McCulley v. Countrywide Homes Loans, Inc., Civil Action No. 12-0359-CG-C

• Court: U.S. District Court — Southern District of Alabama
• Writing for the Court: Callie V. S. Granade
• Decision Date: 21 June 2013
• Docket Number: Civil Action No. 12-0359-CG-C
• Citation: McCulley v. Countrywide Homes Loans, Inc., Civil Action No. 12-0359-CG-C (S.D. Ala. Jun 21, 2013)
• Parties: HENRY MCCULLEY, pro se, Plaintiff, v. COUNTRYWIDE HOMES LOANS, INC., et al., Defendants.

HENRY MCCULLEY, pro se, Plaintiff,

v.COUNTRYWIDE HOMES LOANS, INC., et al., Defendants.

Civil Action No. 12-0359-CG-C

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION

DONE: June 21, 2013

MEMORANDUM OPINION AND ORDER

This matter is before the court on the motion for summary judgment filed by the defendants (Doc. 26), Bank of America, N.A. ("BANA");¹ CWALT, Inc.; CWALT, Inc., Alternative Loan Trust 2007-21CB ("CWALT"); The Bank of New York ("BoNY"); and Mortgage Electronic Registration Systems ("MERS") (collectively, the "defendants"). Also before the court is the plaintiff Henry McCulley's ("McCulley") opposition to summary judgment (Doc. 34), and the defendants' reply (Doc. 35). For the reasons stated below, the defendants' motion is due to be GRANTED.

FACTS

On June 27, 2007, McCulley executed and delivered to Countrywide Home Loans, Inc. ("Countrywide") a promissory note ("Note") in the principal amount of $347,150.00. (Doc. 26-1). Contemporaneously, McCulley secured the note by a Deed of Trust and granted a mortgage interest ("Mortgage") inthe property to the defendant MERS, as nominee for Countrywide. (Doc. 26-2). The Deed of Trust was recorded July 24, 2007 in Instrument Number 1063998 in the Probate Court of Baldwin County, Alabama. (Doc. 26-2 at 2).

Countrywide indorsed the Note in blank and transferred certain mortgage loans to Countrywide Home Loans Servicing, LP. (Doc. 26-5, ¶ 3). On April 27, 2009, Countrywide Home Loan Servicing, LP changed its name to BAC Home Loan Servicing, LP. Id. The defendant BANA is the successor by merger to BAC Home Loan Servicing, LP, effective July 1, 2011. Id. The net result of these events is that BANA is the current holder of the original Note. Id. As to the Mortgage, MERS assigned its interest to BANA on August 1, 2011. (Doc. 26-3). Thus, BANA presently possesses the Mortgage as well as the Note.

McCulley later defaulted on the Note. (Doc. 26-5, ¶ 5). Despite demand for payment, McCulley refused to honor his obligations under the Note. Id. BANA attempted to work with McCulley to allow him an opportunity to apply for loan modification, but he failed to provide the requested financial documents. Id.

As of February, 2013, McCulley was nineteen months delinquent on his mortgage payments. (Doc. 26-5, ¶ 5). He made his last payment on or about April 11, 2011. (Doc. 26-5, ¶ 6). At this time, BANA has not foreclosed on McCulley's property. (Doc. 26-5, ¶ 7).

McCulley filed his pro se complaint on May 30, 2012 claiming (1) thatnone of the defendants has the right to foreclose on his property; (2) that the defendants fraudulently claimed they were entitled to receive mortgage payments from the plaintiff; (3) a claim to quiet title; (4) a request for declaratory relief; (5) that defendants violated the Real Estate Settlement Procedures Act ("RESPA"); and (6) that the defendants violated the Truth in Lending Act ("TILA"). (Doc. 1).

On March 6, 2013, the defendants moved for summary judgment as to all of McCulley's claims. (Doc. 26). McCulley opposes summary judgment, arguing that none of the defendants possess an enforceable interest in the property. (Doc. 34).

DISCUSSION

A. Summary Judgment Standard

Federal Rule of Civil Procedure 56(c) provides that summary judgment shall be granted: "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." The trial court's function is not "to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). "The mere existence of some evidence to support the non-moving party is not sufficient for denial of summary judgment; there must be 'sufficient evidence favoring the nonmoving party for a jury to return averdict for that party.'" Bailey v. Allgas, Inc., 284 F.3d 1237, 1243 (11th Cir. 2002) (quoting Anderson, 477 U.S. at 249). "If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Anderson, at 249-250. (internal citations omitted).

