Thomas v. Wells Fargo Bank, N.A.
116 So. 3d 226
Ala. Civ. App.2012Background
- Thomases refinanced with Option One; note Feb 23, 2007 for $480,000 and 30-year term; mortgage recorded March 2, 2007.
- Thomases defaulted after a few payments; Option One accelerated and foreclosed; trustee notified Nov 14-15, 2007 of foreclosure and sale date.
- Foreclosure sale held March 6, 2008; trustee purchased property for $510,000; Thomases were evicted via ejectment action.
- Thomases argued trustee lacked standing to foreclose and challenged PSA/New York law–governed transfer, noting alleged PSA violations and incomplete chains of endorsement.
- Trial court granted summary judgment for trustee; Thomases appeal; Alabama law governs situs for foreclosure and the court affirms the judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to foreclose under PSA and note ownership | Thomases claim trustee lacked ownership/assignment at foreclosure | Trustee had possession of the note and was the holder of the instrument | Trustee had standing; foreclosure valid |
| Negligibility of PSA violations on enforceability | PSA noncompliance voids trustee’s rights | PSA violations do not defeat enforceability; possession suffices | PSA violations did not affect trustee’s right to enforce the note |
| Negotiability of the note notwithstanding prepayment notice language | Prepayment notice requirement renders note nonnegotiable | Prepayment notification is not an additional undertaking; note remains negotiable | Note remains negotiable; possession and indorsement in blank support enforceability |
| Waiver of loss-mitigation/loan-modification defenses | There was a loan-modification agreement curing default | No modification agreement; waiver via stipulation | Waived; no valid modification defense to foreclosure |
| Postjudgment hearing on Rule 59.1 motion | Trial court failed to hold timely postjudgment hearing | Harmless error; issues already briefed; no merit to challenge | Harmless error; affirmance based on summary-judgment record |
Key Cases Cited
- Ex parte Ballew, 771 So.2d 1040 (Ala.2000) (standard for summary judgment)
- Harton v. Little, 176 Ala. 267, 57 So. 851 (Ala.1911) (foreclosure generally guided by local law)
- Perry v. Federal Nat’l Mortg. Ass’n, 100 So.3d 1090 (Ala.Civ.App.2012) (trustee authority and chain of title considerations)
- Berney v. Steiner, 108 Ala. 111, 19 So. 806 (Ala.1896) (indorsement and possession concepts for negotiable instruments)