Anderson v. Citimortgage, Inc. ( 2014 )

Cite as 2014 Ark. App. 683
ARKANSAS COURT OF APPEALS
DIVISION II
No. CV-14-348
ERIC ANDERSON and TAMA Opinion Delivered December 3, 2014
ANDERSON
APPEAL FROM THE PULASKI
APPELLANTS COUNTY CIRCUIT COURT,
THIRD DIVISION
V. [NO. CV-2010-6701]
CITIMORTGAGE, INC. HONORABLE JAY MOODY, JUDGE
APPELLEE AFFIRMED
RITA W. GRUBER, Judge
For the second time, Eric and Tama Anderson appeal from an order of the Pulaski
County Circuit Court granting summary judgment and dismissing their claims against
appellee CitiMortgage, Inc. We dismissed their first appeal for lack of a final, appealable
order. Anderson v. CitiMortgage, Inc., 2013 Ark. App. 545 (Anderson I). Following remand, the
circuit court entered a final order. We now consider the merits of the appeal and affirm the
grant of summary judgment.
In Anderson I, we set forth the following background:
In 2001, the Andersons purchased a home on which Citimortgage’s
predecessor in interest, First Nationwide Mortgage Corporation, held a mortgage.
The face amount of the mortgage and the note it secured was $186,200. In March
2003, First Nationwide merged with Citimortgage, and Citimortgage began accepting
payments on the Andersons’ mortgage.
The Andersons filed a Chapter 13 bankruptcy in February 2004 in order to
retain possession of their home. Citimortgage was listed as a secured creditor. In 2008,
Citimortgage notified the Andersons that it had not received payment from the
Cite as 2014 Ark. App. 683
bankruptcy trustee.
In May 2009, the bankruptcy trustee filed a motion to dismiss the Andersons’
bankruptcy case, asserting that based on the claim filed and allowed, payments made
into the plan to date, and currently scheduled plan payments, the plan would not be
completed within sixty months from the effective date of the plan; and that the
Andersons were in material default with respect to the terms of the plan. An order
dismissing the bankruptcy case was entered on August 7, 2009.
In October 2009, Citimortgage, after reviewing information provided for that
purpose, determined that the Andersons did not qualify for a loan modification.
Further discussions resulted in the approval of a December 2009 trial payment plan
with monthly trial payments of $1,400 from January 1 through March 1, 2010. At the
conclusion of the December 2009 plan, the loan was reviewed for a potential
modification, but denied as not meeting the requisite criteria.
In October 2010, a statutory foreclosure was commenced, and the Andersons
received a Notice of Default and Intent to Sell from Wilson & Associates. The notice
stated that Wilson & Associates would conduct the sale on November 30, 2010.
On November 24, 2010, the Andersons filed the present action against
Citimortgage, Wilson & Associates, PLLC, and Bank of America. The complaint
asserted that Citimortgage persuaded Tama Anderson to dismiss her bankruptcy,
promising to modify her loan and accept $13,000 to reinstate the mortgage; that
Anderson dismissed her bankruptcy and tendered the above sum; and that
Citimortgage then informed Anderson of additional fees and costs and did not modify
the loan. The Andersons sought a temporary restraining order to enjoin any sale of
the house; an accounting for all charges and payments; and damages for breach of
contract, breach of fiduciary duty, fraud, and violation of the Arkansas Deceptive
Trade Practices Act. They sought further relief in the form of having the security
interest, mortgage, debt, and/or note voided, reinstatement of their mortgage, and
punitive damages.
On November 29, 2010, an ex parte temporary restraining order was granted
that prohibited the defendants from conducting, instituting, or maintaining any
foreclosure action against the Andersons. The parties later agreed to the entry of an
order extending the temporary restraining order. The Andersons were to remit their
monthly mortgage payment into the registry of the court.
Citimortgage filed an answer stating that it was seeking to proceed under the
statutory foreclosure act. After setting forth its version of events, Citimortgage also
asserted that the Andersons were not entitled to have the security interest, mortgage,
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debt, and/or note voided. The answer also asserted certain affirmative defenses and
requested the complaint be dismissed.
Citimortgage later filed its motion for summary judgment and accompanying
brief, to which the Andersons responded. Included with the response was a ten-page
affidavit from Tama Anderson outlining her version of the events and her
conversations with various Citimortgage employees.
Following a hearing, the circuit court ruled from the bench and granted the
motion for summary judgment. The order memorializing that ruling was entered on
August 14, 2012, and dismissed the Andersons’ complaint in its entirety, with
prejudice.
