at 386 (requiring only substantial compliance in condemnation proceedings).

The district court also reasoned that “[i]n the foreclosure and real property context, [appellant]’s reliance on Jackson and the standard of strict compliance is inflexible and does not correspond to the reality of the foreclosure process.” But the supreme court clearly requires strict compliance with the foreclosure-by-advertisement statutes, and “[t]he district court, like this court, is bound by supreme court precedent.” State v. M.L.A., 785 N.W.2d 763, 767 (Minn. App. 2010), review denied (Minn. Sept. 21, 2010). We therefore review respondent’s foreclosure by advertisement for strict compliance with the relevant statutory requirements.

Recording of the Mortgage Assignment

Minn. Stat. § 580.02 (2010) requires that all assignments of a mortgage be recorded as “a condition precedent to the right to foreclose by advertisement.” Jackson, 770 N.W.2d at 497. “[P]roceedings to foreclose a real estate mortgage by advertisement shall be deemed commenced on the date of the first publication of the notice of sale.” Minn. Stat. § 541.03, subd. 2 (2010).

The mortgage in this case was assigned to respondent in September 2009, and the assignment was recorded on November 17. But this recording inaccurately stated respondent’s legal name. The notice of foreclosure sale was published on May 18, 2010. On May 18, respondent once again recorded the September 2009 mortgage assignment to correct the inaccuracy in the first recording. Appellant argues that because respondent did not accurately record the mortgage assignment prior to publishing the notice of sale, the foreclosure is invalid. Respondent counters that the November 2009 recording was sufficient and that it only re-recorded the assignment “out of an abundance of caution.” But respondent offers no legal argument or authority indicating that the first recording was legally sufficient even though it inaccurately stated the assignee’s legal name. And the second recording was untimely under Minn. Stat. § 580.02. Because respondent failed to strictly comply with section 580.02, “the foreclosure proceeding is void.” Jackson, 770 N.W.2d at 494.

Recording of the Notice of Pendency

A person foreclosing a mortgage by advertisement shall record a notice of the pendency of the foreclosure with the county recorder or registrar of titles in the county in which the property is located before the first date of publication of the foreclosure notice but not more than six months before the first date of publication.

Minn. Stat. § 580.032, subd. 3 (2010).

Appellant argues that respondent failed to satisfy this requirement, because it recorded the notice of pendency on the first date of publication. The district court disagreed, relying on a substantial-compliance standard. The district court reasoned that “[respondent] sent the Notice of Pendency for recording on May 14, 2010 by personal courier and attempted to have the Notice of Pendency recorded prior to the first date of publication.” But the date that respondent attempted to record the notice is irrelevant. See Jackson, 770 N.W.2d at 494 (stating that the supreme court requires “a foreclosing party to show exact compliance with the terms of the statutes” (quotation omitted)). Because respondent failed to strictly comply with section 580.032, subd. 3, “the foreclosure proceeding is void.” Id.

Having concluded that respondent’s foreclosure by advertisement is void for failure to strictly comply with sections 580.02 and 580.032, we reverse the district court’s summary-judgment dismissal of appellant’s claims under these sections. And we remand for entry of judgment for appellant on these claims, as well as on her quiet-title claim. It is therefore unnecessary to review the district court’s dismissal of appellant’s claim that the foreclosure is void because respondent did not provide appellant with a pre-foreclosure counseling notice under Minn. Stat. § 580.021, subd. 2 (2010).

II.

Appellant argues that respondent wrongfully evicted her from the upper unit of the property, asserting that because the upper unit was not vacant, respondent was not authorized to change the locks to the unit. See Minn. Stat. § 582.031, subd. 1(a) (2010) (“If premises described in a mortgage or sheriff’s certificate are vacant or unoccupied, the holder of the mortgage or sheriff’s certificate or the holder’s agents and contractors may enter upon the premises to protect the premises from waste and trespass, until the holder of the mortgage or sheriff’s certificate receives notice that the premises are occupied.”). The district court granted summary judgment because “[a]lthough [appellant] denies that the Upper Unit was vacant, she does not adequately rebut [respondent]’s evidence. Essentially, [appellant]’s evidence is conclusory in nature, and she has not pointed to any specific, admissible facts in the record to overcome [respondent]’s assertions or the standard for summary judgment.” We disagree.

Appellant’s affidavit states: “When speaking with [respondent’s real estate agent] . . . in January 2011, I specifically told him that my family occupies both units in the duplex. . . . Upon the contractor’s entry into the property, furniture, clothes, and all normal items demonstrating occupancy would have been readily apparent to the intruding contractor.” Appellant also submitted utility bills showing gas and electricity usage at the unit. Appellant’s affidavit is no more conclusory than the affidavits that respondent submitted in support of summary judgment. Moreover, the real estate agent’s affidavit acknowledges that appellant informed him, before respondent changed the locks, that “her family had a right to have access to both upper and lower units.” On this record, there is a genuine issue of material fact regarding whether the upper unit was “vacant or unoccupied” under Minn. Stat. § 582.031, subd. 1(a).

The district court also reasoned that “even if . . . there remains a genuine issue of material fact that is in dispute,” it could not “ignore the actions of [appellant] in this matter” in re-entering the upper unit because neither party is entitled to self-help. In arriving at this conclusion, the district court appears to have weighed the evidence, which is not permitted on summary judgment. See Fairview Hosp. & Health Care Servs. v. St. Paul Fire & Marine Ins. Co., 535 N.W.2d 337, 341 (Minn. 1995) (“It is axiomatic that on a summary judgment motion a court may not weigh the evidence or make factual determinations, but must take the evidence in a light most favorable to the nonmoving party.”). We therefore reverse the district court’s award of summary judgment to respondent on appellant’s wrongful-eviction claim and remand for further proceedings on this claim.

Reversed and remanded.

[1] The foreclosure sale was originally scheduled for June 30, 2010, but appellant filed an affidavit to postpone the sale for five months in exchange for reduction of the redemption period from six months to five weeks.

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BANK OF NEW YORK v. Cupo | NJ Appellate Div. “plaintiff here does not have standing as an assignee to prosecute this foreclosure action”

BANK OF NEW YORK v. Cupo | NJ Appellate Div. “plaintiff here does not have standing as an assignee to prosecute this foreclosure action”


BANK OF NEW YORK AS TRUSTEE FOR THE CERTIFICATE HOLDERS CWABS, INC., ASSET-BACKED CERTIFICATES, SERIES 2006-23, Plaintiff-Respondent,
v.
ALEXANDER T.J. CUPO, Defendant-Appellant,
MRS. ALEXANDER T.J. CUPO, WIFE OF ALEXANDER T.J. CUPO AND CITIBANK SOUTH DAKOTA N.A., Defendants.

No. A-1212-10T2.
Superior Court of New Jersey, Appellate Division.

Argued October 5, 2011.
Decided February 28, 2012.
Gerald J. Monahan argued the cause for appellant.

Kristina G. Murtha argued the cause for respondent.

Before Judges Fuentes, Graves and Koblitz.

NOT FOR PUBLICATION

PER CURIAM.

In this mortgage foreclosure action, defendant Alexander Cupo appeals from the decision of the Chancery Division, General Equity Part, denying his motion to vacate default judgment and dismiss the complaint filed by plaintiff Bank of New York, as Trustees for the Certificate-Holders CWABS, Inc., Asset-Banked Certificates, Series 2006-23. Defendant argues that the trial court erred when it denied his motion because: (1) plaintiff did not have physical possession of the promissory note at the time it filed its complaint for foreclosure; (2) plaintiff did not have standing to prosecute the foreclosure because the original lender, Countrywide Home Loans, assigned the promissory note and mortgage to plaintiff thirty-nine days after the complaint was filed; and (3) both plaintiff and its assignor Countrywide Home Loans failed to satisfy the requirements under N.J.S.A. 2A:50-56.

After reviewing the record before us, we reverse and remand this matter to the General Equity Part for a hearing to determine whether plaintiff has standing to file the complaint. As we made clear in Deutsche Bank Nat’l Trust Co. v. Mitchell, 422 N.J. Super. 214, 224 (App. Div. 2011), a foreclosing mortgagee must demonstrate that it had the legal authority to enforce the promissory note at the time it filed the original complaint for foreclosure. As correctly noted by defendant here, the record shows that the original lender, Countrywide Home Loans, assigned the promissory note and mortgage to plaintiff on May 10, 2007, thirty-nine days after the complaint was filed.

The following facts will inform our analysis of the issues raised by the parties.

I

On December 22, 2006, defendant signed a promissory note to Countrywide Home Loans, Inc., memorializing a $245,000 loan. To secure payment of the note, defendant executed a mortgage to Mortgage Electronic Registration Systems, Inc. (MERS), acting solely as a nominee for Countrywide Home Loans, Inc. The mortgage was recorded on January 11, 2007. Defendant failed to make the first payment on the loan that was due on February 1, 2007. In fact, to date, defendant has not made any payments on the loan. Pursuant to the terms of the loan, defendant defaulted on March 1, 2007. Countrywide mailed defendant a notice of intent to foreclose dated March 5, 2007.

On May 10, 2007, plaintiff Bank of New York filed a complaint in foreclosure, seeking to sell the mortgaged lands to satisfy the amount due. The complaint indicated that “[b]y assignment of mortgage, Mortgage Electronic Registration Systems, Inc., acting solely as a nominee for Countrywide Home Loans, Inc. assigned its mortgage to Bank of New York as Trustee for the Certificateholders CWABS, Inc., Asset-Backed Certificates, Series 2006-03 which assignment has been sent for recording in the office of the clerk of Hudson County.” Plaintiff served the summons and complaint on defendant on June 14, 2007.

The record shows that MERS assigned its mortgage to Bank of New York as Trustee for the Certificateholders CWABS, Inc., Asset-Backed Certificates, Series 2006-23, on June 19, 2007. The assignment was recorded on July 5, 2007. Plaintiff filed a request to enter default against defendant on August 20, 2007. Plaintiff mailed a notice of intent to enter final judgment on August 29, 2007. In this light, the matter was deemed uncontested and the court entered final judgment by default on November 15, 2007.