The basic issue before the court on a motion for summary judgment is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." See Anderson, 477 U.S. at 251-252. The moving party bears the burden of proving that no genuine issue of material fact exists. O'Ferrell v. United States, 253 F.3d 1257, 1265 (11th Cir. 2001). In evaluating the argument of the moving party, the court must view all evidence in the light most favorable to the non-moving party, and resolve all reasonable doubts about the facts in its favor. Burton v. City of Belle Glade, 178 F.3d 1175, 1187 (11th Cir. 1999). "If reasonable minds could differ on the inferences arising from undisputed facts, then a court should deny summary judgment." Miranda v. B&B Cash Grocery Store, Inc., 975 F.2d 1518, 1534 (11th Cir. 1992) (citing Mercantile Bank & Trust v. Fidelity & Deposit Co., 750 F.2d 838, 841 (11th Cir. 1985)).

Once the movant satisfies his initial burden under Rule 56(c), the non-moving party "must make a sufficient showing to establish the existence of each essential element to that party's case, and on which that party will bear the burden of proof at trial." Howard v. BP Oil Company, 32 F.3d 520, 524(11th Cir. 1994)(citing Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)). Otherwise stated, the non-movant must "demonstrate that there is indeed a material issue of fact that precludes summary judgment." See Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991). The non-moving party "may not rest on the mere allegations or denials of the [non-moving] party's pleading, but .... must set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e) "A mere 'scintilla' of evidence supporting the [non-moving] party's position will not suffice; there must be enough of a showing that the jury could reasonably find for that party." Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir. 1990) (citation omitted). "[T]he nonmoving party may avail itself of all facts and justifiable inferences in the record taken as a whole." Tipton v. Bergrohr GMBH-Siegen, 965 F.2d 994, 998 (11th Cir. 1992). "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574 at 587 (1986) (internal quotation and citation omitted).

B. "Splitting" argument

McCulley's principal argument is that Countrywide improperly transferred the Note without the Mortgage, and this split rendered both interests invalid and unenforceable. Specifically, McCulley alleges that when Countryside "sold" the Note to CWALT, Inc. Alternative Loan Trust 2007-21CB without the Mortgage, "the security interest in the Plaintiff'sproperty...was terminated." (Doc. 1, ¶ 21). McCulley also alleges that MERS' transfer of the Mortgage is void "due to the fact that MERS does not own the Note and therefore cannot legally convey title of the mortgage instrument to a third party." (Doc. 1, ¶ 28(i)).

McCulley appears to employ this theory in several of his causes of action:

(1) In his wrongful foreclosure claim, McCulley alleges that "none of the Defendants and each of them, do not own the Note or have any legal relationship to the Note," and that "[w]ithout ownership of the Note, the beneficiary of the Mortgage cannot foreclose." (Doc. 1, ¶ 56).

(2) In his fraud claim, McCulley alleges that the "Defendants were not entitled to receive mortgage payments as [they] did not have equitable, or actual beneficial interest in the Note or the property." (Doc. 1, ¶ 72).

(3) In his quiet title claim, McCulley alleges that "[t]he claims of Defendants are without any right whatsoever and such Defendants have no right to title, estate, lien, or interest whatsoever in the above-described property or any part thereof." (Doc. 1, ¶ 83).

(4) In his request for declaratory relief, McCulley alleges that certain defendants "do not have authority to foreclose upon and sell the subject property." (Doc. 1, ¶ 88).

In their motion for summary judgment, the defendants assert that there was never a split of the Note and Mortgage. McCulley alleges in hisresponse that he obtained a "securitization audit" on his home, which shows that CWALT, Inc. Alternative Loan Trust 2007-21CB bought the Note. (Doc. 34 at 2). However, he provided the court with no evidence supporting this claim. As stated above, BANA currently possesses the original Note, which Countrywide indorsed in blank.² Moreover, the defendants' supporting affidavit provides that at no time was McCulley's Note ever transferred to any trust. (Doc. 26-5, ¶ 3). As BANA holds both the Note, indorsed in blank, and the Mortgage, via assignment, no splitting occurred, and BANA has the right to foreclose on the property.

The defendants also point out that even if Countrywide had transfered the Note to a trust, Alabama courts have declined to accept McCulley's "splitting" argument. In Mortensen v. Mortgage Electronic Registration Systems, No. 09-cv-00787-WS-N, Doc. No. 78 (S.D. Ala. Dec. 23, 2010),³ this court addressed and rejected the contention that "a 'split' mortgage and note automatically renders the mortgage unenforceable and foreclosure unavailable," and in doing so, cited Crum v. LaSalle Bank, N.A., 55 So.3d 266(Ala. Civ. App. 2009) approvingly.⁴

In Crum, the borrower executed a promissory note in favor of a lender and assigned MERS the mortgage interest. Id. at 267. MERS, as nominee for the lender, subsequently assigned both the mortgage and the note to a bank, which initiated foreclosure proceedings following...