REL:

06/08/2012

Notice: T h i s o p i n i o n i s s u b j e c t t o f o r m a l r e v i s i o n b e f o r e p u b l i c a t i o n i n t h e advance s h e e t s o f Southern R e p o r t e r . R e a d e r s a r e r e q u e s t e d t o n o t i f y t h e Reporter o f Decisions, Alabama A p p e l l a t e C o u r t s , 300 D e x t e r A v e n u e , M o n t g o m e r y , A l a b a m a 3 6 1 0 4 - 3 7 4 1 ((334) 2 2 9 - 0 6 4 9 ) , o f a n y t y p o g r a p h i c a l o r o t h e r e r r o r s , i n o r d e r t h a t c o r r e c t i o n s may b e made b e f o r e t h e o p i n i o n i s p r i n t e d i n Southern R e p o r t e r .

ALABAMA COURT OF CIVIL APPEALS

OCTOBER TERM, 2011-2012

2100934

E r i c a Sumpter Congress v. U.S. Bank, N.A., as t r u s t e e Appeal from J e f f e r s o n C i r c u i t Court (CV-09-901113)

THOMAS,

Judge. Sumpter Congress executed a mortgage

In J u l y 2006, E r i c a

t o M o r t g a g e E l e c t r o n i c R e g i s t r a t i o n S y s t e m s , I n c . ("MERS"), a s nominee f o r M o r t g a g e L e n d e r s N e t w o r k USA, I n c . ("MLN"), a n d a note f o r the p r i n c i p a l amount o f $104,400 i n favor

promissory

2100934 of MLN. MLN sold Congress's note t o EMAX F i n a n c i a l t o EMAX. LLC Group

("EMAX"); t h e n o t e c o n t a i n s an i n d o r s e m e n t sold The the note indorsement to R e s i d e n t i a l Funding

EMAX t h e n ("RFC"). itself; an

Company,

t o RFC i s n o t c o n t a i n e d i s on a

on t h e n o t e paper
1

instead, allonge. note

the indorsement Shortly

separate

called

t h e r e a f t e r , RFC the note,

"securitized"

Congress's

and i n d o r s e d

o n t h e a l l o n g e , t o "U.S. B a n k a s

trustee." ("the and

C o n g r e s s ' s n o t e was p l a c e d i n t o t h e 2 0 0 7 - E M X 1 T r u s t N.A., i s the trustee of the Trust

T r u s t " ) ; U.S. B a n k , other trusts.

several

Section

2.02 o f t h e P o o l i n g a n d a c k n o w l e d g e s U.S. documentation Furthermore, the Trust ("RASC"), into

Servicing Bank's

Agreement of

("PSA") the note

f o r the Trust and

receipt

associated the Trust.

evidencing the

t r a n s f e r of the note i n t o and Assumption

Assignment

Agreement

between

depositor, R e s i d e n t i a l Assets Securities Corporation and the RFC p r o v i d e s Trust that RFC h a d i n d o r s e d as trustee,

the notes placed at the time

t o U.S. i n March

Bank, 2007.

of the

agreement

A c c o r d i n g t o the p a r t i e s ' b r i e f s , a note i s " s e c u r i t i z e d " when numerous m o r t g a g e n o t e s a r e c o m b i n e d i n t o a p o o l , w h i c h , in turn, i s divided into smaller parts that are sold to i n v e s t o r s as mortgage-backed s e c u r i t i e s .
1

2100934
In payments. delinquent bring February Her loan payments 2007, Congress defaulted on her loan

s e r v i c e r , Homecomings, i n f o r m e d her and attempted Although t o work Congress with

of her

Congress t o her loan

her loan

current.

brought

current, and

s h e was e v e n t u a l l y u n a b l e t o c o n t i n u e again. Ultimately,

making payments

defaulted

i n May 2 0 0 8 , GMAC M o r t g a g e , Congress that h e r sent a check t o

w h i c h h a d merged w i t h Homecomings, n o t i f i e d loan was a g a i n i ndefault.

