Wells Fargo Bank, N.A. v. Bowler
| Decision Date | 14 May 2019 |
| Docket Number | CV 18-19-M-DLC |
| Parties | WELLS FARGO BANK, N.A. AS TRUSTEE FOR THE CERTIFICATEHOLDERS OF THE ASSET BACKED SECURITIES CORPORATION HOME EQUITY LOAN TRUST, ASSET BACKED PASS-THROUGH CERTIFICATES, SERIES WMC 2005-HE5, Plaintiff, v. RICK J. BOWLER, Defendant. |
| Court | U.S. District Court — District of Montana |
Before the Court is Plaintiff's Motion for Summary Judgment (Doc. 20). Plaintiff, Wells Fargo Bank, N.A., as Trustee for the Certificateholders of the Asset Backed Securities Corporation Home Equity Loan Trust, Asset Backed Pass-Through Certificates, Series WMC 2005-HE5 ("Wells Fargo"), seeks judgment on a Promissory Note signed by Defendant Rick J. Bowler and a decree of foreclosure on the Deed of Trust intended to secure the promissory note. For the following reasons, Wells Fargo's Motion will be granted.
BACKGROUND
The following facts are undisputed. On March 10, 2005, Bowler executed both a Promissory Note ("the Note") in the original principal amount of $260,000.00 and a Deed of Trust securing Bowler's obligations under the Note. (Docs. 9-1 at 5; 9-2 at 1-2, 17; 22 at 2.) The Deed of Trust describes the following as security for the Note:
(Docs. 9-2 at 3, 18; 22 at 3.)
Wells Fargo is both the trustee for the trust holding the Note and the assignee of the Deed of Trust. (Docs. 21 at 2; 22 at 2.)
Under the terms of the Note, Wells Fargo, as trustee, is entitled to demand the entire balance owing under the Note upon Bowler's default. (Docs. 9-1 at 2.) Additionally, Bowler's default on the Note constitutes a default under the terms of the Deed of Trust. (Docs. 9-2 at 1-5; 22 at 5.) The Note provides that Bowler is liable for Wells Fargo's reasonable attorneys' fees, costs, and expenses incurred in enforcing its rights under the Note. (Doc. 9-1 at 3.)
Bowler has failed to make payments in accordance with the conditions of the Note and received notice of default in December of 2017. (Docs. 9-5 at 1-2; 22 at 4.) Based on these undisputed facts, Wells Fargo is seeking $251,694.54 in principal, in excess of $196,260.10 in interest, $60,929.88 in escrow fees, and $1,985.77 in advance fees. (Doc. 22 at 4.)
LEGAL STANDARD
Wells Fargo is entitled to summary judgment if it can demonstrate "that there is no genuine issue as to any material fact and [it] is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). Material facts are those which may affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute as to a material fact is genuine if there is sufficient evidence for a reasonable fact-finder to return a verdict for the nonmoving party. Id. If the moving party meets its initial responsibility, the burden then shifts to the opposing party to establish that a genuine issue of fact exists. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).
DISCUSSION
Because this Court is exercising diversity jurisdiction, the substantive law of Montana applies. Stanford Ranch, Inc. v. Maryland Cas. Co., 89 F.3d 618, 624 (9th Cir. 1996). However, neither party has provided the Court with the substantive law governing this case. Instead, Wells Fargo conclusively asserts that it is entitled to judgment on the Note and a decree of foreclosure on the Deed of Trust "as a matter of law" without providing any law. (Doc. 21 at 7-8.) And, for his part, Bowler simply concedes that Wells Fargo has "dutifully recited the undisputed facts that are relevant to obtaining an order of judicial foreclosure" but asserts that there are reasons the Court should refrain from entering summary judgment at this time. (Doc. 26 at 2-6.) Although Wells Fargo failed to provide any law establishing that it is entitled to judgment as a matter of law, it has provided undisputed facts that entitle it to that relief.
The Deed of Trust executed in this case has the effect of "transferring the title of the borrower to a private trustee to be held by the trustee to secure the performance of the obligation by the borrower." First State Bank of Forsyth v. Chunkapura, 734 P.2d 1203, 1205 (Mont. 1987). This trust indenture is permitted by Montana's Small Tract Financing Act ("the Financing Act") in lieu of a traditional mortgage. Id. Consistent with the Financing Act, the Deed of Trust in this case "grants and conveys to Trustee, in trust, with power of sale, the property" with the legal description provided above. (Doc. 9-2 at 3, 18.) "Such instruments have the effect of transferring the title of the borrower to a private trustee to be held by the trustee to secure the performance of the obligation by the borrower." Chunkapura, 734 P.2d at 1205. It is undisputed that Wells Fargo is the Trustee of the trust in this case. (Doc. 26-2 at 5.) Montana Code Annotated § 71-1-304(2) provides that a power of sale, such as the one conferred here, is given to the trustee "to be exercised after a breach of the obligation for which the transfer is security."
