* District Judge for the Northern District of Texas, sitting

by designation.

** Pursuant to 5 TH C IR

. R. 47.5, the court has determined that

this opinion should not be published and is not precedent except

under the limited circumstances set forth in 5 TH C IR

. R. 47.5.4. United States Court of Appeals

Fifth Circuit



## FILED

November 11, 2004

Charles R. Fulbruge III

Clerk REVISED DECEMBER 8, 2004

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 03-60278

DARLEEN JACOBS LEVY,

Plaintiff-Counter-Defendant-Appellee,

versus

CARL MCGILL AND MCGILL WELLWORKS, INC.,

Defendants-Counter-Claimants-Appellants.

-------------------- Appeal from the United States District Court

for the Southern District of Mississippi

(01-CV-68)

--------------------

Before WIENER and PRADO, Circuit Judges, and KINKEADE, * District

Judge.

PER CURIAM: **

Defendants-appellants Carl McGill and McGill Wellworks, Inc.

(collectively, “the McGills”) appeal the district court’s denial of

their motion for summary judgment as to whether Hibernia National

Bank (“Hibernia”) acquired title to a note and deed of trust

encumbering real property in Mississippi by virtue of an assignment

from the Federal Deposit Insurance Corporation (“ FDIC”) and then3 See 12 U.S.C. § 1821(d)(2)(A)(i).

2 conducted a valid foreclosure sale to pass title to plaintiffappellee Darleen Jacobs Levy (“Levy”). The McGills also appeal the

district court’s order, following a bench trial, that quieted

Levy’s title to the property based on a determination that they had

failed to establish continuous adverse possession of 62 lots for

ten years. We affirm the district court on both counts.

I. FACTS AND PROCEEDINGS

Over a period of years, Carl McGill and his former wife, Mary

McGill, acquired title to 82 lots in the Dolan’s Race Track

Addition subdivision in Gulfport, Mississippi. In June 1987, Carl

and Mary encumbered the property to secur e a loan from the First

National Bank of Slidell, Louisiana (“First National”), executing

a Deed of Trust to E.C. Stuart, Jr., Trustee.

First National su bsequently went into receivership, and the

FDIC succeeded to its interest in Carl and Mary’s note and Deed of

Trust by operation of law. 3 After obtaining authority from the

United States District Court for the Eastern District of Louisiana,

the FDIC sold F irst National’s assets, including Carl and Mary’s

note and Deed of Trust, to Hibernia under an Asset Purchase

Agreement (“APA”). In August 1989, Hibernia executed a Notice of

Substitution of Trustee for the Deed of Trust and appointed Robert

L. Genin, Jr. as substitute trustee.4 In 1989, Mary separated from Carl and later divorced him.

5 Hereafter, all references to the “district court” are to the

United States District Court for the Southern District of

3 In October 1989, Carl and Mary transferred their interest in

t he lots to McGill Wellworks, Inc., a Mississippi corporation.

Carl and Mary McGill subsequently defaulted on the loan secured by

the property. 4 After publication and posting of a substituted

trustee’s notice of sale, Genin held a foreclosure sale on May 1,

1990 and conveyed the property to Hibernia.

After the foreclosure sale, the McGills continued to use the

p roperty and the improvements on it as they had done befor e the

foreclosure sale. During 1990 and 1991, Carl McGill, his sisterin-law, Tammy McGill, or bo th, had several encounters with

representatives of Hibernia during which they were ejected by the

McGills from what they believed to be their rightful property. In

May 1992, Hibernia sold the property at auction to Levy for $8,800.

In July 2000, Levy filed a Complaint for Damages and to Quiet

Title against the McGills in the United States District Court for

the Eastern District of Louisiana. Levy sought to confirm and

quiet her title to the 82 lots that she had acquired from Hibernia.

Levy also sought to recover revenue that the McGills had collected

on the property over the years.

The United States District Court for the Eastern District of

Louisiana transferred the case to the United States District Court

for the Southern District of M ississippi. 5 The McGills filed aMississippi.

6 As the McGills do not argue counts three and four on appeal,

they are abandoned. S ee Meadowbriar Home for Children, Inc. v.

Gunn , 81 F.3d 521, 533 (5th Cir. 1996) (citing Randall v. Chevron

U.S.A., Inc. , 13 F.3d 888, 911 (5th Cir. 1994)).