On August 23, 2012, the Andersons filed a motion for amendment of findings.
The motion sought to have the circuit court set forth its reasoning for concluding that
there were no issues of material fact as to any of the Andersons’ causes of action. . .
. The circuit court took no action on the Andersons’ motion for amended findings,
and it was deemed denied[.]
Anderson I, 2013 Ark. App. 545, at 2–4.
On appeal, the Andersons raise two points: that the circuit court erred in determining
that no genuine issue of material fact existed and in failing to set out its conclusions of law
with specificity.
The Andersons first argue in several subpoints that there are genuine issues of material
fact that preclude summary judgment. We disagree. Our supreme court has set forth the
following standard of review with regard to motions for summary judgment:
Our standard of review for summary judgment cases is well established.
Summary judgment should only be granted when it is clear that there are no genuine
issues of material fact to be litigated, and the moving party is entitled to judgment as
a matter of law. The purpose of summary judgment is not to try the issues, but to
determine whether there are any issues to be tried. We no longer refer to summary
judgment as a drastic remedy and now simply regard it as one of the tools in a trial
court's efficiency arsenal. Once the moving party has established a prima facie
entitlement to summary judgment, the opposing party must meet proof with proof
and demonstrate the existence of a material issue of fact. On appellate review, we
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determine if summary judgment was appropriate based on whether the evidentiary
items presented by the moving party in support of the motion leave a material fact
unanswered. We view the evidence in a light most favorable to the party against
whom the motion was filed, resolving all doubts and inferences against the moving
party. Our review focuses not only on the pleadings, but also on the affidavits and
other documents filed by the parties. Moreover, if a moving party fails to offer proof
on a controverted issue, summary judgment is not appropriate, regardless of whether
the nonmoving party presents the court with any countervailing evidence.
Harvest Rice, Inc. v. Fritz & Mertice Lehman Elevator & Dryer, Inc., 365 Ark. 573, 575–76, 231
S.W.3d 720, 723 (2006) (citations omitted). The standard is whether the evidence is
sufficient to raise a fact issue, not whether the evidence is sufficient to compel a conclusion.
Wagner v. Gen. Motors Corp., 370 Ark. 268, 258 S.W.3d 749 (2007). A fact issue exists, even
if the facts are not in dispute, if the facts may result in differing conclusions as to whether the
moving party is entitled to judgment as a matter of law. Id. In such an instance, summary
judgment is inappropriate. Id.
The Andersons’ first subpoint is a “show-me-the-note” argument, that CitiMortgage
cannot foreclose on their home because it did not produce the original note. They also argue
that the public records do not show that CitiMortgage has an interest in either the note or
the mortgage. These arguments are based on case law relating to judicial-foreclosure actions
that require production of the note. See McKay v. Capital Res. Co., 327 Ark. 737, 940
S.W.2d 869 (1997); Corn Ins. Agency, Inc. v . First Fed. Bank, 88 Ark. App. 8, 194 S.W.3d
230 (2004). They have no application to the present case.
The right to foreclose a mortgage at a private sale is derived from the power conferred
by the mortgage and does not exist independent of it. Stallings v. Thomas, 55 Ark. 326, 327,
18 S.W. 184, 184 (1892). The instrument creating such a power determines its extent, as well
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as the manner and conditions of its exercise, and those relying upon such a sale must show
that it was made in obedience to the power. Id. The Arkansas statutes governing foreclosure
of property through a private sale do not specifically require that the foreclosing party
produce a physical copy of the original promissary note.1 Most courts that have recently
considered the matter have held that production of the original note is not required before
commencing a statutory-foreclosure proceeding. E.g., Hogan v. Wash. Mut. Bank, N.A., 277
P.3d 781 (Ariz. 2012); Debrunner v. Deutsche Bank Nat’l Trust Co., 138 Cal. Rptr. 3d 830
(Cal. Ct. App. 2012); Jackson v. Mortg. Elec. Registration Sys., Inc., 770 N.W.2d 487 (Minn.
2009); In re Adams, 693 S.E.2d 705 (N.C. Ct. App. 2010).2
Apart from there being no requirement that it produce the original note,
CitiMortgage submitted the affidavit of John Linnenbrink, its business-operations analyst and
custodian of records, stating that the original note was in CitiMortgage’s possession. In
response, the Andersons submitted the affidavit of one of their attorneys stating that he had
researched the records concerning the Andersons’ property and had attached copies of all
records filed as of January 13, 2011.