Although Congress

GMAC t o b r i n g h e r p a y m e n t s c u r r e n t , because 24, Congress's account lacked

t h e c h e c k was n o t h o n o r e d sufficient funds. for On J u n e

2008,

GMAC r e f e r r e d C o n g r e s s ' s m o r t g a g e McCullough, testified t o Congress debt the attorney that

foreclosure. t o handle the

Colleen foreclosure, letter the sent

assigned

she p r e p a r e d 2008,

the acceleration to notify was her that imminent.

on J u l y 1 1 ,

entire

was d u e a n d t h a t the

foreclosure

A f t e r she r e c e i v e d telephoned said, set GMAC

acceleration letter, with a

s a i d Congress, she who, s h e

and spoke her that

representative,

reassured

a f o r e c l o s u r e - s a l e date had n o t been t o work w i t h her t o had notice of the

and t o l d h e r that foreclosure.

GMAC w o u l d c o n t i n u e However, McCullough

avoid

2100934
foreclosure consecutive sale published w e e k s -- J u l y i n t h e Alabama Messenger f o r three 12, 19, and 26, 2008. on C o n g r e s s ' s as the holder the property, of the

When M c C u l l o u g h c h e c k e d t h e t i t l e she discovered To that remedy to MERS was listed

mortgage. could cloud

the p o s s i b i l i t y the property, authority

that

discrepancy using an

title

McCullough,

agreement and GMAC,

f o r signing executed

between

her law f i r m , on J u l y

MERS,

a mortgage

assignment

29, 2008,

transferring Bank. although assignment transfer the

the ownership

of t h e mortgage

f r o m MERS t o U.S. assignment, included an to on

According

to McCullough, that the

t h e mortgage assignment

i t indicated

of the r e l a t e d

indebtedness,

was n o t i n t e n d e d

anything

b u t t h e m o r t g a g e a s a way t o c l e a r t i t l e stated that

property.

McCullough

t h e a s s i g n m e n t was n o t the note. County bid

intended The

to serve

the purpose sale was

of negotiating held

foreclosure

at the Jefferson

C o u r t h o u s e on A u g u s t 12, 2008. of $49,600 a t t h e f o r e c l o s u r e possession of

U.S. B a n k made t h e w i n n i n g sale. When C o n g r e s s t o U.S. Bank

failed to after i t s

yield

the property

2100934
d e m a n d , U.S. on M a r c h The resulting November was was 31, case in 19, a Bank f i l e d 2009. was
2

an

ejectment

action

against

Congress

originally in

tried favor of

on

October Bank

13,

2009, on

judgment

U.S.

entered

2009.

However,

Congress's

postjudgment

motion case the the Bank her

g r a n t e d by the t r i a l s e t f o r a new of trial

c o u r t on M a r c h

11, 2010,

and t h e After 2010,

t o b e h e l d on J u n e held on

1, 2 0 1 0 . June 1-3,

conclusion trial on court

a three-day t r i a l

e n t e r e d a l e n g t h y judgment 23, 2011. After the

i n favor court

o f U.S. denied

February

trial

postjudgment On argues

motion,

Congress makes

appealed to t h i s several judgment She bases

court. She because first the the not

appeal, Congress that the trial

arguments. i s void this

court's

foreclosure fact that

s a l e was

invalid.

a r g u m e n t on B a n k was

the assignment before

o f t h e m o r t g a g e t o U.S. institution of the

accomplished proceedings, those

i t s

foreclosure t o commence Home Loans

t h u s d e p r i v i n g U.S. See

Bank of s t a n d i n g v. BAC

proceedings.

Sturdivant

As the t r i a l c o u r t e x p l a i n e d i n i t s judgment, Congress's s t e p m o t h e r , H e n r i e t t a J a c k s o n , was named as a d e f e n d a n t n s e r v i c e was not r e s i d e i n

2

2100934
Servicing, , argues reasons. exercise assigned it; in a LP, [Ms. 2100245, December 16, 2011] So. 3d

( A l a . C i v . App. that the

2011). deed U.S.

