Opinion
NO. 03-15-00011-CV
01-29-2016
Clare Trevarthan, Appellant v. Nationstar Mortgage LLC, Appellee
FROM THE DISTRICT COURT OF WILLIAMSON COUNTY, 26TH JUDICIAL DISTRICT
NO. 14-1087-C26, HONORABLE BILLY RAY STUBBLEFIELD, JUDGE PRESIDINGMEMORANDUM OPINION
Appellant Clare Trevarthan sued appellee Nationstar Mortgage LLC, complaining that a foreclosure sale held in June 2011 was void. Nationstar filed a no-evidence and traditional motion for summary judgment, which the trial court granted without specifying the grounds. We affirm the trial court's order granting summary judgment in Nationstar's favor.
Factual Summary
The evidence produced in the parties' summary-judgment filings establishes that in 2004, Trevarthan bought property in Williamson County. In exchange for the $136,000 loan from lender Meridias Capital, she signed a note and deed of trust. Aurora Loan Services, LLC took over as loan servicer in March 2007. After Trevarthan was sent notice that she was in default on the loan, Aurora Loan Services sold the property at a foreclosure sale in June 2011. Appellee Nationstar Mortgage LLC acquired all or a large portion of Aurora Loan Services' assets in June 2012.
Before the foreclosure sale, Trevarthan signed three forbearance agreements with Aurora Loan Services: one on December 22, 2008, one on July 13, 2009, and one on September 23, 2010. Each agreement stated that Aurora Loan Services was the "servicing agent and/or the owner and holder" of the note and that the note was secured by the deed of trust.
Both in the trial court and in this appeal, Trevarthan asserts that an entity named "Aurora Loan Services, Inc." was involved in the activity related to the loan and that this entity's involvement raised material issues about Aurora Loan Services, LLC's authority to foreclose. Nationstar refutes this assertion, and having carefully reviewed the record and the evidence produced by the parties, we agree. The document Trevarthan refers to as support for her assertions is the May 3, 2011 Notice of Substitute Trustee's Sale, which states, "AURORA LOAN SERVICES, LLC is acting as the Mortgage Servicer for AURORA LOAN SERVICES who is the Mortgagee of the Note and Deed of Trust associated with the above referenced loan. AURORA LOAN SERVICES, LLC, as Mortgage Servicer, is representing the Mortgagee, whose address is: AURORA LOAN SERVICES." It does not mention "Aurora Loan Services, Inc." Further, an affidavit by Kristen Trompisz, legal liaison for Aurora Loan Services, LLC until September 7, 2012, explains, "The Loan Records reflect that Aurora Loan Services or a related entity began acting as the Loan's mortgage servicer on or around March 1, 2007. 'Aurora Loan Services' and 'Aurora Loan Services, LLC' are both references to 'Aurora Loan Services, LLC.' They are the same entity."
In March 2014, Trevarthan filed suit against Nationstar, complaining that the foreclosure sale was void and asserting claims for breach of the terms of the deed of trust, violations of chapter twelve of the civil practice and remedies code, and failure to comply with the local government code and the property code. Nationstar filed a traditional and no-evidence motion for summary judgment. In the no-evidence portion, Nationstar asserted that there was no evidence of at least one essential element of each of Trevarthan's claims. In its traditional motion, among other things, it asserted that Aurora Loan Services had authority to foreclose on the loan. Nationstar attached the following evidence:
• The deed of trust signed by Trevarthan in exchange for the mortgage loan. The deed recites that the lender is Meridias Capital, Inc.; that MERS "is acting solely as a nominee for Lender and Lender's successors and assign" and is "the beneficiary" under the deed; that the note could be sold "without prior notice" to Trevarthan, which might result in a change in the loan servicer, and that Trevarthan would receive written notice of such a change; that the lender could remove or substitute the trustee "without the necessity of any formality other than a designation by Lender in writing"; and that "MERS (as nominee for Lender and Lender's successors and assigns) had the right: to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property; and to take any action required of Lender including, but not limited to, releasing and canceling this Security Instrument."
• A copy of the "blue-ink original Note," which names Meridias as lender, is indorsed in blank by Meridias, and says, "I understand that Lender may transfer this Note. Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this Note is called the 'Note Holder.'"
• The loan disclosure agreement signed by Trevarthan at the time she took out the loan, which states that Meridias does "not service mortgage loans and we presently intend to assign, sell, or transfer the servicing of your mortgage loan. You will be informed about your servicer."
• A February 2007 notice stating that servicing of the loan was being transferred and assigned to Aurora Loan Services.
• The forbearance agreements signed by Trevarthan in 2008, 2009, and 2010, each acknowledging that Aurora was the "servicing agent and/or the owner and holder" of the note and that the note was secured by the deed of trust.
• The notice of default dated January 14, 2011, stating that Trevarthan could cure her default by paying $15,912.45 to Aurora Loan Services within thirty days, that she had "the right to assert in the foreclosure proceeding the non-existence of a default or any other defense you may have," that Aurora Loan Services was representing mortgagee Lxs2007-6, and that MERS was the current beneficiary of record.
