U.S. Bank National Ass'n v. McConnell
305 P.3d 1
| Kan. Ct. App. | 2013Background
- Foreclosure action against the McConnells over their home mortgage; district court granted summary judgment for the Bank; the McConnells appealed.
- Note was executed in 2005 by Steven ( Janet did not sign the note) and the loan was originated by Flatirons Financial, LLC, secured by a mortgage signed by both Steven and Janet.
- In 2008, Steven entered a Balloon Loan Modification with U.S. Bank; the note was already in default by April 2008.
- Bank filed foreclosure in Oct. 2008; MERS assigned the mortgage to the Bank on Jan. 13, 2009; the court entered default in Feb. 2009, then set a sheriff’s sale.
- The McConnells moved to set aside the default and later admitted the note/ mortgage were signed; Bank moved for summary judgment in June 2009; judgment granted July 15, 2009, later set aside in Aug. 2009.
- On remand, the court granted summary judgment in July 2011, holding Bank was the holder of the note and mortgage, KCPA claims were unsubstantiated, and Janet consented to the mortgage lien; final judgment of foreclosure affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to foreclose | Bank held the note before suit and the mortgage followed the note. | Potential severance of note and mortgage and post-filing transfers could jeopardize standing. | Bank had standing; mortgage followed the note; post-filing assignment did not defeat standing. |
| KCPA claims and summary judgment | Bank answered KCPA claims; no genuine triable issue. | McConnells’ KCPA claims remained unsubstantiated; not properly raised as counterclaims. | Summary judgment proper; KCPA claims abandoned/no material evidence. |
| Severance of note from mortgage | Note-holder and mortgagee need not be identical at all times; transfer reunites before judgment. | Severance could render foreclosure improper if not cured. | Mortgage follows the note; severance cured before judgment is feasible; filing suffices for foreclosure. |
| Homestead rights | Janet consented to the mortgage lien; homestead exemption not applicable. | Janet may not have consented to the note; potential homestead protection. | Consent to lien by Janet suffices; homestead rights not a bar to foreclosure. |
| Appropriateness of summary judgment on the record | Prima facie case established: signed note/mortgage, default, and Bank as holder. | Contentions about chain of title and discovery created triable issues. | No genuine issues of material fact; summary judgment appropriate. |
Key Cases Cited
- In re Martinez, 444 B.R. 192 (Bankr. D. Kan. 2011) (discusses MERS, agency, and note/mortgage relation in transfers)
- Anthony v. Brennan, 74 Kan. 707 (1906) (note follows mortgage; holder of note has lien rights)
- Middlekauff v. Bell, 111 Kan. 206 (1922) (mortgage follows note; ownership vested by note purchase)
- Army Nat'l Bank v. Equity Developers, Inc., 245 Kan. 3 (1989) (mortgage follows the note; secured interest remains with note holder)
- MetLife Home Loans v. Hansen, 48 Kan. App. 2d 213 (2012) (mortgage follows the note; transfer of debt transfers mortgage)
- Landmark Nat'l Bank v. Kesler, 289 Kan. 528 (2009) (MERS as straw man; mortgage typically follows note)