Alternatively, was invalid for

Congress several to

foreclosure that

She p o s i t s a g a i n t h e power of s a l e

B a n k was

not e n t i t l e d

because the mortgage had not had not been

been to

t o i t and b e c a u s e t h e note related was argument, she

indorsed the

contends that i t was the

mortgage

assignment recited

ineffective i t

because both

a sham mortgage

i n that i t and the have when

that

transferred t o U.S.

underlying any

indebtedness in the

Bank note

when MERS d i d n o t to transfer and

interest

underlying

McCullough not true.

admitted

that

the r e c i t a l s

i n t h e a s s i g n m e n t were

Congress invalid

next

argues Bank

that failed

the

foreclosure

deed

was

b e c a u s e U.S.

to follow

statutory

notice

requirements did the not l i s t

s e t o u t i n A l a . Code 1975, 3 5 - 1 0 - 9 , b e c a u s e i t the current identity of the holder o r owner Bank of had

n o t e a n d m o r t g a g e a n d b e c a u s e i t s t a t e d t h a t U.S.

b e e n a s s i g n e d t h e m o r t g a g e when i t h a d n o t y e t b e e n Congress separated, further making asserts the that the note and

assigned. were Bank

mortgage that U.S.

foreclosure

invalid,

2100934
breached i t s fiduciary duty to her by failing to conduct a

sale r e s u l t i n g i n a reasonable did and not properly her notify her or of the

s a l e s p r i c e , and the

t h a t U.S.

Bank

assignment of her of the

mortgage mortgage to and was

note,

default, also

acceleration U.S.

debt. her

Congress that i t

argues follow

that

Bank m i s r e p r e s e n t e d procedures while sh e

would that U.S.

loss-mitigation would not occur

assured

her

foreclosure

working with and that

Bank to b r i n g the Bank failed to mortgage that the to

mortgage payments follow certain

current federal

U.S.

regulations

relating argues

foreclosures. note the was trial not a negotiable conclusion transferred entitled trial allonge clear the to

Congress instrument, that, into

presumably to defeat of whether the U.S. Bank She her or was

court's

regardless the Trust, the

n o t e was

properly and the the by

i t s holder argues that that

enforce

note. required

also to

court was and trial to the

improperly forged,

establish

fabricated, evidence. failing she

lacked

authenticity she complains the

convincing court note,

Finally,

that

e r r e d by which,

to e x c l u d e or s t r i k e was not timely

allonge in

says,

produced

discovery

2100934 and which, she file accuses, "on was of prepared trial." c o u r t ' s judgment was entered and and inserted into the

custodial As after

t h e eve the

noted

above,

trial

a three-day t r i a l

at which the c o u r t heard testimony Thus, our r e v i e w of the i s governed to the by

r e c e i v e d numerous e x h i b i t s . of fact on w h i c h

findings the ore

the judgment i s based

tenus ore

rule:

"Where e v i d e n c e a presumption of

i s presented

trial as

court to the

tenus,

correctness exists of f a c t ;

court's

c o n c l u s i o n s on

issues

i t s determination w i l l

n o t be d i s t u r b e d u n l e s s c l e a r l y evidence, the manifestly Dixon our unjust, v. or

erroneous, without supporting a g a i n s t the 596 So. 2d great weight 898, 899 of

evidence." However, trial

Windsor,

(Ala.

1992). by is, (Ala. We the

review of the governed

legal by the

conclusions reached ore 897 tenus So. 2d rule 268, and 271

c o u r t i s not de novo.

instead, 2004). find

S h e a l y v.

Golden,

one

issue

dispositive court

of

this

appeal

at

this to and she She

t i m e : whether the t r i a l prove forgery or

improperly of the

r e q u i r e d Congress allonge by clear what

fabrication

convincing was aiming

evidence. to prove

C o n g r e s s ' s argument r e g a r d i n g at trial is confusing at

best.

