Onemain Fin. Grp. v. Pennington

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ONEMAIN FINANCIAL GROUP, LLC, Plaintiff-Appellee, v. PATRICK PENNINGTON and CARLTON PENNINGTON, Intervenors/Third-Party Plaintiffs/ Counterclaimants-Appellants, and CARMEN J. PENNINGTON; ASSOCIATES FINANCIAL SERVICES COMPANY OF NEW MEXICO, INC.; AMERICAN FURNITURE COMPANY; and THE UNKNOWN SPOUSE OF CARMEN J. PENNINGTON, Defendants, and SPS, INC. a/k/a SELECT PORTFOLIO SERVICING; and JOHN DOES 1-4, Third-Party Defendants, and CARLTON PENNINGTON and PATRICK PENNINGTON, Plaintiffs-Appellants, v. HOUSE &ALLISON, APCA, a New Mexico company and an Arizona company; ONEMAIN FINANCIAL GROUP, LLC, a New Mexico registered foreign corporation; ONEMAIN FINANCIAL HOLDING INC., a manager of Onemain Financial LLC, a Delaware corporation; SELECT PORTFOLIO SERVICES, INC., registered in New Mexico as a registered foreign corporation; ROSE L. BRAND &ASSOCIATES, PC, a New Mexico domestic profit corporation; and JOHN DOES 1-6, Defendants-Appellees.

No. A-1-CA-40608

Court of Appeals of New Mexico

February 28, 2024

Corrections to this opinion/decision not affecting the outcome, at the Court's discretion, can occur up to the time of publication with NM Compilation Commission. The Court will ensure that the electronic version of this opinion/decision is updated accordingly in Odyssey.

APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY Benjamin Chavez District Court Judge.

Carlton Pennington, Patrick Pennington Pro Se Appellants.

Houser LLP, Solomon S. Krotzer for Appellees OneMain Financial Group, LLC; Houser &Allison, APC; Select Portfolio Servicing, Inc.; and OneMain Financial Holding, Inc.

MEMORANDUM OPINION

JANE B. YOHALEM, Judge

{¶1} Patrick and Carlton Pennington (Penningtons) appeal from the district court's order granting OneMain Financial Group LLC's (OneMain) motion for summary judgment on its claim for in rem judicial foreclosure, rejecting Penningtons' affirmative defenses. The district court also granted summary judgment to OneMain and Houser &Allison, APCA; OneMain Financial Holding, Inc.; Select Portfolio Services, Inc.; Rose L. Brand &Associates PC; and John Does 1-6 on the claims made by Penningtons in their complaint in the district court case No. D-202-CV-2019-07273, consolidated with the foreclosure case, alleging malicious abuse of process, in violation of the federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692; the New Mexico Unfair Practices Act, NMSA 1978, Sections 57-12-1 to -26 (1967, as amended through 2019), racketeering; fraudulent misrepresentation; negligent misrepresentation; intentional infliction of emotional distress; civil conspiracy, and prima facie tort, all allegedly committed in the foreclosure process. We affirm.

DISCUSSION

{¶2} Penningtons raise numerous (well more than twenty) claims of error by the district court in its resolution by summary judgment of this consolidated case. Rather than attempting to address each of Penningtons' arguments separately, we have grouped their claims based on our understanding of the gravamen of each of their arguments on appeal. We address any relevant facts within our discussion of each claim.

{¶3} We note that Penningtons appeared in the district court and are appearing in this Court as pro se litigants. "Although pro se pleadings are viewed with tolerance a pro se litigant is held to the same standard of conduct and compliance with court rules, procedures, and orders as are members of the bar." In re Camino Real Env't Ctr., Inc., 2010-NMCA-057, ¶ 21, 148 N.M. 776, 242 P.3d 343 (omission, internal quotation marks, and citation omitted). This Court will review pro se arguments to the best of its ability, but cannot respond to arguments that are unclear, conclusory, and undeveloped. See State v. Guerra, 2012-NMSC-014, ¶ 21, 278 P.3d 1031 (acknowledging that appellate courts are under no obligation to review unclear or undeveloped arguments). We encourage litigants to limit the number of issues they choose to raise on appeal in order to ensure that the issues presented are ones that can be adequately supported by argument, authority, and factual support in the record. See Rio Grande Kennel Club v. City of Albuquerque, 2008-NMCA-093, ¶¶ 54-55,144 N.M. 636,190 P.3d 1131. This is an example of a case where the sheer number of arguments presented on appeal negatively impact the efficacy with which each of those issues could be presented. See Clayton v. Trotter, 1990-NMCA-078, ¶ 12, 110 N.M. 369, 796 P.2d 262. We employ a presumption of correctness in the rulings of the district court, and the burden is on the appellant to clearly demonstrate error. See Farmers, Inc. v. Dal Mach. &Fabricating, Inc., 1990-NMSC-100, ¶ 8, 111 N.M. 6, 800 P.2d 1063.

