Bank of Am., N.A. v. Ash
| Decision Date | 07 August 2015 |
| Docket Number | 113,006., Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 3. |
| Citation | 2015 OK CIV APP 69,358 P.3d 951 |
| Parties | BANK OF AMERICA, N.A., Plaintiff/Appellee, v. Michael J. ASH, Defendant/Appellant, and Spouse, if any, of Michael J. Ash and John Doe, Occupant, Defendant. |
| Court | United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma |
A. Grant Schwabe, Lauren Smith, Kivell, Rayment and Francis, P.C., Tulsa, OK, for Plaintiff/Appellee.
Babette Patton, Breathwit & Patton, P.C., Oklahoma City, OK, for Defendant/Appellant.
¶ 1 Defendant Michael Ash (Ash) seeks review of the trial court judgment granting summary judgment in favor of Plaintiff Bank of America, N.A. (Bank) on its foreclosure petition describing real estate situated in Oklahoma City, Oklahoma. Ash challenges Bank's standing to pursue the action and its entitlement to judgment as a matter of law. We reverse the order and remand for further proceedings.
¶ 2 Ash appeals without appellate briefs in conformance with the procedures for the appellate accelerated docket, Okla. Sup. Ct. R. 1.36, 12 O.S.Supp.2003, Ch. 15, App. 1. An appeal on summary judgment comes to this court as a de novo review. Carmichael v. Beller, 1996 OK 48, ¶ 2, 914 P.2d 1051. All inferences and conclusions are to be drawn from the underlying facts contained in the record and are to be considered in the light most favorable to the party opposing the summary judgment. Rose v. Sapulpa Rural Water Co., 1981 OK 85, 631 P.2d 752. Summary judgment is improper if, under the evidentiary materials, reasonable individuals could reach different factual conclusions. Gaines v. Comanche County Medical Hospital, 2006 OK 39, ¶ 4, 143 P.3d 203.
¶ 3 In January of 2012, Bank filed a foreclosure petition against Ash, alleging on July 23, 1993, he executed and delivered to Sears Mortgage Corporation (“Sears”): 1) a promissory note payable to Sears “in the principal sum of $37,390.80,” and 2) a mortgage on the subject property in Oklahoma County filed in August of 1993. After alleging it “is in possession of and is the holder of and is entitled to enforce said note, ” Bank further alleged 1) Ash defaulted on its monthly payment due November 1, 2010; 2) the mortgage was assigned to Bank on November 9, 2012; and 3) “there is due and owing on said note and mortgage the principal sum of $29,739.73 with interest ... at the rate of 6% per annum from October 1, 2010, until paid,” and fees, costs, late charges, etc.
¶ 4 Three exhibits were attached to Bank's petition. Exhibit 1 included copies of two promissory notes. The first, a two-page “Note” dated July 23, 1993, is executed by Ash and payable to Sears, the Lender, and describes a specific street address in Oklahoma City, Oklahoma. The Note states “[i]n return for a loan received from Lender,” Ash “promises to pay the principal sum of ... (U.S. $36,616.00), plus interest, to the order of Lender,” the “[i]nterest on the unpaid principal is eight percent (8%) per year until the full amount had been paid,” and Ash's “promise to pay is secured by a mortgage ... that is dated the same date as this Note and called the ‘Security Instrument.’ ” The Note sets a monthly payment of principal and interest in the amount of $268.68, with the first payment beginning September 1, 1993 and a “Maturity Date” of August 1, 2023 (“Original Note”). The Original Note has two undated blank indorsements, one by Sears and the other by Countrywide Home Loan, Inc. (“Countrywide”).
¶ 5 The second note in Exhibit 1 is titled “Amended and Restated Note.” The second note, like the Original Note, is dated July 23, 1993, describes the same property address, Ash is the sole “Borrower,” and states it was given “in return for a loan received from Lender” and is “secured by a mortgage ... that is dated the same date as this Note and called the ‘Security Instrument.’ ” Unlike the Original Note, Countrywide is identified as the “Lender,” the principal sum Ash promises to pay “to the order of Lender” is $37,390.80, the interest rate is six percent (6%) per year, and the first payment lowered to $266.17 is due on “April 01, 2004” with a new maturity date of “June 01, 2024.” The Amended and Restated Note contains no indorsements.
