Court Opinion

ID: 6320875
Source: CourtListenerOpinion
Date Created: 2022-03-07 20:18:45.142232+00
Date Added: 2024-06-11T09:02:39.165571
License: Public Domain

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA

                                  January 2022 Term
                                                                             FILED
                               _____________________                      March 7, 2021
                                                                             released at 3:00 p.m.
                                                                         EDYTHE NASH GAISER, CLERK
                                    No. 20-0970                          SUPREME COURT OF APPEALS
                                                                              OF WEST VIRGINIA
                               _____________________

                                   CLETE PAVONE,
                               Plaintiff Below, Petitioner

                                           v.

    NPML MORTGAGE ACQUISITIONS, LLC, A FOREIGN CORPORATION,
                   Defendant Below, Respondent

       ___________________________________________________________

                Appeal from the Circuit Court of Monongalia County
                         Honorable Phillip D. Gaujot, Judge
                            Civil Action No. 19-C-110

              REVERSED AND REMANDED WITH DIRECTIONS
        _________________________________________________________

                           Submitted: January 12, 2022
                              Filed: March 7, 2022

   Edmund J. Rollo, Esq.                                 Buddy Turner, Esq.
   Morgantown, West Virginia                             Gaydos & Turner, PLLC
   Attorney for Petitioner                               Kingwood, West Virginia
                                                         Attorney for Respondent

CHIEF JUSTICE HUTCHISON delivered the Opinion of the Court.
JUSTICE ALAN D. MOATS, sitting by special assignment, not participating.
                              SYLLABUS BY THE COURT

              1.      “Where neither party to an appeal raises, briefs, or argues a

jurisdictional question presented, this Court has the inherent power and duty to determine

unilaterally its authority to hear a particular case. Parties cannot confer jurisdiction on this

Court directly or indirectly where it is otherwise lacking.” Syl. Pt. 2, James M.B. v.

Carolyn M., 193 W. Va. 289, 456 S.E.2d 16 (1995).

              2.      “‘“In essence, the question of standing is whether the litigant is

entitled to have the court decide the merits of the dispute or of particular issues.” Warth v.

Seldin, 422 U.S. 490, 498 [95 S.Ct. 2197, 45 L.Ed.2d 343] (1975).’ Findley v. State Farm

Mutual Automobile Insurance Company, 213 W.Va. 80, 576 S.E.2d 807 (2002).” Syl. Pt.

4, Manville Personal Injury Settlement Trust v. Blankenship, 231 W. Va. 637, 749 S.E.2d

329 (2013).

              3.      A litigant who is not a party to a mortgage assignment or a party

intended to benefit from the assignment lacks standing to challenge the assignment.

                                               i
HUTCHISON, Chief Justice:

              The petitioner, Clete Pavone, appeals the October 27, 2020, final order of the

Circuit Court of Monongalia County granting summary judgment in favor of the

respondent, NPML Mortgage Acquisitions, LLC (“NPML Mortgage”). Mr. Pavone filed

suit against NPML Mortgage in April 2019 after he received a foreclosure notice advising

him that his real property located in Granville, West Virginia, was going to be sold. 1 Mr.

Pavone alleged that NPML Mortgage had no lawful right to foreclose on his property

because it lacked a valid assignment of the deed of trust on the property. The circuit court

found, however, that the after-acquired title doctrine cured any irregularity in the

assignment of the deed of trust.

              In this appeal, Mr. Pavone contends that the circuit court erred in its

application of the after-acquired title doctrine. Upon consideration of the parties’ briefs

and oral argument, the appendix record, and the relevant authorities, we find that Mr.

Pavone lacks standing to challenge the assignment of the deed of trust to NPML Mortgage.

Accordingly, for the reasons set forth below, we reverse the circuit’s court’s decision and

remand this case for entry of an order dismissing this action for lack of standing.

