Bank of N.Y. v. Romero

• Decision Date: 28 July 2016
• Docket Number: Opinion Number: 34,426
• Parties: The Bank of New York as Trustee for Popular Financial Services Mortgage/Pass Through Certificate Series #2006–D, Plaintiff–Appellant, v. Joseph A. Romero and Mary Romero a/k/a Mary O. Romero a/k/a Maria Romero, Defendants–Appellees.
• Court: Court of Appeals of New Mexico

382 P.3d 991

The Bank of New York as Trustee for Popular Financial Services Mortgage/Pass Through Certificate Series #2006–D, Plaintiff–Appellant,

v.Joseph A. Romero and Mary Romero a/k/a Mary O. Romero a/k/a Maria Romero, Defendants–Appellees.

Opinion Number: 34,426

Court of Appeals of New Mexico.

Filing Date: July 28, 2016

Certiorari Denied, September 22, 2016, No. S-1-SC-36063

Johnson Law Firm, LC, Thomas L. Johnson, Albuquerque, NM, Rose L. Brand & Associates, P.C., Eraina M. Edwards, Albuquerque, NM, Houser & Allison, APC, Kerri L. Allensworth, Albuquerque, NM, for Appellant.

Daniel Yohalem, Santa Fe, NM, Katherine Murray, Santa Fe, NM, Santa Fe Neighborhood Law Center, Frederick M. Rowe, Santa Fe, NM, Joshua R. Simms, P.C., Joshua R. Simms, Albuquerque, NM, for Appellees.

OPINION

SUTIN, Judge.

{1} This is the second time this case has been appealed to this Court. The first appeal focused on whether the Bank of New York as Trustee for Popular Financial Services Mortgage/Pass Through Certificate Series #2006–D (the Bank) had standing to bring its foreclosure action against Joseph and Mary Romero (the Romeros). This Court's opinion affirming the district court's determination that the Bank had standing was appealed to the New Mexico Supreme Court. Our Supreme Court held that the Bank did not have standing at the time the complaint was filed and thus reversed this Court and the district court and “remand[ed] to the district court with instructions to vacate its foreclosure judgment and to dismiss the Bank['s] ... foreclosure action for lack of standing.” Bank of N.Y. v. Romero , 2014–NMSC–007, ¶ 1, 320 P.3d 1.

{2} Upon remand, the district court vacated the final judgment and dismissed the foreclosure action with prejudice. In this second appeal, the Bank challenges the designation of the district court's dismissal as being “with prejudice,” along with the district court's ruling that the Bank “is precluded from raising in the future the issue that it is entitled to enforce the Romeros' note and foreclose on the Romeros' mortgage.” We reverse and remand with instructions.

BACKGROUND

{3} On June 26, 2006, the Romeros executed and delivered to Equity One, Inc. an adjustable rate note (the Note) in the principal sum of $227,240. After the Romeros defaulted on the Note, the Bank, on April 1, 2008, filed a complaint for foreclosure. After a bench trial, the district court entered findings of fact and conclusions of law in favor of the Bank. On September 1, 2009, the district court entered its final judgment and order for foreclosure sale. The Romeros appealed the judgment and order. This Court issued an opinion affirming the district court. Bank of N.Y. v. Romero , 2011–NMCA–110, 150 N.M. 769, 266 P.3d 638, rev'd by 2014–NMSC–007, 320 P.3d 1.

{4} The Romeros petitioned for a writ of certiorari, our Supreme Court granted the petition, and the Court held that the Bank “did not establish its lawful standing in this case to file a home mortgage foreclosure action.” Romero , 2014–NMSC–007, ¶ 1, 320 P.3d 1. And the Court remanded to the district court “with instructions to vacate its foreclosure judgment and to dismiss the Bank ['s] ... foreclosure action for lack of standing.” Id.

{5} On remand, the Romeros filed a motion to vacate the final judgment and for other relief. The district court granted the Romeros' motion, vacated the foreclosure sale, and ordered the Bank to “pay all property taxes due on the property[,]” “remove ... liens, encumbrances[,] or charges” on the property, “promptly issue a quit claim deed conveying the property that was the subject of this foreclosure action back to [the Romeros,]” and repay any rental fees or monies paid to the Bank or their counsel. Thereafter, the Romeros filed a motion to dismiss the foreclosure with prejudice, arguing that the Supreme Court's opinion supported dismissal with prejudice and that “both res judicata and the statute of limitations bar any subsequent attempts to collect on the accelerated Romero note and accompanying mortgage.” The district court granted the motion and dismissed the foreclosure with prejudice.

{6} In its order granting the motion to dismiss and dismissing the foreclosure with prejudice, the district court stated, “it is the opinion of the [c]ourt that by reason of issue preclusion ... [the] Bank ... is precluded from raising in the future the issue that it is entitled to enforce the Romeros' note and foreclose on the Romeros' mortgage.” (Emphasis added.) The court then ordered that “the [c]omplaint for [f]oreclosure is dismissed with prejudice and the Bank ... cannot refile a complaint to enforce the Romeros' note and foreclose on the Romeros' mortgage.”

