Stephens v. Palmer

• Citation: 324 So.3d 1175
• Decision Date: 29 June 2021
• Docket Number: No. 2020-CA-00044-COA,2020-CA-00044-COA
• Parties: The ESTATE OF Mark STEPHENS Sr. by and through Mark Stephens Jr., Administrator, Appellant, v. The ESTATE OF Shirley PALMER, Marc Dunlap, and Candace Dunlap, Appellees.
• Court: Court of Appeals of Mississippi

324 So.3d 1175

The ESTATE OF Mark STEPHENS Sr. by and through Mark Stephens Jr., Administrator, Appellant,

v.The ESTATE OF Shirley PALMER, Marc Dunlap, and Candace Dunlap, Appellees.

No. 2020-CA-00044-COA

Court of Appeals of Mississippi.

June 29, 2021

ATTORNEY FOR APPELLANT: CALEB ELIAS MAY

ATTORNEY FOR APPELLEES: MARK A. SCARBOROUGH, Meridian

BEFORE CARLTON, P.J., GREENLEE AND McDONALD, JJ.

GREENLEE, J., FOR THE COURT:

¶1. In an action to set aside a foreclosure sale, the Estate of Mark Stephens Sr., by and through Mark Stephens Jr., administrator (hereinafter "Stephens Estate") appeals from a judgment by the Lauderdale County Chancery Court dismissing its civil action against Marc and Candace Dunlap and the Estate of Shirley Palmer.

¶2. On appeal, the Stephens Estate argues that the chancery court erred by ruling that necessary parties were not included in the action. Specifically, the court held that Robert M. Dreyfus, the trustee of a relevant deed of trust, was not included as a necessary party. After reviewing the parties’ arguments and the applicable law, we affirm the chancellor's decision.

FACTS AND PROCEDURAL HISTORY

¶3. In 2001, Mark Stephens Sr. purchased property in Lauderdale County, Mississippi, from H.C. "Sonny" Palmer.¹ On July 16, 2007, Mark Stephens Sr. executed and delivered a renewed deed of trust to Robert M. Dreyfus Jr., as trustee, for the benefit of Sonny and his wife, Shirley. The deed of trust secured Mark Stephens Sr.'s debt to the Palmers in the principal amount of $80,586.09.

¶4. Under the deed of trust, Mark Stephens Sr. was required to pay the debt owed to the Palmers and all taxes and assessments. He also granted Dreyfus the authority to conduct a non-judicial foreclosure sale upon default at the request of the beneficiary.

¶5. Mark Stephens Sr. made his scheduled payments and performed his duties under the deed of trust until his death in February 2011. After his father's death, Mark Stephens Jr. claimed that he made the prescribed payments to the Palmers.² In February 2013, Sonny passed away, leaving Shirley as the sole beneficiary under the deed of trust. The Stephens Estate claimed in its complaint that it paid the loan in full in August 2014 and that Shirley had promised to issue a release immediately.

¶6. In November 2014, Shirley assigned the note and the deed of trust and all of her rights and interest in them to Marc Dunlap and his wife, Candace. Shirley's assignment to the Dunlaps of the deed of trust was recorded in the land records of Lauderdale County.

¶7. According to the Dunlaps, the Stephens Estate was in default of both its payments and its performance of several of the deed-of-trust terms, including non-payment of taxes. The Dunlaps requested that Dreyfus foreclose on the property. Pursuant to the terms of the deed of trust, Dreyfus noticed the sale of the property by posting a notice on the bulletin board of the Lauderdale County Courthouse, mailing notices to all known heirs of the Stephens Estate, and publishing the notice in the Meridian Star newspaper. On December 12, 2014, Dreyfus conducted the foreclosure sale, at which the Dunlaps were the highest bidders, offering $24,420.10. Later the same day, Dreyfus executed a trustee's deed and delivered it to the Dunlaps. The Dunlaps paid the delinquent taxes and redeemed all prior taxes on the property.³

¶8. On May 18, 2016, Mark Stephens Jr. filed a complaint on behalf of the Stephens Estate against the Dunlaps and Shirley in the Lauderdale County Chancery Court to set aside the foreclosure sale. The complaint alleged that the Stephens Estate had paid its debt in full, and thus, the Dunlaps unlawfully foreclosed on the property in question. Specifically, the complaint alleged that the Dunlaps wrongfully foreclosed on property belonging to the Stephens Estate and did not give the proper notice to Mark Stephens Jr. of foreclosure. The Stephens Estate requested that the court set aside the foreclosure, return the property, and award any rents collected since the foreclosure along with costs and attorney's fees. Dreyfus, the trustee of the deed of trust, was not a party to the complaint.

¶9. Shirley died on March 29, 2017. The Stephens Estate amended its complaint to add Shirley's Estate as a party.

