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Federal National Mortgage Association v. Stafford

Supreme Court of Montana

May 14, 2019

FEDERAL NATIONAL MORTGAGE ASSOCIATION, Plaintiff and Appellee,
v.
GAIL STAFFORD, Defendant, Counter-Claimant and Appellant,
v.
FEDERAL NATIONAL MORTGAGE ASSOCIATION, and JOHN DOES 1-50, Counter-Defendants and Appellees.

          Submitted on Briefs: March 27, 2019

          District Court of the Second Judicial District, In and For the County of Butte/Silver Bow, Cause No. DV-13-204 Honorable Brad Newman, Presiding Judge

          For Appellant: Adam H. Owens, Gregory G. Costanza, Granite Peak Law, PLLC, Bozeman, Montana

          For Appellee: Mark D. Etchart, Browning, Kaleczyc, Berry & Hoven, P.C., Helena, Montana

          Laurie McKinnon Justice

         ¶1 Pursuant to Section I, Paragraph 3(c), 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 Gail Stafford appeals from an order of the Second Judicial District Court, Butte-Silver Bow County, granting Federal National Mortgage Association's (Fannie Mae) motion to dismiss and denying Stafford's motion for leave to amend her pleading. We affirm.

         ¶3 In January 2010, Stafford began leasing a house on a property located at 86 Elkhorn Lane in Butte, Montana. According to Stafford, she and the property owner at that time signed a hand-written residential landlord-tenant agreement for a period of one year with a month-to-month option at the end of the year. Stafford never retained a copy of the agreement. A couple years later, the property owner died, and a mortgage on the property fell into default.

         ¶4 A trustee's sale was held at the county courthouse to auction off the property on December 14, 2012. Stafford alleges she and two other potential bidders attended the sale and no Fannie Mae representatives were present. That afternoon, Joseph Nowakowski, an auctioneer, approached the potential bidders and commenced the auction. According to Stafford, she was the only potential bidder to make a bid, and her bid was one dollar above Nowakowki's starting price. However, Stafford alleges Nowakowki told Stafford her bid was too low and abruptly ended the auction. Stafford did not learn who purchased the property until some time later when she examined the clerk and recorder's records and saw that they listed Fannie Mae as having purchased the property at the auction.

         ¶5 On March 13, 2013, Fannie Mae served Stafford a notice that her tenancy would expire on April 13, 2013. Stafford, however, refused to vacate the property and held over her tenancy. In June 2013, Fannie Mae filed this action against Stafford for unlawful detainer, seeking possession of the property with costs. In response, Stafford filed an answer and a counterclaim wherein she denied that Fannie Mae had standing to bring a lawsuit for unlawful detainer because it did not legally own the property. She argued Fannie Mae could not have purchased the property because it did not have a representative present at the public auction. Through her counterclaim, she also asked the District Court to "enter a declaratory judgment quieting title in her name as to a leasehold interest in the property for a period of one year." Stafford made no other counterclaims at that time.

         ¶6 In January 2014, Fannie Mae moved for summary judgment, and the District Court stayed consideration of the motion until the parties could complete discovery. Stafford served Fannie Mae with discovery requests in February and March 2014. Fannie Mae, however, never replied to Stafford's requests. Stafford therefore filed a motion to compel and a motion for summary judgment in May 2014. The District Court granted Stafford's motion to compel. Fannie Mae responded to Stafford's motion for summary judgment, but it still did not comply with Stafford's earlier discovery requests. On September 5, 2014, Fannie Mae filed an affidavit from Nowakowski, the auctioneer, wherein he stated the only bid he received at the public auction in December 2012 was Fannie Mae's. Fannie Mae still did not comply with Stafford's discovery requests. On September 8, 2014, Stafford filed a motion to dismiss Fannie Mae's complaint and for an entry of default against Fannie Mae on her counterclaim as a sanction for Fannie Mae's discovery violations. That same day, the District Court heard oral arguments on the parties' cross-motions for summary judgment. However, the District Court never ruled on the motions for over three years, despite receiving several additional motions and notices of issue from the parties.

         ¶7 In January 2018, Fannie Mae quitclaimed the property to a third-party purchaser. In March, Fannie Mae moved to dismiss its original complaint and Stafford's counterclaim with prejudice, arguing that because it no longer owned the property, its unlawful detainer action and Stafford's counterclaim seeking to establish a leasehold interest were no longer appropriate. Stafford objected to the motion later that month. Stafford also filed a motion for leave to amend her counterclaim to add a claim for, among other things, a declaratory judgment quieting title for a complete ownership interest in the property-no longer just a leasehold interest-in her favor. Stafford also sought to add several defendants including the third-party purchaser whom Fannie Mae conveyed the property to. Fannie Mae objected to Stafford's motion for leave to amend. In July 2018, the District Court denied Stafford's motion for leave to amend and granted Fannie Mae's motion to dismiss. The court concluded there was no longer a justiciable controversy between the parties. It also concluded that granting Stafford leave to amend was inappropriate because Stafford knew of the potential additional parties and claims for many years and only filed her motion after Fannie Mae filed its motion to dismiss. Stafford appeals.

         ¶8 Mootness, an issue of justiciability, presents a question of law that we review de novo. Montanans Against Assisted Suicide v. Bd. of Med. Examiners, 2015 MT 112, ¶ 7, 379 Mont. 11, 347 P.3d 1244. We review a district court's decision denying leave to amend for abuse of discretion. Griffin v. Moseley, 2010 MT 132, ¶ 22, 356 Mont. 393, 234 P.3d 869.

         ¶9 Stafford first raises an issue of whether the District Court erred by granting Fannie Mae's motion to dismiss. She asserts she retained claims against Fannie Mae that existed independently of Fannie Mae's interest in the property, and she argues Fannie Mae's sale of ...


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