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Peeples v. Ditech Financial LLC

United States District Court, N.D. Alabama, Middle Division

April 8, 2019

NICKELS BOWEN PEEPLES, Plaintiff,
v.
DITECH FINANCIAL LLC, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., Defendants.

          MEMORANDUM OPINION AND ORDER

          ANNEMARIE CARNEY AXON, UNITED STATES DISTRICT JUDGE

         Before the court is Defendant Ditech Financial LLC's (“Ditech”) unopposed motion for summary judgment on all claims brought by Plaintiff Nickels Bowen Peeples. (Doc. 42). Mr. Peeples alleges that Ditech wrongfully claimed an adverse interest in Mr. Peeples' property and wrongfully initiated and advertised foreclosure proceedings against the same property.[1] (Doc. 18 at 3 ¶¶ 8, 13). Mr. Peeples brings various state law tort claims against Ditech for monetary, injunctive, and declaratory relief. (Id.).

         The court GRANTS IN PART and DENIES IN PART Ditech's motion for summary judgment. First, the court STAYS the proceedings with respect to Counts Two, Three, and Four because Ditech has notified the court of its voluntary petition for bankruptcy relief under Chapter 11, which operates as an automatic stay of those counts under 11 U.S.C. § 362. As a result, the court DENIES the motion for summary judgment on Counts Two, Three and Four WITHOUT PREJUDICE to refiling the motion if and when the automatic stay is lifted. But because the bankruptcy court granted Ditech limited relief from the automatic stay to assert a defense in title disputes, the stay does not preclude the court's consideration of Counts One and Five. The court GRANTS summary judgment on Counts One and Five because the undisputed evidence establishes that the mortgage was valid.

         I. BACKGROUND

         On a motion for summary judgment, the court “draw[s] all inferences and review[s] all evidence in the light most favorable to the non-moving party.” Hamilton v. Southland Christian Sch., Inc., 680 F.3d 1316, 1318 (11th Cir. 2012) (quotation marks omitted). Although Mr. Peeples did not respond to the motion for summary judgment, the court has reviewed “all of the evidentiary materials submitted in support of the motion for summary judgment.” United States v. One Piece of Real Prop. Located at 5800 SW 74th Ave., Miami, Fla., 363 F.3d 1099, 1101-02 (11th Cir. 2004). The court draws its description of the facts from those evidentiary materials.

         On June 27, 2007, Deidra Y. Sanders, then Deidra Y. Peeples, purchased property located at 1281 Sanie Road, Branchville, Alabama 35210. (Doc. 42-1 at 3 ¶ 3). To finance the purchase of the property, Ms. Sanders entered into and executed a promissory note and mortgage. (Id. at 3 ¶ 4). On June 26, 2009, Ms. Sanders and Mr. Peeples divorced and Ms. Sanders transferred her interest in the property to Mr. Peeples. (Id. at 4 ¶ 11). The divorce required Mr. Peeples to obtain a mortgage to purchase the property in his name and required Ms. Sanders to convey the property to Mr. Peeples by quit claim. (Id. at 4 ¶¶ 11-12). Ms. Sanders conveyed the property to Mr. Peeples by quit claim deed on September 3, 2009 (doc. 42-1 at 4 ¶ 12), but it appears he never obtained a mortgage in his own name (see doc. 18 at 3 ¶¶ 9, 11). In October 2012, Ms. Sanders filed for Chapter 7 bankruptcy. (Doc. 42-1 at 4¶ 17). The bankruptcy court discharged Ms. Sanders' case in 2013. (Id.).

         In 2017, the note fell into default and Ditech initiated foreclosure proceedings. (See Doc. 3-5). Ditech published a foreclosure sale notice and advertised a foreclosure sale of the property for July 6, 2017. (See Doc. 18 at 3 ¶ 7).

         Before the foreclosure sale, Mr. Peeples filed suit in the Circuit Court of St. Clair County, Alabama, Ashville Division. (Doc. 1-2). He seeks injunctive and declaratory relief based on a claim for quiet title (“Counts One and Five”). (Doc. 18 at 5-7, 12-13). He also seeks monetary damages for (1) slander of title (“Count Two”); (2) being placed in a false light (“Count Three”); and (3) defamation, libel, or slander (“Count Four”). (Doc. 18 at 7-12). Ditech removed the case to this court.

         II. DISCUSSION

         Ditech moves for summary judgment on all counts of the complaint. (Doc. 42). After briefing was complete on the motion for summary judgment, however, Ditech filed in this court a notice of its voluntary petition for chapter 11 bankruptcy. (See Docs. 51, 51-1). Under 11 U.S.C. § 362(a), filing a bankruptcy petition typically operates as an automatic stay of any judicial action or proceeding against the debtor. The bankruptcy court has granted Ditech limited relief from the automatic stay, allowing it to assert a defense in title disputes. (Doc. 51-2 at 8, 11). Accordingly, the court finds that the automatic stay does not preclude this court's consideration of the motion for summary judgment on Counts One and Five. The automatic stay does, however, apply to Counts Two, Three, and Four, so the court DENIES the motion for summary judgment on those counts WITHOUT PREJUDICE to refiling if and when the automatic stay is lifted.

         As to Counts One and Five, summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Although Mr. Peeples has not responded to Ditech's motion for summary judgment, this court “cannot base the entry of summary judgment on the mere fact that the motion was unopposed, but, rather, must consider the merits of the motion.” United States v. One Piece of Real Prop. Located at 5800 SW 74th Ave., Miami, Fla., 363 F.3d 1099, 1101 (11th Cir. 2004). The court therefore will proceed to consider the merits of the motion as to Counts One and Five.

         In Count One, Mr. Peeples requests an order compelling Ditech to transfer legal title and possession of the property to him and a declaration that Ditech has no claim to the property, all on the basis that the mortgage is invalid. (Doc. 18 at 7 ¶ 34). Mr. Peeples also requests that the court enjoin Ditech from claiming any interest in the property and requests that the court grant him costs incurred while filing suit. (Id.). In Count Five, Mr. Peeples alleges that Ditech “obtained a mortgage lien on Plaintiff's property without consent of the Plaintiff and without Plaintiff's authorization or knowledge, ” and requests that the court declare the mortgage lien invalid and void. (Doc. 18 at 12 ¶ 71).

         In support of his challenge to the validity of the mortgage, Mr. Peeples contends that a homestead exemption invalidates the mortgage and that Ms. Sanders' bankruptcy proceeding discharged the debt under the mortgage. (Doc. 18 at 6 ¶¶ 31-32). The court rejects both arguments.

         1. ...


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