Brenda F. Campbell and C.W. Campbell v. Bank of America, N.A.

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Rel: 03/30/2012 Notice: T h i s o p i n i o n i s s u b j e c t t o formal r e v i s i o n b e f o r e p u b l i c a t i o n i n t h e advance s h e e t s o f Southern R e p o r t e r . R e a d e r s a r e r e q u e s t e d t o n o t i f y t h e R e p o r t e r o f D e c i s i o n s , Alabama A p p e l l a t e C o u r t s , 300 D e x t e r A v e n u e , M o n t g o m e r y , A l a b a m a 3 6 1 0 4 - 3 7 4 1 ((334) 2 2 9 - 0 6 4 9 ) , o f a n y t y p o g r a p h i c a l o r o t h e r e r r o r s , i n o r d e r t h a t c o r r e c t i o n s may b e made b e f o r e t h e o p i n i o n i s p r i n t e d i n Southern R e p o r t e r . ALABAMA COURT OF CIVIL APPEALS OCTOBER TERM, 2011-2012 2100246 Brenda F. Campbell and C.W. Campbell v. Bank o f America, N.A. Appeal from J e f f e r s o n C i r c u i t (CV-08-903079) Court PITTMAN, J u d g e . Brenda F. C a m p b e l l a n d h e r s o n , C.W. Campbell, appeal f r o m a j u d g m e n t i n f a v o r o f Bank o f A m e r i c a , N.A. ("Bank o f America"), i n an e j e c t m e n t a c t i o n . We a f f i r m . 2100246 F a c t s and P r o c e d u r a l H i s t o r y The following Jefferson Circuit Court's judgment recites facts: "The p a r t i e s e n t e r e d i n t o a mortgagor/mortgagee r e l a t i o n s h i p b a s e d on a m o r t g a g e and n o t e , w h i c h o r i g i n a t e d on June 10, 1998. Subsequently, the [ C a m p b e l l s ] e x p e r i e n c e d f i n a n c i a l d i f f i c u l t i e s , and t h e l o a n was a c c e l e r a t e d i n 2004 as a r e s u l t o f d e f a u l t f o r nonpayment. O v e r t h e n e x t two y e a r s , t h e e v i d e n c e shows t h a t [ B a n k o f A m e r i c a ] i n i t i a t e d a number o f l o s s - m i t i g a t i o n p r o c e d u r e s as w e l l as other a c t i o n s designed to help the [ C a m p b e l l s ] a v o i d f o r e c l o s u r e . These a c t i o n s were u n s u c c e s s f u l , and although [Bank of America] s e t a date for a foreclosure sale i n late 2006, t h e [Campbells] s t a y e d t h e s a l e by f i l i n g a C h a p t e r 13 b a n k r u p t c y petition. Over the next two years, numerous b a n k r u p t c y p e t i t i o n s were f i l e d , f u r t h e r d e l a y i n g foreclosure proceedings. [Bank of America] was g r a n t e d r e l i e f from the s t a y of the f o r e c l o s u r e s a l e i n June o f 2008, and n o t i c e o f t h e s a l e was a g a i n g i v e n t o t h e [ C a m p b e l l s ] . The f o r e c l o s u r e s a l e t o o k p l a c e on S e p t e m b e r 3, 2008, a t w h i c h t i m e [ B a n k o f America] took t i t l e . "At t r i a l , the [ C a m p b e l l s ] d i d not d i s p u t e t h e f a c t t h a t t h e y were i n d e f a u l t ; r a t h e r , t h e y a r g u e d t h a t [Bank of A m e r i c a ] f a i l e d t o comply w i t h [ U n i t e d S t a t e s D e p a r t m e n t o f H o u s i n g and U r b a n D e v e l o p m e n t ] regulations regarding l o s s - m i t i g a t i o n procedures, and that the foreclosure sale was therefore w r o n g f u l l y i n i t i a t e d . S p e c i f i c a l l y , the [ C a m p b e l l s ] alleged t h a t [ B a n k o f A m e r i c a ] was guilty of noncompliance by failing to both 1) o f f e r a l l p o s s i b l e l o s s - m i t i g a t i o n programs t o [ t h e m ] b e f o r e b e g i n n i n g f o r e c l o s u r e p r o c e e d i n g s , and 2) r e i n i t i a t e l o s s - m i t i g a t i o n e f f o r t s a f t e r the r e l i e f from s t a y was g r a n t e d and b e f o r e f o r e c l o s u r e p r o c e e d i n g s were resumed." 