Deutsche Bank National Trust Co. v. Slade

This memorandum opinion was not selected for publication in the New Mexico Appellate Reports. Please see Rule 12-405 NMRA for restrictions on the citation of unpublished memorandum opinions. Please also note that this electronic memorandum opinion may contain computer-generated errors or other deviations from the official paper version filed by the Court of Appeals and does not include the filing date. 1 IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO 2 DEUTSCHE BANK NATIONAL TRUST 3 COMPANY AS INDENTURE TRUSTEE 4 FOR CENTURY HOME EQUITY LOAN 5 TRUST 2005-2, 6 Plaintiff-Appellant, 7 v. NO. 34,727 8 COLETTE SLADE and CURTIS SLADE, 9 Defendants-Appellees, 10 and 11 DILCO, INC. d/b/a A & I WAREHOUSE; 12 CLOVER, INC.; UNITED STATES OF AMERICA 13 DEPARTMENT OF JUSTICE; CAGO, INC.; and 14 RESTORATION SOLUTIONS, LLC, 15 Defendants. 16 APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY 17 Clay Campbell, District Judge 18 Little, Bradley & Nesbitt, P.A. 19 Sandra A. Brown 20 Lucinda R. Silva 21 Albuquerque, NM 22 for Appellant 1 Simon A. Kubiak, Attorney at Law, P.C. 2 Simon A. Kubiak 3 Albuquerque, NM 4 for Appellees 5 MEMORANDUM OPINION 6 VANZI, Chief Judge. 7 {1} Plaintiff Deutsche Bank National Trust Company as Indenture Trustee for 8 Century Home Equity Loan Trust 2005-2 (Deutsche Bank) appeals from an order of 9 the district court dismissing its foreclosure complaint against Defendants Colette and 10 Curtis Slade (the Slades); Dilco, Inc. d/b/a A & I Warehouse; Clover, Inc.; United 11 States of America Department of Justice; Cago, Inc. (Cago); and Restoration 12 Solutions, LLC. We conclude that the district court erred in dismissing the complaint 13 and voiding the decree of foreclosure for lack of standing. Accordingly, we reverse. 14 BACKGROUND 15 {2} Deutsche Bank sought foreclosure of the Slades’ mortgage in September 2008. 16 The foreclosure complaint included copies of the note and mortgage, naming New 17 Century Mortgage Corporation (New Century) as the lender. The complaint alleged 18 that “the [n]ote and [m]ortgage were assigned to [Deutsche Bank], and [Deutsche 19 Bank] is the owner and holder in due course of said [n]ote and [m]ortgage.” The note, 20 however, showed no indorsement to Deutsche Bank from New Century, nor did it — 2 — 1 contain an indorsement in blank. The Slades’ pro se answer to the complaint did not 2 raise standing, lack of jurisdiction, or any affirmative defenses. 3 {3} In November 2008 Deutsche Bank filed a motion for summary judgment. Only 4 Cago filed a response, in which it did not oppose summary judgment. On January 9, 5 2009, the district court held a hearing on Deutsche Bank’s motion for summary 6 judgment, with Cago appearing by counsel and the Slades appearing in person and 7 unrepresented. The issues of standing and jurisdiction were not raised during the 8 hearing. Instead, the Slades requested time to hire an attorney. The district court held 9 off on addressing the merits of the summary judgment motion, granted the Slades’ 10 request, and gave them four weeks to file a written response to Deutsche Bank’s 11 motion for summary judgment. The district court advised the Slades that it would 12 grant summary judgment without any further hearing if no response was filed, either 13 by them or by their attorney. On February 17, 2009, having received no written 14 response from the Slades, the district court entered a stipulated summary and default 15 judgment, decree of foreclosure, and appointment of special master in favor of 16 Deutsche Bank. The mortgaged property was sold in August 2011, and the district 17 court entered an order confirming the sale in June 2012. The Slades did not appeal 18 from the foreclosure judgment and related orders. 19 {4} Almost two years after the district court entered the order confirming the sale, 20 on April 7, 2014, the Slades filed a motion pursuant to Rule 1-060(B) NMRA to set — 3 — 1 aside the judgment as void, based primarily on our Supreme Court’s opinion in Bank 2 of New York v. Romero, 2014-NMSC-007, ¶ 1 , 320 P.3d 1 , abrogation in part 3 recognized by PNC Mortgage v. Romero, 2016-NMCA-064 , ¶ 19 n.3, 377 P.3d 461 , 4 which held that a foreclosure judgment was void for lack of subject matter jurisdiction 5 when the plaintiff did not have standing to file the foreclosure complaint. After a 6 hearing on the Slades’ Rule 1-060(B) motion, the district court concluded in a 7 memorandum opinion that Deutsche Bank failed to establish that it had standing at the 8 time it filed suit. Consequently, relying on Bank of New York, the district court 9 dismissed Deutsche Bank’s foreclosure complaint for lack of jurisdiction and voided 10 the decree of foreclosure and the subsequent sale of the mortgaged property. 11 DISCUSSION 12 {5} Generally, we review a district court’s grant or denial of relief under Rule 1- 13 060(B) for an abuse of discretion. Meiboom v. Watson, 2000-NMSC-004, ¶ 29 , 128 14 N.M. 536 , 994 P.2d 1154 . “However, a district court has no discretion to refuse to set 15 aside a void judgment under Rule 1-060(B)(4).” State ex rel. Office of Att’y Gen. v. 16 Grand River Enters. Six Nations, Ltd., 2014-NMCA-073, ¶ 7 , 329 P.3d 723 . 17 {6} In Deutsche Bank National Trust Co. v. Johnston, 2016-NMSC-013, ¶¶ 9, 11 , 18 13, 369 P.3d 1046 , our Supreme Court clarified certain statements in Romero 19 concerning the issue of standing and ultimately held that the issue of standing in 20 mortgage foreclosure cases is not jurisdictional, but rather is prudential. As a — 4 — 1 prudential matter, a standing issue in a foreclosure case may be raised any time “prior 2 to the completion of a trial on the merits.” Johnston, 2016-NMSC-013, ¶ 16 . Although 3 the Johnston Court ultimately held that the homeowner in that case did not waive the 4 issue of standing because he raised it prior to trial, id. ¶ 17, the Court did clarify that 5 “a final judgment on . . . an action to enforce a promissory note . . . is not voidable 6 under Rule 1-060(B) due to a lack of prudential standing.” Johnston, 2016-NMSC- 7 013, ¶ 34. 8 {7} Here, the Slades are attempting to attack the final judgment as void under Rule 9 1-060(B)(4) for lack of standing. This is exactly the type of attack that our Supreme 10 Court expressly prohibited in Johnston. As a result, we must conclude that the Slades’ 11 motion to set aside the judgment as void for lack of standing—filed five years after 12 entry of the foreclosure judgment, and where no previous challenge had been made 13 as to Deutsche Bank’s standing during active litigation prior to the final 14 judgment—has no legal basis, and the Slades can find no relief in their Rule 1-060(B) 15 motion. 16 CONCLUSION 17 {8} For the foregoing reasons, the district court erred in dismissing Deutsche 18 Bank’s foreclosure complaint as void for lack of standing. Accordingly, we reverse. 19 {9} IT IS SO ORDERED. — 5 — 1 __________________________________ 2 LINDA M. VANZI, Chief Judge 3 WE CONCUR: 4 _________________________________ 5 JONATHAN B. SUTIN, Judge 6 _________________________________ 7 HENRY M. BOHNHOFF, Judge — 6 —