       1
         The notice Mr. Pavone received was from Seneca Trustees, Inc., which indicated
that it was the substitute trustee under the deed of trust and was conducting the foreclosure
sale on behalf of NPML Mortgage. Mr. Pavone named Seneca Trustees, Inc., as a
defendant in his complaint along with NPML Mortgage, but later requested it be dismissed
from the action. Seneca Trustees, Inc., was dismissed from the action by order of the circuit
court entered on August 5, 2019.
                                             1
                         I. Facts and Procedural Background

              Mr. Pavone obtained the subject property by a general warranty deed from

Patrick Russell on October 21, 2018. Before selling the property to Mr. Pavone, Mr.

Russell owned the real estate for almost twenty years, having acquired it on June 25, 1999.

Six months after he purchased the property in 1999, Mr. Russell obtained a $20,000 loan

from Equity South Mortgage, LLC. The loan was secured by a deed of trust on the subject

property and was duly recorded in the Office of the Clerk of the County Commission of

Monongalia County on December 29, 1999. Unbeknownst to Mr. Pavone, the property

remained encumbered by the deed of trust when he purchased it in 2018. 2

              The record shows that over the years the deed of trust was assigned to various

companies with the final assignment to NPML Mortgage. The chain of assignments that

Mr. Pavone challenged during the proceedings below is as follows: 3            (1) the first

assignment of the deed of trust from Equity South Mortgage, LLC, to EFC Mortgage

Corporation was made on January 16, 2000, and was recorded on February 7, 2019; (2) the

second assignment from EFC Mortgage Corporation to Life Bank occurred on January 7,

       2
        It appears that Mr. Pavone did not conduct a title search before he bought the
property.
       3
         According to the record, there are two entirely separate chains of assignments with
respect to the deed of trust recorded in the Office of the Clerk of the County Commission
of Monongalia County, both of which end with NPML Mortgage. However, NPML
Mortgage does not claim to have obtained its assignment through the first chain as an
assignment from Equity South Mortgage to the first purported assignee does not exist.
Accordingly, the first chain of assignments was not at issue in this case.
                                             2
2000, and was recorded on February 11, 2019; (3) the third assignment from Life Bank to

Franklin Credit Management Corporation was dated August 15, 2005, and was recorded

on February 12, 2019; (4) the fourth assignment from Franklin Credit Management

Corporation to Deutsche Bank National Trust Company occurred on February 4, 2009, and

was recorded on February 13, 2019; and (5) the final assignment from Deutsche Bank

National Trust Company to NPML Mortgage was on January 30, 2019, and was recorded

on February 14, 2019.

              As set forth above, Mr. Pavone filed suit against NPML Mortgage in April

2019 after he received the foreclosure notice. By order entered April 29, 2019, the circuit

court granted a temporary injunction of the foreclosure sale. Thereafter, Mr. Pavone filed

an amended complaint alleging that NPML did not have a valid assignment of the deed of

trust. The basis of Mr. Pavone’s claim was the fact that the second assignment of the deed

of trust from EFC Mortgage Corporation to Life Bank occurred on January 7, 2000, nine

days before the mortgage was transferred to EFC Mortgage Corporation from Equity South

Mortgage. Mr. Pavone asserted that the second assignment, which purportedly occurred

before the first assignment, constituted a “fatal break” in the chain of assignments such that

there was never a valid assignment of the deed of trust to NPML Mortgage.

              The facts were undisputed, so the parties filed cross-motions for summary

judgment. Mr. Pavone argued that the deed of trust remained with EFC Mortgage as it

never assigned its interest after it was obtained on January 16, 2000. Therefore, Mr. Pavone

                                              3
reasoned that NPML Mortgage did not have a valid assignment of the deed of trust that

would permit it to foreclose on his property. Conversely, NPML Mortgage maintained that

it had a valid assignment of the deed of trust pursuant to the after-acquired title doctrine.

As NPML Mortgage asserted: “The after-acquired title doctrine states that title acquired by

a grantor, who previously attempted to convey title to land which the grantor did not in fact

own, inures automatically to the benefit of prior grantees.” Citing 9 Thompson on Real

Property, Thomas Editions § 82.11 (2020).

