216 P.3d 158 (Kan. 2009), 98,489, Landmark Nat. Bank v. Kesler

Docket Nº:98,489.
Citation:216 P.3d 158, 289 Kan. 528
Opinion Judge:ROSEN, J.:
Party Name:LANDMARK NATIONAL BANK, Plaintiff/Appellee, v. Boyd A. KESLER Appellee/Cross-appellant Millennia Mortgage Corporation, Defendant, (Mortgage Electronic Registration Systems, Inc. and Sovereign Bank), Appellants/Cross-appellees, and Dennis Bristow and Tony Woydziak, Intervenors/Appellees.
Attorney:Tyson C. Langhofer and Court T. Kennedy, of Stinson Morrison Hecker, L.L.P., of Wichita, for appellants/cross-appellees. Ted E. Knopp, of Ted E. Knopp, Chartered, of Wichita, for appellee Boyd A. Kesler. David A. Schatz, of Husch Blackwell Sanders L.L.P., of Kansas City, Missouri, for amicus curi...
Case Date:August 28, 2009
Court:Supreme Court of Kansas

Page 158

216 P.3d 158 (Kan. 2009)

289 Kan. 528

LANDMARK NATIONAL BANK, Plaintiff/Appellee,

v.

Boyd A. KESLER Appellee/Cross-appellant

Millennia Mortgage Corporation, Defendant,

(Mortgage Electronic Registration Systems, Inc. and Sovereign Bank), Appellants/Cross-appellees,

and

Dennis Bristow and Tony Woydziak, Intervenors/Appellees.

No. 98,489.

Supreme Court of Kansas.

August 28, 2009

Page 159

[Copyrighted Material Omitted]

Page 160

Syllabus by the Court

1. Denial of a motion to set aside default judgment is subject to review under a standard of abuse of discretion. A district court decision that denies a motion to join a party as a necessary party under K.S.A. 60-219(a) is also subject to an abuse of discretion standard of review.

2. Whether the evidence demonstrates that the statutory requirements for joinder have been met is a mixed question of fact and law. When reviewing a mixed question of fact and law, an appellate court reviews the district court's factual findings for substantial competent evidence and reviews de novo the district court's legal conclusions.

3. Intervention as a matter of right is subject to the same mixed determination of law and fact as is joinder. Permissive intervention lies within the discretion of the district court.

4. Judicial discretion is abused when no reasonable person would take the view adopted by the trial court. Review for abuse of discretion includes review to determine whether erroneous legal conclusions guided the exercise of discretion.

5. K.S.A. 60-255(b) does not require that the party moving for relief from default judgment be a party to the action.

6. It is appropriate for a trial court to consider evidence beyond the bare pleadings to determine whether it should set aside a default judgment. In a motion to set aside default, a trial court should consider a variety of factors to determine whether the defendant or would- [289 Kan. 529] be defendant had a meritorious defense, and the burden of establishing a meritorious defense rests with the moving party.

7. Relief under K.S.A. 60-255(b) is appropriate only upon a showing that if relief is granted the outcome of the suit may be different than if the entry of default or the default judgment is allowed to stand; the showing should underscore the potential injustice of allowing the case to be disposed of by default. In most cases the court will require the party in default to demonstrate a meritorious defense to the action as a prerequisite to vacating the default entry or judgment. The nature and extent of the showing that will be necessary lie within the trial court's discretion.

8. The law relating to a contingently necessary party closely resembles the law relating to vacating default judgment, in that both require the party asserting the interest to demonstrate a meritorious defense or an interest that may be impaired.

9. The word " nominee" is subject to more than one interpretation. The legal significance of the word depends on the context in which it is used. The word encompasses a range of meanings from a straw man or limited agent to a representative enjoying

Page 161

the same legal rights as the party that acts as the nominator.

10. The law generally understands that a mortgagee is not distinct from a lender: a mortgagee is a party to whom property is mortgaged, which is to say, a mortgage creditor or lender. A mortgagee and a lender have intertwined rights that defy a clear separation of interests.

11. Parties are bound by the formal admissions of their counsel in an action.

12. The Due Process Clause does not protect entitlements where the identity of the alleged entitlement is vague. A protected property right must have some ascertainable monetary value. An entitlement to a procedure does not constitute a protected property interest.

Tyson C. Langhofer and Court T. Kennedy, of Stinson Morrison Hecker, L.L.P., of Wichita, for appellants/cross-appellees.

