U.S. Bank, N.A. v. Alexander

• Decision Date: 01 May 2012
• Docket Number: No. 109,648.,109,648.
• Citation: 2012 OK 43,280 P.3d 936
• Parties: U.S. BANK, N.A., as Trustee, for CREDIT SUISSE FIRST BOSTON HEAT 2005–4, Plaintiff/Appellee, v. John W. ALEXANDER, III, and Lisa Alexander, Defendants/Appellants, and Citifinancial Services, Inc., Defendant.
• Court: Oklahoma Supreme Court

280 P.3d 936

2012 OK 43

U.S. BANK, N.A., as Trustee, for CREDIT SUISSE FIRST BOSTON HEAT 2005–4, Plaintiff/Appellee,

v. John W. ALEXANDER, III, and Lisa Alexander, Defendants/Appellants,andCitifinancial Services, Inc., Defendant.

No. 109,648.

Supreme Court of Oklahoma.

May 1, 2012.

On Appeal from the District Court of Cleveland County; Honorable Tom A. Lucas, District Judge.

¶ 0 This matter comes before this Court as an accelerated appeal from an order granting summary judgment in favor of U.S. Bank National Association, as Trustee, for Credit Suisse First Boston HEAT 2005–4, against John W. Alexander, III, and Lisa Alexander.

REVERSED AND REMANDED FOR FURTHER PROCEEDINGS.

Sally E. Garrison, Baer, Timberlake, Coulson and Cates, P.C., Oklahoma City, Oklahoma; Mark Edward Hardin, Tulsa, Oklahoma; Kari Y. Hawkins, Oklahoma City, Oklahoma, for Plaintiff/Appellee.

Michael R. Warkentin, Michael R. Warkentin, P.C., Norman, Oklahoma, for Defendants/Appellants.

COMBS, J.

¶ 1 On May 10, 2005, John W. Alexander, III (Alexander), executed a note to MILA, Inc., DBA Mortgage Investment Lending Associates, Inc. (MILA), and a mortgage to Mortgage Electronic Registration Systems, Inc. (MERS), as nominee for MILA and its successors and assigns. The mortgage also contains language, identifying MERS as the mortgagee under this security instrument.

¶ 2 Wells Fargo Bank, N.A. (Wells Fargo), filed a foreclosure petition on July 23, 2009, alleging appellant defaulted on the note for installments beginning April 1, 2009.¹ The petition further states Wells Fargo was the present holder of the note and mortgage, and Wells Fargo took the note and mortgage for good and valuable consideration from the original lender. A copy of the note and part of the mortgage was attached to the original petition. The note attached to the original petition contained no indorsements.

¶ 3 On October 6, 2009, an Order Granting Motion for Substitution of Plaintiff and Modification of Caption was filed in response to a Motion filed that same date. Appellee, U.S. Bank National Association, as Trustee, for Credit Suisse First Boston HEAT 2005–4 (Appellee) was substituted in place of Wells Fargo. The motion stated Wells Fargo had subsequently assigned all of its rights in the mortgage to Appellee. Appellee also filed, on October 6, 2009, its First Amended Petition. This amended petition re-alleged all of the allegations of Wells Fargo's petition and identified additional defendants as parties who may have an interest in the property. Appellee attached to the amended petition, a copy of the same unindorsed note and mortgage originally executed by the Appellant John W. Alexander, III, in 2005.

¶ 4 Appellants (John W. Alexander, III, and Lisa Alexander) never answered the petition and a judgment was entered against Appellants on April 19, 2010. One day later, on April 20, 2010, Appellants' counsel made an entry of appearance and the judgment was vacated by order of May 19, 2010.

¶ 5 On June 8, 2010, Appellee filed a motion for summary judgment. Appellee claims, in this motion for summary judgment, it is the holder of the note and mortgage, and that Appellants have been in constant default since the July 1, 2009, installment payment was due. Appellee further alleges Appellants have made no tender sufficient to reinstate the loan, and there has been no extension or renewal of the note. Appellee attached a copy of the same unindorsed note and parts of the mortgage included in its First Amended Petition. It also attached an affidavit and assignment of real estate mortgage. The affidavit was executed by a Vice President Loan Documentation of Appellee and generally affirms the allegations in the motion. The assignment of real estate mortgage reflects an execution date of August 13, 2009, but made effective March 1, 2005.² This assignment was from MERS (as nominee for the lender) to Appellee of the real estate mortgage “together with the note, debts and claims thereby secured.” (emphasis added)

¶ 6 Appellants filed an objection to Appellee's motion for summary judgment and later filed a supplement to the objection. Appellants challenged certain comments in Wells Fargo's motion to substitute which stated Wells Fargo subsequently assigned its rights under the mortgage to Appellee after the filing of the original petition on July 23, 2009. The assignment of real estate mortgage executed August 13, 2009, is from MERS to Appellee. This document, it is asserted by Appellee, provides evidence of the attempt to assign the note. The assignment of real estate mortgage from MERS to Appellee, was made retroactive to March 1, 2005, seventy (70) days prior to the note and mortgage being executed.

