Avakian v. Wilmington Trust, Nat'l Ass'n, 2017–CA–00291–COA

• Decision Date: 10 April 2018
• Docket Number: NO. 2017–CA–00291–COA,2017–CA–00291–COA
• Citation: 242 So.3d 961
• Parties: Burnette AVAKIAN, Individually and as Executrix of the Estate of Norair Avakian, Deceased, Appellant/Cross–Appellee v. WILMINGTON TRUST, NATIONAL ASSOCIATION, as Successor Trustee to Citibank, N.A., as Trustee for Bear Stearns Asset Backed Securities Trust 2007–2, Asset–Backed Certificates, Series 2007–2, Appellee/Cross–Appellant
• Court: Mississippi Court of Appeals

242 So.3d 961

Burnette AVAKIAN, Individually and as Executrix of the Estate of Norair Avakian, Deceased, Appellant/Cross–Appellee

v.WILMINGTON TRUST, NATIONAL ASSOCIATION, as Successor Trustee to Citibank, N.A., as Trustee for Bear Stearns Asset Backed Securities Trust 2007–2, Asset–Backed Certificates, Series 2007–2, Appellee/Cross–Appellant

NO. 2017–CA–00291–COA

Court of Appeals of Mississippi.

April 10, 2018

STEVEN CRAIG PANTER, ATTORNEY FOR APPELLANT

WILLIAM JACOB LONG IV, CHRISTOPHER DANIEL MEYER, ATTORNEYS FOR APPELLEE

BEFORE LEE, C.J., GREENLEE AND TINDELL, JJ.

LEE, C.J., FOR THE COURT:

¶ 1. This case is the latest in a series of litigation between the parties regarding Wilmington Trust, National Association's right to foreclose on Burnette Avakian's home. In this appeal, we must decide whether the chancery court—finding that res judicata applied—properly granted Wilmington Trust's motion for partial summary judgment on its claims for judicial foreclosure, breach of contract, and declaratory judgment. On cross-appeal, we must also decide whether the chancery court properly granted Burnette's motion for partial summary judgment on Wilmington Trust's claim for unjust enrichment. Following a de novo review, we affirm the judgments of the chancery court.

¶ 2. We acknowledge the facts and circumstances giving rise to the instant action on appeal are identical to those in previous actions between these same parties. See Estate of Avakian v. Wilmington Tr. Nat'l Ass'n , 231 So.3d 208 (Miss. Ct. App. 2017) (probate action); Avakian v. Citibank N.A. , 773 F.3d 647 (5th Cir. 2014) ; Avakian v. Citibank N.A. , No. 1:12-CV-00139-SA-DAS, 2015 WL 4643129 (N.D. Miss. Aug. 4, 2015) (federal action).

¶ 3. Because the chancery court's decision to grant summary judgment on certain claims in the instant case was based on the doctrine of res judicata, it is necessary to detail not only the facts and procedural history of the instant case, but also the prior actions between the parties.

FACTS

¶ 4. In September 2002, Norair and Burnette Avakian, husband and wife, purchased a house in Columbus, Mississippi, and executed a deed of trust to secure a loan for the purchase from Southstar Financing LLC. At that time, the title to the property was vested in both their names as joint tenants. Then, in November 2004, Norair executed a deed conveying title to the property to Burnette alone. In March 2006, the Avakians refinanced the mortgage with EquiFirst Corporation, and Norair took out a loan in his name only and executed a promissory note in favor of EquiFirst. It was undisputed that the Avakians intention was to structure the ownership and debt so that Burnette would not be liable for the debt if Norair died. However, because title was vested in Burnette alone, EquiFirst required both Burnette and Norair to execute a deed of trust. Norair was out of state at the time of the closing, so Burnette and Norair each signed separate deeds of trust on the property. This resulted in two deeds of trust on the property—one executed by Norair on March 7, 2006, and one executed by Burnette on March 8, 2006. Each deed of trust was recorded as a separate instrument with the Lowndes County Chancery Clerk.

¶ 5. Norair's promissory note to EquiFirst was later sold to Citibank N.A. in its capacity as trustee of the Bear Sterns Asset Backed Securities Trust. J.P. Morgan became the servicing agent for Citibank. On December 3, 2012, Wilmington Trust replaced Citibank as the trustee for Bear Sterns. So, J.P. Morgan served as the servicer for the loan, and EquiFirst, Citibank, and Wilmington Trust were the successive creditors.

¶ 6. Norair defaulted on the promissory note and died shortly after in July 2010. In early 2012, Citibank, the trustee/creditor at that time, noticed Burnette its intention to foreclose on the house and set the foreclosure sale for May 10, 2012. On May 9, 2012, the day before the scheduled foreclosure sale, Burnette filed suit in the chancery court against Citibank seeking to enjoin the foreclosure. This began the series of litigation between the parties present on appeal (through Wilmington Trust's predecessor, Citibank).

