Capital One, NA v. Guthrie

04/04/2017
DA 16-0210
Case Number: DA 16-0210
IN THE SUPREME COURT OF THE STATE OF MONTANA
2017 MT 75CAPITAL ONE, NA as successor by Merger
to Chevy Chase Bank. F.S.B.,
Plaintiff and Appellee,
v.
MARTHA M. GUTHRIE; RICHARD A. GUTHRIE;
RICHARD A. GUTHRIE, as Custodian for Taylor M. Guthrie,
Defendants and Appellants.
APPEAL FROM: District Court of the Eleventh Judicial District,
In and For the County of Flathead, Cause No. DV-10-597(A)
Honorable Amy Eddy, Presiding Judge
COUNSEL OF RECORD:
For Appellants:
Harold V. Dye, Dye & Moe, P.L.L.P., Missoula, Montana
For Appellee:
Rik S. Tozzi, Burr & Forman LLP, Birmingham, Alabama
Joe A. Solseng, Robinson Tait, P.S., Seattle, Washington
Submitted on Briefs: January 25, 2017
Decided: April 4, 2017
Filed:
__________________________________________
Clerk
Chief Justice Mike McGrath delivered the Opinion of the Court.
¶1 Martha M. Guthrie, Richard A. Guthrie, and Richard A. Guthrie, as custodian for
Taylor M. Guthrie, (Guthrie) appeal from a December 17, 2015 District Court order
granting summary judgment to the plaintiff. We affirm.
¶2 We restate the issues on appeal as follows:
Issue One: Did the retired District Court Judge have jurisdiction over the
proceedings?
Issue Two: Did the District Court err in granting partial summary judgment to
Capital One on the equitable estoppel claim?
Issue Three: Did the District Court properly rely on an affidavit when it granted
Capital One’s summary judgment motion?
FACTUAL AND PROCEDURAL BACKGROUND
¶3 In 2005, Guthrie took out a loan for the purchase of real property. The mortgage
was subsequently assigned to Chevy Chase Bank (Chevy) by the lender. Guthrie and
Chevy modified the loan twice. In 2008, Guthrie requested a third loan modification.
Chevy agreed to release a portion of its security over some of the property, which Guthrie
could then sell. Chevy’s release was contingent on an appraisal of the remaining
property. The property did not value as high as Chevy required. Chevy then suggested
Guthrie pay down the mortgage in order to have a portion of the property released.
Guthrie did not pay down the mortgage.1 Chevy merged with Capital One (Capital) and
Capital took over as successor to the mortgage.
1
Guthrie has not made any payments since July 2009.
2
¶4 In April 2010, Capital initiated a foreclosure action against Guthrie. Guthrie
asserted the affirmative defense of equitable estoppel based on the discussed third
mortgage modification with Chevy. For the next five years the parties filed various
motions regarding the foreclosure action. The District Court denied Guthrie’s equitable
estoppel claim and denied Capital’s summary judgment motions on the right to foreclose
at that time.
¶5 In June 2015, Capital moved for summary judgment, again seeking the right to
foreclose on the property. The motion was supported by exhibits A-J and the affidavits
of Huy Pham (Pham), Cassie Dellwo, and Leslie Lane. In July 2015, Guthrie filed an
objection and motion to strike the Pham affidavit and a brief in opposition to the
summary judgment motion. Guthrie’s argument in the motion to strike was that the
Pham affidavit was not admissible; it was not based on Pham’s personal knowledge,
uncertified document copies were attached, and it failed to establish foundation for the
business records exemption. Guthrie did not deny the existence of the loan or the default
of payment, or provide evidence or facts to rebut Capital’s right to foreclose.
¶6 In July 2015, Capital submitted both an opposition to the Guthrie motion to strike
Pham’s affidavit and a reply in support of its motion for summary judgment. Capital
argued the affidavit’s contents were properly authenticated as a business record pursuant
to M. R. Civ. P. 803(6) and the affidavit clearly showed Pham had personal knowledge of
the statements and procedures therein.
