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Baughman v. Wells Fargo Bank, N.A.

Supreme Court of Idaho

May 26, 2017

NATHON A. BAUGHMAN and MELISSA K. KEMPTON-BAUGHMAN, husband and wife, Plaintiffs-Appellants,
v.
WELLS FARGO BANK, N.A.; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; CHEVY CHASE BANK, F.S.B., and CAPITAL ONE, N.A., U.S. BANK, N.A., Trustee for Master Adjustable Rate Mortgage Trust Pass Through Certificates, Series 2007-3, Defendants-Respondents.

         2017 Opinion No. 50

         Appeal from the District Court of the First Judicial District of the State of Idaho, in and for Kootenai County. Hon. Lansing L. Haynes, District Judge.

         The judgment of the district court is affirmed.

          Henry D. Madsen, Madsen Law Offices, P.C., Coeur d'Alene, argued for appellants.

          Kelly G. McConnell, Givens Pursley, LLP, Boise, argued for respondents.

          EISMANN, Justice.

         This is an appeal out of Kootenai County from a judgment dismissing the Plaintiffs' claims, including that the statute of limitations under Idaho Code section 5-214A barred any foreclosure proceedings by the Defendants, and granting a counterclaim for judicial foreclosure of a deed of trust. We affirm the judgment of the district court.

         I.

         Factual Background.

         Melissa K. Kempton-Baughman borrowed $1, 192, 000 from Chevy Chase Bank, F.S.B., to refinance real property located on 5583 East Shoreline Drive in Post Falls. She executed a promissory note in that amount payable to the bank, and as security for the loan, the Plaintiffs executed a deed of trust transferring the real property to First American Title Insurance Company as trustee. The promissory note required monthly payments and stated a maturity date of March 1, 2047. The deed of trust identified the note, and it defined the bank as the lender, the Plaintiffs as the borrowers, and Mortgage Electronic Registration Systems, Inc. ("MERS"), as the beneficiary, "acting solely as a nominee for Lender and Lender's successors and assigns." The deed of trust also stated, "Borrower has promised to pay this debt in regular Periodic Payments and to pay the debt in full not later than March 1, 2047." The deed of trust was properly recorded on February 26, 2007.

         The Plaintiffs did not make the payment that came due in December 2007, and they have not made any further payments. On January 22, 2008, Chevy Chase Bank sent Ms. Kempton-Baughman a letter stating that her loan was in default and that the default had to be cured by February 22, 2008. The letter also stated:

Your failure to cure said default on or before said date shall result in the acceleration (immediately becoming due and payable in full) of the entire sum secured by the loan security instrument and the immediate institution of foreclosure proceedings by either strict foreclosure or by sale of the property by public auction.
As provided in the loan security instrument, you have the right to reinstate the loan after loan acceleration and the right to bring a court action to assert the nonexistence of a default or any other defense you may have to the acceleration and sale

         The promissory note provided that if there was a default that was not cured by the date specified in a written notice from the holder of the note, the holder "may require me to pay immediately the full amount of principal which has not been paid and all the interest that I owe on that amount."

         Plaintiffs apparently tried to work out a plan to cure the default. The bank sent Ms. Kempton-Baughman another similar letter dated April 15, 2008, stating that the loan was in default, and it sent her a letter dated May 14, 2008, which set forth a payment schedule to bring the loan current. She did not do so, and by letter dated July 16, 2008, the bank notified her that the default had to be cured by August 15, 2008. This letter included the same provision regarding acceleration of the entire sum secured by the deed of trust that is quoted above from the letter dated January 22, 2008.

         On November 15, 2008, MERS executed an "Assignment of Deed of Trust, " transferring to UBS Investment Bank the promissory note and the beneficial interest in the deed of trust. That assignment was recorded on May 4, 2009.

         On January 29, 2009, Pioneer Lenders Trustee Services, LLC, as successor trustee, recorded a "Notice of Default and Election to Sell Under Deed of Trust." The notice stated, "The beneficial interest under said deed of trust and the obligations secured thereby is currently held by UBS Investment Bank." The notice also stated,

By reason of such Default, the Beneficiary under said Deed of Trust has executed and delivered to said Trustee a written declaration of default and demand for sale, and has deposited with said Trustee such Deed of Trust and all documents evidencing obligations secured thereby and has declared and does hereby declare all sums secured thereby immediately due and payable and has elected to cause the trust property to be sold. Said sums being the following:
The unpaid principal balance of $1, 234, 272.29 together with interest thereon at the current rate of 7.875% per annum from 12/01/2007 until paid, plus all accrued late charges, escrow advances, attorney fees and costs, and any other sums incurred or advanced by the beneficiary pursuant to the terms and conditions of said deed of trust.

         In her affidavit filed in opposition to the Defendants' motion for summary judgment, Ms. Baughman stated that she was personally served with this notice.

         On June 4, 2009, the Plaintiffs filed a voluntary petition under Chapter 7 of the Bankruptcy Code. In their petition, they listed Chevy Chase Bank as a secured creditor, and they stated that it had a lien on the property at 5583 Shoreline Drive, that the lien was in foreclosure, that the secured debt exceeded the value of the property by $550, 000, and that the property would be surrendered. On September 9, 2009, they received a discharge. They did not list UBS Investment Bank as a creditor.

         On October 14, 2009, MERS executed an "Assignment of Deed of Trust, " transferring to UBS Investment Bank the promissory note and the beneficial interest in the deed of trust. That assignment was recorded on November 20, 2009. On January 8, 2010, the property was sold at a nonjudicial foreclosure sale to UBS Investment Bank, and the trustee's deed was recorded on January 27, 2010.

         On May 23, 2011, MERS executed an "Assignment of Deed of Trust" transferring to U.S. Bank N.A., as Trustee for Master Adjustable Rate Mortgage Trust Pass Through Certificates, Series 2007-3 ("US Bank"), the promissory note and all beneficial interest in the ...


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