Ted E. Knopp, of Ted E. Knopp, Chartered, of Wichita, for appellee Boyd A. Kesler.

David A. Schatz, of Husch Blackwell Sanders L.L.P., of Kansas City, Missouri, for amicus curiae American Land Title Association.

OPINION

ROSEN, J.:

[289 Kan. 530] Mortgage Electronic Registration Systems, Inc. (MERS) and Sovereign Bank seek review of an opinion by our Court of Appeals holding that a nonlender is not a contingently necessary party in a mortgage foreclosure action and that due process does not require that a nonlender be allowed to intervene in a mortgage foreclosure action.

The facts underlying this appeal are not in dispute. On March 19, 2004, Boyd Kesler secured a loan of $50,000 from Landmark National Bank (Landmark) with a mortgage registered in Ford County, Kansas. On March 15, 2005, he secured an additional loan of $93,100 from Millennia Mortgage Corp. (Millennia) through a second mortgage registered in Ford County. Both mortgages were secured by the same real property located in Ford County.

The second mortgage lies at the core of this appeal. That mortgage document stated that the mortgage was made between Kesler— the " Mortgagor" and " Borrower" — and MERS, which was acting " solely as nominee for Lender, as hereinafter defined, and Lender's successors and assigns." The document then identified Millennia as the " Lender." At some subsequent time, the mortgage may have been assigned to Sovereign and Sovereign may have taken physical possession of the note, but that assignment was not registered in Ford County.

On April 13, 2006, Kesler filed for bankruptcy in the United States Bankruptcy Court for the District of Kansas, Wichita Division. He named Sovereign as a creditor; although he claimed the secured property as exempt, he filed an intention to surrender the property. The bankruptcy court discharged his personal liability on November 16, 2006. The record contains little documentation or evidence explaining the interplay of the bankruptcy and the foreclosure [289 Kan. 531] action, except to suggest that the bankruptcy action may have given Sovereign constructive notice of a possible default on payments.

On July 27, 2006, Landmark filed a petition to foreclose on its mortgage, serving and naming as defendants Kesler and Millennia. It did not serve notice of the litigation on MERS or Sovereign. In the absence of answers from either defendant, the trial court entered default judgment against Kesler and Millennia on September 6, 2006. The trial court then filed an order of sale on September 29, 2006. Notice of the sale was initially published in the Dodge City Daily Globe on October 4, 2006. On October 26, 2006, Dennis Bristow and Tony Woydziak purchased the secured property at a sheriff's sale for $87,000, and on November 14, 2006, Landmark filed a motion to confirm sale of the secured property.

Also on November 14, 2006, Sovereign filed an answer to the foreclosure petition, asserting an interest in the real property as the successor in interest to Millennia's second mortgage. A week later, on November 21, 2006, Sovereign filed a motion to set aside

Page 162

or vacate the default judgment and an objection to confirmation of sale. The motion asserted that MERS was a K.S.A. 60-219(a) contingently necessary party and, because Landmark failed to name MERS as a defendant, Sovereign did not receive notice of the proceedings. The motion asked the court to vacate the default judgment under K.S.A. 60-260(b). The motion further asked the court to set aside the surplus from the sale, holding it to later to be paid to Sovereign if the court elected not to grant the motion to vacate.

On November 27, 2006, Kesler filed a motion seeking distribution of surplus funds from the sheriff's sale, and on January 3, 2007, Kesler filed a motion joining Landmark's earlier motion to confirm the sheriff's sale. The trial court conducted a hearing on the various motions on January 8, 2007, at which counsel for Landmark, Kesler, Sovereign, and Bristow appeared and presented their cases. The trial court deferred judgment pending review of the pleadings.

On January 16, 2007, MERS filed a motion joining Sovereign's motion to vacate the journal entry of default judgment and objecting [289 Kan. 532] to confirmation of the sheriff's sale, followed on January 18, 2007, by a motion to intervene under K.S.A. 60-224. MERS proffered an answer and a cross-claim to the original foreclosure petition.

On that same date, the trial court filed an order finding that MERS was not a real party in interest and Landmark was not required to name it as a party to the foreclosure action. The court found that MERS served only as an agent or representative for Millennia. The court also found that Sovereign's failure to register its interest with the Ford County Register of Deeds precluded it from asserting rights to the mortgage after judgment had been entered. The court denied the motions to set aside judgment and to intervene and granted the motions to confirm the sale and to distribute the surplus.

