Glenn D. Augenstein v. Deutsche Bank National Trust Company as Trustee for the Certificateholders of Soundview

RENDERED: NOVEMBER 5, 2021; 10:00 A.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2018-CA-1831-MR
GLENN D. AUGENSTEIN APPELLANT
APPEAL FROM HENRY CIRCUIT COURT
v. HONORABLE R. LESLIE KNIGHT, SPECIAL JUDGE
ACTION NO. 12-CI-00203
DEUTSCHE BANK NATIONAL TRUST
COMPANY, AS TRUSTEE FOR THE
CERTIFICATEHOLDERS OF
SOUNDVIEW HOME LOAN TRUST 2005-OPT4,
ASSET-BACKED CERTIFICATES, SERIES 2005-OPT4
c/o AMERICAN HOME MORTGAGE SERVICING, INC.,
1525 SOUTH BELTLINE RD COPPELL, TX 75019 APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE: ACREE, COMBS, AND MAZE, JUDGES.
MAZE, JUDGE: Appellant, Glenn D. Augenstein, pro se, appeals the Henry
Circuit Court’s summary judgment and order of sale in favor of Appellee,
Deutsche Bank,1 as well as other orders relating to the underlying action. For the
following reasons, we affirm.
BACKGROUND
This is a foreclosure case. On September 9, 2005, Augenstein
obtained a loan for $160,500.00 and executed a promissory note in favor of Option
One Mortgage Corporation to purchase real property located at 932 Wooded Hills
Road, Pendleton, Kentucky 40055. Option One Mortgage Corporation endorsed
the promissory note in blank on the allonge attached to the instrument. Then, in
January 2008, Option One Mortgage Corporation assigned its interest in the
mortgage to Deutsche Bank.
In 2012, after Augenstein failed to make the mortgage payments,
Deutsche Bank filed a foreclosure action.2 Augenstein answered the complaint and
also filed counterclaims against Deutsche Bank. The trial court dismissed
1
Appellee is fully identified as Deutsche Bank National Trust Company, as Trustee for the
Certificateholders of Soundview Home Loan Trust 2005-OPT4, Asset-Backed Certificates,
Series 2005-OPT4 c/o American Home Mortgage Servicing, Inc., 1525 South Beltline Rd
Coppell, TX 75019 (hereinafter “Deutsche Bank”).
2
Deutsche Bank previously filed a foreclosure action against Augenstein in December 2007 and
the Henry Circuit Court granted judgment in its favor in June 2008. That order was vacated by
this Court in 2011 after Deutsche Bank failed to file an appellate brief and we concluded that
Deutsche Bank did not have standing to commence the foreclosure action in December 2007
because Option One Mortgage Corporation did not assign its interest in the mortgage until
January 2008, which was after Deutsche Bank filed its complaint. See Augenstein v. Deutsche
Bank Nat’l Trust Co., No. 2009-CA-000058-MR, 2011 WL 556057 (Ky. App. Feb. 18, 2011,
petition for reh’g denied Jul. 29, 2011).
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Augenstein’s counterclaims by summary judgment orders entered on June 29, 2015
and February 9, 2018, respectively.
On May 14, 2018, Deutsche Bank filed a motion for summary
judgment seeking a personal judgment against Augenstein and a sale of the real
estate which secured the mortgage. Attached to Deutsche Bank’s motion was the
affidavit of Yvonne S. Belcher, a representative who attested to the amount and
status of Augenstein’s mortgage based upon a review of the business records kept
in the regular course of business related to the mortgage loan.
On August 15, 2018, the trial court granted summary judgment to
Deutsche Bank. The trial court found that Augenstein had not made a payment on
his mortgage since 2007 and, as of April 30, 2018, the total amount Augenstein
owed on the note and mortgage debt with related late fees, escrows for taxes,
insurance, and property preservation costs was $376,216.60. The trial court
concluded that Augenstein was in default of his promissory note and mortgage by
the written terms of those documents for failing to make his monthly payments and
ordered the Master Commissioner to sell the real estate at issue to satisfy the
judgment.
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Subsequently, Augenstein filed a CR3 59.05 motion to vacate, which
the trial court verbally denied during an October 29, 2018, hearing.4 On November
28, 2018, Augenstein filed this appeal.5 Additional facts will be developed as
necessary.
ANALYSIS
I. The trial court did not err in granting summary judgment.
Appellate review of a motion for summary judgment only involves
questions of law and “a determination of whether a disputed material issue of fact
exists.” Shelton v. Kentucky Easter Seals Society, Inc., 413 S.W.3d 901, 905 (Ky.