              By order dated October 27, 2020, the circuit court denied Mr. Pavone’s

motion for summary judgment and granted the motion for summary judgment filed by

NPML Mortgage. The circuit court found that the after-acquired title doctrine cured the

irregularity in the chain of title and that the assignment of the deed of trust to NPML

Mortgage was valid. Upon entry of the circuit court’s order, Mr. Pavone filed this appeal.

                                 II. Standard of Review

              Mr. Pavone appeals from the circuit court’s order granting summary

judgment to NPML Mortgage. It is well established that “[a] circuit court’s entry of

summary judgment is reviewed de novo.” Syl. Pt. 1, Painter v. Peavy, 192 W. Va. 189,

451 S.E.2d 755 (1994).

                                             4
                                      III. Discussion

              Mr. Pavone asserts error with respect to the circuit court’s application of the

after-acquired title doctrine and its finding that NPML Mortgage has a valid assignment of

the deed of trust. However, as a threshold matter, we find it is necessary to consider

whether Mr. Pavone has standing to challenge the assignment of the deed of trust to NPML

Mortgage. “Standing is a jurisdictional requirement that cannot be waived, and may be

brought up at any time in a proceeding.” Franklin D. Cleckley, Robin J. Davis & Louis J.

Palmer, Jr., Litigation Handbook on West Virginia Rules of Civil Procedure § 12(b), at 21

(Supp. 2004); see also State ex rel. Paul B. v. Hill, 201 W. Va. 248, 256, 496 S.E.2d 198,

206 (1997) (noting that “standing is an element of jurisdiction over the subject matter”).

Although neither party raised the issue below or in their initial briefing of this appeal, we

have the authority to sua sponte address the issue as this Court has previously held:

                      Where neither party to an appeal raises, briefs, or argues
              a jurisdictional question presented, this Court has the inherent
              power and duty to determine unilaterally its authority to hear a
              particular case. Parties cannot confer jurisdiction on this Court
              directly or indirectly where it is otherwise lacking.

Syl. Pt. 2, James M.B. v. Carolyn M., 193 W. Va. 289, 456 S.E.2d 16 (1995); see also State

ex rel. Abraham Linc Corp. v. Bedell, 216 W. Va. 99, 111, 602 S.E.2d 542, 554 (2004)

(Davis, J., concurring) (“The decisions of this Court and other jurisdictions have pointed

out that an appellate court has the inherent authority and duty to sua sponte address the

                                              5
issue of standing, even when the parties have failed to raise the issue at the trial court level

or during a proceeding before the appellate court.”). 4

              “[S]tanding is defined as ‘[a] party’s right to make a legal claim or seek

judicial enforcement of a duty or right.’” Findley v. State Farm Mut. Auto. Ins. Co., 213

W. Va. 80, 94, 576 S.E.2d 807, 821 (2002) (quoting Black’s Law Dictionary 1413 (7th ed.

1999)). As this Court has observed,

                      “‘[i]n essence, the question of standing is whether the
              litigant is entitled to have the court decide the merits of the
              dispute or of particular issues.’ Warth v. Seldin, 422 U.S. 490,
              498 [95 S.Ct. 2197, 45 L.Ed.2d 343] (1975).” Findley v. State
              Farm Mutual Automobile Insurance Company, 213 W.Va. 80,
              576 S.E.2d 807 (2002).

Syl. Pt. 4, Manville Personal Injury Settlement v. Trust v. Blankenship, 231 W.Va. 637,

749 S.E.2d 329 (2013). Stated another way, “when standing is placed in issue in a case,

the question is whether the person whose standing is challenged is a proper party to request

an adjudication of a particular issue[.]” Findley, 213 W. Va. at 95, 576 S.E.2d at 822

(additional citation omitted).

              In this case, the focus of our standing inquiry is whether Mr. Pavone is the

proper party to challenge the assignment of the deed of trust to NPML Mortgage given that

       4
        While the parties did not raise the issue, after oral argument of this appeal, this
Court ordered the parties to file simultaneous supplemental briefs addressing Mr. Pavone’s
standing to bring the action before the circuit court.
                                               6
he was not a party to the assignment contract. In fact, Mr. Pavone was not the borrower.