A trust indenture may be foreclosed upon in one of two ways: "by advertisement and sale" or, "at the option of the beneficiary, by judicial procedure as provided by law for the foreclosure of mortgages on real property." Mont. Code Ann. § 71-1-304(3). When the foreclosure is completed via advertisement and sale, the Financing Act expressly prohibits the entry of a deficiency judgment. § 71-1-317. On the other hand, the judicial foreclosure of a mortgage is typically attended by the debtor's rights of possession and redemption for the year following the foreclosure and can also result in a deficiency judgment. Chunkapura, 734 P.2d at 1204-05. But, in the context of a judicial foreclosure on occupied, single-family residential property pursued under the authorization of the Financing Act, the Montana Supreme Court has determined that the typical legal consequences of a judicial foreclosure—the lender's entitlement to a deficiency judgment and the borrower's entitlements to a one-year period of redemption and possession1—do not apply. Id. at 1208, 1211.
Here, Wells Fargo has opted to pursue judicial foreclosure. Accordingly, the foreclosure is governed by the "one action rule" to the extent it is consistent with the remedies provided by the Financing Act. Id. at 1203; § 71-1-305; F.D.I.C. v. Shoop, 2 F.3d 948, 951 (9th Cir. 1993) (). The "one action rule" provides that the Court may, by its judgment, direct:
§ 71-1-222(1). To make a prima facie case for foreclosure, Wells Fargo is obligated to prove the following three elements: (1) Bowler's debt; (2) nonpayment of the debt; and (3) Wells Fargo's present ownership of the debt. First Nat. Bank of Albuquerque v. Quinta Land and Cattle Co., 779 P.2d 48, 50 (Mont. 1989); HSBC BANK USA, Nat. Ass'n v. Anderson, 406 P.3d 416, 425 (Mont. 2017).
It is undisputed that Bowler borrowed money as reflected in the Note and Deed of Trust. (Docs. 12 at 1; 26-2 at 1-4.) Wells Fargo claims that Bowler owes $251,694.54 in principal, $196,260.10 in interest calculated "to February 1, 2018," $60,929.88 in "Escrow/Impound Advance Balance," and $1,985.77 in "Loan Level Advance Balance." (Docs. 21 at 4; 22 at 4.) In its brief, Wells Fargo claims that interest will continue to accrue "from February 1, 2019 at a rate of $58.61 per day." (Doc. 21 at 4.) However, in its statement of undisputed facts, Wells Fargo claims that this number is "$53.98 per day." (Doc. 22 at 4.) The latter rate of interest comes from the Affidavit of Stephanie Jolley and its attached "Payoff Statement." (Doc. 23 at 3-4.) While Bowler did not dispute Wells Fargo's use of the lower rate, the Court finds that the record supports the higher rate and will use it in its calculations. (Id. at 3-4.)
Bowler raises two disputes as to the amount of the debt. First, he disputes the day to which interest is claimed to have been calculated to. (Doc. 26-2 at 5-6.) Wells Fargo's brief and statement of undisputed facts both purport to have calculated interest through February 1, 2018. (Docs. 21 at 4; 22 at 4.) However, both the brief and statement of undisputed facts then state that the amount of per diem is running as of February 1, 2019. (Docs. 21 at 4; 22 at 4.) And the "Payoff Statement" attached to Jolley's Affidavit shows that interest was calculated through February 1, 2019. (Doc. 23 at 4.) The Court finds that this is an error in transcription on the part of Wells Fargo, but that there is not a material dispute as to when interest was calculated through. Accordingly, the Court will calculate any additional interest as of February 1, 2019.
Second, Bowler disputes the "amount of Escrow/Impound Balance that is appropriate." (Id. at 6.) Wells Fargo has submitted the "Payoff Statement" generated by Select Portfolio Servicing, Inc. in support of its claim for $60,929.88 of "Escrow/Impound Advance Balance." (Docs. 22 at 4; 23 at 4.) Although Bowler disputes this amount, he does not make any effort to set forth specific facts showing why a different number is appropriate. Instead, he merely claims that the number is inappropriate. In other words, he has not attempted to show that there is a genuine issue for trial that would preclude summary judgment on this issue. Anderson v. Liberty Lobby, Inc., ...
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