2013). Therefore, our review of the summary judgment order is de novo with no
need to defer to the trial court’s decision. Id.Augenstein argues the trial court erred in granting summary judgment
and Deutsche Bank did not have a right to enforce the mortgage and promissory
note because those documents were not authenticated. Specifically, Augenstein
claims no witness attested that the documents were what they were purported to be
3
Kentucky Rules of Civil Procedure.
4
The trial court entered a nunc pro tunc order denying Augenstein’s CR 59.05 motion on
January 11, 2019.
5
Augenstein also filed a motion for intermediate relief and a petition for writ of prohibition,
which the Court denied on December 13, 2018 and February 7, 2019, respectively. See
Augenstein v. Honorable R. Leslie Knight, et al., No. 2018-CA-001802-OA.
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and, citing Acuff v. Wells Fargo Bank, N.A., 460 S.W.3d 335 (Ky. App. 2014),
argues that physical possession of the instruments is essential to enforcement.
“Generally, in foreclosure cases, the real party in interest is the current
holder of the note and/or mortgage.” Acuff, 460 S.W.3d at 339. A holder of a note
is entitled to enforce the obligations secured thereby. Stevenson v. Bank of
America, 359 S.W.3d 466, 470 (Ky. App. 2011). A “holder” is defined as
someone “in possession of a negotiable instrument that is payable either to bearer
or to an identified person that is the person in possession[.]” KRS6 355.1-
201(2)(u)1. “When indorsed in blank, an instrument becomes payable to bearer
and may be negotiated by transfer of possession alone until specially indorsed.”
KRS 355.3-205(2); see also KRS 355.3-201(1). Accordingly, if a party is in
possession of the original note, it is entitled to enforce the obligations secured by it
and is the real party in interest. Stevenson, 359 S.W.3d at 470.
Based on our review of the record, Deutsche Bank proved that it was
the holder of the original note endorsed in blank. Deutsche Bank produced the
original note in open court for Augenstein’s review and inspection. Also, the
mortgage document was filed with the Henry County Clerk’s office and
Augenstein’s signature on the document had never been disputed. Moreover,
6
Kentucky Revised Statutes.
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Augenstein did not file an affidavit or cite other evidence to dispute the validity or
authenticity of the documents.
A party is entitled to summary judgment if it appears from the
pleadings and all relevant discovery that no genuine issue of material fact exists,
and the moving party is entitled to judgment as a matter of law. CR 56; Steelvest,
Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476 (Ky. 1991). A party
opposing summary judgment cannot merely rest on allegations in his pleadings.
Continental Casualty Co. v. Belknap Hardware and Manufacturing Co., 281
S.W.2d 914 (Ky. 1955). Instead, a party seeking to defeat summary judgment
should present affirmative evidence, by affidavit or otherwise, that demonstrates a
genuine issue of material fact exists requiring trial. Hubble v. Johnson, 841
S.W.2d 169, 171 (Ky. 1992). We conclude that the trial court did not err in
granting summary judgment to Deutsche Bank because a genuine issue of material
fact did not exist as to Deutsche Bank’s right to enforce the note and maintain this
action as the real party in interest.
II. The trustworthiness of Deutsche Bank’s records
Augenstein argues that the trial court erred in admitting Deutsche
Bank’s records and Ms. Belcher’s affidavit regarding the default of his mortgage
because they lacked trustworthiness. On appellate review, “the decision whether to
admit evidence is vested in the sound discretion of the trial court and will not be
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reversed absent a showing of an abuse of discretion.” Welsh v. Galen of Virginia,
Inc., 128 S.W.3d 41, 51 (Ky. App. 2001) (citation omitted).
KRE7 803(6) explains that records of regularly conducted activity “if
kept in the course of a regularly conducted business activity” and the testimony of
the records custodian “or other qualified witness” concerning those records are not
excluded by the hearsay rule “unless the source of information or the method or
circumstances of preparation indicate lack of trustworthiness.” Here, Augenstein
offered no evidence that Ms. Belcher’s affidavit or the documents themselves lack
trustworthiness. We conclude the trial court did not abuse its discretion in
admitting this evidence.
III. Augenstein had an adequate opportunity to respond to Deutsche
Bank’s summary judgment motion.
Next, Augenstein claims the trial court erred by denying him an
opportunity to respond to Deutsche Bank’s summary judgment motion in a
properly noticed hearing. He claims this denial violated his right to due process.
