Borrower subsequently hired counsel and moved to withdraw his previous answer and filed a motion to dismiss, claiming in part that Loan Owner lacked standing to foreclose because the promissory note and mortgage had been assigned to Loan Owner after the filing of the foreclosure action. In response, Loan Owner claimed that it had been assigned the note before the filing of the foreclosure action, but that the assignment of mortgage had not been recorded until afterward.
Nevertheless, the trial court found that the assignment of mortgage had occurred after the filing of foreclosure action, and that Loan Owner had violated a local rule requiring all assignments of mortgage showing standing to foreclose to be submitted to the court prior to any ruling on the foreclosure. Accordingly, the trial court dismissed the foreclosure complaint, but denied Borrower's motion to withdraw the answer as moot and allowed Loan Owner to re-file.
Because of the Barnes decision, the trial court reversed itself and vacated its order of dismissal. Borrower also filed a motion to reconsider, which the court denied, and, in response to Loan Owner's motion to confirm the sale, argued that the "full debt" bid resulted in an unconscionable sale price. Nevertheless, the trial court confirmed the judicial sale. Borrower appealed the confirmation of the sale and the denial of his motion for reconsideration.
Borrower unsuccessfully argued that the court was not required to follow Barnes because the Loan Owner had failed to demonstrate that it had standing prior to filing the foreclosure action, because Barnes was not yet "well-established" law, because Borrower's case was factually distinguishable from Barnes, and because the trial court should have granted Borrower's motion for reconsideration for public policy and equitable reasons.
Rejecting these arguments, the Court pointed out that Borrower had not provided any specific justification for departing from precedent, and that the appellate court in Barnes had made an explicit and essential finding about the timing and ability of the defendant to raise the standing issue.
The Court also observed that, although the defendant in Barnes raised the standing issue in a motion to vacate rather than in a motion to dismiss, the critical factor in both cases was the time at which the standing issue was raised. The Court explained, "[b]oth cases involve mortgage foreclosure claims where the defendant attempted to raise a question as to the plaintiff's standing to bring the action after the foreclosure judgment had already been entered. Thus, the result should be the same."
Ralph T. Wutscher
McGinnis Tessitore Wutscher LLP
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