Opinion
No. 108,341.
2013-07-19
BRAND INVESTMENTS, LLC, Appellee, v. Keith S. ADAMS, Defendant, Lisa Bennet Adams, Appellant, and Sedgwick County Board of Commissioners, Defendants.
Appeal from Sedgwick District Court; Douglas R. Roth, Judge. Lisa Adams Bennett, appellant pro se. Keith E. Martin, of Smith, Shay, Farmer & Wetta, LLC, of Wichita, for appellee.
Appeal from Sedgwick District Court; Douglas R. Roth, Judge.
Lisa Adams Bennett, appellant pro se. Keith E. Martin, of Smith, Shay, Farmer & Wetta, LLC, of Wichita, for appellee.
Before BUSER, P.J., ATCHESON, J., and BUKATY, S.J.
MEMORANDUM OPINION
PER CURIAM.
This is an appeal from the district court's denial of Keith S. Adams and Lisa Bennet Adams' motion for relief from judgment, pursuant to K.S.A.2012 Supp. 60–260(b). The Adams sought to set aside a foreclosure decree as void because they claimed the district court lacked jurisdiction over the subject matter of the proceedings under the Kansas Uniform Consumer Credit Code (KUCCC), K.S.A. 16a–1–101 et seq. We affirm the district court.
Factual and Procedural Background
In May 2006, the Adams purchased a residence for $60,000 with the intention of moving it to 5 acres of land they acquired in Sedgwick County, Kansas. On November 2, 2006, to finance the purchase of the residemce and the cost of having it moved and remodeled, the Adams borrowed $140,000 from Priority Mortgage Corporation (Priority) of Wichita, Kansas.
The promissory note provided that the Adams agreed to make monthly payments in the amount of $1,050, beginning on December 2, 2006, and to satisfy the loan in full with a balloon payment, on May 2, 2007. To secure payment of the note, the Adams also executed a mortgage granting Priority and its “successors and assigns” a security interest in the property. Following the execution of the note and mortgage, Priority assigned its “right, title and interest” in the mortgage/deed of trust to Brand Investments, L.L.C. (Brand). The assignment was subsequently recorded in the Office of the Register of Deeds on November 6, 2006.
The Adams did not comply with the terms of the note, despite “repeated demand” and Brand's agreement to extend the maturity date of the loan by 180 days. As a result, on August 11, 2008, Brand filed a petition to foreclose the mortgage. At the time, a principal balance of $144,267.15, plus interest at the rate of 9% per annum remained unpaid. The Adams filed an answer denying most of the allegations in Brand's petition. However, the Adams did admit that the “mortgage [was] a valid lien on the real estate” and they did not challenge Brand's standing or capacity to sue.
A few days after Brand filed its foreclosure petition, Lisa contacted Michael Brand, a member of the investment group, and asked if he would be willing to delay the foreclosure proceeding and work with her on repaying the loan. Michael agreed to extend the loan's maturity date by 6 months if Lisa paid Brand an initial payment of $9,500 followed by monthly payments of $1,050. According to Michael, although he “wrote up a little agreement,” he was unable to contact Lisa to finalize the details. Consequently, Brand proceeded with the foreclosure action.
On December 2, 2008, the district court entered a decree of foreclosure, and the journal entry stated that the Adams consented to the judgment. The district court awarded Brand “the principal amount of $144,267.15, together with interest accruing from and after May 7, 2008, at the rate of 9% per annum, plus abstracting expenses, reasonable attorney's fees, court costs and the cost of preserving the property, if any.” When the Adams failed to satisfy Brand's judgment within 10 days from the date of the journal entry, the district court ordered a sheriff's sale of the property, subject to the Adams' 3–month right of redemption. The district court further ordered that the sale proceeds would be applied: (1) to pay the costs of the action and sale; (2) to pay all real estate and special assessment taxes; (3) to pay Brand's judgment, with interest; and (4) “[t]he residue, if any, to be paid in to the Court, subject to further order of [the] Court.”
