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Countrywide Home Loans, Inc. v. Estate of Iree Sterling Mims Rowe

Court of Appeals of Louisiana, Second Circuit

June 21, 2017

COUNTRYWIDE HOME LOANS, INC. Plaintiff-Appellant
v.
ESTATE OF IREE STERLING MIMS ROWE AKA IREE S. ROWE Defendant-Appellee

         Appealed from the Twenty-Sixth Judicial District Court for the Parish of Webster, Louisiana Lower Court Case No. 67, 947 Honorable Jeff Cox, Judge Honorable Michael Nerren, Judge

          SEALE, SMITH, ZUBER & BARNETTE By: Jessica Chapman Counsel for Appellant, Bank of New York Mellon

          McGLINCHEY STAFFORD, PLLC By: Stephen W. Rider Melissa H. Harris Mark James Chaney, III, STEMMANS & ALLEY By: Jennifer E. Frederickson W. Michael Stemmans M. Todd Alley Michael J. Taffaro Counsel for Appellee, Heirs of William D. Rowe

          CAMPBELL, CAMPBELL & MARVIN By: John C. Campbell Counsel for Appellees, Estate of Iree S. Mims

          Before MOORE, GARRETT, and STONE, JJ.

          MOORE, J.

         Bank of New York Mellon appeals a judgment that found that it abandoned its executory process suit against the named heirs of William D. Rowe, and dismissed the suit with prejudice. We affirm the dismissal, but amend it to be without prejudice.

         FACTUAL AND PROCEDURAL HISTORY

         In 2003, Iree Rowe and her husband, William D. Rowe, took out a home equity line of credit with MBNA America, with a limit of $51, 300. They executed a multiple indebtedness mortgage affecting their home, described as Lot 2, Boucher Subdivision, Cullen, La.[1] The mortgage included a confession of judgment, acceleration clause and other provisions associated with executory process. Within a month, MBNA indorsed the mortgage package to Countrywide Home Loans.

         William Rowe died in December 2004, and Iree died in January 2005. The mortgage fell into arrears.

         On February 8, 2008, Countrywide filed this petition for executory process against "the Estate of Iree Sterling Mims Rowe, aka Iree S. Rowe, " alleging that Iree had died and no succession had been opened.[2] It recited the essentials for executory process and prayed for seizure and sale of Lot 2, Boucher Subdivision. The writ issued and the sheriff filed notice on February 27.

         On June 25, 2008, a curator filed an answer on behalf of Iree's heirs. He recited that he was trying to contact them, and generally denied all of Countrywide's allegations.

         On January 15, 2010, someone identified only as Kathryn Talbot filed a "notarial act of correction" in the Webster Parish mortgage records. This recited that the original mortgage documents actually intended to encumber Lot 2, less and except the north 10 feet thereof, Boucher Subdivision. This document was filed only in the mortgage records, not in the suit record.

         On May 4, 2011, someone identified only as "from the foreclosure department" faxed a letter to the sheriff's office, asking to stop the scheduled foreclosure "so that we may amend the petition to reflect the correct legal description of the property." The procès-verbal, issued the same day, described Lot 1 and the north 10 feet of Lot 2, Boucher Subdivision, with an assessed value of only $1, 500. However, no sale took place.

         On December 5, 2012, Countrywide filed a supplemental and amended petition for executory process. This cited the notarial act of correction, filed January 15, 2010, and requested seizure and sale of Lot 1 and the north 10 feet of Lot 2, Boucher Subdivision. An ad hoc judge signed the order of seizure and sale the same day.

         On January 29, 2013, Lula B. Cornelius, the administratrix of Iree's succession, filed a petition to arrest the seizure and sale. She showed that the original mortgage referred to Lot 2, but that Countrywide was now trying to seize more property, Lot 1 and the north 10 feet of Lot 2; that the person who filed the notarial act of correction, Ms. Talbot, had no apparent connection to the original mortgage; and that the correction was much more than the "clerical error" allowed by statute, R.S. 35:2.1. A rule was set for March 3, but no one appeared for it.

         On August 13, 2013, Countrywide filed a motion to substitute Bank of New York Mellon ("BNY") as plaintiff, as BNY had acquired the mortgage note. On September 16, BNY filed a motion to convert the matter to an ordinary proceeding.

         In a second supplemental and amending petition, BNY admitted its "inadvertence and error" in the original property description, alleging that the debtors had really intended to encumber Lots 1 and 2, Boucher Subdivision, and named as defendants Loretha R. Pointer and other heirs of William Rowe ("the William Rowe heirs").

         The William Rowe heirs promptly filed a motion to dismiss for abandonment, La. C. C. P. art. 561. They alleged that no step in the prosecution or defense had occurred for over three years, from June 25, 2008, when Iree's curator filed an answer, until August 15, 2012, when Countrywide filed a motion to substitute counsel.[3] The district court signed, that very day, an ex parte order dismissing BNY's claims against the William Rowe heirs, with prejudice.

         BNY filed a "motion for amendment of judgment and motion to set aside dismissal." It conceded that the property description had expanded from Lot 2 (in the act of mortgage and original petition) to Lot 1 and the north 10 feet of Lot 2 (in the notarial act of correction and first supplemental and amended petition) to Lots 1 and 2 (in the second supplemental and amended petition). However, it argued that code articles about abandonment do not apply to executory process, citing Greater New Orleans Homestead Ass'n v. Bell, 219 La. 41, 52 So.2d 241 (1951); that the notarial act of correction was a step in the prosecution; and that Art. 561 must always be construed in favor of maintaining the suit. Alternatively, it argued that any dismissal for abandonment should be presumptively without prejudice.

         The William Rowe heirs opposed the motion, arguing that dismissal with prejudice, though rare, is within the court's discretion; that Bell relied on an article in the former Code of Practice, which had been repealed, and the current law, La. C. C. P. art. 561, makes no exception for executory proceedings; that BNY converted the matter to ordinary process, and could not argue any benefit of executory process; and that the notarial act of correction exceeded the statutory authority to correct a "clerical error" and was without legal effect.

         After a hearing limited to argument, a different judge of the 26th JDC rendered an opinion denying the motion to amend or set aside the judgment.[4]

         BNY took this devolutive appeal, raising four ...


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