To the extent that the Andersons argue that CitiMortgage had a duty to record any
assignment of the note or mortgage, there is no such duty. As recently stated by a federal
court in Arkansas,
1
Ark. Code Ann. §§ 18-50-101 to -117 (Repl. 2003 & Supp. 2013).
2
Other cases are collected in William Howard, Annotation, Necessity of Production of
Original Note Involved in Mortgage Foreclosure–Twenty-First Century Cases, 86 A.L.R. 6th 411,
§ 5 (2013).
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Arkansas’s statutes “do not require assignments to be recorded.” Bryan v. Easton
Tire Co., 262 Ark. 731, 733, 561 S.W.2d 79, 80 (1978). The rationale is easily
understood. In Arkansas, a recorded mortgage provides constructive notice to
subsequent purchasers that the subject property is encumbered by the mortgage. Ark.
Code Ann. § 14-15-404(a) (West 2012). “But an unrecorded mortgage is good
between the parties thereto, and constitutes a lien which may be enforced as against
the mortgagor.” Judkins v. State, 123 Ark. 28, [33,] 184 S.W. 407, 408 (1916). In
other words, a mortgage’s legal efficacy as to the original parties is not diminished if
the mortgage goes unrecorded. The purpose of recording is simply to give
constructive notice to subsequent purchasers. See Ark. Code Ann. § 14-15-404(a);
Neas v. Whitener–London Realty Co., 119 Ark. 301, 178 S.W. 390, 391 (1915).
Brown v. Mortg. Elec. Registration System, Inc., 903 F. Supp. 2d 723, 727 (W.D. Ark. 2012),
aff’d, 738 F.3d 926 (8th Cir. 2013). Because CitiMortgage presented evidence in the form
of the Linnenbrink affidavit that it was in possession of the note, it was incumbent on the
Andersons to meet proof with proof in order to create a genuine issue of material fact. See
Campbell v. Asbury Auto., Inc., 2011 Ark. 157, 381 S.W.3d 21. They did not do so.
Therefore, the circuit court correctly granted summary judgment in favor of CitiMortgage
on the Andersons’ claim to void any interest CitiMortgage might have in the mortgage and
note.
We address the Andersons’ subpoints on their fraud and Arkansas Deceptive Trade
Practices Act claims together because they rely on the same basic allegations. The factual
predicates for these arguments fail. One claim was that CitiMortgage continued to assess late
charges and other fees despite the existence of the December 2009 repayment plan.
However, the documents the Andersons rely on expressly state that late charges and other
fees would continue to accrue until the account was brought current.
The Andersons argue that CitiMortgage induced them to leave the protection of the
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bankruptcy court in return for a promised modification of their mortgage loan and then
failed to grant a loan modification. However, the Andersons did not voluntarily leave their
bankruptcy case; instead, it was dismissed upon motion of the bankruptcy trustee. That
motion explained that the Andersons were in material default with respect to the terms of
the confirmed plan, which limited the duration of the plan to a total of sixty months, because
they were not making sufficient payments for the plan to be paid within that time. After the
Andersons failed to appear at the hearing on the trustee’s motion, the bankruptcy court
entered its order dismissing the bankruptcy case. It was the Andersons’ failure to comply with
the terms of the bankruptcy plan, not any alleged misrepresentations by CitiMortgage, that
resulted in the dismissal of their bankruptcy case. Moreover, the Andersons admitted during
discovery that they did not tender the $13,000 allegedly required in order to obtain a
modification of their loan.
If a plaintiff responding to a motion for summary judgment cannot present proof of
an essential element of the claim, the moving party is entitled to summary judgment as a
matter of law. Quattlebaum v. McCarver, 2013 Ark. App. 376; Lancaster v. Red Robin Int’l, Inc.,
2011 Ark. App. 706, 386 S.W.3d 662. Here, the circuit court correctly granted summary
judgment on the fraud and Arkansas Deceptive Trade Practices Act claims.
The Andersons’ fourth subpoint is that the circuit court erred in granting summary
judgment on their breach-of-contract claim. The basis for this claim is the Andersons’
contention that they and CitiMortgage entered into the December 2009 repayment plan in
order to reinstate their mortgage and pay off the balance. They alleged that they complied
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with the terms of this agreement by making timely payments in January, February, and
March 2010. They further alleged that CitiMortgage refused to accept continued payments
in April and May 2010.