Despite the entry of final judgment, plaintiff and defendant continued to discuss a possible settlement of the suit. Sheriff sales were postponed a number of times during these negotiations.[1] The parties eventually proceeded to mediation. After two sessions, the parties reached an apparent impasse. Although a third session was scheduled for September 28, 2010,[2] defendant moved to vacate the default judgment and dismiss plaintiff’s complaint on August 26, 2010, arguing that plaintiff lacked standing to prosecute the foreclosure action, and failed to comply with the notice requirements in N.J.S.A. 2A:50-56. Plaintiff argued that defendant had not established excusable neglect nor raised a meritorious defense. The trial court denied defendant’s motion to vacate the default judgment as well as his subsequent motion for reconsideration.

II

We start our analysis by reaffirming certain bedrock principles of appellate review. The decision to vacate a judgment lies within the sound discretion of the trial court, guided by principles of equity. Hous. Auth. of Morristown v. Little, 135 N.J. 274, 283 (1994). Under Rule 4:50-1:

On motion, with briefs, and upon such terms as are just, the court may relieve a party or the party’s legal representative from a final judgment or order for the following reasons: (a) mistake, inadvertence, surprise, or excusable neglect; (b) newly discovered evidence which would probably alter the judgment or order and which by due diligence could not have been discovered in time to move for a new trial under [Rule] 4:49; (c) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (d) the judgment or order is void; (e) the judgment or order has been satisfied, released or discharged, or a prior judgment or order upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment or order should have prospective application; or (f) any other reason justifying relief from the operation of the judgment or order.

The trial court’s decision to vacate a judgment under Rule 4:50-1 “will be left undisturbed unless it represents a clear abuse of discretion.” Hous. Auth. of Morristown, supra, 135 N.J. at 283 (citing Mancini v. EDS, 132 N.J. 330, 334 (1993)). To vacate a default judgment, the defendant “must show that the neglect to answer was excusable under the circumstances and that he has a meritorious defense.” Marder v. Realty Constr. Co., 84 N.J. Super. 313, 318 (App. Div.), aff’d, 43 N.J. 508 (1964). Because a default judgment is not predicated on a determination that plaintiff has met its burden of proof after providing a defendant his or her day in court, the trial court should review a motion to set aside a default judgment “with great liberality, and every reasonable ground for indulgence is tolerated to the end that a just result is reached.” Hous. Auth. of Morristown, supra, 135 N.J. at 283-84 (quoting Marder, supra, 84 N.J. Super. at 318-19).

Here, defendant’s argument challenges directly the power of the court to grant the relief requested by plaintiff. Defendant argues that the default judgment obtained by plaintiff is utterly void from its inception because plaintiff did not have standing to prosecute the case at the time it filed the foreclosure complaint.

A mortgagee may establish standing by showing “that it is the holder of the note and the mortgage at the time the complaint was filed.” Deutsche Bank, supra, 422 N.J. Super. at 224-25 (internal quotation marks omitted). Plaintiff must have “presented an authenticated assignment” dated prior to its filing of the original complaint. See id. at 225. Here, the only evidence of the assignment is the assignment document dated June 19, 2007, which is dated thirty-nine days after plaintiff filed the complaint. As was the case in Deutsche Bank, plaintiff here does not have standing as an assignee to prosecute this foreclosure action.

Because the record before us does not include a certified copy of the original promissory note, we do not address plaintiff’s potential standing under the provisions of the Uniform Commercial Code (UCC) governing the transfer of negotiable instruments. N.J.S.A. 12A:3-101 to-605. We thus remand this matter to the trial court to conduct a hearing to determine whether, before filing the original complaint, plaintiff was in possession of the note or had another basis to achieve standing to foreclose, pursuant to N.J.S.A. 12A:3-301.

Finally, defendant argues that plaintiff failed to provide notice, pursuant to N.J.S.A. 2A:50-56(c), that defendant could sell his home prior to going into foreclosure. We reject this argument substantially for the reasons expressed by the trial court.

N.J.S.A. 2A:50-56(c) requires, in relevant part:

The written notice shall clearly and conspicuously state in a manner calculated to make the debtor aware of the situation

….

(8) the right, if any, of the debtor to transfer the real estate to another person subject to the security interest and that the transferee may have the right to cure the default as provided in this act, subject to the mortgage documents[.]

[(Emphasis added).]

The plain language of the statute only requires inclusion of the right to transfer the real estate if the mortgagor actually has the right to transfer the real estate subject to the security interest. If the mortgage documents do not provide that right, the mortgagee does not have to include that language in its notice of foreclosure.

Here, defendant’s mortgage states:

If all or any part of the Property or any Interest in the Property is sold or transferred… without Lender’s prior written consent, Lender may require immediate payment in full of all sums secured by this Security Instrument.

[(Emphasis added).]

Thus, although the mortgage permits defendant to transfer the property, a nonconsensual transfer is treated as a default, authorizing plaintiff to accelerate the payment of the outstanding principal.

In this light, the trial judge gave the following explanation for rejecting defendant’s argument:

[T]he statute only requires that language to be in [the notice under N.J.S.A. 2A:50-56(c)] if that right exists, and in this case, as I understand it, the mortgage specifically provides that the defendant does not have the right to have anyone else assume the debt or to transfer his interest in the property without the lender’s consent.

….

There is language in the notice of intent, as I read it…, if you are willing to sell your property, your home, in order to avoid foreclosure, it is possible that the sale of your home can be approved through Countrywide, even if your home is worth less than what is owed on it.

So it tells him he can convey his home, it has to be approved by Countrywide, but to have it sold to anyone or to have someone else assume the debt is precluded by virtue of the mortgage instrument itself.

So… that would actually be misleading if that language were in there, because he doesn’t have that right…. [T]he language that you’re saying should be in the notice of intent is in violation of the mortgage document itself.

We agree with the trial judge’s analysis and ultimate conclusion. N.J.S.A. 2A:50-56(c) does not require the lender to notify the borrower of his or her right to transfer the property; it only requires notice of the right to transfer the property subject to the mortgage. Here, the mortgage document prohibits transfer of the property subject to the mortgage without consent. Under these circumstances, plaintiff was not required to provide defendant with notice of an unequivocal right to transfer the property.

Reversed on the issue of standing and remanded for such further proceedings as may be warranted. We do not retain jurisdiction.

[1] Defendant is an intellectually challenged young man who also suffers from a digestive disorder. His father John Cupo, a realtor, has assumed the responsibility to advocate for his son. The record thus includes a certification by defendant’s father in support of defendant’s application to adjourn a court-ordered sheriff’s sale. According to John Cupo, after extensive negotiations on behalf of his son with representatives of Countrywide, the parties reached a tentative settlement in June 2008, whereby Countrywide agreed to restructure defendant’s outstanding debt “by consolidating the loan balance, late fees and penalties with a[n] 11% interest rate going forward.” John Cupo expressed his frustration that despite “innumerable attempts” to inform the lender of his son’s willingness to accept this settlement, “Countrywide… failed to respond to the acceptance of their proposal….”

[2] The parties met for a third and final mediation session on September 28, 2010. The mediation ended without a settlement.

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PHH MTGE. CORP. v. Ramsey | OH Appeals Court “affidavits and exhibits submitted in connection with plaintiff’s SJ motion reveal genuine issues of material fact”

PHH MTGE. CORP. v. Ramsey | OH Appeals Court “affidavits and exhibits submitted in connection with plaintiff’s SJ motion reveal genuine issues of material fact”


2012 Ohio 672

PHH Mortgage Corporation fka Cendent Mortgage Corporation dba Coldwell Banker Mortgage, Plaintiff-Appellee,
v.
Andrew Ramsey et al., Defendants-Appellants.

 

No. 11AP-559.
Court of Appeals of Ohio, Tenth District, Franklin County. 

Rendered on February 21, 2012.
Lerner, Sampson & Rothfuss, and Patricia K. Block, for appellee.Goldman & Rosenthal, and Lee S. Rosenthal, for appellants.

DECISION

BRYANT, J.

{¶ 1} Defendants-appellants, Andrew Ramsey and Precision Real Estate Group, LLC, appeal from a judgment of the Franklin County Court of Common Pleas that granted the summary judgment motion of plaintiff-appellee, PHH Mortgage Corporation fka Cendent Mortgage Corporation dba Coldwell Banker Mortgage, entered judgment for plaintiff in the principal balance of $53,956.13 plus interest, determined plaintiff to be the first lien on the property subject of the mortgage, and ordered foreclosure on the subject premises. Defendants assign a single error:

The Trial Court committed error when it granted Summary Judgment to Appellee because Appellants presented evidence of genuine issues of material fact to be litigated.

Because genuine issues of material fact preclude granting summary judgment to plaintiff, we reverse.

I. Facts and Procedural History

{¶ 2} Plaintiff filed a complaint on November 10, 2009 against, among others, defendant Andrew Ramsey. Count One of the complaint alleged defendant owed plaintiff $53,956.13, together with interest at the rate of 7.00500 percent per year from July 1, 2009 as a result of his default on a note of which plaintiff was the holder. Count Two sought to reform the mortgage securing the note to correct a scrivener’s error, and Count Three asked the court not only to declare plaintiff to be the first lien on the property but to foreclose on the mortgage.

{¶ 3} After Precision Real Estate Group, LLC was added as a defendant, both defendants filed a joint answer to plaintiff’s complaint on April 27, 2010. Plaintiff responded to their answer with a motion for summary judgment filed on July 16, 2010; on the same date, plaintiff sought default judgment against those parties who had not filed an answer to the complaint. Before responding to plaintiff’s motion for summary judgment, defendants sought and were granted leave to file a counterclaim against plaintiff. They followed the counterclaim with a memorandum opposing plaintiff’s motion for summary judgment.

{¶ 4} On November 18, 2010, the trial court referred the case to mediation and vacated the scheduled trial date pending the outcome of mediation. When mediation proved unsuccessful, the court rescheduled the matter for trial. With leave of court, plaintiff filed a renewed motion for summary judgment on its complaint and defendants’ counterclaim.

{¶ 5} After the parties briefed the motion, the trial court filed an entry on May 27, 2011, determining no genuine issue of material fact existed and plaintiff was entitled to judgment and foreclosure as a matter of law. Accordingly, the trial court granted plaintiff summary judgment, entered a decree in foreclosure, reformed plaintiff’s mortgage and deed, and dismissed with prejudice defendants’ counterclaim.

II. Summary Judgment—Genuine Issues of Material Fact

{¶ 6} Defendants’ single assignment of error asserts the trial court wrongly granted plaintiff summary judgment because genuine issues of material fact exist to be resolved at trial.

