Residential Funding Real Estate Holdings, LLC v. Adams

• Decision Date: 29 May 2012
• Docket Number: No. 108,864.,108,864.
• Citation: 2012 OK 49,279 P.3d 788
• Parties: RESIDENTIAL FUNDING REAL ESTATE HOLDINGS, LLC, Plaintiff, and RAHI Real Estate Holdings, LLC, Substitute Plaintiff/Appellee, v. Vincent ADAMS and Leslie Adams, Defendants/Appellants and John Doe, Jane Doe and Harvard Pointe Homeowners Association, Inc., Defendants.
• Court: Oklahoma Supreme Court

279 P.3d 788

2012 OK 49

RESIDENTIAL FUNDING REAL ESTATE HOLDINGS, LLC, Plaintiff,andRAHI Real Estate Holdings, LLC, Substitute Plaintiff/Appellee,

v. Vincent ADAMS and Leslie Adams, Defendants/AppellantsandJohn Doe, Jane Doe and Harvard Pointe Homeowners Association, Inc., Defendants.

No. 108,864.

Supreme Court of Oklahoma.

May 29, 2012.

ON CERTIORARI TO THE COURT OF CIVIL APPEALS DIVISION 2.

¶ 0 This matter comes to this Court on a Writ of Certiorari granted March 5, 2012. The Court of Civil Appeals affirmed an order of the trial court that granted summary judgment to Appellee in a foreclosure action.

CERTIORARI PREVIOUSLY GRANTED; COURT OF CIVIL APPEALS OPINION VACATED; DISTRICT COURT'S DISPOSITION BY SUMMARY JUDGMENT REVERSED AND CAUSE REMANDED FOR FURTHER PROCEEDINGS

Phillip A. Taylor, Taylor & Associates, Broken Arrow, Oklahoma, for Defendants/Appellants.

Steven A. Heath, Baer Timberlake, Coulson & Cates, P.C., Tulsa, Oklahoma, for Plaintiff/Appellee.

COMBS, J.

¶ 1 This matter comes before us on a writ of certiorari to the Oklahoma Court of Civil Appeals, Division II (COCA). This case concerns a summary judgment granted by the district court in favor of the plaintiff/appellee RAHI Real Estate Holdings, LLC, (appellee) and against the defendants, Vincent Adams and Leslie Adams (appellants). COCA affirmed the district court's ruling and we reverse and remand for further proceedings.

¶ 2 On October 20, 2006, appellant Vincent Adams (Vincent), executed a promissory note to Gateway Mortgage Group, LLC, (Gateway) for the purchase of real property. On the same day, appellants executed a mortgage to Gateway to secure the note.

¶ 3 The original plaintiff, Residential Funding Real Estate Holdings, LLC, (Residential) filed a petition to foreclose on June 26, 2009, claiming appellants defaulted on the note beginning January 1, 2009. Residential attached a copy of the subject note and mortgage to the petition. The note has a special indorsement from Gateway which states “Pay to The Order Of: Option One Mortgage Without Recourse.” It is executed by “Amanda Goodnight ITS: SHIPPING SPECIALIST.” Also attached to the note is a blank indorsement by Option One Mortgage Corporation, A California Corporation, (Option One Mortgage Corporation). It is executed by “Dora Galvan Assistant Secretary.” On July 24, 2009, a motion to substitute plaintiff and modification of caption was filed, thereby substituting RAHI Real Estate Holdings, LLC, (RAHI) in place of Residential. The motion stated that RAHI was subsequently assigned all of Residential's rights in the mortgage. On July 27, 2009, the district court granted the motion and substituted RAHI as plaintiff in place of Residential in this foreclosure action and ordered that the caption be modified to reflect RAHI as plaintiff. One day after the order granting substitution, July 28, 2009, Residential as plaintiff filed its first amended petition.¹ The amended petition added a new defendant, Harvard Pointe Homeowners Association, Inc., and re-alleged all allegations made in the original petition. It also attached the same note and mortgage.

¶ 4 Defendants filed their answer on August 24, 2009, admitting that a note and mortgage were executed but denied that the note and mortgage attached to the petition are the ones he/they signed. Further, they deny default and demand strict proof thereof. They then blame “plaintiff/servicing agent” for the cause of the alleged default. Appellants also attacked plaintiff's standing and the subject matter jurisdiction of the court.

