Flagstar Bank, FSB v. Licha

• Decision Date: 04 June 2015
• Docket Number: 33,150.
• Citation: 356 P.3d 1102
• Parties: FLAGSTAR BANK, FSB, Plaintiff–Appellee, v. Jonathan K. LICHA, and Pamela S. MacKenzie–Licha, husband and wife; et al., Defendants–Appellants.
• Court: Court of Appeals of New Mexico

356 P.3d 1102

FLAGSTAR BANK, FSB, Plaintiff–Appellee

v.Jonathan K. LICHA, and Pamela S. MacKenzie–Licha, husband and wife; et al., Defendants–Appellants.

33,150.

Court of Appeals of New Mexico.

June 4, 2015.

Sutin, Thayer & Browne, P.C., Michelle K. Ostrye, Justin R. Sawyer, Albuquerque, NM, for Appellee.

Eric Ortiz Law, Eric N. Ortiz, Joseph C. Gonzales, Jean Y. Chu, Albuquerque, NM, for Appellants.

OPINION

GARCIA, Judge.

{1} We have now considered and partially grant Defendants' motion for rehearing. As a result, we withdraw our opinion filed on February 18, 2015, and substitute the following in its place. Defendants Jonathan K. Licha and Pamela S. MacKenzie–Licha (the Lichas), appeal the district court's order granting summary judgment for foreclosure in favor of Plaintiff Flagstar Bank, FSB (Flagstar). The Lichas primarily assert on appeal that issues of fact concerning Flagstar's standing to enforce the note and mortgage precluded summary judgment. We disagree with the Lichas and affirm.

BACKGROUND

A. The Loan and the District Court Proceedings

{2} On March 4, 2009, the Lichas executed a promissory note to Lending Solutions, Inc. (Lending Solutions) to borrow $181,878. As security for the loan, the Lichas signed a mortgage contract with Mortgage Electronic Registration Systems, Inc. (MERS), as the nominee for Lending Solutions. On July 18, 2011, Flagstar filed a foreclosure complaint against the Lichas, alleging that Flagstar was the current holder of the note and the mortgage and that the Lichas were in default. The copy of the note that Flagstar attached to its complaint contained an indorsement signed by Ryan P. Tally, vice president of Lending Solutions, along with the words, “PAY TO ORDER OF: FLAGSTAR BANK, FSB WITHOUT RECOURSE.” Flagstar also attached to its complaint a copy of the mortgage with MERS and a copy of a mortgage assignment from MERS to Flagstar dated April 29, 2011.

{3} The Lichas filed a pro se motion asking the district court to dismiss the complaint on the basis that the complaint had failed to state a claim upon which relief could be granted. The district court summarily denied the motion. Flagstar filed a motion for summary judgment, which it later withdrew to give the Lichas opportunity to answer the complaint. The Lichas then retained counsel, who filed an answer to the complaint on their behalf. The answer asserted, among other things, that Flagstar lacked standing to bring the complaint because it was not “the holder in due course” and because it was “not the contractual party with respect to the transaction.”

{4} Flagstar renewed its summary judgment motion, asserting that it was “entitled to enforce the [n]ote and [m]ortgage” because the note and mortgage were “transferred and assigned to [Flagstar].” In support of this assertion, Flagstar referred to a copy of the MERS assignment that it had attached to its complaint and it attached an affidavit of Lisa Jones, an employee of Flagstar. In her affidavit, Ms. Jones stated that “[t]he original [n]ote is maintained in a vault at Flagstar[,]” that “Flagstar's vault document management system” indicates “that Flagstar held possession of the original [n]ote when it commenced the instant foreclosure action,” that Flagstar continues to “hold [ ] possession of the original [n]ote[,]” and that she “reviewed the copy of the [n]ote ... and ha[s] confirmed that it is a true and correct copy of the original [n]ote that is maintained at Flagstar.” Attached to this affidavit were copies of the note containing the indorsement to Flagstar, the mortgage, and the MERS assignment, which appear to be identical to the documents that Flagstar attached to its complaint.

{5} In response to Flagstar's renewed summary judgment motion, the Lichas made four arguments relevant to this appeal. Their first argument concerned Flagstar's standing to foreclose. They argued that there were factual disputes about whether Lending Solutions authorized MERS to assign the mortgage to Flagstar, whether Flagstar gave any consideration for the assignment of the note and mortgage, and whether Flagstar was the current owner of the mortgage. In support of their assertion that Flagstar was not the owner of the mortgage, the Lichas submitted an affidavit of Vanessa DeNiro, an attorney who performed a “loan audit” for the Lichas. Ms. DeNiro stated in her affidavit that, based on her research, Ginnie Mae was the owner of the mortgage loan. Her affidavit also contained numerous legal arguments and conclusions of law.

