A-1-CA-36075 | Omnilex

Testo completo

Court of Appeals of New Mexico
Filed 8/23/2019 11:14 AM

OCR transcription for search; preserved printed pages are authoritative

—

10
11

12
13
14
15
16
17
18

21
22

Corrections to this opinion not affecting the outcome. at the Court's discretion, can occur up to the time of publication with NM
Compilation Commission. The Court will ensure that the electronic version of this opinion is updated accordingly in Odyssey.

IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Court of Appeals of New Mexico

NATIONSTAR MORTGAGE, LLC, Filed pi2s/2019 11:14 AD
Plaintiff-Appellee, Uh. ~fe4
Mark Reynolds
v. No. A-1-CA-36075
ALAN BIRD,
Defendant-Appellant,
and
POLLY MAFCHIR,
Defendant.
APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY

David K. Thomson, District Judge
Weinstein & Riley, P.S.

Jason Bousliman

Albuquerque, NM

for Appellee

Gleason Law Firm, LLC

Deirdre Gleason

Heath, MA

for Appellant
MEMORANDUM OPINION

MEDINA, Judge.

4; Plaintiff Alan Bird (Bird) appeals the district court’s grant of summary

judgment in favor of Nationstar Mortgage LLC (Bank) in this foreclosure action.

Bird contends that disputes of material fact precluded the district court’s
determination that Bank established its standing to enforce the underlying note. We
affirm.

BACKGROUND

23 The undisputed facts establish that Polly Mafchir (Mafchir) borrowed
$227,502 from Bank and executed a promissory note (Note) secured by a mortgage
on certain property in Santa Fe, New Mexico (the property). Mafchir defaulted on
the Note in or around September 2013 and has made no payments or otherwise cured
the default thereafter. Bank filed a complaint against Mafchir seeking foreclosure in
February 2014.

33 Pursuant to NMSA 1978, Section 53-17-1 (1975), Bank brought this action as
the holder of the note and the mortgagee of the deed of trust. Bank attached three
exhibits to the complaint: (1) an unindorsed copy of the note made payable to Bank;
(2) a copy of the recorded deed of trust Mafchir executed describing the property
and transferring rights in the property to Bank; and (3) a copy of a deed of trust
corporate assignment of mortgage dated January 2014 from Mortgage Electronic

Registration Systems Inc. (MERS),! removing itself as nominee and assigning the

'IMERS is a national electronic registry, created by the banking industry to
avoid local and state recording fees, which keeps track of changes in the servicing
and ownership of mortgage loans. Bank of N.Y. v. Romero, 2014-NMSC-007, { 35,
320 P.3d 1.

mortgage to Bank. Three days after filing the complaint, Bank recorded a notice of
lis pendens.

{4} Mafchir never answered the complaint. However, on March 19, 2014, Bird
moved to intervene claiming he had acquired title to the property from Mafchir via
quitclaim deed and, therefore, had “an interest relating to the property.” Bird paid
Mafchir $3,100 in consideration for the quitclaim deed, notwithstanding that Bank
had already recorded a notice of lis pendens. Bank stipulated to the intervention,
which the district court subsequently granted. In his answer to Bank’s complaint,
Bird alleged Bank lacked standing to enforce the Note and that Bank’s interest in the
property was inferior to Bird’s.

{5} Bank sought default judgment against Mafchir and moved under Rule 1-056
NMRA for summary judgment against Bird. In support of its motion for summary
judgment, Bank attached an affidavit from its assistant secretary, Michael Brown,
(Brown affidavit) in which Brown attested to Bank’s possession of the Note at the
time the complaint was filed to establish standing to enforce its rights under the Note.
The Brown affidavit stated the unindorsed copy of the Note attached to the complaint
was a true and correct copy of the Note.

{6} Bird responded to Bank’s motion for summary judgment disputing all Bank’s
material facts and further asserting: (1) the motion for summary judgment was

“premature”; (2) Bank failed to establish its standing to enforce the Note with

admissible evidence; (3) the Brown affidavit was inadmissible hearsay; (4) the
evidence did not establish Bank was the lender/payee of the Note; and (5) the district
court lacked subject matter jurisdiction over the matter. Bank replied that the district
court had subject matter jurisdiction, the evidence showed Bank had standing to
enforce the Note, and Bird did not present evidence sufficient to call into question
any of the material facts.

