Hollis v. OneWest Bank FSB

Filing 8

MEMORANDUM OPINION. Signed by Judge William M Acker, Jr on 2/15/13. (KGE, )

FILED
2013 Feb-15 PM 02:54
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
WILLIE CARL HOLLIS,

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Plaintiff,
v.
ONEWEST BANK, FSB
Defendant.

CIVIL ACTION NO.
2:12-cv-04006-WMA

MEMORANDUM OPINION
Before the court is the motion of defendant Onewest Bank, FSB
(“OWB”) to dismiss, or in the alternative, for summary judgment.
The court is treating it as a motion for summary judgment. Doc. 6.
Willie Carl Hollis (“Hollis”) instituted the above-entitled action
against OWB alleging breach of contract, wrongful foreclosure,
negligence and wantonness. For the reasons set forth below, OWB’s
motion for summary judgment will be granted.
Facts1
On or about November 7, 2007, Hollis executed a mortgage (“the
mortgage”) in favor of Mortgage Electronic Registration Systems,
Inc.

(“MERS”)

solely

as

nominee

for

IndyMac

Bank,

F.S.B.

(“IndyMac”). The mortgage covered property at 5736 Willow Lake
Drive, Birmingham, Alabama, 35244 (“the property”). At some point

1

Because of the procedural posture, all admissible evidence is viewed
in the light most favorable to Hollis.

after the origination of the mortgage and before September 1, 2010,
IndyMac was acquired by OWB and became its wholly owned subsidiary.
On September 1, 2010, Indymac as a subsidiary of OWB, sent
Hollis a letter informing him that he was in default for failure to
make payments on his loan. See Doc. 4-2. The letter stated that in
order to cure his default, he must pay $18,096.59 on or before
October 3, 2010 to IndyMac as a division of OWB. The letter also
stated “[i]f you do not cure your default, we will accelerate your
mortgage with the full amount remaining accelerated and becoming
due and payable in full, and foreclosure proceedings will be
initiated at that time.” See Id. Hollis did not make any payments
following this letter. On November 10, 2010 an assignment of
mortgage to OWB was executed and one week later was recorded in the
Probate Court of Jefferson County. Ala. Code § 35-4-62(b) allowed
effective

recordation

involving

real

property

located

in

the

Bessemer Division of Jefferson County, as the subject real property
is, to be recorded either in the Birmingham Division of Jefferson
County or the Bessemer Division.
On December 21, 2010, Hollis filed a voluntary petition for
Chapter 7 bankruptcy in the Bankruptcy Court for the Northern
District of Alabama. See In re Hollis, case no. 10-07475. Hollis
was discharged on March 29, 2011. Hollis then, on April 8, 2011,
filed a voluntary petition for Chapter 13 bankruptcy. See In re
Hollis, Bankruptcy Court for the Northern District of Alabama case
no. 11-01991. This case was dismissed on May 23, 2011.

On June 29, 2011, OWB sent Hollis a notice of acceleration of
the mortgage and note informing him that because he had not cured
his default, OWB was accelerating to maturity the entire remaining
unpaid balance of the debt. It also informed him if he did not pay
this amount, OWB would hold a foreclosure sale on August 1, 2011.
Hollis did not make any payments, and OWB followed through with the
August 1 foreclosure sale in front of the Bessemer Courthouse.
Federal

National

Mortgage

Association

(“Fannie

Mae”)

was

the

highest bidder at the sale and became the new owner of the
property.
On August 15, 2011, Fannie Mae brought an ejectment action
against Hollis in the Circuit Court of Jefferson County, Bessemer
Division. See Federal National Mortgage Association v. Hollis, cv11–900477. On June 19, 2012, Fannie Mae prevailed on its motion for
summary judgment and was awarded full title to and possession of
the property. Hollis was ordered to restore immediate possession to
Fannie Mae. Hollis did not appeal the state court order.
On October 19, 2012, Hollis filed the above-entitled action in
the Circuit Court of Jefferson County, Bessemer Division. He
alleged that OWB failed to notify him before accelerating his loan,
and that OWB’s actions were negligent, wanton, in breach of their
contract, and resulted in a wrongful foreclosure. OWB properly
removed the action to this court on December 3, 2012.
Analysis
As stated above, the basis of Hollis’s complaint is that OWB

did not notify him before accelerating his loan. He alleges four
separate

counts–breach

of

contract,

wrongful

foreclosure,

wantonness, and negligence. All are based on OWB’s alleged failure
to notify.

