Opinion
2013 CA 0165
11-01-2013
SUSAN CLEVELAND v. IMPERIAL FIRE AND CASUALTY INSURANCE COMPANY
Stephen W. Rider Cullen Brown New Orleans, LA Attorneys for Appellant Defendant - Bank of America, N.A. Byard Edwards, Jr. Hammond, LA Attorney for Appellee Plaintiff - Susan Cleveland
NOT DESIGNATED FOR PUBLICATION
Appealed from the
21st Judicial District Court
In and for the Parish of Livingston, Louisiana
Trial Court Number 129,314
Honorable Elizabeth P. Wolfe, Judge
Stephen W. Rider
Cullen Brown
New Orleans, LA
Attorneys for Appellant
Defendant - Bank of America, N.A.
Byard Edwards, Jr.
Hammond, LA
Attorney for Appellee
Plaintiff - Susan Cleveland
BEFORE: WHIPPLE, C.J., WELCH, AND CRAIN, JJ.
WELCH, J.
Defendant, Bank of America, N.A., appeals a default judgment awarding damages to plaintiff, Susan Cleveland, and declaring a judgment rendered in its favor in a foreclosure proceeding and the subsequent seizure and sale of Ms. Cleveland's home null and void for the lack of proper service. We reverse.
BACKGROUND
Ms. Cleveland owned a residence located at 20360 Fairway in Springfield, Louisiana. The home was damaged by a fire occurring on October 17, 2009. On July 13, 2010, Ms. Cleveland filed a lawsuit against her homeowners' insurer, Imperial Fire and Casualty Insurance Company (Imperial Fire), claiming that the home was a total loss and seeking to recover for her losses under the policy (the "fire lawsuit"). The fire lawsuit was allotted to Division F of the 21st Judicial District Court (21st JDC). In her first amended and supplemental petition, Ms. Cleveland added Whirlpool Corporation as a defendant to the fire lawsuit, asserting a products liability claim against it.
The record reflects that after the fire lawson Ms. Cleveland's home, filed a petition for executory process against Ms. Cleveuit commenced, on October 29, 2010, Bank of America, which held a mortgage land in the 21st JDC (the foreclosure action). The case was allotted to Division D.
On September 9, 2011, in the fire lawsuit, Ms. Cleveland filed a motion to consolidate the fire lawsuit and the foreclosure action. Imperial Fire opposed the motion, asserting that the foreclosure action had been concluded and was no longer in litigation at the time the consolidation motion was filed. In support of its motion, Imperial Fire offered evidence showing that: (1) a writ of seizure and sale had been issued on November 5, 2010 with respect to the subject property in the foreclosure action; (2) Bank of America purchased the property at a sheriff's sale for the sum of $146,666.68 and the sale was recorded in the Livingston Parish's Clerk of Court's office on July 21, 2011; (R 80-83) and (3) on August 3, 2011, Bank of America sold the subject property to Federal National Mortgage Association for the sum of $228,274.09; the sale was recorded in the Livingston Parish Clerk of Court's Office on August 8, 2011. Whirlpool also opposed the consolidation attempt, urging that the foreclosure action was wholly unrelated to the products liability claim brought against it. The trial court granted the motion for consolidation. Imperial Fire sought supervisory review of that ruling, and on June 4, 2012, this court reversed the order of consolidation. Cleveland v. Imperial Fire and Casualty Insurance Company, 2012-0223(La. App. 1st Cir. 6/4/12)(unpublished writ action).
Meanwhile, in the fire lawsuit, Ms. Cleveland filed a reconventional demand against Bank of America seeking a judgment declaring the sheriff's sale of the subject property to be null and void because service by Bank of America was insufficient. She also sought to recover damages for wrongful seizure. Also, on January 10, 2012, Ms. Cleveland filed a second amending and supplemental petition in the fire lawsuit asserting claims against Bank of America and Imperial Fire. In the second amended petition, Ms. Cleveland made these allegations: The central dispute between Ms. Cleveland and Imperial Fire was whether the home was a "total loss." Imperial Fire tendered a check to Ms. Cleveland in the amount of $149,000.00, which it considered to be the cost of the repairs. Because the check was less than the $220,000.00 balance on the mortgage note owed by Ms. Cleveland to Bank of America, Bank of America refused to endorse the check, stating that it would accept full payment of the mortgage or nothing. When the policy period ended, Imperial Fire refused to renew the policy because the residence had not been repaired; Bank of America refused to endorse the check tendered by Imperial Fire and allow Ms. Cleveland to reduce the mortgage, and the bank refused to accept her monthly mortgage payments because the premises were uninsured. Bank of America then foreclosed on Ms, Cleveland's home because she was not making the monthly payments they refused to take. In the foreclosure action, Bank of America alleged that Ms. Cleveland was an absentee; however, the allegations of absenteeism were false as there were many communications between Bank of America and Ms. Cleveland and her counsel such that Bank of America could have easily located her. Ms. Cleveland asserted in the second amending petition that Imperial Fire and Bank of America acted in concert to deprive her of her property without due process and are therefore liable in solido for the damages she suffered, including: mental anguish; pain and suffering; loss of enjoyment of life; extinguishment of a decent lifestyle; and mental aggravation.