The sale was held on February 11, 2009, and Brand was the highest bidder, purchasing the property for $159,724.20. The district court confirmed the sale on February 20, 2009, and ordered the sheriff to issue Brand a certificate of purchase to the property, and, in the event the Adams did not exercise their right of redemption, a sheriff's deed.
On May 4, 2009, the Adams filed an “Amended Motion to Show Cause in Support of Request for Preliminary Injunction” seeking an order to invalidate “various documents” filed by Priority and Brand with the register of deeds and an injunction to permanently enjoin them from “filing any lawsuits, foreclosure proceedings, or any adverse land clauses ... without prior leave of the court.” Without elaboration, the Adams contended they were the victim of “illegal and unethical real estate practices” because Priority and Brand had “wrongfully and unlawfully attempted to coerce [them] into an unethical lending agreement” that would “deliberately force [them] into financial default, and subsequent [ ] foreclosure on the respective property and surrounding land(s).”
Four days later, on May 8, 2009, the district court held a hearing on the motion, and after reviewing the file and entertaining the parties' arguments, the court found that the Adams had failed to show that they were entitled to injunctive relief; specifically, that they would “likely prevail on the merits” and did not have an adequate remedy at law. The Adams filed a timely pro se notice of appeal, but due to their failure to properly docket it, our court dismissed the appeal on July 23, 2009.
The Adams failed to exercise their right of redemption, and on June 12, 2009, the sheriff provided Brand with a deed to the property. Subsequently, Brand spent about $75,000 for property taxes, insurance expenses, the replacement of fixtures that the Adams had removed, the completion of the Adams' remodeling project, and additional features.
On February 23, 2010, Brand sold the property to Aaron and Halie Smith, bona fide third party purchasers, for $280,000. The Smiths subsequently executed a note and mortgage to Merrill Lynch Credit Corporation, in the amount of $226,900, and they made additional improvements to the Property, at a cost of about $31,000.
Over 1 year later, on May 11, 2011, the Adams filed a motion for relief from judgment, under K.S.A.2012 Supp. 60–260(b), seeking to set aside the decree of foreclosure, sheriff's sale, and sheriff's deed. The Adams contended that the decree of foreclosure was void because the district court lacked jurisdiction over the subject matter of the proceedings under the KUCCC, K.S.A. 16a–1–101 et seq . The Adams contended that K.S.A. 16a–2–301(2) requires “ ‘an assignee of a supervised loan to be licensed as a supervised lender before taking an assignment or directly collecting on such loan and [only] provides a 3–month grace period in which an unlicensed assignee may collect and enforce a loan.’ “ The Adams argued that because Brand was not a “supervised lender” under the KUCCC, the company lacked standing to foreclose on the mortgage.
Shortly thereafter, the Smiths filed a motion to intervene because, as the current owners of the property, the Adams' motion for relief from judgment could adversely affect their title. The Smiths also filed an “Objection” to the motion for relief from judgment supporting the validity of the foreclosure proceedings. In particular, the Smiths claimed that the Adams were not entitled to relief because they had confused ‘ “capacity to sue,” ‘ with “ ‘standing to sue,’ “ and ‘ “an objection or defense based on an opposing party's lack of capacity to sue does not implicate subject matter jurisdiction and is waived unless timely asserted. [Citations omitted.]” ‘ Alternatively, in the event the foreclosure orders were vacated, the Smiths asserted they had properly relied on the status of the property's title, and as innocent third party purchasers, the Adams' only potential remedy was restitution from Brand because the investment group had “no right under Kansas law to eject [them] or defeat [their] title.”
The district court granted the Smiths' motion to intervene, and on July 8, 2011, the court recognized and preserved the Smiths' title to the property regardless of the outcome of the Adams' motion for relief from judgment. The district court found that due to the Smiths' status as bona fide purchasers, K.S.A. 60–2410(d) prohibited the Adams from defeating their title, and their only potential remedy for a defect in the foreclosure proceedings was to seek restitution from Brand.
