FRE v. Margaret Wilson, et al

Filing

Opinion issued by court as to Appellant Margaret Wilson. Decision: Affirmed. Opinion type: Non-Published. Opinion method: Per Curiam. The opinion is also available through the Court's Opinions page at this link http://www.ca11.uscourts.gov/opinions.

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Date Filed: 07/12/2017

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 16-15369
Non-Argument Calendar
________________________
D.C. Docket No. 2:13-cv-01744-SLB
FEDERAL HOME LOAN MORTGAGE CORPORATION,
Plaintiff-Counter Defendant-Appellee,
versus
MARGARET WILSON,
Defendant-Counter Claimant-Appellant,
WELLS FARGO BANK N.A.,
Counter Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Northern District of Alabama
________________________
(July 12, 2017)
Before TJOFLAT, MARCUS and WILLIAM PRYOR, Circuit Judges.
PER CURIAM:

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Margaret Wilson appeals from the district court’s grant of summary
judgment in favor of the Federal Home Loan Mortgage Corporation (“Freddie
Mac”) and Wells Fargo Bank N.A. (“Wells Fargo”) on their claim for ejectment
and Wilson’s counterclaims for breach of contract, wrongful foreclosure,
negligence, slander of title, defamation, invasion of privacy, and violations of the
Fair Credit Reporting Act. On appeal, Wilson argues that the district court erred
in: (1) granting summary judgment on the ejectment claim because (a) Wells Fargo
lacked authority to conduct the foreclosure sale of her home in its own name, (b) it
is disputed whether the sale took place during the legal hours of sale under
Alabama law, and (c) Freddie Mac and Wells Fargo were estopped from claiming
a proper foreclosure based on Wells Fargo’s conduct; and (2) granting summary
judgment on her counterclaims for breach of contract, wrongful foreclosure,
negligence, and slander of title. After careful review, we affirm.
We review a district court’s order granting summary judgment de novo,
viewing the material presented and drawing all factual inferences in the light most
favorable to the nonmoving party. Brooks v. Cnty. Comm’n of Jefferson Cnty.,
Ala., 446 F.3d 1160, 1161–62 (11th Cir. 2006). Summary judgment is proper
where “the movant 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).
“A mere scintilla of evidence supporting the nonmoving party’s position will not
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suffice.”

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Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir. 1997)

(alteration adopted) (quotations omitted).
The district court did not err in determining that the foreclosure sale was
proper. As for Wilson’s claim that Wells Fargo lacked the authority to conduct the
sale in its own name because Wells Fargo sold the mortgage to Freddie Mac, we
are unpersuaded. The Alabama Code provides that a note can be enforced by
(1) the holder of the instrument, (2) a nonholder who is in possession of the
instrument and who has the rights of a holder, or (3) a person not in possession of
the instrument who is entitled to enforce it. Ala. Code § 7-3-301. A “holder” is
“[t]he person in possession of a negotiable instrument that is payable either to
bearer or to an identified person that is the person in possession.”

Id.

§ 7-1-201(21)(A). A negotiable instrument that has been endorsed in blank is
payable to bearer. Id. § 7-3-205(b). Moreover, “[a] person may be a person
entitled to enforce the instrument even though the person is not the owner of the
instrument or is in wrongful possession of the instrument.”

Id. § 7-3-301.

“Possession of a note payable to order and indorsed in blank is prima facie
evidence of ownership.” Thomas v. Wells Fargo Bank, N.A., 116 So. 3d 226, 233
(Ala. Civ. App. 2012).

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The undisputed evidence showed that Wells Fargo originated the loan and
subsequently assigned both the mortgage and note to Freddie Mac. 1 In conjunction
with the assignment, Wells Fargo endorsed the note in blank, but retained physical
possession of the note and mortgage, and agreed to act as the loan servicer and
document custodian for Freddie Mac. Thus, because of the assignment, Freddie
Mac held legal title to the mortgage, and Wells Fargo possessed the right to
enforce the remedies in the note, including the power of sale, as the entity in
possession of the note. See Ala. Code § 7-3-301. Because the note was endorsed
in blank, Wells Fargo was properly considered the holder of the note and of the
power of sale in the note by virtue of possession of the note.

See id.

§§ 7-1-201(21)(A), § 7-3-205(b); Thomas, 116 So. 3d at 233. So even though
Wells Fargo only possessed the note as document custodian for Freddie Mac,
ownership of the note is not required. See Ala. Code § 7-3-301.
Wilson also claims that Wells Fargo’s agreement with Freddie Mac required
it to fill out a form, as the loan servicer, to obtain the note from the document
custodian in order to become the holder of the note. We disagree. To the extent
Wilson argues that Wells Fargo lacked authority to foreclose in its own name
because it violated its agreement with Freddie Mac, Wilson was not a party to that
1

