Wilmington Sav. Fund Soc'y, FSB v. Holverson
| Decision Date | 14 May 2021 |
| Docket Number | No. 122,179,122,179 |
| Court | Kansas Court of Appeals |
| Parties | WILMINGTON SAVINGS FUND SOCIETY, FSB d/b/a/ Christiana Trust AS Owner TRUSTEE OF the RESIDENTIAL CREDIT OPPORTUNITIES TRUST III, Appellant, v. Ashley A. HOLVERSON, et al., Appellees. |
William H. Meyer, of Southlaw, P.C., of Overland Park, for appellant.
Tai J. Vokins, of Sloan, Eisenbarth, Glassman, McEntire & Jarboe, L.L.C., of Lawrence, for appellee Ashley A. Holverson.
Before Powell, P.J., Green and Hill, JJ.
This is a summary judgment case involving the foreclosure of a real estate note and mortgage. Wilmington Savings Fund Society, FSB d/b/a Christiana Trust as Owner Trustee of the Residential Credit Opportunities Trust III (Wilmington) appeals the district court's grant of summary judgment in favor of the borrowers: Ashley A. Holverson and Timothy J. Holverson. The Holversons claimed that Wilmington's foreclosure action was barred by K.S.A. 60-511(1)'s five-year statute of limitations. The trial court agreed and ruled against Wilmington. On appeal, Wilmington contends that the foreclosure action here was timely filed. We agree. Thus, we reverse and remand for further proceedings consistent with this opinion.
On January 22, 2009, the Holversons executed a note as well as a mortgage on their house that secured the note. Under the note, Countrywide Bank, FBS (Countrywide) agreed to lend the Holversons $244,200, and the Holversons agreed to repay their loan to Countrywide at a rate of $1,348.48 per month plus interest and fees. The maturity date for the Holversons' loan was February 1, 2039. Nevertheless, the Holversons' note and mortgage also contained an acceleration clause. Although the acceleration clause in the Holversons' note and mortgage differed slightly, both provided that Countrywide, or any other party it ultimately assigned the Holversons' note and mortgage to, could accelerate the Holversons' loan maturity date should they default on their loan. Significantly, the acceleration clause in the Holversons' note stated:
Eventually, Countrywide assigned the Holversons' note and mortgage to Bank of America (BOA). Afterwards, in December 2010, the Holversons started missing their monthly mortgage payments. Then, on January 11, 2011, BOA sent the Holversons a letter entitled "Notice of Intent to Accelerate."
In this letter, BOA told the Holversons that they had defaulted on their loan by missing their monthly mortgage payments beginning in December 2010. Also, BOA told the Holversons, in writing, the following: (1) that they had the right to cure their default, which totaled $5,568.65, "on or before February 10, 2011"; (2) that if they failed to cure their default "on or before February 10, 2011, [their] mortgage payments [would] be accelerated with the full amount remaining accelerated and becoming due and payable in full, and foreclosure proceedings [would] be initiated at that time"; and (3) that their "default [would] not be considered cured unless [it] receive[d] ‘good funds’ in the amount of $5,568.65 on or before February 10, 2011."
The Holversons were unable to cure their default on or before February 10, 2011. But nothing immediately happened upon the Holversons' failure to cure their default. Instead, it seems that the next contact BOA had with the Holversons occurred on October 17, 2012. On that date, BOA sent a letter to the Holversons stating that it intended to initiate foreclosure proceedings against them. The letter further stated that the Holversons needed to pay it $42,529.86 to "reinstate" their loan or "to bring [their] account current." Also, the letter explained that the Holversons' outstanding principal balance under their mortgage totaled $238,053.18.
A few months later, on January 22, 2013, BOA petitioned the district court to foreclose on the Holversons' mortgage. BOA's petition provided that because the Holversons had been unable to cure their default after they started missing their monthly mortgage payments beginning in December 2010, their "total amount of indebtedness due under the terms of [their] Note and Mortgage ha[d] been accelerated and [was] due." As it did in its October 17, 2012 letter, BOA alleged that in addition to unpaid interest, late charges, and fees, the Holversons owed it the outstanding principal balance of their mortgage, which totaled $238,053.18.