2100934 litters h e r argumen t w i t h t h e d e s c r i p t i v e terms Although "invalid," adduced

"fraudulent,"

and " f a b r i c a t e d . "

Congress

some e v i d e n c e a t t r i a l

i n d i c a t i n g that

digitized

signatures and

c o u l d be m a n i p u l a t e d a n d t h a t b o t h d i g i t i z e d

signatures

s t a m p e d s i g n a t u r e s c o u l d be e a s i l y r e p r o d u c e d , i t a p p e a r s t h a t she was not i n t e n t were f o r g e d and on p r o v i n g that the signatures sense. could on t h e

allonge that

i n the t r a d i t i o n a l stamped

Her e v i d e n c e be easily

digitized

signatures

r e p r o d u c e d was allonge was,

intended i n fact,

t o support her contention fabricated well after the

that the alleged

t r a n s f e r o f the note t o the T r u s t .

She s a y s a t t h e c o n c l u s i o n

o f h e r argument on t h e i s s u e i n h e r a p p e l l a t e b r i e f t h a t t h e trial judge confused the r e a l i s s u e , a b o u t w h i c h she s t a t e s records i s qualitatively a

"[a]uthenticity

of the business

d i f f e r e n t a n d more f u n d a m e n t a l i s s u e t h a n t h e a u t h e n t i c i t y o f t h e s i g n a t u r e on t h e a l l o n g e t h a t t h e t r i a l c o u r t f o c u s e s o n . " I t a p p e a r s t h a t C o n g r e s s w a n t e d t o p r o v e t h a t t h e a l l o n g e was fabricated or created a f t e r the f i r s t trial b y U.S. Bank o r

GMAC i n r e s p o n s e t o h e r a r g u m e n t t h a t t h e n o t e h a d n o t b e e n properly negotiated t o U.S. Bank.

2100934 At the beginning discussion before file objections the of t r i a l , counsel f o r t h e p a r t i e s had a to

the t r i a l t o the

c o u r t about Congress's f a i l u r e

a u t h e n t i c i t y o f U.S. pretrial no

Bank's e x h i b i t s scheduling order. before

within

time s p e c i f i e d i n the although Congress

Apparently, trial,

filed counsel

objections

on t h e m o r n i n g o f t r i a l , d i d o b j e c t to the the allonge.

f o r Congress i n d i c a t e d

t h a t she including intended can

a u t h e n t i c i t y of c e r t a i n e x h i b i t s , The trial court stated that i t

t o a d m i t a l l e x h i b i t s and

s t a t e d t h a t " i f [Congress] on, I ' l l consider copy o f the the

show t h a t

some s h e n a n i g a n s were g o i n g the case." allonge also At and the the

t h a t when I d e c i d e note with the file,

time the copy of

attached which

entire and

custodial

contains

a copy of

the

note

a l l o n g e , were e n t e r e d Instead, had

i n t o evidence, witnesses

Congress d i d not

object. allonge how i t

she q u e s t i o n e d i n the

r e g a r d i n g where t h e and when and

been l o c a t e d

custodial file

m i g h t have b e en The signatures authentic ("the trial on and

created. court the note was and correct allonge in are stating that to the be Code R.

"presumed

authorized"

under the

Uniform Commercial

UCC").

A l a . Code 1975,

7-3-308(a).

Likewise, Ala.

10

2100934 Evid. 902(9) provides that "[e]xtrinsic evidence of

a u t h e n t i c i t y as a c o n d i t i o n p r e c e d e n t t o a d m i s s i b i l i t y i s n o t required with thereon, respect to ... [c]ommercial paper, signatures provided the and first

and documents r e l a t i n g t h e r e t o t o t h e e x t e n t commercial law." thereon and U.S. are Bank

by g e n e r a l signatures authorized,

Thus, t h e a l l o n g e i t s e l f and presumed was not to be authentic in the

required

i n s t a n c e to e s t a b l i s h the a l l o n g e ' s a u t h e n t i c i t y to ensure i t s admissibility. However, authenticity despite of the any presumptions or in favor of the was not

allonge

i t s signatures, U.S. the

Congress Bank does trial

e n t i t l e d to challenge dispute properly that right,

their authenticity. but i t insists to present that

court

required

Congress

clear

and

convincing Although shown which by a

evidence of f o r g e r y or f a b r i c a t i o n of the U.S. clear Bank a r g u e s t h a t and convincing a forgery on in

allonge.