2 the 2100246 Following a bench trial, the c i r c u i t judgment determining that Housing and Development procedures Urban were the United mandatory, entered a S t a t e s Department o f ("HUD") that court Bank loss-mitigation of America had s u b s t a n t i a l l y c o m p l i e d w i t h t h o s e p r o c e d u r e s , a n d t h a t Bank o f America had e s t a b l i s h e d i t s r i g h t t o e j e c t t h e Campbells the property. motion court The C a m p b e l l s a timely postjudgment a n d r e q u e s t e d a h e a r i n g on t h a t m o t i o n . The c i r c u i t s e t a date f o ra hearing, but i t b e f o r e t h e h e a r i n g was h e l d . The filed from The C a m p b e l l s denied t h e motion timely appealed. supreme c o u r t s u b s e q u e n t l y t r a n s f e r r e d t h e a p p e a l t o t h i s court pursuant t o A l a . Code 1975, § 12-2-7(6). Standard o f Review "'"Where e v i d e n c e i s p r e s e n t e d t o t h e t r i a l c o u r t ore tenus, a presumption o f c o r r e c t n e s s e x i s t s as t o t h e c o u r t ' s c o n c l u s i o n s on i s s u e s o f f a c t ; i t s d e t e r m i n a t i o n w i l l n o t be d i s t u r b e d u n l e s s i t i s clearly erroneous, without supporting evidence, m a n i f e s t l y u n j u s t , or a g a i n s t the great weight of the evidence."' P o l l a r d v . Unus P r o p s . , L L C , 902 So. 2d 18, 23 (Ala. 2004) (quoting American P e t r o l e u m E q u i p . & C o n s t r . , I n c . v . F a n c h e r , 708 So. 2d 129, 132 ( A l a . 1 9 9 7 ) ) . 'However, as t o i s s u e s o f l a w , ... " ... o u r r e v i e w i s de n o v o . P a d g e t t v . C o n e c u h C o u n t y Comm'n, 901 So. 2d 678, 685 ( A l a . 2004) ( q u o t i n g A l f a Mut. I n s . Co. v . S m a l l , 829 So. 2d 743, 745 ( A l a . 2 0 0 2 ) ) . " 3 2100246 Weeks v. W o l f C r e e k I n d u s . , I n c . , 941 So. 2d 263, 268-69 ( A l a . 2006). Discussion I. The Campbells maintain on argued i n the c i r c u i t appeal noncompliance with that HUD Bank of court and they America's loss-mitigation now alleged alternatives to f o r e c l o s u r e c o n s t i t u t e s a defense to a f o r e c l o s u r e a c t i o n . An ejectment a c t i o n f o l l o w i n g a n o n j u d i c i a l foreclosure, however, i s n o t a " f o r e c l o s u r e a c t i o n , " and a d e f e n s e i n s u c h an a c t i o n asserting errors i n the f o r e c l o s u r e attack on a foreclosure. Rock, 227 Ala. 484, See process i s a Dewberry 493, 150 collateral v. Bank o f S t a n d i n g So. 463, 470 (1933) ( c h a r a c t e r i z i n g t h e a c t i o n i n J o n e s v. H a g l e r , 95 A l a . 529, So. 345 (1891), i n which the p l a i n t i f f certain property the p r o p e r t y 10 sought p o s s e s s i o n of he had p u r c h a s e d f r o m a t r u s t e e , who had s o l d p u r s u a n t t o a power o f s a l e i n a d e e d o f and i n w h i c h t h e d e f e n d a n t h a d a s s e r t e d trust, i r r e g u l a r i t i e s i n the s a l e , as "a s t a t u t o r y a c t i o n i n t h e n a t u r e o f e j e c t m e n t an i n d i r e c t o r c o l l a t e r a l a t t a c k upon t h e f o r e c