Opinion
NO. 2013-CA-001544-MR
10-20-2017
EILEEN M. BRIAN AND STEVEN BLANTON APPELLANTS v. WESTVUE NPL TRUST II C/O FCI LENDER SERVICES, INC. APPELLEE
BRIEF FOR APPELLANTS: Eileen M. Brian, pro se Steven Blanton, pro se Prospect, Kentucky BRIEF FOR APPELLEE: Brian E. Chapman Cincinnati, Ohio
NOT TO BE PUBLISHED APPEAL FROM OLDHAM CIRCUIT COURT
HONORABLE KAREN A. CONRAD, JUDGE
ACTION NO. 11-CI-00180 OPINION
REVERSING AND REMANDING
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BEFORE: KRAMER, CHIEF JUDGE; ACREE AND JONES, JUDGES. KRAMER, CHIEF JUDGE: Eileen M. Brian and her husband, Steven Blanton, appeal pro se from an order of the Oldham Circuit Court granting summary judgment in favor of Kondaur Capital Corporation ("Kondaur") in this mortgage foreclosure action. For the reason discussed below, we conclude that summary judgment was premature and thus remand this matter.
As the caption of this opinion indicates, Kondaur Capital Corporation is not the listed appellee. Instead, it is an entity known as "Westvue NPL Trust II c/o FCI Lender Services, Inc." This change came about while this appeal was pending; at that time, Kondaur's counsel, who also represents Westvue, filed a notice stating that Westvue had become the real party in interest pursuant to Kentucky Rule of Civil Procedure (CR) 17.01. No issue has been made of this substitution. For the sake of simplicity, however, we will continue to refer to the appellee as "Kondaur."
Kondaur filed the instant foreclosure action against Brian on February 22, 2011, alleging that it was "entitled to enforce" a promissory note Brian had executed on or about December 26, 2002, relating to a mortgage on her residence. When Brian filed her answer, she asserted among other defenses that Kondaur had not alleged it possessed her promissory note; and that if Kondaur had filed its action without having her promissory note in its possession it lacked standing to sue. Brian also filed motions to compel Kondaur to produce her original promissory note, and to dismiss Kondaur's suit if it was unable to do so.
On March 22, 2011, Kondaur responded to Brian's motion by stating in relevant part:
This is a foreclosure action. [Kondaur] pled that it is entitled to enforce the promissory note and mortgage executed by [Brian]. [Kondaur] has obtained a copy of the note and anticipates having the original shortly. The note bears an endorsement from the original obligee to blank. [Kondaur] also possesses assignments of the mortgage, which pre-date the filing of the complaint. These documents all tend to prove [Kondaur] possesses the ability to enforce the note and is in fact the real party in interest.(Emphasis added.)
Over the course of litigation that followed, Kondaur ultimately presented Brian's original promissory note; the circuit court denied Brian's motion to dismiss; Kondaur moved for summary judgment; and, despite Brian's continued argument that Kondaur had failed to demonstrate its standing, the circuit court granted Kondaur's motion.
At the circuit court level, Brian contested the authenticity of the promissory note that Kondaur presented. On appeal, Brian does not; her brief contains no such argument. Therefore, she has waived any argument regarding the note's authenticity. See, e.g., Osborne v. Payne, 31 S.W.3d 911, 916 (Ky. 2000) ("Any part of a judgment appealed from that is not briefed is affirmed as being confessed.").