On December 30, 2011, the district court held an evidentiary hearing to consider the Adams' motion for relief from judgment. At the hearing, while Brand admitted that it was not a “supervised lender” under the KUCCC, Brand contended that the Adams were not entitled to relief for the following reasons: (1) The Adams' motion was barred under the doctrine of res judicata due to the filing of their Amended Motion to Show Cause in Support of Request for Preliminary Injunction, which attacked the legality of the foreclosure proceedings and the jurisdiction of the district court; (2) The Adams were essentially challenging Brand's “capacity” to sue rather than its “standing,” and an objection to an opposing party's capacity is an affirmative defense, which was never raised in the original litigation; and (3) Equitable considerations prohibited the Adams from obtaining restitution. The parties also litigated whether the KUCCC applied to Brand, i.e., whether the note qualified as a “supervised loan.”
At the conclusion of the hearing, the district court denied the Adams' motion. The district court found that the foreclosure decree was not a void judgment, under K.S.A.2012 Supp. 60–260(b)(4), because Brand's alleged failure to comply with K.S.A. 16a–2–301 involved its capacity to sue, an affirmative defense, which the Adams waived by failing to raise it during the foreclosure proceedings. The district court further found that even if the Adams' argument was interpreted as an attack upon the judgment under K.S.A.2012 Supp. 60–260(b)(6), i.e., “any other reason that justifies relief,” the Adams' request for relief failed because the Adams did not raise their capacity objection “within a reasonable time.” See K.S.A.2012 Supp. 60–260(b)(6). Based upon these findings, the district court declined to address the applicability of the KUCCC and whether “the loan[,] which was the subject of this action[,] was a consumer loan.”
Lisa subsequently filed a timely pro se notice of appeal.
Procedural Bars to Consideration of Issues on Appeal
Lisa filed a pro se notice of appeal which stated that she was appealing “from the judgment entered against her on December 30, 2011.” As summarized above, that judgment denied the Adams' motion for relief from the foreclosure and sale of the residence. The legal basis for the Adams' motion was that Brand was not licensed as a supervised lender under the KUCCC and, therefore, it had no standing under K.S.A. 16a–1–101 et seq. to foreclose on the mortgage. Without standing to sue, the Adams asserted that the district court did not have subject matter jurisdiction to consider the matter. Without jurisdiction, the district court's foreclosure judgment was void ab initio which, according to the Adams, necessitated the setting aside of the judgment under K.S.A.2012 Supp. 60–260(b)(4).
In the docketing statement filed with this court, Lisa did not mention the issue which was raised and decided by the district court on December 30, 2011. Instead, in her statement of issues, Lisa claimed that Priority and Brand “defaulted on the original contract terms by not fulfilling the financial requirements outlined in the mortgage construction contract.”
In her brief on appeal, however, Lisa raises four issues. First, she claims that Brand engaged in deceptive acts under K.S.A. 50–627(a). Second, she asserts the district court “erred in ruling ... the motion was not brought about under K.S.A. 60–260 within a reasonable amount of time.” In support of this claim, Lisa asserts: “Defendant was participating in the Attorney General and State Banking Commissioner Investigation. This action is not pursuant to the Code of Civil Procedure, Statute 60–260: Relief from judgment or order. (b)” For her third claim, Lisa contends the “trial court improperly placed the burden on them that [Brand] was authorized to act as an owner of said real estate and costs of preserving it.” Fourth, Lisa claims the trial court “erred when it failed to support the law with respect to the ... transaction.... [Brand] willfully failed to state material facts by failing to inform the Adams that they were not licensed to engage in mortgage loans in Kansas....”