His complaint states:
Per the terms of the mortgage, Defendant, as
Lender, had a duty to give Hollis notice in
writing at least 30 days prior to acceleration
of the promissory note. Said notice is
required to specify the default; the action
required to cure the default; a date, not less
than 30 days from the date the notice is given
to the borrower, by which the default must be
cured; and that failure to cure the default on
or before the date specified in the notice may
result in acceleration of the note secured by
the mortgage and sale of the property. . . .
Hollis never received said notice from
Defendant
of
the
Lender’s
intent
to
accelerate. . . . Defendant accelerated the
debt without the notice required in the
contract between the parties, and subsequently
foreclosed on Hollis’s property.

Complaint ¶ 15-17. However, OWB has responded to these allegations
with undisputed proof that it did in fact notify Hollis exactly as
the agreement required. OWB also points out that the mortgage
states “[a]ny notice to Borrower in connection with this Security
Instrument shall be deemed to have been given to Borrower when
mailed by first class mail. . . .” Doc. 4 citing Ex A-1 at ¶15.
OWB’s letters show that they were mailed first class. Hollis does
not challenge any of this; therefore, OWB has established that
there are no disputes of material fact regarding the actions OWB
took to comply with the contract.
However, Hollis interjects a new argument that goes beyond the
contract’s

explicit

requirements

and

the

allegations

in

the

complaint. He departs from the stance he took in his complaint,
that

notice

of

default

was

not

given,

and

now

argues

that

acceleration did not take place within a reasonable time after
default because nearly 10 months passed between the notice of
default and the notice of acceleration.
The pronounced passage of time . . . between
the date of the Notice of Default given prior
to Defendant’s interest in the Mortgage and
the
delayed
election
by
Defendant
to
accelerate said Note and initiate foreclosure,
rendered the September 1, 2010 Notice untimely
and outdated.
Doc. 6 at page 2. He cites no provision in the contract that
requires acceleration to occur within a reasonable time of notice,
understandably because there is no such provision in the contract.
The contract’s only time requirement is that the notice of default
must specify “a date, not less than 30 days from the date the
notice is given to the Borrower, by which the default must be
cured.” Doc. 4-1 at ¶ 22. OWB met this time requirement and thus
met the requirements of the contract. The contract is unambiguous;
therefore, there is no need to look outside of it to determine
whether OWB complied with it.
Hollis quotes an Alabama Supreme Court case that he claims
requires

the

court

to

look

beyond

the

contract’s

written

requirements. The court there said “the election of the holder to
declare the acceleration of the due date of the whole debt must be
exercised within a reasonable time after default.” McJenkin v.
Central Bank of Tuscaloosa, N.A., 417 So. 2d 153, 157 (Ala. 1982).

However, McJenkin involves a completely different situation. Mr.
McJenkin

and

Mrs.

McJenkin

obtained

a

divorce,

whereupon

he

conveyed all of his rights in the property to her. She then made
payments for 18 months until the bank, without notice, accelerated
the loan under the due-on-sale clause, based on the prior transfer
from

Mr.

McJenkin

to

Mrs.

McJenkin.

