Pennymac Loan Services, LLC v. Mark Lyles ( 2022 )

RENDERED: JULY 15, 2022; 10:00 A.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2021-CA-0988-MR
PENNYMAC LOAN SERVICES, LLC APPELLANT
APPEAL FROM BULLITT CIRCUIT COURT
v. HONORABLE RODNEY BURESS, JUDGE
ACTION NO. 19-CI-00899
MARK LYLES; ANNA LYLES; ANNA
LYLES, AS PERSONAL REPRESENTATIVE/
ADMINISTRATRIX FOR THE ESTATE OF
MATTHEW R. LYLES; AND UNKNOWN
DEFENDANTS, WHO ARE THE HEIRS OR
DEVISEES OR LEGATEES OF MATTHEW
R. LYLES AKA MATTHEW LYLES AKA
MATTHEW RHEA LYLES (DECEASED) AND
THEIR SPOUSES AND ANY UNKNOWN
PERSON WHO MAY HAVE AN INTEREST
IN THE PROPERTY WHICH IS THE SUBJECT
OF THIS ACTION: 313 COUNTRY LANE,
LEBANON JUNCTION, KY 40150 APPELLEES
OPINION
REVERSING, VACATING,
AND REMANDING
** ** ** ** **
BEFORE: ACREE, COMBS, AND MAZE, JUDGES.
MAZE, JUDGE: PennyMac Loan Services, LLC (PennyMac) appeals from orders
of the Bullitt Circuit Court dismissing its action against Mark Lyles, Anna Lyles, 1
and the unknown heirs of Matthew Lyles (collectively, the Lyleses). We agree
with PennyMac that its reformation and foreclosure claims were not subject to the
revival statute because the real property at issue passed to the Lyleses immediately
upon Matthew’s death, and because the trial court never obtained personal
jurisdiction over Matthew prior to his death. For the same reasons, we conclude
that the trial court erred by directing PennyMac to release its lien against the
subject property. Hence, we reverse the order dismissing, vacate the order
directing PennyMac to release the lien, and remand this matter to the trial court for
additional proceedings.
The relevant facts of this action are not in dispute. On June 26, 2014,
Matthew Lyles (Matthew) executed a note borrowing $131,632.00. The note was
secured by a mortgage on real property located at 313 Country Lane, Lebanon
Junction, Bullitt County, Kentucky. The mortgage was filed for record with the
Bullitt County Clerk in Mortgage Book M1549. The mortgage was subsequently
assigned to PennyMac.
1
Anna Lyles appears in her individual capacity and as administratrix of the estate of Matthew
Lyles. As discussed below, PennyMac has not asserted any claims against Matthew’s estate.
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On September 4, 2019, PennyMac filed a complaint alleging that
Matthew had defaulted on the note and seeking to foreclose on the real property.
The complaint also sought to correct a scrivener’s error in the property description
in the mortgage. PennyMac attempted to serve Matthew with a summons and the
complaint by certified mail and personal delivery. However, the certified mail was
returned unclaimed and personal service failed due to Matthew’s death on
September 16, 2019.
Upon being advised of Matthew’s death, PennyMac filed an amended
complaint against Matthew’s parents, Mark and Anna Lyles, who were Matthew’s
heirs at law. PennyMac also named any “unknown defendants” who may have an
interest in the property. On November 7, 2019, the Lyleses moved for a dismissal
under KRS2 395.278, arguing that PennyMac failed to revive the action against
Anna Lyles in her capacity as personal representative of Matthew’s estate. The
Lyleses also asked the trial court to release the mortgage. The trial court granted
the motions in an order entered on July 21, 2021.
PennyMac raises three issues in this appeal. First, PennyMac argues
that it was not required to substitute Matthew’s estate as a party because the
Lyleses are now the real parties in interest. In a related argument, PennyMac also
contends that KRS 395.278 did not require it to revive the action against
2
Kentucky Revised Statutes.
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Matthew’s estate because Matthew was never served with the original complaint
prior to his death. And finally, PennyMac argues that, even if the trial court
properly dismissed the complaint, KRS 395.278 did not authorize the trial court to
order a release of the lien. Each of these issues involves questions of law, which
we review de novo. Cinelli v. Ward, 997 S.W.2d 474, 476 (Ky. App. 1998).
The first two issues concern the scope and application of KRS
395.278, which provides as follows:
An application to revive an action in the name of the
representative or successor of a plaintiff, or against the
representative or successor of a defendant, shall be made
within one (1) year after the death of a deceased party.
On the first issue, it is well established that, upon the death of an
owner of real property, the title to the property passes directly to the heirs at law or
beneficiaries under the will without the need for probate. Wood v. Wingfield, 816
S.W.2d 899, 902 (Ky. 1991). Consequently, the heirs at law are the real parties in
interest. Levin v. Ferrer, 535 S.W.2d 79, 82 (Ky. 1975), and Slone v. Casey, 194
S.W.3d 336, 337 (Ky. App. 2006). As a result, revival under KRS 395.278 is not
required. Theisen v. Estate of Wilson, 226 S.W.3d 59, 61-62 (Ky. 2007).
PennyMac’s claim under the note are personal to Matthew. As a
result, KRS 395.278 required revival of the action against Matthew’s personal
representative. However, PennyMac’s amended complaint only asserted claims
under the mortgage, which passed with the property. Therefore, PennyMac
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properly brought those claims against the Lyleses without naming the personal
representative of Matthew’s estate.
We also agree with PennyMac that KRS 395.278 was not applicable
because Matthew was never served with the summons and complaint prior to his
death. The statute anticipates that the trial court had obtained personal jurisdiction
over the defendant prior to his death. Mitchell v. Money, 602 S.W.2d 687, 688
(Ky. App. 1980). Since Matthew was never served with process, the trial court
never obtained personal jurisdiction over him and he was never a party to the
action under KRS 395.278. Mitchell, 602 S.W.2d at 688-89. See also Ratliff v.
Oney, 735 S.W.2d 338, 341 (Ky. App. 1987). As a result, we conclude that the
trial court erred by dismissing the complaint based upon PennyMac’s failure to
revive the reformation and foreclosure actions against the personal representative.
Based on these conclusions, PennyMac’s third issue is now moot. We
would note, however, that if revival had been necessary in this case, then there
would have been no real party in interest to seek release of PennyMac’s lien. In
such a case, the trial court would have lacked jurisdiction to order release of the
lien. Theisen, 226 S.W.3d at 62. But since PennyMac properly asserted the
reformation and foreclosure claims against the Lyleses, we conclude that the trial
court had no basis to order PennyMac to release its lien against the subject
property.
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Accordingly, we reverse the order of the Bullitt Circuit Court
dismissing PennyMac’s claims against the Lyleses, we vacate the order directing
PennyMac to release the lien, and we remand this matter for additional proceedings
on the merits of PennyMac’s remaining claims.
ALL CONCUR.
BRIEFS FOR APPELLANT: BRIEF FOR APPELLEES:
Palmer G. Vance II Thomas E. Cooper
Patrick T. Eavenson Joshua M.P. Cooper
Lexington, Kentucky Elizabethtown, Kentucky
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