As is readily apparent, Lisa did not raise any of these four issues as a basis for her motion for relief from judgment in the district court. As a general rule, issues not raised before the trial court may not be raised on appeal. In re Care & Treatment of Miller, 289 Kan. 218, 224–25, 210 P.3d 625 (2009). Moreover, on appeal Lisa does not brief the “standing to sue” jurisdictional argument that she presented to the district court. An issue not briefed by the appellant is deemed waived and abandoned. Superior Boiler Works, Inc. v. Kimball, 292 Kan. 885, 889, 259 P.3d 676 (2011). Finally, the “Assignments of Error and Argument” section of Lisa's brief addressing the four issues consists of 2 1/2 typewritten pages with no citation to any legal authority. Most of the content and argument is obscure. In this regard, a point raised incidentally in a brief and not argued therein is also deemed abandoned. Manhattan Ice & Cold Storage v. City of Manhattan, 294 Kan. 60, 71, 274 P.3d 609 (2012).
“A pro se litigant in a civil case is required to follow the same rules of procedure ... which are binding upon a litigant who is represented by counsel.” In re Matter of the Estate of Broderick, 34 Kan.App.2d 695, Syl. ¶ 6, 125 P.3d 564 (2005). While appellate courts may overlook technical or minor flaws in pro se briefing, Lisa's brief contains serious defects which, taken together, do not substantially comply with our appellate rules. Accordingly, for all of the reasons stated, Lisa has not properly presented her appeal to this court for our review.
Brand, on the other hand, has filed briefing which essentially ignores Lisa's appellate brief but responds to the arguments the Adams made in the district court (when they were represented by counsel) and the ruling made by the district court on December 30, 2011. For this reason, we will address the merits as framed by Brand.
Denial of the Motion for Relief from Judgment under K.S.A.2012 Supp. 60–260(b)(4)
The Adams filed their motion for relief from judgment under K.S.A.2012 Supp. 60–260(b) which authorizes a district court to provide relief from “a final judgment, order or proceeding for the following reasons: ... (4) the judgment is void.” Because a void judgment is a nullity, our Supreme Court has held that it may be vacated at any time. In re Marriage of Hampshire, 261 Kan. 854, 862, 934 P.2d 58 (1997). A judgment is void if the court “lacked subject matter jurisdiction, personal jurisdiction, or acted in a manner inconsistent with due process. [Citation omitted.]” Waterview Resolution Corp. v. Allen, 274 Kan. 1016, 1024, 58 P.3d 1284 (2002).
With regard to our standards of review, if a judgment is attacked as void under K.S.A.2012 Supp. 60–260(b)(4), district courts have “no discretion to exercise in such a case; either a judgment is valid or it is void as a matter of law.” In re Adoption of A.A. T., 287 Kan. 590, 598, 196 P.3d 1180 (2008), cert. denied129 S.Ct. 2013 (2009). Consequently, appellate courts exercise unlimited review over the district court's ultimate legal conclusion with respect to the judgment's validity, and the court's underlying factual findings are evaluated to determine if they are supported by substantial competent evidence. 287 Kan. at 598–99.
Of note in the present case, the district court found that the evidence was essentially uncontroverted and, as a result, “adopt[ed] the testimony in the case as its findings of fact.” Lisa does not take issue with any of the material facts necessary to decide the jurisdictional issue on appeal. Where no objection is made, the appellate court will presume the district court found all facts necessary to support its judgment. O'Brien v. Leegin Creative Leather Products, Inc., 294 Kan. 318, 361, 277 P.3d 1062 (2012). As a result, we will only review the district court's legal determination denying the Adams' motion for relief from judgment.
In the district court, the Adams essentially argued that the district court erred when it found that the foreclosure decree was not void, under K.S.A.2012 Supp. 60–260(b)(4). The Adams alleged that the district court lacked subject matter jurisdiction over the foreclosure proceedings because Brand did not have standing to collect or enforce the loan under K.S.A. 16a–2–301(2). In response on appeal, Brand supports the district court's decision, arguing that any noncompliance with K.S.A. 16a–2–301(2) involved its capacity to sue, an affirmative defense, rather than its standing to sue, a component of the district court's subject matter jurisdiction.