A. Applicable Law

{¶ 7} An appellate court’s review of summary judgment is conducted under a de novo standard. Coventry Twp. v. Ecker, 101 Ohio App.3d 38, 41 (9th Dist.1995); Koos v. Cent. Ohio Cellular, Inc., 94 Ohio App.3d 579, 588 (8th Dist.1994). Summary judgment is proper only when the parties moving for summary judgment demonstrate: (1) no genuine issue of material fact exists, (2) the moving parties are entitled to judgment as a matter of law, and (3) reasonable minds could come to but one conclusion and that conclusion is adverse to the party against whom the motion for summary judgment is made, that party being entitled to have the evidence most strongly construed in its favor. Civ.R. 56; State ex rel. Grady v. State Emp. Relations Bd., 78 Ohio St.3d 181 (1997).

B. Affidavit

{¶ 8} In responding to plaintiff’s summary judgment motion, Ramsey admitted to being the obligor on the note and mortgage attached to plaintiff’s complaint but stated payments were current through July 2009 under the terms of the note and mortgage. According to the affidavit, he “always made [his] payments online.” (Affidavit, ¶ 3.)

{¶ 9} As Ramsey’s affidavit explained, he attempted to make his August payment electronically, or online, on August 3, 2009 but received an online response that plaintiff was not able to process his payment at that time. He again attempted to pay online on August 6 and 10 but again received the response that plaintiff was unable to process the payment. Ramsey attached to his affidavit the responses received online.

{¶ 10} On August 13, he again attempted an online payment, and the payment appeared to be successful. At the end of the transaction, however, he did not receive a confirmation number. He called the help desk and was given a confirmation number for his August payment. The person at the help desk further told Ramsey “that the payment would be pushed through the system and `not to worry.'” (Affidavit, ¶ 5.) After receiving a late payment notice from plaintiff on August 16, 2009, Ramsey again called the help line on August 21, 2009. The person Ramsey spoke to informed him “that Plaintiff was having some system issues but that [his] payment would be processed as he could see it `stuck’ in the system.” (Affidavit, ¶ 6.)

{¶ 11} On September 3, 2009, Ramsey attempted to complete his September payment online, but it could not be processed. At that time, Ramsey became aware that the August 2009 payment was never processed as promised, because a late fee was charged to his account. When he checked his bank account, he learned his August payment was never debited from his account.

{¶ 12} Ramsey again called the help desk, and the person he spoke to said she would process his payment. Ramsey expressed his concern about the payment being considered late, and the help desk person acknowledged the late payment would be placed on his credit report. Ramsey asked that it be removed because the delay was not his fault, but he was told nothing could be done about it. Ramsey asked to speak with someone else; he “was told there was no one else to speak with.” (Affidavit, ¶ 7.) Ramsey requested to speak with the legal department, but the help desk person refused to transfer him and hung up the telephone.

{¶ 13} After being unable to make an online payment on September 3, Ramsey contacted the Coldwell Banker/King Thompson real estate agent who sold him the property to see if he could suggest any avenue to clear up the matter. Someone from the local office called Ramsey, said they would check on the situation and get back to him, but did not. As a result, on September 9, 2009, Ramsey physically went to the Coldwell Banker/King Thompson office on Polaris Parkway, explained the situation to the receptionist, and asked if he could speak with someone at that location. He was informed no one at the location had authority in the matter, he attempted payment, and his payment was refused.

{¶ 14} The next day, Ramsey forwarded a letter to Coldwell Banker/King Thompson, together with a check in the amount of $1,600 for the August and September 2009 payments on the note. The letter explained the situation, but the check was never cashed or returned to Ramsey. On October 5, 2009, Ramsey sent another check in the amount of $1,600 as payment for October and November, accompanied by another letter of explanation. Again, the check was neither cashed nor returned.

C. Plaintiff’s Arguments

{¶ 15} Aware of defendants’ factual contentions from their response to plaintiff’s first summary judgment motion, plaintiff’s renewed motion for summary judgment alleged plaintiff was entitled to judgment because (1) Ramsey did not attempt to make payment and has no contractual right to pay online, and (2) plaintiff was not required to accept partial payment in the event of default. Plaintiff argues similarly on appeal.

1. Online payments

{¶ 16} Plaintiff points to the terms of the note and mortgage to support its contention that Ramsey had no contractual right to pay electronically, as the mortgage specifies that payments shall be made in U.S. currency. Whether the provision addresses the issue at hand is questionable at best, as it appears to preclude payment in foreign currency. Moreover, nothing in the note or mortgage precludes electronic payment. To the contrary, the document contemplates electronic funds transfer as an acceptable mode of payment, specifying that if any check or other instrument the lender receives as payment is returned unpaid, the lender may require “any and all subsequent payments due under the Note and this Security Instrument be made in one or more of the following forms, as selected by the Lender: * * * Electronic Funds Transfer.” (Mortgage, ¶ 1.)

{¶ 17} In addition, Ramsey’s affidavit states he always made payments electronically. As a result, a genuine issue of material fact exists as to whether plaintiff waived any provision of the agreement that possibly required other than electronic payment. See EAC Properties, L.L.C. v. Brightwell, 10th Dist. No. 10AP-853, 2011-Ohio-2373, ¶ 23, appeal not allowed, 129 Ohio St.3d 1506, 2011-Ohio-5358 (noting that whether a party’s inconsistent conduct amounts to waiver involves a factual determination within the province of the trier of fact).

{¶ 18} Plaintiff next suggests that even if online payments are acceptable, payments are not deemed received until the lender receives them at the location designated in the note or such other location as the lender may designate. Plaintiff argues that because Ramsey was aware his attempted online payments were ineffective but nonetheless failed to send them to the designated location, he failed to make payment according to the note and mortgage. Ramsey’s affidavit explains his efforts to make the regular payments beginning with his August payment. The affidavit states he called on August 13, 2009 concerning the August payment and received confirmation for it. Although plaintiff contends its records do not reflect a payment in August, the dispute over the August payment is in itself an issue for a trier of fact to resolve after hearing all the evidence, resolution of which may affect Ramsey’s subsequent payments, at least one of which was forwarded in advance of the due date.

2. Timeliness and partial payment

{¶ 19} Plaintiff also asserts Ramsey’s attempt to make his August payment was untimely, noting payments were to be made on the first of the month but Ramsey did not attempt payment until, at the earliest, August 3, 2009. Plaintiff’s argument presents at least two issues. Initially, the pertinent documents specify a late fee, suggesting failure to make payment on the first of each month is not necessarily a default on the note, even though it may cause Ramsey to incur late fees. Secondly, the exhibits attached to plaintiff’s affidavit indicate Ramsey on many occasions made payments after the first of the month, and plaintiff accepted them, thus raising an issue of plaintiff’s possible waiver of the provisions requiring payment on the first of the month.

{¶ 20} Pertinent to the waiver issue, both the note and mortgage contain anti-waiver provisions. The note states that “[e]ven if, at a time when [the borrower is] in default, the Note Holder does not require [the borrower] to pay immediately in full as described above, the Note Holder will still have the right to do so if [the borrower is] in default at a later time.” (Note, ¶ 6(D).) To the extent the provision applies under these circumstances, the record evidence does not appear to address whether plaintiff invoked its rights. The mortgage states that “Lender may accept any payment or partial payment insufficient to bring the Loan current, without waiver of any rights hereunder or prejudice to its right to refuse such payments or partial payments in the future.” (Mortgage, ¶ 1.) To the extent the provision applies, the evidence again is unclear that plaintiff ever invoked the provision, as its September 9, 2009 letter to Ramsey not only does not declare him in default, but demands payment for the months of August and September.

{¶ 21} In the end, Ramsey’s version of the payment history between the parties creates genuine issues concerning the due date for payments and the applicability of the anti-waiver provisions. Cf. Fairfield Natl. Bank v. Lininger, 5th Dist. No. 02-CA-25, 2002-Ohio-4875, ¶ 31 (noting “[i]t is well settled that if one accepts late payments and subsequently wishes to insist on a specific due date as a `time of the essence’ requirement, prior notification thereof is required”) and First Natl. Bank of Am. v. Pendergrass, 6th Dist. No. E-08-048, 2009-Ohio-3208, ¶ 25 (noting “it has repeatedly been held that a mortgagee’s previous acceptance of late loan payments does not constitute a waiver of the mortgagee’s right to accelerate and foreclose on a loan following a subsequent default where, as here, the relevant loan documents contain `anti-waiver’ provisions”). The trial court did not address those issues. In the absence of the trial court’s addressing the meaning and applicability of the note and mortgage anti-waiver provisions to the facts provided in the parties’ affidavits and exhibits, we decline to do so in the first instance.

{¶ 22} Lastly, plaintiff’s motion for summary judgment asserts that because Ramsey was in default on his payment, the entire amount of the note became due, leaving plaintiff free to reject Ramsey’s attempt to partially pay by tendering the September and October payments to plaintiff. Because a genuine issue of material fact exists as to whether Ramsey defaulted on the note, plaintiff’s argument premised on a default is premature.

{¶ 23} In the final analysis, the affidavits and exhibits submitted in connection with plaintiff’s summary judgment motion reveal genuine issues of material fact regarding whether Ramsey defaulted in his payment on the note, making summary judgment inappropriate. Defendants’ single assignment of error is sustained, the judgment of the trial court is reversed, and this matter is remanded for further proceedings consistent with this decision.

Judgment reversed and cause remanded.

SADLER and CONNOR, JJ., concur.

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HABER v. DEUTSCHE BANK | FL 4DCA “failed to show that it provided appellant with the requisite notice and opportunity to cure, not entitled to a final SJ”

HABER v. DEUTSCHE BANK | FL 4DCA “failed to show that it provided appellant with the requisite notice and opportunity to cure, not entitled to a final SJ”


OMAR HABER, Appellant,

v.

DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR THE BENEFIT OF THE CERTIFICATE HOLDERS FOR ARGENT SECURITIES, INC., ASSET-BACKED PASS-THROUGH CERTIFICATES, SERIES 2006-W2, Appellee.

 No. 4D10-4458.

 District Court of Appeal of Florida, Fourth District.

  February 22, 2012.

Lionel Barnet of the Law Offices of Lionel Barnet, P.A., Miami, for appellant.

Debra Rescigno of Robertson, Anschutz & Schneid, P.L., Boca Raton, for appellee.

PER CURIAM.

