Wilmington Savings Fund Society Fsb, d/b/a Christiana Trust as Owner Trustee of the… v. Gregory Hutchins, in his individual capacity

UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
_________________________________
WILMINGTON SAVINGS FUND
SOCIETY FSB, d/b/a Christiana Trust as
Owner Trustee of the Residential Credit
Opportunities Trust III,
Plaintiff - Appellee,
v.
GREGORY HUTCHINS, in his individual
capacity and as personal representative of
the Estate of Sandra J. Neill, and The
Unknown Heirs, Devisees or Legatees of
Sandra J. Neill,
Defendant - Appellant.
No. 21-2094
(D.C. No. 1:18-CV-00346-JCH-JHR)
(D. N.M.)
_________________________________
ORDER AND JUDGMENT*
_________________________________
Before BACHARACH, BRISCOE, and ROSSMAN, Circuit Judges.
_________________________________
In this mortgage-foreclosure action, Gregory Hutchins appeals pro se from a
district court order that entered summary judgment in favor of Wilmington Savings Fund
Society FSB, d/b/a Christiana Trust as Owner Trustee of the Residential Credit
* After examining the briefs and appellate record, this panel has determined
unanimously to honor the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
submitted without oral argument. This order and judgment is not binding precedent,
except under the doctrines of law of the case, res judicata, and collateral estoppel. It
may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1
and 10th Cir. R. 32.1.
FILED
United States Court of Appeals
Tenth Circuit
April 12, 2022
Christopher M. Wolpert
Clerk of Court
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Opportunities Trust III (“Wilmington Savings”). Exercising jurisdiction under 28 U.S.C.
§ 1291, we affirm.
B ACKGROUND
This case involves real property located in Bernalillo, New Mexico. In 2007,
Sandra J. Neill borrowed $225,000 from CTX Mortgage Company (CTX) to purchase a
home. Neill executed a promissory note in CTX’s favor and granted CTX a mortgage to
secure repayment. Neill soon defaulted on the loan.
CTX indorsed the note in blank and, in 2009, assigned it and the mortgage to J.P.
Morgan Mortgage Acquisition Corp. (“JPMMA”), which later sued Neill in New Mexico
state court. In 2015, JPMMA assigned the note and mortgage to “Wilmington Trust,
National Organization,” R., Vol. I at 46, which in turn executed an assignment to
Wilmington Savings, id. at 48, 50.
In April 2018, Wilmington Savings joined the state lawsuit as a plaintiff and
elected to seek only “recovery on the promissory note . . . as opposed to on the
mortgage.” Id. at 252. Contemporaneously, Wilmington Savings filed the instant
litigation in federal district court based on diversity jurisdiction, seeking only to foreclose
on the mortgage.1 Legal proceedings were stayed in June, however, by Neill’s filing of a
Chapter 7 bankruptcy petition.
1 “New Mexico continues to follow the common law rule that a foreclosure action
and a suit on the underlying note may be filed separately at the mortgagee’s option.”
Kepler v. Slade, 896 P.2d 482, 485 (N.M. 1995). According to Wilmington Savings, it
has not pursued the state court litigation on the note.
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On September 20, 2018, the bankruptcy court entered a final decree, closing the
case upon the full administration of Neill’s estate. The next day, Hutchins filed in the
district court a Fed. R. Civ. P. 25(a)(1) suggestion of death, indicating that Neill had died
“during the pendency of this action” and that he was the executor of her estate. Id. at 94.
In response, Wilmington Savings amended its complaint, designating as defendants:
Hutchins, both in his individual capacity and as the estate’s personal representative; and
Neill’s unknown heirs, devisees, or legatees.
Hutchins then moved to dismiss the complaint, challenging the federal district
court’s diversity jurisdiction and Wilmington Savings’ standing to sue. After a
magistrate judge recommended denying the motion to dismiss, the district court reviewed
Hutchins’ objections de novo, adopted the recommendation, and denied the motion to
dismiss.
