395 P.3d 393
Idaho2017Background
- In 2007 Melissa Kempton-Baughman executed a $1,192,000 promissory note (maturity March 1, 2047) secured by a recorded deed of trust naming MERS as nominee for the lender.
- Plaintiffs defaulted after the December 2007 payment; lender sent default/acceleration notices in Jan., Apr., May, and July 2008; Plaintiffs never cured.
- Assignments transferred beneficial interest to UBS Investment Bank (assignment dated Nov. 15, 2008; recorded May 4, 2009); a trustee’s sale occurred Jan. 8, 2010, to UBS; trustee’s deed recorded Jan. 27, 2010.
- Plaintiffs filed Chapter 7 bankruptcy (June 2009) listing Chevy Chase; received discharge Sept. 2009 and did not list UBS. A later rescission notice by the trustee was recorded May 24, 2011; US Bank claimed the sale was void because UBS Investment Bank was a nonentity.
- Plaintiffs sued (July 2013) for quiet title, injunction against foreclosure, mesne profits, and breach of contract; US Bank counterclaimed for judicial foreclosure. The district court granted Defendants’ summary judgment, denied Plaintiffs’ partial SJ, entered judgment for US Bank, and Plaintiffs appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Statute of limitations under Idaho Code §5-214A (effect of acceleration) | Jan. 22, 2008 default notice automatically accelerated loan on Feb. 22, 2008, so 5-year limitations ran before US Bank’s 2014 foreclosure counterclaim | Note states maturity date (Mar. 1, 2047); §5-214A uses stated maturity date if present, so limitations did not begin in 2008 | Court held statute did not bar foreclosure because the note expressly set maturity (Mar. 1, 2047); limitations did not start from the 2008 notices |
| Validity / standing from assignments (UBS nonentity) | Foreclosure invalid because purported assignee (UBS Investment Bank) was a nonentity and could not take title or foreclose | Defendants relied on recorded assignments, notices, and evidence that beneficial interest passed and that trustee’s sale could be rescinded if sale invalid; UBS’s nonentity status supported rescission but did not bar foreclosure by current holder | Court accepted that UBS Investment Bank was not a legal entity for title purposes; trustee’s sale could be rescinded as invalid, and US Bank could pursue judicial foreclosure; Plaintiffs’ challenges failed on record evidence |
| Mesne profits (lost rental income) | Plaintiffs lost rental income during period of wrongful possession after the 2010 sale and before rescission; thus entitled to mesne profits | Defendants: sale was not illegal possession; they had right to secure/protect property; awarding mesne profits would be inequitable given lender losses | Court upheld denial of mesne profits on three alternate grounds: sale not illegal foreclosure, defendants had right to protect property, and equitable bar given US Bank’s unrecovered losses |
| Breach of contract / quiet title / injunction | Nonjudicial foreclosure and sale violated deed of trust terms; Plaintiffs entitled to quiet title and injunctive relief | Defendants noted Plaintiffs admitted nonpayment and default; assignments and notices supported foreclosure authority; statutory rescission provisions apply where sale invalid | Court dismissed breach, quiet title, and injunction claims; confirmed US Bank’s right to foreclose judicially and rejected Plaintiffs’ entitlement to relief |
Key Cases Cited
- Infanger v. City of Salmon, 137 Idaho 45, 44 P.3d 1100 (Idaho 2002) (summary judgment standard — view facts in favor of nonmoving party)
- The Union Central Life Ins. Co. v. Keith, 58 Idaho 471, 74 P.2d 699 (Idaho 1937) (authority cited re: acceleration effect on statute of limitations)
- Thomas v. Goff, 100 Idaho 282, 596 P.2d 794 (Idaho 1979) (discussed statute of limitations under different statute governing written instruments)
- Idaho Military Historical Soc’y, Inc. v. Maslen, 156 Idaho 624, 329 P.3d 1072 (Idaho 2014) (apportionment of attorney fees for frivolous issues)