a n o t e must be situations in

evidence

signature

i s presumed v a l i d , the otherwise:

Official

Comment t o

7-3-

308(a) s t a t e s

11

2100934 " ' P r e s u m e d ' i s d e f i n e d i n S e c t i o n [ 7 - ] 1 - 2 0 1 [ ] and means t h a t u n t i l some e v i d e n c e i s i n t r o d u c e d w h i c h would support a f i n d i n g t h a t the s i g n a t u r e i s forged or u n a u t h o r i z e d , the p l a i n t i f f i s not r e q u i r e d t o p r o v e t h a t i t i s v a l i d . The p r e s u m p t i o n r e s t s upon the f a c t t h a t i n o r d i n a r y experience forged or unauthorized signatures are very uncommon, and n o r m a l l y any e v i d e n c e i s w i t h i n t h e c o n t r o l o f , o r more a c c e s s i b l e t o , t h e d e f e n d a n t . The d e f e n d a n t i s t h e r e f o r e r e q u i r e d t o make some s u f f i c i e n t s h o w i n g of the grounds f o r the d e n i a l b e f o r e the p l a i n t i f f i s r e q u i r e d t o i n t r o d u c e e v i d e n c e . The d e f e n d a n t ' s evidence need not be sufficient to require a d i r e c t e d v e r d i c t , b u t i t must be enough t o s u p p o r t the denial by permitting a finding in the defendant's favor. Until i n t r o d u c t i o n of such e v i d e n c e the presumption r e q u i r e s a f i n d i n g f o r the plaintiff. Once s u c h e v i d e n c e i s i n t r o d u c e d the burden of establishing the signature by a preponderance of the total e v i d e n c e i s on the plaintiff."
3

In

i t s brief,

U.S.

Bank r e l i e s are

on

cases

involving properly and which See, may be e.g., ("This

recorded

deeds,

which

presumed v a l i d

i m p e a c h e d o n l y by

c l e a r and So.

convincing evidence. 2d 1317, 1318

Thompson v. M i t c h e l l , 337

( A l a . 1976)

A l t h o u g h t h e O f f i c i a l Comment t o 7-3-308 r e f e r s t o 7-1-201, t h e d e f i n i t i o n o f "presumed" i s no l o n g e r c o n t a i n e d i n t h a t code s e c t i o n . I n s t e a d , 7-1-206 e x p l a i n s t h e use o f p r e s u m p t i o n s u n d e r t h e UCC, s t a t i n g : "Whenever t h i s title c r e a t e s a 'presumption' w i t h respec t to a f a c t , or p r o v i d e s t h a t a f a c t i s 'presumed,' t h e t r i e r o f f a c t must f i n d t h e e x i s t e n c e o f t h e f a c t u n l e s s and u n t i l e v i d e n c e i s i n t r o d u c e d that supports a f i n d i n g of i t s nonexistence."
3

12

2100934 c o u r t has s a i d t h a t p r o p e r e x e c u t i o n and r e c o r d a t i o n o f a d e e d i s p r i m a f a c i e e v i d e n c e o f i t s due s u c h a d e e d as clear and e x e c u t i o n and one attacking by of such not

a f o r g e r y must show t h a t i t was evidence, doubt of reaching the a

a forgery degree of and

convincing leaving no

high

certainty, fact.").

truthfulness

However, t h e n o t e i s n o t a d e e d , and t h e UCC deed f o r g e r i e s a p p l i e s t o

t h e common l a w c o n c e r n i n g

questions

r e g a r d i n g i t s a u t h e n t i c i t y . As t h e a b o v e - q u o t e d comment makes very clear, the only burden on one attempting on to rebut the

presumption substantial presumption

i n favor evidence

of a s i g n a t u r e to refute the the

a note i s to

provide If the the we not

presumption.