The repayment-plan document creates no such obligation on the part of CitiMortgage
to modify the Andersons’ loan. At the time of the repayment plan, the Andersons were
approximately $40,000 in arrears on their mortgage. The plan itself shows that it was only
for the January to March period, with payments of $1,400 per month. The document also
provides that, during the plan, the terms of the note and mortgage “shall remain in full force
and effect.”3 The plan does not alter the fact that the Andersons were not entitled to have
the mortgage reinstated until they cured the default by paying the entire amount of the
past-due payments, late fees, and costs and expenses, including attorney’s fees. See Ark. Code
Ann. § 18-50-114(a) (Repl. 2003); Lambert v. Firstar Bank, N.A., 83 Ark. App. 259, 127
S.W.3d 523 (2003). Moreover, the Andersons acknowledged in their response to the motion
for summary judgment that the December 2009 plan was actually a temporary measure while
CitiMortgage considered whether to modify the loan.
The Andersons also assert that the circuit court erred in granting summary judgment
on their breach-of-fiduciary-duty claim. The Eighth Circuit Court of Appeals has recently
held that a similar claim was nothing more than a variation of the show-me-the-note
argument. Kraus v. CitiMortgage, Inc., 513 Fed. App’x 624, 625–26 (8th Cir. 2013). As such,
3
This contradicts the statements in Tama Anderson’s affidavit that the letter she
received contained no such statement. However, the document was attached as an exhibit
to the Andersons’ complaint.
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there is no reversible error for the reasons discussed above under the Andersons’ first
subpoint.
As their final subpoint, the Andersons argue that an issue of fact exists as to whether
they are entitled to an equitable accounting. It appears that CitiMortgage gave the Andersons
exactly what they wanted. John Linnenbrink’s affidavit in support of CitiMortgage’s motion
for summary judgment stated that, as of January 2011, all payments that had been received
were reflected in the attached accounting. The Andersons did not dispute Linnenbrink’s
affidavit but asserted that “these are not current accountings of Plaintiffs’ mortgage and do
not provide explanations for several of the fees. It is impossible for Plaintiffs to determine
what CitiMortgage claims they owe on their mortgage absent a detailed accounting.”
Although the Andersons requested more time to obtain discovery at the summary-judgment
hearing, they did not comply with Ark. R. Civ. P. 56(f) by filing an affidavit stating that they
were unable to present evidence in opposition to the motion for summary judgment. See
Killian v. Gibson, 2012 Ark. App. 299, 423 S.W.3d 98. There is no basis for reversal on this
issue.
For their second point on appeal, the Andersons contend that the circuit court erred
in denying their request for specific findings of fact and conclusions of law. After the court’s
order granting summary judgment was entered, the Andersons filed a motion pursuant to
Rule 52 of the Arkansas Rules of Civil Procedure requesting the court to amend the finding
that it made and to make specific findings of fact and conclusions of law on eleven issues
constituting the grounds of its decision. They requested that the court answer their questions
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so that they could have guidance in knowing what potential claims they may have against
CitiMortgage. The circuit court failed to act on the motion, and it was deemed denied.
This court has recently rejected such an argument, stating:
First, the court’s ruling dismissing this case was made pursuant to Ark. R. Civ. P. 56
(2011). A court grants a motion for summary judgment when it determines that there
are no genuine issues of material fact to be litigated and, therefore, that the party is
entitled to judgment as a matter of law. By definition, the action was never “tried
upon the facts” to either a jury or the court. The object of a summary judgment
proceeding is not to try the issues, but to determine if there are any issues to be tried.
Thus, Rule 52 is inapplicable to a court’s decision pursuant to Rule 56. Furthermore,
Rule 52 specifically provides that “[f]indings of fact and conclusions of law are
unnecessary on decisions of motions under these rules.” Appellant argues that,
notwithstanding this language, the better practice would be for the court to explain
its decisions. Perhaps. But this court has no authority to rewrite Rule 52; accordingly,
we affirm the court’s denial of his motion.
Summers v. Byrd, 2012 Ark. App. 171, at 9, 392 S.W.3d 374, 378–79 (alteration in original)
(citations omitted). Moreover, a party is not entitled to a direct answer on every specific
requested finding if the circuit court’s findings adequately address the issues. Lawson v. Sipple,
319 Ark. 543, 893 S.W.2d 757 (1995).
Affirmed.
WYNNE and BROWN , JJ., agree.
Owings Law Firm, by: Steven A. Owings and Alexander P. Owings, for appellants.
Wilson & Associates, PLLC, by: Samuel S. High, for appellee.
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