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Smalls v. Wells Fargo Bank, N.A.

Alabama Court of Civil Appeals

May 1, 2015

Charissa A. Smalls
v.
Wells Fargo Bank, N.A

          Appeal from Madison Circuit Court. (CV-09-001669).

         Charissa A. Smalls, Appellant, Pro se.

         For Appellee: D. Keith Andress and Catherine Crosby Long of Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C., Birmingham.

         DONALDSON, Judge. Thompson, P.J., and Pittman and Moore, JJ., concur. Thomas, J., concurs in the result, without writing.

          OPINION

Page 911

          DONALDSON, Judge.

         Charissa A. Smalls appeals from a judgment (" the confirmation judgment" ) entered by the Madison Circuit Court (" the trial court" ) confirming the judicial-foreclosure sale of real property in Madison County (" the property" ) and incorporating a previously entered partial summary judgment. Although the evidence in the record is sufficient to establish that Wells Fargo Bank, N.A., (" Wells Fargo" ) had a right to assert a claim for judicial foreclosure of the property, a genuine issue of material fact remains as to Wells Fargo's right to foreclose.

         Facts and Procedural History

         Smalls and her spouse, Lloyd Harper, purchased the property in 1998. To finance the purchase, Harper executed a promissory note (" the note" ) in favor of Hamilton Mortgage Corporation for a principal amount of $71,200 (" the loan" ). Both Harper and Smalls executed a mortgage on the property to secure the repayment of the loan. The mortgage conferred the power of sale to the mortgagee and its assigns, permitting a nonjudicial foreclosure sale in the event of a default. In 2006, Smalls and Harper divorced. Pursuant to an agreement between them, Harper transferred all of his interest in the property to Smalls through a quitclaim deed executed on July 12, 2006.

         The record shows that Wells Fargo began performing certain services regarding the loan in December 2006, including sending billing statements and collecting payments. Wells Fargo sent a letter to Smalls dated August 16, 2009, notifying

Page 912

her that the loan was in default and of the need to cure the default to avoid acceleration of the indebtedness. In a letter dated October 7, 2009, Wells Fargo notified Smalls that it had accelerated the remaining balance of the note and that a nonjudicial foreclosure sale of the property was scheduled for November 23, 2009.

         The sale apparently did not occur on the date specified in the October 7, 2009, letter. On November 30, 2009, Smalls filed a complaint in the trial court against Wells Fargo, alleging in part that Wells Fargo did not have a legal interest in the note or the mortgage and could not foreclose on the property. Smalls also sought an injunction to cancel the foreclosure sale of the property and a judgment declaring that Wells Fargo lacked the legal right to pursue a foreclosure sale. She also alleged that Wells Fargo's attempt to conduct a foreclosure sale was legally defective. After the complaint was filed, Wells Fargo did not pursue a nonjudicial foreclosure.

         On March 20, 2010, Wells Fargo filed an answer denying all of Smalls's claims. Wells Fargo filed a third-party complaint against Harper, asserting a claim of breach of the note, and it asserted claims against both Harper and Smalls seeking damages for unjust enrichment. Wells Fargo also sought a judgment permitting a judicial foreclosure of the property or, alternatively, granting it an equitable mortgage in the property in the event the trial court invalidated the mortgage. In its claim alleging a breach of the note, Wells Fargo sought a judgment for the outstanding balance of the note plus interest. In its claim alleging unjust enrichment, Wells Fargo sought a judgment for the benefit received by Smalls from occupying the property without paying the amount due under the note. Harper did not participate in the litigation, and Wells Fargo later dismissed its claims against Harper.

         On April 9, 2013, Wells Fargo moved for a summary judgment regarding Smalls's claims against it for injunctive and declaratory relief and on its counterclaims seeking a judicial-foreclosure sale of the property and damages for unjust enrichment. In support of its motion, Wells Fargo submitted an affidavit of Kimberly Mueggenberg, a vice president of loan documentation at Wells Fargo. Mueggenberg testified that Wells Fargo began providing services for the loan on December 1, 2006, and that, subsequently, Smalls failed to make required payments on the note. She testified regarding Smalls's failure to cure the default and Wells Fargo's notification letters to Smalls regarding the unpaid debt and foreclosure proceedings. Regarding the note and the mortgage, Mueggenberg testified as follows:

" In preparation to begin foreclosure proceedings, Wells Fargo was assigned the Note and Mortgage on June 16, 2009. ... Wells Fargo then received possession of the Note and Mortgage on January 4, 2010."

         Mueggenberg testified that she based the affidavit on her personal knowledge after a review of documents maintained by Wells Fargo pertaining to the loan.

         In support of its motion for a summary judgment, Wells Fargo also submitted the note, the mortgage, the notification letters, and documentation of the assignment from Mortgage Electronic Registration Systems, Inc. (" MERS" ), to Wells Fargo of the " Mortgage together with the note and indebtedness secured by the Mortgage, and all interest of the undersigned in and to the property described in said Mortgage." Those materials show that the original mortgagee was Hamilton Mortgage Corporation. The note contains two indorsements. The first is stamped " Without

Page 913

Recourse, Pay to the order of Chiles & Company" and appears to be signed by a representative of Hamilton Mortgage Corporation. The second indorsement is stamped " Pay to the order of Trustcorp Mortgage Company Without Recourse" and is signed by a representative of First State Bank Moulton, presumably under a power of attorney on the behalf of " Chiles & Company, Inc." In addition, the record contains a document purporting to assign the mortgage and the note from Charles F. Curry Company to MERS. There is no indication in the record of how Charles F. Curry Company obtained rights to the mortgage and the note.

         Smalls filed a response opposing the motion for a summary judgment, contending that Wells Fargo did not have the authority to foreclose on the property because it was not entitled to payments for the debt secured by the note. Smalls argued that the evidence submitted by Wells Fargo failed to establish a sufficient indorsement of the note to Wells Fargo, the authority of MERS to assign the mortgage to Wells Fargo, and/or that Wells Fargo was a holder of the note. Among other documents, Smalls submitted copies of checks she paid to " Washington Mutual Bank N.A." toward the debt due under the note and an insurance policy on the property dated May 9, 2007, that listed " Washington Mutual Bank FA" as the mortgagee.

         After a hearing, the trial court entered a partial summary judgment on June 26, 2013, in favor of Wells Fargo, dismissing all of Smalls's claims with prejudice and authorizing a judicial-foreclosure sale. The trial court ordered Wells Fargo to provide public notice of the sale through publication in a newspaper for four consecutive weeks and to submit a report of the foreclosure and copy of the foreclosure deed to the court after the sale. The partial summary judgment also stated that Wells Fargo's " counterclaims remain pending including any additional claims that may be necessary to secure possession of the property following the foreclosure sale." [1]

         On June 28, 2013, Smalls filed a motion to dismiss Wells Fargo's judicial-foreclosure action based on a lack of standing. On July 3, 2013, the trial court denied that motion. On September 5, 2013, Wells Fargo conducted a foreclosure sale of the property, and on September 12, 2013, it executed a foreclosure deed that was subsequently recorded in the Madison County Probate Office.

         On October 29, 2013, Wells Fargo filed with the trial court a report on the foreclosure sale that had occurred on September 5, 2013, and a copy of the foreclosure deed. Wells Fargo also moved, however, for permission to conduct a new foreclosure sale. Wells Fargo asserted that, due to a clerical error, notice of the sale had been published for only three consecutive weeks before the foreclosure sale instead of the four consecutive weeks required by the trial court's partial summary judgment. On November 6, 2013, Smalls filed an opposition to Wells ...


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