Deutsche Bank Nat'l Trust Co. v. Matthews

• Citation: 76 UCC Rep.Serv.2d 909,2012 OK 14,273 P.3d 43
• Decision Date: 28 February 2012
• Docket Number: No. 108,427.,108,427.
• Parties: DEUTSCHE BANK NATIONAL TRUST COMPANY, as trustee, Plaintiff/Appellee, v. Theron MATTHEWS, Defendant/Appellant,andChristina A. MATTHEWS; John Doe; Jane Doe; AVB f/k/a Arkansas Valley State Bank; and Chase Bank USA, N.A., Additional Defendants.
• Court: Supreme Court of Oklahoma

2012 OK 14

273 P.3d 43

76 UCC Rep.Serv.2d 909

DEUTSCHE BANK NATIONAL TRUST COMPANY, as trustee, Plaintiff/Appellee,

v.Theron MATTHEWS, Defendant/Appellant,andChristina A. MATTHEWS; John Doe; Jane Doe; AVB f/k/a Arkansas Valley State Bank; and Chase Bank USA, N.A., Additional Defendants.

No. 108,427.

Supreme Court of Oklahoma.

Feb. 28, 2012.

ON APPEAL FROM THE DISTRICT COURT OF CREEK COUNTY; LAWRENCE W. PARISH, DISTRICT JUDGE¶ 0 Appeal of a partial summary judgment granted in Deutsche Bank National Trust Company's favor against the Matthewses on August 20, 2009, memorialized by minute order. A Partial Journal Entry of Judgment was filed on May 26, 2010. The Matthews appeal this summary judgment arguing Deutsche Bank National Trust Company as Trustee for J.P. Morgan Mortgage Acquisition Trust 2007–CH3 failed to demonstrate standing.REVERSED AND REMANDED WITH INSTRUCTIONS

Theron T. Matthews, Pro Se, Mounds, Oklahoma, for Defendant/Appellant.

Sally E. Garrison, Baer, Timberlake, Coulson & Cates, P.C., Oklahoma City, Oklahoma, for Plaintiff/Appellee.

COMBS, J.

FACTUAL AND PROCURAL HISTORY

¶ 1 In a petition filed on January 14, 2009, Deutsche Bank National Trust company, as Trustee for J.P. Morgan Mortgage Acquisition Trust 2007–CH3 (hereinafter Deutsche Bank) filed a foreclosure action against Theron Matthews (Matthews). Deutsche Bank claimed at that time to hold the note and mortgage. Deutsche Bank claims the note and mortgage were indorsed in blank. However from the face of the note attached to the Petition, no such indorsement is found. Chase Bank USA, N.A., was the original lender. Deutsche Bank, filed on June 18, 2009, a document entitled “Assignment of Real Estate Mortgage,” dated June 9, 2009, with the County Clerk of Creek County. This was some six months after the filing of the foreclosure proceeding. A partial summary judgment granted in Deutsche Bank's favor against the Matthews on August 20, 2009, was memorialized by minute order. A Partial Journal Entry of Judgment was filed on May 26, 2010. The Matthewses appeal this summary judgment arguing Deutsche Bank failed to demonstrate standing.

STANDARD OF REVIEW

¶ 2 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, 1053. 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, 205.

ANALYSIS

¶ 3 Appellant argues Appellee does not have standing to bring this foreclosure action. The note attached to Deutsche Bank's motion for summary judgment, filed June 25, 2009, contained two allonges. These were not included with the note that was attached to its petition filed on January 14, 2009. Both allonges are dated January 9, 2007. The first allonge is a special indorsement made by the lender, Chase Bank USA, N.A., and is payable to Chase Home Finance, LLC. It is signed by A. Young, assistant secretary. The second allonge is a blank indorsement, made by Chase Home Finance, LLC, and is also signed by A. Young, assistant secretary. Deutsche Bank states in its motion for summary judgment that it brings this action in its capacity as the holder and owner of the note and mortgage at issue. However, in the same paragraph Deutsche Bank states it acquired Chase Bank USA, N.A.'s interest in the note and mortgage subsequent to the filing of this action. Deutsche Bank also attached an affidavit by an officer of Chase Home Finance, LLC, executed May 6, 2009. The officer merely states Deutsche Bank is the current holder of the note and mortgage.

¶ 4 The crux of the entire issue presented to this Court is the issue of standing. This Court has previously held:

Standing, as a jurisdictional question, may be correctly raised at any level of the judicial process or by the Court on its own motion. This Court has consistently held that standing to raise issues in a proceeding must be predicated on interest that is “direct, immediate and substantial.” Standing determines whether the person is the proper party to request adjudication of a certain issue and does not decide the issue itself. The key element is whether the party whose standing is challenged has sufficient interest or stake in the outcome.

