Jackson v. Wells Fargo Bank, N.A.
90 So. 3d 168
Ala.2012Background
- In 2005, the Jacksons refinanced their Mobile home loan and granted a mortgage later assigned to the bank, which served the loan.
- The mortgage was the FNMA/FHLMC Uniform Instrument; paragraph 22 required 30-day notice before acceleration following default and informed of rights to cure, reinstate, and pursue defenses.
- By Oct 2007 the Jacksons were in arrears and entered a special forebearance; a second forebearance was offered in Jan 2008 due to ongoing negotiations.
- The Jacksons failed to make a May 2008 payment, while negotiations continued for further forbearance.
- On July 21, 2008 a trustee acceleration letter claimed acceleration and announced foreclosure; the sale occurred Aug 15, 2008, with a deed issued to K-Quad, LLC.
- The Jacksons sued Sept 30, 2008 alleging negligent/wanton foreclosure and breach of contract; K-Quad settled and was dismissed; the bank and trustee moved for summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did acceleration comply with notice requirements? | Jacksons contend notice of intent to accelerate was missing. | Bank/Trustee argue acceleration letter satisfied notice. | Breaches of contract issue; insufficient notice found, so reversal of part. |
| Whether foreclosure was negligent or wanton | Foreclosure was improper due to defects in notice and acceleration. | Foreclosure conducted per contract and notices | Affirmed as to negligent foreclose claim. |
| Whether breach of contract claim survives | Acceleration notice violated contract terms; pre-acceleration notice missing. | Acceleration letter indicates performance under contract. | Breach-of-contract claim reversed; remanded for further proceedings. |
| Damages and relief | Damages should be awarded for breach/foreclosure invalidity. | Damages not established without valid acceleration and notice. | Resolution limited; breach claim reversed; remaining negligent-foreclosure claim affirmed. |
Key Cases Cited
- Reeves Cedarhurst Dev. Corp. v. First American Fed. Sav. & Loan Ass’n, 607 So.2d 180 (Ala. 1992) (wrongful foreclosure requires improper use of power; must secure debt)
- Ogden v. Gibraltar Savings Ass’n, 640 S.W.2d 232 (Tex. 1982) (distinguishes notice of intent to accelerate vs. notice of acceleration)
- Sharpe v. Wells Fargo Home Mortg., 425 B.R. 620 (Bankr.N.D. Ala. 2010) (FNMA/FHLM acceleration form requires pre-acceleration and right to cure)
- Fairfax Cnty. Redev. & Hous. Auth. v. Riekse, 281 Va. 441, 707 S.E.2d 826 (2011) (mortgagee must act within instrument’s limits and terms)