On June 21, 2012, Ms. Cleveland filed a third amending and supplemental petition. Therein, she alleged that Bank of America failed to properly serve her with notice of the seizure, appraisal, and judgment, having these documents nailed to the door of her burned-out shell of a house, despite having numerous communications with Ms. Cleveland through her counsel of record and having knowledge of her new address through payments submitted by her. Ms. Cleveland claimed that the judgment confirming the foreclosure and the seizure and sale of the property at sheriff's sale are absolute nullities and should be set aside. She further averred that Bank of America improperly foreclosed on her home despite Imperial Fire's refusal to pay her claim. She asked that Bank of America be joined as defendant in the proceeding and be required to assert its contractual claims against Imperial Fire and its products liability claims against Whirlpool in a concursus proceeding. Ms. Cleveland alleged that the respective claims sought to be impleaded, among others, included her claim against Bank of America for action in nullity and associated damages and her claim under La. C.C. 2315 for wrongful conduct against Bank America. (R 184) Finally, in the third amending petition, Ms. Cleveland prayed that there be judgment in her favor and against all defendants set out in that petition as well as the first and second supplemental and amending petitions.
On August 16, 2012, Ms. Cleveland filed a motion and order for preliminary default against Bank of America, asserting that on June 21, 2012, she filed a third amending and supplemental petition joining Bank of America as a defendant in the action, that Bank of America had been served through C.T. Corporation, and that Bank of America failed to file an answer or other responsive pleading. The record reflects a certificate of the clerk of court stating that Bank of America had been served through C.T. Corporation on July 11, 2012, and since that time, there was no answer or other pleading filed on behalf of Bank of America. The trial court entered a preliminary default judgment on August 16, 2012.
On August 22, 2012, a hearing to confirm the default judgment was held. Ms. Cleveland testified at the hearing and although Ms. Cleveland's attorney made reference to various documents, no documentary evidence was filed into the record. Ms. Cleveland testified that Bank of America had her cell phone number since 2005 and that after the fire, she gave Bank of America her new address and told the bank that her phone number was the same. Ms. Cleveland was shown a letter purportedly from her attorney asking Bank of America to contact him. She was also shown another letter written in February 2010 by her attorney and signed by her authorizing the bank to contact her attorney with respect to any problems, along with a time sheet. Ms. Cleveland's attorney argued that this evidence showed that before Bank of America filed the foreclosure action, it knew how to contact Ms. Cleveland, but had her declared as an absentee; he insisted that Bank of America failed to make a diligent search.
Ms. Cleveland acknowledged that she recalled discussions with Bank of America and Imperial Fire regarding settling her claim to have the mortgage completely paid. She testified that she had coverage in the amount of $300,000.00 under the fire policy and that she recalled her attorney trying to negotiate a pay off of the loan. She stated that a check was sent to Bank of America; however, it was sent back to her because Bank of America wanted the full amount. Ms. Cleveland testified as to the effect the loss of her home and the foreclosure proceedings had on her life. She stated that prior to the foreclosure, she had a great credit score and could get whatever she wanted; however, she lost her good credit rating because of the foreclosure on her credit report. She also stated that she could not drive down the street where she used to live because she was so disgusted over the fact that there were people living in her house.
Ms. Cleveland's attorney informed the court that the foreclosure proceedings had been filed on October 29, twenty-two months prior to the default confirmation hearing. He asked that the court award Ms. Cleveland $2,500.00 a month for those twenty-two months in general damages and also award at least an additional $500.00 a month for Ms. Cleveland's adverse credit rating. Ms. Cleveland added that she was living in a trailer, and when questioned as to the amount she was seeking for mental anguish, she stated, "$2,000.00." She was then asked whether that represented a total amount, but she stated that she did not know.