This Court had long recognized that the “prudential standing rule . . . normally bar litigants

from asserting the rights or legal interests of others in order to obtain relief from an injury

to themselves.” Kessel v. Leavitt, 204 W. Va. 95, 118, 511 S.E.2d 720, 743 (1998) (quoting

Warth v. Seldin, 422 U.S. 490, 509, 95 S.Ct. 2197, 2210, 45 L.Ed.2d 343, 361 (1975)). In

other words, “[o]ne specific aspect of standing is that one generally lacks standing to assert

the rights of another.” State ex rel. Leung v. Sanders, 213 W. Va. 569, 578, 584 S.E.2d

203, 212 (2003). Indeed,

                     [t]raditionally, courts have been reluctant to allow
              persons to claim standing to vindicate the rights of a third party
              on the grounds that third parties are generally the most
              effective advocates of their own rights and that such litigation
              will result in an unnecessary adjudication of rights which the
              holder either does not wish to assert or will be able to enjoy
              regardless of the outcome of the case

Snyder v. Callaghan, 168 W. Va. 265, 279, 284 S.E.2d 241, 250 (1981).

              Although this Court has not previously considered whether a litigant who is

not a party to an assignment has standing to challenge the assignment, courts that have

considered the issue in the context of mortgage assignments have concluded that such a

litigant has no standing. For example, in Marcuzzo v. Bank of the West, 862 N.W.2d 281

(Neb. 2015), the mortgagors, Brian and Donna Marcuzzo, filed suit against Wells Fargo

Bank, the Federal National Mortgage Association, and Bank of the West following the

foreclosure and subsequent sale of their residence. All of the Macuzzos’ claims were based

on their contention that the assignment of their mortgage was improper. Specifically, the

                                              7
Marcuzzos asserted that there was a defective assignment of their mortgage because a

Wells Fargo employee signed documents that should have been signed by a Bank of the

West employee and, further, the wrong loan servicing number had been used. As in the

case at bar, the lower court granted summary judgment in favor of the defendant banks.

On appeal, the Marcuzzos argued, inter alia, that there were genuine issues of fact with

regard to the assignment of their mortgage. The Supreme Court of Nebraska, concluded,

however, that the Marcuzzos “lack[ed] standing to attack the assignment of their

mortgage.” 862 N.W.2d at 289.

             In finding the Marcuzzos did not have standing to challenge the assignment

of their mortgage, the Nebraska court reasoned:

                     [S]tanding requires that a plaintiff show his or her claim
             is premised on his or her own legal rights as opposed to rights
             of a third party. Accordingly, Nebraska law states that “only a
             party (actual or alleged) to a contract can challenge its
             validity.” “‘[T]he fact that a third party would be better off if a
             contract were unenforceable does not give him standing to sue
             to void the contract.’” Parties can recover as third-party
             beneficiaries of a contract only if it appears that the rights and
             interest of the third parties “‘were contemplated and that
             provision was being made for them.’”

                    Though we have never addressed the more specific
             question of whether a borrower has standing to challenge the
             assignment of their mortgage, it follows from these rules that a
             borrower who is not a party to a mortgage assignment, or a
             party intended to benefit from the assignment, lacks standing
             to challenge the assignment.

                    While not many courts have addressed this specific
             question, the majority of courts have found under these
             principles that borrowers do not have standing to challenge an

                                             8
             assignment of their mortgage, because they are not a party to
             the assignment contract. This is true even if there is proof that
             the assignment is somehow flawed. Where the mortgage
             assignment does not alter the borrower’s obligations under the
             note or mortgage, and no injury is traceable to the mortgage
             assignment, the borrowers simply have shown no injury. In
             reaching this conclusion, courts rely on the general common-
             law principle that the maker of a promissory note cannot
             challenge his or her obligations under the note by asserting that
             an invalid assignment had occurred.

862 N.W.2d at 289-90 (footnotes and citations omitted).

             Similarly, in Ames v. JP Morgan Chase Bank, N.A.,783 S.E.2d 614 (Ga.