l o s u r e o f r e a l and personal property s o l d by a t r u s t e e , u n d e r t h e power [ o f s a l e 4 2100246 i n a deed of t r u s t ] " added)). We factual (some e m p h a s i s i n o r i g i n a l ; some e m p h a s i s need not address determination -- that s u b s t a n t i a l l y complied with procedures is the evidence," court's supra, as basis: m i t i g a t i o n i s s u e by a the Bank of America supporting or the weight against b e c a u s e we matter that the of great a f f i r m the law, on Campbells waived file set aside I n Coleman v. BAC Servicing, So. , the the more loss- declaratory i t occurred foreclosure of circuit another, f a i l i n g to seek i n j u n c t i v e or to had without foreclosure sale before action court's HUD-mandated l o s s - m i t i g a t i o n r e l i e f t o h a l t the an circuit erroneous, unjust, Weeks, judgment, fundamental, the "clearly evidence, manifestly whether sale or to after i t occurred. 2012] 3d [Ms. ( A l a . C i v . App. 2100453, F e b r u a r y 2012), the mortgagor argued t h a t the f o r e c l o s i n g e n t i t y ' s f a i l u r e to e x p l o r e mitigation measures This a defense to an ejectment loss- stated: court was action. " I n s u p p o r t o f h e r a r g u m e n t , Coleman c i t e s a number of decisions from other jurisdictions indicating that the failure to explore loss-mitigation actions as an alternative to f o r e c l o s u r e i s an e q u i t a b l e d e f e n s e t o a f o r e c l o s u r e action. The c a s e s upon w h i c h Coleman r e l i e s do, i n 5 3, 2100246 f a c t , c o n t a i n such statements, b u t t h e statements are i n t h e context o f j u d i c i a l f o r e c l o s u r e a c t i o n s by m o r t g a g e e s , o r i n p r e - f o r e c l o s u r e a c t i o n s by mortgagors seeking d e c l a r a t o r y o r i n j u n c t i v e r e l i e f , not i n the context of nonjudicial foreclosure a c t i o n s p u r s u a n t t o a power o f s a l e i n a m o r t g a g e instrument or post-foreclosure ejectment actions. See, e.g., F e d e r a l N a t ' l M o r t g . A s s ' n v . Moore, 609 F. Supp. 194 (N.D. I l l . 1985) (judicial f o r e c l o s u r e ) ; ABN AMRO M o r t g . Group, I n c . v . T u l l a r , 770 N.W.2d 851 (Iowa C t . App. 2009) (table) (decision without a published opinion) (judicial f o r e c l o s u r e ) ; W e l l s F a r g o Home M o r t g . , I n c . v . N e a l , 398 Md. 705, 922 A . 2 d 538 (2007) (pre-foreclosure action by mortgagor seeking declaratory and i n j u n c t i v e r e l i e f ) ; F e d e r a l L a n d Bank o f S t . P a u l v . O v e r b o e , 404 N.W.2d 445, 449 (N.D. 1987) ( j u d i c i a l foreclosure). ' [ I ] t i s generally recognized under A l a b a m a l a w t h a t a power o f s a l e g i v e n u n d e r a m o r t g a g e a f f o r d s t h e m o r t g a g e e an a d d i t i o n a l a n d more s p e e d y remedy f o r r e c o v e r y o f the debt.' J o h n s o n v . S h i r l e y , 539 So. 2d 165, 168 ( A l a . 1988) ( c i t i n g P a i n t Rock P r o p s . v . Shewmake, 393 So. 2d 982, 984 ( A l a . 