State v. Kesler
35,165
| N.M. Ct. App. | Jul 18, 2017Background
- In Feb 2008 Perry Kesler borrowed $150,000 from First Community Bank and gave a mortgage on his Rowe, NM home. First Community Bank later failed and the FDIC sold assets (including the loan) to U.S. Bank.
- Kesler became delinquent; in late Feb 2012 he mailed a partial payment which U.S. Bank returned as insufficient. Two weeks later the Bank sent notice that foreclosure had begun.
- U.S. Bank filed suit to foreclose, attaching a specially indorsed promissory note, an allonge (which mistakenly listed $300,000), and a recorded assignment of mortgage.
- Kesler answered and counterclaimed, alleging (among other things) that the Bank violated the Home Loan Protection Act (HLPA) by failing to post/accept his payment, and raised claims under the UPA, RICO, FDCPA, slander of title, fraud, and interference with contractual relations.
- The Bank moved for summary judgment supported by an affidavit from a Bank officer; Kesler opposed, disputing standing, the affiant’s personal knowledge, and asserting he needed more discovery. The district court granted summary judgment for the Bank and dismissed Kesler’s counterclaims with prejudice.
- On appeal the Court of Appeals affirmed most rulings but reversed as to Kesler’s HLPA and UPA claims, remanding those claims for further proceedings.
Issues
| Issue | Plaintiff's Argument (U.S. Bank) | Defendant's Argument (Kesler) | Held |
|---|---|---|---|
| 1. Standing to foreclose (right to enforce note at filing) | Bank attached specially indorsed note, allonge, and assignment to complaint showing it was holder/assignee at filing | Indorsements undated, amount mismatch between note and allonge, and signatory authority questionable | Held for Bank: attachments sufficed to show prima facie right to enforce; Kesler failed to present admissible evidence creating a genuine issue of fact |
| 2. Sufficiency of Bank affiant's personal knowledge | Affidavit from loan-servicing officer described business records and her review of the note and assignment | Affiant lacked personal knowledge and confused deed of trust vs. mortgage, so affidavit incompetent | Held for Bank: affiant’s familiarity with servicing and identification of business records satisfied Rule 1-056(E) personal-knowledge requirement |
| 3. Denial of additional discovery before summary judgment | Summary judgment appropriate; Kesler had long pendency and failed to identify specific needed discovery or file required Rule 1-056(F) affidavit | Court prematurely entered summary judgment and denied motions to compel/subpoena without ruling first | Held for Bank: no abuse of discretion; Kesler did not show why discovery remained essential or prejudice from denial |
| 4. HLPA/UPA claims based on returned payment | Bank argued Kesler cited wrong statute (MLCA) and thus claims should fail; did not rebut merits in reply | Kesler asserted Bank violated HLPA duty to post/accept payments and preserved claim by later correcting statutory citation | Held for Kesler (reversed as to these claims): court found a genuine issue of material fact on HLPA/UPA claim and remanded for further proceedings |
| 5. Delay in district court entry of judgment beyond 60 days (Rule 1-054.1) | Any delay was harmless and did not prejudice Kesler | Delay violated the rule and impaired Kesler’s ability to seek relief and preserve claims | Held for Bank: procedural delay was harmless; no substantial prejudice shown so judgment stands |
Key Cases Cited
- Bank of N.Y. v. Romero, 320 P.3d 1 (N.M. 2014) (party must demonstrate under UCC it had standing to foreclose at the time suit was filed)
- Deutsche Bank Nat’l Tr. Co. v. Johnston, 369 P.3d 1046 (N.M. 2016) (attaching note with undated indorsement to initial complaint can show right to enforce)
- PNC Mortg. v. Romero, 377 P.3d 461 (N.M. Ct. App. 2016) (holder must show right to enforce note before commencing foreclosure)
- Bank of N.Y. Mellon v. Lopes, 336 P.3d 443 (N.M. Ct. App. 2014) (summary-judgment burden shifting; movant makes prima facie showing)
- Horne v. Los Alamos Nat’l Sec., L.L.C., 296 P.3d 478 (N.M. 2013) (opponent to summary judgment must present specific evidentiary facts, not speculation)