Johnson v. Nationstar Mortg., LLC

• Decision Date: 22 September 2015
• Docket Number: WD 78179
• Citation: 470 S.W.3d 754
• Parties: Jillian Johnson, Appellant, v. Nationstar Mortgage, LLC, et al., Respondents.
• Court: Missouri Court of Appeals

470 S.W.3d 754

Jillian Johnson, Appellant

v.Nationstar Mortgage, LLC, et al., Respondents.

WD 78179

Missouri Court of Appeals, Western District.

OPINION FILED: SEPTEMBER 22, 2015

Benjamin Mann, Christopher Miles, Kansas City, MO, Counsel for Appellant.

George Kapke, Lee's Summit, MO, Counsel for Respondents.

Before Division Three: Karen King Mitchell, P.J., Lisa White Hardwick, and Anthony Rex Gabbert, JJ.

Opinion

Anthony Rex Gabbert, Judge

Jillian Johnson appeals the trial court's grant of summary judgment in favor of Nationstar Mortgage, LLC (“Nationstar”) and U.S. Bank, National Association, as Trustee for the holders of the CSFB Mortgage Securities Corp., Adjustable Rate Mortgage Trust 2005–8, Adjustable Rate Mortgage–Backed Pass–Through Certificates, Series 2005–8 (“U.S. Bank”) (collectively, “Respondents”). Johnson's amended petition sought declaratory judgment quieting title to the property legally described as 3217 Charlotte Street in Kansas City, Missouri. Respondents filed a motion for summary judgment and the trial court granted their motion.

On appeal, Johnson asserts that the trial court erred in sustaining Respondents' summary judgment motion because there were substantial disputes of material fact on the issue of the proper party to the Note and Deed of Trust signed by Johnson and the security interest in her home. Johnson maintains that a trial on the merits is necessary to determine those disputed facts and the actual party in interest to the security in her home. We affirm.

Factual Background

On May 23, 2005, Jillian Johnson obtained a mortgage loan in the amount of $140,400.00 from America's Wholesale Lender, as evidenced by a promissory note (“Note”). The Note was executed in favor of “America's Wholesale Lender” and was subsequently endorsed in blank by “Countrywide Home Loans, Inc., a New York Corporation Doing Business as America's Wholesale Lender, by David A. Spector, Managing Director” (“Countrywide” or “Countrywide d/b/a America's Wholesale Lender”). The Note was secured by a Deed of Trust (“Deed”) on the property, which Johnson executed in favor of America's Wholesale Lender on the same day. In 1996 and 2010, Countrywide registered “America's Wholesale Lender” as its fictitious trade name with the Missouri Secretary of State.

Possession of the Note and Deed was transferred to various parties through a series of transactions occurring between 2005 and 2013. The instruments—originally held by Countrywide d/b/a America's Wholesale Lender—eventually came into the possession of Respondents. Similarly, the servicing rights to the loan were transferred between several parties over this time period, ultimately coming into Respondents' possession.¹ Johnson defaulted on her loan in late 2012 and Respondent Nationstar instituted foreclosure proceedings against her. On October 21, 2013, Nationstar sold the property secured by the Deed for $97,859.03, leaving an amount due and owing of $49,434.95.

On November 20, 2013, Johnson filed suit for declaratory judgment quieting title to the property against a number of other parties, including Respondents. Johnson argued that Respondents did not have the authority to foreclose upon her home because they did not take lawful possession of the Note and Deed from the purported lender, an entity named “America's Wholesale Lender, Inc. ” Johnson's argument was premised upon the fact that the “Lender” designated in the security instruments was identified by varying names, which Johnson argued created an ambiguity as to the identity of the original holder of the Note. Accordingly, she argued that Countrywide d/b/a America's Wholesale Lender was not the original holder of the security interest in her home and it could not legally transfer possession of a security interest to Respondents. Instead, Johnson argued that another company, America's Wholesale Lender, Inc., was the actual party to the Note and Deed and only this entity could legally assign a security interest to Respondents.

Respondents filed a motion for summary judgment, arguing that they were entitled to foreclose upon Johnson's property because they took lawful possession of the Note and Deed through a valid chain of transfers originating with the unambiguous “Lender” identified therein: Countrywide d/b/a America's Wholesale Lender. The trial court granted Respondents' motion, finding there to be no ambiguity regarding the identity of the original “Lender” in the Note and Deed. The court determined that the language used within the four comers of the Note, as viewed in conjunction with all non-disputed material facts, expressed no doubt that Countrywide was the actual party to the Note and not America's Wholesale Lender, Inc. Thus, the trial court held that Respondents took lawful possession of the Note and Deed and had the authority to foreclose upon Johnson's home under the terms of the Note. The trial court also found that Nationstar was entitled to its fair and reasonable attorney's fees in the amount of $12,973.50 incurred in pursuit of the action.

