Court Opinion

ID: 9754417
Source: CourtListenerOpinion
Date Created: 2023-08-28 20:00:01.473803+00
Date Added: 2024-06-11T07:27:53.284667
License: Public Domain

GURICH, J.,
with whom WINCHESTER, J. joins dissenting:
T1 I respectfully dissent. In this case, the record demonstrates that the Plaintiff filed the Petition in May of 2009, attaching an unindorsed note and an assignment of mortgage. The Defendants failed to answer the Petition and filed nothing in the case until the Plaintiff's moved to confirm the sale of the property at sheriff's sale. In their Petition and Motion to Vacate Final Entry of Judgment, the Defendants argued that the Plaintiff was not the proper party to bring the foreclosure action. However, because the Defendants failed to assert Plaintiff's lack of "standing" until after the judgment, I would affirm the trial court's denial of Defendants' Petition and Motion to Vacate Final Entry of Judgment.
The majority states that "[tlo 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," citing Gill v. First Nat. Bank & Trust Co., 1945 OK 181, *594159 P.2d 717.1 See Majority Op. 15. I agree that in any foreclosure action a party must demonstrate it is the proper party to request adjudication of the issues. However, the issue of whether a party is the proper party to request adjudication of the issues is a real-party-in-interest issue, not an issue of "standing," as the majority frames it. See Toxic Waste Impact Group, Inc. v. Leavitt, 1994 OK 148, 890 P.2d 906 (Opala, J., concurring). Justice Opala framed the issue correctly in Toxic Waste Impact Group:
Standing in the federal legal system is imbued with a constitutional/jurisdictional dimension, while in the body of state law it fits under the rubric of ordinary procedure. The U.S. Constitution, Article III, has long been held to require that a "case" or "controversy" is essential to invoke federal judicial jurisdiction and that a person's competence to bring an action is a core component of standing in a case-or-controversy inquiry. -It is for this reason that standing is an integral part of the mechanism for invoking the federal judiciary's power.
Oklahoma's fundamental law places no restraint on the judiciary's power analogous to the federal case-or-controversy requirement. Under the earlier Code of Civil Procedure the suit had to be brought by the real party in interest. That requirement has always been non-jurisdictional. If a state court proceeded to adjudicate a claim pressed by one not in that status, its decision was not fraught with jurisdictional infirmity but rather regarded as erroneous for want of proof to establish an important element of the claim. An error in this category is waivable at the option of the defendant; and, if not asserted on appeal, the reviewing court may reach the merits of the case despite a plaintiff's apparent lack of standing at nisi prius.
Toxic Waste Impact Group, Inc. v. Leavitt, 1994 OK 148, 890 P.2d 906 (Opala, J., concurring, ¶¶ 2-3) (emphasis added); see also Black Hawk Oil Co. v. Exxon, 1998 OK 70, ¶ 24, 969 P.2d 337, 344 ("Using the term 'standing' to designate real-party-in-interest issues tempts courts to apply standing principles outside the context in which they were developed.... A defendant is entitled to have the suit against him prosecuted by the 'real party in interest' but 'his concern ends when a judgment for or against the nominal plaintiff would protect defendant from any action on same demand by another.'") (Watt, J., Majority Op.).
12 The majority in this case cites Hendrick v. Walters, 1993 OK 162, ¶ 4, 865 P.2d 1232, 1234 and Fent v. Contingency Review Board, 2007 OK 27, n. 19, 168 P.3d 512, 519 for the proposition that "standing may be raised at any stage of the judicial process or by the court on its own motion." See Majority Op. ¶ 4. Those cases cite Matter of the Estate of Doan, 1986 OK 15, ¶ 7, 727 P.2d 574, as authority for this proposition. Arguably, however, Doan misstates the law:
Ever since the Code of Civil Procedure was replaced in 1984 by the Pleading Code, our nomenclature for identifying the party entitled to sue, which began to follow that of federal jurisprudence, has used "standing" as if it were a functional equivalent of the earlier procedural terms of art-real party in interest, one with ap-pealable interest, one occupying the aggrieved-party or pecuniary-interest status. It was during this transition that one of our opinions inadvertently referred to "standing" in terms of a jurisdictional requirement, thus creating the misimpression that the term has a jurisdictional dimension. Oklahoma's constitution has no case-or-controversy clause. Standing is hence to be viewed as an adjective-law concept. The inadvertent reference to the contrary should be treated as ineffective to alter standings true character in the body of our procedural law.
*595I concur in today's opinion and in the disposition of the cause. If I were writing for the court, I would additionally declare that Doan's inadvertent reference to federal law is to be viewed as withdrawn. Lu-jan's tripartite standing test, which we adopt today, must be treated as having been received sans its federal jurisdictional baggage.
See Toxic Waste Impact Group, 1994 OK 148, 890 P.2d 906 (Opala, J., concurring 14).