Omar Haber appeals the trial court’s entry of a final summary judgment of foreclosure in favor of Deutsche Bank National Trust Company (the bank). He argues that summary judgment was improper because the bank lacked standing to file the foreclosure suit and failed to refute his affirmative defense that the bank did not provide him with the requisite notice and opportunity to cure required an the mortgage agreement. We affirm as to the standing issue without discussion, but we reverse the final summary judgment because the bank failed to refute appellant’s affirmative defense regarding notice and opportunity to cure.

The mortgage agreement states, in pertinent part:

Lender shall give notice to Borrower prior to acceleration following Borrower’s breach of any covenant or agreement in this Security Instrument . . . The notice shall specify: (a) the default; (b) the action required to cure the default; (c) a date, not less than 30 days from the date the notice is given to Borrower, by which the default must be cured; and (d) that failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by this Security Instrument, foreclosure by judicial proceeding and sale of the Property.

There is no evidence within the record showing that the bank provided appellant with the requisite notice and opportunity to cure.

An order granting summary judgment is reviewed de novo. Allenby & Assocs., Inc. v. Crown St. Vincent Ltd., 8 So.3d 1211, 1213 (Fla. 4th DCA 2009) (citation omitted). In order to be entitled to summary judgment, a mortgagor must refute all of the affirmative defenses of the mortgagee or show that they are legally insufficient. Woodrum v. Wells Fargo Mortg. Bank, N.A., 73 So.3d 873, 874 (Fla. 4th DCA 2011) (citing Frost v. Regions Bank, 15 So.3d 905 (Fla. 4th DCA 2009)). Because the bank failed to show that it provided appellant with the requisite notice and opportunity to cure, it was not entitled to a final summary judgment of foreclosure.

Affirmed in part, Reversed in part and Remanded.

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Beaumont v. BANK OF NEW YORK MELLON | FL 5DCA “BONY failed to prove who lost the note and when it was lost, …and produced no evidence of ownership”

Beaumont v. BANK OF NEW YORK MELLON | FL 5DCA “BONY failed to prove who lost the note and when it was lost, …and produced no evidence of ownership”


MARC D. BEAUMONT, Appellant,
v.
BANK OF NEW YORK MELLON, etc., Appellee.

Case No. 5D10-3471.
District Court of Appeal of Florida, Fifth District.
Opinion filed February 17, 2012.

Marc D. Beaumont, Port Orange, pro se.

Todd A. Armbruster of Moskowitz, Mandell, Salim & Simowitz, P.A., Fort Lauderdale, for Appellee.

PER CURIAM.

Marc D. Beaumont appeals a final summary judgment entered by the trial court on a claim to foreclose a residential mortgage and recover on a promissory note executed in connection with the mortgage. We reverse.

The final summary judgment in this case was entered in favor of Novastar Home Mortgage, Inc. (“Novastar”), a nonparty to the suit because of its prior withdrawal from the case. It is fundamental error to enter judgment in favor of a nonparty. Beseau v. Bhalani, 904 So. 2d 641 (Fla. 5th DCA 2005); Rustom v. Sparling, 685 So. 2d 90 (Fla. 4th DCA 1997). The defect, which is jurisdictional, can be raised by this Court sua sponte. Dep’t of Envtl. Prot. v. Garcia, 36 Fla. L. Weekly D1664b (Fla. 3d DCA Aug. 3, 2011).

The judgment would also have to be reversed even if entered in favor of appellee, The Bank of New York Mellon, as Successor Trustee Under Novastar Mortgage Funding Trust 2005-3 (“Mellon”). Mellon sought in the complaint to reestablish the note and recover on it. See § 673.3091, Fla. Stat. (2010). This required Mellon to show it was entitled to enforce the note when it lost the instrument, or that it directly or indirectly acquired ownership from a person who was entitled to enforce the instrument when loss of possession occurred. § 673.3091(1), Fla. Stat.[1] Mellon failed to prove who lost the note and when it was lost, offered no proof of anyone’s right to enforce the note when it was lost, and produced no evidence of ownership, due to the transfer from Novastar to Mellon.[2] See Duke v. HSBC Mortg. Servs., LLC, 36 Fla. L. Weekly D2569a (Fla. 4th DCA Nov. 23, 2011). The trial court was also required to address the issue of providing adequate protection to Beaumont against loss that might occur by reason of a claim by another person to enforce the instrument. § 673.3091(2), Fla. Stat. If Mellon has, in fact, found the note, it must produce it prior to judgment. Gee v. U.S. Bank Nat’l Ass’n, 72 So. 3d 211, 212 (Fla. 5th DCA 2011); Perry v. Fairbanks Capital Corp., 888 So. 2d 725, 726 (Fla. 5th DCA 2004); see also Feltus v. U.S. Bank Nat’l Ass’n, 37 Fla. L. Weekly D253a (Fla. 2d DCA Jan. 27, 2012).

Mellon also argues that Beaumont has waived the lack of “standing” to enforce the note because of the failure to assert this as an affirmative defense. Generally, the failure to raise standing as an affirmative defense operates as a waiver. Kissman v. Panizzi, 891 So. 2d 1147, 1150 (Fla. 4th DCA 2005) (holding lack of standing is an affirmative defense that must be raised by defendant and failure to raise it generally results in waiver). Standing involves the right to enforce the note and must exist when suit is filed. See, e.g., McLean v. JP Morgan Chase Bank Nat’l Ass’n, 36 Fla. L. Weekly D2728a (Fla. 4th DCA Dec. 14, 2011); Taylor v. Deutsche Bank Nat’l Trust Co., 44 So. 3d 618 (Fla. 5th DCA 2010). There is no evidence showing that Beaumont was on notice prior to the time his answer was filed that ownership of the note had been transferred from Novastar to Mellon. In fact, the claimed transfer, alleged to have occurred on the day suit was filed, was either concealed by Novastar for more than three years while it continued to pursue the action, or Novastar backdated the assignment it finally produced on July 23, 2010, as justification for substituting Mellon as plaintiff. Under these circumstances, Beaumont may raise lack of standing when suit was filed as a defense. See Boston Hides & Furs, Ltd. v. Sumitomo Bank, Ltd., 870 F. Supp. 1153, 1161 n.6 (D. Mass. 1994) (holding banks were not precluded from raising affirmative defense of fraud for first time on summary judgment in action alleging wrongful dishonor of letter of credit, where banks did not discover information suggesting fraud until almost one year of discovery). Furthermore, Mellon must prove its right to enforce the note as of the time the summary judgment is entered, even if Beaumont had waived the right to challenge the bank’s standing as of the date suit was filed. Venture Holdings & Acquis. Group, LLC v. A.I.M. Funding Group, LLC, 75 So. 3d 773 (Fla. 4th DCA 2011). Its failure to do so would require this Court to reverse the summary judgment entered on the note and mortgage, even if judgment had been entered in favor of Mellon.

REVERSED.

TORPY, PALMER and COHEN, JJ., concur.

[1] A negotiable instrument is enforceable by: (1) the holder of the instrument, (2) a nonholder in possession who has the rights of a holder, or (3) a person not in possession of the instrument who is entitled to reestablish a lost, destroyed or stolen instrument pursuant to section 673.3091, or who has paid or accepted a draft by mistake as described in section 673.4181. § 673.3011, Fla. Stat.

[2] The record contains a copy of an assignment of the note from Novastar to Mellon, but the document was never offered into “evidence,” by being attached to an affidavit for purposes of authentification. As such, it is not competent evidence of the assignment and cannot be considered in ruling on Mellon’s motion. See, e.g., Morrison v. U.S. Bank, N.A., 66 So. 3d 387, 387 (Fla. 5th DCA 2011) (reversing summary judgment of foreclosure where defendant asserted she had not received a notice of default as required by mortgage, and bank had simply filed an unauthenticated notice letter).

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Ohio Appeals Court Judge Dissents Because No Evidence BONY At Any Point Possessed The Note

Ohio Appeals Court Judge Dissents Because No Evidence BONY At Any Point Possessed The Note


IN THE COURT OF APPEALS
NINTH JUDICIAL DISTRICT

BANK OF NEW YORK MELLON TRUST
COMPANY NATIONAL
Appellee

v.

CORNELIU MIHALCA, et al.

EXCERPT:

BELFANCE, P. J. CONCURS IN PART, AND DISSENTS IN PART, SAYING:

{¶ 30} I concur with the majority’s conclusion that the trial court erred in granting summary judgment to the Bank. However, I respectfully dissent from the majority’s judgment that the trial court correctly denied Mr. and Mrs. Mihalca’s motion for summary judgment.

{¶ 31} In the vast majority of cases involving foreclosures, it is the bank that moves for summary judgment. As such it must demonstrate an absence of material fact as to all of the elements of its claim. Thus, it makes sense that if when the bank moves for summary judgment it cannot establish that it is the real party in interest, a genuine issue of material fact remains preventing the bank from succeeding on summary judgment. See U.S. Bank, N.A. v. Richards, 189 Ohio App.3d 276, 2010-Ohio-3981, ¶ 13 (9th Dist.). However, when the defendant in a foreclosure case moves for summary judgment, the defendant may challenge the existence of evidence which is necessary for the bank to prevail on its claim and upon which the bank has the burden of proof.

{¶ 32} In this case, the Mihalcas filed a motion for summary judgment in which they claimed that the Bank had no evidence that it was the holder of the note. The Bank had the ultimate burden to demonstrate it was the holder of the note, and in reply to the Mihalcas’ summary judgment motion, it had the reciprocal burden to present evidence establishing its entitlement to recover on the note. See Dresher v. Burt, 75 Ohio St.3d 280, 293 (1996).

[A] party seeking summary judgment, on the ground that the nonmoving party cannot prove its case, bears the initial burden of informing the trial court of the basis for the motion, and identifying those portions of the record that demonstrate the absence of a genuine issue of material fact on the essential element(s) of the nonmoving party’s claims. The moving party cannot discharge its initial burden under Civ.R. 56 simply by making a conclusory assertion that the nonmoving party has no evidence to prove its case. Rather, the moving party must be able to specifically point to some evidence of the type listed in Civ.R. 56(C) which affirmatively demonstrates that the nonmoving party has no evidence to support the nonmoving party’s claims. * * * However, if the moving party has satisfied its initial burden, the nonmoving party then has a reciprocal burden outlined in Civ.R. 56(E) to set forth specific facts showing that there is a genuine issue for trial and, if the nonmovant does not so respond, summary judgment, if appropriate, shall be entered against the nonmoving party.

(Emphasis sic.) Id.