¶ 5 On February 9, 2010, appellee filed a motion for summary judgment alleging there is no controversy as to any material facts and attached an affidavit. The affidavit is from Denise Bailey, Assistant Secretary of Litton Loan Servicing, LP, as servicer for RAHI Real Estate Holdings. The affidavit states the plaintiff is the holder of the note and mortgage by virtue of an attached assignment of mortgage and the defendants are in default. She states she is in charge of loan servicing, and the records and files concerning the loan in this action are maintained under her supervision, and she has personal knowledge of the contents therein. She also states that there has been no extension or agreement to delay entry of judgment.The motion also attached a copy of the note and mortgage, the same as the ones attached to the original petition, and an assignment of mortgage. The assignment of mortgage is executed January 18, 2010, but made effective June 26, 2009. It assigns only the subject mortgage; there is no attempted assignment of the note. It is made by Sand Canyon Corporation f/k/a Option One Mortgage Corporation (Sand Canyon) to RAHI Real Estate Holding, LLC, and signed by Brian McConnell, a Vice President of Sand Canyon.

¶ 6 On March 1, 2010, appellants' attorney filed an entry of appearance and a motion to deny plaintiff's motion for summary judgment. Appellants allege they need more time to respond to the motion because appellee failed to respond to their discovery requests pursuant to Oklahoma District Court Rule 13(d).² They allege it cannot be determined if the appellee is the real party in interest, proper party or that a valid note exists. It is further alleged that the indorsements on the note are not valid, and under the UCC, a note must be indorsed by its holder before it can be transferred. ³ Appellants attach an affidavit made by the appellants and a copy of their discovery requests. The affidavit states that appellants mailed their discovery requests to appellee's attorney on or about August 23, 2009. They allege that as of March 1, 2010, they have not received any responses to their discovery requests. Appellants also refer to a certificate of mailing made by appellee's attorney certifying, on June 19, 2009, he mailed appellants answers to their request for admissions. Appellants assert that this date was prior to the petition being filed.

¶ 7 In the response to the motion to deny, appellee's attorney claims he timely mailed a response to the request for admissions on September 17, 2009, but it was returned undeliverable. He refrained from providing additional responses because it appeared appellants had vacated the address listed on their pleadings and appellants failed to provide a telephone number on their pleadings which he could call. Appellee also asserts that appellants' affidavit is incorrect because on the same day that appellants executed their affidavit, March 1, 2010, they came to appellee's attorney's office and demanded their discovery requests. Appellee claims later that day its attorney gave appellants a copy of the response to their request for admissions and a complete response to appellant's other discovery requests. Appellee attached a copy of a certificate of hand delivery signed by appellee's attorney reciting that on March 1, 2010, “I hand delivered Plaintiff's Response to Defendant's Requests Documents to the Defendant.” Appellee also claims that appellants cannot recite any authority why the indorsements on the note are invalid and that appellants are inaccurate in their assertion that in order for a negotiable instrument to be transferred it must be indorsed. It cites 12A O.S.2001, § 3–203(b), which provides a transfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the instrument. Appellee asserts it is a person entitled to enforce the note because an indorsement is not necessary for a transfer but, in this case, the subject note and allonge are indorsed and in its possession.

¶ 8 Appellants replied on March 26, 2010, stating on March 1, 2010, appellee's attorney did not attach any documents to their discovery request. They allege most of appellee's responses say “see attached” but no documents are attached. They also assert that Title 16 O.S.2001 § 93, applies to the indorsements in this case and a “shipping specialist” is not authorized to indorse a note under this statute.⁴

¶ 9 On April 15, 2010, the district court issued an order granting summary judgment in favor of appellee. This was later vacated on April 28, 2010, because appellants' attorney was not notified of the hearing. The district court also allowed responsive pleadings to the motion for summary judgment to be made within twenty (20) days.

¶ 10 On May 17, 2010, appellants filed a motion to compel discovery and a renewal of motion to deny the motion for summary judgment. In the motion to compel, appellants restate that appellee's attorney did not attach requested discovery to its response even though he had been personally contacted. They also assert the following: 1) the real party in interest cannot be determined by the filings attached to appellee's motion for summary judgment; 2) the indorsements are invalid and therefore appellee has no standing to bring this action; 3) the allonge is made by Option One Mortgage Corporation but the original lender, Gateway, specially indorsed the note to an alleged different entity, Option One Mortgage; and 4) the affidavit attached to the motion for summary judgment is invalid, insufficient, and inadmissible; and the assignment of mortgage is irrelevant and, therefore, inadmissible. This last contention is based on no showing the assignor was an indorsee of the note and therefore could not have any rights as to the mortgage. Sand Canyon Corporation f/k/a Option One Mortgage Corporation is the assignor of the mortgage, however, Gateway indorsed the note to Option One Mortgage not Option One Mortgage Corporation. Further, there is no documentation Sand Canyon Corporation succeeded Option One Mortgage Corporation. The assignment was made on January 18, 2010, and backdated to June 26, 2009. Appellants allege there is no law in Oklahoma that authorizes such backdating. They assert the assignment of mortgage is unrecorded and therefore unenforceable and inadmissible because it is...