Special Assets v. Chase Home Finance

Citation991 So.2d 668
Decision Date21 December 2007
Docket Number1060083,1060084.
PartiesSPECIAL ASSETS, L.L.C. v. CHASE HOME FINANCE, L.L.C. First Properties, L.L.C. v. Chase Home Finance, L.L.C.
CourtSupreme Court of Alabama
991 So.2d 668
SPECIAL ASSETS, L.L.C.
v.
CHASE HOME FINANCE, L.L.C.
First Properties, L.L.C.
v.
Chase Home Finance, L.L.C.
1060083
1060084.
Supreme Court of Alabama.
December 21, 2007.
Rehearing Applications Denied April 11, 2008.

[991 So.2d 669]

Banks C. Ladd, Mobile, for appellants.

Harlan I. Prater IV, Sara Anne Ford, and William E. Bonner of Lightfoot, Franklin & White, L.L.C., Birmingham, for appellee.

Jesse P. Evans III of Haskell Slaughter Young & Rediker, LLC, Birmingham; and James A. Bradford and Ed R. Haden of Balch & Bingham, LLP, Birmingham, for amicus curiae Alabama Land Title Association, in support of the appellee.

SMITH, Justice.


Special Assets, L.L.C., and First Properties, L.L.C., appeal separately from a summary judgment entered in favor of Chase Home Finance, L.L.C. ("Chase Finance"), in a consolidated action Chase Finance brought as the successor by merger to Chase Manhattan Mortgage Corporation ("Chase Manhattan"). We affirm.

991 So.2d 670
I. Factual Background and Procedural History

Jefferson County, Local Amendments, § 12, Constitution of Alabama of 1901 (Off.Recomp.) (hereinafter "Local Amendment § 12"), authorizes "[t]he county governing body" of Jefferson County to create fire-service districts in Jefferson County "to establish and maintain a system to fight or prevent fires."1 Local Amend. § 12, ¶ 2. The expenses of the fire districts are to "be paid for by the proceeds of service charges or property taxes ... or by a combination of such proceeds." Id. § 12, ¶ 3. Service charges for the fire districts are "a personal obligation of the occupant" of "the property for which the services are provided or made available," and those charges are "a lien upon such property, enforceable by the sale thereof." Id. § 12, ¶ 4.

The present appeals arise from separate instances in which the fire districts of the communities of Center Point and Forestdale, in Jefferson County, foreclosed on properties for unpaid fire-service charges and then sold the properties to Special Assets and First Properties. The fire districts made no attempt to provide notice of those sales to any mortgagee through the mail or by personal service. Instead, the fire districts published notice of the sales in local newspapers in accordance with § 11-48-49, Ala.Code 1975.2

The Evans Property in the Forestdale Fire District (Case no. 1060083— Special Assets)

On July 11, 1997, Randolph Evans and Angela Evans purchased a parcel of real estate located in the Forestdale fire district in Jefferson County ("the Evans property"). That same day, the Evanses executed a mortgage on that property in favor of American Investment Mortgage, Inc., for $94,350, and American Investment assigned the mortgage to Chase Manhattan. On November 12, 1997, the assignment was recorded in the Jefferson County Probate Records Office.

The mortgage on the Evans property required the Evanses to pay the Forestdale fire district directly for any outstanding service charges. The Evanses failed to pay their fire-service charges, however, and the Forestdale fire district published notice in the Birmingham News, a daily newspaper, that the Evans property would be sold for failure to pay those charges.

On November 22, 1999, the Forestdale fire district conducted a foreclosure sale, at which it purchased the Evans property for $619.89, the amount of delinquent fire-service charges. On January 3, 2002, the fire district executed a quitclaim deed to the property in favor of Special Assets, L.L.C., for $2,355.25.

991 So.2d 671

On March 12, 2002, the Jefferson Probate Court issued a certificate of warning to redeem.3 Even though the Evanses' loan was not a sub-prime loan, a copy of the certificate was mailed to an office in San Diego that handled sub-prime loans for Chase Manhattan. However, a copy of the certificate of warning to redeem was not mailed to the address Chase Manhattan had on file with the Jefferson County tax assessor or to the address of the registered agent for service of process for Chase Manhattan, which was on file with the secretary of state.

The Swoopes Property in the Center Point Fire District (Case no. 1060084—First Properties)

On August 28, 1997, Danny Swoopes purchased property located in the Center Point fire district in Jefferson County and executed a mortgage on the property in favor of American Investment Mortgage, Inc., for $72,402. That same day, American Investment assigned the mortgage to Chase Manhattan; the mortgage was recorded in the Jefferson County Probate Records Office on November 12, 1997.