Deutsche Bank filed its summary judgment motion on May 14, 2018.
That motion was originally noticed for May 21, 2018, but later re-noticed for May
25, 2018, due to a mistake regarding the special judge’s hearing schedule. When
7
Kentucky Rules of Evidence.
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Augenstein complained about the two different notices and the timing of the
hearing date, the trial court continued the hearing to June 14, 2018.
Then, at the June 14, 2018, hearing, Augenstein complained that the
trial court should not hear Deutsche Bank’s motion because he only received some
attachments to the motion five days previously and he needed more time to
respond. Thereafter, on July 2, 2018, Augenstein filed his response to Deutsche
Bank’s summary judgment motion. He also filed a motion to set a hearing, which
he noticed for July 9, 2018. On July 9, the trial court granted Augenstein’s motion
and provided him an opportunity to argue his case. Augenstein claimed he was not
ready, that he was being ambushed, and asked the court to schedule the hearing for
another date. The court did not schedule a further hearing and deemed the motion
for summary judgment submitted.
Pursuant to CR 56.03, a party is required to serve a motion for
summary judgment ten days before the time fixed for the hearing. Based on the
record, even though Deutsche Bank’s motion was originally noticed for a hearing
within ten days, it was re-noticed for a time outside the ten-day window. Thus,
Deutsche Bank’s re-noticed motion complied with CR 56.03.
Moreover, when Augenstein objected to the timing of Deutsche
Bank’s motion, the trial court rescheduled the hearing for June 14, 2018. This
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gave Augenstein additional time to respond to Deutsche Bank’s motion for
summary judgment.
In addition, the trial court provided Augenstein an adequate
opportunity to be heard. The trial court accepted and considered his untimely
written response to Deutsche Bank’s summary judgment motion before making its
decision:
[Augenstein] failed to file a timely response to [Deutsche
Bank’s] Motion for Summary Judgment despite the Court
having continued [Deutsche Bank’s] Motion on its
Summary Judgment to June 14, 2018. After this Court’s
hearing on that date at which time the Court took all
matters under submission, on July 2, 2018, [Augenstein]
filed a response to [Deutsche Bank’s] Motion. [Deutsche
Bank] then filed a Motion to Strike [Augenstein’s]
Response. However, despite his late filing, and the
pending Motion of [Deutsche] to strike same, the Court
has reviewed and considered said [Augenstein’s]
Response and the arguments made therein in ruling on
[Deutsche Bank’s] Motion.
Thus, the trial court considered Augenstein’s written response to Deutsche Bank’s
motion. Also, the court provided Augenstein an opportunity to argue his position
at both the June 14, 2018 and July 9, 2018, hearings.
A trial court has broad discretion in controlling its docket and
considering requests for extensions of time. Smith v. Commonwealth, 481 S.W.3d
510, 514 (Ky. App. 2016). Only if the court abused its discretion by issuing a
decision that was “arbitrary, unreasonable, unfair, or unsupported by sound legal
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principles[,]” will the Court set aside a trial court’s decision on a request for
extension of time. Commonwealth v. English, 993 S.W.2d 941, 945 (Ky. 1999).
Having reviewed the record and the law, we cannot conclude that the trial court’s
denial of Augenstein’s request for another hearing was arbitrary, unreasonable,
unfair, or unsupported by sound legal principles. Augenstein was afforded
adequate opportunities to be heard and the trial court considered his written
response to Deutsche Bank’s summary judgment motion. Thus, we conclude that
Augenstein’s due process rights were not violated.
IV. The trial court did not err in denying Augenstein’s motion to
compel the clerk to issue a CR 77.02(2) notice.
Augenstein argues that the trial court erred by not issuing a CR 77.02
notice to dismiss for lack of prosecution. He claims that CR 77.02 is a mandatory
rule and the trial court’s refusal to comply illustrates its bad faith toward him.
Augenstein requests all the trial court’s actions after its refusal to issue a CR 77.02
notice be voided and for the Court to remand this action back with instructions for
the trial court to dismiss the case without prejudice.
CR 77.02 is known as the “housekeeping rule.” Manning v.
Wilkinson, 264 S.W.3d 620, 622 (Ky. App. 2007). The courts use this rule to
remove stale cases from the court’s docket when they are not being actively
prosecuted. Id. Pursuant to CR 77.02, the trial court is required to review the
cases on its docket each year and dismiss those cases in which no pretrial steps
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have been taken within the last year unless good cause is shown. If the parties
provide no answer or an insufficient answer to such notice, the court “shall enter an
order dismissing without prejudice[.]” CR 77.02(2).
