NATIONSTAR MORTGAGE LLC, d/b/a CHAMPION MORTGAGE COMPANY, Plaintiff-Appellant,
SHEILA J. O'MALLEY, Defendant-Appellee, and TIMOTHY W. O'MALLEY, IF LIVING; IF DECEASED THE UNKNOWN HEIRS OF TIMOTHY W. O'MALLEY, DECEASED; UNITED STATES OF AMERICA BY AND THROUGH THE SECRETARY OF HOUSING AND URBAN DEVELOPMENT; OCCUPANTS OF THE PROPERTY, Defendants.
FROM THE DISTRICT COURT OF TAOS COUNTY Sarah C. Backus,
McCarthy & Holthus, LLP Joshua T. Chappell Karen H.
Weaver Albuquerque, NM Albuquerque, NM Murr Siler &
Accomazzo, P.C. James P. Eckels Jamie G. Siler Denver, CO
Jared Daniel Albert Najjar Santa Fe, NM for Appellant.
• Scholl • Carillo • P.A. Orlando C. Martinez
Albuquerque, NM for Appellee.
M. BOHNHOFF, Judge.
Plaintiff Nationstar Mortgage, LLC, d/b/a Champion Mortgage
Co. (Nationstar), appeals the district court's order
granting summary judgment in favor of Defendant Sheila J.
O'Malley. The district court ruled that, pursuant to NMSA
1978, Section 40-3-13 (1993), a mortgage of residential
property that Mrs. O'Malley's husband executed in
favor of Nationstar was void because Mrs. O'Malley did
not execute it as well. We hold that the mortgage was valid,
because Mrs. O'Malley earlier had entered into a sole and
separate property agreement that transmuted the couple's
community property to her husband's separate property. We
therefore reverse the summary judgment.
The salient facts are undisputed. In September 2010, Timothy
(Husband) and Sheila (Wife) O'Malley acquired residential
property in Taos, New Mexico (the Property); the deed
conveyed title to them as joint tenants with right of
survivorship. According to Wife's affidavit supporting
her motion for summary judgment, Husband was an attorney and
handled the couple's assets and finances. In early 2012,
the O'Malleys were interested in purchasing an adjoining
lot. "At that time, my husband had me sign some
documents in order to purchase the adjacent lot and combine
it with the Property." One of those papers apparently
was a "SOLE AND SEPARATE PROPERTY AGREEMENT AND
CONVEYANCE" (SSPAC), which Husband and Wife executed in
the presence of a notary on March 7, 2012. The SSPAC provides
Pursuant to [NMSA 1978, Section 40-3-8(A)(5) (1990)], Timothy
W. O'Malley and Sheila J. O'Malley, husband and wife,
agree that the property described as [Property's legal
description] is hereby designated as the separate property of
Timothy W. O'Malley. Sheila J. O'Malley hereby
expressly grants and conveys the above property to Timothy W.
O'Malley with special warranty covenants. Sheila J.
O'Malley further, expressly waives, relinquishes and
releases any and all right, title, claim or interest in and
to the above described property heretofore or hereafter
The contemplated purchase of the ad joining lot did not
occur. Instead, on April 16, 2012, Husband executed in favor
of MetLife Home Loans, a division of MetLife Bank, N.A.
(MetLife), an "Adjustable Rate Note (Home Equity
Conversion)" and an "Adjustable Rate Deed of Trust
(Home Equity Conversion)." The deed of trust states
that, "THIS DEED OF TRUST SECURES A REVERSE MORTGAGE
LOAN," and the parties otherwise characterize the
transaction as a reverse mortgage loan
transaction. Both the SSPAC and the deed of trust
(Reverse Mortgage) were recorded with the Taos County Clerk
on April 20, 2012. The SSPAC's and Reverse Mortgage's
recording information show filing times of 2:08:25 p.m. and
2:08:27 p.m., respectively.
On June 1, 2012, Husband deeded the Property to himself and
Wife "as joint tenants with right of survivorship,"
i.e., the deed returned the Property to its pre- March 7,
2012, ownership status.
On October 22, 2012, MetLife assigned the Reverse Mortgage to
Nationstar, which is a business name of Champion Mortgage
Company. The assignment was recorded on November 8, 2012.
In the interim, Husband died on June 30, 2014. Wife states in
her affidavit that she was not aware of the reverse mortgage
transaction until sometime after her husband's passing
when she received correspondence from Nationstar.