{7} Bird filed his own motion for summary judgment. Although Bird conceded
that Bank was the named lender in the “mortgage loan,” he nonetheless argued that
Bank lacked standing to enforce the Note claiming Bank sold the mortgage loan and
had not demonstrated it regained “holder” status through a UCC-qualified
“negotiation.”

{83} Bank’s response to Bird’s summary judgment motion argued that: (1) it
provided the district court with the original Note; (2) the copy of the Note attached
to the complaint satisfied New Mexico’s pleading standards under Rule 1-008
NMRA and Rule 1-009(1) NMRA; (3) as holder of the Note, Bank had standing to
foreclose on the property; (4) Bank was not required to show it had the original Note
at the time the complaint was filed; (5) Bird could not challenge the validity of any
assignment of the mortgage; (6) securitization or sale of a loan is irrelevant to
standing; (7) the testimony and corresponding business records confirmed Bank’s

possession of the Note before the complaint was filed and established Bank as a

“holder” under Deutsche Bank National Trust Co. v. Johnston, 2016-NMSC-013,
369 P.3d 1046; and (8) Bird did not have standing to challenge Bank’s standing.

9} Bank attached seven exhibits to its response including an affidavit from
Edward Hyne (Hyne affidavit), Bank’s litigation resolution analyst, which described
the verification of Bank’s possession of the original Note less than a week before
filing the complaint, and that Bank sent the original Note to their counsel on the day
the complaint was filed. The Hyne affidavit included two copies of the Note, one
with an undated blank indorsement and one without an indorsement; a record
showing Bank’s November 2011 registration with MERS, and subsequent sale of
the Note’s investment interest; and a file review checklist. Bird replied claiming
Bank admitted to selling the Note, provided no evidence it re-acquired ownership of
the Note, and the Bank’s evidence establishing standing was inadmissible. In neither
motion for summary judgment did Bird contest the existence and validity of the
underlying loan or Mafchir’s default.

410} The district court denied Bird’s motion for summary judgment, granted
Bank’s motion for summary judgment against Bird and motion for default judgment
against Mafchir. The district court concluded Bank possessed the original, blank-
indorsed Note and the original mortgage, and was therefore entitled to enforce both.
The district court concluded that Bird had standing to challenge Bank’s standing

based on the executed quitclaim deed.

{11}. This appeal followed. We note that Bank did not cross-appeal the district
court’s conclusion Bird had standing to challenge Bank’s authority to enforce the
underlying Note against Mafchir.

DISCUSSION

{12} Bird argues the district erred in granting Bank’s motion for summary
judgment because an issue of material fact exists as to whether Bank had standing
to enforce the note. According to Bird, Bank sold the note and did not demonstrate
with admissible evidence that it reacquired the note before filing the complaint.

I. Standard of Review

{13} We review the grant or denial of summary judgment on appeal de novo. City
of Rio Rancho v. Amrep Sw. Inc., 2011-NMSC-037, § 14, 150 N.M. 428, 260 P.3d
414. We will affirm the district court “if we conclude that there are no genuine issues
of material fact and the movant is entitled to judgment as a matter of law.” Id.
(internal quotation marks and citation omitted). “We view the facts in a light most
favorable to the party opposing summary judgment and draw all reasonable
inferences in support of a trial on the merits.” /d. (internal quotation marks and
citation omitted). “The party moving for summary judgment has the initial burden
of establishing a prima facie case for summary judgment by presenting such
evidence as is sufficient in law to raise a presumption of fact or establish the fact in

question unless rebutted.” /d. (internal quotation marks and citation omitted). Once

the movant meets this burden, “the burden shifts to the party opposing the motion to
demonstrate the existence of specific evidentiary facts which would require trial on
the merits.” Roth v. Thompson, 1992-NMSC-011, 9.17, 113 N.M. 331, 825 P.2d
1241. A fact is material if “under the pertinent substantive law, the fact is necessary
to give rise to a claim.” City of Rio Rancho, 2011-NMSC-037, 4 14 (internal
quotation marks and citation omitted).

