Sun Country Sav. Bank of New Mexico, F.S.B. v. McDowell
| Decision Date | 27 June 1989 |
| Docket Number | No. 17629,17629 |
| Citation | 775 P.2d 730,1989 NMSC 43,108 N.M. 528 |
| Parties | SUN COUNTRY SAVINGS BANK OF NEW MEXICO, F.S.B., a United States savings bank, Plaintiff-Appellee and Cross-Appellee, v. Elisa McDOWELL, Defendant-Appellee and Cross-Appellant, v. Jack McDOWELL, Bank of Santa Fe, a New Mexico banking corporation, and The Omega Group Architects, a Texas corporation, Defendants-Appellees and Cross-Appellees, v. M.O.B., a joint venture composed of L. Michael Messina, James O'Leary and Gus Blaisdell, Defendants-Appellants and Cross-Appellees. |
| Court | New Mexico Supreme Court |
Defendants Elisa and Jack McDowell,1 makers of a promissory note secured by a mortgage, and defendant M.O.B., a joint venture and judgment creditor of Jack McDowell, appeal from the district court's entry of an order and partial summary judgment against M.O.B. and an order entering final judgment for foreclosure and approving attorney fees and costs in favor of the mortgagee, plaintiff Sun Country Savings Bank of New Mexico (Sun Country). On appeal, the McDowells challenge the validity of a stipulation between them and Sun Country, attorney representation, and the court's refusal to grant their motion to set aside judgment. M.O.B. argues on appeal that the court erred in granting Sun Country and the Bank of Santa Fe partial summary judgment and in limiting M.O.B. to a one-month redemption period. M.O.B. also challenges the court's grant of partial summary judgment without allowing them to complete discovery. We affirm.
On September 26, 1984, the McDowells executed a promissory note with Sun Country in the principal sum of $1,000,000. To secure the note, the McDowells executed a mortgage with Sun Country on commercial property, which was recorded on September 27, 1984. The mortgage provides: "If this mortgage is foreclosed, the redemption period after Judicial sale shall be one month in lieu of nine months."
When the McDowells failed to make payments due on the note at maturity, Sun Country filed a complaint for debt and money due and for foreclosure on March 20, 1986. Subsequently, on April 16, 1986, Sun Country filed an amended complaint naming the McDowells, the Bank of Santa Fe, M.O.B. and the Omega Group Architects (Omega Group) as defendants. The Bank of Sante Fe has a second mortgage which was recorded on September 27, 1984, with a principal balance of $406,000. M.O.B., a junior lienholder, has a transcript of judgment growing out of an entirely different transaction against Jack McDowell, which was recorded on December 17, 1985, in the amount of $45,151.07. Omega Group has a claim of lien, which was recorded on March 10, 1986, in the amount of $18,182.31.
On August 20, 1986, the McDowells filed a Chapter 11 bankruptcy petition and obtained an automatic stay of the pending district court foreclosure proceedings under 11 U.S.C. Section 362(a) (1982 & Supp. IV 1986). On January 12, 1987, Sun Country filed a motion for relief from the stay under 11 U.S.C. Section 362(d). On February 12, 1987, the bankruptcy court held a preliminary hearing on Sun Country's motion. On April 6, 1987, as a result of the hearing, the McDowells, Sun Country, and the Bank of Santa Fe entered and signed a stipulation of adequate protection under 11 U.S.C. Section 362(d)(1) before the bankruptcy court.
The stipulation provided that the automatic stay would be continued and that the McDowells had to sell the property by October 31, 1987. Within seven days of entry of the stipulation, the parties agreed to enter a stipulated judgment of foreclosure that would foreclose the property in the pending court proceedings. The stipulation stated that if the McDowells could not sell the property by October 31, then the stay would be lifted on November 1, 1987, so that Sun Country could file the stipulated judgment of foreclosure and proceed with the foreclosure sale. The stipulation directed all parties to proceed in the state court action to litigate and reduce to judgment the extent or validity of M.O.B.'s lien and any redemption rights or other issues concerning M.O.B.'s claim.
In accordance with the stipulation, Sun Country, the Bank of Santa Fe, the Omega Group, and the McDowells personally and their attorney signed and entered a stipulated partial judgment, decree of foreclosure, order of sale and appointment of special master (stipulated partial judgment). The district court approved and signed the order before depositing it with an escrow agent.