¶7 In the summer of 2015, the presiding judge, Ted O. Lympus, announced his
retirement. The Chief Justice of the Montana Supreme Court directed retired District
3
Court Judge Katherine R. Curtis (Judge Curtis) to assume temporary judicial authority of
Judge Lympus’ pending cases.2 Judge Curtis was given “full authority to conduct all
proceedings required by law” for such cases “including final resolution.”
¶8 On September 16, 2015, Judge Curtis denied Guthrie’s motion to strike the Pham
affidavit, noting Guthrie was relying on those same exhibits in its own filings or had
admitted that the copies were genuine.
¶9 Ultimately, the Governor appointed Amy Eddy as District Judge to replace Judge
Lympus and she assumed final authority over these proceedings. On December 17, 2015,
following a hearing, Judge Eddy granted Capital’s motion for summary judgment, noting
Guthrie had failed to put any material fact in dispute. Guthrie appeals.
STANDARD OF REVIEW
¶10 Whether a court has jurisdiction is a legal conclusion, which this Court reviews de
novo. Pinnow v. Montana State Fund, 2007 MT 332, ¶ 13, 340 Mont. 217, 172 P.3d
1273.
¶11 The Montana Supreme Court reviews the granting of a motion for summary
judgment de novo, using the same standards applied by the District Court under
M. R. Civ. P. 56. Pilgeram v. GreenPoint Mortg. Funding, Inc., 2013 MT 354, ¶ 9, 373
Mont. 1, 313 P.3d 839; In re Estate of Harmon, 2011 MT 84A, ¶ 14, 360 Mont. 150, 253
P. 3d 821. Summary judgment is appropriate if the pleadings, depositions, answers to
2
On July 9, 2015, the Chief Justice issued an order directing Judge Curtis to assume
jurisdiction over sixteen civil cases. On August 11, 2015, the Chief Justice also directed Judge
Curtis to “assume judicial authority of all cases scheduled in Department 1 on the Law and
Motion Calendar, Criminal Calendar, and Juvenile Calendar for the dates September 1 to
December 31, 2015.”
4
interrogatories, and admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that the moving party is entitled to a
judgment as a matter of law. M. R. Civ. P. 56(c)(3); Roe v. City of Missoula, 2009 MT
417, ¶ 14, 354 Mont. 1, 221 P.3d 1200. The moving party has the burden of establishing
the absence of a genuine issue of material fact and entitlement to judgment as a matter of
law. Harmon, ¶ 14. Once established the non-moving party must then present
substantial evidence that raises a genuine issue of material fact essential to one or more
elements of the case. Apple Park LLC v. Apple Park Condos LLC, 2008 MT 284, ¶ 11,
345 Mont. 359, 192 P.3d 232.
¶12 We review evidentiary rulings made in the context of a summary judgment
proceeding de novo, and need not defer to the judgments and decision of the district
court, in order to determine whether evidentiary requirements for summary judgment
have been satisfied. Smith v. Farmers Union Mut. Ins. Co., 2011 MT 216, ¶ 15, 361
Mont. 516, 260 P.3d 163; Harmon, ¶ 14; PPL Mont., L.L.C. v. State, 2010 MT 64, ¶ 84,
355 Mont. 402, 229 P.3d 421, rev’d on other grounds in PPL Mont., LLC v. Montana,
565 U.S. 576, 132 S. Ct. 1215 (2010); Boyne USA, Inc. v. Lone Moose Meadows, LLC,
2010 MT 133, ¶ 11, 356 Mont. 408, 235 P.3d 1269.
DISCUSSION
¶13 Issue One: Did the retired District Court Judge have jurisdiction over the
proceeding?
