Title: Littlefield v. Smith

State: alabama

Issuer: Alabama Supreme Court

Document:

Rel:   December 15, 2023 
 
 
 
 
 
 
 
 
 
Notice: This opinion is subject to formal revision before publication in the advance sheets of Southern Reporter.  
Readers are requested to notify the Reporter of Decisions, Alabama Appellate Courts, 300 Dexter Avenue, 
Montgomery, Alabama 36104-3741 ((334) 229-0650), of any typographical or other errors, in order that corrections 
may be made before the opinion is printed in Southern Reporter. 
 
 
 
SUPREME COURT OF ALABAMA 
 
OCTOBER TERM, 2023-2024 
____________________ 
 
SC-2023-0069 
____________________ 
 
Stacey Littlefield and Scott Littlefield 
 
v. 
 
Terry Daniel Smith, Staci Herring Smith, and Planet Home 
Lending, LLC 
 
Appeal from Jefferson Circuit Court 
(CV-20-902963) 
 
 
PARKER, Chief Justice. 
 
 
 
 
 
 
 
 
This appeal arises from a summary judgment entered in favor of 
the purchasers of a home that had been foreclosed on by the mortgagee 
 
SC-2023-0069 
 
2 
 
but was still occupied by the defaulting mortgagors. The Jefferson Circuit 
Court entered the summary judgment in favor of the purchasers in their 
ejectment/declaratory-judgment 
action 
against 
the 
defaulting 
mortgagors. It also entered a summary judgment in favor of the 
purchasers and the mortgagee on the defaulting mortgagors' 
counterclaims against them. The defaulting mortgagors appealed. We 
affirm. 
I. Facts 
 
In May 2019, Scott Littlefield and Stacey Littlefield purchased a 
home with a loan from Planet Home Lending, LLC ("Planet"). The loan 
was secured by a mortgage, which contained a provision requiring Planet 
to send the Littlefields notice of intent to accelerate the loan in the event 
the Littlefields defaulted. Under that provision, such notice had to 
"specify … a date, not less than 30 days from the date the notice is given, 
… by which the default must be cured." 
The Littlefields did not make any mortgage payments. Planet 
prepared two identical letters notifying the Littlefields of its intent to 
accelerate the loan. Although the letters were dated October 2, 2019, they 
 
SC-2023-0069 
 
3 
 
were purportedly mailed on October 3, 2019. In the letters, Planet gave 
the Littlefields until November 1, 2019, to cure the default. 
The Littlefields did not cure the default, and Planet foreclosed on 
the Littlefields' home and purchased it at the foreclosure sale. Planet 
then sold the home to Terry Daniel Smith and Staci Herring Smith. The 
Smiths demanded that the Littlefields vacate the home, but the 
Littlefields refused. The Smiths commenced an ejectment action against 
the Littlefields. They later added a request for a judgment declaring that 
the Littlefields had forfeited their redemption rights. 
In their answer, the Littlefields asserted affirmative defenses to the 
Smiths' ejectment claim. They also asserted several counterclaims and 
added Planet as a counterclaim defendant. Against both the Smiths and 
Planet, the Littlefields sought a judgment declaring that the foreclosure 
was void because Planet had failed to comply with the mortgage's notice 
requirements. The Littlefields also asserted a slander-of-title claim 
against the Smiths and Planet. Against Planet only, the Littlefields 
asserted claims of breach of contract, wrongful foreclosure, and violation 
of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 
2601 et seq. The Smiths then asserted against Planet a breach-of-
 
SC-2023-0069 
 
4 
 
warranty-of-title cross-claim in the event that the Littlefields established 
that the foreclosure was void. 
Planet moved for a summary judgment against the Littlefields on 
their counterclaims and against the Smiths on their cross-claim. The 
Smiths also moved for a summary judgment on their claims against the 
Littlefields, on the Littlefields' counterclaims against them, and on their 
cross-claim against Planet. The Littlefields moved for a summary 
judgment on the Smiths' claims against them and on their counterclaims 
seeking a declaratory judgment (against all counterclaim defendants) 
and alleging breach of contract (against Planet only).  
The circuit court entered a summary judgment against the 
Littlefields and in favor of the Smiths and Planet. It ruled that October 
3 was day 1 of the 30-day cure period and that the notices were therefore 
valid. It denied the Littlefields' motion for a summary judgment against 
the Smiths and Planet on its counterclaims, and it dismissed as moot the 
Smiths' cross-claim against Planet. The Littlefields filed a motion to 
alter, amend, or vacate the judgment, which was denied by operation of 
law. The Littlefields appealed.  
II. Standard of Review 
 
SC-2023-0069 
 
5 
 
 
"This Court's review of a summary judgment is de novo. 
We apply the same standard of review as the trial court 
applied. Specifically, we must determine whether the movant 
has made a prima facie showing that no genuine issue of 
material fact exists and that the movant is entitled to a 
judgment as a matter of law. In making such a determination, 
we must review the evidence in the light most favorable to the 
nonmovant. Once the movant makes a prima facie showing 
that there is no genuine issue of material fact, the burden 
then shifts to the nonmovant to produce 'substantial evidence' 
as to the existence of a genuine issue of material fact. 
'[S]ubstantial evidence is evidence of such weight and quality 
that fair-minded persons in the exercise of impartial 
judgment can reasonably infer the existence of the fact sought 
to be proved.'" 
 
