369 P.3d 1046
N.M.2016Background
- Homeowner refinanced in 2006 with a note payable to New Century; default began in 2008 and servicing letters came from ASC/Wells Fargo.
- Deutsche Bank (as trustee) filed a foreclosure complaint Feb 24, 2009 attaching an unindorsed copy of the note and a mortgage recorded in New Century’s name.
- After filing, Deutsche Bank produced a February 7, 2006 assignment of mortgage (recorded later) and at trial produced a note indorsed in blank and testimony that a servicer began servicing the loan for Deutsche Bank in 2006.
- The district court found Deutsche Bank was holder and entitled to foreclose; the Court of Appeals reversed, holding standing must exist at filing and Deutsche Bank had not proved it then.
- The Supreme Court granted certiorari to decide whether standing is jurisdictional in foreclosure, whether a post-filing production of an indorsed note can cure standing, and whether a pre-filing assignment of mortgage alone establishes standing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is standing jurisdictional in mortgage foreclosure actions? | Deutsche Bank: No — enforcement of a promissory note is a common-law cause of action, so standing is not jurisdictional. | Homeowner/Ct of Appeals: Characterized standing as jurisdictional in prior decisions. | Held: Not jurisdictional — foreclosure actions are not statutory causes of action; prudential standing rules apply. |
| Must standing be established as of the time the complaint is filed? | Deutsche Bank: No — New Mexico’s non-jurisdictional standing and judicial economy permit post-filing proof. | Homeowner/Ct of Appeals: Yes — plaintiff must have the right to enforce the note when suit commences. | Held: Yes — prudential and policy reasons (title certainty, prevent double liability) require standing at filing. |
| Can a defendant waive challenge to plaintiff’s standing by acknowledging allegations or failing to press the issue early? | Deutsche Bank: Homeowner admitted ownership in his answer, so issue was waived. | Homeowner: Timely moved to dismiss and preserved the challenge; standing is like failure-to-state-a-claim and can be raised through trial. | Held: No waiver here — prudential standing may be raised during litigation and is not forfeited by initial pleadings; but final judgments are protected from collateral attack on prudential standing. |
| Did Deutsche Bank prove it had standing when it filed suit? | Deutsche Bank: Assignment of mortgage (dated 2/7/2006), servicer testimony, and production at trial of a note indorsed in blank support standing. | Homeowner: Assignment of mortgage does not prove note transfer/possession; post-filing production of indorsed note does not prove possession at filing. | Held: Deutsche Bank failed to show by substantial evidence that it had the right to enforce the note at filing; district court judgment reversed and foreclosure vacated. |
Key Cases Cited
- Bank of New York v. Romero, 320 P.3d 1 (N.M. 2014) (analyzed standing to enforce promissory note under UCC in foreclosure context)
- Deutsche Bank Nat’l Tr. Co. v. Beneficial N.M., Inc., 335 P.3d 217 (N.M. Ct. App. 2014) (Court of Appeals holding standing must exist at filing; reversed on part of rationale)
- ACLU of N.M. v. City of Albuquerque, 188 P.3d 1222 (N.M. 2008) (New Mexico explains non-jurisdictional nature of standing and adopts federal prudential framework)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (U.S. 1992) (federal standing principles: injury in fact, causation, redressability)
- Kepler v. Slade, 896 P.2d 482 (N.M. 1995) (recognizes common-law origins of actions to enforce promissory notes)