{¶ 33} In the Mihalcas’ answer to the complaint, they denied that the Bank was the holder of the note. Moreover, in their motion for summary judgment, the Mihalcas did not simply make a conclusory assertion that the Bank could not prove its case; they specifically asserted that the Bank could not prove its case because it had not established that it was the holder of the note. They pointed to evidence that, for a number of months their counsel demanded the production and inspection of the original note and that notwithstanding, the note had not been produced. Attached to the Mihalcas’ response to the Bank’s summary judgment motion and its cross-motion for summary judgment was an affidavit by the Mihalcas’ counsel. Accompanying the affidavit, was a letter dated August 20, 2010, from the Bank’s counsel to the Mihalcas’ counsel responding to the Mihalcas’ demand for production of the note. Even viewing this letter in the light most favorable to the Bank, the letter only allows one to conclude that counsel for the Bank is going to ask the Bank for the note and that counsel believes that the Bank has possession of the original note. The letter does not affirmatively state that the Bank has possession of it. The affidavit of the Mihalcas’ counsel avers that the parties again discussed production of the original note on September 27, 2010. At that time, the Bank’s counsel stated that “they were still `looking for’ the original note.” By November 9, 2010, at the time of the Bank’s response to the Mihalcas’ motion for summary judgment, the Bank presented no evidence that it possessed or had ever possessed the original note. In addition, the Mihalcas noted that the Bank’s affidavit in support of its own summary judgment motion was improper evidence and as such, there was no proper summary judgment evidence from the Bank before the trial court on this issue.

{¶ 34} The Bank failed to meet its reciprocal burden of production, as it failed to produce evidence that demonstrated it was the holder or to produce some evidence that at least demonstrated the existence of a genuine issue of material fact as to its status. Notably, the Bank did not produce any evidentiary materials in response to the Mihalcas’ motion. Thus, it did not meet its Dresher burden, and there was no genuine dispute of material fact as to whether it was the holder of the note. Due to its failure to properly respond to the Mihalcas’ motion for summary judgment, Mr. and Mrs. Mihalca were entitled to have summary judgment in their favor. See generally HSBC Bank USA, N.A. v. Thompson, 2nd Dist. 23761, 2010-Ohio-4158. Under the circumstances, the Bank could have produced an affidavit asserting that it did possess the note or alternatively, it could have sought an extension of time to respond to the Mihalcas’ summary judgment motion so it could have then submitted proper summary judgment evidence in response to the Mihalcas’ motion.

{¶35} I can only conclude that the Bank has failed to meet its burden, as there was no
evidence before the trial court that the Bank at any point in time possessed the original note. The
Mihalcas were entitled to have summary judgment granted in their favor. Accordingly, I
respectfully dissent from the majority’s resolution of this issue.

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Notice of Oral Argument on 4/4/12: Freddie Mac v. SCHWARTZWALD – Ohio Supreme Court

Notice of Oral Argument on 4/4/12: Freddie Mac v. SCHWARTZWALD – Ohio Supreme Court


H/T B. Behrens

The Supreme Court of Ohio

Federal Home Loan Mortgage Corp

v.

Duane Schwartzwald et al.

The Supreme Court of Ohio will hold an oral argument on the merits in this case on Wednesday, April 04, 2012. Time allowed for oral argument will be 15 minutes per
side.

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BAC HOME LOANS v BOOTH | Ohio 5th Appellate District “Dismissed W/ Prejudice” – Lerner, Sampson & Rothfuss Failue to Show, Failure to Prosecute

BAC HOME LOANS v BOOTH | Ohio 5th Appellate District “Dismissed W/ Prejudice” – Lerner, Sampson & Rothfuss Failue to Show, Failure to Prosecute


[Cite as BAC Home Loans Servicing, L.P. v. Booth, 2012-Ohio-487.]

COURT OF APPEALS
STARK COUNTY, OHIO
FIFTH APPELLATE DISTRICT

BAC HOME LOANS SERVICING, L.P.
FKA COUNTRYWIDE HOME LOANS
SERVICING, L.P.
Plaintiff-Appellant

-vs-

CARL B. BOOTH, ET AL.
Defendant-Appellees

JUDGES:
Hon. W. Scott Gwin, P.J.
Hon. William B. Hoffman, J.
Hon. John W. Wise, J.
Case No. 2011CA00161

O P I N I O N

CHARACTER OF PROCEEDING: Appeal from the Stark County Common
Pleas Court, Case No. 2010CV03436

JUDGMENT: Affirmed
DATE OF JUDGMENT ENTRY: February 6, 2012

APPEARANCES:
For Plaintiff-Appellant For Defendant-Appellees
ELIZABETH S. FULLER DAVID L. DINGWELL
Designated as Primary Counsel Tzangas, Plakas, Mannos & Raies, LTD

Lerner, Sampson & Rothfuss 220 Market Avenue South
120 East Fourth Street, 8th Floor Eighth floor
Cincinnati, Ohio 45202 Canton, Ohio 44702

Stark County, Case No. 2011CA00161 2

Hoffman, J.

(¶1) Plaintiff-appellant BAC Home Loans Servicing L.P., fka Countrywide
Home Loans Servicing L.P., appeals the June 22, 2011 Order entered by the Stark
County Court of Common Pleas in favor of Defendants-appellees Carl B. Booth and
Cynthia L. Booth.

STATEMENT OF FACTS AND THE CASE

(¶2) Appellees Carl and Cynthia Booth executed a promissory note in the
amount of $69,750.00 in favor of America’s Wholesale Lender to secure property at
9341 Oak Avenue S.E., East Sparta, Ohio. To secure the borrowed sum, Appellees
granted a first mortgage to Mortgage Electronic Registration Systems, Inc, as nominee
for America’s Wholesale Lender. The loan was later acquired by Appellant Countrywide
Home Loans Servicing, L.P., nka BAC Home Loans Servicing, L.P.

(¶3) Appellees defaulted on the mortgage, and Appellant accelerated the
amount due on the note. Appellant then filed a foreclosure action on September 20,
2010, and Appellees filed an answer on October 8, 2010. The trial court scheduled the
matter for mediation. Appellant failed to send a representative at the appointed time,
and did not make a representative available by phone as agreed upon. The trial court
then mandated a dispositive motion deadline of April 28, 2011, and scheduled a nonjury
trial for June 13, 2011. The assignment notice was sent via facsimile to Appellant’s
counsel.

(¶4) On June 13, 2011, Appellant’s counsel moved the trial court for a
continuance of the scheduled trial date, which the trial court denied.

(¶5) On June 13, 2011, Appellees’ counsel moved the trial court to dismiss the
complaint with prejudice.

(¶6) On June 22, 2011, the trial court ordered dismissal of the complaint with
prejudice. The same day, June 22, 2011, Appellant filed a notice of dismissal with the
trial court voluntarily dismissing the case without prejudice. The trial court’s order of
dismissal is filed prior to Appellant’s notice of dismissal in the trial court docket.

(¶7) On July 21, 2011, Appellant moved the trial court to vacate the dismissal
with prejudice pursuant to Civil Rule 60(B).

(¶8) Prior to the trial court’s ruling on Appellant’s 60(B) motion, Appellant filed a
notice of appeal with this Court, assigning as error:

(¶9) “I. THE TRIAL COURT ERRED IN DISMISSING APPELLANT’S
COMPLAINT WITH PREJUDICE BECAUSE APPELLANT DID NOT RECEIVE
SUFFICIENT NOTICE OF THE TRIAL COURT’S INTENTION TO DISMISS THE CASE
WITH PREJUDICE.

(¶10) “II. THE TRIAL COURT ERRED IN DISMISSING APPELLANT’S
COMPLAINT WITH PREJUDICE BECAUSE APPELLANT’S CONDUCT DID NOT
NECESSITATE SUCH A HARSH SANCTION.

(¶11) “III. THE TRIAL COURT ERRED IN DISMISSING APPELLANT’S
COMPLAINT WITH PREJUDICE BECAUSE APPELLANT WAS WITHIN ITS RIGHTS
TO VOLUNTARILY DISMISS ITS COMPLAINT WITHOUT PREJUDICE SINCE THE
JUNE 13, 2011 TRIAL NEVER COMMENCED.

(¶12) “IV. THE TRIAL COURT ERRED IN DISMISSING APPELLANT’S
COMPLAINT WITH PREJUDICE BECAUSE THE DISMISSAL UNJUSTLY ENRICHED

APPELLEES WHO WERE PREVIOUSLY DISCHARGED OF THE UNDERLYING
DEBT IN A CHAPTER 7 BANKRUPTCY.”
I, II, and III.

(¶13) Appellant’s first, second and third assignments of error raise common and
interrelated issues; therefore we will address the arguments together.

(¶14) The standard of review of an involuntary dismissal issued by the trial court
with prejudice is an abuse of discretion. Nelson v. Alpha Enterprises, Inc., 2003-Ohio-
5422. Civil Rule 41(B) states,

(¶15) “(B) Involuntary dismissal: effect thereof

(¶16) “(1) Failure to prosecute. Where the plaintiff fails to prosecute, or comply
with these rules or any court order, the court upon motion of a defendant or on its own
motion may, after notice to the plaintiff’s counsel, dismiss an action or claim.

(¶17) “(2) Dismissal; non-jury action. After the plaintiff, in an action tried by the
court without a jury, has completed the presentation of the plaintiff’s evidence, the
defendant, without waiving the right to offer evidence in the event the motion is not
granted, may move for a dismissal on the ground that upon the facts and the law the
plaintiff has shown no right to relief. The court as trier of fact may then determine them
and render judgment against the plaintiff or may decline to render any judgment until the
close of all the evidence. If the court renders judgment on the merits against the plaintiff,
the court shall make findings as provided in Civ. R. 52 if requested to do so by any
party.

(¶18) “(3) Adjudication on the merits; exception. A dismissal under division (B) of
this rule and any dismissal not provided for in this rule, except as provided in division

(B)(4) of this rule, operates as an adjudication upon the merits unless the court, in its
order for dismissal, otherwise specifies.”

(¶19) Appellant argues the trial court did not afford them notice of the trial
court’s intent to dismiss the case with prejudice, and Appellant was unable to appear at
the scheduled trial on June 13, 2011.

