Opinion
NO. 2015-CA-000433-MR
06-16-2017
JOHN WESLEY SEE AND JACQUELINE IDA SEE APPELLANTS v. SRP 2013-7 LLC APPELLEE
BRIEF FOR APPELLANT: Michael T. Hogan Louisa, Kentucky BRIEF FOR APPELLEE: Nicholas K. Rohner Cincinnati, Ohio
NOT TO BE PUBLISHED APPEAL FROM LAWRENCE CIRCUIT COURT
HONORABLE JOHN DAVID PRESTON, JUDGE
ACTION NO. 14-CI-00066 OPINION
AFFIRMING
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BEFORE: ACREE, CLAYTON, AND J. LAMBERT, JUDGES. LAMBERT, J., JUDGE: John and Jacqueline See appeal from the Lawrence Circuit Court's judgment of foreclosure on the Sees' Louisa, Kentucky, farm. We affirm.
The Sees purchased the 56-acre property from John's aunt in 1999. On June 17, 1999, John and Jacqueline obtained a 30-year $42,400.00 note from Contimortgage in order to update the house. Over the next 14 years, the Sees never missed a payment. During that time, however, the note was assigned twice, first to Mortgage Electronic Registration System (MERS) and then to SRP 2013-7, LLC. And the Sees declared bankruptcy in 2009.
The Sees last made their mortgage payment in October 2013. Subsequent statements and notices were ignored by the Sees. SN Servicing Corporation, engaged by SRP to service its loans, sent a notice of default followed by a payoff statement after SRP sought to accelerate the note pursuant to the original terms. The payoff amount included principal ($33,564.35), interest ($4,095.81 at a per diem interest rate of $8.23), and attorney fees (estimated at $10,108.88). SRP filed suit against the Sees, seeking a foreclosure on the property (rather than a personal judgment because of the Sees' bankruptcy discharge). The Sees counterclaimed for declaratory and injunctive relief.
A bench trial was held on February 12, 2015. William Fogleman, an employee of SN Servicing, testified on behalf of SRP. Exhibits of the mortgage, assignments, the Sees' payment history, notice of default, and itemized payoff estimate were introduced through Fogleman.
John See testified that he was reluctant to continue making payments to SN Servicing because he was not convinced of the identity of the holder of the note. Furthermore, John said, he believed that SN Servicing was not reporting his payments to the credit bureaus; thus he was unable to sufficiently repair his credit rating in order to obtain alternative financing of the note. John claimed that at least 12 banks declined the Sees' applications for refinancing.
The Lawrence Circuit Court denied the Sees' motions for directed verdict (made at the conclusion of SRP's case in chief and at the conclusion of all evidence) and granted SRP's motion to dismiss the Sees' counterclaim. Lawrence County, which had claimed taxes due for 2014, did not present evidence and was dismissed from the action. The circuit court ordered that the Sees' property be sold by the Master Commissioner.
Prior to addressing the Sees' arguments on appeal, we direct the appellants' attention to the Kentucky Rules of Civil Procedure (CR) regarding appellate briefs. CR 76.12(4)(c)(v) provides: "[t]he organization and contents of the appellant's brief shall [include]: ... at the beginning of the argument a statement with reference to the record showing whether the issue was properly preserved for review and, if so, in what manner." Appellant's brief lacks such statements at the outset of both arguments raised before this Court.
"[A]n appellate court cannot consider items that were not first presented to the trial court." Oakley v. Oakley, 391 S.W.3d 377, 380 (Ky. 2012). "It is not so much to ensure that opposing counsel can find the point at which the argument is preserved, it is so that we, the reviewing Court, can be confident the issue was properly presented to the trial court...." Id. We have nonetheless decided to address the Sees' arguments but caution counsel to practice more vigilant compliance with CR 76.12 in future appeals.
The Sees first claim that SRP was not the real party in interest and thus had no standing to seek foreclosure on the note. In this vein, the Sees allege several shortcomings with the evidence used to support the circuit court's findings, namely, that the allonge attached to the original note was unsigned, that photocopies rather than original documents were produced, that the wrong address was given for the Sees, and that Kentucky's Uniform Commercial Code was not adhered to.
SRP aptly points out, and we agree, that the issue of the real party in interest was lacking in the prehearing statement or by timely motion submitted to this Court. CR 76.03(8) ("A party shall be limited on appeal to issues in the prehearing statement except that when good cause is shown the appellate court may permit additional issues to be submitted upon timely motion.").
Furthermore, as holder of the note, SRP had the right to enforce it.
[W]hen the note was endorsed in blank it became a bearer instrument and no assignment was necessarily required to transfer the right to collect and enforce the note. Mere possession of the original note was sufficient. Because [the bearer] was lawfully in possession of the original note, clearly it was entitled to enforce the obligations secured thereby and was the real party in interest in the litigation below. Any argument to the contrary is wholly without merit. The trial court did not err.Stevenson v. Bank of Am., 359 S.W.3d 466, 470 (Ky. App. 2011).
We turn to the Sees' argument that they suffered prejudice because of an undisclosed witness and introduction of documents not disclosed prior to the bench trial. This argument is specious. The circuit court offered the Sees two opportunities to continue the matter, both of which were denied. Additionally, there has been no demonstration of prejudice to the Sees. The circuit court did not abuse its discretion in proceeding to trial or in admitting the evidence about which the Sees now complain. See Manus, Inc. v. Terry Maxedon Hauling, Inc., 191 S.W.3d 4, 8 (Ky. App. 2006).
The judgment of the Lawrence Circuit Court is affirmed.
ALL CONCUR. BRIEF FOR APPELLANT: Michael T. Hogan
Louisa, Kentucky BRIEF FOR APPELLEE: Nicholas K. Rohner
Cincinnati, Ohio