Deutsche Bank National Trust v. Bruce Merritt, Gloria King Merritt and Indymac Bank ( 2013 )

Note: Decisions of a three-justice panel are not to be considered as precedent before any tribunal.
ENTRY ORDER
SUPREME COURT DOCKET NO. 2013-122
OCTOBER TERM, 2013
Deutsche Bank National Trust } APPEALED FROM:
}
} Superior Court, Windsor Unit,
v. } Civil Division
}
Bruce E. Merritt, Gloria King Merritt and } DOCKET NO. 525-7-09 Wrcv
Indymac Bank }
Trial Judge: Robert P. Gerety, Jr.
In the above-entitled cause, the Clerk will enter:
Defendant homeowners seek to appeal the trial court’s order granting substitute plaintiff
bank’s motion to dismiss this foreclosure action without prejudice. Homeowners raise several
arguments regarding bank’s standing to enforce homeowners’ promissory note, and seek an
order dismissing the case without prejudice specifying bank’s lack of standing as the basis for
the dismissal, ordering that any legal charges, assessments and fees assessed by a bank against
homeowners in connection with this action be removed from their mortgage debt, and ordering
that initial plaintiff OneWest return all mortgage payments received from homeowners with
statutory interest. We conclude that following the court’s order dismissing the case without
prejudice there are no live issues in the present case and the appeal is moot. To the extent
defendants seek additional relief, they cannot now pursue those claims in the context of an
appeal of the now-dismissed foreclosure action.
OneWest Bank, FSB filed a complaint for foreclosure in July 2009, alleging that
homeowners had failed to make scheduled payments due under a note executed by homeowners
in favor of IndyMac Bank, F.S.B. Attached to the complaint was a purported copy of the note.
Homeowners answered, agreed that they were behind on their payments, and requested six
months to redeem. Homeowners did not make any counterclaims against OneWest. In
December 2009, the court denied without prejudice OneWest’s initial motion for summary
judgment, explaining that the bank needed to provide documents by an officer with corporate
authority to show the chain of conveyances between IndyMac and OneWest.
OneWest promptly refiled for summary judgment and attached a bill of sale documenting
the transfer of IndyMac’s assets to OneWest as well as an affidavit from a corporate officer
averring that the bank held the original note. By entry order in February 2010, the court granted
OneWest’s motion and requested the bank prepare a judgment order after the clerk prepared an
accounting. Shortly thereafter, homeowners objected to the clerk’s proposed accounting and
moved to dismiss the foreclosure on the ground that OneWest did not have standing to foreclose
on the note in question. In March 2010, the court held a status hearing and ordered the parties to
mediate before judgment issued. In June 2010, the court held another hearing at which the
parties represented that they had reached an agreement. The court put the case on hold pending
negotiation of the settlement.
In October 2010, while the case was still essentially “on hold” pending settlement
negotiations, OneWest filed a motion to strike its request for judgment, stating that it was
conducting “a national review of all paperwork filed relative to all pending foreclosure actions”
and would “re-file, as necessary.” The trial court granted the motion.
In June 2012, OneWest filed a motion to substitute parties explaining that Deutsche Bank
National Trust Company owned the note homeowners gave to IndyMac and that OneWest had
assigned its mortgage interest to Deutsch Bank, such that Deutsch Bank was the proper party in
interest. Homeowners opposed the motion and moved to dismiss for lack of standing. They
essentially argued that Deutsche Bank had owned the note and mortgage all along, and that at the
time the foreclosure action was filed, OneWest did not own the original note and mortgage and
did not have standing to initiate a foreclosure. Homeowners argued that the case should
therefore be dismissed, and that OneWest could not remedy its lack of standing when it filed the
complaint by substituting the proper party three years later. See U.S. Bank Nat’l Ass’n v.
Kimball, 2011 VT 81, ¶ 10, 190 Vt. 210. Homeowners also requested that the court
preemptively rule that any legal fees and costs billed or anticipated to be billed to homeowners
on account of the “false filing of foreclosure” be ruled inapplicable, and asserted that monies it
had paid to OneWest pursuant to a forbearance agreement had not been properly accounted for.
In November 2012, the court granted OneWest’s motion to substitute parties, and denied
homeowners’ motion to dismiss for lack of standing. With respect to homeowners’ motion, the
court explained that the complaint on its face made allegations sufficient to support standing, so
the court could not dismiss the case pursuant to a motion to dismiss. If homeowners wanted to
present evidence to disprove OneWest’s allegations supporting its claim that it had standing to
file the foreclosure, then they could file a motion for summary judgment. The court made it
clear that it was not ruling either way on the question of whether OneWest actually did have the
original promissory note and authority to foreclose on the mortgage when it filed the foreclosure
action.