Here, instead of filing a motion to dismiss pursuant to CR 41.02,8
Augenstein moved the court to issue a CR 77.02 notice to dismiss. On review, we
ask whether the trial court acted within its discretion in denying Augenstein’s
motion for a CR 77.02 notice to dismiss the case for lack of prosecution. Manning,
264 S.W.3d at 622.
Based on the record, Deutsche Bank informed the court that pretrial
steps were being taken in the form of investigation and discovery. The trial court
held the case was progressing as evidenced by Deutsche Bank’s recently filed
summary judgment motion and denied Augenstein’s motion. We conclude that the
trial court did not abuse its discretion in denying Augenstein’s motion as Deutsche
Bank showed good cause for keeping the case on the court’s docket.9
8
CR 41.02 provides that a defendant may move to dismiss an action or claim against him for
plaintiff’s failure to prosecute.
9
With his appellate brief, Augenstein submitted a CR 77.02 notice from an unrelated case and a
statistical report purportedly reflecting the frequency of CR 77.02 notices issued in courts across
the Commonwealth. We note that the decision whether to issue a CR 77.02 notice is case
specific and, thus, the Court fails to see the relevance of these documents to this case.
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V. Augenstein’s access to the court record
Augenstein argues that the trial court refused to comply with CR
79.05(1), which states that the original record shall not be removed from the
clerk’s office unless by a court order. In response to this argument, Deutsche Bank
claims: (1) Augenstein had access to the record in the clerk’s office; (2) as a party,
Augenstein received copies of all motions and orders, so he possessed copies of the
pleadings; and (3) Augenstein’s motion for the trial court to comply with CR
79.05(1) was simply a tactic to delay the case.
According to the record, the trial court denied Augenstein’s “motion
for order directing Henry Circuit Clerk to retain original case file” after a hearing
on June 14, 2018. The trial court noted that it did not know what Augenstein was
requesting or what relief he was seeking by his motion.
While Augenstein complains that he was denied access to the record
and this infringed on his right to fair and impartial proceedings, he does not state
when, or even if, the record was removed from the clerk’s office. Also,
Augenstein fails to explain when, where, or how he was denied access to the
record. We cannot conclude that the trial court erred in denying Augenstein’s
motion for an order directing the clerk to retain the original case file.
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VI. The trial court did not err in denying Augenstein’s motion to
compel.
Augenstein argues that the trial court erred by denying his motion to
compel discovery. We review a trial court’s decision related to discovery issues
under an abuse of discretion standard. Hilton v. Commonwealth, 539 S.W.3d 1, 9
(Ky. 2018) (citations omitted).
Pursuant to CR 26.02(1), “[p]arties may obtain discovery regarding
any matter, not privileged, which is relevant to the subject matter involved in the
pending action[.]” Augenstein contends that his discovery requests “related
directly to the subject matter of the litigation,” but he fails to identify any specific
interrogatory or request that was not answered. In a footnote in his brief, he claims
that he sought “the note, allonge, mortgage, assignments of mortgage, chain of
title, custody of the note, (and) servicing.” However, he does not state that these
documents were not produced. Indeed, in his brief, Augenstein admits that the
note and mortgage were produced for his inspection at Deutsche Bank’s counsel’s
office. Augenstein also claims the trial court erred in failing to make Deutsche
Bank meet its burden of proof regarding claims of privilege. Again, however, he
does not identify what information or documents he was seeking that Deutsche
Bank allegedly claimed were privileged.
“It is not our function as an appellate court to research and construct a
party’s legal arguments[.]” Hadley v. Citizen Deposit Bank, 186 S.W.3d 754, 759
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(Ky. App. 2005). The Court will not search the record for errors to construct
Augenstein’s argument for him. Milby v. Mears, 580 S.W.2d 724, 727 (Ky. App.
1979). Without more, we cannot conclude that the trial court abused its discretion
in denying Augenstein’s motion to compel.
VII. Augenstein’s claim of error regarding due process
Augenstein summarily claims his rights were violated, citing the
United States and Kentucky Constitutions. However, he does not set forth any
argument for this claim. As stated previously, “[i]t is not our function as an
appellate court to research and construct a party’s legal arguments[.]” Hadley, 186
S.W.3d at 759. Thus, we cannot conclude that Augenstein’s rights were violated.
VIII. Augenstein’s claim of error regarding disqualification of the
circuit court judges
Augenstein claims the Chief Justice of the Kentucky Supreme Court
erred by refusing to disqualify Judge S. Marie Hellard and Judge R. Leslie Knight.