In December 2014, Nationstar filed its complaint with the
district court, seeking a judgment foreclosing on its
security interest in the Property pursuant to the Reverse
Mortgage and authorization to sell the Property to satisfy
the underlying debt that Nationstar alleged totaled
approximately $375,000. Nationstar did not claim that Wife
was personally liable for the debt. In her answer, Wife
generally denied or stated her lack of knowledge with respect
to the complaint's allegations, but also asserted without
elaboration affirmative defenses of "lack and failure of
consideration," "mistake," and
"fraudulent conduct and bad faith" on the part of
In December 2015, Wife filed a motion (the Motion) to dismiss
the complaint for failure to state a claim, or in the
alternative, for summary judgment. Based solely on her
aforementioned affidavit testimony that "my husband had
me sign some documents in order to purchase the adjacent lot
and combine it with the Property," Wife asserted in her
statement of undisputed material facts that, "Mr.
O'Malley had [Mrs.] O'Malley sign a [SSPAC] under the
pretense that it was necessary to facilitate the purchase of
the adjacent lot and combine it with the Property."
However, in her motion Wife did not otherwise claim, or even
suggest, fraudulent or other nefarious conduct on the part of
Husband, much less MetLife. On the contrary, her argument was
strictly legal: the Property was community property; pursuant
to Section 40-3-13 and NMSA 1978, Section 47-1-7 (1901), the
Reverse Mortgage was void both because Wife did not sign it
and because the March 7, 2012, S SPAC was not recorded before
the Reverse Mortgage was executed. Similarly, she contended
that, because the June 1, 2012, deed re-conveyed the Property
to Husband and Wife, the subsequent assignment of the
Mortgage from MetLife to Nationstar was void as well because
both Husband and Wife failed to sign it. On the same day,
Wife moved for a protective order excusing her from
responding to what she characterized as "voluminous sets
of discovery'' propounded by Nationstar until after
the district court ruled on her Motion.
Nationstar timely responded in opposition to the motion for
protective order but not the Motion. However, On January
21,2016, Nationstar moved for leave to file a response to the
Motion with a copy of the proposed substantive response
attached. Nationstar argued therein that: pursuant to Section
40-3-8(A)(5), the Property was transmuted to Husband's
separate property on March 7, 2012, as a result of Wife's
execution of the SSPAC; the SSPAC was effective as against
Wife notwithstanding the fact that it was not immediately
recorded; Section 40-3-13 and Section 47-1 -7 did not
invalidate the Reverse Mortgage because as of April 16, 2012,
the Property was no longer community property and, among
other reasons, the SSPAC was not a power of attorney; because
the Reverse Mortgage was not community property, Section
40-3-13 did not invalidate the October 22,2012, assignment.
Nationstar did not dispute Wife's statement of undisputed
material facts. However, Nationstar requested that, assuming
the district court did not deny the Motion on the basis of
these legal arguments pursuant to Rule 1-056(F) NMRA, the
district court should postpone ruling on the request for
summary judgment until after Nationstar had an opportunity to
The district court scheduled a motions hearing for February
3, 2016. The morning of the hearing, Nationstar's counsel
filed an affidavit pursuant to Rule 1-056(F), asserting that,
in order to respond fully to Wife's summary judgment
request, Nationstar needed answers to the discovery it
already had propounded-and which was the subject of
Wife's protective order motion-and might need additional
discovery regarding "the facts surrounding . . .
Defendant's acquisition of the property at issue, the
execution and recording of the [SSPAC], the execution and
recording of the [Reverse] Mortgage, ... and the reconveyance
of the property to [Husband and Wife]."
During the hearing, the district court stated that, in view
of the affidavit and documents attached and referred to in
the Motion, it would treat the Motion as one for summary
judgment. The court asked Wife's counsel to address
Nationstar's argument that it would need additional time
to conduct discovery. Wife's counsel stated that he did
not believe there was a disputed issue of fact that was
necessary to resolve the case, but also argued that the Rule
1-056(F) affidavit was not sufficiently specific and
Nationstar had not disputed Wife's statement of
undisputed material facts. The district court characterized
Wife's motion as a legal argument, but then indicated its
understanding that Wife's position was that she signed
the SSPAC under false pretenses, that she thought it was
executed for purposes of acquiring the adjoining lot and it
was not given for purposes of the reverse mortgage.
Wife's counsel responded by stating that those facts were
not needed to rule on the motion.
The district court then ruled that it would grant Wife's
motion. As grounds for its ruling, the court stated that Wife
had made a prima facie showing that she was entitled to
summary judgment and that Nationstar had not come forward
with any facts to rebut that showing and that it would not be
able to proffer any facts even if it was permitted additional
discovery. In its written order, the district court deemed
Wife's statement of undisputed material facts admitted by
Nationstar, and stated that Wife had made a prima facie
showing of entitlement to summary judgment based on Section
40-3-13, Nationstar had not rebutted that showing, and
additional discovery was not necessary for adjudicating the
Motion. Nationstar appeals.
We review the district court order granting summary judgment
under a de novo standard of review. Cain v. Champion
Window Co., 2007-NMCA-085, ¶ 6,142 N.M. 209,