• A corporate assignment of deed of trust dated March 7, 2011, that states that MERS, as nominee for Meridias, had transferred the deed to Aurora Loan Services. • The notice of the substitute trustee's sale, signed by Naomi Feistel "c/o Cal-Western Reconveyance Corp." and dated May 3, 2011, stating that the property would be sold on June 7, 2011, and that "Aurora Loan Services, LLC is acting as the Mortgage Servicer for Aurora Loan Services who is the Mortgagee of the Note and Deed of Trust associated with the above referenced loan."
• A copy of the substitute trustee's deed, signed by Juanita Strickland and recorded June 17, 2011, stating that the note had been transferred and assigned to Aurora Loan Services and then sold to Aurora Loan Services on June 7, 2011.
• An affidavit by Lorrie Womack, an employee of Cal-Western Reconveyance, who explained that Cal-Western provided non-judicial foreclosure services and was hired by Aurora Loan Services to assist with the Trevarthan foreclosure.
• An affidavit by Kristen Trompisz, who worked for Aurora Loan Services and then Nationstar and who stated that the original, indorsed-in-blank note had been in Aurora Loan Services's possession and was currently in Nationstar's possession.
• Two post-foreclosure notices of transfer: a July 6, 2011 letter from Aurora Loan Services and Aurora Bank saying that loan servicing "will be transferred from Aurora Loan Services to our parent company, Aurora Bank"; and a June 15, 2012 letter notifying Trevarthan that servicing of the loan was being transferred from Aurora Bank to Nationstar effective July 1, 2012.
Trevarthan also sued several other defendants. After the trial court granted Nationstar's motion for summary judgment, it severed Trevarthan's claims against Nationstar into a separate proceeding, from which this appeal arises. The other defendants in the underlying suit are not parties to this appeal.
Trevarthan filed a response to the motion asserting that Aurora Loan Services lacked the authority to foreclose on the property as either mortgagee or mortgage servicer. Trevarthan insisted that MERS lacked the authority to assign the note, mortgage, or deed of trust and that "Nationstar cannot receive nor act on authority MERS did not have and Aurora could not acquire. Nationstar's motion for summary judgment must be denied."
Although Trevarthan attached numerous exhibits to her response, the trial court struck most of them, and Trevarthan does not appeal that decision. The struck exhibits therefore may not be considered in our review. See Perry v. Del Rio, 66 S.W.3d 239, 259 (Tex. 2001) ("an appellate court's review is confined to the record in the trial court when the trial court acted"); Hendee v. Dewhurst, 228 S.W.3d 354, 376 (Tex. App.—Austin 2007, pet. denied) ("When reviewing a summary judgment, an appellate court cannot consider independent grounds—much less summary judgment evidence—not presented to the trial court.").
The remaining exhibits that were not duplicates of those attached to Nationstar's motion were the appointment of substitute trustee naming Juanita Strickland, Janie Mucha, Deborah Schwartz, and Naomi Feistel as trustees; a chart summarizing activity related to the loan; Trevarthan's declaration that she had made repeated efforts to modify the loan and had made "at least 17 payments" to Aurora Loan Services from October 27, 2008, to September 21, 2010, as well as receipts for those payments; and Trevarthan's declaration that although she received notice in January 2011 that she was in default and that Aurora Loan Services was representing "Lxs 20076," she had never received notice "from Lxs 20076 . . . instructing [her] to send payments for the debt secured by a security instrument to Aurora."
Standard of Review
We review a trial court's granting of summary judgment de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). When reviewing the grant of a traditional motion for summary judgment, we take as true all evidence favorable to the nonmovant and indulge all reasonable inferences and resolve any doubts in her favor. Id. Summary judgment is properly granted when the evidence establishes that the movant is entitled to judgment as a matter of law because there are no genuine issues of material fact. Tex. R. Civ. P. 166a(c).
Discussion
On appeal, Trevarthan's only argument is that the evidence did not establish as a matter of law that Aurora Loan Services had the authority to foreclose on July 7, 2011. She contends that the record is unclear about who owned the deed and note as of the date of foreclosure and that Nationstar was therefore not entitled to summary judgment. We disagree. Instead, the evidence establishes that Aurora Loan Services had authority to foreclose as a holder of the original note, as servicer of the mortgage, and as assignee of the deed.
Trevarthan makes much of what she claims are inconsistencies between Trompisz's affidavit and another affidavit by her filed in a separate proceeding, alleging that Trompisz either "apparently perjured herself" or was "horribly confused" about the facts and that her testimony thus "must be disregarded." However, even if the differences were meaningful (Trompisz's affidavit here states that Nationstar acquired "most" of Aurora Loan Service's assets, whereas her other affidavit states that Nationstar acquired Aurora Loan Services itself), the affidavit from the other proceeding was struck by the trial court and cannot be considered in this cause. See Hendee, 228 S.W.3d at 376.
