Case Title: Deutsche Bank National Trust v. Brumbaugh

Citation: 

Docket Number: 109223

State: oklahoma

Court: Oklahoma Supreme Court

Date: 2012-01-17T00:00:00Z

Document:
DEUTSCHE BANK NATIONAL TRUST v. BRUMBAUGH2012 OK 3Case Number: 109223Decided: 01/17/2012THE SUPREME COURT OF THE STATE OF OKLAHOMA
NOTICE: THIS OPINION HAS NOT BEEN RELEASED FOR PUBLICATION IN 
THE PERMANENT LAW REPORTS. UNTIL RELEASED, IT IS SUBJECT TO REVISION OR 
WITHDRAWAL. 

DEUTSCHE BANK NATIONAL TRUST, AS TRUSTEE FOR LONG BEACH MORTGAGE 
LOAN 2002-1, Plaintiff/Appellee,v.DENNIS BRUMBAUGH, 
Defendant/Appellant.
ON APPEAL FROM THE DISTRICT COURT OF TULSA COUNTYHONORABLE 
LINDA G. MORRISSEYDISTRICT JUDGE
¶0 The Plaintiff /Appellee, Deutsche Bank National Trust as Trustee for Long 
Beach Mortgage Loan 2002-1, filed this foreclosure action against the 
Defendant/Appellant, Dennis Brumbaugh. Plaintiff filed a motion for summary 
judgment which was granted by the trial court. Defendant contends there is not 
enough evidence to show Plaintiff has standing. Plaintiff asserts it is the 
holder of the note and has standing. We find there are material issues of fact 
that need to be determined and summary judgment is not appropriate.
REVERSED AND REMANDED WITH INSTRUCTIONS
Phillip A. Taylor, TAYLOR & ASSOCIATES, Broken Arrow, Oklahoma, for 
Defendant/Appellant.Ray E. Zschiesche, PHILLIPS MURRAH P.C., Oklahoma City, 
Oklahoma, for Plaintiff/Appellee.
COMBS, J.
FACTS
¶1 This is an appeal from a foreclosure action initiated by Appellee, 
Deutsche Bank National Trust As Trustee for Long Beach Mortgage Loan 2002-1 
(Appellee) against Appellant Dennis Brumbaugh (Appellant) and others. Appellant 
and his wife, Debra Brumbaugh, (Brumbaughs) executed a note and mortgage with 
Long Beach Mortgage Company on February 27, 2002. On December 27, 2006, the 
Brumbaughs entered into a loan modification agreement with U.S. Bank, N.A., 
successor trustee to Wachovia Bank, N.A. (formerly known as First Union National 
Bank), as Trustee for Long Beach Mortgage Loan Trust 2002-1, Asset Backed 
Certificates, Series 2002-1 in trust for the benefit of the Certificateholders. 
On July 20, 2007, the Brumbaughs divorced, and in 2008, Debra Brumbaugh executed 
a quitclaim deed to Dennis Brumbaugh.
¶2 Appellant defaulted on the note in January 2009, and Appellee filed its 
petition for foreclosure on June 2, 2009. Attached to the petition was a copy of 
the note, mortgage, loan modification agreement, and copies of statements of 
judgments and liens by other entities. Appellee claims it is the present holder 
of the note and mortgage having received due assignment through mesne 
assignments of record or conveyance via mortgage servicing transfer. The 
Appellant answered, denying Appellee owns any interest in the note and mortgage, 
and the copies attached to the petition were not the same as those he signed. He 
claims Appellee lacked capacity to sue and the trial court lacks jurisdiction 
over the subject matter. He also denied being in default and asserted the 
Appellee/servicing agent caused the alleged default. 
¶3 On April 1, 2010, Appellee filed a motion for summary judgment. Attached 
to the motion was an affidavit from an employee of JP Morgan Chase Bank (Chase) 
as the servicing agent for Appellee. The affidavit states the Appellee is the 
current owner and holder of the original note, mortgage, and the modification 
agreements. However, there is no mention of when Appellee became the 
holder. 
¶4 Appellant asserts in his response to the motion for summary judgment that 
Appellee failed to prove the affiant is a competent witness and no documentation 
was presented that connects Appellant to Appellee. The note attached to the 
petition and the motion did not show it had been negotiated to any other party 
including Appellee. Negotiation requires transfer of possession of the 
instrument and its indorsement by the holder. 12A O.S. 2001, § 3-201(b). He asserts because 
there is no indorsement whatsoever by Long Beach Mortgage Company attached to 
the petition and motion for summary judgment, Appellee cannot be the holder of 
the note. Therefore, Appellant asserts Appellee cannot be the real party in 
interest. However, in Appellee's reply to Appellant's response to the motion for 
summary judgment and at the hearing, a copy of the note with a blank, undated 
indorsement signed by Long Beach Mortgage Company was attached and 
presented. 
¶5 Appellee asserts that even if negotiation of the note was at issue, 
Appellee has possession of the note and that satisfies the "negotiation" 
requirements of 12A O.S. 2001, § 
3-201. Further, the Chase affiant has personal knowledge because he reviewed 
and examined the account files and Chase is the servicing agent for Appellee. 
Appellee further asserts, it has the original note and mortgage, and is 
therefore, the real party in interest. 
¶6 The trial court reviewed the note presented at the hearing and agreed with 