(¶20) Upon review of the record, the March 24, 2011 Report of Mediation
indicates the case should be returned to the docket due to the failure of Appellant to be
available at mediation either in person or by phone as previously agreed upon. Further,
Appellant moved the trial court for a continuance of the trial date asserting:

(¶21) “Bank of America and BAC Home Loans Servicing, LP (together “BAC”)
has established a process to insure that reasonable efforts to avoid foreclosure
sale/judgment have been exhausted before proceeding to sale/judgment. These efforts
have not yet been completed in connection with this loan and plaintiff therefore requests
that the trial be postponed for 120 days to allow these efforts to conclude. Plaintiff
notes that the case is under the 1 year guideline as same was filed September of 2010.”

(¶22) The June 13, 2011 transcript of the proceedings before the trial court
indicates the trial court called the matter for trial and Appellees were present in the
courtroom with counsel. The trial court reviewed the record and Appellees’ counsel
made a brief statement as to the proceedings to date and Appellant’s failure to
prosecute and act in good faith. The trial court overruled Appellant’s motion for a
continuance, and dismissed Appellant’s complaint because counsel for Appellant failed
to appear for the scheduled trial.

(¶23) Appellant received notice the case had been set for trial, effectively putting
them on notice if they failed to appear for trial, the case may be dismissed for lack of
prosecution. The record reflects Appellant had notice of the trial date, and throughout
the proceedings had failed to actively participate. We find the trial court did not abuse
its discretion in dismissing Appellant’s complaint with prejudice due to Appellant’s failure
to appear at the scheduled trial. We find failure to appear for a scheduled trial different
from case law addressing dismissals for want of prosecution for failing to abide by
interlocutory court orders or discovery related disputes.

(¶24) Our review of the trial court docket indicates the trial court’s order of
dismissal was filed prior to Appellant’s notice of voluntary dismissal without prejudice in
the record.

(¶25) The first, second and third assignments of error are overruled.

IV.

(¶26) Appellant’s fourth assignment of error asserts Appellees were unjustly
enriched by the trial court’s judgment as the underlying debt was previously discharged
in a Chapter 7 bankruptcy.

(¶27) Appellant’s complaint states at Count I:

(¶28) “Plaintiff further says that the defendants, Carl B. Booth and Cynthia L.
Booth, are immune from personal liability on said note by virtue of Bankruptcy Case No.
08-64367, United States Bankruptcy Court, Northern District of Ohio, Eastern Division.”

(¶29) We find Appellant’s complaint does not set forth a claim for unjust
enrichment.

(¶30) Upon review of the record, while the trial court’s dismissal of Appellant’s
complaint with prejudice may well appear to present a windfall for Appellees, Appellant’s
failure to appear at trial cannot be circumvented by now claiming unjust enrichment.
Appellant’s own actions lead to the trial court’s dismissal of the complaint with prejudice,
and Appellant was the architect of that outcome.

(¶31) Appellant’s fourth assignment of error is overruled.

(¶32) The June 22, 2011 Order of the Stark County Court of Common Pleas is
affirmed.

By: Hoffman, J.
Gwin, P.J. and
Wise, J. concur

s/ William B. Hoffman _________________
HON. WILLIAM B. HOFFMAN

s/ W. Scott Gwin_____________________
HON. W. SCOTT GWIN

s/ John W. Wise _____________________
HON. JOHN W. WISE

IN THE COURT OF APPEALS FOR STARK COUNTY, OHIO
FIFTH APPELLATE DISTRICT
BAC HOME LOANS SERVICING, L.P. :
FKA COUNTRYWIDE HOME LOANS :
SERVICING, L.P. :
:
Plaintiff-Appellant :
:
-vs- : JUDGMENT ENTRY
:
CARL B. BOOTH, ET AL. :
:
Defendant-Appellees : Case No. 2011CA00161
For the reasons stated in our accompanying Opinion, the June 22, 2011 Order of
the Stark County Court of Common Pleas is affirmed. Costs to Appellant.

s/ William B. Hoffman _________________
HON. WILLIAM B. HOFFMAN

s/ W. Scott Gwin _____________________
HON. W. SCOTT GWIN

s/ John W. Wise______________________
HON. JOHN W. WISE

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Posted in STOP FORECLOSURE FRAUDComments (1)

Bank of N.Y. v Spadafora | NY APPELLATE DIVISION : 2nd JUDICIAL DEPARTMENT “SC Rendered Deed & Mortgage Invalid, Forged Signature”

Bank of N.Y. v Spadafora | NY APPELLATE DIVISION : 2nd JUDICIAL DEPARTMENT “SC Rendered Deed & Mortgage Invalid, Forged Signature”


Decided on February 7, 2012

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE DIVISION : SECOND JUDICIAL DEPARTMENT
REINALDO E. RIVERA, J.P.
RANDALL T. ENG
PLUMMER E. LOTT
SANDRA L. SGROI, JJ.
2011-01986
2011-01987
(Index No. 06-03395)

[*1]Bank of New York, etc., appellant-respondent,

v

John Spadafora, et al., defendants, Lucy Spadafora, respondent-appellant.

 

DelBello Donnellan Weingarten Wise & Wiederkehr, LLP, White
Plains, N.Y. (Robert Hermann, Lee S. Wiederkehr, Jacob E. Amir,
and Eliot Schuman of counsel), for appellant-respondent.
McMahon, McCarthy & Verrelli, Bronx, N.Y. (Matthew J.
McMahon of counsel), for respondent-
appellant.

DECISION & ORDER

In an action to foreclose a mortgage on certain real property, the plaintiff appeals from (1) a decision of the Supreme Court, Westchester County (Friedman, J.H.O.), dated February 12, 2010, made after a nonjury trial, and (2) so much of a judgment of the same court dated August 18, 2010, as, upon the decision, declared that a certain deed and the subject mortgage are null and void, and is in favor of the defendants and against it dismissing the complaint, and the defendant Lucy Spadafora cross-appeals (1) from the same decision, and (2), as limited by her brief, from so much of the same judgment as imposed an equitable lien against the subject property in favor of the plaintiff in the sum of $328,796.97.

ORDERED that the appeal and cross appeal from the decision are dismissed, without costs or disbursements, as no appeal lies from a decision (see Schicchi v J.A. Green Constr. Corp., 100 AD2d 509, 509-510); and it is further,

ORDERED that the judgment is affirmed insofar as appealed and cross-appealed from, without costs or disbursements.

The plaintiff commenced the instant action against, amongst others, the defendant John Spadafora (hereinafter John) seeking to foreclose a mortgage (hereinafter the subject mortgage) on certain real property allegedly owned by John (hereinafter the subject premises). Sometime thereafter, Lucy Spadafora (hereinafter Lucy), John’s wife, was granted leave to intervene in the action as a party defendant, claiming that her signature was forged on the deed by which she allegedly had conveyed title to the subject premises to John (hereinafter the subject deed).

The Supreme Court conducted a nonjury trial, after which it issued a decision in which it explained its conclusion, inter alia, that Lucy’s signature on the subject deed was forged, and that title to the subject premises remained with her, but that the plaintiff is entitled to an equitable lien against the subject premises.

Thereafter, the Supreme Court entered a judgment upon the decision in which it declared that both the subject deed and the subject mortgage on the premises are null and void, and [*2]dismissed the complaint. The plaintiff appeals from those portions of the judgment. The judgment also, inter alia, imposed an equitable lien against the subject premises in favor of the plaintiff in the sum of $328,796.97. Lucy cross-appeals from that portion of the judgment.

Contrary to the plaintiff’s contention, under the circumstances, the Supreme Court providently exercised its discretion in limiting the rebuttal testimony of the plaintiff’s handwriting expert (see Farrell v Gelwan, 30 AD3d 563, 563-564; American Linen Supply Co. v M.W.S. Enters., 6 AD3d 1079, 1081; Gobbelet v Hit Cycle Corp., 121 AD2d 682, 683; cf. Simpson v Bellew, 161 AD2d 693, 698), and in refusing to allow two notaries public to testify as rebuttal witnesses (see Farrell v Gelwan, 30 AD3d at 563; see also Hageman v Jacobson, 202 AD2d 160, 161; Kaminsky v Segura, 4 Misc 3d 1019[A], 2004 NY Slip Op 50963[U][2004], affd 26 AD3d 188).

“In reviewing a trial court’s findings of fact following a nonjury trial, this Court’s authority is as broad as that of the trial court and includes the power to render the judgment it finds warranted by the facts, bearing in mind that due regard must be given to the trial judge who was in the position to assess the evidence and the credibility of the witnesses” (D’Argenio v Ashland Bldg., LLC, 78 AD3d 758, 758; see Northern Westchester Professional Park Assoc. v Town of Bedford, 60 NY2d 492, 499; A. Montilli Plumbing & Heating Corp. v Valentino, 90 AD3d 961, 961).

Here, the Supreme Court’s determinations that the signature on the subject deed was forged, rendering it and the subject mortgage invalid (see Bryant v Bryant, 58 AD3d 496, 496; cf. John Deere Ins. Co. v GBE/Alasia Corp., 57 AD3d 620, 622), and that the plaintiff is entitled to an equitable lien against the subject premises (see King v Pelkofski, 20 NY2d 326, 333; Federal Natl. Mtge. Assn. v Woodbury, 254 AD2d 182, 182; cf. Crispino v Greenpoint Mtge. Corp., 304 AD2d 608, 609-610), are warranted by the facts. Thus, we decline to disturb those determinations.
RIVERA, J.P., ENG, LOTT and SGROI, JJ., concur.

ENTER:

Aprilanne Agostino

Clerk of the Court

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Posted in STOP FORECLOSURE FRAUDComments (1)

AURORA LOAN SERVS., LLC v. LOUIS | Ohio: Court of Appeals “No demonstration that Aurora is the note holder, Chain of Title Deficit – Theodore Schultz Affidavit”

AURORA LOAN SERVS., LLC v. LOUIS | Ohio: Court of Appeals “No demonstration that Aurora is the note holder, Chain of Title Deficit – Theodore Schultz Affidavit”


2012 Ohio 384

Aurora Loan Services, LLC, Appellee,

v.

Dion T. Louis, et al., Appellant.

C.A. No. L-10-1289.

Court of Appeals of Ohio, Sixth District, Lucas County.

Decided: February 3, 2012.

Darryl E. Gormley, for appellee.

Brandon S. Cohen, for appellant.

DECISION AND JUDGMENT

YARBROUGH, J.

I. INTRODUCTION

{¶ 1} Appellant Dion T. Louis appeals from a judgment of the Lucas County Court of Common Pleas, which granted summary judgment in favor of appellee, Aurora Loan Services, LLC (“Aurora”), and denied appellant’s cross-motion for summary judgment. Thereafter, the trial court entered a judgment and decree of foreclosure and ordered the property sold. For the reasons that follow, we reverse.