{6} Second, the Lichas argued that they should have been afforded an opportunity to conduct additional discovery on the issue of whether Flagstar had standing to foreclose. Third, they argued that the district court should sanction Flagstar for “bad faith discovery tactics” because it stated in its responses to the Lichas' interrogatories that the “subject loan” was “owned by Flagstar” when the “true owner is [Ginnie Mae].” Fourth, they argued that “there was a potential violation of [the] Home Loan Protection Act.”

{7} In its reply, Flagstar moved to strike the DeNiro affidavit because, among other reasons, the affidavit contained statements that were “inadmissible hearsay, violate the best evidence rule[,] or are inadmissible legal conclusions.” Flagstar argued that the Lichas did not have standing to challenge the consideration paid for the assignment of the mortgage to Flagstar. Flagstar also attached an affidavit and an exhibit to its reply showing an undated endorsement in blank by Flagstar on the back of the note.

{8} Without holding a hearing, the district court entered an order granting summary judgment in favor of Flagstar, in which it concluded that Flagstar was entitled to enforce the note and mortgage. In the same order, it struck the DeNiro affidavit and denied the Lichas' request for additional discovery, but it did not discuss the reasons for these decisions. It later denied the Lichas' motion to reconsider.

B. Arguments on Appeal

{9} All but one of the arguments set forth in the Lichas' brief in chief were preserved in the district court. The unpreserved argument asserts that the Jones affidavit attached to Flagstar's summary judgment motion did not show that Ms. Jones had “personal knowledge” concerning her statement that Flagstar possessed the original note on the date it filed for foreclosure because she relied on Flagstar's computer system for this information. Flagstar correctly counters that the Lichas did not raise this argument in the district court. Thus, we do not address this issue because the Lichas do not argue, and we do not find, that we should apply the public interest exception to the rule that appellate courts do not address unpreserved arguments. See Rule 12–216 NMRA ; O'Neel v. USAA Ins. Co., 2002–NMCA–028, ¶ 32, 131 N.M. 630, 41 P.3d 356 (declining to consider unpreserved arguments on appeal where there was no basis to apply the general public interest exception).

{10} The five preserved arguments that the Lichas renew in their brief in chief are whether: (1) There were disputed issues of material fact regarding whether Flagstar was the holder of the note and the mortgage; (2) The Lichas have standing to challenge the validity of the assignment of the note and mortgage; (3) The DeNiro affidavit should not have been stricken; (4) The district court should have allowed the Lichas more time to conduct additional discovery; and (5) The district court should have held a hearing before it decided to strike the DeNiro affidavit, deny the Lichas' request for bad faith discovery sanctions against Flagstar, and grant summary judgment in favor of Flagstar.

{11} The Lichas did not renew various other issues in their brief in chief that they raised in the district court. However, because Flagstar raises two of these additional issues in its answer brief and the Lichas address them in their reply brief, we shall discuss them in this opinion. See Brashear v. Packers, 1994–NMSC–108, ¶ 7, 118 N.M. 581, 883 P.2d 1278 (“[I]f an appellee raises an argument not addressed by the appellant in its opening brief, the appellant may reply.” (alteration, internal quotation marks, and citation omitted)). These two additional issues are whether MERS was authorized to assign the mortgage to Flagstar and whether the Lichas' contention that the original lender “may have” violated the Home Loan Protection Act precludes summary judgment in favor of Flagstar.

DISCUSSION

A. Standard of Review

{12} We review a district court's order granting summary judgment de novo.

Summers v. Ardent Health Servs., L.L.C., 2011–NMSC–017, ¶ 10, 150 N.M. 123, 257 P.3d 943. “Summary judgment is appropriate where there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law.” Montgomery v. Lomos Altos, Inc., 2007–NMSC–002, ¶ 16, 141 N.M. 21, 150 P.3d 971 (internal quotation marks and citation omitted). “On review, we examine the whole record for any evidence that places a genuine issue of material fact in dispute, and we view the facts in a light most favorable to the party opposing the motion and draw all reasonable inferences in support of a trial on the merits[.]” Handmaker v. Henney, 1999–NMSC–043, ¶ 18, 128 N.M. 328, 992 P.2d 879 (internal quotation marks and citation omitted). The party moving for summary judgment has the burden “to establish that no genuine issue of material fact exists for trial and that the movant is entitled to judgment as a matter of law.” C & H Constr. & Paving Co. v. Citizens Bank, 1979–NMCA–077, ¶ 9, 93 N.M. 150, 597 P.2d 1190. However, “[t]he party opposing a motion for summary judgment cannot defeat the motion ... by the bare contention that an issue of fact exists, but must show that evidence is available which would justify a trial of the issue.” Spears v. Canon de Carnue Land Grant, 1969–NMSC–163, ¶ 12, 80 N.M. 766, 461 P.2d 415 ; see Guest v. Berardinelli, 2008–NMCA–144, ¶ 35, 145 N.M. 186, 195 P.3d 353 (“General assertions...