(14; Because we conclude Bank’s motion for summary judgment was properly
granted and resolves the issues on appeal, we do not address Bird’s motion for
summary judgment, except as it provides an additional basis for affirming the district
court’s grant of summary judgment in Bank’s favor.

II. Bank Made a Prima Facie Case to Support Summary Judgment

15} As the movant in its motion for summary judgment, Bank was required to
demonstrate it had standing to enforce the Note under New Mexico’s Uniform
Commercial Code (UCC). See Romero, 2014-NMSC-007, {J 17, 19. See generally
NMSA 1978, §§ 55-1-101 to -12-111 (1961, as amended through 2015). The UCC
requires a person seeking to enforce a note to prove it is either: “(i) the holder of the
instrument{;] (ii) a nonholder in possession of the instrument who has the rights of a
holder[;] or (iii) a person not in possession of the instrument who is entitled to
enforce the instrument[.]” Section 55-3-301; see also § 55-3-104(a) (identifying a

promissory note as a negotiable instrument). A plaintiff may show it is the holder of

10
1]
12
13
14
15
16

17
18

a note and satisfy standing requirements by attaching a note indorsed in blank to its
complaint. See Johnston, 2016-NMSC-013, § 23; BAC Home Loans Servicing LP v.
Smith, 2016-NMCA-025, J 11, 366 P.3d 714 (“[U]nder the UCC, possession of a
note indorsed in blank ordinarily establishes the right of a third party as the holder
of that note.”); cf § 55-1-201(b)(21)(A) (stating that the holder of a note is “the
person in possession of a [note] that is payable either to bearer or to an identified
person that is the person in possession’) “The payee is always a holder if the payee
has possession.” Romero, 2014-NMSC-007, { 21.
{16} Bank first demonstrated it was the holder of the Note by attaching a copy of
the Note to the complaint, showing Bank as the Note’s payee. Bird concedes the
Note was made payable to Bank. In its response to Bird’s motion for summary
judgment, Bank attached the Hyne affidavit, which included another copy of the
Note showing Bank as payee and with a single blank indorsement from Bank.

Where paper bearing the payee’s indorsement is found in his

possession, it is presumed that he has never delivered it or that it has

been retransferred to him, and whether such indorsement be a general

or special one, it has been held that the payee may strike out such
indorsement.

Tompkins v. Rain, 1921-NMSC-015, 95, 26 N.M. 631, 195 P. 800 (internal
quotation marks and citation omitted). The Hyne affidavit included Bank’s business
records which showed the Note was never transferred and that Bank has always been
the loan servicer. These facts demonstrated Bank was the payee of the Note and had

continuous possession of the Note from the time it was executed to the filing of the

complaint. Further, Bank also demonstrated standing as the holder of a note properly
indorsed in blank. “Under the UCC, possession of a note properly indorsed in blank
establishes the right to enforce that note.” Bank of N.Y. Mellon v. Lopes, 2014-
NMCA-097, § 12, 336 P.3d 443. Thus Bank made a prima facie showing of its
standing to enforce the note on two separate grounds in accordance with our case
law.

III. Bird Did Not Demonstrate the Existence of a Genuine Issue of Material
Fact

{17} “Once the movant makes a prima facie showing, the party opposing summary
judgment has the burden to demonstrate the existence of specific evidentiary facts
which would require trial on the merits.” Horne v. Los Alamos Nat’! Sec., L.L.C.,
2013-NMSC-004, 9.15, 296 P.3d 478 (internal quotation marks and citations
omitted). Bird generally argues that Bank did not make a prima facie case of
entitlement to summary judgment with admissible evidence. Specifically, Bird
argues that some of the evidence relied on by Bank gives rise to an inference Bank
did not possess or have the right to enforce the Note when it filed its foreclosure
complaint. For the reasons we explain below, we conclude Bird did not demonstrate
the existence of specific material facts requiring a trial on the merits.