A. Facts and Procedural History

{¶ 2} On April 16, 1999, appellant entered into a contract with Mayflower d.b.a. Republic Bancorp Mortgage, Inc. to purchase a property located in Toledo, Ohio. Appellant signed a note that contained a promise to pay $33,750 plus interest at the rate of 10.825 percent per annum. In exchange, Mayflower received a mortgage against the property as security for repayment of the note. The mortgage was later assigned to Mayflower d.b.a. Union Mortgage Services, and the assignment was recorded on October 13, 1999. Sometime after 1999, Aurora began to service the loan and appellant made his monthly payments to it.

{¶ 3} In early 2009, appellant stopped making payments on the loan. Aurora contends that appellant’s default enabled them to exercise an “option” clause contained in the note and mortgage to accelerate the debt. On July 6, 2009, Aurora filed an action for repayment of the note and foreclosure on the mortgage. Aurora attached copies of the note and mortgage to its complaint. Both the note and mortgage were endorsed by and made payable to Mayflower. There was no mention of Aurora on either document. In addition, Aurora requested that the trial court declare it a real party in interest as the holder of the note and mortgage. Aurora also submitted a preliminary judicial report which revealed that the assignment of the mortgage from Mayflower to Aurora was not recorded, and an attempted recording on January 13, 2006, revealed that the chain of title was defective.

{¶ 4} On September 22, 2009, appellant answered the complaint and raised six affirmative defenses, including that Aurora failed to state a claim upon which relief could be granted.

{¶ 5} On December 7, 2009, Aurora filed a motion for summary judgment in which it included an affidavit submitted by Cheryl Marchant, the vice president of Aurora. The affidavit states that Aurora exercised the “option” contained in the mortgage and note which were attached to the pleadings and had accelerated and called due the entire principal balance. The affidavit also declares that Marchant was authorized to make the affidavit and that she possessed personal knowledge of all of the facts therein.

{¶ 6} On December 28, 2009, appellant moved for summary judgment and filed a memorandum in opposition to Aurora’s motion for summary judgment based on the contention that Aurora lacked standing as a real party in interest. Appellant argued that Aurora’s first affidavit omitted the chain of title issues and did not address the issue of an assignment from Mayflower to Aurora. In response, on January 29, 2010, Aurora filed a brief in opposition to appellant’s motion for summary judgment, stating that Mayflower had intended to assign the mortgage to Aurora but the assignment was lost or unrecorded.

{¶ 7} Attached to its brief in opposition to appellant’s motion for summary judgment is an affidavit by Theodore Schultz, the assistant vice president of Aurora, as to the lost assignment of the mortgage. This second affidavit states that “[t]he Original Lender assigned its right, title and interest in the note to Mayflower * * * [w]hereas Mayflower assigned its right, title and interest in the note to Aurora.” The affidavit goes on to state that “[t]he original assignment of the Open-end Mortgage between Mayflower DBA Union Mortgage Services and Aurora Loan Services has been lost and or was not recorded.” The affidavit does not assert that Schultz had personal knowledge of the matters stated in the affidavit, nor does it provide the circumstances by which Schultz may have gained personal knowledge of the assignment. Since Mayflower is now out of business, Schultz asserts that a replacement assignment to confirm that it is the proper holder of the mortgage is unattainable. Schultz further asserts that Aurora is the holder of the promissory note in question.

{¶ 8} After considering the motions and affidavits, the trial court granted summary judgment in favor of Aurora on August 30, 2010, in the amount of $30,472.27 plus interest on the principal amount at the rate of 10.825 percent per annum from January 1, 2009. In addition, the court found that Aurora had a valid lien and ordered the foreclosure of the property. The trial court reasoned that Aurora established its prima facie case when it submitted the affidavits as evidence. In so determining this, the trial court found that the burden shifted to appellant to show the existence of a genuine issue of material fact pursuant to Civ.R. 56(C). The trial court concluded that appellant “fail[ed] to bring any [additional] evidence under Civ.R. 56(C) to show a genuine issue of material fact” and denied appellant’s cross-motion for summary judgment.

B. Assignments of Error

{¶ 9} Appellant now appeals, asserting the following assignment of error:

The trial court erred in granting plaintiff-appellee’s motion for summary judgment because it failed to demonstrate that it is entitled to judgment as a matter of law; the unrefuted Civ.R. 56 Evidence demonstrates, at the least, that a genuine issue of material fact exists as to whether plaintiff appellee is the equitable party in interest.

II. ANALYSIS

A. Standard of Review

{¶ 10} When reviewing a trial court’s summary judgment decision, the appellate court conducts a de novo review. Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996). Summary judgment will be granted when there are no genuine issues of material fact, and when construing the evidence most strongly in favor of the nonmoving party, reasonable minds can only conclude that the moving party is entitled to judgment as a matter of law. Harless v. Willis Day Warehousing Co., 54 Ohio St.2d 64, 66-67, 375 N.E.2d 46 (1978).

{¶ 11} On a motion for summary judgment, the moving party has the burden of demonstrating that no genuine issue of material fact exists. Dresher v. Burt, 75 Ohio St.3d 280, 292, 662 N.E.2d 264 (1996). The moving party must point to some evidence in the record of the type listed in Civ.R. 56(C). Id. at 292-293. The evidence permitted to be considered is limited to the “pleadings, depositions, answers to interrogatories, written admissions, affidavits, transcripts of evidence, and written stipulations of fact, if any, timely filed in the action * * *.” Civ.R. 56(C). The burden then shifts to the nonmoving party to provide evidence showing that a genuine issue of material fact does exist. Dresher at 293. See also Civ.R. 56(E).

B. Summary judgment improper

1. No demonstration that Aurora is the note holder

{¶ 12} In foreclosure actions, the real party in interest is the current holder of the note and mortgage. See, e.g., Deutsche Bank Natl. Trust Co. v. Greene, 6th Dist. No. E-10-006, 2011-Ohio-1976, ¶ 13. Civ.R. 17(A) requires that “a civil action must be prosecuted by the real party in interest,” that is, by a party “who can discharge the claim upon which the action is brought * * * [or] is the party who, by substantive law, possesses the right to be enforced.” (Citations omitted.) Discover Bank v. Brockmeier, 12th Dist. No. CA2006-057-078, 2007-Ohio-1552, ¶ 7. If an individual or one in a representative capacity does not have a real interest in the subject matter of the action, that party lacks the standing to invoke the jurisdiction of the court. State ex rel. Dallman v. Court of Common Pleas, Franklin Cty., 35 Ohio St.2d 176, 179, 298 N.E.2d 515 (1973), syllabus.

{¶ 13} In its complaint, Aurora alleged that it is the current holder of the note and mortgage. Nevertheless, the mortgage was not recorded and the title search revealed that the chain of title is deficient. In fact, Aurora admitted this in its complaint and asked the trial court for a declaratory judgment to establish that it is the holder of the note and mortgage. The only evidence submitted in support of Aurora’s motion for summary judgment were the Marchant and Schultz affidavits.

{¶ 14} In determining the sufficiency of these affidavits, we turn to the requirements set forth by Civ.R. 56.

{¶ 15} Pursuant to Civ.R. 56(C),

Summary judgment shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, written admissions, affidavits, transcripts of evidence, and written stipulations of fact, if any, timely filed in the action, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. No evidence or stipulation may be considered except as stated in this rule.

{¶ 16} Further, Civ.R. 56(E) provides:

Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated in the affidavit. Sworn or certified copies of all papers or parts of papers referred to in an affidavit shall be attached to or served with the affidavit. (Emphasis added.)

{¶ 17} Marchant does not assert or aver to any facts which support a finding that Aurora is the holder of the note or mortgage at issue. In fact, the note filed with her affidavit shows the following endorsement: “PAY WITHOUT RECOURSE TO THE ORDER OF: LIFE BANK BY: [ILLEGIBLE SIGNATURE] TIMOTHY A MERRITT, BRANCH MANAGER FOR MAYFLOWER D.B.A. UNION MORTGAGE SERVICES.” There is no explanation of any facts to illustrate how Aurora became the holder of the note. Rather, Marchant’s testimony is that “Aurora Loan Services, LLC has exercised the option contained in the note and mortgage and has accelerated and called due the entire principal balance due thereon.” This statement fails to establish Aurora as a real party in interest.

{¶ 18} Next, we turn to the Schultz affidavit and find that it is deficient in establishing Aurora’s status as a holder of the note and mortgage for three reasons.

{¶ 19} First, the Schultz affidavit states that: (1) “Aurora Loan Services LLC is the holder (`Holder’) of the following described promissory note (the `Note’): * * * Loan No: 0115933855 * * * Borrowers: Dion T. Louis, an unmarried man * * * Property address: 280 Knower St., Toledo, OH 43609 * * * Amount: $33,750.00;” and (2) “Mayflower DBA Union Mortgage Services assigned its right, title and interest in the note to Aurora.” A sworn or certified copy of the note was not attached or served with this affidavit as required by Civ.R. 56(E).

{¶ 20} Second, there is no explanation as to how Schultz came to know this information or whether he personally presided over appellant’s account. We note,

[t]he [affiant] need not have firsthand knowledge of the transaction, but must demonstrate [that] the [affiant] is sufficiently familiar with the operation of the business and with the circumstances of the record’s preparation, maintenance and retrieval, such that the witness can reasonably testify on the basis of this knowledge that the record is what it purports to be * * *. Wachovia Bank of Delaware, N.A. v. Jackson, 5th Dist. No. 2010-CA-00291, 2011-Ohio-3202, ¶ 36, citing State v. Patton, 3d Dist. No. 1-91-12, 1992 WL 42806 (Mar. 5, 1992).

{¶ 21} Moreover, Schultz’s position as assistant vice president of Aurora does not create a presumption that he had personal knowledge of the assignment from Mayflower to Aurora. For example, in TPI Asset Mgt. v. Conrad-Eiford, 193 Ohio App.3d 38, 2011-Ohio-1405, 950 N.E.2d 1018, ¶ 21, the affiant stated that “from my own personal knowledge the following facts are true as I verily believe, and * * * I am competent to testify to same.” The TPI court held that, regardless of the affiant’s position in the bank as team leader, the affidavits failed to demonstrate the particular basis on which the affiants gained their understanding of the facts. Id. at ¶ 23. Because the Schultz affidavit does not demonstrate that Schultz had personal knowledge of the assignment to Aurora, it does not meet the requirements for affidavits set forth in Civ.R. 56(E).