Appellants assert the retroactive assignment may have been designed to cover possible violations of prohibited transactions for retirement plans or to demonstrate the transfer occurred prior to MILA filing bankruptcy on July 7, 2007. Appellants demanded, in their response to the motion for summary judgment, proof that MILA had authority to execute an assignment of the mortgage and indorsement of the note.

¶ 7 Appellants assert the note provided by Appellee does not have an indorsement and they claim such indorsement is necessary under the Uniform Commercial Code, 12A O.S.2001, Sections 3–103(a), 3–203 and 3–204. Appellants fear without an indorsement they are vulnerable to future liability on the original note by another party.³

¶ 8 A summary order was filed August 18, 2010, denying Appellee's motion for summary judgment because there were factual issues to be resolved.

¶ 9 Appellee filed a second motion for summary judgment on April 15, 2011. Appellee attached to the second motion for summary judgment, for the first time, a copy of the note with a blank allonge purportedly executed by an assistant funding manager of MILA. This allonge reflects “payable to the order of” “without recourse.” Appellee asserted appellant did not contest the genuineness, authenticity and execution of the note and mortgage, and further, Appellants admitted at deposition they were behind on their payments.⁴ Therefore, Appellee asserted a prima facie case for foreclosure, specifically a valid mortgage exists and there had been a default.

¶ 10 Appellants filed an objection and cross motion for summary judgment on May 4, 2011. Appellants admit Alexander signed the note and mortgage on May 5, 2005. Appellants allege, on July 7, 2007, MILA filed for Chapter 11 bankruptcy in the Western District of Washington, and there has been no relief from the automatic stay for the subject property of this action.⁵

¶ 11 The trial court, on June 7, 2011, granted summary judgment in favor of Appellee and awarded Appellee costs and attorney fees. On June 10, 2011, Appellee alleges counsel for Appellants would not sign the journal entry of judgment because he thought attorney fees were unreasonable.⁶ Appellee filed a motion to settle journal entry on June 17, 2011, and Appellants filed an objection on June 27, 2011. The basis for the objection is that Appellee's attorney fees are unreasonable due to Appellants' inability to determine who was the holder of the note by reason of the inconsistencies in the various pleadings, and Appellees failure to provide loan transfer documents to Appellants when requested in discovery.

¶ 12 Appellants filed their petition in error on July 7, 2011, and later amended the petition in error to include the file stamped copy of the journal entry of judgment filed August 15, 2011. The Journal Entry of Judgment favored Appellee and found no substantial controversy as to any material fact. The Journal Entry of Judgment also denied Appellants cross motion for summary judgment.

STANDARD OF REVIEW

¶ 13 An appeal on summary judgment comes to this court as a de novo review. Carmichael v. Beller, 1996 OK 48, ¶ 2, 914 P.2d 1051, 1053. All inferences and conclusions are to be drawn from the underlying facts contained in the record and are to be considered in the light most favorable to the party opposing the summary judgment. Rose v. Sapulpa Rural Water Co., 1981 OK 85, 631 P.2d 752. Summary judgment is improper if, under the evidentiary materials, reasonable individuals could reach different factual conclusions. Gaines v. Comanche County Medical Hospital, 2006 OK 39, ¶ 4, 143 P.3d 203, 205.

ANALYSIS

¶ 14 Appellant asserts nineteen (19) issues on appeal.⁷ These include error by the trial court in not requiring more contemporaneous evidence of the transfer of the note and mortgage when allegedly Appellee's counsel and its loan servicer, ASC, did not know which entity had standing to enforce the note. Appellants argue the trial court committed reversible error by not requiring a valid assignment of mortgage prior to commencement of the foreclosure action. Essentially, Appellant is arguing Appellee did not have standing to bring the foreclosure action because there was a material issue of fact as to whether the Appellee was a person entitled to enforce the note at the time Appellee filed its amended petition. Standing is the dispositive issue in this case.

¶ 15 Appellee argues in its response to petition in error that at no time did appellant ever file an answer and no defenses have ever been asserted or preserved.⁸ Appellee asserts that Appellants' nineteen (19) issues are either abandoned, expired or are in contravention of established law. Appellees acknowledge the only issues preserved for appeal are those raised by Appellants in pleadings or oral argument. In the opinion of the Appellee, the preserved issues are: 1) did Appellee provide sufficient evidence that it has standing to enforce the note and mortgage; 2) does negotiation of the note carry with it the security interest independent of a formal assignment; 3) if not, is the formal assignment in this matter effective; and 4) are the attorney's fees reasonable.

¶ 16 As previously identified, the dispositive issue is whether or not Appellee had...