Berry v. Deutsche Bank Nat'l Trust Co.

Decision Date27 August 2010
Docket Number2080840.
Citation57 So.3d 142
PartiesStephanie BERRY and Eva Berryv.DEUTSCHE BANK NATIONAL TRUST COMPANY, as trustee for Long Beach Mortgage Loan Trust 2003–1.
CourtAlabama Court of Civil Appeals

OPINION TEXT STARTS HERE

Kenneth James Lay, Legal Services Alabama, Inc., Birmingham, for appellants.Gregory M. Deitsch, R. Ryan Daugherty, and Meaghan E. Ryan of Sirote & Permutt, P.C., Birmingham, for appellee.

On Application for Rehearing

BRYAN, Judge.

The opinion of May 14, 2010, is withdrawn, and the following is substituted therefor.

Stephanie Berry and Eva Berry appeal from a summary judgment in favor of Deutsche Bank National Trust Company, as trustee for Long Beach Mortgage Loan Trust 2003–1 (Deutsche Bank), in Deutsche Bank's ejectment action against them. We reverse and remand.

On October 15, 2002, Stephanie borrowed $48,450 from Long Beach Mortgage Company (“Long Beach”) and executed a variable-rate promissory note (“the note”) in which she promised to repay the loan with interest. Contemporaneously, Stephanie and her grandmother, Eva, executed (1) a mortgage (“the mortgage”) in favor of Long Beach on a parcel of real property they owned in Birmingham (“the property”) and (2) an instrument titled “Fixed/Adjustable Rate Rider” (“the rate rider”).

On July 24, 2008, Deutsche Bank sued Stephanie and Eva, stating a claim of ejectment. As the factual basis of its claim, Deutsche Bank alleged that it had foreclosed the mortgage on June 19, 2008, that it had purchased the property at the foreclosure sale, that it had served Stephanie and Eva with a written demand for possession of the property, and that Stephanie and Eva had not vacated the property. As relief, Deutsche Bank sought possession of the property and damages for Stephanie and Eva's failure to vacate the property. In addition, Deutsche Bank sought a determination that Stephanie and Eva had forfeited their right to redeem the property by failing to vacate the property within 10 days after receiving Deutsche Bank's written demand for possession.

Answering, Stephanie and Eva denied the allegations of the complaint and asserted, as an affirmative defense, that Deutsche Bank was not entitled to prevail on its ejectment claim because, Stephanie and Eva said, it did not own title to the property because, Stephanie and Eva said, the foreclosure of the mortgage upon which Deutsche Bank based its claim of title was invalid.

On September 29, 2008, Deutsche Bank moved the trial court for a summary judgment on the ground that it was entitled to possession of the property by virtue of its foreclosing the mortgage. In support of its motion, Deutsche Bank submitted, among other things, authenticated copies of the foreclosure deed conveying title to the property to Deutsche Bank and a June 25, 2008, letter addressed to Stephanie and Eva demanding possession of the property. Deutsche Bank also submitted evidence establishing that Stephanie and Eva had not vacated the property.

Stephanie and Eva moved the trial court to grant them time to conduct discovery before responding to the summary-judgment motion, and the trial court did so. On December 3, 2008, Deutsche Bank filed additional evidence in support of its summary-judgment motion. That evidence included authenticated copies of the note; the mortgage; the rate rider; and letters giving Stephanie and Eva notice of default, notice of their right to cure the default within 30 days, notice of acceleration of the sums due under the mortgage, and notice of the foreclosure sale.

On December 17, 2008, Stephanie and Eva filed a response to Deutsche Bank's summary-judgment motion. In their response, Stephanie and Eva asserted, among other things, that Deutsche Bank was not entitled to a summary judgment because, they said, the foreclosure upon which Deutsche Bank based its ejectment claim was invalid because, they said, Deutsche Bank had breached the fiduciary duty it owed Stephanie and Eva by purchasing the property at the foreclosure sale for $33,915 when the market value of the property was $84,800 according to the Jefferson County tax assessor. In support of this argument, Stephanie and Eva submitted an affidavit made by Eva in which she attested that the Jefferson County tax assessor had determined that the market value of the property in 2008 was $84,800. On January 9, 2009, Deutsche Bank moved the trial court to “to strike any testimony in [Stephanie and Eva's] affidavits testifying to the value of the property” on the ground that Stephanie and Eva had “failed to submit any admissible evidence relevant to the value of the property at the time of the foreclosure sale.” Also on January 9, 2009, Stephanie and Eva filed an unauthenticated copy of the 2008 tax notice on the property prepared by the Jefferson County tax collector (“the 2008 tax notice”), which listed the market value of the property as $84,800, and an unauthenticated copy of a document purporting to be an estimate of the value of property prepared by Zillow.com, which estimated the market value of the property to be $86,500. Deutsche Bank did not move to strike the unauthenticated copy of the 2008 tax notice or the unauthenticated copy of the Zillow.com estimate.