4 counterclaim in the district court setting forth five counts: (1)

confirmation of title by adverse possession; (2) removal of title

clouds created by Levy’s complaint; (3) confirmation of title and

removal of clouds as to lots that Levy did no t claim; (4)

confirmation of title to a prescriptive easement; and (5)

declaratory judgment that Levy did not have title to the property

because her predecessor-in-title, Hibernia, acquired its title by

a defective Substituted Trustee’s Deed. 6

In October 2 001, the district court entered an Agreed Order

that dismissed wit h prejudice “all claims for monetary damages”

between the McGills and Levy. The Agreed Order also dismissed

without prejudice all claims “relating to surveys, boundary lines

and physical location of the subject real property . . . .”

Both partie s then moved for summary judgment on two issues:

(1) whether Hibernia’s foreclosure on the McGills’ Deed of Trust

was valid; and (2) whether the McGills adversely possessed 62 of

the 82 lots for a continuous period of ten years. In January 2002,

the district court found that no genuine issue of material fact

existed as to the validity of the foreclosure sale and granted

summary judgment in favor of Levy on this issue. As the McGills

claimed title to only 62 of the 82 lots, the district court’s grant7 The filing of a suit to contest the adverse possessor’s

possession interrupts the ten-year period. See Trotter v. Roper

, 92 So. 2d 230, 232 (Miss. 1957). The question whether the district

court correctly determined that Levy’s suit did not toll the tenyear period until its transfer to the Mississippi district court is

not before us for review; neither would the answer to that question

affect the outcome of this action.

5 of summary judgment in favor of Levy quieted her title as to the 20

uncontested l ots. The district court also ruled that genuine

issues of material fact existed with re gard to the adverse

possession issue and thus denied both parties’ motions on that

claim.

After a bench trial on the issue of adverse possession only,

the court entered a final judgment that cleared Levy’s title to the

remaining 62 lots. The district court determined that Levy’s suit

had not tolled the McGills’ alleged period of adverse possession

until February 2001, when the Dis trict Court for the Eastern

District of Louisiana transferred i t to the Southern District of

Mississippi. 7 As such, the McGills needed to establish

commencement of any alleged period of adverse possession by March

1 991, ten years before the transfer to the Mississippi district

court. The district court ruled that the McGills had failed to

prove commencement of a period of adverse possession by March 1991

by m aking a positive assertion of a right hostile to the record

title owner. In the alternative, the district court concluded that

the McGills had interrupted any period of adverse possession that8 United States ex. rel. Reagan v. E. T ex. Med. Ctr. Reg’l

Healthcare Sys. , – F.3d —, 2004 WL 1959083, at *2 (5th Cir. Sept.

21, 2004).

9 Id. (citing F E D

. R. C IV

. P ROC

. 56(c); Daniels v. City of

Arlington , 246 F.3d 500, 502 (5th Cir. 2001)).

10 Id. (citing Morris v. Covan World Wide Moving, Inc.

, 144

F.3d 377, 380 (5th Cir. 1998)).

6 might have been established when they acknowledged Hibernia’s and

Levy’s title to the foreclosed lots. This appeal ensued.

II. ANALYSIS

A. Summary Judgment

1. Standard of Review

We review a district court’s gra nt or denial of summary

judgment de novo and use the same standard as that applied by the

district cour t. 8 Summary judgment is “proper, if, viewing the

evidence and inferences drawn from that evidence in the light most

favorable to the non-moving party, there is no genuine issue of

material fact and the moving part is entitl ed to judgment as a

matter of law.” 9 At this stage, “a court may not weigh the

evidence or eva luate the credibility of witnesses, and all

justifiable inferences will be made in the non-moving party’s

favor.” 10

2. Discussion

The McGills raise several arguments w ith regard to the

district court’s denial of their motion for summary judgment on the

issue of the validity of the foreclosure sale. The McGills first11 See United States v. Pace

, 10 F.3d 1106, 11 15 (5th Cir.

1993).

12 See, e.g., Kepner-Tregoe, Inc. v. Leadership Software, Inc.

, 12 F.3d 527, 540 (5th Cir. 1994) (“‘Signed instruments such as

wills, contracts, and promissory notes are writings that have

independent legal significance, and are nonhearsay.’

. . . The

admission of a contract to prove the operative fact of the

contract’s existence thus cannot be the subject of a valid hearsay

objection. To introduce a contract, a party need only authenticate

it.”).

7 argue that Hibernia never acquired title to the property from the

FDIC because the FDIC’s assignment to Hibernia was invalid. To

support this proposition, the McGills argue that the district court

erred when i t admitted the APA between Hibernia and the FDIC as

evidence that the FDIC assigned the Deed of Trust to Hibernia. The

McGills also argue that the district court erred when it concluded

that the APA was a valid assignment to Hibernia because (1) it

lacked definiteness; (2) Levy failed to prove that the FDIC

delivered the assignment to Hibernia; and (3) Hibernia did not

record the assignment.