Appellee that Appellee was the holder of the note because it had possession of 
the note and it was indorsed in blank. The court granted summary judgment in 
favor of Appellee on January 27, 2011. 
STANDARD OF REVIEW
¶7 An appeal on summary judgment comes to this court as a de novo 
review. Carmichael v. Beller, 1996 OK 48, ¶2, 914 P.2d 1051, 1053. All inferences and conclusions 
are to be drawn from the underlying facts contained in the record and are to be 
considered in the light most favorable to the party opposing the summary 
judgment. Rose v. Sapulpa Rural Water Co., 1981 OK 85, 621 P.2d 752. Summary judgment is 
improper if, under the evidentiary materials, reasonable individuals could reach 
different factual conclusions. Gaines v. Comanche County Medical 
Hospital, 2006 OK 
39, ¶4, 143 P.3d 203, 205.
ANALYSIS
¶8 The Uniform Commercial Code adopted in Oklahoma, 12A O.S. 2001, § 1-101 et seq., defines who is a 
"person entitled to enforce" the note (instrument).1 A "person entitled to 
enforce" the note requires possession of the note with a very limited 
exception.2 It will be either one who is a "holder" of the note or 
a "nonholder in possession of the note who has the rights of a holder."3 
¶9 Appellee must demonstrate it is a person entitled to enforce the note. It 
must provide evidence it has possession of the note either by being a holder or 
a nonholder in possession who has the rights of a holder. Appellee attached to 
its Reply to Defendant's Response to Plaintiff's Motion for Summary Judgment a 
copy of the note with a blank indorsement from Long Beach Mortgage Company. 
Appellee states this allonge4 was inadvertently omitted from the copy of the note 
that was attached to its Motion for Summary Judgment. However, this allonge was 
not attached to the Petition for Foreclosure of Mortgage. Appellee is trying to 
establish it is a "holder" of the note. Evidence establishing when Appellee 
became a person entitled to enforce the note must show Appellee was a person 
entitled to enforce the note prior to filing its cause of action for 
foreclosure. 
¶10 Appellant argues Appellee does not have standing to bring this 
foreclosure action. The issue presented to this Court is standing. This Court 
has previously held:
Standing, as a jurisdictional question, may be correctly raised at any level 
of the judicial process or by the Court on its own motion. This Court has 
consistently held that standing to raise issues in a proceeding must be 
predicated on interest that is "direct, immediate and substantial." Standing 
determines whether the person is the proper party to request adjudication of a 
certain issue and does not decide the issue itself. The key element is whether 
the party whose standing is challenged has sufficient interest or stake in the 
outcome.
Matter of the Estate of Doan, 1986 OK 15, ¶7, 727 P.2d 574, 576. In Hendrick v. Walters, 
1993 OK 
162, ¶ 4, 865 P.2d 1232, 1234, this Court also held:
Respondent challenges Petitioner's standing to bring the tendered 
issue. Standing refers to a person's legal right to seek relief in a judicial 
forum. It may be raised as an issue at any stage of the judicial process by 
any party or by the court sua sponte. (emphasis original)
Furthermore, in Fent v. Contingency Review Board, 2007 OK 27, footnote 19, 163 P.3d 512, 519, this Court stated "[s]tanding 
may be raised at any stage of the judicial process or by the court on its own 
motion." Additionally in Fent, this Court stated:
Standing refers to a person's legal right to seek relief in a judicial forum. 
The three threshold criteria of standing are (1) a legally protected interest 
which must have been injured in fact- i.e., suffered an injury which is 
actual, concrete and not conjectural in nature, (2) a causal nexus between the 
injury and the complained-of conduct, and (3) a likelihood, as opposed to mere 
speculation, that the injury is capable of being redressed by a favorable court 
decision. The doctrine of standing ensures a party has a personal stake in the 
outcome of a case and the parties are truly adverse.
Fent v. Contingency Review Board, 2007 OK 27, ¶7, 163 P.3d 512, 519-520. In essence, a plaintiff who 
has not suffered an injury attributable to the defendant lacks standing to bring 
a suit. And, thus, "standing [must] be determined as of the commencement of 
suit." Lujan v. Defenders of Wildlife, 504 U.S. 555, 570, n.5, 112 S. Ct. 2130, 2142, 119 L. Ed. 351 (1992).
¶11 To commence a foreclosure action in Oklahoma, a plaintiff must 
demonstrate it has a right to enforce the note and, absent a showing of 
ownership, the plaintiff lacks standing. Gill v. First Nat. Bank & Trust 
Co. of Oklahoma City, 1945 OK 181, 159 P.2d 717.5 Being a person entitled to enforce the note is an 
essential requirement to initiate a foreclosure lawsuit. In the present case, 
there is a question of fact as to when Appellee became a holder, and thus, a 
person entitled to enforce the note. Therefore, summary judgment is not 