Dow v. Alabama Democratic Party, 897 So. 2d 1035, 1038-39 (Ala. 2004) 
(citations omitted). Moreover, "[w]e may affirm the circuit court's 
judgment for any legal, valid reason, even one not raised in or considered 
by the circuit court, unless due-process fairness principles require that 
the ground have been raised below and it was not." State v. Epic Tech, 
LLC, [Ms. 1210012, May 20, 2022] ___ So. 3d ___, ___ (Ala. 2022). 
III. Analysis 
The Littlefields make two alternative arguments for reversal. First, 
they contend that October 3, the date the notice letters were purportedly 
mailed, was merely the triggering event from which the 30 days of the 
cure period are counted, not day 1 of the cure period. Accordingly, they 
 
SC-2023-0069 
 
6 
 
contend that the notice letters failed to strictly comply with the 
mortgage's notice requirements, and, thus, that the foreclosure was 
invalid. Second, they contend that, even if the date of mailing counts as 
day 1 of the 30-day cure period, the notice letters in this case were still 
not effective because Planet never sent them. The Littlefields contend 
that their testimony that they never received the notice letters created a 
genuine issue of material fact regarding whether they received the 
letters. 
The Smiths and Planet raise several arguments in response, but we 
find one argument made by Planet dispositive. Planet contends that, 
even if the notice letters gave the Littlefields less than 30 days to cure 
the default, and even if that defect was material, the foreclosure was 
merely voidable, not void. They further contend that, because the 
Littlefields did not directly challenge the foreclosure before the Smiths 
purchased the home, the foreclosure cannot be set aside because the 
Smiths were bona fide purchasers for value. 
 
Planet's argument is based on several decisions construing 
Alabama's nonjudicial-foreclosure statutes. Section 35-10-8, Ala. Code 
1975, sets forth various requirements for nonjudicial-foreclosure sales, 
 
SC-2023-0069 
 
7 
 
one of which is that "[n]otice of said sale shall be given in the manner 
provided in such mortgage." Section 35-10-9, Ala. Code 1975, provides 
that foreclosure sales made "contrary to the provisions of this article [i.e., 
Title 35, Chapter 10, Article 1], shall be null and void." In Dewberry v. 
Bank of Standing Rock, 227 Ala. 484, 492, 150 So. 463, 469 (1933), this 
Court held that those statutes together provide that foreclosure sales 
conducted contrary to the powers contained in mortgages are null and 
void. However, only five years later, this Court interpreted those statutes 
as providing that foreclosure sales that do not comply with the provisions 
of the mortgage or the nonjudicial-foreclosure statutes are "voidable on 
direct attack." Appelbaum v. First Nat'l Bank of Birmingham, 235 Ala. 
380, 383, 179 So. 373, 375 (1938). See also Vick v. Bishop, 252 Ala. 250, 
253, 40 So. 2d 845, 848 (1949) (same).1 Thus, according to Planet, even if 
the notice letters did not comply with the mortgage's notice 
 
1Although this Court's language in Appelbaum and Vick using the 
term "voidable" appears to be in facial tension with the "null and void" 
language of § 35-10-9, we do not address whether those cases were 
correctly decided because none of the parties has asked us to revisit or 
overrule them. Moore v. Prudential Residential Servs. Ltd. P'ship, 849 
So. 2d 914, 926 (Ala. 2002) ("Stare decisis commands, at a minimum, a 
degree of respect from this Court that makes it disinclined to overrule 
controlling precedent when it is not invited to do so."). 
 
SC-2023-0069 
 
8 
 
requirements, the foreclosure was merely voidable, and the Littlefields 
could not raise the defect in the notice letters after title had been 
transferred to the Smiths.  
 
One of the differences between a void and a voidable foreclosure 
sale is that a void sale can be set aside even if the property has passed to 
a bona fide purchaser, whereas a voidable sale can be set aside only if the 
property has not passed to a bona fide purchaser. Campbell v. Bank of 
America, N.A., 141 So. 3d 492, 495 (Ala. Civ. App. 2012). See also 12 
Thompson on Real Property §§ 101.04(c)(2)(i) and 101.04(c)(2)(ii) at 402-
03 (David A. Thomas ed. 1994)). The rule that a voidable sale cannot be 
set aside if legal title has passed to a bona fide purchaser "'follows from 
the traditional common law rule that a subsequent bona fide purchaser 
of a legal title takes free of hidden equities.'" Campbell, 141 So. 3d at 495 
(quoting 12 Thompson on Real Property § 101.04(c)(2)(ii) at 403). "'The 
right of an injured party to set aside a deed because of flaws that produce 
only a voidable title is an equitable right cut off by transfer to a bona fide 
purchaser.'" Id. 
 