¶14 Guthrie contends Judge Curtis did not have jurisdiction over the motion to strike
the Pham affidavit. Specifically, the case was not among the sixteen cases the Chief
5
Justice directed Judge Curtis to assume. Further, Guthrie argues that the Chief Justice’s
second order to Judge Curtis, that she assume judicial authority for all cases on the law
and motion calendar, did not include the objection and motion to strike the Pham
affidavit, because it was not a free standing request on the law and motion calendar.
¶15 Article VII Section 6(3) of the Montana Constitution provides that the Chief
Justice of the Montana Supreme Court “may, upon request of the district judge, assign
district judges and other judges for temporary service from one district to another and
from one county to another.” In interpreting the meaning of the Constitution’s language
this Court has construed “other judges” to include retired judges. Cushman v. Mont.
Twentieth Judicial Dist. Court, 2015 MT 311, ¶ 6, 381 Mont. 324, 360 P.3d 492 (citing
State ex rel. Wilcox v. District Court, 208 MT 351, 360, 378 P.2d 209, 214 (1984)).
Section 19-5-103, MCA, provides that “a retired judge is subject to call for duty by the
Chief Justice to aid and assist any district court or any water court under directions that
the Chief Justice may give.”
¶16 Judge Curtis was called for duty pursuant to § 19-5-103, MCA, and Article VII
Section 6(3) of the Montana Constitution, at Judge Lympus’ request. The order directed
Judge Curtis to assume jurisdiction over sixteen specific civil cases on July 9, 2015.
Guthrie’s case was not among them. However, on August 11, 2015, the Chief Justice
ordered Judge Curtis to “assume judicial authority of all cases scheduled in Department 1
on the Law and Motion Calendar, Criminal Calendar, and Juvenile Calendar for the dates
September 1 to December 31, 2015.” Additionally, Judge Curtis was given “full
authority to conduct all proceedings required by law” for such cases “including final
6
resolution.” The parties do not dispute that this case was assigned to Department 1, and
that the motion for summary judgment was scheduled for a hearing on December 16,
2015.
¶17 Article VII Section 6(3) of the Montana Constitution, codified in § 19-5-103,
MCA, entrusts the Chief Justice of the Montana Supreme Court to confer jurisdiction and
authority to retired judges as district court judges. The authority the Chief Justice can
confer is comprehensive, up to and including all duties of the sitting district court judge.
Section 19-5-103, MCA. This Court, in accordance with its constitutional and statutory
authority, provided Judge Curtis the authority and jurisdiction to rule on Guthrie’s motion
to strike. Capital’s summary judgment motion hearing was scheduled for December 16,
2015, well within the specified time frame that Judge Curtis had jurisdiction. Guthrie’s
motion to strike the Pham affidavit was a proceeding required by law. Judge Curtis had
jurisdiction and authority to rule on Guthrie’s motion to strike.
¶18 Issue Two: Did the District Court err in granting partial summary judgment to
Capital One on the equitable estoppel claim?
¶19 Guthrie argues the District Court erred in granting Capital’s summary judgment
motion and denying the affirmative defense of equitable estoppel. Summary judgment is
appropriate if the pleadings, depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment as a matter of law.
M. R. Civ. P. 56(c)(3); Roe ¶ 14.
7
¶20 Guthrie argues they were prejudiced when the District Court relied on
documentary evidence provided by Capital in the reply brief. Specifically, the District
Court should not have considered the new evidence because it deprived Guthrie (the
nonmoving party) of the opportunity to address it. However, the documents at issue were
the “Defendant’s Answer and Objections to Plaintiff’s First Discovery Requests” and
“Defendant’s Narrative and Supporting Emails Regarding the Defendants Equitable
Estoppel Claim.” Consequently, Capital argues the inclusion of the new documents did
not prejudice Guthrie. The supporting documents were not new to Guthrie because they
created them. We agree.
¶21 Guthrie was the creator of the documents in question and therefore was in
possession of the documents when Capital included them in the reply. The late inclusion
of the documents did not prejudice Guthrie. Moreover, Guthrie failed to include support
or documentation for the affirmative defense of equitable estoppel. Guthrie failed to
place any material fact in dispute. The District Court properly granted summary
judgment to Capital.