¶10. On May 24, 2018, and October 01, 2019, the Dunlaps filed a motion to dismiss the complaint and the amended complaint. On October 17, 2019, the Stephens Estate filed its response to the Dunlaps’ motion to dismiss. On November 20, 2019, the chancery court heard arguments on the motion. The court rendered its judgment on November 21, 2019. The court found that the Stephens Estate failed to include all necessary parties by not including the trustee, Dreyfus, as a party. And because the statute of limitations had run on an action against the trustee, the court dismissed the action. After the court denied the Stephens Estate's motion to alter or amend the judgment or, in the alternative, grant a new trial, the Stephens Estate filed its appeal.

¶11. On appeal, the Stephens Estate argues that the chancery court erred by ruling that all necessary parties were not included in the action because of the omission of trustee Robert M. Dreyfus as a party. The Stephens Estate also argues that the court erred by not finding that the debt was paid in full and by limiting its grounds for relief. After reviewing of the parties’ arguments and the applicable law, we affirm the chancellor's decision.

STANDARD OF REVIEW

¶12. On appeal, we review the chancellor's grant of a motion to dismiss de novo. Nethery v. Estate of Nethery , 146 So. 3d 999, 1003 (¶16) (Miss. Ct. App. 2014). Questions of law are reviewed de novo. Id .

DISCUSSION

I. Whether the trustee to the deed of trust was a necessary party to this action.

¶13. On appeal, the Stephens Estate contends that the chancery court erred when it dismissed the action and found that complete relief could not be afforded without the trustee's participation as a party. The Stephens Estate's main assertion regarding the chancellor's judgment is that Dreyfus should not have been deemed a necessary party under Mississippi Rule of Civil Procedure 19. The chancellor's application of Rule 19 is a matter of law, so, as stated above, we apply a de novo review. Pope v. Fountain , 287 So. 3d 988, 993 (¶18) (Miss. Ct. App. 2019) (citing Williams v. Williams , 264 So. 3d 722, 725 (¶5) (Miss. 2019) ).

¶14. A necessary party is one who "has such a substantial interest in the suit that no complete, practical, and final judgment can be made without directly affecting his interest or else leaving the controversy in such condition that its final determination may be wholly inconsistent with equity and good conscience." Mahaffey v. Alexander , 800 So. 2d 1284, 1285 (¶5) (Miss. Ct. App. 2001). Rule 19 governs the joinder of necessary parties. Assuming joinder is feasible, Rule 19(a) states:

A person who is subject to the jurisdiction of the court shall be joined as a party in the action if:

(1) in his absence complete relief cannot be accorded among those already parties, or

(2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest.

If he has not been so joined, the court shall order that he be made a party. If he should join as a plaintiff but refuses to do so, he may be made a defendant or, in a proper case, an involuntary plaintiff.

M.R.C.P. 19(a)(1)-(2). Where joinder is not feasible, Rule 19(b) applies.⁴

¶15. As an agent of both parties, the trustee named in a deed of trust has a "duty to perform his duties in good faith and act fairly to protect the rights of all parties equally." Eastover Bank for Sav. v. Hall , 587 So. 2d 266, 269-70 (Miss. 1991). "The sale by a trustee under a deed of trust is presumed valid and the burden of proof is on the party attacking this validity." Myles v. Cox , 217 So. 2d 31, 34 (Miss. 1968).

¶16. In situations such as the one before this Court, a trustee is a necessary party. See 5 Tiffany Real Property § 1534 (3d ed. 2010) (citing Harlow v. Mister , 64 Miss. 25, 26, 8 So. 164, 164-165 (1886) ) (explaining that the trustee under a deed of trust "must usually be made a party to a proceeding instituted by an owner or part owner of the debt secured"); see also Hill v. Boyland , 40 Miss. 618, 640 (1866) (finding that where a "bill seeks to enforce the collection of the notes secured by the deed of trust to [Miles] as trustee, he is the holder of the legal title, and a necessary party"); Moyse v. Cohn , 76 Miss. 590, 25 So. 169, 169 (1899) (stating that in both Hill , 40 Miss. at 640, and Harlow , 64 Miss. at 26, 8 So. at 164, a trustee is deemed a necessary party).⁵ Therefore, the Stephens Estate's claim that Dreyfus was a "nominal" party, whose presence was not necessary for the chancery court to enter a final judgment, is incorrect.

¶17. Stephens relies on Taylor v. Ocwen Loan Servicing LLC , No. 2:12-CV-107-SA-JMV, 2014 WL 280399 (N.D. Miss. Jan. 24, 2014), and Smith v. Homecomings Financial LLC , No. 1:14-CV-345-HSO-JCG, 2016 WL 750661 (S.D. Miss. Feb. 24, 2016), in support of his claim that a trustee is a nominal party. However, we must note that in those cases the courts found that the trustees were nominal parties for the purpose of diversity jurisdiction; they had no personal stake in the outcome of the case, and therefore complete relief could be afforded in their absence. Smith , 2016 WL 750661, at *2 ; Taylor , 2014 WL 280399, at *2. As discussed below, Dreyfus has a stake in the outcome of this case because he holds legal title and is therefore a necessary party. "[T]he trustee is not necessarily a nominal party when he is alleged to have...