Nevertheless, on September 12, 2016, BOA moved to voluntarily dismiss its foreclosure action against the Holversons. In its motion, BOA asserted that "it ha[d] decided not to pursue further collection against [the Holversons'] Note and Mortgage at [that] time." It also requested that the district court "fully reinstate[ ]" the Holversons' note and mortgage should it grant its voluntary dismissal motion. The next day, the district court "sustained" BOA's voluntary dismissal motion, dismissing its foreclosure action without prejudice.
Although not definitively established in the record on appeal, it seems that BOA moved to voluntarily dismiss its foreclosure action against the Holversons because it had already assigned the Holversons' note and mortgage to some other party. In any case, the Secretary of Housing and Urban Development (Secretary) eventually became owners of the Holversons' note and mortgage. Then, on December 2, 2016, the Secretary assigned the Holversons' note and mortgage to Bayview Loan Servicing, LLC (Bayview).
Several days following this assignment, on December 14, 2016, Bayview filed a petition to foreclose on the Holversons' note and mortgage with the district court. Bayview's foreclosure petition largely paralleled BOA's earlier foreclosure action. And like BOA's foreclosure petition, Bayview alleged that because the Holversons had been unable to cure their default after they started missing their monthly mortgage payments beginning in December 2010, their "total amount of indebtedness due under the terms of [their] Note and Mortgage ha[d] been accelerated and [was] due."
Although the Holversons, who were now divorced, answered Bayview's foreclosure petition separately, both argued that Bayview's foreclosure action was time-barred. In furtherance of this argument, Ashley moved for summary judgment against Bayview, which Timothy later joined.
In their joint motion for summary judgment, the Holversons asserted that Bayview filed its foreclosure petition beyond K.S.A. 60-511(1)'s five-year statute of limitations. In making this argument, the Holversons relied upon FGB Realty Advisors, Inc. v. Keller , 22 Kan. App. 2d 853, 854, 923 P.2d 520 (1996). According to the Holversons, the FGB Realty decision established that K.S.A. 60-511(1)'s five-year statute of limitations started to run against any holders of their note and mortgage on their failure to cure their default by the February 10, 2011 deadline as stated in BOA's January 11, 2011 Notice of Intent to Accelerate letter. The Holversons then asserted that Bayview needed to file its foreclosure petition against them no later than September 8, 2016, to not be time-barred under K.S.A. 60-511(1).
In calculating Bayview's deadline to timely file its foreclosure petition, the Holversons conceded that 211 days had to be added to K.S.A. 60-511(1)'s 5-year statute of limitations because this was how long BOA's foreclosure action against them was extended or tolled while Ashley's federal bankruptcy cases were pending. Hence, the Holversons determined that Bayview needed to file its foreclosure petition against them no later than September 8, 2016, because this date was 5 years and 211 days after the February 10, 2011 deadline. And the Holversons thus asserted that Bayview's foreclosure petition was untimely under K.S.A. 60-511(1) because it filed its foreclosure petition on December 14, 2016.
But shortly after the Holversons moved for summary judgment against Bayview, Bayview moved to substitute Wilmington as the proper plaintiff in its foreclosure action. Although Wilmington has not included Bayview's motion in the record on appeal, it is apparent that Bayview made such a motion because on July 14, 2017, the district court entered an order substituting Wilmington in place of Bayview. In its order, the district court simply stated that it was granting Bayview's motion because Bayview's "statements and allegations" in its motion were "true."
As a result, although it seems likely that Bayview made its substitution motion because it had assigned the Holversons' note and mortgage to Wilmington, which in turn allowed the district court to substitute Wilmington as the proper plaintiff under K.S.A. 60-255(c), we see nothing in the record on appeal which fully explains the district court's reason for granting Bayview's substitution motion. Even so, because the parties have not challenged the propriety of the district court's substitution order, we assume for the purpose of this appeal that on the filing of the district court's substitution order, Bayview's December 14, 2016 foreclosure petition against the Holversons effectively became Wilmington's December 14, 2016 foreclosure petition against the Holversons. And for this same reason, we will in the future refer to Bayview's December 14, 2016 foreclosure petition as Wilmington's December 14, 2016 foreclosure petition.
Immediately after the district court substituted Wilmington as the proper plaintiff, Wilmington responded to the Holversons' summary judgment motion. In its response, Wilmington conceded that the timelines of its foreclosure petition were controlled by K.S.A. 60-511(1)'s five-year statute of limitations....
To continue reading
Request your trial