We first address the meaning of standing. Essentially, “[s]tanding is a party's right to make a legal claim or seek judicial enforcement of a duty or right. [Citation omitted.]” (Emphasis added.) Board of Sumner County Comm'rs v. City of Mulvane, 43 Kan.App.2d 500, 506, 227 P.3d 997,rev. denied 291 Kan. 910 (2010). For purposes of standing, “[a] party must have a sufficient stake in the outcome of an otherwise justiciable controversy in order to obtain judicial resolution of that controversy. [Citation omitted.]” Board of Sumner County Comm'rs v. Bremby, 286 Kan. 745, 751, 189 P.3d 494 (2008). Standing implicates a court's jurisdiction to hear a case and requires a court to determine ‘ “whether the plaintiff has alleged such a personal stake in the outcome of the controversy as to warrant invocation of jurisdiction and to justify exercise of the court's remedial powers on his or her behalf.’ [Citations omitted.]” Cochran v. Kansas Dept. of Agriculture, 291 Kan. 898, 903, 249 P.3d 434 (2011). Because standing implicates a court's subject matter jurisdiction, the parties may not waive standing, and the issue can be raised at any time. Mid–Continent Specialists, Inc. v. Capital Homes, 279 Kan. 178, Syl. ¶ 2, 106 P.3d 483 (2005).
Traditionally, in order to demonstrate standing in Kansas, a party must demonstrate the following: (1) ‘ “he or she suffered a cognizable injury” ‘; and (2) ‘ “there is a causal connection between the injury and the challenged conduct.’ [Citation omitted.]” Cochran, 291 Kan. at 908–09. Sometimes, however, standing is also governed by statute. See, e.g., Bremby, 286 Kan. at 751–61 (discussing standing requirements of the Kansas Judicial Review Act); Mid–Continent Specialists, Inc., 279 Kan. at 182–87 (discussing standing requirements of the Uniform Commercial Code). In such circumstances, courts must first decide whether the plaintiff satisfies the statutory standing requirements and, if these requirements are met, courts then determine whether the plaintiff meets the traditional test for standing. City of Mulvane, 43 Kan.App.2d at 507.
Appellate courts exercise de novo review over issues involving the existence of standing and jurisdiction. Cochran, 291 Kan. at 903. Likewise, in cases which require statutory interpretation, appellate review is unlimited. Double M Constr. v. Kansas Corporation Comm'n, 288 Kan. 268, 271, 202 P.3d 7 (2009).
Next, we consider what is meant by the legal capacity to sue or be sued. Importantly, standing is distinguishable from a party's “legal capacity to sue or be sued.” Vorhees v. Baltazar, 283 Kan. 389, 397, 153 P.3d 1227 (2007). The term ‘ “capacity to sue’... consists of the right to come in to court for relief concerning the subject of the action. [Citations omitted.]” (Emphasis added.) Toklan Royalty Corp. v. Panhandle Eastern Pipe Line Co., 168 Kan. 259, 268, 212 P.2d 348 (1949). The question of standing does not relate to a party's legal capacity to sue because an objection or defense based on an opposing party's lack of capacity does not implicate subject matter jurisdiction. Rather, capacity is an affirmative defense that is waived unless it is timely asserted. K.S.A.2012 Supp. 60–209(a); Mid–Continent Specialists, Inc., 279 Kan. at 185 (“The question of standing ‘does not relate to the legal capacity to sue, a defense ... waived unless timely asserted ... but to the interest of an adversary in the subject of the suit as an antecedent to the right to relief.’ [Citation omitted.]”); see also Vorhees, 283 Kan. at 397 (“Accordingly, we have held that when a defendant raises a plaintiff's lack of capacity to sue, its failure to comply with 60–209[a] must be regarded as a waiver of the defense. [Citations omitted.] By contrast, we have held that subject matter jurisdiction, unlike capacity, cannot be waived and may be raised at any time, whether it be for the first time on appeal or even upon the appellate court's own motion. [Citation omitted.]”).
The parties and the district court assumed that Brand was an unlicensed assignee of a supervised loan. As a result, with the assumption that the KUCCC governs the Adams' loan, the threshold issue in this case is whether K.S.A. 16a–2–301(2) bars an unlicensed assignee of a supervised loan from having standing to bring a cause of action or limits that party's capacity to maintain an action.