18} Bird’s arguments hinge on his contention that Bank sold the Note, including
that Bank’s failure to produce “complete documentation regarding the Note and the

transactions of sale” required the district court to impose an adverse presumption

against Bank, and that the district court applied a rule that “once a holder, always a
holder” to conclude Bank had standing. Bird does not cite where in the record Bank
admitted to selling the Note. See Muse v. Muse, 2009-NMCA-003, § 42, 145 N.M.
451, 200 P.3d 104 (“We are not obligated to search the record on a party’s behalf to
locate support for propositions a party advances or representations of counsel as to
what occurred in the proceedings.”). Instead, Bird references Bank’s admission to
selling an investment interest in the Note and relies on his own unsupported
assertions that the sale of an investment interest evidences the Note’s sale. “It is not
our practice to rely on assertions of counsel unaccompanied by support in the record.
The mere assertions and arguments of counsel are not evidence.” Chan v. Montoya,
2011-NMCA-072, § 9, 150 N.M. 44, 256 P.3d 987 (internal quotation marks and
citation omitted). In support of his position, Bird also cites transcript pages from a
transcript not included in the record proper. We do not consider matters outside the
record. See Kepler v. Slade, 1995-NMSC-035, 4 13, 119 N.M. 802, 896 P.2d 482.
Bird offers no authority that a holder of a note relinquishes its enforcement rights
when it sells an investment interest in the note. We therefore assume none exists.
See In re Adoption of Doe, 1984-NMSC-024, § 2, 100 N.M. 764, 676 P.2d 1329.
Nor does Bird explain how this is relevant under the UCC enforcement provisions

when Bank is in possession of the Note, indorsed-in-blank, and the original payee.

See Headley v. Morgan Mgmt. Corp., 2005-NMCA-045, § 15, 137 N.M. 339, 110
P.3d 1076 (“We decline to review such an undeveloped argument.”).

{19} We similarly decline to address Bird’s undeveloped claim that Bank lacked
standing based on Bank’s failure to claim independent settlement or mediation
authority because Bird does not explain how independent settlement or mediation
authority interacts with the UCC enforcement requirements or offer authority in
support thereof. See id.

{20} Bird notes that the certification of possession of original Note signed and filed
by Bank’s counsel is based on statements and certifications of attorneys that are not
admissible evidence sufficient to prove Bank possessed the Note when the complaint
was filed. We are not persuaded. Having concluded that Bank made a prima facie
case of standing without relying on this evidence, the admissibility of this evidence
is irrelevant.

21} Bird also challenges the authenticity of the Note contending that since
Johnston promissory notes are no longer self-authenticating, and therefore the
district court took improper judicial notice of the Note’s authenticity. Bird’s reliance
on Johnston to negate Bank’s standing is misplaced because our Supreme Court did
not consider the self-authentication of commercial paper or hold that notes secured
by a mortgage are no longer self-authenticating. “Cases are not authority for

propositions not considered.” Sloan v. State Farm Mut. Auto. Ins. Co., 2004-NMSC-

004, 9 12, 135 N.M. 106, 85 P.3d 230 (alteration, internal quotation marks, and
citation omitted).

{22} Bird also argues the evidence presented by Bank was inadmissible and
therefore, the district court improperly took judicial notice of the Note’s authenticity.
However, “[t]he form of summary judgment evidence itself does not have to meet
the requirements of admissibility for trial evidence, but the substance of the evidence
must be of a type that can be admitted at trial.” Seal v. Carlsbad Indep. Sch. Dist.,
1993-NMSC-049, 914, 116 N.M. 101, 860 P.2d 743. The Brown and Hyne
affidavits and attached exhibits provided sufficient evidence for the district court to
rely on to conclude the Note was authentic, regardless of whether they were
objectionable as to form.