2016), the mortgagors, Cindy and David Ames, filed suit when Chase Bank initiated a

foreclosure sale on their property. The Ameses alleged that the assignment of the security

deed was invalid because the power of attorney authorizing Chase Bank to make the

assignment expired before the assignment was completed. Finding that the Ameses did

not have standing to challenge to the assignment, the Supreme Court of Georgia explained:

                    The assignment of a security deed is a contract between
             the deed holder and the assignee. See Bank of Cave Spring v.
             Gold Kist, Inc., 173 Ga.App. 679, 680, 327 S.E.2d 800 (1985).
             And a lawsuit on a contract generally may be brought only by
             a party to the contract or an intended third-party beneficiary of
             the contract. See OCGA § 9–2–20. The debtor normally is not
             a party to an assignment of the deed, and the Ameses clearly
             were not a party to the assignment at issue here.

                    ****

                    [T]he debtor cannot . . . dispute the assignment; that
             may normally be done only by the assignor, because the debtor
             is not a third-party beneficiary of the assignment as a whole
             and particularly is not intended to directly benefit from the
             transfer of the power of sale. “‘[S]tatus as a third-party

                                            9
             beneficiary does not imply standing to enforce every promise
             within a contract, including those not made for that party’s
             benefit.’ To the contrary, ‘a third party beneficiary . . . can only
             enforce those promises made directly for his benefit.’” Archer
             W. Contractors., Ltd. v. Estate of Pitts, 292 Ga. 219, 226–227,
             735 S.E.2d 772 (2012) (citations omitted). The Ameses were
             plainly not intended third-party beneficiaries of the assignment
             at issue here.

Ames, 783 S.E.2d at 620.

             Likewise, in Harnett v. M&T Bank, 204 F.Supp.3d 851 (E.D. Va. 2016),

another court rejected an attempt by borrowers to prevent the foreclosure on their property

based an alleged improper assignment of the deed of trust. Again, the decision was based

on a lack of standing. As that court explained:

                     [T]he Hardnetts have no standing to dispute the
             assignment of the Deed of Trust based on alleged improper
             notarization on the document and a failure to publicly record
             the assignment. They are neither parties to the assignment nor
             the intended beneficiaries of the assignment. Bennett v. Bank
             of Am., N.A., No. 3:12cv34, 2012 WL 1354546, at *7 (E.D.Va.
             Apr. 18, 2012) (noting that “the validity of the assignment does
             not affect whether [a] [b]orrower owes its obligations, but only
             to whom [a] [b]orrower is obligated” (alterations in original)
             (citation omitted)); Wolf v. Fed. Nat'l Mortg. Ass'n, 830
             F.Supp.2d 153, 161 (W.D.Va.2011), aff'd, 512 Fed.Appx. 336
             (4th Cir.2013). Because the Hardnetts lack standing to
             challenge the assignment of the Deed of Trust, any claim based
             on such assignment fails.

Harnett, 204 F.Supp.3d at 858. Several other courts have reached the same conclusion.

See Haynes v. McCalla Raymer, LLC, 793 F.E2d 1246, 1251 (11th Circ. 2015) (borrowers

lack standing to bring their claim because they “are not parties to the assignment they are

challenging”); Farkas v. GMAC Mortg., L.L.C., 737 F.3d 338, 342 (5th Cir. 2013) (a non-

                                             10
party mortgagor “lacks requisite standing” to challenge assignment of deed of trust); Yuille

v. American Home Mortg. Services, Inc., 483 Fed.Appx. 132, 135 (6th Cir. 2012)

(defaulting borrower “as a stranger to the [mortgage] assignment, lacked standing to

challenge its validity”); Hopper v. Mortgage Electronic Registrations Systems, Inc., No.