1 9 8 1 ) ) . I n t h e a b s e n c e o f a s t a t u t e o r c o n t r o l l i n g a u t h o r i t y f r o m o u r supreme c o u r t t o t h e c o n t r a r y , we c o n c l u d e t h a t t h e f a i l u r e o f a f o r e c l o s i n g e n t i t y t o c o m p l y w i t h HUD o r [ U n i t e s States Department of Veterans Affairs] l o s s - m i t i g a t i o n r e q u i r e m e n t s may n o t be r a i s e d as a defense t o an e j e c t m e n t action following a nonjudicial foreclosure." So. the same Coleman. the 3d a t . I n t h e present case, t h e Campbells a u t h o r i t i e s that were cited cite and d i s t i n g u i s h e d i n P e r h a p s r e c o g n i z i n g t h e d i s t i n c t i o n made i n Coleman, Campbells cite an additional, decision f o r theproposition that 6 unreported "a p r o p e r t y California owner f a c i n g a 2100246 nonjudicial apply foreclosure [may] a s s e r t a lender's failure to t h e m a n d a t o r y l o s s m i t i g a t i o n p r o c e d u r e s " as a d e f e n s e . G h e r v e s c u v . W e l l s F a r g o Home M o r t g . , 2008) ( C a l . C t . App. 2008) supports (No. E041809, M a r c h 13, (unpublished). the position that t h e Campbells Ghervescu a c t u a l l y have w a i v e d their l o s s - m i t i g a t i o n d e f e n s e b y r a i s i n g i t f o r t h e f i r s t t i m e i n an ejectment a c t i o n f o l l o w i n g a f o r e c l o s u r e . an ejectment action; the mortgagor G h e r v e s c u was n o t i n that case s o u g h t an i n j u n c t i o n t o r e s t r a i n d e l i v e r y o f t h e t r u s t e e ' s deed and t o set aside a foreclosure sale. The C a l i f o r n i a C o u r t o f A p p e a l s stated: "We s e e no r e a s o n t h a t a p r o p e r t y owner f a c i n g a n o n j u d i c i a l f o r e c l o s u r e s h o u l d n o t be a b l e t o a s s e r t a lender's f a i l u r e t o apply t h e mandatory l o s s mitigation procedures defensively, either to p r e c l u d e o r t o s e t a s i d e a f o r e c l o s u r e s a l e . Where no s a l e h a s t a k e n p l a c e , a c o u r t may p r e c l u d e t h e sale u n t i l the lender complies with the [Federal Housing Administration's] loss mitigation p r o c e d u r e s . Or, i f t h e s a l e has t a k e n p l a c e , t h e c o u r t may s e t t h e s a l e a s i d e " See a l s o W e l l s F a r g o Home M o r t g . , I n c . v . N e a l , 922 A . 2 d 538 (2007) (holding 398 Md. 705, t h a t because f o r e c l o s u r e e q u i t a b l e remedy, a m o r t g a g o r may a s s e r t t h e e q u i t a b l e of t h e mortgagee's f a i l u r e procedures i s an defense t o engage i n t h e l o s s - m i t i g a t i o n mandated by f e d e r a l 7 regulations and a c o u r t may 2100246 prohibit a foreclosure sale u n t i l with C a m p b e l l s c i t e B e r r y v. D e u t s c h e Bank N a t i o n a l 57 So. 3d 142 L a S a l l e Bank, 24 So. on complied those r e g u l a t i o n s ) . The Co., t h e m o r t g a g e e has (Ala. 3d 1143 another ground, Berry, mortgagor may Civ. raise App. 2010), ( A l a . C i v . App. supra, Hawkins v. 2009), overruled proposition f o r the irregularities and Trust that in the a foreclosure p r o c e e d i n g s as an a f f i r m a t i v e d e f e n s e t o an e j e c t m e n t a c t i o n . Berry addressed the a l l e g e d inadequacy of the p r i c e p a i d at a f o r e c l o s u r e s a l e . Hawkins a d d r e s s e d the collective sale at foreclosure of question three parcels hampered t h e m o r t g a g o r ' s a b i l i t y t o redeem t h e w h i c h he was Hawkins are because residing. they dealt Berry with and foreclosure sales whether one of the land parcel on distinguishable that allegedly f a i l e d to s a t i s f y the s t a t u t o r y r e q u i r e m e n t s f o r a n o n j u d i c i a l foreclosure in Alabama. (stating that " [a]ll contained mortgages provisions in of this (emphasis a d d e d ) ) . 