i s rebutted,

trial

court

then evaluates As

i s s u e under a preponderance of the e v i d e n c e s t a n d a r d . e x p l a i n e d a b o v e , h o w e v e r , C o n g r e s s a p p e a r s t o be

arguing

t h a t s i g n a t u r e s on t h e a l l o n g e a r e f o r g e d o r o t h e r w i s e to prevent enforcement of the note, but

invalid was in of the

t h a t the a l l o n g e first the trial chain

f a b r i c a t e d or, e s s e n t i a l l y , order to remedy the

c r e a t e d a f t e r the defect in

apparent

indorsements. trial court and

Thus, d e s p i t e t h e r e l i a n c e on 7-3-308 by the

arguments of the p a r t i e s r e s p e c t i n g i t s

13

2100934 m e a n i n g , we c o n c l u d e t h a t t h a t code s e c t i o n h a s no a p p l i c a t i o n here. Nevertheless, a higher burden that basis the t r i a l than was c o u r t r e q u i r e d t h a t C o n g r e s s meet required was i n order t o prove her There i s no

contention rational

the allonge for the

fabricated. of

application

the

clear-andfact

convincing-evidence question. The

standard court

of proof to t h i s p a r t i c u l a r was presented with

trial

indirect

e v i d e n c e i n d i c a t i n g t h a t t h e a l l o n g e was p a r t o f t h e c u s t o d i a l file at least by August 2007. Congress challenged that

evidence by p r e s e n t i n g expert

the testimony

o f Thomas J . Adams, an

i n mortgage s e c u r i t i z a t i o n ,

who s t a t e d t h a t t h e f a c t

t h a t t h e a l l o n g e was p h y s i c a l l y l o c a t e d i n a d i f f e r e n t p a r t o f the custodial file i n d i c a t e d t o him t h a t i t had been created

at a l a t e r time. judgment, custodial the "an file, there file

I n a d d i t i o n , as t h e t r i a l was some confusion

court noted i n i t s where the

regarding

was a c t u a l l y the t r i a l for the

k e p t p e n d i n g GMAC's r e q u e s t f o r court stated, at least to be indicated or

which,

opportunity

documents

altered

manipulated."

14

2100934 The trial c o u r t s h o u l d have e v a l u a t e d t h e i s s u e w h e t h e r trial under the

the a l l o n g e had been c r e a t e d a f t e r t h e f i r s t preponderance-of-the-evidence standard. higher clear-and-convincing-evidence this

Because i t used the standard to evaluate

Congress's evidence, the t r i a l

c o u r t has no c h o i c e b u t t o r e v e r s e and remand t h e c a u s e t o t h e trial under

c o u r t ' s judgment

c o u r t f o r i t t o e v a l u a t e the e v i d e n c e adduced a t t r i a l the a p p r o p r i a t e standar d of p r o o f . So. 2d 46, 47 ( A l a . 1994)

See Ex p a r t e P e r k i n s , 646

( e x p l a i n i n g t h a t an a p p e l l a t e c o u r t , c o u r t has i m p r o p e r l y a p p l i e d i s s u e , must "reverse[] the

once i t d e t e r m i n e s t h a t a t r i a l a higher burden of proof t o an

judgment

a n d remand[]

the cause t o a l l o w the t r i a l from the d i s p u t e d e v i d e n c e ,

court to using the

make i t s d e t e r m i n a t i o n correct In standard"). light of our

reversal

of

the

j u d g m e nt

on

this

particular

i s s u e , and b e c a u s e t h e t r i a l

court's determination

on t h i s i s s u e on remand may

a f f e c t t h e o t h e r i s s u e s r a i s e d by

C o n g r e s s i n t h i s a p p e a l , we p r e t e r m i t d i s c u s s i o n o f C o n g r e s s ' s other issues. 2d 719, 723 See F a v o r i t e M a r k e t S t o r e v. W a l d r o p , ( A l a . C i v . App. 2005) (stating 924 So.

that this

court

15

2100934 would pretermit discussion of further issue). issues i n light of

dispositive

nature of another

REVERSED AND REMANDED WITH INSTRUCTIONS. P i t t m a n and Moore, J J . , c o n c u r . Thompson, without P . J . , and Bryan, J . , concur i n the r e s u l t ,

writings.

16