Barnes v. U.S. Bank National Association, 062620 ALCIV, 2180699

Docket Nº2180699
Opinion JudgeHANSON, JUDGE.
Party NameTerri Barnes v. U.S. Bank National Association, as trustee for NRZ Pass-Through Trust V
Judge PanelThompson, P.J., and Moore and Donaldson, JJ., concur. Edwards, J.
Case DateJune 26, 2020
CourtAlabama Court of Civil Appeals

Terri Barnes


U.S. Bank National Association, as trustee for NRZ Pass-Through Trust V

No. 2180699

Alabama Court of Civil Appeals

June 26, 2020

Appeal from Jefferson Circuit Court (CV-17-901127)


Terri Barnes appeals from a final judgment of the Jefferson Circuit Court entered in favor of U.S. Bank National Association ("U.S. Bank"), as trustee for NRZ Pass-Through Trust V, in an ejectment action arising from a mortgage foreclosure.1 Because we conclude that U.S. Bank's predecessors in interest, in contravention of Ex parte Turner, 254 So.3d 207 (Ala. 2017), failed to strictly comply with the notice provisions required in the 22d numbered paragraph ("paragraph 22") of the mortgage instrument executed by Barnes in order to effect foreclosure of the mortgage, we reverse.

In the trial court, the parties stipulated to the existence of a number of pertinent facts underlying the action. On December 11, 2002, Autrey Fletcher, who is now deceased, executed a note payable to Hometown Mortgage Services, Inc. ("HMS"), the repayment of which was secured by a mortgage on a parcel of property located in Birmingham; the mortgage instrument was signed by both Fletcher and Barnes as "Borrower[s]" in favor of HMS and its nominee Mortgage Electronic Registration Services, Inc. Paragraph 22 of the mortgage instrument, in pertinent part, specified that HMS, which was identified in the mortgage instrument as the "Lender," "shall give notice to Borrower [i.e., Fletcher and Barnes] prior to acceleration following Borrower's breach of any covenant or agreement" in the mortgage instrument. Under paragraph 22, the required notice was to include the following specifications: the default, actions required to cure the default, a date on or before which the default was to be cured, and a disclosure that failure to cure the default may result in acceleration of the due date of paying the outstanding balance owed. Paragraph 22 also stated that "[t]he notice shall further inform Borrower of the right to reinstate after acceleration and the right to bring a court action to assert the non-existence of a default or any other defense of Borrower to acceleration and sale" of the mortgaged property (emphasis added).

After Fletcher died in 2008, Barnes assumed all liability under the note and the mortgage, and in 2012 The Bank of New York Mellon Trust Company, National Association ("BONY"), as Trustee for RAMP 2003-RZ1, succeeded to HMS's rights as lender under the mortgage. After Barnes had defaulted on her obligation to make payments on the note secured by the mortgage on the subject property, a third-party loan servicer acting on behalf of BONY, i.e., Ocwen Loan Servicing, LLC ("Ocwen"), sent a notice of default to Barnes on October 28, 2016. In pertinent part, Ocwen's notice of default disclosed that Barnes owed a total of $834.34 in past-due sums; informed her that failure to pay such sums on or before December 3, 2016, could result in an election to accelerate repayment of the full balance of the note, collection from Barnes of expenses incident to foreclosure, and exercise of the power of sale provided in the mortgage instrument; and contained the following additional pertinent statement: "You may have the right to assert in court the non-existence of a default or any other defense to acceleration or foreclosure." In January 2017, Barnes was sent a notice of acceleration and, thereafter, a notice of foreclosure sale by BONY's counsel, and three newspaper advertisements were placed in a newspaper of general circulation in Jefferson County informing of the upcoming foreclosure sale.

On February 22, 2017, BONY was issued a foreclosure deed to the property after placing the highest bid for the property at a public auction. Thereafter, on March 2, 2017, counsel for BONY sent Barnes a notice to vacate the property; because Barnes did not vacate the property in response to that notice, BONY commenced the ejectment action on March 21, 2017, naming Barnes as a defendant and seeking both possession of the property and damages.[2] Barnes, acting through counsel, answered the complaint, admitting that a foreclosure sale had occurred; however, Barnes's answer "denie[d] that [BONY had] lawfully foreclosed her interest in the property and demand[ed] strict proof thereof."

BONY moved for the entry of a summary judgment in its favor on its ejectment claim, to which Barnes filed a response asserting that the notice of default ocwen sent to her was not in strict compliance with paragraph 22 and that, therefore, the foreclosure sale was void; the trial court denied the summary-judgment motion. The parties then filed trial briefs, with BONY asserting that Barnes had waived "all affirmative defenses" to BONY's claim such that her defense based upon paragraph 22 should be rejected, that Barnes did not rely on any alleged deficiencies in the notice of default in her answer, that Barnes did not comply with provisions in the mortgage instrument relating to grievances, and that the notice of default Ocwen sent to Barnes was in strict compliance with paragraph 22. Barnes filed a brief asserting that she had sufficiently injected the defense of illegality of the foreclosure sale into the action and reiterating her contention that paragraph 22 had not been strictly complied with; she subsequently sought a summary judgment in her favor on the issue of the voidness of the foreclosure sale. Thereafter, the parties entered into their joint stipulation of facts, in which it was agreed that BONY had conveyed its interests in the property to U.S. Bank, and stipulated to the presence of five legal issues in the case: (1) whether Barnes properly asserted or had waived affirmative defenses; (2) whether the filing of Barnes's answer required that a prima facie case be proved; (3) whether Barnes's failure to specifically plead failure of a condition precedent was excused by the absence of an averment in the complaint that all conditions precedent had been fulfilled; (4) whether the notice of default sent to Barnes satisfied the requirements of paragraph 22; and (5) whether a prima facie case for ejectment had been proved.

On January 9, 2019, the trial court entered a final judgment, and it amended that judgment on its own motion two days later. In its judgment, as amended, the trial court made factual findings in conformity with the parties' factual stipulations and reached the following legal conclusions: (1) that U.S. Bank had proved all the elements set forth in Steele v. Federal National Mortgage Ass'n, 69 So.3d 89, 92 (Ala. 2010), to establish a prima facie case of entitlement to a judgment in ejectment; (2) that Barnes's assertion of the illegality of the foreclosure sale upon which U.S. Bank's right of possession rested was a sufficient invocation of an affirmative defense under Rule 8(c), Ala. R. Civ. P.; and (3) that the notice of default sent to Barnes "strictly complied" with paragraph 22 because the notice had "informed [Barnes] ... of ... her right to assert non-existence of default and other defenses in court" so as to...

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