SC-2023-0069 
 
9 
 
In Campbell, the Court of Civil Appeals identified the relatively few 
circumstances that Alabama courts have held render a foreclosure sale 
void. Those circumstances include: 
"(1) when the foreclosing entity does not have the legal right 
to exercise the power of sale, as, for example, when that entity 
is neither the assignee of the mortgage, nor the holder of the 
promissory note at the time it commences the foreclosure 
proceedings; (2) when 'the debt secured by the mortgage was 
fully paid prior to foreclosure'; (3) when the foreclosing entity 
failed to give notice of the time and place of the foreclosure 
sale; and (4) when the purchase price paid is '"so inadequate 
as to shock the conscience, it may itself raise a presumption 
of fraud, trickery, unfairness, or culpable mismanagement, 
and therefore be sufficient ground for setting the sale aside."'" 
 
Campbell, 141 So. 3d at 495-96 (citations omitted). None of those 
situations exists here. Thus, it appears that Planet's failure to give the 
notice required by the mortgage rendered the foreclosure only voidable, 
not void. 
 
The Littlefields respond by noting that their declaratory-judgment 
counterclaim was a direct challenge to the foreclosure and, thus, that it 
does not matter whether Planet's failure to provide sufficient time to cure 
rendered the foreclosure void or voidable. The Littlefields' argument 
picks up on a different, but related, difference between a void foreclosure 
sale and a voidable one. As the Court of Civil Appeals explained: 
 
SC-2023-0069 
 
10 
 
"In a direct attack on a foreclosure -- that is, an action 
seeking declaratory and injunctive relief to halt the 
foreclosure sale before it occurs or an action to set aside the 
sale after it has occurred -- any circumstance in the 
foreclosure process that would render the foreclosure sale void 
or voidable may be asserted. In a proceeding involving a 
collateral attack on a foreclosure, however, only those 
circumstances that would render the foreclosure sale void 
may be raised as an affirmative defense." 
 
Campbell, 141 So. 3d at 494 (some emphasis added; citations omitted). 
But even if the Littlefields are correct that their counterclaim was a 
direct action under Campbell, meaning that they could raise an issue that 
would render the foreclosure sale voidable, they could not raise such an 
issue once title to the property passed to a bona fide purchaser. In other 
words, there are two independent restrictions that apply when a party 
challenges a foreclosure on grounds that render it merely voidable: (1) 
the challenge must be brought in a direct action and (2) the challenge 
must be brought before title passes to a bona fide purchaser. Here, the 
second restriction is not satisfied because title had already passed to the 
Smiths when the Littlefields asserted their counterclaim. 
The Littlefields also contend that, in Ex parte Turner, 254 So. 3d 
207 (Ala. 2017), this Court held that a foreclosure was void because the 
mortgagee had failed to notify the mortgagors of their right to bring a 
 
SC-2023-0069 
 
11 
 
court action challenging the foreclosure. Turner is unavailing because 
this Court did not decide whether the mortgagee's failure to comply with 
the mortgage's notice requirements rendered the foreclosure sale void or 
voidable. It did not need to do so because title had not passed to a bona 
fide purchaser. Instead, the mortgagee bought the property at the 
foreclosure sale and continued to hold title to the property when the 
mortgagors commenced their action. "A mortgagee purchasing at a sale 
conducted by the mortgagee will not likely qualify as a bona fide 
purchaser, since the mortgagee/purchaser should be aware of the 
irregularity [that] makes the sale voidable." 12 Thompson on Real 
Property § 101.04(c)(2)(ii) at 403-04. Because there was no bona fide 
purchaser, the mortgagors could challenge the foreclosure as either void 
or voidable. Accordingly, this Court held that the foreclosure in Turner 
"failed" without specifying whether it was void or voidable.2 254 So. 3d at 
213. 
 
