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Durnam v. Bank of America N.A.

Supreme Court of Montana

February 4, 2014

ZACHARY DURNAM and STEPHANIE DURNAM for the Estate of ZACHARY DURNAM, Plaintiffs and Appellants,
v.
BANK OF AMERICA N.A.; BAC HOME LOANS SERVICING LP f/k/a COUNTRYWIDE HOME LOANS SERVICING LP; THE BANK OF NEW YORK MELLON f/k/a THE BANK OF NEW YORK AS TRUSTEES FOR THE CERTIFICATE HOLDERS OF THE CWABS INC. ASSET BACKED CERTIFICATES SERIES 2006-15; RECONTRUST COMPANY N.A.; [MERS] MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., Defendants and Appellees.

Submitted on Briefs: January 15, 2014

District Court of the Eighteenth Judicial District, In and For the County of Gallatin, Cause No. DV-11-917C Honorable John C. Brown, Presiding Judge.

For Appellants: Zachary Durnam, Stephanie Durnam, self-represented; Belgrade, Montana

For Appellees: Charles K. Smith; Poore, Roth & Robinson, P.C.; Butte, Montana (for Mortgage Electronic Registration Systems, Inc.) Danielle A.R. Coffman; Crowley Fleck PLLP; Kalispell, Montana

OPINION

Jim Rice Justice

¶1 Pursuant to Section I, Paragraph 3(d), Montana Supreme Court Internal Operating Rules, this case is decided by memorandum opinion and shall not be cited and does not serve as precedent. Its case title, cause number, and disposition shall be included in this Court's quarterly list of noncitable cases published in the Pacific Reporter and Montana Reports.

¶2 Zachary and Stephanie Durnam (Durnams), proceeding as unrepresented parties, filed an action in the Eighteenth Judicial District Court, Gallatin County, alleging various claims to halt a nonjudicial foreclosure sale of their property. Defendants filed a Motion to Dismiss for failure to state a claim under M. R. Civ. P. 12(b)(6). The District Court granted Defendants' motion, and Durnams timely appealed.

¶3 On or about July 19, 2006, Durnams borrowed $360, 000 from Countrywide Home Loans, Inc. The promissory note for this loan states: "I understand that the Lender may transfer this Note. The Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this Note is called the 'Note Holder.'" The Note was secured by a deed of trust (DOT) on Durnams' property. The DOT was entered pursuant to the Small Tract Financing Act (STFA), named Mortgage Electronic Registration Systems, Inc. (MERS) as beneficiary, and was recorded on August 7, 2006. The DOT also provides that the Note and DOT may be "sold one or more times without notice to Borrower."

¶4 On or about May 31, 2011, MERS transferred the beneficial interest in the DOT and Note, assigning them to The Bank of New York Mellon, f/k/a The Bank of New York, as Trustee for the Certificate holders of CWABS, Inc., Asset-Backed Certificates, Series 2006-15 (BNY). This assignment was recorded on June 1, 2011. On May 31, 2011, BNY substituted ReconTrust Company, N.A. (ReconTrust) as successor trustee for the DOT. This substitution was also recorded on June 1, 2011.

¶5 On June 1, 2011, ReconTrust recorded a Notice of Trustee's Sale, indicating that Durnams had been in default on their payment obligations since August, 2010. On September 26, 2011, Durnams filed a Complaint in District Court raising "Invalid Foreclosure, " "Invalid Affidavit, " "Lack of Standing, " and "Fraud and Unjust Enrichment." Durnams also alleged that Defendants had failed to respond to a Qualified Written Request under the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601 et. seq. (RESPA). The Durnams did not claim they were not in default, but rather presented blanket assertions that Defendants "do not have the authority to institute the foreclosure" and are "not the legal owner[s] of the Note, which is the subject of this foreclosure." That same day, Durnams filed a Notice of Lis Pendens in the Gallatin County Clerk and Recorder's Office. However, Durnams did not have the court issue summonses and did not have the complaint served on any party.

¶6 A second Notice of Trustee's Sale was recorded on December 16, 2011. ReconTrust then filed a Cancellation of Trustee's Sale on April 2, 2012. Despite not having been served for nearly one year, Defendants, through Attorney Charles K. Smith (Smith), filed a Motion to Dismiss in District Court. Rather than opposing the motion, Durnams filed a Motion to Dismiss Defendants' Motion to Dismiss, contending that Defendants failed to enter evidence, prove the standards for dismissal under M. R. Civ. P. 56, or state a claim for which relief could be granted. In their supporting Brief, Durnams argued that (1) Smith failed to present evidence in the form of affidavits that he was authorized to speak on behalf of Defendants, (2) Defendants had not presented any evidence that they were entitled to foreclose, and (3) Defendants were not permitted to file any motion to dismiss in the action as Durnams had not yet served process on any of them and had three years to do so under M. R. Civ. P. 4(t).

¶7 The District Court granted the Defendants' motion, holding that Durnams did not state any factual allegations to support their conclusory claims for "Invalid Foreclosure, " "Invalid Affidavit, " or "Lack of Standing, " nor did they present any facts to refute the documents granting ReconTrust, as successor trustee, power to foreclose nonjudicially in the event of default. The District Court noted that Durnams "are not basing their claims on their payment of the mortgage, but rather hope to find some defect in the transfers among lenders which they contend will void their promise to repay." It further dismissed their claim under RESPA, holding that Durnams "failed to plead plausible facts demonstrating the alleged correspondence [a 14-page letter demanding a complete audit of their account along with 142 other enumerated demands] constituted a qualified written request" and "failed to allege facts demonstrating the purported failure to respond caused [their] damages." Finally, the court held that Durnams failed to allege any of the elements of fraud.

¶8 On appeal, Durnams raise the following issues: (1) whether the District Court erred in dismissing their complaint, (2) whether the District Court erred in dismissing the case before it could properly be deemed "open, " (3) whether the District Court prematurely ruled out fraud and unjust enrichment, and (4) whether Smith properly appeared in the case.

¶9 The District Court's determination that a plaintiff's complaint failed to state a claim for which relief could be granted is a conclusion of law, which we review for correctness. Boreen v. Christensen, 267 Mont. 405, 408, 884 P.2d 761, 762 (1994). A complaint should not be dismissed for failure to state a claim unless it appears that the plaintiff can prove no set of facts in support of the claim which would entitle the plaintiff to relief. "In considering the motion, the complaint is construed in the light most favorable to the plaintiff, and all allegations of fact contained therein are taken as ...


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