K.S.A.16a–2–301 provides:
“Unless a person is a supervised financial organization; or has first obtained a license from the administrator authorizing such person to make supervised loans; or is the federal deposit insurance corporation acting in its corporate capacity or as receiver, such person shall not engage in the business of
(1) making supervised loans; or
(2) taking assignments of and undertaking direct collection of payments from or enforcement of rights against debtors arising from supervised loans, but such person may collect and enforce for three months without a license if the person promptly applies for a license and such person's application has not been denied.” (Emphasis added.)
In their motion for relief from judgment, the Adams relied heavily upon this court's decision in Independent Financial, Inc. v. Wanna, 39 Kan.App.2d 733, Syl. ¶¶ 2, 5, 186 P.3d 196 (2008), wherein a panel of this court found that while a violation of the KUCCC does not generally impair rights on a debt, K.S.A. 16a–2–301(2) “clearly and unambiguously requires an assignee of a supervised loan to be licensed as a supervised lender before taking an assignment or directly collecting on such a loan,” subject to a 3–month grace period. Based on this statutory interpretation, our court affirmed the district court's grant of summary judgment against an unlicensed assignee of a supervised loan, because, pursuant to K.S.A. 16a–2–301(2), the assignee had no authority to collect on the loan or enforce its terms. 39 Kan.App.2d at 733.
Independent Financial, Inc., does not resolve the question before us because the issue of subject matter jurisdiction was not raised by the parties or ruled on by the district court. Moreover, our court did not characterize its holding as one of a lack of “capacity to sue” although its holding is clearly consonant with that legal precept. Finally, the procedural posture in both cases is different. In Independent Financial, Inc., the applicability of K.S.A. 16a–2–301(2) was raised in a motion for summary judgment while the foreclosure proceedings were still pending.
While our research has not discovered any Kansas cases that are directly on point, there are three cases which address the differences between the standing to sue and the capacity to sue in other contexts. In Vorhees, our Supreme Court found that although “absent an administrator or an executor, an estate lacks the ability to sue or be sued,” this requirement only relates to the estate's capacity to sue rather than its standing to do so. Vorhees, 283 Kan. at 394–97. And the court explained:
“Under the facts and the Administrator's allegations in the instant case, the purported threshold issue of jurisdiction is a red herring. The relevant threshold issue is instead one of capacity to be sued, i.e., whether the defendant named at the time of the petition's timely filing—‘Administrator of the Estate of Francisco J. Baltazar’—was a legal entity capable of being sued....
....
“Based upon our prior holdings and Kansas statute, we agree with these commentators that subject matter jurisdiction is distinguishable from legal capacity to sue or be sued. In Mid–Continent Specialists, Inc. v. Capital Homes, 279 Kan. 178, 106 P.3d 483 (2005), we discussed standing, a component of subject matter jurisdiction, and cited with approval a Missouri case revealing standing's distinction from capacity: ‘The question of standing “does not relate to the legal capacity to sue, a defense [see K.S.A.2004 Supp. 60–209(a) ] waived unless timely asserted....’ “ [Citations omitted.]
....
“Accordingly, although the defendant named at the time of the petition's timely filing, ‘Administrator of the Estate of Francisco J. Baltazar,’ may have lacked the capacity to be sued because Horak had not yet been appointed, and had still not been appointed by the 2–year anniversary of the date of the accident, there is no legitimate controversy concerning the district court's subject matter jurisdiction over this case.” Vorhees, 283 Kan. at 394–97.
Likewise, in The Haile Group v. City of Lenexa, No. 102,319, 2010 WL 4977221, at *3 (Kan.App.2010) (unpublished opinion), rev. denied 292 Kan. 969 (2011), a panel of this court held that a foreign limited liability company's failure to register with the Kansas Secretary of State, as required by K.S.A. 17–76,126(a), prior to “maintain[ing] any action, suit or proceeding” in Kansas only implicated the company's capacity to sue, not its standing to sue. Notably, K.S.A. 17–76,126(a) provides:
‘ “A foreign limited liability company doing business in the state of Kansas may not maintain any action, suit or proceeding in the state of Kansas until it has registered in this state and has paid to the state all fees and penalties for the years, or parts thereof, during which it did business in the state without having registered.’ [Citation omitted.]” (Emphasis added.) 2010 WL 4977221, at *3.