The McGills objected to the admissibility of the APA on

hearsay grounds. We review a district court’s ruling on

admissibility of evidence for abuse of discretion. 11 T he district

court did not abuse its discretion here. The McGills’ objection to

the APA as hearsay is meritless. 12

A thorough review of the record reveals no reversible error in

the district court’s conclusion that the APA operated as a valid

assignment to Hibernia of the McGills’ note and Deed of Trust. The13 “An action shall not be brought whereby to charge a

defendant or other party

. . . upon any contract for the sale of

lands

. . . unless, in each of said cases, the promise or agreement

upon which such action may be brought, or some memorandum or note

thereof, shall be in writing, and signed by the party to be charged

therewith or signed by some person by him or her thereunto lawfully

authorized in writing.” M ISS

. C ODE A NN

. § 15-3-1( C ).

14 “An estate of inheritance or freehold, or for a term of more

than one year, in lands shall not be conveyed from one to another

unless the conveyance be declared by writing signed and delivered.”

M ISS

. C ODE A NN

. § 89-1-3.

15 See Scruggs v. Northern

, 85 So. 89, 91 (Miss. 1920) (noting

that the failure to record the assignment of a note secured by a

deed of trust does not affect the validity of the assignee’s

substitution of trustee).

8 McGills cite to Mississippi Code Annotated §§ 15-3-1(c) as support

for the proposition that the APA was not sufficiently definite to

convey the Deed of Trust to Hibernia. 13 The McGills also cite

Mississippi Code Annotated 89-1-3 as support for the proposition

that the FDIC had to de liver the Deed of Trust to Hibernia. 1 4 As

the district court noted, the language of these statutes indicates

that neither explicitly pertains to the assignment or transfer of

a security interest. Indeed, Section 15-3-1(c) mentions nothing on

“definiteness.” The McGills cite to no other authority to support

these arguments.

Neither do the Mc Gills cite to any applicable authority to

support their argument that the partie s had to record the

assignment. 15 Although the McGills cite to Mississippi Code

Annotated § 89-5-29 as support fo r this proposition, we conclude

that the district court did not err when it found that the language16 “Except as hereinafter provided, all mortgages and deeds of

trust upon land given to secure the payment of money, and all

instruments of writing whereby a trustee is substituted under any

such deed of trust, and all instruments of writing canceling or

satisfying, or authorizing the cancellation or satisfaction of any

such mortgage or deed of trust, shall be recorded separately from

other instruments relating to land o r records, and such records

shall be called ‘records of mortgages and deeds of trust on land.’”

M ISS

. C ODE A NN

. § 89-5-29.

17 See Myles v. Cox , 217 So. 2d 31, 34 (Miss. 1968).

18 See id.

9 of Section 89-5-29 requires that a party record only mortgage and

deed of trust documents themselves or documents that evidence a

substitution of trustee. 16

The McGills also contend that the foreclosure sale itself was

invalid. To support this a rgument, the McGills argue that the

Substitution of Trustee instrument and the notice of the

foreclosure sale did not meet the requirements of Mississippi law,

because they did not (1) show how Hibernia acquired the benefit of

the Deed of Trust and (2) properly name the original beneficiary of

the Deed of Trust, First National.

Under Mississippi law, a foreclosure sale is presumed valid. 17

The burden of proving invalidity is on the party who seeks to set

aside the foreclosur e sale. 1 8 To meet this burden, the party

attacking the validity of the sale must prove that the trustee

failed “to perform a necessary condition pre cedent to the valid

exercise of [the trustee’s] power of sale or there mu st exist an19 Id.

20 Record on Appeal 3:424.

10 inadequate consideration plus inequitable circumstances.” 19 As the

McGills do not al lege that there existed “inadequate

consideration,” they must prove that the trustee failed to satisfy

a condition precedent to his power of sale.

We perceive no error in the district court’s conclusion that

the notice and advertisement of the foreclosure sale met the

requirements of Mississippi law. Like the district court, we have

found no law that requires a substitution of trustee instrument to

demonstrate

—— in detail

—— how the secured party obtained its

interest. There is no dispute that the parties properly recorded

the Substitution of Trustee instrument here; neither do the parties

dispute that the Deed of Trust allows the legal holder to appoint

a substitute trustee. The Substitution of Trustee instrument

clearly stated that Hibernia was the holder of the McGills’ note

and Deed of Trust. In addition, the instrument stated that the

then-current holder of the note and Deed of Trust was “Hibernia

National Bank, formerly F irst National Bank of Slidell,

Louisiana.” 20 In sum, we conclude that the district court did not

err when it granted summary judgment in favor of Levy and against

the McGills on the validity of the foreclosure sale.