On November 24, 1987, the district court entered an order and partial summary judgment against M.O.B., later denying M.O.B.'s motion for reconsideration. In its order, the court concluded that Sun Country and the Bank of Santa Fe were entitled to an award of reasonable attorney fees, costs, and expenses incurred relative to the collection of the promissory notes and mortgages. Once the court had considered the amount of fees, costs, and expenses to be awarded to counsel in a later hearing, then the mortgage liens of Sun Country and Bank of Santa Fe could be foreclosed.
As the McDowells were unable to sell the property, the court directed the special master to publish notice of a foreclosure sale, which could commence thirty days after entry of its order. The court also established the priority of all creditors' liens and limited M.O.B. to a one-month right of redemption.
On January 26, 1988, the district court entered an order approving attorney fees and costs and entry of final judgment for foreclosure against the McDowells, and adopted the partial summary judgment order against M.O.B. as part of its final order. Subsequently, Sun Country purchased the debtors' property at a foreclosure sale held on March 4, 1988, bidding in the amount of their lien. The district court entered an order approving special master's report and confirming foreclosure sale on March 22, 1988. M.O.B.'s one-month right of redemption expired on April 21, 1988.
The McDowells incorrectly raise four issues challenging the court's grant of judgment against them in its partial summary judgment order against M.O.B. The McDowells contend that Sun Country never filed a formal summary judgment motion against them, that they had no opportunity to present evidentiary responses or defenses to a summary judgment motion, that Sun Country's counsel had no authority to sign the partial summary judgment order against M.O.B. on behalf of the McDowells' attorney, and that no attorney representing the McDowells had their authority to allow entry of summary judgment against them. We reject these contentions; the liability of the McDowells was previously set by the signing of the stipulation and the subsequent entry of the stipulated partial judgment when the property could not be sold. The summary judgment motions were against M.O.B. solely, and the subsequent partial summary judgment order against M.O.B. incidentally included language with reference to the McDowells. The court included this language in its order against M.O.B. to establish the priority of all creditors' liens. A court can honor a stipulation concerning the trial of a cause or conduct of the litigation. Peay v. Ortega, 101 N.M. 564, 686 P.2d 254 (1984). We find no merit in the McDowells' arguments.
The McDowells' contention that they had no opportunity to present defenses to Sun Country's complaint or the foreclosure action is equally meritless. A clause in the stipulation stated: "The debtors agree that they will not raise any claims they may have against Sun Country as a defense to or as an offset of the Sun Country Note and Mortgage in the foreclosure action...." (Emphasis added.) In reviewing this unambiguous language, we conclude that the McDowells waived any rights they had to present defenses to Sun Country's complaint or the foreclosure action. This court will not thwart the clear terms of the stipulation. The McDowells negotiated and executed the stipulation; thus, we see no reason why they should not be bound by its terms.
The McDowells also contend that Sun Country and the Bank of Santa Fe failed to negotiate in good faith with potential purchasers of the property, thereby violating the terms of the stipulation. Whether the stipulation placed a legal duty on the lending institutions to release their liens of mortgage upon receipt of full payment from potential purchasers was not an issue before the district court. Therefore, as the McDowells did not raise those issues before the district court, they are waived in this appeal. State ex rel. Brown v. Hatley, 80 N.M. 24, 450 P.2d 624 (1969).
Finally, the McDowells argue that the district court never entered the stipulated partial judgment and decree of foreclosure into the record. We disagree; the record reveals the stipulated partial judgment was filed in the district court's office on July 14, 1988.
The McDowells direct us to review the record, which indicates that several attorneys represented them at various times during the proceedings. The McDowells question whether James Kennedy had real or apparent authority to actually represent them as he did not enter a formal appearance on their behalf. We have recognized that a formal entry of appearance by an attorney is unnecessary if the attorney has entered a constructive appearance before the court. See Merrill v. Tabachin, Inc., 107 N.M. 802, 765 P.2d 1170 (1988). Constructive appearance may be found when the party's overt actions show an intent to submit to the jurisdiction of the court. Id. at 803, 765 P.2d at 1711; Mayfield v. Sparton Southwest, Inc., ...
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