Bank of N.Y. Mellon v. Chamberlain

BANK OF NEW YORK MELLON v. HELEN E. CHAMBERLAIN

No. M2019-00876-COA-R3-CV

COURT OF APPEALS OF TENNESSEE AT NASHVILLE

January 7, 2020 Session

February 5, 2020

Appeal from the Circuit Court for Davidson County

No. 18C326

Hamilton V. Gayden, Jr., Judge

Appellant homeowner appeals the trial court's grant of summary judgment to the purchaser bank in an unlawful detainer action. Because the homeowner presented specific evidence to show a genuine dispute of material fact as to the whether certain mandatory provisions of the deed of trust were complied with prior to foreclosure, we reverse the judgment of the trial court.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Reversed and Remanded

J. STEVEN STAFFORD, P.J., W.S., delivered the opinion of the court, in which FRANK G. CLEMENT, JR., P.J., M. S., and ANDY D. BENNETT, J., joined.

Carol A. Molloy, Fitchburg, Massachusetts, and Jonathan Lynn Miley, Nashville, Tennessee, for the appellant, Helen E. Chamberlain.

Bret J. Chaness and Patty Whitehead, Peachtree Corners, Georgia, for the appellee, The Bank of New York Mellon.

OPINION

I. BACKGROUND

In 2007, Plaintiff/Appellant Helen Chamberlain ("Appellant") deeded an interest in real property located in Nashville, Tennessee ("the Property") to Delores Rose Dauenhauer.¹ On March 30, 2007, Ms. Dauenhauer took out a loan with America's Wholesale Lender in the principal amount of $555,000.00, evidenced by a promissorynote ("the Note"). To secure the loan, Ms. Dauenhauer, Appellant, and Frank C. Dauenhauer executed a Deed of Trust secured by the Property. The Deed of Trust was duly recorded in the Register's Office of Davidson County. Relevant to this appeal, the Deed of Trust contained the following provisions:

15. Notices. All notices given by Borrower or Lender in connection with this Security Instrument must be in writing. Any notice to Borrower in connection with this Security Instrument shall be deemed to have been given to Borrower when mailed by first class mail or when actually delivered to Borrower's notice address if sent by other means. Notice to any one Borrower shall constitute notice to all Borrowers unless Applicable Law expressly requires otherwise. The notice address shall be the Property Address unless Borrower has designated a substitute notice address by notice to Lender. Borrower shall promptly notify Lender of Borrower's change of address. If Lender specifies a procedure for reporting Borrower's change of address, then Borrower shall only report a change of address through that specified procedure. There may be only one designated notice address under this Security Instrument at any one time. Any notice to Lender shall be given by delivering it or by mailing it by first class mail to Lender's address stared herein unless Lender has designated another address by notice to Borrower. Any notice in connection with this Security Instrument shall not be deemed to have been given to Lender until actually received by Lender.

* * *

22. Acceleration; Remedies. Lender shall give notice to Borrower prior to acceleration following Borrower's breach of any covenant or agreement in this Security Instrument (but not prior to acceleration under Section 111 unless Applicable Law provides otherwise). The notice shall specify: (a) the default; (b) the action required to cure the default (c) a date, not less than 30 days from the date the notice is given to Borrower, by which the default mast be cured; and (d) that failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by this Security Instrument and sale of the Property. The notice shall further Inform Borrower of the right to reinstate after acceleration and the right to bring a court action to assert the non-existence of a default or any other defense of Borrower to acceleration and sale if the default is not cured on or before the date specified in the notice. Lender at its option may require immediate payment in full of all sums secured by this Security Instrument without further demand and may invoke the power of sale and any other remedies permitted by Applicable Law. Lender shall be entitled to collect all expenses incurred in pursuing the remedies provided in this Section 22, including, but not limited to, reasonable attorneys' fees and costs of title evidence.

Both Ms. Dauenhauer and Appellant were designated as "Borrower" in the Deed of Trust.² Attached to the Deed of Trust was a Second Home Rider that indicated that the Property would be used by Ms. Dauenhauer as a second home.