{¶4} With this predicate, we turn to Penningtons' arguments.

I. Probate-Related Claims

{¶5} Penningtons raise multiple objections to the district court's conclusion that "[t]his action to enforce a mortgage is not prevented by the New Mexico Uniform Probate Code [(the Probate Code)]," NMSA 1978, §§ 45-2-101 to 45-3-816 (1975, as amended through 2016). The district court adopted this conclusion as the law of the case at the hearing on the summary judgment motions.

{¶6} Penningtons claim on appeal that the district court erred in concluding that an in rem foreclosure action can proceed after the death of the borrowers when the financial institution seeking foreclosure has not filed a claim in the probate of the borrowers' estate or joined the borrowers' personal representative. In their affirmative action, they accuse OneMain and parties related to OneMain's foreclosure efforts of malicious abuse of process in part for avoiding the requirements of the Probate Code.

{¶7} In support of their claim that any foreclosure had to be filed in the probate proceeding, Penningtons challenge the characterization of the foreclosure action as an in rem action, claiming it is at its essence an action in contract for a debt of the deceased borrowers, a cause of action over which the probate court would have exclusive jurisdiction. According to Penningtons, the summary judgment of foreclosure entered by the district court after the probate proceedings were concluded is null and void "as the court had no jurisdiction."

{¶8} Alternatively, Penningtons argue that, even if the district court had jurisdiction, only the personal representative of the borrowers' estate appointed by the probate court had the authority to decide if OneMain has a security interest in the property and if that interest is valid. The personal representative in the probate proceeding, Carmen Pennington, inherited the property following probate. Penningtons claim that Carmen Pennington's deed is no longer subject to the mortgage and cannot be collaterally attacked in this proceeding. Penningtons argued these issues repeatedly in the district court and have, therefore, preserved them for our review.

{¶9} There are no material issues of fact in dispute and their appeal on the probate issues summarized above presents only questions of law. "[W]e apply de novo review [to questions of law] and are not required to view the appeal in the light most favorable to the party opposing summary judgment." City of Albuquerque v. BPLW Architects &Eng'rs, Inc., 2009-NMCA-081, ¶ 7, 146 N.M. 717, 213 P.3d 1146.

{¶10} The parties do not appear to dispute that the borrowers, Penningtons' grandparents, died prior to the filing of this action; that both of their estates were probated; that the probate proceedings were closed before this action was filed; that the real property at issue was distributed in probate to Carmen Pennington; that neither OneMain nor its predecessors in interest filed a claim in probate court; and that OneMain does not seek to recover on the debt, only to foreclose on the mortgage.

{¶11} We agree with the district court that this action to foreclose a mortgage is not precluded by the Probate Code. Section 45-3-803, titled "Limitation on presentation of claims," sets the requirements for pursuing a claim in probate. This section expressly provides that "[n]othing in this section affects or prevents: (1) any proceeding to enforce any mortgage, pledge or other lien upon property of the estate." Section 45-3-803(D)(1). Section 45-3-812 similarly exempts "the enforcement of mortgages, pledges or liens upon real or personal property in an appropriate proceeding" from the prohibition on court proceedings outside of probate to collect on debts of the estate.

{¶12} Penningtons' claims that OneMain was required to file its foreclosure claim in probate, and that the district court lacks jurisdiction to foreclose on the mortgage are based on a misunderstanding of the exemption from probate found in Sections 45-3-803(D) and -812. Holders of secured claims, including mortgages, are allowed to enforce their lien on real property, and are specifically allowed to foreclose on a mortgage, without presenting their claim in probate court. This exception to probate is a longstanding common law principle adopted by the Probate Code. See Ross v. Lewis, 1917-NMSC-085, ¶ 1, 23 N.M. 524, 169 P. 468 (agreeing with the proposition later reflected in the Probate Code that "a debtor whose claim is secured by mortgage, pledge, or any specific lien, need not present his claim [in probate court]).

{¶13} Penningtons' alternative argument, that Section 45-3-814 authorizes the personal representative of the estate in probate to decide whether a mortgage is valid and enforceable, and that no separate foreclosure action can be brought where the personal representative has not recognized the mortgage as valid and enforceable, is founded on a misapprehension of the legal principles stated in Section 45-3-814. Section 45-3-814 of the Probate Code authorizes the personal representative of a...