Trevarthan also relies on her argument related to the purported existence of Aurora Loan Services Inc., but as we have already discussed, the record does not support a conclusion that an entity named Aurora Loan Services Inc. was ever an issue in this case. Finally, she points to the postforeclosure notices of transfer and argues that those notices "indicate that neither Aurora [Bank] or LLC nor Nationstar believed that there had been a foreclosure, as such a foreclosure would have extinguished the Note, and there would have been no servicing rights in the Note to transfer." We do not believe that actions occurring after the foreclosure are relevant to whether Aurora Loan Services had the authority to conduct the foreclosure sale.
Texas law defines a holder of a negotiable instrument such as the note in this case as a "person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession." Tex. Bus. & Com. Code § 1.201(b)(21)(A). If a note is indorsed in blank, meaning it is indorsed but not made payable to an identified person, it is "payable to bearer and may be negotiated by transfer of possession alone." Id. § 3.205(a), (b). Nationstar's summary judgment evidence included a certified copy of the original note, indorsed in blank by Meridias, and evidence that Aurora Loan Services was in possession of the original, indorsed-in-blank note at the time it conducted the foreclosure sale. Therefore, Aurora Loan Services was the holder of the note and had the authority to conduct the foreclosure sale. See id. § 3.301 (holder of instrument is entitled to enforce instrument; "A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument."); Judah v. EMC Mortg. Corp., No. 03-14-00304-CV, 2015 WL 5096798, at *3-4 (Tex. App.—Austin Aug. 25, 2014, pet. filed) (mem. op.) (bank's evidence that it possessed original note on behalf of third party and that note had been indorsed to third party established that bank was holder and entitled to enforce instrument; even if note had been indorsed in blank at time of execution, without indorsement to third party, bank was in possession of note and was thus holder and entitled to enforce it); see also Boyd v. Diversified Fin. Sys., 1 S.W.3d 888, 892 (Tex. App.—Dallas 1999, no pet.) (plaintiff showed that it was holder and owner of note by establishing its possession of original note indorsed to it by previous holder); Lawson v. Gibbs, 591 S.W.2d 292, 294 (Tex. Civ. App.—Houston [14th Dist.] 1979, writ ref'd n.r.e.) (holder of note may enforce note; mortgage "is an incident of the debt; and as long as the debt exists, the security will follow the debt").
Further, Aurora Loan Services was given the duties of mortgage servicer in March 2007. As of the date of the foreclosure sale, it retained those duties and thus had authority to conduct the foreclosure sale as servicer. See Tex. Prop. Code §§ 51.0001(4) (defining "mortgagee"), .0025 (mortgage servicer may administer foreclosure on behalf of mortgagee if given authority by mortgagee and if proper notice provided); Morlock, L.L.C. v. Nationstar Mortg., L.L.C., 447 S.W.3d 42, 47 (Tex. App.—Houston [14th Dist.] 2014, pet. denied) ("Under section 51.0025, a 'mortgagee' or a 'mortgage servicer' may conduct foreclosure proceedings.").
Finally, MERS was named in the deed of trust as a beneficiary and nominee for the lender. It therefore had the authority to assign the note to Aurora Loan Services, which it did on March 7, 2011. See Roper v. CitiMortgage, Inc., No. 03-11-00887-CV, 2013 WL 6465637, at *7 (Tex. App.—Austin Nov. 27, 2013, pet. denied) (mem. op.) (explaining MERS's role in mortgage system); see also Bierwirth v. BAC Home Loans Servicing, L.P., No. 03-11-00644-CV, 2012 WL 3793190, at *5 (Tex. App.—Austin Aug. 30, 2012, pet. denied) (mem. op.) (deed of trust identified MERS as beneficiary and nominee, meaning MERS was mortgagee; when MERS assigned deed to BAC, "BAC obtained all of MERS's rights and interests in the deed of trust (originating from the Lender, Countrywide), including the 'right to foreclose and sell the Property'"). Therefore, Aurora Loan Services was mortgagee as of the date of the foreclosure sale and had the authority to foreclose on the property.See Tex. Prop. Code § 51.0001(4); Roper, 2013 WL 6465637, at *7.
MERS as nominee remained the mortgagee of record for as long as the note was transferred between MERS members. See Roper v. CitiMortgage, Inc., No. 03-11-00887-CV, 2013 WL 6465637, at *7 (Tex. App.—Austin Nov. 27, 2013, pet. denied) (mem. op.). The reference in the January 2011 notice of default to Lxs 2007-6 as "mortgagee" does not cast doubt or raise material questions as to the validity of the March 2011 assignment by MERS to Aurora Loan Services. --------
Nationstar established as a matter of law that Aurora Loan Services was authorized to foreclose based on (1) its status as holder of the indorsed-in-blank note, (2) its status as servicer of the loan, and (3) its status as assignee of the deed of trust.
Conclusion
The evidence established as a matter of law that Aurora Loan Services had the authority to conduct the foreclosure sale, and Trevarthan does not attack any of the other grounds asserted for summary judgment by Nationstar. We therefore affirm the trial court's granting of summary judgment in favor of Nationstar.
/s/_________
David Puryear, Justice Before Justices Puryear, Goodwin, and Bourland Affirmed Filed: January 29, 2016