{7} On appeal, the Bank argues that the dismissal with prejudice and the district court's statement that the Bank “is precluded from raising in the future the issue that it is entitled to enforce the Romeros' note and foreclose on the Romeros' mortgage” were in error.

{8} Although the district court referred to “issue preclusion” as the basis for its dismissal with prejudice, we address the elements and merits of both issue and claim preclusion because (1) the district court appears to have merged the doctrines in its order when it dismissed the foreclosure claim with prejudice due to the Supreme Court's decision on the standing issue , and (2) the Romeros argued in district court and now argue on appeal that claim preclusion may also support dismissal with prejudice. As well, the Bank argues that the order is not supported under law of the case, claim preclusion, issue preclusion, or some “hybrid” between the two.

DISCUSSION

I. Law of the Case

{9} “Whether law of the case applies, as well as how it applies, are questions of law subject to de novo review.” State ex rel. King v. UU Bar Ranch Ltd. P'ship , 2009–NMSC–010, ¶ 20, 145 N.M. 769, 205 P.3d 816. “The doctrine of law of the case has long been recognized in New Mexico [.]” Ute Park Summer Homes Ass'n v. Maxwell Land Grant Co. , 1972–NMSC–018, ¶ 13, 83 N.M. 558, 494 P.2d 971. The law of the case doctrine “is a matter of precedent and policy; it is a determination that, in the interests of the parties and judicial economy, once a particular issue in a case is settled it should remain settled.” Trujillo v. City of Albuquerque , 1998–NMSC–031, ¶ 40, 125 N.M. 721, 965 P.2d 305 (internal quotation marks and citation omitted). Our Supreme Court has held that “a decision by an appeals court on an issue of law made in one stage of a lawsuit becomes binding on subsequent trial courts as well as subsequent appeals courts during the course of that litigation.” King , 2009–NMSC–010, ¶ 21, 145 N.M. 769, 205 P.3d 816. When there “is any doubt or ambiguity regarding the [appellate] mandate, the meaning of the [appellate] opinion governs.” Id. ¶ 22.

{10} The parties disagree as to whether law of the case based on the Supreme Court's opinion in Romero , 2014–NMSC–007, 320 P.3d 1, dictates a dismissal with prejudice. The Romeros argue that the Supreme Court's opinion “clearly demonstrates that the Supreme Court intended that the foreclosure be dismissed with prejudice.” They argue that the Supreme Court's statements regarding mootness of the claim and future foreclosure attempts under the Home Loan Protection Act (HLPA), NMSA 1978, §§ 58–21A–1 to –14 (2003, as amended through 2009), by whichever “institution may be able to establish standing to foreclose on the Romero home” clearly show that the Supreme Court meant to preclude the Bank from bringing future actions. Romero , 2014–NMSC–007, ¶ 39, 320 P.3d 1. Conversely, the Bank argues that the Supreme Court acknowledged its inability to reach the merits of the case and thus anticipated that a future action may be filed by any institution, including the Bank. See id. ¶¶ 15, 39. According to the Bank, because law of the case only applies to decisions on the merits, it should not apply, and a dismissal with prejudice is unsupported. The Bank points out that the Supreme Court was silent on whether the dismissal should be with or without prejudice, but argues that the reference to future attempts should be interpreted to mean that dismissal should be without prejudice. The Bank also argues that “changed circumstances” of fact or law have undermined the law of the case to such an extent that dismissing the case with prejudice would be unjust.

{11} We are not persuaded that there is clear law of the case that dictates that the Romero Court intended, one way or the other, that the dismissal be with or without prejudice. The Supreme Court expressed nothing from which any reasonable inference can be drawn to support either party's interpretation of the Court's intent. See id. ¶ 1 (“We ... remand to the district court with instructions to ... dismiss the Bank['s] ... foreclosure action for lack of standing.”). Due to the Romero Court's silence on the matter and the resulting ambiguity, we are unable to comfortably opine as to the Supreme Court's intent regarding the dismissal, and we therefore address the preclusion arguments made by both sides. However, before doing so, it is important to understand the connection between dismissals “with” or “without” prejudice and the preclusion principles. We begin by discussing the “with” and “without” designations that accompany dismissals and explain their impact on preclusion.

II. Dismissal With/Without Prejudice

{12} Claim and issue preclusion are doctrines that may arise when a lawsuit is filed by the same plaintiff against the same defendant after the same or similar lawsuit has previously been dismissed. See, e.g. , State ex rel. Peterson v. Aramark Corr. Servs., LLC , 2014–NMCA–036, ¶¶ 1–2, 9, 321 P.3d 128 (considering the applicability of claim and issue preclusion when a plaintiff, seeking damages because the defendant refused to provide him with a nutritionally adequate vegetarian diet, first filed a lawsuit for breach of duty, fraud, unfair practices, and violation of the New...