2Turner could be read as necessarily holding that the foreclosure 
was void because the mortgagors challenged the validity of the 
foreclosure in a defense to the mortgagee's ejectment action, which was a 
collateral attack. Had the foreclosure been merely voidable, the 
mortgagors would have had to challenge it in a direct action. There, the 
 
 
SC-2023-0069 
 
12 
 
Finally, the Littlefields made no effort to demonstrate that there 
was any genuine issue of material fact regarding whether the Smiths 
were bona fide purchasers. Because of that omission, and because the 
foreclosure was merely voidable, not void, the Littlefields' counterclaims 
challenging the validity of the foreclosure and sale to the Smiths -- i.e., 
their declaratory-judgment claim and their slander-of-title claim -- fail as 
a matter of law. Accordingly, the Smiths and Planet were entitled to a 
judgment as a matter of law on those claims. 
Further, the Littlefields make no argument that there is a genuine 
issue of material fact regarding the Smiths' ejectment claim, including 
 
notice was deficient because it failed to notify the mortgagors of their 
right to bring a court action directly challenging the foreclosure. A 
holding that that defect made the foreclosure merely voidable, and thus 
subject to only a direct attack, would have deprived the mortgagors of 
any notice of their only method of challenging the foreclosure. As we 
noted in Turner, the requirement that a party be given notice of his right 
to challenge a foreclosure by a court action is important because it 
preserves his right to raise defects that might render the foreclosure only 
voidable. See Turner, 254 So. 3d at 212 n.2. Thus, to the extent that 
Turner can be read as necessarily holding that the foreclosure was void, 
it appears that that holding was limited to the type of defect present in 
that case. In other words, in addition to Campbell's limited list of defects 
that render a foreclosure void, Turner potentially added the failure to 
notify a party of his right to directly challenge a foreclosure. It did not 
alter the general rule that deficient notice renders a foreclosure merely 
voidable.  
 
SC-2023-0069 
 
13 
 
the circuit court's award of damages for mesne profits. And as explained 
above, the only affirmative defense to the Smiths' ejectment claim that 
they assert on appeal -- that the foreclosure was invalid because of the 
deficient notice -- is barred by the transfer of title to a bona fide purchaser 
and as a collateral attack on the foreclosure on a basis that would render 
the foreclosure only voidable. Campbell, 141 So. 3d at 494 ("In a 
proceeding involving a collateral attack on a foreclosure, however, only 
those circumstances that would render the foreclosure sale void may be 
raised as an affirmative defense."). Accordingly, the Smiths were entitled 
to a judgment as a matter of law in their favor on their ejectment claim. 
We turn next to the Smiths' one claim that the Littlefields do not 
challenge on the basis that the foreclosure was invalid, namely, their 
claim for a judgment declaring that the Littlefields forfeited their 
redemption rights. In its judgment, the circuit court ruled that the 
Littlefields forfeited their right to redeem the property because they did 
not deliver possession of the property to Planet within 10 days after 
Planet demanded possession. The Littlefields do not challenge that ruling 
on appeal. "When an appellant fails to argue an issue in its brief, that 
issue is waived." Boshell v. Keith, 418 So. 2d 89, 92 (Ala. 1982). 
 
SC-2023-0069 
 
14 
 
Accordingly, the circuit court's judgment on that claim is due to be 
affirmed on that basis alone. 
Similarly, the Littlefields do not make any arguments challenging 
the circuit court's rulings on their counterclaims against Planet alleging 
wrongful foreclosure and violation of the RESPA. Even after Planet 
included arguments in its appellate brief offering alternative reasons 
why it was entitled to a judgment as a matter of law on those claims, the 
Littlefields did not reply to those arguments in their reply brief. 
Accordingly, the Littlefields are deemed to have abandoned those 
counterclaims on appeal, and the circuit court's judgment on those claims 
is due to be affirmed. 
The only remaining claim is the Littlefields' counterclaim against 
Planet alleging breach of contract for failing to comply with the notice 
requirements of the mortgage. In their briefs, the parties discuss the 
Littlefields' breach-of-contract claim against Planet with their 
declaratory-judgment claim because both claims involve the question 
whether Planet strictly complied with the terms of the mortgage. But 
even though both claims involve that question, the two claims are 
fundamentally different. As discussed above, the declaratory-judgment 
 
SC-2023-0069 
 
15 
 
claim sought a declaration that Planet's failure to comply with the 
mortgage's notice requirements rendered the foreclosure void. By 
contrast, the breach-of-contract claim did not require a finding that the 
foreclosure was void; even if the foreclosure itself was valid, the 
Littlefields might have had a viable claim for damages resulting from 
Planet's alleged breach of the notice requirements. But in their briefs, the 
Littlefields asserted only that Planet's alleged breach of the mortgage's 
notice requirements rendered the foreclosure void. That argument is 
irrelevant to the breach-of-contract claim. Accordingly, the Littlefields 
appear to have abandoned the breach-of-contract claim on appeal. 
Because the foregoing holdings are dispositive as to each of the 
claims before us, we do not reach the issues whether the circuit court 
erred in concluding that October 3 was day 1 of the 30-day cure period or 
whether the 30-day notice requirement was material. 
IV. Conclusion 
 
For these reasons, we affirm the circuit court's judgment.  
 
AFFIRMED. 
 
Shaw, Bryan, Mendheim, and Mitchell, JJ., concur.