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Monroe v. Bank of America Corp.

United States District Court, N.D. Oklahoma

July 31, 2018

AMY L. MONROE a/k/a AMY L. McCAFFERTY and C. MARCUS McCAFFERTY, Plaintiffs,
v.
BANK OF AMERICA CORPORATION, f/n/a BANK OF AMERICA, N.A., and WILMINGTON SAVINGS FUND SOCIETY, FSB, Defendants.

          OPINION & ORDER

          JOHN E. DOWDELL, UNITED S/ATES DISTRICT JUDGE

         I. Background

         The following facts are undisputed by the parties. In 2006, Amy L. Monroe (a/k/a Amy L. McCafferty) executed a promissory note payable to Bank of America, N.A. (“BANA”) in the principal sum of $175, 000.00. (Doc. 2-2 at 10-19 of 43). Amy and C. Marcus McCafferty (“the McCafferty's”) then executed a mortgage to secure the note. (Id. at 20-39 of 43). On March 10, 2011, BANA filed a foreclosure action (“the 2011 Action”) in the Tulsa County District Court against the McCafferty's. (Doc. 25-1 at 2 of 37). BANA's petition in this 2011 Action contained the following assertions:

7. That said EMA [the promissory note] and mortgage provide that if default be made in the payment of any of the monthly installments, or on failure or neglect to keep or perform any of the other conditions and covenants of the mortgage, that the entire principal sum and accrued interest, together with all other sums secured by said mortgage, shall at once become due and payable, at the option of the holder thereof, and the holder shall be entitled to foreclose said mortgage and recover the unpaid principal thereon and all expenditures of the mortgagee made thereunder, with interest thereon, and to have said premises sold and the proceeds applied to the payment of the indebtedness secured thereby, together with all legal and necessary expense and all costs.
8. That default has been made upon said [note] and mortgage in that the installments due the 10th day of August, 2010, and thereafter have not been paid.
. . .
10. That after allowing all just credits there is due Plaintiff [BANA] on said [note] and mortgage the sum of $174, 996.31, with 2.99% interest per annum thereon, or as adjusted by the Note and Mortgage, from the 10th day of July, 2010, until paid; said abstract and title exam expense; late fees of $130.02; corporate advances of $95.00; the further sum of a reasonable attorney's fee, and for all costs of this action, for which amounts said mortgage is a first, prior and superior lien upon the real estate and premises above described.”

(Doc. 25-1 at 3-4 of 37). The 2011 Action was dismissed without prejudice on October 17, 2012.

         In 2015, BANA assigned all of its interest in the mortgage to Wilmington Savings Fund Society, FSB, doing business as Christiana Trust, not in its individual capacity, but solely as trustee for BCAT 2015-14BTT (“Wilmington”). (Doc. 19-1). Then, on June 30, 2016, Wilmington filed a new foreclosure action (“the 2016 Action”) against the McCafferty's in the Tulsa County District Court. That lawsuit was dismissed on January 5, 2017, for failure to serve process.

         On April 12, 2017, Plaintiffs filed a petition in the Tulsa County District Court seeking declaratory judgments regarding the validity of the mortgage and the enforceability of the note and mortgage, as well as asserting a claim of slander of title. (Doc. 2 at 3-9 of 43). Defendants then removed the action to this Court on May 3, 2017, and moved to dismiss these claims under Fed.R.Civ.P. 12 (b)(6). (Doc. 9, 18). This Court granted BANA's motion to dismiss as to all three of Plaintiffs' claims and Wilmington's motion to dismiss as to Plaintiffs' first and third claims. (Doc. 30, 37). The second claim for relief, in which Plaintiffs seek a declaratory judgment regarding the enforceability of the note and mortgage, has survived as against Wilmington. (Doc. 37 at 4-5).

         II. Show Cause Order

         On May 18, 2018, the Court ordered Defendant Wilmington to show cause why summary judgment should not be entered in favor of Plaintiffs on their second claim. (Doc. 38). The Court had already determined that, under Oklahoma law, an election to accelerate a debt causes the statute of limitations to begin to run against the whole amount due. (See Doc. 30 at 4-6). Moreover, the Court had concluded that a six-year statute of limitations applied to both the note and mortgage. (See Doc. 37 at 3). Thus, the Court reasoned, if the debt was accelerated in 2011 when BANA first initiated a foreclosure action against Plaintiffs, then the note and mortgage would no longer be enforceable. It appeared to the Court that the issue of whether the debt was accelerated in 2011 was not genuinely in dispute, since BANA demanded the entire principal sum and accrued interest in its 2011 petition for foreclosure. See Union Central Life Ins. Co. v. Adams, 38 P.2d 26, 29 (Okla. 1934), overruled in part on other grounds by Okla. Brick Corp. v. McCall, 497 P.2d 215 (Okla. 1972).

         Both parties have had an opportunity to brief the Court on this issue. (See Doc. 39, 40, 41). In its response brief, Wilmington revealed that it filed a new foreclosure action (“the 2017 Action”) on December 18, 2017, in the Tulsa County District Court. (Doc. 39-1). Wilmington argues that Oklahoma's “savings statute” gave Wilmington one year from the dismissal of the 2016 Action to re-file a foreclosure action against the McCafferty's.

         The cited savings statute, Okla. Stat. tit. 12, ...


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