Parrish v. Fed. Nat'l Mortg. Ass'n
292 Va. 44
| Va. | 2016Background
- Brian and Teresa Parrish owned Hanover County real property secured by a deed of trust; substitute trustee conveyed the property at foreclosure to Fannie Mae, which sought possession by unlawful detainer in general district court.
- The Parrishes alleged the foreclosure violated a condition incorporated in their deed of trust (relying on 12 C.F.R. §1024.41(g) / a loss-mitigation application) and thus challenged the validity of the trustee's deed.
- General district court awarded possession to Fannie Mae; the Parrishes filed a de novo appeal to the circuit court.
- In circuit court, Fannie Mae moved for summary judgment arguing (1) the trustee's deed is prima facie evidence of right to possession and (2) general district courts lack jurisdiction to try title so the circuit court’s derivative jurisdiction on appeal likewise could not reach the title challenge.
- The circuit court granted summary judgment to Fannie Mae; the Supreme Court of Virginia granted review to resolve whether a general district court (and a circuit court on de novo appeal) has jurisdiction to adjudicate an unlawful detainer that raises a bona fide title question.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a general district court has subject-matter jurisdiction to decide an unlawful detainer when the defendant raises a bona fide challenge to the validity of a trustee's deed after foreclosure | Parrishes: their allegations (completion of loss‑mitigation application and breach of deed terms) sufficiently raise a bona fide title question that should be heard | Fannie Mae: general district courts cannot try title; a challenge to the foreclosure’s validity is outside that court’s limited statutory jurisdiction | If the homeowner’s allegations, if proven, would be sufficient in equity to set aside the foreclosure (i.e., raise a bona fide question of title), the general district court lacks jurisdiction and must dismiss without prejudice |
| Whether a circuit court on de novo appeal may address a title challenge when the general district court lacked jurisdiction | Parrishes: de novo appeal precludes circuit court reliance on lower‑court pleadings and entitles them to a fresh adjudication | Fannie Mae: circuit court’s jurisdiction on de novo appeal is derivative of the general district court and is therefore limited when the lower court lacked jurisdiction | Circuit court’s subject‑matter jurisdiction is derivative; if the general district court lacked jurisdiction, the circuit court must dismiss the unlawful detainer and cannot adjudicate the title issue on that appeal |
| Standard for when an allegation about a trustee’s deed divests general district court jurisdiction | Parrishes: contend their pleadings suffice to raise the issue | Fannie Mae: any contest to the deed must be resolved in circuit court/equity | The county court must assess whether the defendant’s allegations are a bona fide claim of title — sufficient to survive demurrer in a circuit‑court complaint to set aside the sale; mere naked or conclusory allegations are insufficient |
| Whether the circuit court erred by considering the general district court pleadings on de novo appeal | Parrishes: the nature of de novo appeal precludes consideration of lower‑court pleadings | Fannie Mae: statute requires transmission of the lower‑court record; the circuit court may consider it | Court held it was permissible for the circuit court to consider pleadings transmitted from the general district court on de novo appeal |
Key Cases Cited
- Spencer v. City of Norfolk, 271 Va. 460 (jurisdiction is a threshold question reviewed de novo)
- Addison v. Salyer, 185 Va. 644 (courts not of record lack power to try title)
- Warwick v. Mayo, 56 Va. 528 (court not of record must dismiss when presented with bona fide claim of title)
- Pannill v. Coles, 81 Va. 380 (distinction between right of possession and complete title in unlawful detainer)
- Ramos v. Wells Fargo Bank, N.A., 289 Va. 321 (equitable relief to set aside foreclosure for fraud/collusion or grossly inadequate price)
- Mathews v. PHH Mortgage Corp., 283 Va. 723 (note/deed of trust obligations are distinct)
- Squire v. Virginia Housing Dev. Auth., 287 Va. 507 (pleading specificity required to challenge trustee’s authority)
- Whitlow v. Mountain Trust Bank, 215 Va. 149 (constructive fraud where trustee purchases at own sale — sale voidable)
- Corbett v. Nutt, 59 Va. 624 (unlawful detainer may turn on validity of title)