3:18-cv-00034-FDW-DSC, 2018 WL 1278204, at *3 (W.D. N.C. Mar. 12, 2018)

(mortgagor lacked standing to challenge assignment of deed of trust because “person who

is not a party to the assignment or an intended beneficiary does not possess standing to

assert a claim based on the assignment’s validity”); Ukaegbu v. Select Portfolio Servicing,

Inc., No. PWG-16-3415, 2017 WL 2930465, at *4 (D. M.D. July 7, 2017) (“Ukaegbu

insists that ‘no transfer of possession, endorsements or any chain of assignments exists and

in fact never took place,’ thereby challenging whether MERS could, as nominee for MLN,

assigned MLN’s rights to the Deed of Trust to Wells Fargo in the Assignment of Deed . . .

But, Plaintiff is neither a party to nor a beneficiary of this contract and therefore he lacks

standing to challenge it.”); Lawson v. Bank of America, N.A., No. 12–cv–14326, 2014 WL

4374379, at *4 (E.D. Mich. Sept. 4, 2014) (“Plaintiffs challenges to the foreclosure and

sale rest on the alleged invalidity of the assignment of the mortgage and note from

Countrywide/MERS to defendant. Plaintiffs lack standing to challenge the assignment.”);

Hunt v. Select Portfolio Servicing, Inc., No. 11-14067, 2012 WL 6193865, at *4 (E.D.

Mich. Dec. 12, 2012) (“Even if there were defects in the assignments [of note and

mortgage] . . . .and even if such defects would destroy the chain of title, Plaintiff

nevertheless lacks standing to raise such defects. Plaintiff is not a party to the assignments

in question.”); Paatalo v. J.P. Morgan Chase Bank, N.A., No. CV-10-119-BLG-CSO, 2012

                                             11
WL 2505742, at *7 (D. Mont. June 28, 2012) (“To the extent that Paatalo challenges the

validity of the various assignments, purchase agreements, and pooling or servicing

agreements, this Court concludes, as many courts have previously held, that a borrower

does not have standing to challenge assignments and agreements to which it is not a

party.”); Wolf v. Fed. Nat. Mortg. As’n, 830 F.Supp.2d 153, 161 (W.D. Va. 2011) (“Wolf

is not a party to the assignment from MERS to BAC [and] is not an intended beneficiary

of the assignment which is, to be sure, a contract . . . As such, she lacks standing to

challenge the assignment’s validity.”).

              Notably, some courts have recognized an exception, allowing debtors to

challenge an assignment that is truly void. As the Marcuzzo court explained,

              if the borrower was at risk of paying the same debt twice, then
              the borrower could establish a concrete injury arising from the
              improper assignment of the mortgage. If the borrower can
              show any injury that is directly traceable to the assignment of
              the mortgage, then, under this exception, the borrower would
              have standing to challenge that assignment.

862 N.W.2d at 290-91; see also Livonia Properties Holdings, LLC v. 12840-12976

Farmington Road, 399 Fed.Appx. 97, 102 (6th Cir. 2010) (explaining that an obligor may

assign as a defense to foreclosure any matter that renders an assignment void “because they

cannot otherwise protect themselves from paying the same debt twice”). Obviously, in

this case, Mr. Pavone could not make such a claim as he was not the borrower and,

therefore, was not subject to paying the debt in the first instance.

                                              12
              Having considered the foregoing authorities, we now hold that a litigant who

is not a party to a mortgage assignment or a party intended to benefit from the assignment

lacks standing to challenge the assignment. Applying our holding to this case, we find that

Mr. Pavone does not have standing to challenge the validity of the assignment of the deed

of trust to NPML Mortgage. The facts as presented show that Mr. Pavone was not a party

to the assignment of the deed of trust nor was he intended to benefit from the assignment.

Accordingly, Mr. Pavone’s civil action must be dismissed because he does not have

standing to pursue his claim. 5

                                      IV. Conclusion

              For the reasons set forth above, the final order of the circuit court entered on

October 27, 2020, is reversed, and this case is remanded to the circuit court for entry of an

order dismissing this action for lack of standing.

                                                     Reversed and remanded with directions.

       5
         Having found that Mr. Pavone lacks standing to bring this action, we will not
address the merits of his appeal.
                                             13