In January 2013, Deutsch Bank, as substitute plaintiff, moved to dismiss the action
without prejudice, explaining that homeowners had executed a loan modification and were now
current on their loan. On February 20, 2013, the court granted Deutsch Bank’s motion to dismiss
without prejudice. On the same day, the court denied as moot homeowners’ pending motions for
discovery. Homeowners subsequently filed a motion for summary judgment, and on March 13,
2013 the court denied it as moot. On March 20, 2013, homeowners filed this appeal.
On appeal, homeowners argue that the court erred in several ways, most importantly in
not dismissing this action specifically on account of OneWest’s lack of standing. Homeowners
request that this Court dismiss the complaint for lack of standing, preclude the bank from
assessing any fees or legal charges against homeowners on account of this action, order OneWest
to pay them back the payments homeowners made to OneWest with interest, and remand the
case to the superior court “for a damages hearing.”
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Deutsch Bank argues that this Court cannot consider the merits of homeowners’ appeal
because a voluntary dismissal order is not a final order subject to appeal; homeowners failed to
file a request to appeal within ten days following judgment, which it asserts is required by
Vermont Rule of Civil Procedure 80.1; homeowners’ claims are moot; and, homeowners did not
preserve their claims for appeal. On the merits, the Deutsch Bank argues that OneWest had
standing at the time it filed the foreclosure action.
Because we conclude that homeowners’ claims are moot in the context of this case, we
need not address the question of whether a voluntary dismissal without prejudice is an appealable
order, and need not reach the substantive arguments raised by either bank or homeowners.1 This
Court’s authority is limited to deciding only “actual controversies arising between adverse
litigants.” Chase v. State, 2008 VT 107, ¶ 11, 184 Vt. 430 (quotation omitted). To have
jurisdiction over an appeal, the case “must present a live controversy at all stages of the appeal,
and the parties must have a legally cognizable interest in the outcome.” Id. (quotation omitted).
An action “becomes moot when the issues presented are no longer live or the parties lack a
legally cognizable interest in the outcome.” State v. Lee, 2007 VT 7, ¶ 10, 181 Vt. 605 (mem.)
(quotation omitted).
Here, the matter is moot because there is no live controversy between the parties and this
Court is unable to grant homeowners any further relief. The only claims pending before the
superior court were the bank’s foreclosure claims. The bank voluntarily dismissed its claims.
Homeowners had no counterclaims that kept a live issue in front of the court once the bank
voluntarily dismissed. Therefore, the controversy between the parties that was before the
superior court was extinguished, and is no longer a live legal controversy. In addition, there is
no further relief that this Court can grant to homeowners in connection with this case. In
response to the banks’ claims, homeowners sought dismissal without prejudice. That is exactly
the remedy granted by the superior court. This Court can grant no further relief than that already
granted by the trial court and therefore the case is moot. See In re Young’s Tuttle Street Row,
2007 VT 118, ¶ 4, 182 Vt. 631 (mem.) (“[W]hen a tribunal has already granted the relief
requested, the appellate case is moot, because the reviewing court can no longer grant effective
relief.” (quotation omitted)).
To the extent that homeowners seek an advisory opinion from this court to the effect that
OneWest did not have standing when it filed the foreclosure action, we cannot oblige.
Homeowners did not file their motion for summary judgment on this issue until after the case
was dismissed, and so the trial court, properly, never ruled on the question. Homeowners’ other
requests—for an order precluding the banks from assessing legal fees against them in connection
with what they allege to have been a wrongful foreclosure action, and for return of the
unaccounted-for monies they paid to OneWest—were not squarely before the court in this action
once the case was dismissed. We express no opinion on the merits of these additional claims,
but also note that nothing about this decision precludes homeowners from seeking, in a separate
legal action, relief concerning monies they believe they can show to have been improperly
1
We do squarely reject Deutsch Bank’s argument that if a voluntary dismissal of a
foreclosure action is appealable, V.R.C.P. 80.1(m) requires that a party appeal within 10 days.
The ten-day appeal requirement in the rule is expressly directed at judgments “for foreclosure of
the mortgage.” V.R.C.P. 80.1(m).
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accounted for, or from fees and legal charges they believe to have been wrongly assessed against
them by a bank.
Appeal dismissed.
BY THE COURT:
_______________________________________
John A. Dooley, Associate Justice
_______________________________________
Marilyn S. Skoglund, Associate Justice
_______________________________________
Beth Robinson, Associate Justice
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