Matter of the Estate of Doan, 1986 OK 15, ¶ 7, 727 P.2d 574, 576. In Hendrick v. Walters, 1993 OK 162, ¶ 4, 865 P.2d 1232, 1234, this Court also held:

Respondent challenges Petitioner's standing to bring the tendered issue. Standing refers to a person's legal right to seek relief in a judicial forum. It may be raised as an issue at any stage of the judicial process by any party or by the court sua sponte. (emphasis original)

Furthermore, in Fent v. Contingency Review Board, 2007 OK 27, footnote 19, 163 P.3d 512, 519, this Court stated “[s]tanding may be raised at any stage of the judicial process or by the court on its own motion.” Additionally in Fent, this Court stated:

Standing refers to a person's legal right to seek relief in a judicial forum. The three threshold criteria of standing are (1) a legally protected interest which must have been injured in fact- i.e., suffered an injury which is actual, concrete and not conjectural in nature, (2) a causal nexus between the injury and the complained-of conduct, and (3) a likelihood, as opposed to mere speculation, that the injury is capable of being redressed by a favorable court decision. The doctrine of standing ensures a party has a personal stake in the outcome of a case and the parties are truly adverse.

Fent v. Contingency Review Board, 2007 OK 27, ¶ 7, 163 P.3d 512, 519–520. In essence, a plaintiff who has not suffered an injury attributable to the defendant lacks standing to bring a suit. And, thus, “standing [must] be determined as of the commencement of suit.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 570, n. 5, 112 S.Ct. 2130, 2142, 119 L.Ed.2d 351 (1992).¹

¶ 5 To commence a foreclosure action in Oklahoma, a plaintiff must demonstrate it has a right to enforce the note and, absent a showing of ownership, the plaintiff lacks standing. Gill v. First Nat. Bank & Trust Co. of Oklahoma City, 1945 OK 181, 195 Okla. 607, 159 P.2d 717. ² An Assignment of the mortgage, however, is of no consequence because under Oklahoma law, “[p]roof of ownership of the note carried with it ownership of the mortgage security.” Engle v. Federal Nat. Mortg. Ass'n, 1956 OK 176, ¶ 7, 300 P.2d 997, 999. Therefore, in Oklahoma it is not possible to bifurcate the security interest from the note. BAC Home Loans Servicing, L.P. v. White, 2011 OK CIV APP 35, ¶ 10, 256 P.3d 1014, 1017. Because the note is a negotiable instrument, it is subject to the requirements of the UCC. Thus, a foreclosing entity has the burden of proving it is a “person entitled to enforce an instrument” by showing it was “(i) the holder of the instrument, (ii) a nonholder in possession of the instrument who has the rights of a holder, or (iii) a person not in possession of the instrument who is entitled to enforce the instrument pursuant to Section 12A–3–309 or subsection (d) of Section 12A–3–418 of this title.” 12A O.S.2001, § 3–301.

¶ 6 The note, in which the Matthews promised to pay a sum certain to the order of Lender, is a negotiable instrument pursuant to 12A O.S.2001 § 3–104(a). It may be indorsed specially to be payable to an identified person or it may be indorsed in blank to be payable to bearer. 12A O.S.2001, § 3–205(a) and (b) ³.

¶ 7 To show you are the “holder” of the note you must prove you are in possession of the note and the note is either “payable to bearer” (blank indorsement) or to an identified person that is the person in possession (special indorsement).⁴ Therefore, both possession of the note and an indorsement on the note or attached allonge are required in order for one to be a “holder” of the note.

¶ 8 To be a “nonholder in possession who has the rights of a holder” you must be in possession of a note that has not been indorsed either by special indorsement or blank indorsement. Basically, no negotiation has occurred because the person now in possession did not become a holder by lack of the note being indorsed as mentioned. Negotiation is the voluntary or involuntary transfer of an instrument by a person other than the issuer to a person who thereby becomes its holder. 12A O.S.2001, § 3–201. Transfer occurs when the instrument is delivered by a person other than its issuer for the purpose of giving to the person receiving delivery the right to enforce the instrument. 12A O.S.2001, § 3–203. Delivery of the note would still have to occur even though there is no negotiation. Delivery is defined as the voluntary transfer of possession. 12A O.S.2001, § 1–201(b)(15). The transferee would then be vested with any right of the transferor to enforce the note. 12A O.S.2001, § 3–203(b). Some jurisdictions have held without holder status and therefore the presumption of a right to enforce, the possessor of the note must demonstrate both the fact of the delivery and the purpose of the delivery of the note to the transferee in order to qualify as the person entitled to enforce. In re Veal, 450 B.R. 897, 912 (B.A.P. 9th Cir.2011). This would include showing the note was transferred for the purpose of giving to the person receiving delivery the right to enforce the instrument. 12A O.S.2001, § 3–203.

¶ 9 Here, Deutsche Bank is trying to show it is a “holder” of the note and not that it is a “nonholder in possession who has the rights of a holder.” If Deutsche was trying to establish it was a “nonholder in possession who has the rights of a holder” an Assignment of Real Estate Mortgage, like...