While Hutchins’ motion to dismiss was pending, Wilmington Savings sought
summary judgment, presenting evidence of Neill’s default and its right to foreclose on the
property. Hutchins opposed the motion, re-asserting his arguments from his motion to
dismiss and seeking to strike the affidavit of Ron McMahan, the CEO of Wilmington
Savings’ parent company. Given the overlap of Hutchins’ arguments in the motion to
dismiss and summary-judgment response, the magistrate judge incorporated his analysis
of Hutchins’ motion to dismiss into a recommendation to grant Wilmington Savings’
summary-judgment motion. Hutchins filed objections. The district court overruled
Hutchins’ objections, adopted the magistrate judge’s recommendation, and entered
summary judgment against Hutchins and a default judgment against the other defendants.
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Hutchins unsuccessfully sought to set aside the summary judgment and then
appealed.2
D ISCUSSION
I. Standard of Review
“We review the district court’s grant of summary judgment de novo.” Young v.
Dillon Cos., Inc., 468 F.3d 1243, 1249 (10th Cir. 2006). “The court shall grant summary
judgment if the movant shows that there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
We construe Hutchins’ pro se filings liberally, but we do not act as his advocate.
See Garrett v. Selby Connor Maddux & Janer, 425 F.3d 836, 840 (10th Cir. 2005).
II. Diversity Jurisdiction
Hutchins first argues the district court lacked diversity jurisdiction. Diversity
jurisdiction under 28 U.S.C. § 1332 requires “complete diversity of citizenship . . .
between the adverse parties and” an “amount in controversy exceed[ing] $75,000.”
2 Hutchins’ notice of appeal designated the district court’s order granting summary
judgment and other pre-judgment decisions, including the order denying his motion to
dismiss. Ordinarily, an order denying a motion to dismiss is not appealable. See Decker
v. IHC Hosps., Inc., 982 F.2d 433, 435 (10th Cir. 1992). And although an “appeal from a
final judgment supports review of . . . earlier interlocutory orders,” Siloam Springs Hotel,
LLC v. Century Sur. Co., 906 F.3d 926, 931 (10th Cir. 2018) (internal quotation marks
omitted), we decline to separately review the order denying Hutchins’ motion to dismiss
because the district court incorporated its analysis of the motion to dismiss into the final
order in this case (the order granting Wilmington Savings’ motion for summary
judgment). See Long v. St. Paul Fire & Marine Ins. Co., 589 F.3d 1075, 1078 n.2
(10th Cir. 2009) (declining to separately review interlocutory order denying plaintiff’s
motion for summary judgment, where plaintiff had appealed from the final order granting
defendant’s motion for judgment on the pleadings and motion to dismiss).
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Dutcher v. Matheson, 733 F.3d 980, 987 (10th Cir. 2013) (internal quotation marks
omitted).
We review de novo “the ultimate question of whether diversity jurisdiction exists,”
but “we review the district court’s citizenship finding only for clear error,” reversing
“only if the district court’s finding lacks factual support in the record or if, after
reviewing all the evidence, we have a definite and firm conviction that the district court
erred.” Middleton v. Stephenson, 749 F.3d 1197, 1201 (10th Cir. 2014) (citation and
internal quotation marks omitted).
Hutchins asserts that because he was unable to locate a state government
document using Wilmington Savings’ name in its complete form, as it appears in the
amended complaint’s caption, then Wilmington Savings does not “exist[ ]” for purposes
of diversity jurisdiction. Aplt. Opening Br. at 21. This argument is meritless.