T3 Additionally, both Hendrick and Fent were original actions in this Court. As such, "standing" could have been raised at any point by this Court sua sponte. However, in a proceeding in District Court, because it is a non-jurisdictional issue, failure to assert that the Plaintiff is not the real party in interest may be waived. See Liddell v. Heavner, 2008 OK 6, n. 5, 180 P.3d 1191 (Opala, J., Majority Op.); see also 12 O.S.2012 § 2008(D).
4 In this case, the facts demonstrate that the Defendants did not raise the issue of "standing" until after the property was sold at sheriff's sale. Therefore, the Defendants waived the issue below, and the majority improperly addresses the issue on appeal.2 Liddell, 2008 OK 6, n. 5, 180 P.3d 1191.
15 Additionally, the trial court in this case correctly granted default judgment to the Plaintiffs and did not abuse its discretion in denying Defendants' Petition and Motion to Vacate Final Entry of Judgment. As the Appellee argues in its Answer Brief, it had a right to enforce the note despite the fact the note lacked an indorsement. The Majority correctly states the law regarding a nonholder in possession who has the rights of a holder, entitling that entity to enforce the note. However, I cannot agree with the Majority's application of the law to the facts in this case.
Transfer of an instrument 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.S8. § 3-208. Once the note is delivered, the transferee is then vested with any right of the transferor to enforee the note. 12A 0.8. § 8-208(b). Official Comment 2 of Section 3-208 explains:
If the transferee is not a holder because the transferor did not indorse, the transferee is nevertheless a person entitled to enforce the instrument ... if the transfer- or was a holder at the time of transfer. Although the transferee is not a holder under (b) the transferee obtained the rights of the transferor as holder. Because the transferee's rights are derivative of the transferor's rights, those rights must be proved. . .. The instrument, by its terms, is not payable to the transferee and the transferee must account for possession of the unindorsed instrument by proving the transaction through which the transferee acquired it. Proof of a transfer to the transferee by a holder is proof that the transferee has acquired the rights of a holder.
In this case, the note attached to the Petition was not indorsed. As such, to enforce the note, the Plaintiff had to prove it was a nonholder in possession with rights of the holder. Plaintiffs Petition alleged a valid cause of action against Defendants, ownership of the subject note and mortgage, Defendants' default on the note, and Plaintiff's right and intent to foreclose. Defendants were served with summons and Petition and were fully aware of Plaintiff's claim against them. The Defendants not only failed to answer the Petition and deny the pled facts, but also failed to respond in any way until the Plaintiff's moved to confirm the sale of the property at sheriff's sale. As a result of the Defendant's failure to respond, the facts pled in the Petition were admitted. 12 0.8. 2012 § 2008(D). As such, Plaintiff proved it was a nonholder in possession with rights of the holder and an entity entitled to enforce *596the note. The trial court correctly granted default judgment to the Plaintiffs.
6 Because the issue raised by the Defendants in this case is a real-party-in-interest issue and not one of "standing," the Defendants waived their right to argue the issue when they failed to assert it until after the Judgment. As such, the issue was waived, and it is improper for the majority to address the issue on appeal. Additionally, because the Defendants failed to respond before the judgment, the Plaintiff proved it was entitled to enforce the note. The trial court correctly granted default judgment to the Plaintiffs and did not abuse its discretion in denying Defendants' Petition and Motion to Vacate Final Entry of Judgment. The procedure imposed by the majority in this case invalidates a properly granted default judgment, will result in delay, will not affect the inevitable outcome of foreclosure, and will increase the homeowner's debt. I would affirm the trial court's denial of Defendants' Petition and Motion to Vacate Final Entry of Judgment.

. In Gill, the plaintiff brought an action to foreclose a mortgage on real property. There was no discussion in the case of whether the plaintiff had standing to bring the action or whether the plaintiff was the real party in interest. In fact, the case was tried to the Court, and the appeal turned on the sufficiency of evidence presented at trial. The Gill decision stands for the proposition that the assignment of the note carries with it an assignment of the mortgage. It is not relevant to the standing analysis, nor does it stand for the proposition that the plaintiff must prove at the time of filing that it has a right to enforce the note.

. The majority's discussion of MERS is also improper as MERS was not a party to the action and was not seeking to enforce the note and mortgage in this case. Again, had the Defendants wished to challenge Plaintiff's right to bring the foreclosure action, it should have done so before judgment. Because it did not, it waived the issue, and this Court cannot address the issue on appeal.