These

facts

are

quite

different from those currently before the court. McJenkin involves
a default, 18 months of accepted payments, and then acceleration
without notice. On the other hand, the instant case involves notice
of default, notice of acceleration and a passage of only 10 months
in between the two. Furthermore, the quoted statement is just
dicta. The court’s actual holding involves reversing a trial
court’s refusal to grant a TRO on other grounds.2
Even if this court should read a reasonable time requirement
into the contract’s acceleration provisions, Hollis has not shown
that OWB acted unreasonably. Hollis has not presented any case law
that

a

10

month

lapse

between

notice

and

acceleration

is

unreasonable. However, even if he had shown that a passage of 10
months was unreasonable, other circumstances that were not the
fault of OWB prolonged the time between default and acceleration.
OWB sent its first notice of default on September 1, 2010. As per

2

Hollis and the Alabama Supreme Court also cite a Colorado case. See
Malouff v. Midland Federal Savings and Loan Association, 509 P. 2d 1240
(1973). Unlike the Alabama Supreme Court case, the Colorado Supreme Court
actually held that acceleration must be a reasonable time after default.
However, not only is it not controlling precedent, but it is also not very
informative to the analysis at hand. The case dealt with an election to
accelerate that was made within a month after notice, and the court found that
it was reasonable. Id. at 1246.

the requirements in the mortgage, OWB had to allow Hollis 30 days
to cure this default. Therefore, the letter stated that he had
until October 3, 2010 to cure the default. He did not make any
payments; therefore, OWB was allowed to accelerate the loan on
October 3, but did not do so immediately. Eleven weeks after the
first day OWB could accelerate, Hollis filed Chapter 7 bankruptcy.
The bankruptcy’s automatic stay prevented OWB from attempting to
collect any debt from Hollis while he was in bankruptcy. Hollis was
discharged from bankruptcy on March 29, 2011, but then filed
another voluntary petition, this time for Chapter 13 bankruptcy,
just nine days later on April 8, 2011. Again, OWB could not
accelerate the loan while Hollis was in bankruptcy. Hollis’s
Chapter 13 bankruptcy proceeding was dismissed on May 23, 2011.
Just over a month later on June 29, 2011, OWB sent Hollis a notice
of acceleration of the loan. Hollis did not cure the default, so
OWB followed through with foreclosure proceedings as promised.
Therefore, when considering all of the circumstances, it is not as
if ten months passed during which OWB sat on its ability to
accelerate while it deteriorated to nothingness. The time during
which OWB could accelerate but did not is as follows: eleven weeks
before the first bankruptcy, nine days between the chapter 7
bankruptcy and the chapter 13 bankruptcy, and five weeks after the
second bankruptcy discharge. The only case law that Hollis cites in
which there is an actual holding regarding the reasonableness of a
specific time says that a month is reasonable. See Malouff v.

Midland Federal Savings and Loan Association, 509 P. 2d 1240 (Colo.
1973). This does not show that what OWB did was unreasonable.
Furthermore, it is Hollis’s own actions–filing for bankruptcy
twice–that delayed OWB’s ability to accelerate. “Those who seek
equity must do equity.” Levine v. Levine, 80 So. 2d 235. (Ala.
1955).

Based

on

all

of

the

circumstances,

OWB

did

not

act

unreasonably when it accelerated Hollis’s loan.
There are no disputed material facts in this case. OWB has
disproved Hollis’s allegations that he was not notified of his
default prior to acceleration, leaving the reasonableness of OWB’s
actions as the only possible issue. Based on the totality of the
circumstances, OWB acted reasonably. Because there are no disputed
material facts and OWB did not act unreasonably as a matter of law,
OWB’s motion for summary judgment is due to be granted.
OWB also contends that the issue Hollis wants to present has
already been litigated by Fannie Mae in the state court ejectment
case in which Fannie Mae prevailed on June 19, 2012. It is not
necessary to analyze whether this is correct because the case is
due to be dismissed on grounds previously discussed.
For the foregoing reasons, OWB’s motion for summary judgment
will be granted by separate order.
Done this 15th day of February.

_____________________________
WILLIAM M. ACKER, JR.
UNITED STATES DISTRICT JUDGE