US BANK NAT. ASS'N v. Kimball
2011 VT 81
| Vt. | 2011Background
- U.S. Bank appeals a trial court's summary judgment dismissing its foreclosure action for lack of standing and with prejudice.
- Homeowner purchased her home in 2005, financing with a note to Accredited Home Lenders secured by a mortgage to MERS as nominee.
- Mortgage and note allegedly assigned to U.S. Bank by MERS via an assignment dated January 6, 2009; complaint attached the assignment and an allonge endorsing the note.
- Homeowner argued U.S. Bank failed to prove it held the note or proper assignments; she also challenged authenticity via conflicting affidavits and evidence.
- Bank later claimed it held the original note endorsed to it; affidavits and endorsements remained undated and inconsistent.
- Court found no evidence that Bank held the note at the time suit was filed and dismissed the action, with prejudice, prompting Bank’s appeal and homeowner’s fee cross-claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did the court err in dismissing for lack of standing? | U.S. Bank held the note and was holder; endorsed to Bank before filing. | Bank failed to prove timing of endorsements and possession before filing. | Yes; dismissal affirmed for lack of standing. |
| Was there sufficient evidence of a valid assignment and note ownership? | Original note endorsed to RFC and then to U.S. Bank; exhibits support ownership. | Endorsements were undated and documentation inconsistent; insufficient to prove at filing. | Insufficient evidence of ownership at filing; standing lacking. |
| May Bank substitute itself as real party in interest under Rule 17(a) after filing? | Liberally substituted since Bank acquired interest in note post-filing. | Substitution requires timely, well-supported showing; court did not abuse discretion. | Court did not abuse discretion; substitution denied at this stage. |
| Was dismissal with prejudice appropriate? | Prejudice ensures finality and prevents re-litigation of standing issues. | Merits of underlying debt not adjudicated; dismissal with prejudice improper to foreclose merits. | Affirmed dismissal but noted it did not preclude future foreclosure on merits. |
| Should homeowner be awarded attorney's fees for bad-faith filings? | Not addressed; fees should be considered. | Request timely and proper; court should rule on fees. | Remand for consideration of homeowner's fee request. |
Key Cases Cited
- Wells Fargo Bank, N.A. v. Ford, 418 N.J. Super. 592 (N.J. Super. Ct. App. Div. 2011) (note ownership essential for standing in foreclosure)
- Raftogianis v. Bank, 418 N.J. Super. 323 (N.J. Super. Ct. App. Div. 2010) (adequate standing requires proof of note ownership at filing)
- Huntington v. McCarty, 174 Vt. 69 (Vt. 2002) (note is controlling; mortgage is incident to the note)
- Korda v. Chicago Insurance Co., 2006 VT 81 (Vt. 2006) (acquisition of capacity to sue after filing relates back for Rule 17(a))
- Indymac Bank, F.S.B. v. Yano-Horoski, 78 A.D.3d 895 (N.Y. App. Div. 2010) (reversed dismissal for lack of standing; foreclosure merits not reached)