In finding that Wilmington Savings is a Delaware citizen, the district court first
cited the trust agreement establishing “Wilmington Savings Fund Society, FSB, d/b/a
Christian Trust” as the “Owner Trustee” of the “Residential Credit Opportunities Trust
III.” R., Vol. I at 444. When a trustee of a traditional trust files a lawsuit, its “citizenship
is all that matters for diversity purposes.” Americold Realty Trust v. Conagra Foods,
577 U.S. 378, 383 (2016); see also Navarro Savings Association v. Lee, 446 U.S. 458,
464, 465 (1980) (indicating that “a trustee is a real party to the controversy for purposes
of diversity jurisdiction when [it] possesses certain customary powers to hold, manage,
. . . dispose of assets for the benefit of others,” and “control the litigation”). Next, the
district court cited a document from Delaware’s Division of Corporations recognizing
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“Wilmington Savings Fund Society, FSB” as the registered agent for the “Residential
Credit Opportunities Trust III,” a Delaware statutory trust. R., Vol. I at 454. Given these
documents, and the unrefuted allegations of the complaint alleging that Wilmington
Savings is a Delaware citizen, 3 the district court found diversity based on Hutchins’
citizenship, both as an individual (Connecticut) and as the representative of Neill’s estate
(New Mexico), see 28 U.S.C. § 1332(c)(2) (giving “the legal representative of the estate
of a decedent” the same citizenship as the decedent). Finally, it is undisputed in this case
that the amount in controversy exceeded $75,000.
We conclude that the district court’s citizenship findings are not clearly erroneous
and that the district court had diversity jurisdiction in this case.
III. Standing
Hutchins argues that Wilmington Savings lacked Article III standing to enforce
Neill’s promissory note and therefore could not foreclose on the mortgage. We review de
novo the district court’s determination that Wilmington Savings had standing to bring this
lawsuit. See Lupia v. Medicredit, Inc., 8 F.4th 1184, 1190 (10th Cir. 2021).
“The plaintiff, as the party invoking federal jurisdiction, bears the burden of
establishing” standing, which requires (1) “an injury in fact, (2) that is fairly traceable to
the challenged conduct of the defendant, and (3) that is likely to be redressed by a
3 “For diversity, a corporation is a citizen of its state of incorporation and the
state where its principal place of business is located.” See Grynberg v. Kinder
Morgan Energy Partners, 805 F.3d 901, 905 (10th Cir. 2015).
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favorable judicial decision.” Spokeo, Inc. v. Robins, 578 U.S. 330, 338 (2016). To
address these elements, “[a] federal court sitting in diversity applies the substantive law
of the forum state,” Mincin v. Vail Holdings, Inc., 308 F.3d 1105, 1108 (10th Cir. 2002),
which here, is New Mexico.
First, to show injury in fact, “a party seeking to enforce a promissory note must
establish that it has the right to enforce the note” by, for example, being a “holder of the
instrument.” Los Alamos Nat’l Bank v. Velasquez, 446 P.3d 1220, 1225 (N.M. App.
2019). “[P]ossession of a note properly indorsed in blank establishes the right to enforce
that note” as a holder of the instrument. Id. (internal quotation marks omitted); see also
HSBC Bank USA, Nat’l Ass’n v. Wiles, 468 P.3d 922, 925 (N.M. App. 2020) (“The
mortgage follows the note, allowing the subsequent holder of the note to enforce the
mortgage even without a formal assignment of the mortgage.”). Here, Wilmington
Savings possessed Neill’s promissory note, which was indorsed in blank and attached to
the initial complaint. Thus, Wilmington Savings was entitled to enforce the note and
recover the debt. Contrary to Hutchins’ assertion, Wilmington Savings could do so
without suing in federal court on the note itself. See Kepler v. Slade, 896 P.2d 482,
484-85 (N.M. 1995) (explaining that “independent remedies” arise upon a mortgagor’s
default, enabling a mortgagee to “pursue [a] remedy in personam for the debt, or [a]
remedy in rem to subject the mortgaged property to its payment” (internal quotation
marks omitted)).
Second, Wilmington Savings’ injury in this case is traceable to Neill’s default on
the debt and Hutchins’ failure, either independently or as the executor/representative of
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Neill’s estate, to satisfy that debt. And finally, a judicial decision in Wilmington
Savings’ favor will redress the injury by foreclosing the mortgage and allowing the
property to be sold in satisfaction of the debt.
