Wells Fargo Bank v. Duda

WELLS FARGO BANK, N.A., not in its individual capacity but solely as Trustee for the RMAC REMIC TRUST, SERIES 2008-1, Plaintiff-Appellant, v. JOSEPH C. DUDA, Defendant-Appellee.

No. A-1-CA-38476

Court of Appeals of New Mexico

September 13, 2021

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 SANTA FE COUNTY Raymond Z. Ortiz District Judge.

McCarthy & Holthus, LLP

Jason Bousliman

Albuquerque, NM

for Appellant

Walcott, Henry & Winston, P.C.

Donald A. Walcott

Santa Fe, NM

for Appellee

MEMORANDUM OPINION

JACQUELINE R. MEDINA, Judge.

{¶1} Wells Fargo, as trustee for the RMAC Remic Trust, (Bank) appeals dismissal of its foreclosure action in the district court. On appeal Bank argues that the district court erred in finding that Bank's foreclosure was barred by the statute of limitations provided in NMSA 1978, Section 55-3-118 (1992). Specifically, Bank asserts that (1) pursuant to NMSA 1978, Section 37-1-16 (1957), Joseph Duda's (Borrower) forbearance payments and affidavit revived the statute of limitations; (2) Bank's 2009 foreclosure suit tolled the statute of limitations; and (3) Bank's voluntary dismissal of the 2009 foreclosure suit decelerated the loan and reset the statute of limitations. We conclude that Borrower's subsequent payments revived Bank's cause of action and therefore reverse.

BACKGROUND

{¶2} This case involves two separate foreclosure actions between Bank and Borrower founded upon the same promissory note (the Note) and mortgage (Mortgage). The first suit was filed in 2009 and later dismissed without prejudice in 2015. Bank filed a new complaint in 2016 that was dismissed by the district court in 2019. For clarity we address each foreclosure suit separately.

2009 Foreclosure Suit

{¶3} In 2007 Borrower executed the Note and Mortgage in favor of Mortgage Electronic Registration Systems, Inc. (MERS) as nominee for Equifirst Corporation. In 2009 MERS assigned its interest under the Note and Mortgage to Quantum Servicing Corporation (Quantum). Later that year Quantum filed a complaint for foreclosure under the Note and Mortgage but subsequently agreed to forbear from continuing with foreclosure while Borrower made payments pursuant to a written forbearance agreement (Agreement).^[1] In 2011 Quantum assigned its interest under the Note and Mortgage to Bank, and Bank was substituted as the plaintiff in the foreclosure.

{¶4} Bank filed a motion for summary judgment in late 2011 asserting that forbearance and loan modification negotiations were unsuccessful. ^[2] Borrower responded to Bank's motion and in an affidavit attached as an exhibit to his response, he attested to payments made pursuant to the Agreement as well as additional payments made after the Agreement term ended. The district court did not rule on Bank's motion and the case proceeded. In late 2013 Bank renewed its motion for summary judgment, and Borrower again responded. A hearing was set on Bank's motion but later vacated in early 2014. Bank moved to dismiss its claims without prejudice in 2015, and the district court dismissed the case on July 8, 2015, over Borrower's objection.^[3]

2016 Foreclosure Suit

{¶5} On March 23, 2016, Bank filed a new complaint for foreclosure. Borrower moved to dismiss Bank's complaint pursuant to Rule 1-012(B)(6) NMRA, arguing that Bank's claim was time barred by the statute of limitations established in Section 55-3-118(a). Bank responded to Borrower's motion, arguing its voluntary dismissal reversed acceleration and, in the alternative, that partial payments made after the 2009 foreclosure suit was filed revived the cause of action. The district court held a hearing on Borrower's motion to dismiss after which it granted a partial dismissal. In relevant part, the district court's order found that pursuant to the statutes of limitations in Section 55-3-118(a) and NMSA 1978, Section 37-1-3 (2015), Bank's acceleration in the 2009 foreclosure began the limitation period. However, relying on out-of-state authority, ^[4] the district court also found that while defaults occurring prior to the 2009 case were barred, defaults occurring after voluntary dismissal remained viable despite prior acceleration.