¶22 Issue Three: Did the District Court properly rely on an affidavit when it granted
Capital One’s summary judgment motion?
¶23 Guthrie argues because the Pham affidavit and supporting documents were not
based on personal knowledge, as required by M. R. Civ. P. 56(e), they were improperly
considered by the District Court when ruling on the motions for summary judgment.
Specifically, Guthrie argues Pham’s affidavit was hearsay.
8
¶24 An affidavit supporting a motion for summary judgment must be made on
personal knowledge, set out facts that would be admissible in evidence, and show that the
affiant is competent to testify on matters stated. M. R. Civ. P. 56(e)(1). Any document
referenced in the affidavit must be a sworn or certified copy, which is attached to or
served with the affidavit. M. R. Civ. P. 56(e)(1). Exhibits in support of an affidavit may
be attached if a foundation is laid for such exhibits based on any exception to the rule
excluding hearsay evidence. Alfson v. Allstate Prop. & Cas. Ins. Co., 2013 MT 326,
¶ 13, 372 Mont. 363, 313 P.3d 107.
¶25 Pham’s affidavit falls within the “records of regularly conducted activity”
exception to the hearsay exclusion. M. R. Evid. 803(6); Bean v. Mont. Bd. of Labor
Appeals, 1998 MT 222, ¶ 20, 290 Mont. 496, 965 P.2d 256. For a record to be
considered a record of regularly conducted business, it must have been made at or near
the time of the act and routinely kept or made during regularly conducted business
activity. M. R. Evid. 803(6); Bean, ¶ 20. The testimony of a custodian or other qualified
witness may show the records meet these requirements, unless the source or
circumstances of preparation indicate lack of trustworthiness. M. R. Evid. 803(6); Bean,
¶ 20.
¶26 Pham testified as an authorized signer that he had personal knowledge and
firsthand experience regarding Capital’s business records and home loan procedures.
This knowledge is separate and apart from his review of such records. The purpose of
Pham’s testimony was to authenticate and establish the admissibility of the loan
documents attached.
9
¶27 The documents attached were for the most part certified as true and correct. Three
documents were at issue: copies of the title insurance policy for the property; certificate
of merger of Chevy Chase Bank into Capital One; and the affidavit of Huy Pham that the
original promissory note was lost or missing. Here, Guthrie (the objecting party) bears
the burden of establishing that the documents lack trustworthiness. Significantly, Guthrie
admitted, in the answer and counterclaim, that the copy of the promissory note was
genuine. It was the exact same document Pham attached to his affidavit.
¶28 Pham was a custodian of these documents. As an authorized signer for Capital he
had personal knowledge of the procedures and practices Capital and its predecessor
followed regarding the creation of business records, and testified to the authenticity of the
records. Most of the documents attached to the affidavit were certified. Those
documents not certified as true and correct were certified as true through Pham’s
affidavit. A document “kept in the course of a regularly conducted business activity”
may be admitted into evidence, even though it is hearsay, when it is “the regular practice
of that business activity” to create the document. M. R. Evid. 803(6); Rafanelli v. Dale,
278 Mont. 28, 45, 924 P.2d 242, 253 (1996). Guthrie has not provided any evidence that
the documents are not genuine. Guthrie failed to establish the documents lack
trustworthiness.
CONCLUSION
¶29 The retired District Court Judge had jurisdiction over the proceedings. Guthrie
failed to prove any genuine issue of material fact remained and the District Court
10
properly relied on the Pham affidavit. Capital’s motions for summary judgment were
properly granted.
¶30 Affirmed.
/S/ MIKE McGRATH
We Concur:
/S/ JAMES JEREMIAH SHEA
/S/ MICHAEL E WHEAT
/S/ DIRK M. SANDEFUR
/S/ JIM RICE
11