Thus, we conclude that Wilmington Savings had standing to bring this lawsuit.4
IV. The McMahon Affidavit
Hutchins contends that the district court erred in not striking McMahon’s affidavit,
which was offered in support of Huntington Savings’ summary judgment motion. In
particular, Hutchins argues the affidavit was inadmissible because McMahon relied on a
default notice and a loan-payoff schedule to show that the real property is subject to an
unpaid debt. We conclude that the district court did not abuse its discretion in not
striking McMahon’s affidavit. See Johnson v. Weld County, 594 F.3d 1202, 1207
(10th Cir. 2010) (“[W]e review challenges to the district court’s determinations regarding
what is and is not competent evidence for our consideration at the summary judgment
stage for abuse of discretion.”).
4 Hutchins argues that Wilmington Savings could not foreclose after (1) the
bankruptcy court discharged Neill’s liability on the note; and (2) Neill died. Hutchins is
mistaken on both counts. First, although a Chapter 7 bankruptcy “discharge extinguishes
. . . the personal liability of the debtor,” “a creditor’s right to foreclose on the mortgage
survives or passes through the bankruptcy.” Johnson v. Home State Bank, 501 U.S. 78,
83 (1991) (internal quotation marks omitted). Further, Neill’s Chapter 7 bankruptcy
petition identified Wilmington Savings as a creditor possessing a secured claim against
her home, and “an in rem action on a secured claim survives [a Chapter 7] bankruptcy,”
Chandler Bank of Lyons v. Ray, 804 F.2d 577, 579 (10th Cir. 1986). Second, in New
Mexico, the mortgagor’s death does not extinguish the mortgagee’s lien on real property.
See 5 Tiffany Real Property § 1546 (3d ed. 2021) (citing Cleveland v. Bateman, 158 P.
648, 657 (N.M. 1915), on reh’g, (N.M. 1916)).
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McMahon’s affidavit satisfied the evidentiary requirements for his reliance on the
default notice and payoff schedule. Specifically, McMahon stated that in his role as the
CEO of Huntington Savings’ parent company and in the performance of his regular job
duties, he was familiar with the companies’ business records maintained for the purpose
of collecting loan debts. A witness may testify about a matter within his personal
knowledge as long as there is “[e]vidence to prove personal knowledge[,] [which] may
consist of the witness’s own testimony.” Fed. R. Evid. 602. And unless “the witness
could not have actually perceived or observed that which he testifies to,” the testimony is
proper. United States v. Gutierrez de Lopez, 761 F.3d 1123, 1132 (10th Cir. 2014)
(internal quotation marks omitted). McMahon’s affidavit testimony established the
personal-knowledge requirement.
Further, although the default notice and payoff schedule contained out-of-court
statements “offered to prove the truth of the matter asserted,” Fed. R. Evid. 801(c), i.e.,
the existence of the debt, McMahon could nevertheless rely on those documents under
the business-records exception to the hearsay rule. That exception allows the admission
of hearsay statements in business records if the following conditions are met: the records
were (A) made around the time of the events at issue, (B) kept in the course of a regularly
conducted business activity, and (C) made as a regular practice of that activity. See Fed.
R. Evid. 803(6)(A)-(C). McMahon testified as to these conditions, and Hutchins has not
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“show[n] that the source of information or the method or circumstances of preparation
indicate a lack of trustworthiness.” Id. 803(6)(E). 5
C ONCLUSION
We affirm the district court’s judgment.
Entered for the Court
Mary Beck Briscoe
Circuit Judge
5 Even if McMahon’s affidavit contained flaws, they were harmless, given that
Neill herself acknowledged during the bankruptcy proceedings the existence of a
$466,737.42 debt owed to Huntington Savings that was secured by her residence.
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