On February 1, 2007, MERS and Sovereign filed motions to reconsider. The trial court conducted a hearing on those motions, at which counsel for Kesler, Sovereign, and MERS appeared and argued. The trial court subsequently entered an order denying the motions to reconsider. MERS and Sovereign filed timely notices of appeal.

Prior to the appellants submitting their briefs, the purchasers Bristow and Woydziak filed a motion with the Court of Appeals seeking leave to intervene in the appeal. The Court of Appeals granted the motion. Bristow and Woydziak then filed a motion to compel the office of the Clerk of the Appellate Courts to docket their cross-appeal, which the Court of Appeals denied. The Court of Appeals affirmed the district court in Landmark National Bank v. Kesler, 40 Kan.App.2d 325, 192 P.3d 177 (2008). This court granted the appellants' petition for review.

I. Did The District Court...

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149 practice notes
  • In re Danastorg, 091613 MABC, 13-13006-JNF
    • United States
    • Federal Cases United States Bankruptcy Courts First Circuit
    • September 16, 2013
    ...the fact that the law "generally understands that a mortgagee is not distinct from a lender." Landmark Nat'l Bank v. Kesler , 289 Kan. 528, 539, 216 P.3d 158 (2009). Accord Mortgage Elec. Registration Sys., Inc. v. Saunders , 2 A.3d 289, 295 (Me. 2010), quoting Black's Law Diction......
  • 195 Cal.App.4th 1618, B223447, Ferguson v. Avelo Mortgage, LLC
    • United States
    • California California Court of Appeals
    • June 1, 2011
    ...note, and therefore had no interest in the mortgage to assign. (Id. at pp. *5-6; see also Landmark National Bank v. Kesler (Kan. 2009) 289 Kan. 528 [216 P.3d 158, 167] [in a mortgage foreclosure action, trial court did not abuse discretion by denying MERS motion to set aside default judgmen......
  • 286 P.3d 1150 (Kan.App. 2012), 106,846, MetLife Home Loans v. Hansen
    • United States
    • Kansas Court of Appeals of Kansas
    • September 28, 2012
    ...can then sell their interests to investors without having to record each transaction in the public records. Landmark Nat'l Bank v. Kesler, 289 Kan. 528, 536, 216 P.3d 158 (2009)( Landmark ); see also Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 1034, 1039 (9th Cir.2011) (providing mo......
  • 293 P.3d 168 (Kan.App. 2013), 106,107, State v. Meeks
    • United States
    • Kansas Court of Appeals of Kansas
    • January 18, 2013
    ...of the law. When a constitutional right is involved, the discretion of the district court is limited. Landmark Nat'l Bank v. Kesler, 289 Kan. 528, 544, 216 P.3d 158 (2009); State v. Gant, 288 Kan. 76, 82, 201 P.3d 673 (2009). An exercise of discretion that results in an error of constitutio......
  • Free signup to view additional results
143 cases
  • In re Danastorg, 091613 MABC, 13-13006-JNF
    • United States
    • Federal Cases United States Bankruptcy Courts First Circuit
    • September 16, 2013
    ...the fact that the law "generally understands that a mortgagee is not distinct from a lender." Landmark Nat'l Bank v. Kesler , 289 Kan. 528, 539, 216 P.3d 158 (2009). Accord Mortgage Elec. Registration Sys., Inc. v. Saunders , 2 A.3d 289, 295 (Me. 2010), quoting Black's Law Diction......
  • 195 Cal.App.4th 1618, B223447, Ferguson v. Avelo Mortgage, LLC
    • United States
    • California California Court of Appeals
    • June 1, 2011
    ...note, and therefore had no interest in the mortgage to assign. (Id. at pp. *5-6; see also Landmark National Bank v. Kesler (Kan. 2009) 289 Kan. 528 [216 P.3d 158, 167] [in a mortgage foreclosure action, trial court did not abuse discretion by denying MERS motion to set aside default judgmen......
  • 286 P.3d 1150 (Kan.App. 2012), 106,846, MetLife Home Loans v. Hansen
