JAS, Inc. v. Eisele, 2016 MT 33 (Feb. 16, 2016) (Shea, J.; Baker, J., concurring) (5-0, aff’d)
Issue: (1) Whether Bank of America’s notice of the trustee’s sale precludes it from objecting to the sale because it did not strictly comply with the Small Tract Financing Act of Montana; (2) whether Bank of America was entitled to notice of the trustee’s sale when it did not have a recorded interest in the property at the time of the sale; (3) whether JAS in entitled to repayment of funds it paid to OneWest Bank for the property purchased at the trustee’s sale.
Short Answer: (1) No; (2) the Court will not address this issue because it was not raised below; and (3) the Court will not address this issue because it was not raised below.
Facts: Eisele borrowed money from IndyMac, FSB to buy a home in 2004. The loan was secured with a deed of trust. In 2005, Eiseles borrowed money from Countrywide, which was secured by a second position lien and a deed of trust. In 2008, Bank of America (BOA) bought Countrywide. BOA contends that Countrywide’s interest in Esieles’ property was transferred to it at that time.
IndyMac assigned its deed of trust to OneWest in 2010. In 2011, Eiseles defaulted on that loan. A trustee’s sale was set for September 2011, and notice was sent to Eiseles, Countrywide, and MERS. That sale was canceled and rescheduled for November 2011. BOA was not served with notice of either sale.
JAS bought the property at the trustee’s sale in November 2011. Several days later, Northwest Trustee Services offered to buy the property from JAS. NTS had been hired to represent BOA’s interests at the trustee’s sale. JAS and NTS agreed to sell NTS the property for $473,000, and in December 2011, NTS paid JAS with a cashier’s check issued by BOA.
About two weeks later, NTS withdrew its offer and requested JAS return the check. NTS claimed there was a flaw in the trustee’s sale and the sale to JAS was void. JAS returned the check, and filed a quite title action. It named several defendants, but not BOA. Numerous defendants were dismissed after disclaiming any interest in the property, and others, including Countrywide, MERS, and OneWest, were defaulted.
The district court entered a final judgment in July 2012, quieting title to JAS. A few days later, Countrywide and MERS filed a joint motion to have the entries of default against them set aside. A few weeks later, BOA moved to intervene and have the default judgment against Countrywide set aside. The district court granted MERS’s motion to set aside the default and BOA’s motion to intervene. JAS appealed, and this Court affirmed. 2014 MT 77.
On remand, JAS moved for summary judgment against BOA and MERS, and BOA moved for summary judgment against JAS. The district court held a hearing in November 2014.
Procedural Posture & Holding: The district court granted BOA’s motion for summary judgment and denied JAS’s motion, holding that the trustee’s sale was void ab initio for failure to strictly follow Montana’s foreclosure laws and a new sale must occur. JAS moved toalter or amend, asking that it be substituted for the original foreclosure entity, OneWest, so that it could conduct a new trustee’s sale, and that notice be limited to the remaining defendants. Alternatively, JAS asked that OneWest return the $282,488 JAS paid at the first trustee’s sale. The district court denied the motion to alter or amend, and denied repayment because JAS did not raise the issue in its original summary judgment motion. JAS appeals the summary judgment orders, and the Supreme Court affirms.
Reasoning: (1) The Small Tract Financing Act (STFA) requires affidavits of mailing, posting and publication to be recorded on or before the date of the trustee’s sale. § 71-1-315. Here, no affidavit of mailing was filed for the November 2011 sale, and the sale was properly voided by the district court.
(2) Because JAS did not raise this issue to the district court, the Court will not address it.
(3) JAS did not appeal the district court’s denial of its motion to alter or amend, and the issue of whether JAS is entitled to a refund of its payment to OneWest was not raised in its motion for summary judgment. Although equity favors JAS’s recovery of the funds, the district court did not err by refusing to consider the issue. It may be an issue after the next sale is concluded, but it not properly before the Court at this time.
Justice Baker’s Concurrence: Regarding Issue Two, Bank of America had no recorded interest and was therefore not entitled to notice of the sale. It therefore had no standing to object to a defect in the notice. Standing is a threshold issue that can be raised at any time. Justice Baker would conclude that BOA lacked standing to challenge the trustee’s sale.
However, MERS was also a named defendant and is a party to the Appellee’s brief, and did have standing to challenge the notice. Justice Baker therefore concurs in the decision to affirm.