By contrast, in Mid–Continent Specialists, Inc., our Supreme Court interpreted K.S.A. 84–3–420(a), which bars the issuer of an instrument from bringing an action for conversion. Mid–Continent Specialists, Inc., 279 Kan. at 182–83, 184–87. Based upon the language of the statute and the related Comments, our Supreme Court found that K.S.A. 84–3–420(a) is jurisdictional, because it “ ‘ goes to the existence of a cause of action.’ “ 279 Kan. at 185–87. Specifically, K.S.A. 84–3–420(a) states:
“The law applicable to conversion of personal property applies to instruments. An instrument is also converted if it is taken by transfer, other than a negotiation, from a person not entitled to enforce the instrument or a bank makes or obtains payment with respect to the instrument for a person not entitled to enforce the instrument or receive payment. An action for conversion of an instrument may not be brought by (1) the issuer or acceptor of the instrument or (2) a payee or endorsee who did not receive delivery of the instrument either directly or through delivery to an agent or a copayee.' (Emphasis added.)” 279 Kan. at 182.
Notably, the Uniform Commercial Code's Official Comment explains: “ ‘There is no reason why a drawer should have an action in conversion. The check represents an obligation of the drawer rather than property of the drawer.’ “ 279 Kan. at 182. And the 1996 Kansas Comment states: “ ‘Plaintiffs are generally restricted to the persons to whom the instrument is payable and who have received the instrument. The maker or drawer of the instrument is not a proper plaintiff, nor is the payee of an instrument which is not delivered.’ “ 279 Kan. at 182–83.
Considering these three cases together, we conclude that the licensure requirement set forth in K.S.A. 16a–2–301(2) is comparable to the registration requirement for a foreign limited liability company ( The Haile Group ) and the appointment prerequisite for an estate ( Vorhees ). We are persuaded that Mid–Continent Specialists, Inc., where our Supreme Court found that K.S.A. 84–3–420(a) is jurisdictional because it “ ‘ goes to the existence of a cause of action,’ “ 279 Kan. at 185–87, is distinguishable. Unlike Mid–Continent Specialists, Inc., in the present case, K.S.A. 16a–2–301(2) does not preclude all creditors from bringing an action in foreclosure because that action does not exist in law. On the contrary, K.S.A. 16a–2–301(2) simply establishes a legal impediment to the enforcement of an unlicensed assignee's rights.
Finally, unlike K.S.A. 84–3–420(a) which specifically prohibits the filing of “[a]n action for conversion of an instrument,” K.S.A. 16a–2–301 does not contain a direct and specific prohibition against the filing of a cause of action; instead, the statute focuses generally upon prohibiting an unlicensed assignee from “ engag [ ing ] in the business of ... taking assignments of and undertaking direct collection of payments from or enforcement of rights against debtors arising from supervised loans.” (Emphasis added.) K.S.A. 16a–2–301. This distinction was noted by the trial court which observed that, unlike the statute in question here, K.S.A. 84–3–420(a) is “very specific” and “prohibits the bringing of the action.”
Accordingly, based on the plain language of K.S.A. 16a–2–301, we conclude that Brand's noncompliance with the licensure requirement only implicated the assignee's capacity to sue—its ability to maintain an action—rather than its standing to sue to seek judicial relief. The district court did not err when it found that the foreclosure decree was not void for lack of subject matter jurisdiction. As a result, because the judgment was not void, the Adams' motion for relief from judgment under K.S.A.2012 Supp. 60–260(b)(4) was properly denied.