On August 22, 2012, the trial court entered judgment in favor of Ms. Cleveland and against Bank of America, confirming the preliminary default as prayed for in Ms. Cleveland's second and third amending and supplemental petition as follows: Pursuant to the second amending and supplemental petition, Paragraphs 24, 25, 26, 27, and 28, the trial court awarded damages in the amount of $125,000.00, apportioning those damages as follows: $45,000.00 for mental anguish; $49,000.00 for extinguishment of a decent lifestyle; and $25,000.00 for mental aggravation. Pursuant to Paragraph 33 of the third supplemental petition, the trial court entered judgment declaring the judgment rendered in favor of Bank of America in the foreclosure action and the subsequent seizure and sale of Ms. Cleveland's properties to be null and void and set aside as absolute nullities for the lack of legal and sufficient service as proven by sufficient evidence.
This appeal of the default judgment, taken by Bank of America, followed.
DISCUSSION
Bank of America contends that the trial court erred in vacating the order of seizure and sale entered in foreclosure proceedings and in nullifying the sheriff's sale of the property. It further contends that the trial court erred in entering a default judgment awarding any damages to Ms. Cleveland and alternatively, erred in awarding her damages in the amount of $125,000.00. Bank of America submits that the default judgment is fraught with legal and evidentiary errors, mandating its reversal. Specifically, Bank of America argues that the court erred in granting the default judgment for the following reasons: (1) the judgment granted relief not requested in the third supplemental petition, upon which the motion for default was premised; (2) Ms. Cleveland's delictual claims had prescribed; (3) the trial court committed "plain and fundamental evidentiary errors" by allowing improper leading questions, considering documents that were not authenticated and which Ms. Cleveland refused to admit at the hearing, and granting relief on the basis of Ms. Cleveland's attorney's testimony; (4) the supplemental petitions were improperly considered by the trial court because Ms. Cleveland failed to file a motion for leave to file either petition; (5) the court erred in awarding Ms. Cleveland emotional or mental damages because Ms. Cleveland failed to prove either a physical injury or that Bank of America's actions constituted outrageous conduct; (6) the trial court erred in nullifying the foreclosure order and subsequent sheriff's sale; (7) the trial court erred in allowing Ms. Cleveland's foreclosure claims to be cumulated with the fire lawsuit; and (8) the trial court erred in granting any relief based on Ms. Cleveland's claim that Bank of America was required to accept less than the full amount of her unpaid loan balance.
Because we find that the trial court erred in entering judgment declaring that the judgment obtained by Bank of America in the foreclosure action and the subsequent seizure and sale of the property were null and void, and further find that Ms. Cleveland failed to prove that the seizure and sale of her home was wrongful so as to entitle her to recover any damages resulting from the seizure and sale, we pretermit discussion of Bank of America's remaining attacks to the propriety of the default judgment.
Default Judgments
A judgment of default must be confirmed by proof of the demand sufficient to establish a prima facie case. La. C.C.P. art. 1702; Assamad v. Percy Square and Diamond Foods, L.L.C., 2007-1229 (La. App. 1st Cir. 7/29/08), 993 So.2d 644, 646, writ denied, 2008-2138 (La. 11/10/08); 996 So.2d 1077. The plaintiff has the burden of proving each of the essential elements of his claim with competent evidence as fully as if each of the allegations of the petition had been specifically denied. Id. The plaintiff must present competent evidence that convinces the court that it is probable he will prevail on the merits. Arias v. Stoithaven New Orleans, L.L.C., 2008-1111 (La. 5/5/09), 9 So.3d 815, 820. A plaintiff seeking to confirm a default must prove both the existence and validity of his claim. Id. A default judgment cannot be different in kind from what is demanded in the petition and the amount of damages must be proven to be properly due. La. C.C.P. art. 1703.
To obtain a reversal of a confirmation of a default judgment, the defendant must overcome the presumption that the judgment was rendered upon sufficient evidence and that it is legally correct. However, this presumption does not apply where the record contains a note of evidence introduced or a transcript of the proceeding in the court. Assamad, 993 So.2d at 646-647. In this case, while plaintiff declined to introduce any documents presented to the court in support of her claims against Bank of America at the confirmation hearing, the record does contain a transcript of the confirmation hearing, and therefore, the presumption that the judgment was rendered on sufficient evidence and is legally correct does not apply.