appropriate. If Deutsche Bank became a person entitled to enforce the note as 
either a holder or nonholder in possession who has the rights of a holder after 
the foreclosure action was filed, then the case may be dismissed without 
prejudice and the action may be re-filed in the name of the proper party. We 
reverse the granting of summary judgment by the trial court and remand back for 
further determinations as to when Appellee acquired its interest in the 
note.
CONCLUSION
¶12 It is a fundamental precept of the law to expect a foreclosing party to 
actually be in possession of its claimed interest in the note, and have the 
proper supporting documentation in hand when filing suit, showing the history of 
the note, so the defendant is duly apprised of the rights of the plaintiff. This 
is accomplished by establishing that the party is a holder of the instrument or 
a nonholder in possession of the instrument who has the rights of a holder, or a 
person not in possession of the instrument who is entitled to enforce the 
instrument pursuant to 12A O.S. 2001, § 3-309 or 12A O.S. 2001, § 3-418. 12A O.S. 2001, § 3-301. Likewise, for the 
homeowners, absent adjudication on the underlying indebtedness, the dismissal 
cannot cancel their obligation arising from an authenticated note, or loan 
modification, or insulate them from foreclosure proceedings based on proven 
delinquency. See, U.S. Bank National Association v. Kimball 27 A.3d 1087, 75 
UCC Rep.Serv.2d 100, 2011 VT 81 (VT 2011); and Indymac Bank, F.S.B. v. 
Yano-Horoski, 78 A.D.3d 895, 912 N.Y.S.2d 239 (2010).
REVERSED AND REMANDED WITH INSTRUCTIONS
¶13 CONCUR: TAYLOR (This Court's decision in no way releases or exonerates 
the debt owed by the defendants on this home.), C.J., KAUGER (joins Taylor, 
C.J.), WATT, WINCHESTER (joins Taylor, C.J.), EDMONDSON, REIF, COMBS, GURICH 
(joins Taylor, C.J.), JJ.
¶14 RECUSED: COLBERT, V.C.J.
FOOTNOTES
1 12A O.S. 2001, § 3-301. 
2 A person who is not reasonably able to obtain 
possession of the note because it was lost, destroyed, in the wrongful 
possession of another, or it is paid or accepted by mistake. 12A O.S. 2001, § 3-301. 
3 A holder is a person in possession of the note that is 
payable either to bearer (blank indorsement) or to an identified person (special 
indorsement) that is the person in possession. 12A O.S. 2001, §§ 1-201(b)(21), 3-204 and 3-205. 
A "nonholder in possession who has the rights of a holder" is a person in 
possession of the note but the note was not indorsed by the previous holder; 
special indorsement or blank indorsement. No negotiation has occurred because 
the person now in possession did not become a holder by lack of the note being 
indorsed as mentioned. An example would be when a sale of notes in bulk is made 
by the holder to a transferee and the holder is transferring the right to 
enforce the notes even though there has been no negotiation. (See the REPORT 
OF THE PERMANENT EDITORIAL BOARD FOR THE UNIFORM COMMERCIAL CODE, APPLICATION OF 
THE UNIFORM COMMERCIAL CODE TO SELECTED ISSUES RELATING TO MORTGAGE NOTES 
(NOVEMBER 14, 2011)). Negotiation is the voluntary or involuntary transfer 
of an instrument by a person other than the issuer to a person who thereby 
becomes its holder. 12A O.S. 2001, § 3-201. Transfer occurs when the 
instrument is delivered by a person other than its issuer for the purpose of 
giving to the person receiving delivery the right to enforce the instrument. 
12A O.S. 2001, § 
3-203. Delivery of the note would still have to occur even though there is no 
negotiation. Delivery is defined as the voluntary transfer of possession. 
12A O.S. 2001, § 
1-201(b)(15). The transferee would then be vested with any right of the 
transferor to enforce the note. 12A O.S. 2001, § 3-203(b). Some jurisdictions 
have held that without holder status and therefore the presumption of a right to 
enforce, the possessor of the note must demonstrate both the fact of the 
delivery and the purpose of the delivery of the note to the transferee in order 
to qualify as the person entitled to enforce. In re Veal, 450 B.R. 897, 912 
(B.A.P. 9th Cir. 2011). 
4According to Black's Law Dictionary (9th ed. 2009) an allonge is "[a] slip of paper sometimes 
attached to a negotiable instrument for the purpose of receiving further 
indorsements when the original paper is filled with indorsements." See, 
12A O.S. 2001, § 
3-204(a). 
5 This opinion occurred prior to the enactment of the UCC 
and as explained in footnote 3 of this opinion, the person entitled to enforce 
the note in almost all situations is required to be in possession of the note 
and therefore if the owner of the note is not in possession of the note it is 
not a person entitled to enforce the note. (See the REPORT OF THE PERMANENT 
EDITORIAL BOARD FOR THE UNIFORM COMMERCIAL CODE, APPLICATION OF THE UNIFORM 
COMMERCIAL CODE TO SELECTED ISSUES RELATING TO MORTGAGE NOTES (NOVEMBER 14, 
2011)).