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The Bank of New York Mellon v. Luu

Court of Appeals of New Mexico

June 26, 2019

THE BANK OF NEW YORK MELLON f/k/a THE BANK OF NEW YORK, as Trustee for the CERTIFICATEHOLDERS OF THE CWABS, INC., ASSET-BACKED CERTIFICATES, SERIES 2007-9, Plaintiff-Appellee,
v.
PHUONG T. LUU, Defendant-Appellant.

          APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY Alan M. Malott, District Judge.

          Rose L. Brand & Associates, P.C. Eraina M. Edwards Albuquerque, NM for Appellee

          Cravens Law LLC Richard H. Cravens, IV Albuquerque, NM for Appellant

          OPINION

          M. MONICA ZAMORA, CHIEF JUDGE.

         {¶1} Defendant Phuong T. Luu appeals from the district court's judgment on the merits and order for foreclosure sale in favor of Plaintiff The Bank of New York Mellon f7k/a The Bank of New York, as Trustee for the Certificate holders of the CWABS, Inc., Asset-Backed Certificates, Series 2007-9. On appeal, Defendant challenges the district court's conclusion that Plaintiff had standing to enforce the promissory note. Specifically, Defendant questions the validity of the note's indorsement, claiming it is fraudulent and therefore ineffective to show that Plaintiff holds the note, and alleges that the district court's determination to the contrary was unsupported by any evidence. Concluding the district court's ruling is supported by substantial evidence, we affirm.

         BACKGROUND

         {¶2} On May 3, 2007, Defendant executed a promissory note in the principal sum of $160, 800, payable to Countrywide Home Loans, Inc. d/b/a America's Wholesale Lender (Countrywide). Around the same time, and as security for repayment of the debt evidenced by the note, Defendant executed a mortgage in favor of Mortgage Electronic Registration Systems, Inc., as nominee for Countrywide.

         {¶3} Plaintiff is trustee for a trust created on May 1, 2007. According to the evidence introduced at trial, on May 8, 2007, Defendant's loan was transferred from Countrywide to the Plaintiff trust, which had a cut-off date for receiving loans of June 8, 2007. Defendant's loan was initially serviced by Bank of America until Specialized Loan Servicing (SLS) took over servicing the loan. SLS records show the original note was delivered to Bank of America on May 8, 2007, and thereafter transferred to counsel for Plaintiff on July 10, 2012.

         {¶4} Defendant became delinquent on payments due under the note, and on October 4, 2012, Plaintiff filed its initial complaint for foreclosure against Defendant.[1] Plaintiff attached a copy of the note as an exhibit to that complaint, which was unindorsed and contained a stamp from Land America Albuquerque Title Company certifying the note as a true and correct copy of the original. On October 22, 2014, that complaint was voluntarily dismissed without prejudice. No rulings regarding standing were made prior to dismissal.

         {¶5} On April 21, 2015, Plaintiff filed a second complaint for foreclosure against Defendant, initiating the case that forms the basis for this appeal. In its complaint, Plaintiff alleged it is the holder of the note and the mortgage and is therefore entitled to enforce the note. Plaintiff further alleged that it was in possession of the original note at the time of filing, and attached a copy of the note to the complaint, as well as an affidavit from Plaintiffs counsel attesting to possession of the original note. The note attached to the complaint contains a blank indorsement signed by Michele Sjolander, Executive Vice President of Countrywide. The indorsement is undated, and the parties and the district court agree that the indorsement was signed by stamp, rather than by hand. The note attached to the present complaint does not contain the title company's stamp, as the 2012 copy did.

         {¶6} Defendant filed a motion to dismiss the complaint, arguing Plaintiff lacked standing because the note's indorsement is invalid. In her motion, Defendant claimed it was "suspicious" that the note attached to Plaintiffs prior complaint in 2012 was unindorsed, yet the note attached to the present complaint contains an indorsement, and therefore contended that the indorsement in the present case must be a result of fraud. The district court denied Defendant's motion. Following discovery, Plaintiff moved for summary judgment, which the district court also denied, ruling there was a genuine issue of material fact as to whether Plaintiff had standing because of the dispute over the timing and effectiveness of the note's indorsement.

         {¶7} The matter proceeded to a bench trial, wherein the original note containing the indorsement was presented and admitted as an exhibit, as were other documents concerning Defendant's loan. Based on the evidence admitted at trial, which is discussed in more detail below, the district court concluded that Plaintiff had standing to enforce the note and mortgage lien. Rejecting Defendant's argument that the indorsement was fraudulent, the district court determined the indorsement was properly made. Following a bench trial, the district court concluded that Plaintiff had standing and was thus entitled to enforce the note and foreclose the mortgage. The district court issued an order ruling in favor of Plaintiff and ordering a foreclosure sale.

         DISCUSSION

         {¶8} Defendant argues the district court erred in finding that the note was indorsed by Ms. Sjolander of Countrywide prior to April 1, 2009, and in ruling that Plaintiff has standing to bring the action as the real party in interest. Defendant similarly argues that the district court erred in ruling that the original note is indorsed in blank and has been transferred by possession alone. In short, these arguments challenge whether the indorsement was effective to show Plaintiff was the holder of the note at the time the complaint was filed and, thus, whether Plaintiff has standing to ...


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