Brian presents several arguments on appeal. At present, however, our review is necessarily limited to what Brian has raised with respect to Kondaur's standing to sue in this matter. In general, to invoke the jurisdiction of the court to enforce a claim, a plaintiff must show he has standing to do so. J.N.R. v. O'Reilly, 264 S.W.3d 587 (Ky. 2008). Standing to bring an action requires a personal interest, often referred to as a "substantial" interest in the subject matter of the litigation as distinguished from a "mere expectancy." Housing Authority of Louisville v. Service Employees International Union Local 557, 885 S.W.2d 692, 695 (Ky. 1994). The issue of standing is concerned only with the question of who is entitled to mount a legal challenge rather than with the merits of the subject matter of the controversy. Flast v. Cohen, 392 U.S. 83, 88 S.Ct. 1942, 20 L.Ed.2d 947 (1968). It is a concept utilized to determine whether a party has shown a personal stake in the outcome sufficient to insure that a justiciable controversy is adequately presented to the court. BLACK'S LAW DICTIONARY 1413 (7th ed. 1999). Courts apply the concept of standing as a matter of self restraint to avoid rendering advisory opinions on matters instigated by parties who are merely "intermeddlers." 59 Am. Jur. 2d Parties § 36 (2002). Because the jurisdiction of the court is a prerequisite to commencement of any action, standing must exist at the time the action is filed. Id. at § 37.
One argument Brian has raised on appeal that does not involve Kondaur's standing takes issue with the circuit court's decision to allow an uncompensated foreclosure of Blanton's (Brian's husband's) curtesy interest in her foreclosed property, despite the fact that Blanton was not a party to her mortgage agreement. We cannot review this argument, however, because it would be moot if Kondaur lacked standing.
As noted, Kondaur alleged in its complaint that it was "entitled to enforce" the promissory note Brian executed on or about December 26, 2002. In the various pleadings and memoranda Kondaur filed below, it also explained why: in its view, it was the holder of the note, indorsed to blank, at the time the complaint was filed.
To be sure, the "holder" of a promissory note that has been indorsed in blank, such as the note at issue in this matter, has standing and is the real party in interest in a foreclosure case associated with the note. Acuff v. Wells Fargo Bank, N.A., 460 S.W.3d 335, 339 (Ky. App. 2014). And, because Kondaur's sole theory of standing derives from its assertion that it is a "holder" of her note, several of Brian's arguments on appeal are simply inapplicable.
For example, Brian argues that two documents Kondaur also presented in support of its standing (i.e., documents indicating Kondaur had received an assignment of her mortgage) were legally deficient. She further argues Kondaur lacked standing because it did not present a "pooling and servicing agreement" demonstrating its authority to enforce her promissory note. However, if Kondaur was the holder of her note, these points are irrelevant. The right to enforce a promissory note that has been indorsed in blank, along with its accompanying liens and obligations, springs from possession of the note itself, rather than a mortgage document and its proper assignment to another party. See Stevenson v. Bank of America, 359 S.W.3d 466, 470 (Ky. App. 2011).
For this reason, various sub-arguments Brian has presented in this vein are likewise irrelevant. Brian also argues the circuit court erred by: (1) refusing to allow discovery of any pooling and servicing agreement that may have existed relative to Brian's promissory note; (2) permitting Kondaur to modify a prior admission and allowing Kondaur to maintain instead that Brian's note had not been securitized, and that no pooling servicing agreement existed relating to it; and (3) failing to make a ruling on a motion to strike the assignment of mortgage documents and various affidavits Kondaur filed with them. --------
However, a "holder" of a promissory note indorsed in blank does not merely have a copy of the note, or an expectation of receiving the note; it must, by definition, have possession of the note. See Kentucky Revised Statute (KRS) 355.1-201(2)(u)(1). More to the point, the purported "holder" must demonstrate it possessed the note at the time it filed suit; and, if a defendant raises an issue as to the purported holder's possession of the note, the purported holder is obligated to produce it for purposes of summary judgment. Acuff, 460 S.W.3d at 340-41.
Here, Kondaur presented evidence indicating it possessed Brian's promissory note, but did not present evidence indicating when it took possession. Moreover, its pleadings tend to indicate it possessed the note months after it filed the instant suit. If that is indeed the case, Kondaur lacked standing at the commencement of its suit, and the circuit court should have accordingly dismissed this matter without prejudice.
In light of the foregoing, the Oldham Circuit Court's judgment and order of sale is REVERSED and REMANDED for further proceedings consistent with this opinion.
ALL CONCUR. BRIEF FOR APPELLANTS: Eileen M. Brian, pro se
Steven Blanton, pro se
Prospect, Kentucky BRIEF FOR APPELLEE: Brian E. Chapman
Cincinnati, Ohio