Wells Fargo Home Mortgage, Inc. (“WFHMI”) originated the loan. The foreclosure
deed stated that Wells Fargo is the “successor by merger” to WFHMI. Wilson asserted before
the district court that WFHMI and Wells Fargo were not the same entity, but she did not present
any evidence to support that assertion.
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agreement and cannot raise a violation of its terms. See Dunning v. New England
Life Ins. Co. 890 So. 2d 92, 97 (Ala. 2003). Further, the undisputed evidence
showed that Wells Fargo was both the document custodian and the loan servicer.
A representative of Freddie Mac and Wells Fargo testified that Wells Fargo had
possession of the note and mortgage since the year it was originated. He further
said that Wells Fargo would not have submitted a form since it already possessed
the note as the document custodian. Thus, the district court did not err in holding
that Wells Fargo had authority to initiate the foreclosure sale in its own name.
We are also unpersuaded that there was a genuine dispute of material fact
about whether the foreclosure sale occurred during the hours allowed by Alabama
law. Alabama requires a foreclosure sale to be held between the hours of 11 A.M.
and 4 P.M. Ala. Code § 35-10-14. Freddie Mac and Wells Fargo presented the
foreclosure deed, signed by the auctioneer, which indicated that the sale was held
during the lawful hours of sale. Alabama courts have held that a foreclosure deed
that contains recitals showing compliance with mortgage terms is “prima facie
evidence of facts stated therein,” and the statements in the deed establish the fact
and validity of the foreclosure sale “in the absence of evidence to show that the
recitals are untrue.” Garst v. Johnson, 37 So. 2d 183, 185 (Ala. 1948). Wilson
argues that the evidence showed that the statement about the time of sale was
untrue because the auctioneer’s certificate of the sale said the sale took place at
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either 10:49 a.m. or 11:49 a.m. 2 Viewing this evidence in the light most favorable
to Wilson, it merely demonstrated that the auctioneer’s certificate was ambiguous.
Brooks, 446 F.3d at 1161–62. This ambiguity did not affirmatively show that the
statement in the foreclosure deed was untrue. Garst, 37 So. 2d at 185. Because
Wilson failed to rebut the prima facie showing of Freddie Mac and Wells Fargo,
the district court did not err in concluding that the foreclosure sale was proper.
Finally, we are unconvinced that the doctrine of equitable estoppel bars the
ejectment action because Wells Fargo’s previous postponements of the foreclosure
sale and continued attempts to work with Wilson to mitigate the loss “lull[ed] her
into a false sense of security.”

Under Alabama law, equitable estoppel is

warranted when:
[t]he actor, who usually must have knowledge of the true facts,
communicates something in a misleading way, either by words,
conduct or silence. The other relies upon that communication. And the
other would be harmed materially if the actor is later permitted to
assert any claim inconsistent with his earlier conduct.
Mazer v. Jackson Ins. Agency, 340 So. 2d 770, 773 (Ala. 1976) (citation and
internal quotation marks omitted).
Wilson notes that the foreclosure sale was postponed several times, and
Wells Fargo requested documents from her to assess whether she was eligible for a

2

For the time of sale, the auctioneer either wrote “10:49” and then overwrote the “0”
with a “1” to make “11:49,” or wrote “11:49” and then overwrote the second “1” with a “0” to
make “10:49.”
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third loan modification up to the time of the foreclosure sale. However, Wilson’s
deposition testimony revealed that no one at Wells Fargo guaranteed her a loan
modification or foreclosure postponement, she knew that she had been denied a
third modification and her appeal had been unsuccessful, and she knew it was too
late. She had been told that the sale would go forward, but she hoped that she
would be granted a modification or postponement because she was doing
everything Wells Fargo asked her to do. Thus, nothing in the record suggested that
Wells Fargo misled Wilson to believe that she would be granted a modification or
that the sale would be postponed. Id. Accordingly, the district court properly
declined to apply the doctrine of equitable estoppel in this case.
Moreover, the district court properly granted summary judgment in favor of
Freddie Mac and Wells Fargo on their ejectment claim. Wilson argues that she
demonstrated that Freddie Mac’s right to possess the property is in dispute because
the foreclosure sale was invalid.

Under Alabama law, “a complaint seeking

ejectment is sufficient if it alleges that the plaintiff was possessed of the premises
or has the legal title thereto, properly designating or describing them, and that the
defendant entered thereupon and unlawfully withholds and detains the same.”
Steele v. Fed. Nat’l Mortg. Ass’n, 69 So. 3d 89, 93 (Ala. 2010) (quotation
omitted).

Freddie Mac demonstrated that it had legal title by presenting the

foreclosure deed, and it is undisputed that Wilson has not vacated the premises.
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Where there is a collateral attack on the foreclosure process in an ejectment action,
only a wrongful foreclosure that renders the sale void can overcome the right to
assert ejectment. Campbell v. Bank of Am., N.A., 141 So. 3d 492, 494-95 (Ala.
Civ. App. 2012). As we’ve discussed, Wilson failed to demonstrate that the
foreclosure was wrongful.

Accordingly, she also failed to show that the

foreclosure rendered the sale void.
Wilson’s arguments that the district court erred in granting Freddie Mac and
Wells Fargo summary judgment on her counterclaims for breach of contract,
wrongful foreclosure, negligence, and slander of title are based on her assertions
that Wells Fargo lacked the authority to conduct the foreclosure sale in its own
name, and the sale did not take place during the legal hours of sale. Because we
have rejected those claims, her challenges to the district court’s decision as to her
counterclaims also fail.
Accordingly, we affirm.
AFFIRMED.

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