We first address that portion of the default judgment that annulled the sale of Ms. Cleveland's home. It is well settled that a debtor may not annul a sale of property on the basis of an alleged defect in the executory proceeding once the property has passed into the hands of an innocent third person. Under such circumstances, once the property has been sold to one other than the mortgagee, the mortgagor may not annul the sale. First Guaranty Bank, Hammond, Louisiana v. Baton Rouge Petroleum Center, Inc., 529 So.2d 834, 840 (La. 1987). The record demonstrates that Bank of America purchased the subject property and then sold it to a third party. Because the property was in the hands of a third party, the judgment annulling the sale must be reversed.
Next, we address that portion of the judgment that decreed the judgment obtained by Bank of America in the foreclosure action and the subsequent seizure of Ms. Cleveland's home to be absolute nullities. Pursuant to La. C.C.P. art. 2002, if a judgment is rendered against a defendant who has not been served and who has not entered a general appearance, that judgment is an absolute nullity and may be collaterally attacked by an adversely affected party at any time. Lewis v. Temple Inland, 2011-0729, 2011-0730 (La. App. 1st Cir. 11/9/11), 80 So.3d 52, 64-65. Ms. Cleveland did not demonstrate that she did not receive notice of the foreclosure action; nor did she demonstrate that she did not participate in the proceedings. The only alleged "defect" she asserted in the proceeding is that Bank of America had a curator appointed when it should have known of her whereabouts. However, she did not establish that the curator did not notify her of the proceedings. In short, Ms. Cleveland failed to offer sufficient evidence to support her claim that the judgment rendered in the foreclosure action and the resulting seizure of her home were absolute nullities, and we reverse those portions of the judgment as well.
Bank of America filed a motion to supplement the record to include the record of the foreclosure proceedings or in the alternative, to take judicial notice of the record in the foreclosure proceeding, which it claims shows that the curator actually contacted Ms. Cleveland and notified her of the foreclosure proceedings and that Ms. Cleveland participated in those proceedings by filing pleadings and appearing at a hearing. This court denied the motion to supplement the record, observing that such matters are more properly directed to the district court. Cleveland v. Bank of America, 2013-0165 (La. App. 1
Lastly, we address that portion of the judgment awarding Ms. Cleveland damages for wrongful seizure. As a general rule, a debtor has no cause of action for damages for wrongful seizure when an executory proceeding has been implemented and completed lawfully. Gulf Coast Bank and Trust Company v. Warren, 2012-1570 (La. App. 4th Cir. 9/18/13), _ So.3d _, _. In Gulf Coast Bank and Trust Company, the court concluded that a debtor did not have a cause of action for wrongful seizure where the debtor failed to set forth factual allegations establishing that the creditor's use of the executory process was invalid for substantive defects, that the use of executory process was unconstitutional, that the creditor owed him any duty or obligation that it failed to perform, or that he was entitled to any relief for wrongful seizure. Id. Our review of the transcript of the confirmation hearing reveals that Ms. Cleveland failed to offer sufficient proof that there was some substantive defect in the foreclosure action that rendered it unlawful or unconstitutional. Furthermore, she did not establish that Bank of America acted negligently in instituting foreclosure proceedings or that Bank of America was guilty of any conduct that could form the basis for an award of damages for wrongful seizure. Therefore, the default judgment awarding Ms. Cleveland's damages for wrongful seizure is reversed.
CONCLUSION
For the foregoing reasons, the August 22, 2012 default judgment declaring the judgment rendered in Bank of America v. Cleveland, docket number 130784, 21st Judicial District Court, Parish of Livingston, and the subsequent seizure and sale of Susan Cleveland's property to be null and void and set aside as absolute nullities is reversed. That portion of the August 22, 2012 judgment awarding damages to Susan Cleveland is also reversed. The motion to take judicial notice is denied as moot. This matter is remanded to the trial court for further proceedings consistent with this opinion.
REVERSED AND REMANDED; MOTION DENIED.
st Cir. 4/23/13)(unpublished). The motion to take judicial notice was referred to this panel. Because we have concluded that Ms. Cleveland did not put forth sufficient evidence to establish the basis for her nullity claim at the hearing on the confirmation of the default judgment, we deny the motion to take judicial notice as moot.