    • United States
    • Kansas Court of Appeals of Kansas
    • September 28, 2012
    ...can then sell their interests to investors without having to record each transaction in the public records. Landmark Nat'l Bank v. Kesler, 289 Kan. 528, 536, 216 P.3d 158 (2009)( Landmark ); see also Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 1034, 1039 (9th Cir.2011) (providing mo......
  • 293 P.3d 168 (Kan.App. 2013), 106,107, State v. Meeks
    • United States
    • Kansas Court of Appeals of Kansas
    • January 18, 2013
    ...of the law. When a constitutional right is involved, the discretion of the district court is limited. Landmark Nat'l Bank v. Kesler, 289 Kan. 528, 544, 216 P.3d 158 (2009); State v. Gant, 288 Kan. 76, 82, 201 P.3d 673 (2009). An exercise of discretion that results in an error of constitutio......
  • Free signup to view additional results
2 firm's commentaries
  • The Myths And Merits Of MERS
    • United States
    • Mondaq United States
    • September 27, 2012
    ...holder of the encumbrance."). 656 F.3d 1034 (9th Cir. 2011). Id. at 1042. Id. Id. at 1044, citing Landmark Nat'l Bank v. Kesler, 216 P.3d 158, 167 (Kan. 2009). See also, U.S. Bank v. Howie, No. 106,415 (Kans. App. June 8, 2012) in which an appellate court interpreted the Kansas Supreme......
  • Show Me Your Papers: Sales And Assignments Of Secured Real Estate Loans And The California Foreclosure Process
    • United States
    • JD Supra United States
    • February 6, 2012
    ...Mortgage Electronic Registration Systems, Inc. v. Saunders, 2010 ME 79, 2 A.3d 289, 294-297 (Me. 2010); Landmark Nat. Bank v. Kesler, 289 Kan. 528, 216 P.3d 158, 167 (2009). But see Stein v. Chase Home Finance, LLC, 2011 WL 5984286 (8th Cir. 2011) (applying Minnesota law); Jackson v. Mortga......
4 books & journal articles
  • A proposal for a national mortgage registry: MERS done right.
    • United States
    • Missouri Law Review Vol. 78 Nbr. 1, January - January 2013
    • January 1, 2013
    ...to approve a payoff of the loan to a false bank account). (36.) 860 N.E.2d 785 (Ohio Ct. App. 2006). (37.) Id. at 786. (38.) Id. (39.) 216 P.3d 158 (Kan. 2009); see also Lang v. Butler, 483 P.2d 994 (Colo. App. 1971) (finding that a foreclosing senior deed of trust holder had no obligation ......
  • Two faces: demystifying the Mortgage Electronic Registration System's land title theory.
    • United States
    • William and Mary Law Review Vol. 53 Nbr. 1, October 2011
    • October 1, 2011
    ...not a necessary party."). (48.) Id. at 5, 301 S.W.3d at 4. (49.) Id. at 6, 301 S.W.3d at 4. (50.) See Landmark Nat'l Bank v. Kesler, 216 P.3d 158, 169 (Kan. 2009). (51.) Id. at 165-66. (52.) Id. at 169. (53.) 2010 ME 79, [paragraph] 1, 2 A.3d. 289, 292. (54.) See id. [paragraph] 1, 2 A......
  • Losing Our Homes, Losing Our Way, or Both? Foreclosure, County Property Records, and the Mortgage Electronic Registration System
    • United States
    • Capital University Law Review Nbr. 40-4, December 2012
    • December 1, 2012
    ...2008). 79See, e.g., Gretchen Morgenson, The Banks Still Want a Waiver, N.Y. TIMES, July 23, 2011, at BU1. 80Landmark Nat’l Bank v. Kesler, 216 P.3d 158, 169 (Kan. 2009). Page 838 838 CAPITAL UNIVERSITY LAW REVIEW [40:821 either the United States or the Kansas Constitutions.”81The Supreme Co......
  • 79 J. Kan. Bar Assn 6, 21 (2010). Civil Code and Time Computation Changes Effective July 1.
    • United States
    • Kansas Bar Journal Nbr. 2010, January 2010
    • January 1, 2010
    ...Committee Note to 2009 amendment. 2010 HB 2656, § 74. 2010 HB 2656, § 72. 2010 HB 2656, § 90. 2010 HB 2656, § 86. 2009 HB 2613. 289 Kan. 528, 216 P.3d 168 (2009) 2010 HB 2656, § 84. 2010 HB 2656, § 128. See Rashidi v. Albright, 818 F. Supp. 1354, 1356 (D. Nev. 1993), holding that ......