The mortgage required Swoopes to pay the Center Point fire district directly for any outstanding service charges. However, Swoopes failed to pay his fire-service charges, and, after publishing notice in the Alabama Messenger, a weekly newspaper, the Center Point fire district executed a quitclaim deed in favor of First Properties on April 15, 2002, for $1,200.

On August 5, 2004, at the request of First Properties, the Jefferson Probate Court issued a certificate of warning to redeem, and a copy was mailed to a Chase Manhattan address in Baton Rouge, Louisiana, which was not the address Chase Manhattan had on file with the Jefferson County tax assessor or the secretary of state.

The Proceedings in the Jefferson Circuit Court

Chase Finance filed separate actions in the Jefferson Circuit Court seeking declarations that the mortgage interests of Chase Finance in the Swoopes property and the Evans property had not been impaired by the foreclosure sales to First Properties and Special Assets.4 Chase Finance later filed a motion to consolidate the two actions, which the Jefferson Circuit Court granted.

The circuit court entered a summary judgment in favor of Chase Finance in both actions, holding that the fire districts had failed to use "reasonable efforts to identify the mortgagees of the properties and to provide actual notice of the upcoming foreclosure sales" and therefore had violated Chase Finance's constitutional due-process rights. First Properties and Special Assets filed a joint motion to alter, amend, or vacate the judgment, which was denied. First Properties and Special Assets appeal.

II. Standard of Review

"We review a summary judgment and all questions of law de novo." Pinkerton Sec. & Investigation Servs., Inc. v. Chamblee, 961 So.2d 97, 101 (Ala.2006).

III. Discussion

As noted, in entering a summary judgment in favor of Chase Finance, the trial court held that the sale of the Evans property and the Swoopes property by the fire

991 So.2d 672

districts violated the due-process rights of Chase Finance. The trial court found that in conducting the sales of those properties for delinquent fire-service charges the fire districts made no attempt to provide notice of the sales to any existing mortgagee— such as Chase Finance—other than by publishing a notice of the sale in a local newspaper.

The trial court found that Chase Finance, which held duly recorded mortgages on the properties before the foreclosure sales, was a "readily identifiable" mortgagee. Relying on Mennonite Board of Missions v. Adams, 462 U.S. 791, 103 S.Ct. 2706, 77 L.Ed.2d 180 (1983), the trial court held that the failure of the fire districts to use "reasonable efforts to identify the mortgagees of the properties and to provide actual notice of the upcoming foreclosure sales" violated the due-process rights of Chase Finance. First Properties and Special Assets challenge that ruling of the trial court.

A.

In Mennonite Board of Missions, the United States Supreme Court held that due process requires that "[w]hen [a] mortgagee is identified in a mortgage that is publicly recorded, constructive notice by publication must be supplemented by notice mailed to the mortgagee's last known available address, or by personal service." 462 U.S. at 798, 103 S.Ct. 2706. First Properties and Special Assets do not dispute that Chase Finance held publicly recorded mortgages on the Swoopes property and the Evans property before and at the time the fire districts conducted the foreclosure sales. However, the recorded mortgages to Chase Manhattan do not include an address for Chase Manhattan; instead, those mortgages list "Chase Manhattan Mortgage Corporation" as the mortgagee.5 Because no address for Chase Manhattan is listed on those mortgages, First Properties and Special Assets claim that the trial court erred in concluding that Chase Manhattan was a "readily identifiable" mortgagee.6 In particular, First Properties and Special Assets assert:

"Chase Finance argues that Chase [Manhattan's] `address was on file with both the Jefferson County tax collector and the Alabama Secretary of State at the time of the [foreclosure sale by the fire districts].' [Chase Finance's] brief, p. 21. However, there is no such evidence in the record. The only evidence in the record is that the tax collector had an address for Chase [Manhattan] on December 6, 2004, which was kept in a separate non-public database used for mailing mortgage service providers ad

991 So.2d 673

valorem tax bills. There is no evidence that the address was correct, that the tax collector had this information on the date of the sale, or that this information was available to the fire district. Furthermore, there is nothing in the record indicating that the Secretary of State had an address for Chase [Manhattan] at the time of the sale."

(First Properties' and Special Assets' reply briefs, pp. 14-15.)

There are several problems with the assertions made by First Properties and Special Assets in support of their argument that Chase Manhattan was not a "readily identifiable" mortgagee. First, their claim that "there is nothing in the record indicating that the Secretary of State had an address for Chase [Manhattan] at the time of the sale" is without merit. As Chase Finance points out on page 24 of its brief to this Court, it submitted evidence in its summary-judgment materials that "Chase...

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