Harris v. Deutsche Bank National Trust Co., 141 So. 3d 482

Background

In 2005 the Harrises obtained a $96,300 note secured by a mortgage naming SouthStar as Lender and MERS as nominee; the mortgage allowed transfer and required written notice before acceleration and sale.
The Harrises defaulted; servicer Litton sent multiple letters in 2008 (including a certified-mail notice of default and later acceleration/foreclosure letters). The trustee’s counsel sent additional letters in July and December 2008.
MERS assigned the mortgage to Deutsche Bank (the trustee) on January 8, 2009; the trustee conducted a foreclosure sale on February 3, 2009, purchased the property, and recorded a foreclosure deed.
The trustee demanded possession and filed an ejectment action; the Harrises counterclaimed for wrongful foreclosure and asserted lack of proper notice and defective transfer/assignment to the trustee.
The trial court granted summary judgment for the trustee on ejectment and the counterclaim; the Alabama Supreme Court affirmed the judgment on the counterclaim but vacated the ejectment summary judgment and remanded for determination whether the trustee held the note (the right to receive payment) before executing the foreclosure deed.

Issues

Issue	Plaintiff's Argument (Harrises)	Defendant's Argument (Trustee)	Held
Standing vs. merits of foreclosure initiation	Trustee lacked right to foreclose before assignment; initiation was invalid	Failure to hold assignment at initiation does not bar foreclosing purchaser’s claim; goes to merits, not standing	Failure to have assignment before initiation does not automatically invalidate conveyance or defeat standing; issue is merits (citing Ex parte GMAC)
Notice of default/acceleration required by mortgage	Harrises denied receiving required notices; trustee produced no substantial evidence of mailing	Trustee produced certified-mail receipt, letters, and affidavit of mailing	Court found substantial evidence that contractually required notices were mailed and delivered as required
Validity of assignment into trust (PSA and chain issues)	PSA limited acquisitions; MERS did not properly assign to trust — raises genuine issue	Trustee argued Harrises lack privity/beneficiary status to enforce PSA and offered to produce evidence of assignment of note	Court rejected PSA argument (Harrises not party/beneficiary) and held their submissions were unauthenticated/newly offered without adequate explanation; remand ordered to resolve whether trustee obtained the note assignment before foreclosure deed
Wrongful-foreclosure counterclaim theory	Foreclosure invalid due to procedural defects/assignment problems	Power of sale was used to secure debt; Harrises did not allege sale was used for an improper purpose	Summary judgment for trustee on counterclaim affirmed because claim did not allege a power-of-sale exercise for an improper purpose

Key Cases Cited

Dow v. Alabama Democratic Party, 897 So.2d 1035 (Ala. 2004) (definition of substantial evidence)
West v. Founders Life Assurance Co. of Florida, 547 So.2d 870 (Ala. 1989) (substantial-evidence standard quotation)
Tanksley v. ProSoft Automation, Inc., 982 So.2d 1046 (Ala. 2007) (documents on summary judgment must be authenticated)
Ware v. Deutsche Bank Nat’l Trust Co., 75 So.3d 1168 (Ala. 2011) (mortgagor not party or third-party beneficiary of PSA may not enforce PSA)
Hail v. Regency Terrace Owners Ass’n, 782 So.2d 1271 (Ala. 1999) (requirements for considering evidence submitted with a Rule 59(e) motion)
Moore v. Glover, 501 So.2d 1187 (Ala. 1986) (standard for newly discovered evidence on reconsideration)
Carpenter v. First National Bank, 181 So. 239 (Ala. 1938) (agent without ownership of debt cannot foreclose in own name)
Jackson v. Wells Fargo Bank, N.A., 90 So.3d 168 (Ala. 2012) (definition of wrongful-foreclosure claim requires use of power of sale for a purpose other than securing the debt)
Reeves Cedarhurst Dev. Corp. v. First American Fed. Sav. & Loan Ass’n, 607 So.2d 180 (Ala. 1992) (wrongful-foreclosure principle explained)