{¶6} Borrower filed a motion to reconsider asserting that out-of-state authority, ^[5]contrary to that relied on by the district court, supported full dismissal. Bank responded to Borrower's motion and the district court ordered additional briefing on the issue. The parties submitted supplemental briefing after which the district court dismissed Bank's suit in its entirety. In its order granting dismissal, the district court adopted the out-of-state authority cited by Borrower finding that Bank's voluntary dismissal of the 2009 case did not revoke acceleration and therefore the statute limitations to foreclose expired.

{¶7} Following dismissal, Bank filed its own motion to reconsider, arguing again that the loan was decelerated. Bank also argued that the prior suit tolled the statute of limitations and in the alternative that the cause of action was revived pursuant to Section 37-1-16. Borrower responded to Bank's motion, and the district court held a hearing on the issue. On August 2, 2019, the district court issued an order on Bank's motion in which the court adopted the legal conclusions rendered in its order fully dismissing Bank's claim. The district court also found:

10. The statute of limitations was not tolled during the pendency of the 2009 case[; and]

11. This case involves the enforcement of a negotiable instrument that, pursuant to the [UCC], is governed by . . . [Section] 55-3-118(a). Therefore, pursuant to NMSA 1978 § 37-1-17 (1953), and case law interpreting this statute, the provisions of Chapter 37 do not apply to this case. Therefore, there was no [revival] under [Section] 37-1-16.

{¶8} This appeal followed.

DISCUSSION

{¶9} On appeal Bank argues in the alternative that (1) Borrower's forbearance payments and subsequent acknowledgement revived the statute of limitations, (2) the statute of limitations was tolled during the pendency of Bank's 2009 foreclosure suit, and (3) dismissal of the first foreclosure suit decelerated the loan and therefore the statute of limitations did not accrue. As explained below we conclude that Borrower's subsequent payments revived his debt and therefore the statute of limitations on Bank's foreclosure action did not expire before Bank filed its second suit. Consequently, because we reverse on Bank's revival arguments, we need not reach its tolling and deceleration arguments. See Crist v. Town of Gallup 1947-NMSC-012, ¶ 14, 51 N.M. 286 183 P.2d 156 (holding that appellate court need not address questions unnecessary for a decision), superseded by statute on other grounds as stated in Hoover v. City of Albuquerque, 1954-NMSC-043, ¶ 5, 58 N.M. 250, 270 P.2d 386.

Borrower's Payments Revived the Statute of Limitations

{¶10} Bank argues that Borrower's payments and acknowledgment of the debt made after acceleration in 2009 revived the statute of limitations. In response Borrower argues that the statute of limitations established in Section 55-3-118(a) supersedes the statute of limitations in Section 37-1-3, and therefore revival is not available for Bank's cause of action. Borrower also argues that even if revival is available, his payments did not revive the statute of limitations because Bank did not apply them to Borrower's principle or interest.

{¶11} Each of Bank's arguments on appeal involves issues pertaining to the statute of limitations applicable to its foreclosure action. As explained below, the facts relevant to our analysis and ultimate holding regarding the statute of limitations are not in dispute. "When facts relevant to a statute of limitations issue are not in dispute, the standard of review is whether the district court correctly applied the law to the undisputed facts." LSF9 Master Participation Tr. v. Sanchez, 2019-NMCA-055 ¶ 10, 450 P.3d 413 (internal quotation marks and citation omitted). "We review questions of law de novo." Id. (internal quotation marks and citation omitted). To the extent our analysis involves statutory interpretation, our review is de novo. Id. We begin our discussion with the district court's conclusion that revival was not applicable.

{¶12} Bank argued in the district court that Borrower's payments pursuant to the Agreement as well as Borrower's acknowledgment of the debt in his affidavit revived the debt. Although the district court's original dismissal turns on a finding that Bank did not decelerate the loan upon voluntary dismissal, the district court's conclusion necessarily implies that the debt was not revived. The district court confirmed this implication in its denial of Bank's motion to reconsider, which found in relevant part that:

This case involves the enforcement of a negotiable instrument that, pursuant to the [UCC], is governed by [Section] 55-3-118(a). Therefore, pursuant to [Section] 37-1-17, and case law interpreting this statute, the provisions of Chapter 37 do not apply to this case. Therefore there was no [revival] under [Section] 37-1-16.

However the district court's finding in this regard goes farther than simply finding that the debt was not revived. Instead the district court determined as a matter of law that Section 55-3-118(a) supersedes the statute of limitations in Section 37-1-3. As a result of this determination the district court also concluded that Section 37-1-17 precluded all provisions of Chapter 37...