PROCEDURAL HISTORY

1. Federal Action

¶ 7. On May 9, 2012, Burnette filed a lawsuit in chancery court to enjoin Citibank from foreclosing on the property. She argued that the two deeds of trust on the home were both void pursuant to Mississippi Code Annotated section 89–1–29 (Rev. 2011) because neither deed contained the signatures of both Burnette and Norair. Citibank removed the lawsuit to the United States District Court for the Northern District of Mississippi. Following a trial, the district court entered a final judgment on February 10, 2014, in favor of Burnette, holding that the deeds of trust on the house were unenforceable. See Avakian v. Citibank N.A. , No. 1:12-CV-00139-SA-DAS, 2014 WL 346861 (N.D. Miss. Jan. 30, 2014), rev'd and remanded , 773 F.3d 647 (5th Cir. 2014).

¶ 8. Citibank appealed the decision to the Fifth Circuit Court of Appeals. See Avakian , 773 F.3d at 649. During the appeal, the Fifth Circuit issued a stay on May 12, 2014, that prohibited foreclosure of the property during the pendency of the appeal. On December 9, 2014, the Fifth Circuit reversed the district court, finding that the Mississippi Supreme Court would likely construe the two deeds of trust as together creating a valid deed of trust. Id. at 653. Thus, the Fifth Circuit found the two deeds of trust together formed a valid and enforceable instrument and remanded the case for further proceedings. Id.

¶ 9. On remand in the district court, Citibank filed a motion for entry of final judgment. See Avakian , 2015 WL 4643129, at *1. In response, Burnette filed a motion to dismiss the action without prejudice, arguing that it became moot on December 3, 2012, when Wilmington Trust succeeded Citibank as trustee for the lienholder. Id. at *2. Citibank responded by filing a motion to substitute Wilmington Trust as the defendant and then renewed its request for entry of a final judgment. Id. The district court noted that "[ Rule 25 of the Federal Rules of Civil Procedure ] states that when ‘an interest is transferred, the action may be continued by or against the original party unless the court, on motion, orders the transferee to be substituted in the action or joined with the original party.’ " Id. (quoting Fed. R. Civ. P. 25(c) ). In applying the rule, the district court found that it was proper for Citibank to continue as the named defendant even after it ceased to have any interest in the subject property. Id. Further, the district court noted that "[Burnette] [did] not dispute that Wilmington succeeded Citibank as trustee on December 3, 2012. In fact, [Burnette relied] upon the complete transfer of Citibank's interest to Wilmington in arguing that th[e] action [was] moot because Citibank no longer ha[d] any interest in the outcome." Id. at *3. Accordingly, the district court denied Burnette's motion to dismiss with prejudice, granted Citibank's motion to substitute Wilmington Trust, and granted Citibank's motion for final judgment in favor of Wilmington Trust. Id.

2. Probate Action

¶ 10. On July 28, 2010, Burnette filed a petition in the Lowndes County Chancery Court to probate Norair's last will and testament. That same day, the chancery court entered an order probating the last will and testament and issued letters testamentary to Burnette to serve as executor of the Estate. Burnette did not identify any entity as a known creditor of the Estate and did not provide Wilmington Trust, or any creditor, notice by mail regarding the probate of the Estate, thereby failing to comply with Mississippi Code Annotated section 91–7–145 (Rev. 2013). She did file a "Notice to Creditors Affidavit," stating that she had and would notify known creditors; however, she did not list any specific creditors.

¶ 11. Citibank made two attempts to foreclose in 2010 but did not complete the process. During the pendency of the 2012 foreclosure attempt, after the district court (prior to appeal) ruled that the deeds of trust were void and unenforceable, Citibank (through its servicer, J.P. Morgan) filed a statement of claim on October 14, 2014, in the probate proceeding pending in chancery court based upon Norair's debt arising from the promissory note of $815,905.06. The statement of claim set forth that "[t]he claim was presumed secured pursuant to a mortgage loan; however, the claim has been deemed unsecured via [the district court's judgment]." Burnette filed her contest of the statement of claim, asserting that any claim on the promissory note was time-barred by Mississippi Code Annotated section 15–1–25 (Rev. 2012), and that pursuant to Mississippi Code Annotated section 15–1–3 (Rev. 2012), the statute of limitations had run on the underlying claim.

¶ 12. The chancellor found that although Citibank filed its statement of claim outside of the ninety-day statutory time period to probate a claim against the Estate under Mississippi Code Annotated section 91–7–151 (Rev. 2013), the claim was still timely filed due to Burnette's failure as executor to provide all reasonably ascertainable creditors with notice of probate of the Estate as required by section 91–7–145.

¶ 13. In regard to Burnette's argument that the statute of limitations had run on the underlying claim, the chancellor noted that if the creditor is not paid on a claim based on the promissory note during the probate proceeding, the creditor must then bring a separate civil suit against the Estate to enforce that claim on the promissory note before the four-year statute of limitations in such actions expires under section 15–1–25. The chancellor acknowledged that letters testamentary were issued to Burnette on July 28, 2010; the ninety-day moratorium on bringing a civil suit against an executor under Mississippi Code Annotated section 91–7–239 (Rev. 2013) expired on October 26, 2010; and on that date, the...