In his briefs, he vaguely claims that Judge Hellard and Judge Knight did not
“comply with laws stated in mandatory language” and, thus, their impartiality was
questionable.
On October 5, 2017 and September 27, 2018, the Chief Justice issued
orders denying Augenstein’s requests to disqualify Judge Hellard and Judge
Knight, respectively, stating that Augenstein “failed to demonstrate any
disqualifying circumstance that would require the appointment of a special judge”
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under KRS 26A.020.10 Augenstein argues the Chief Justice’s orders were “devoid
of findings and conclusions” compared to an order of disqualification in a
completely unrelated case he attaches to his brief and that this illustrates how he is
being treated unfairly.11
A party or counsel may seek to disqualify or recuse a judge from
proceeding further in a matter either by filing a motion with the judge pursuant to
KRS 26A.015, by filing an affidavit pursuant to KRS 26A.020, or by filing both.
Nichols v. Commonwealth, 839 S.W.2d 263, 265 (Ky. 1992). Here, Augenstein
filed affidavits pursuant to KRS 26A.020. The Chief Justice denied his requests
finding the affidavits did not demonstrate any disqualifying circumstances.
Augenstein did not file a motion to recuse either Judge Hellard or Judge Knight.
Logically, without a motion to rule on, the trial court took no action for this Court
to review for alleged error. See Kenney v. Hanger Prosthetics & Orthotics, Inc.,
269 S.W.3d 866, 876 (Ky. App. 2007) (citing Kaplan v. Chase, 690 S.W.2d 761,
763 (Ky. App. 1985) (“function of the Court of Appeals is to review possible
10
Under KRS 26A.020, a party may file with the circuit clerk an affidavit “that the judge will not
afford him a fair and impartial trial[.]” This affidavit prompts the Chief Justice to “review the
facts and determine whether to designate a regular or retired justice or judge of the Court of
Justice as special judge.” KRS 26A.020(1).
11
Notably, in the “Order of Disqualification and Appointment,” from In re: Commonwealth v.
Dickerson, Case No. 19-CI-00425, which Augenstein attaches to his brief, the defendant filed
both a motion to recuse pursuant to KRS 26A.015 and an affidavit pursuant to KRS 26A.020.
Moreover, the length or depth of a court’s order does not prove that a litigant is being treated
unfairly.
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errors made by the trial court, but if the trial court had no opportunity to rule on the
question, there is no alleged error for this court to review.”)).
Generally, the Court of Appeals reviews lower court rulings and we
are not empowered to disturb the rulings by the Kentucky Supreme Court. See
Kentucky Supreme Court Rules (SCR) 1.030(8)(a) (Court of Appeals is bound by
Kentucky Supreme Court precedent). Presumably, we would also lack the
authority to review a decision solely by the Chief Justice as no legal precedent
provides that authority. See Copley v. Craft, 341 S.W.2d 70, 72 (Ky. 1960)
(“Within limits prescribed by the statutes, appellate jurisdiction is the power and
authority to review, revise, correct or affirm the decisions of an inferior court[.]”).
Thus, this Court has no authority to review Augenstein’s alleged claim of error.
IX. Augenstein’s claim of error regarding his motion for proof of
authority
Augenstein argues that the trial court erred by failing to require
Deutsche Bank’s counsel to prove that they represent Deutsche Bank. “Attorneys
who file lawsuits or appear for parties in litigation have no burden to tender their
oaths of office on request or to provide written proof to an opposing party that they
actually were hired by their clients.” 7 AM. JUR. 2D Attorneys at Law § 156 (2021)
(citing Parkway Bank and Trust Co. v. Korzen, 2 N.E.3d 1052 (Ill. App. Ct.
2013)). Therefore, we see no error.
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X. Augenstein’s claim of error regarding his motion for more
definite statement
Augenstein claims the trial court erred in denying his motion for a
more definite statement but fails to articulate an argument to support this claim.
Again, “[i]t is not our function as an appellate court to research and construct a
party’s legal arguments[.]” Hadley, 186 S.W.3d at 759. Thus, we see no error.
CONCLUSION
For the foregoing reasons, we affirm the trial court’s order.
ALL CONCUR.
BRIEFS FOR APPELLANT: BRIEF FOR APPELLEE:
Glenn Augenstein, pro se Edmund S. Sauer
Louisville, Kentucky Brian R. Epling
Nashville, Tennessee
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