Prior to May 2011, Ms. Dauenhauer defaulted on the Note. In August 2012, Ms. Dauenhauer executed a quit claim deed conveying a one-half interest in the Property back to Appellant. Ms. Dauenhauer executed a second quitclaim deed in favor of Appellant conveying "all of [Ms. Dauenhauer's] right title and interest" in the Property in September 2015. Ms. Dauenhauer passed away in December 2015. The Property was thereafter sold at a foreclosure sale in September 14, 2017 to Plaintiff/Appellee Bank of New York Mellon, fka the Bank of New York as Trustee ("the Bank"). A Substitute Trustee's Deed memorializing the sale was recorded in the Register's Office for Davidson County on September 20, 2017. Pursuant to the Deed of Trust, following a foreclosure sale, Borrower or any persons holding possession through Borrower were to immediately surrender possession of the Property.

Because Appellant was still in possession of the Property, the Bank filed a forcible detainer action for possession of the property in the Davidson County General Sessions Court ("general sessions court") on November 13, 2017. Appellant filed an answer to the warrant on November 29, 2017, denying that the Bank was entitled to possession of the Property. After this filing, the case was removed to Davidson County Circuit Court ("the trial court"). Appellant, having retained counsel, thereafter filed an amended answer raising two defenses to the Bank's action: (1) that the foreclosure violated the mortgage servicing rules under the Real Estate Settlement Procedures Act ("RESPA"); and (2) that the foreclosure violated the Notice of Acceleration provision of the Deed of Trust. Appellant also asserted a counterclaim under these theories. Appellant thereafter filed a motion to amend her answer and an amended answer and counterclaim.

On March 16, 2018, the Bank filed a motion to dismiss Appellant's counterclaim and to remand the case to general sessions court. Therein, the Bank asserted that the removal statute had not been followed and that Appellant's counterclaim failed to state a claim upon which relief could be granted. Eventually, the trial court denied the Bank's request to remand the matter back to general sessions court by order of September 11, 2018. By the same order, the trial court ruled that Appellant's counterclaim under RESPA was withdrawn. The Bank thereafter filed an answer to Appellant's counterclaim under a breach of contract theory.

On January 22, 2019, the Bank filed a motion for summary judgment as to its claim for possession and Appellant's counterclaim for breach of the Deed of Trust. In the accompanying memorandum, the Bank argued that it was entitled to possession of theproperty because it complied with all applicable provisions of the Deed of Trust. In particular, the Bank asserted that the undisputed material facts showed that the loan servicer provided Notice of Acceleration as required under the Deed of Trust on two occasions. First, the Bank submitted a January 8, 2014 "Notice of Default and Intent to Accelerate" sent to Appellant at the Property by Bayview Loan Servicing, LLC, ("Bayview"). The letter indicated on its face that it was sent via First Class Mail and Certified Mail return receipt requested. The Bank also submitted a second notice mailed to Ms. Dauenhauer at the Property on December 8, 2014. Again, the notice indicates that it was mailed via First Class Mail and Certified Mail return receipt requested. This notice is accompanied by a return receipt signed by Appellant at the Property address.³

Both letters were supported by the sworn affidavit of Myron De Sa, the litigation manager of Bayview, who stated that the documents were maintained by Bayview in the regular course of business, that documents were created "at or near the time of occurrence of the matters set forth by, or from information transmitted by, a person with knowledge of those matters," that the notices are true and correct copies of the business records maintained by Bayview, and that Mr. De Sa had personal knowledge of the facts contained in the affidavit. Although the January 8, 2014 notice indicated that it was sent both First Class Mail and Certified Mail, Mr. De Sa's affidavit stated that this notice was sent only by First Class Mail. Nothing in the affidavit provides detail of Bayview's typical practices as to mailing such notices. The Bank filed a statement of undisputed material facts detailing these notices.

Appellant responded in opposition to the Bank's motion and statement of undisputed facts on February 19, 2019. As an initial matter, Appellant attacked the affidavit of Mr. De Sa as insufficient to establish the business records exception to hearsay; as such, Appellant asserted that the documents submitted by Mr. De Sa could not be considered. Appellant also argued that the Bank had not complied with the Notice of Acceleration provision of the Deed of Trust because the Bank failed to show that the notices were mailed and/or delivered in compliance with the Deed of Trust. In particular, Appellant submitted an affidavit that while she signed, "on some unknown date," for the December 8, 2014 notice sent to Ms. Dauenhauer, she did not open the letter but immediately forwarded it to Ms. Dauenhauer in Seattle, Washington. Appellant further argued that notice to Ms. Dauenhauer was not sufficient to notify Appellant, as Bayview had made clear...