{23} Bird argues that the existence of the blank indorsement on the copy of the
Note attached to the Hyne affidavit and Bank’s claims it was both a holder and holder
in due course implies the note has been traded and is sufficient to create a genuine
issue of material fact. We disagree. Under our jurisprudence, because Bank is the
payee on the Note and in possession of it, we presume Bank never transferred the
Note, or if it did, that it regained possession of the Note. See Tompkins, 1921-NMSC-
015, 95. Bird presented no evidence to overcome this presumption. See id. J 7

(considering whether letters offered into evidence were sufficient to overcome the

presumption enjoyed by a payee in possession of a note). Further, Bank brought suit
under the legal theory that it was a holder of the Note, not a holder in due course.
(24 We are similarly unpersuaded by Bird’s argument that the assignment of the
mortgage by MERS to Bank creates an issue of material fact as to whether a person
other than Bank was entitled to enforce the Note. Bird does not explain how the
assignment of the mortgage to Bank before filing of the foreclosure complaint means
Bank was not a holder of the Note and instead relies on speculation that some
undisclosed “principal” directed MERS to transfer the mortgage. We do not address
this speculation further. See Horne, 2013-NMSC-004, 915 (reiterating that
speculation is insufficient to overcome a prima facie case for summary judgment).
25} Bird argues the district court gave Bank improper deference when reviewing
the evidence. Once Bank made its prima facie case of standing, the burden shifted
to Bird “to demonstrate the existence of specific evidentiary facts which would
require trial on the merits.” Roth, 1992-NMSC-011, 9 17. Having concluded Bank
demonstrated a prima facie case of standing, we conclude Bird’s accusation of
improper deference is without merit and do not consider it further.

26} Despite conceding Bank was the original payee and holder of the Note, Bird
argues the blank indorsement on the Note was an anomalous indorsement because
there is no evidence Bank held the Note when the indorsement was made. An

anomalous indorsement is “an indorsement made by a person who is not the holder

of the instrument. An anomalous indorsement does not affect the manner in which
the instrument may be negotiated.” Section 55-3-205(d). Without citation to another
indorsement or evidence of a transfer, Bird nonetheless argues Bank became a non-
holder before indorsing the Note in blank. Because there is no evidence Bank lost
its holder status, the indorsement is a blank indorsement. See § 55-3-205(a)-(b) (“If
an indorsement is made by the holder of an instrument and it is not [payable to an
identified person or bearer], it is a blank indorsement|[.]”).

27} To the extent any of Bird’s arguments were intended to allege Bank
fraudulently attached a fake Note to the complaint, we observe that Bird has not met
fraud’s heightened pleading requirements, see Rule 1-009(B), and consider the
argument no further because it is unpreserved. See Rule 12-321(A) NMRA (“To
preserve an issue for review, it must appear that a ruling or decision by the [district]
court was fairly invoked.”).

{28} Based on the foregoing, we conclude Bird failed to demonstrate the existence
of any specific evidence which created a genuine issue as to any material fact or that
the district court relied on improper evidence when it found Bank had standing to
enforce the note.

429} Finally, to the extent Bank contends Bird was not the proper party to challenge
Bank’s standing, Bank stipulated to Bird’s intervention and did not cross-appeal the

district court’s finding that Bird had standing to challenge Bank’s standing.

15
16

17
18

Therefore, Bird’s standing is not before us. Even so, we observe Bank sought default
judgment against Mafchir and that “[iJn instances where a foreclosure plaintiff seeks
a default judgment, courts should raise the standing issue sua sponte and carefully
scrutinize the plaintiffs standing to safeguard the integrity of New Mexico’s
property system and protect subsequent bona fide purchasers.” Johnston, 2016-
NMSC-013, ¥ 27 n.4.

CONCLUSION

{30} For the foregoing reasons, we affirm the district court’s judgment denying
Bird’s motion for summary judgment and granting Bank’s motion for summary
judgment.

313) IT ISSO ORDERED.

AKCQUELINE q “MEDINA, Judge
WE CONCUR:
9. Albu
J. MILES HANISEE, Judge

Mewon

MEGAN P. DUFFY, Judge (/

August 23, 2019- Nationstar Mortgage, LLC v. Alan Bird, No. A-1-CA-36075

Testo completo

OCR transcription for search; preserved printed pages are authoritative

Continua la tua ricerca in ChatGPT o Claude