{¶ 22} Third, Schultz asserted that Aurora is the holder of the note, but failed to set forth any facts in support of this legal conclusion. Affidavits filed in support of summary judgment containing “inferences and bald assertions” rather than a “clear statement or documentation” proving that the original holder of the note and mortgage transferred its interest to Aurora are not sufficient to support a finding that Aurora is the holder of the note and mortgage. See First Union Natl. Bank v. Hufford, 146 Ohio App.3d 673, 678, 767 N.E.2d 1206 (2001) (inferences and bald assertions are insufficient evidence of a transfer of a note and mortgage). Furthermore, Schultz stated, “Mayflower DBA Union Mortgage Services assigned its right, title and interest in the note to Aurora Loan Services.” This statement is contradictory to the endorsement contained on the note which indicates that Mayflower d.b.a. Union Mortgage Services assigned the note to Life Bank.

{¶ 23} Ohio’s version of the Uniform Commercial Code governs who may enforce a note. R.C. 1301.01 et seq.[1] Article 3 of the UCC governs the creation, transfer and enforceability of negotiable instruments, including promissory notes secured by mortgages on real estate. Fed. Land Bank of Louisville v. Taggart, 31 Ohio St.3d 8, 10, 508 N.E.2d 152 (1987).

{¶ 24} Under the code, a “person entitled to enforce” an instrument means any of the following persons: (1) The holder of the instrument, (2) A non-holder in possession of the instrument who has the rights of the holder, (3) A person not in possession of the instrument who is entitled to enforce the instrument pursuant to Section 1303.38 or division (D) of section 1303.58 of the Revised Code. R.C. 1301.31.

{¶ 25} More specifically, under former R.C. 1301.01, “holder” means either of the following:

{¶ 26} “(a) if the instrument is payable to bearer, a person who is in possession of the instrument;

{¶ 27} “(b) if the instrument is payable to an identified person, the identified person when in possession of the instrument.” (Emphasis added.)

{¶ 28} Schultz failed to assert any facts indicating that Aurora is entitled to enforce the instrument. On the face of the note, it is impossible for Aurora to be a “holder” as defined by former R.C. 1301.01. The instrument is not bearer paper, and Aurora is not an identified person on the instrument. Thus, Aurora has failed to meet its Dresher burden of establishing that it is the current note holder.

2. No demonstration that Aurora is the mortgage holder

{¶ 29} “`Holder of the mortgage’ means the holder of the mortgage as disclosed by the records of the recorder or recorders of the county or counties in which the mortgaged premises are situated.” R.C. 5301.232(E)(3).

{¶ 30} In support of Aurora’s motion for summary judgment, Schultz, in his affidavit, stated: “The Loan is secured by an Open-end Mortgage dated 4/16/1999 Book 99 1465 at Page B11 Instrument 24635 in the County of Lucas, State of Ohio.” We note that a certified copy of the mortgage assignment was not attached to the Schultz affidavit as required by Civ.R. 56(E). Furthermore, in regards to the mortgage assignments, the preliminary judicial report filed on July 6, 2009, indicates that the mortgage was initially given to Mayflower d.b.a. Republic Bancorp Mortgage Inc., filed April 21, 1999, in File No. 99 1465B11 of the Lucas County Records. Thereafter, the mortgage was assigned to Mayflower d.b.a. Union Mortgage Services, and filed October 13, 1999, in File No. 99 3915C12 of the Lucas County Records.

{¶ 31} The report goes on to state:

Attempted assignment of mortgage to First Union National Bank as Trustee of the Amortizing Residential Collateral Mortgage Trust 2000-BC1, (by Life Bank), by separate instrument dated April 18, 2001 and filed April 18, 2001 in File No. 01 4794 E01 of Lucas County Records. There is no assignment of mortgage to Life Bank.

Attempted assignment of mortgage to Aurora Loan Services LLC FKA Aurora Loan Services Inc., (by Pacific Premier Bank, FSB, FKA Life Bank, FSB or Life Bank), by separate instrument dated January 13, 2006 and filed March 6, 2006 in file No. 20060306-0013641 of Lucas County Records. The chain of mortgage assignment is defective. (Emphasis added.)

{¶ 32} Thus, the record reflects that Aurora is unable to establish that there is no genuine issue of material fact as to whether it is the current holder of the mortgage, given the chain of assignments and transfers of the mortgage.

{¶ 33} Furthermore, courts have been reluctant to rely on affidavits as a basis for granting summary judgment in foreclosure actions where there is an absence of supporting evidence or circumstances. In DLJ Mtge. Capital, Inc. v. Parsons, 7th Dist. No. 07-MA-17, 2008-Ohio-1177, ¶ 17, the Seventh District Court of Appeals stated that summary judgment could not be granted for the mortgagee where there was no evidence of an assignment of the note and mortgage besides an affidavit by an employee. Although the employee presided over Parson’s account, the affidavit was deemed insufficient to support a motion for summary judgment because it failed to mention “how, when, or whether appellee was assigned the mortgage and note.” Id. Similarly, in First Union, 146 Ohio App.3d at 679, 767 N.E.2d 1206, the Third District Court of Appeals declined to grant summary judgment based exclusively on an affidavit where there was no evidence of an assignment to the mortgagee. The court stated that “though inferences could have been drawn from [the affidavit], inferences are inappropriate, insufficient support for summary judgment and are contradictory to the fundamental mandate that evidence be construed most strongly in favor of the nonmoving party.” Id. However, where other evidence of a transfer exists, such as a valid transfer of one instrument as evidence of the other, courts have relied on affidavits to confirm such facts. See, e.g., Greene, 6th Dist. No. E-10-006, 2011-Ohio-1976, at ¶ 15. In Greene, we held that the assignment of the mortgage, in conjunction with interlocking references in the mortgage and the note, transferred the note as well. We cannot find the same here. As in DLJ Mtge. and First Union, the affidavits in this case were the only evidence that a transfer of the note and mortgage occurred. As discussed, these affidavits fail to establish Aurora as the holder of either the note or the mortgage.

{¶ 34} We note that appellant also argues in his first assignment of error that, “[u]nder statute of frauds principles, Plaintiff-Appellee’s would have to show a signed `option’ or `assignment’ from Lender — Mortgage Holder — to be the real party in interest against Louis.” To support his argument, appellant claims that “without a signed document expressly granting Aurora an assignment in the mortgage to Louis’ property — the trial court cannot grant summary judgment based solely on Aurora’s (self-serving) affidavit.” However, it has been a longstanding rule in Ohio that whenever a promissory note is secured by a mortgage, the note constitutes the evidence of the debt and the mortgage is mere incident to the obligation. U.S. Bank Natl. Assn. v. Marcino, 181 Ohio App.3d 328, 2009-Ohio-1178, 908 N.E.2d 1032, ¶ 52, citing Edgar v. Haines, 109 Ohio St. 159, 164, 141 N.E. 837 (1923). Thus, a transfer of an obligation secured by a mortgage also acts as an equitable assignment of the mortgage, even though the mortgage is not assigned or delivered. Kuck v. Sommers, 59 Ohio Law Abs. 400, 100 N.E.2d 68, 75 (3d Dist.1950). Also, “`[s]ubsection (g) [of U.C.C. 9-203] codifies the common law rule that a transfer of an obligation secured by a security interest or other lien on personal or real property also transfers the security interest or lien.'” Marcino at ¶ 53, quoting Official Comment 9 to U.C.C. 9-203. Thus, there is no requirement that a signed assignment of a mortgage be contained in the record. Finally, both instruments that Aurora seeks to enforce were signed by appellant and an option in the mortgage enables the holder to accelerate the debt upon default. Therefore, we do not believe that the statute of frauds argument is pertinent to this appeal.

{¶ 35} In sum, Aurora submitted affidavits that fail to demonstrate that Aurora is the holder of the note or mortgage. Therefore, we hold that Aurora has failed to satisfy its initial burden of demonstrating that no genuine issue of material fact exists as to whether it is the real party in interest, and thus, summary judgment is inappropriate.

{¶ 36} Accordingly, appellant’s first assignment of error is well-taken.

III. CONCLUSION

{¶ 37} Because a genuine issue of material fact exists as to whether Aurora is a real party in interest, the judgment of the Lucas County Court of Common Pleas is reversed and this case is remanded to the trial court for further proceedings. Pursuant to App.R. 24, appellee is ordered to pay costs of this appeal.

Judgment reversed.

A certified copy of this entry shall constitute the mandate pursuant to App.R. 27. See also 6th Dist.Loc.App.R. 4.

Mark L. Pietrykowski, J., Arlene Singer, P.J. and Stephen A. Yarbrough, J., Concur.

[1] R.C. 1301.01 was repealed by Am.H.B. No. 9, 2011 Ohio Laws File 9, effective June 29, 2011. That act amended the provisions of R.C. 1301.01 and renumbered that section so that it now appears at R.C. 1301.201. Because R.C. 1301.201 only applies to transactions entered on or after June 29, 2011, we apply R.C. 1301.01 to this appeal.

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Richard v. Schneiderman & Sherman et al – MI SC instead of granting leave to appeal, VACATED the judgment & remanded the case pursuant to Res. Funding v. Saurman

Richard v. Schneiderman & Sherman et al – MI SC instead of granting leave to appeal, VACATED the judgment & remanded the case pursuant to Res. Funding v. Saurman


Michigan Supreme Court
Lansing, Michigan

January 30, 2012

AARON RICHARD,
Plaintiff-Appellee,

v

SCHNEIDERMAN & SHERMAN, P.C.,
Defendant-Appellant,

and

GMAC MORTGAGE, and MORTGAGE
ELECTRONIC REGISTRATION SYSTEMS,
INC.,
Defendants-Appellees.
_________________________________________/

By order of December 29, 2011, the proceedings in this case were automatically
stayed by the filing of a petition in bankruptcy. On order of the Court, the bankruptcy
stay having been lifted and the case having been reopened, the application for leave to
appeal the August 25, 2011 judgment of the Court of Appeals is considered and, pursuant
to MCR 7.302(H)(1), in lieu of granting leave to appeal, we VACATE the judgment of
the Court of Appeals and we REMAND this case to the Court of Appeals for
reconsideration in light of Residential Funding Co, LLC, f/k/a Residential Funding Corp
v Saurman, 490 Mich ___ (decided November 16, 2011).

MARILYN KELLY, J., would grant leave to appeal.

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