B. Bench trial

1. Standard of Review21 Adams v. Unione Mediterranea di Sicurita

, 364 F.3d 646, 655

(5th Cir. 2004) (quoting Baldwin v. Stalder

, 137 F.3d 836, 839 (5th

Cir. 1998)).

22 See Martin v. Simmons , 571 So. 2d 254, 257 (Miss. 1990);

Cheatham v. Stokes , 760 So. 2d 795, 799 (Miss. Ct. App. 2000).

23 See M ISS

. C ODE A NN

. § 15-1-13(1); Rice v. Pritchard , 611 So.

2d 869, 871 (Miss. 1992).

11 We review bench trial findings of fact for clear error and

conclusions of law de novo

. 21

2. Discussion

As for the 62 lots to which they claim ownership under adverse

possession, the McGills argue on appeal that the district court

erred when it held that they failed to prove a hostile claim of

ownership for an uninterrupted period of ten years. To establish

a claim of adverse possession under Mississippi law, the claimant

has the burden of showing that his possession was (1) under a claim

of ownership; (2) continuous and uninterrupted; (3) hostile —— as

opposed to amicable and permissive

—— possession; (4) open,

notorious, and visible; (5) peaceful; and (6) e xclusive. 2 2 The

claimant must establish, by clear and convincing evidence, each of

these elements for a period of ten year s. 23 The parties dispute

only three of these elements: (1) claim of ownership; (2) hostile

possession; and (3) continuous and uninterrupted possession.

The district court ruled that the McGills failed to prove by

clear and convincing evidence that they made a positive assertion

of a right hostile to Hibernia’s or Levy’s title sufficient to24 See, e.g., St. Regis Pulp & Paper Corp. v. Floyd

, 238 So.

2d 740, 744 (Miss. 1970) (“Such permissiv e possession of lands,

e ven if long continued, does not confer title in the person in

permissive possession until a positive assertion of a right hostile

to the owne r has been made known to him. The Mississippi courts

have held that a tenant at suffer ance may not set up a hostile

claim of adverse possession ba sed simply upon possession.”).

Further, the Mississippi Supreme Court has held that

[t]o acquire title by possession two things must occur,

to-wit, an occupation, actual or constr uctive, and a

claim of ownership. Neither is effectual without the

other. No continuance of occupation, no matter how long

protracted, will avail unless accompanied by cl aim of

title; and every presumption of law is that the occupant

holds in subordination and not adversely, to th e true

owner

.

Newman v. Smith

, 84 So. 2d 512, 515 (Miss. 1956) (emphasis added).

25 B ecause we find dispositive the district court’s

determination that the McGills interrupted any alleged period of

adverse possession, we need not reach the issue whether a district

court

—— under Mis sissippi law —— can determine an adverse

possession claim when it has not determined the boundaries to the

property. S ee Tutor v. Pannell

, 809 So. 2d 748 (Miss. Ct. App.

2002) (reversing chancery court’s rulin g on adverse possession

because chancery court made no determination as to boundar ies of

property).

12 overcome the presumption that a mortgagor who holds property after

a foreclosure sale is in permissive, as opposed to hostile,

possession. 24 The district court also ruled that the McGills

fatally interrupted any period of hostile possession that they may

have begun when they acknowledged that Hibernia

—— and then Levy

——

held title to the property.

After a careful consideration of the entire record and the law

applicable here, we can discern no error in the district court’s

holding. 25 We are satisfied that the district court did not err in

holding that the McGills interrupted any alleged period of adverse26 Ford v. Rhymes , 103 So. 2d 363, 364 (Miss. 1958).

27 The letter informed Levy that “[t]his office has been

consulted by Dolan Trailer Park, a/k/a McGill Wellworks, Inc.

concerning perhaps unbeknownst to you a possible boundary dispute

which concerns the property which you have acquired from Hibernia

Bank .” Record on Appeal 3:513 (emphasis added).

13 possession when Carl McGill acknowledged Hibernia’s title to the

foreclosed lots during his encounter with t h e Hibernia

representatives and when McGill Wellworks’s lawyer acknowledged

Levy’s title to the same property. Any acknowledgment by an

adverse possessor that the record owner of real property has title

is inconsistent with a claim of adverse possession. 26 The

transcript of t he January 10, 1992 videotaped encounter between

Carl McGill and the Hibernia representative reveals that Carl

repeatedly ackn owledged Hibernia’s title to the foreclosed lots.

Further, in March 1994, David Oliver, attorney for McGill

Wellworks, wrote a letter to Levy in which he acknowledged that

Levy had acquired the foreclosed lots from Hibernia. 2 7 The

district court did not err in this regard.

III. CONCLUSION

For the foregoing reasons, the judgments of the district are,

in all respects,

AFFIRMED.