1 et seq., See Ala. Code 1975, § 35-10-9 s a l e s o f r e a l e s t a t e , made u n d e r p o w e r s or deeds article, of shall Nothing i n T i t l e A l a . Code 1975, trust be 35, null contrary and to the void C h a p t e r 10, Article mandates t h a t a f o r e c l o s i n g e n t i t y 8 2100246 o f f e r a mortgagor l o s s - m i t i g a t i o n a l t e r n a t i v e s t o f o r e c l o s u r e . The f a c t t h a t s u c h m e a s u r e s a r e r e q u i r e d by f e d e r a l s t a t u t e o r regulation, d e b t o r , may or by the mortgage instrument signed by the c o n s t i t u t e an e q u i t a b l e d e f e n s e t o a " f o r e c l o s u r e a c t i o n , " b u t i t i s w h o l l y i m m a t e r i a l t o an e j e c t m e n t w h i c h , as we have d i s c u s s e d , i s n o t a " f o r e c l o s u r e action, action." II. The circuit court's f a i l u r e Campbells' postjudgment to h e a r i n g on the m o t i o n was h a r m l e s s e r r o r b e c a u s e the m o t i o n h a d no p r o b a b l e m e r i t and t h i s hold a c o u r t has r e s o l v e d the i s s u e s p r e s e n t e d t h e r e i n , as a m a t t e r o f l a w , a d v e r s e l y t o t h e Campbells. See Ware v. D e u t s c h e 3d 1163, 1172 ( A l a . 2011) 75 So. ( c i t i n g H o l l a n d e r v. N i c h o l s , 19 So. 3d 184, 197 1088-89 ( A l a . 1 9 9 3 ) ; and G r e e n e v. Thompson, 554 381 ( A l a . 2009); Bank N a t ' l T r u s t Co., K i t c h e n s v. Maye, 623 So. So. 2d 2d 1082, 376, (Ala. 1989)). The judgment of the J e f f e r s o n C i r c u i t C o u r t i s a f f i r m e d . AFFIRMED. Thomas and Moore, J J . , c o n c u r . Thompson, P . J . , c o n c u r s i n t h e r e s u l t , without writing. Bryan, J . , concurs i n the r e s u l t , w i t h writing. 9 2100246 BRYAN, J u d g e , c o n c u r r i n g i n the r e s u l t . I c o n c u r i n t h e r e s u l t b e c a u s e t h i s c o u r t h e l d i n Coleman v. BAC Servicing, (Ala. [Ms. 2100453, Feb. C i v . App. 2012), that, s t a t u t e or c o n t r o l l i n g a u t h o r i t y contrary, to 3, 2012] So. 3d " [ i ] n the absence HUD [United U r b a n D e v e l o p m e n t ] o r VA loss-mitigation defense to an foreclosure." Department of Housing r e q u i r e m e n t s may ejectment action I disagree with be raised i n an foreclosing party's requirements applicable n o t be r a i s e d as a following a the main o p i n i o n nonjudicial insofar ejectment failure action to are adhere to foreclosures. I n my contractual the foreclosing provisions party's failure as i t defenses l i m i t e d to a to statutory opinion, a f f i r m a t i v e d e f e n s e s t h a t may be r a i s e d i n an e j e c t m e n t include to o f t h e m o r t g a g e and e q u i t a b l e o r VA loss-mitigation requirements. 10 the action adhere to defenses o t h e r than the f a i l u r e of a f o r e c l o s i n g e n t i t y t o comply HUD and S t a t e s Department of V e t e r a n s may be i n t e r p r e t e d as i n d i c a t i n g t h a t t h e a f f i r m a t i v e also a f r o m o u r supreme c o u r t t o t h e States [United Affairs] may of we c o n c l u d e t h a t t h e f a i l u r e o f a f o r e c l o s i n g e n t i t y comply w i t h that , with

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