Standard of Review

We review the trial court's grant of summary judgment de novo. ITT Commercial Fin. Corp. v. Mid–Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). We affirm a grant of summary judgment only if the movant is entitled to judgment as a matter of law and no genuine issues of material fact exist. Id. at 377. Where the movant is a defending party, the movant may establish a right to summary judgment by showing

(1) facts that negate any one of the claimant's elements facts, (2) that the non-movant, after an adequate period of discovery, has not been able to produce, and will not be able to produce, evidence sufficient to allow the trier of fact to find the existence of any one of the claimant's elements, or (3) that there is no genuine dispute as to the existence of each of the facts necessary to support the movant's properly-pleaded affirmative defense.

Id. at 381. We review the record in the light most favorable to the party against whom judgment was entered, according her the benefit of all reasonable inferences that may be drawn from the record. Id. at 376.

Analysis

In her sole point on appeal, Johnson argues that the trial court erred in finding there to be no ambiguity regarding the identity of the actual party to her Note. Specifically, she contends that the Note's reference to “America's Wholesale Lender, a Corporation organized and existing under the laws of New York” identifies the “Lender” (and, therefore, the original holder of the Note) as an entity named “America's Wholesale Lender, Inc. ” and not “America's Wholesale Lender” (or, more precisely, not “Countrywide Home Loans, Inc.,” an entity using the fictitious trade name of “America's Wholesale Lender”). We disagree and find the trial court's conclusions to be correct in light of all non-disputed material facts.

The main question in this case is whether the 2005 Note and Deed executed by Johnson conveyed a valid security interest in the Charlotte Street property to Countrywide d/b/a America's Wholesale Lender, thereby making Countrywide the original holder of these instruments. If Countrywide was the original, valid holder of these instruments, it had legal authority to pass lawful title to subsequent holders, including Respondents.

To answer this question, we must first determine who the original parties intended to be the holder of the instruments “by looking at the words of the contract and giving those words their plain, ordinary, and usual meaning.” Ethridge v. TierOne Bank, 226 S.W.3d 127, 131 (Mo. banc 2007). We determine this intent based upon the contract language alone unless its terms are ambiguous. Id. We must also construe the Note and Deed together because, under Missouri law, “the note and deed of trust are inseparable [.]” Fed. Nat. Mortg. Ass'n v. Conover, 428 S.W.3d 661, 669 (Mo. App. W.D. 2014). Thus, where the parties to a note “contemporaneously execute another written contract, such as a deed of trust, which is connected with the note by direct reference or by necessary implication, the two instruments should be considered together as the entire contract.” Id. at 667 (internal quotation omitted).

Here, the Note executed by Johnson on May 23, 2005 explicitly defines “Lender” as America's Wholesale Lender. “America's Wholesale Lender” is a fictitious trade name of Countrywide, as evidenced by its 1996 and 2010 filings with the Missouri Secretary of State. The Note was subsequently endorsed in blank by “Countrywide Home Loans, Inc., a New York Corporation Doing Business as America's Wholesale Lender.” The Deed executed by Johnson on the same day explicitly defines “Lender” as “America's Wholesale Lender ... a corporation organized and existing under the laws of New York,” and the Deed's record of filing defines “Grantee” as America's Wholesale Lender. Although the titles used to denote the holders of these instruments are not identical, we do not find that this creates an ambiguity when we construe the Note and Deed together, along with all undisputed material facts.

I. The Note is Not Ambiguous

First, we find that the plain language of the Note and accompanying endorsement- in-blank unambiguously identifies America's Wholesale Lender (or, alternatively, Countrywide d/b/a America's Wholesale Lender) as the valid and authorized original holder of the Note. Accordingly, Countrywide was lawfully entitled to negotiate the Note to Respondents by transfer of possession.

Under Missouri law, Respondents are entitled to enforce the Note as a negotiable instrument if they are the holders of the instrument. See RSMo § 400.3–301 (defining “person entitled to enforce”); RSMo § 400.3–104(a) –(b) (defining “negotiable instrument” and “instrument”).² A “holder” means the person in possession of the instrument if the instrument is payable to bearer. RSMo § 400.1–201(20). An instrument is “payable to bearer” if it does not state a payee. RSMo § 400.3–109(a)(2). The holder of an...