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Hummel v. Rushmore Loan Management LLC

United States District Court, D. Arizona

August 7, 2018

Bryan W. Hummel and Sandra M. Dahl Living Trust, Plaintiff,
Rushmore Loan Management LLC, et al., Defendants.


          David G. Campbell United States District Judge

         The “Bryan W. Hummel and Sandra M. Dahl Living Trust” (the “Trust” or “Plaintiff”) sued Rushmore Loan Management LLC and U.S. Bank National Association (collectively, “Defendants”) seeking to quiet title and enjoin Defendants from foreclosing on real property owned by the Trust. See Doc. 27. U.S. Bank asserted counterclaims against the Trust and third-party claims against Bryan Hummel and Sandra Dahl in their individual capacities (collectively, the “Hummels”). See Doc. 37. Plaintiff and Defendants have filed cross-motions for summary judgment. Docs. 73, 78. The motions are fully briefed, and no party requests oral argument. For reasons stated below, the Court will grant summary judgment in favor of Defendants on the statute of limitations claim and deny summary judgment on all other claims.[1]

         I. The Trust's Evidentiary Objections.

         Plaintiff objects to the majority of the affidavits and documents submitted by Defendants on the ground that the documents “were not provided in discovery[, ] the individual[s] identified in the supporting affidavit[s] [were] never identified[, and the] time to complete discovery in this matter has expired.” See Doc. 79 at 3-7. Plaintiff cites Rule 56(c) of the Federal Rules of Civil Procedure as the basis for each objection. Id. Other than noting these objections in its response to Defendants' statement of facts, Plaintiff makes no substantive argument in its motion and does not ask the Court to exclude the evidence or impose another sanction. Defendants do not address the objections. See Doc. 82.

         Rule 56(c) establishes that a party moving for summary judgment must support its factual assertions by citing to materials in the record, which may include affidavits and documents. The rule further explains that a “party may object that the material cited to support or dispute a fact cannot be presented in a form that would be admissible in evidence.” Rule 56(c)(2); see also Orr v. Bank of Am., NT & SA, 285 F.3d 764, 773 (9th Cir. 2002) (“A trial court can only consider admissible evidence in ruling on a motion for summary judgment.”). But Plaintiff provides the Court with no analysis as to why the affidavits and documents would be inadmissible.

         Under Rule 37(c)(1), “[i]f a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless.” But Plaintiff does not cite this rule, let alone apply it to the evidence here. Nor does Plaintiff dispute the authenticity or relevancy of the documents. Indeed, many documents come from public records or are duplicative of evidence attached to Plaintiff's complaint or submitted with Plaintiff's cross-motion. It also appears that at least one of the challenged affiants, Michael Bennet, was identified as the preparer of Defendants' discovery responses in March 2018. See Doc. 79-1 at 18-29, 33-43. The Court will not hold Defendants' evidence inadmissible at this stage on the basis of Plaintiff's bare objections.

         II. Background.

         The following facts are undisputed unless otherwise noted. The Hummels purchased real property in Mohave County, Arizona, in June 2003. Doc. 36-1. In September 2007, the Hummels conveyed the property to themselves as trustees of the Trust by properly recorded warranty deed. Doc. 36-2. In February 2008, the Hummels executed three agreements: a warranty deed on behalf of the Trust conveying the property to the Hummels as joint tenants (Doc. 75 at 7), a warranty deed in their individual capacities conveying the property to the Trust (Doc. 75 at 25), and a deed of trust on the property (the “DOT”) securing a $410, 195 loan from Countrywide Bank (Doc. 13-1 at 6; Doc. 77 at 8).[2]

         In the DOT, the Hummels covenanted that they were “lawfully seised of the estate hereby conveyed and [had] the right to grant and convey the Property[.]” Doc. 75 at 14. In their loan application, the Hummels listed the Trust as an owner of the property. Doc. 81 at 9. The parties dispute whether Countrywide was advised that the Trust owned the property and whether the Hummels executed the February 2008 warranty deeds in order to satisfy Countrywide that they - not the Trust - owned the property. Compare Doc. 80 at 2 (“[W]e advised Countrywide that the property had been transferred to the Plaintiff . . . . Despite advising Countrywide of the transfer, Countrywide informed us that it was not a problem and prepared the documents for our signature.”), with Doc. 74 at 3 (“Countrywide required that title to the Property be vested in the Hummels individually as a prerequisite to funding the Loan. To satisfy this requirement, on February 20, 2008, the Trust executed a Warranty Deed conveying the Property to the Hummels as joint tenants[.]”).

         Both warranty deeds are dated February 20, 2008; the DOT is dated February 21, 2008; and all three documents were signed by the Hummels before a notary on February 25, 2008. See Doc. 13-1 at 6-14; Doc. 75 at 7, 25. All three documents were then recorded in Maricopa County on March 4, 2008. See Doc. 75 at 7, 12, 25. In May 2011, the DOT was rerecorded in Mohave County “for the sole purpose of placing it of record in Mohave County which is the correct county in which it should have been recorded” and correcting an error in the property's address. Doc. 13-1 at 5. On January 30, 2015, the DOT and both warranty deeds were rerecorded in Mohave County. See Doc. 75 at 6, 11, 24. Defendants assert that the documents were intentionally recorded in a particular order when originally recorded in Maricopa County, but they present no evidence of the order in which the documents were recorded. E.g., Doc. 73 at 5.

         The beneficial interest in the DOT has been transferred a number of times and currently is owned by Defendant U.S. Bank. Defendant Rushmore is the loan servicer for U.S. Bank. See Doc. 77 at 2. In 2009, the Hummels defaulted on the loan. In February 2009, one of U.S. Bank's predecessors in interest sent the Hummels a notice of intent to accelerate the loan if they did not cure the default. Doc. 27-1 at 68-69. In May 2010, the Hummels filed for bankruptcy protection, which automatically stayed any potential foreclosure proceedings. Doc. 79 at 8. In February 2011, after the bankruptcy proceedings concluded, U.S. Bank's predecessor sent the Hummels a second notice of intent to accelerate. Doc. 77 at 21-22. In February 2013, a notice of trustee's sale was recorded, but the sale was cancelled the following month. Doc. 13-1 at 23-27. In January 2016, a third notice of intent to accelerate was sent to the Hummels. Doc. 77 at 24-25. In October 2016, a second notice of trustee's sale was recorded. Doc. 13-1 at 35-36. The Trust filed this action in February 2017, and the DOT was assigned to U.S. Bank in May 2017. Doc. 1; Doc. 77 at 2. In June 2017, the Court entered a preliminary injunction prohibiting a trustee's sale of the property during the pendency of this case. Doc. 26.

         The Hummels have not made their April 2009 payment under the DOT or any payment since then, but they sought to modify the loan in January 2010 and March 2013. Doc. 77 at 27-37. The current loan principal balance is $404, 918.11. Doc. 74 at 6; Doc. 79 at 6. Defendants assert that the property's current value is $307, 839 and U.S. Bank and its predecessors have spent $40, 309.55 in taxes and insurance on the property since February 2009. Doc. 77 at 4-5. Plaintiff disputes these figures, stating that Defendants have provided no evidence to support them. Doc. 79 at 6-7.

         III. Legal Standard.

         A party seeking summary judgment “bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Summary judgment is appropriate if the evidence, viewed in the light most favorable to the nonmoving party, shows “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Summary judgment is also appropriate against a party who “fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322. Only disputes over facts that might affect the outcome of the suit will preclude summary judgment, and the disputed evidence must be “such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

         IV. ...

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