Denial of the Motion for Relief from Judgment under K.S.A.2012 Supp. 60–260(b)(6)
It is unclear whether the Adams properly presented the alternative argument that because Brand did not have the capacity to sue, the district court abused its discretion by denying the motion for relief from judgment under a different subsection—K.S.A.2012 Supp. 60–260(b)(6). The district court, however, did consider and deny the Adams' motion on this basis in its December 30, 2011, order, and, on appeal, Brand argues in support of the district court's order. As a result, we will also address the argument.
K.S.A.2012 Supp. 60–260(b)(6) is a general provision which allows a district court to relieve a party from a final judgment or order for “any other reason that justifies relief as long as the request was filed “within a reasonable time.” K.S.A.2012 Supp. 60–260(b)(6), (c). In ruling adversely to the Adams, the district court essentially assumed that Brand was incapable of filing a court action seeking foreclosure and that this could be an “other reason” to provide the Adams relief. The district court focused its attention, however, on whether the motion was filed in a timely manner.
The determination of what constitutes a “reasonable time” under the statute is a question to be decided within the discretion of the district court. Meyer v. Meyer, 209 Kan. 31, Syl. ¶¶ 3, 4, 495 P.2d 942 (1972). The time frame is “measured by determining when the movant came into possession of facts justifying the relief as compared to the time when he [or she] filed the motion seeking the relief.” Wilson v. Wilson, 16 Kan.App.2d 651, 659, 827 P .2d 788,rev. denied 250 Kan. 808 (1992). “What constitutes a ‘reasonable time’ for seeking relief from a judgment depends on the facts of each case; relevant considerations include whether parties have been prejudiced by the delay and whether good cause has been shown for failing to take action sooner.” 16 Kan.App.2d 651, Syl. ¶ 6.
The district court found that the Adams did not file their motion “within a reasonable time” and, thus, they could not pursue relief under K.S.A.2012 Supp. 60–260(b)(6). The district court judge explained:
“The question in this case: Is it a reasonable time? And, quite frankly, the Court is going to rule that the motion was not brought within a reasonable time under [K.S.A.2012 Supp.] 60–260. In this particular case the [Adams were] sued, served, answered, the case proceeded. It went to judgment. After judgment it went to a sale, a sheriffs sale. Thereafter, the property was improved with considerable funds, and then it was sold to a third party not involved in the litigation.
“At no point during those several years was the issue ever raised. And to wait until in excess of two years from the judgment being entered, two years from when the redemption period runs, and my understanding if I understand all the dates correctly, two years after when at least a notice of appeal was filed, and then to wait and raise it two years later is not reasonable and is not a reasonable time to bring the motion.”
Generally, appellate courts will not disturb a district court's decision on a K.S.A.2012 Supp. 60–260(b)(6) motion unless the appellant sufficiently demonstrates that the district court abused its sound discretion. In re Marriage of Leedy, 279 Kan. 311, 314, 109 P.3d 1130 (2005). A judicial action constitutes an abuse of discretion,
“if [the] judicial action (1) is arbitrary, fanciful, or unreasonable, i.e., if no reasonable person would have taken the view adopted by the trial court; (2) is based on an error of law, i.e., if the discretion is guided by an erroneous legal conclusion; or (3) is based on an error of fact, i.e., if substantial competent evidence does not support a factual finding on which a prerequisite conclusion of law or the exercise of discretion is based.” State v. Ward, 292 Kan. 541, Syl. ¶ 3, 256 P.3d 801 (2011), cert. denied132 S.Ct. 1594 (2012).
We can find no abuse of discretion. The Adams did not appeal from the foreclosure decree or the denial of their “Amended Motion to Show Cause in Support of Request for Preliminary Injunction.” Moreover, the Adams waited over 2 years from the entry of the foreclosure decree to file their motion for relief from judgment under K.S.A.2012 Supp. 60–260(b), and during this period, the property was improved with considerable funds and purchased by bona fide third party purchasers. Also, the Adams have never offered an explanation for their delay in seeking relief under this basis.
We conclude the district court did not err when it denied the Adams' motion under K.S.A.2012 Supp. 60–260(b)(6) because the motion was not filed within a reasonable time.
Affirmed.