On March 6, 2009, the trial court entered a judgment in favor of Deutsche Bank. The judgment stated:

“Pending is a Motion for Summary Judgment filed by the plaintiff Deutsche Bank National Trust Company, in an ejectment action on property ... where defendants Stephanie Denise Berry and Eva Mae Berry currently reside. [Deutsche Bank] filed in support of its motion the following evidence: an affidavit of Marianne Petrocelli (manager for Nationwide REO Brokers, Inc., an agent for Washington Mutual Banks, as servicing agent for Owner of Record, Deutsche Bank National Trust Company); the foreclosure deed of said property; and a letter to all occupants of the property demanding possession. In opposing [Deutsche Bank's] motion, [Stephanie and Eva] contend that because of wrongful foreclosure proceedings, [Deutsche Bank] is without legal title to the property and [Deutsche Bank's] motion is thus due to be denied.

“A prima facie showing in an ejectment action requires the plaintiff to provide substantial evidence that it has legal title to the property when the complaint was filed and a right to immediate possession. Muller v. Seeds, 919 So.2d 1174, 1177 (Ala.2005). [Deutsche Bank] has provided the Court with prima facie evidence by filing a true and correct copy of the foreclosure deed and a demand for possession letter. The burden therefore shifts to [Stephanie and Eva] to produce substantial evidence that there was a wrongful foreclosure and consequently that [Deutsche Bank] should be estopped from contending [that it has] good title to the property.

[Stephanie and Eva] offer a number of arguments that the foreclosure proceedings were wrongful. Finding most of the arguments meritless, the Court addresses in detail only [their] contention that the foreclosure sale was improper because [Deutsche Bank] breached its duty of good faith and fairness to the mortgagor by selling the property to itself for a price ‘well below the market value.’ [Stephanie and Eva's] brief at page 6. [Stephanie and Eva] cite the general rule in Mt. Carmel Estates v. Regions Bank, 853 So.2d 160 (Ala.2002) that ‘where the price realized at the [foreclosure] sale is so inadequate as to shock the conscience, it may itself raise a presumption of fraud, trickery, unfairness, or culpable mismanagement, and therefore be sufficient ground for setting the foreclosure sale aside.’ Id. In other words, [Stephanie and Eva] claim that the purchase price paid by the bank of $33,915.00 at the foreclosure sale was so inadequate as to ‘shock the conscience’ and is therefore grounds for setting aside the foreclosure sale and deed.

“In support of this argument, [Stephanie and Eva] provided the Court with a copy of their 2008 Jefferson County Tax Notice, wherein the market value of the property at issue was stated to be $84,800.00. [Stephanie and Eva] also filed what appears to be an online appraisal of $86,500.00 from Zillow.com, which presumably bases its assessment on comparable sales of similar properties in the surrounding area. If the Court were to assume, arguendo, that the tax notice market value and Zillow.com appraisal are accurate, then the foreclosure sale yielded less than 40% of the market value. Moreover, the bid price created a 30% deficiency of $13,599.00 on the debt secured by the property.

“A review of case law suggests that the Court can compare the purchase price at the foreclosure sale to the ‘fair market value’ in order to determine if the price was inadequate. There is no doubt that the above-mentioned numbers could ‘shock the conscience.’ The Court, however, must consider whether the suggested market value of the property put forth by [Stephanie and Eva] authoritatively proves the ‘fair market value’ of the property at the time of the foreclosure sale. The Court concludes that such evidence is insufficient. First, evidence was not provided by [Stephanie and Eva] explaining or verifying the method used by the tax assessor's office or Zillow.com to determine the suggested values. Does it include factors such as the size of the home or the number of rooms, or is it based exclusively on sales of properties immediately surrounding the property at issue?

“But even more troubling is the lack of information regarding the condition of the property at the time of the sale. [Stephanie and Eva] failed to provide the Court with either pictures or an affidavit of the condition of the property at that time. What if it was in a state of disrepair? [Stephanie and Eva] could not then reasonably contend that its fair market value would be the same as if it were in top condition.

“There are many factors that the Court must consider when determining a property's fair market value. In doing so, the Court must require more evidence than a copy of...

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