Exhibit 3 of the petition is an Assignment Of Mortgage Of Real Estate (“Mortgage Assignment”), by which Countrywide assigns to Bank “all [Countrywide's] right, title and interest in and to the mortgage executed by [Ash] to [Sears] dated July 23, 1993 ... together with the note, debts and claims secured thereby, covering ... [real estate description].” (Emphasis added.) The Mortgage Assignment was filed January 3, 2013, twenty-eight days before the filing of the foreclosure petition.
¶ 7 On February 27, 2013, Ash moved to dismiss Bank's petition, alleging lack of standing based on Bank's “failure to establish that it is the holder of the governing instrument or otherwise entitled to enforce the instrument.” Ash did not attach any evidentiary material, but instead relied on the following “facts set out in petition and exhibits” to support dismissal: 1) the Original Note has two blank indorsements, one from Sears and another from Countrywide; 2) Bank does not mention the “Amended and Restated Note” in its petition, which note “purports to be dated July 23, 1993, the same date as the Original Note” and “is from Ash to [Countrywide]”; 3) the amount of the loan under the Amended and Restated Note is “$37,390.80, as opposed to the Original Note with a loan amount of $36,616.00”; 4) payments under the Amended and Restated Note begin April 1, 2004 with final payment to be made June 1, 2034(sic)”; and 5) the Amended and Restated Note “does not contain an indorsement.”
¶ 8 Ash argued Bank is not entitled to enforce the Amended and Restated Note for three reasons: 1) the latter note “supersedes the Original Note and is the governing instrument in this action,” 2) the Amended and Restated Note is unindorsed so Bank cannot be a holder, 3) there is no allegation that Bank is in “possession” of the unindorsed Amended and Restated Note and therefore it cannot be a “nonholder in possession” of that note. As an additional basis for dismissing Bank's petition, Ash claimed “the purported assignment of the mortgage on November 9, 2012 from [Countrywide] (which actually ceased to exist in 2008) to [Bank], is of no effect in establishing [Bank's] right to enforce the Amended and Restated Note.” (Parenthetical in original.)
¶ 9 Bank responded, requesting denial of Ash's motion and “to allow ... amendment to its original petition pursuant to ... HSBC Bank USA v. Lyon, 2012 OK 10, .” Bank explained the amendment was needed “to attach as an Exhibit to the Petition a copy of the Amended and Reinstated(sic) Note properly endorsed in order to establish it was entitled to enforce the Note at the time of the filing of the original Petition.” Ash replied to Bank's amendment request, stating “he has no objection to [Bank's] Application for Leave to Amend Petition.” The certified copy of the court appearance dockets indicates the trial court overruled Ash's motion to dismiss for lack of standing and granted Bank “leave to amend within 30 days.”1
¶ 10 On May 22, 2013, Bank filed an Amended Petition, stating it “realleges, restates and incorporates herein its original petition” and specifically alleges it 2 Bank again prayed for judgment in personam and in rem against Ash in the amount of $29,739.73 with accrued interest thereon, “plus interest accruing at the rate of 6% per annum from October 1, 2010, until paid ...” and requested “[t]hat said purchase money mortgage be foreclosed and ... be declared a valid first and prior lien upon the real estate.”
¶ 11 Copies of the Original Note and the Amended and Restated Note were both attached to Bank's Amended Petition, but there is no exhibit marked as “A.” On the second page of the Original Note attached to Bank's Amended Petition, the blank indorsement by Sears had been converted to a special indorsement by stamping “Countrywide Home Loans Inc.” on the line below “Pay to the Order of.” No change had been made to the blank indorsement by Countrywide.
¶ 12 The previously unindorsed Amended and Restated Note now included two undated indorsements: 1) a special indorsement to “Bank of America, N.A.” from “Countrywide Home Loans, Inc. by Recontrust Company, N.A. as attorney-in-fact” and 2) a blank indorsement from “Bank of America, N.A. by Recontrust Company, N.A. as attorney-in-fact.” Both indorsements were signed by the same person, “Margarita Padilla, Vice President.”
¶ 13 On June 5, 2013, Ash filed an Answer to Bank's Amended Petition, admitting his execution of the July 23, 1993 Note to Sears, but denying the principal sum stated in the Petition. He also admitted signing “an Amended and Restated Note dated July 23, 1993, for the amount stated in the Petition showing payments to begin on April 1, 2004” and denied the remaining allegations regarding Bank's alleged possession, status as holder and entitlement to enforce said note. Ash admitted the allegations regarding his execution of the...
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