Citimortgage, Inc. v. Angeline Renee Drake

IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
January 22, 2013 Session

CITIMORTGAGE, INC. v. ANGELINE RENEE DRAKE

Appeal from the Circuit Court for Hamilton County
No. 11C684 W. Jeffrey Hollingsworth, Judge

No. E2012-00722-COA-R3-CV-FILED-FEBRUARY 21, 2013

This is one of three cases consolidated for oral argument. In each case, the following
happened: (1) the borrower defaulted on his or her home loan and the lender foreclosed by
non-judicial action, a procedure authorized by the deed of trust; (2) the purchaser at the
trustee’s sale sought possession through an unlawful detainer action; (3) the borrower filed
a counterclaim asserting that the non-judicial foreclosure process violates the Tennessee
Constitution and is against public policy; and (4) the trial court dismissed the counterclaim
and granted possession to the purchaser. The present case went off on summary judgment.
The borrower appeals. We affirm the judgment of the trial court in all respects.

Tenn. R. App P. 3 Appeal as of Right; Judgment of the Circuit Court
Affirmed; Case Remanded

C HARLES D. S USANO, J R., P.J., delivered the opinion of the Court, in which D. M ICHAEL
S WINEY and J OHN W. M CC LARTY, JJ., joined.

Whitney Durand, Chattanooga, Tennessee, for the appellant, Angeline Renee Drake.

Misty Smith Kelley, Chattanooga, Tennessee, and Bradley E. Trammel, Memphis,
Tennessee, for the appellee, CitiMortage, Inc.

Robert E. Cooper, Jr., Attorney General and Reporter; William E. Young, Solicitor General;
and Alexander S. Rieger, Assistant Attorney General, General Civil Division, Nashville,
Tennessee, for the intervener, Tennessee Attorney General.
 OPINION

I.

On or about February 28, 2006, Angeline Renee Drake (“the Borrower”) signed a
promissory note evidencing a home loan in the amount of $104,500. The note was secured
by a deed of trust on the Borrower’s home at 3804 Youngstown Road, Chattanooga (“the
Property”). The beneficiary under the deed of trust was FMF Capital LLC, the original
lender. Eventually, the note and deed of trust were assigned to CitiMortgage, Inc. and a
substitute trustee was appointed.

Section 22 of the deed of trust gives the lender the ability to sell the Property at a
public auction subject to the following procedure:

Lender shall give notice to Borrower prior to acceleration
following Borrower’s breach of any covenant or agreement in
this Security Instrument . . . . The notice shall specify: (a) the
default; (b) the action required to cure the default; (c) a date, not
less than 30 days from the date the notice is given to Borrower,
by which the default must be cured; and (d) that failure to cure
the default on or before the date specified in the notice may
result in acceleration of the sums secured by this Security
Instrument and sale of the Property. The notice shall further
inform Borrower of the right to reinstate after acceleration and
the right to bring a court action to assert the non-existence of a
default or any other defense of Borrower to acceleration and
sale. If the default is not cured on or before the date specified
in the notice, Lender at its option may require immediate
payment in full of all sums secured by this Security Instrument
without further demand and may invoke the power of sale and
any other remedies permitted by Applicable Law. . . .

If Lender invokes the power of sale, Trustee shall give notice of
sale by public advertisement in the county in which the Property
is located for the time and in the manner provided by Applicable
Law, and Lender or Trustee shall mail a copy of the notice of
sale to Borrower in the manner provided in Section 15. Trustee,
without demand on Borrower, shall sell the Property at public
auction to the highest bidder at the time and under the terms

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 designated in the notice of sale. Lender or its designee may
purchase the Property at any sale.

Trustee shall deliver to the purchaser Trustee’s deed conveying
the Property without any covenant or warranty, expressed or
implied. The recitals in the Trustee’s deed shall be prima facie
evidence of the truth of the statements made therein. . . . If the
Property is sold pursuant to this Section 22, Borrower, or any
person holding possession of the Property through Borrower,
shall immediately surrender possession of the Property to the
purchaser at the sale. . . .

In June 2007, the Borrower fell behind in her monthly payments. From June 2007 to
June 2009, she remained between one to three months behind. Between January 2009 and
August 2009, the Borrower made only three payments. Her last payment was a partial
payment in September 2009. Between June 2008 and June 2009, the Borrower was sent
multiple letters informing her she was in default and that failure to cure the default might
result in acceleration of all sums due and foreclosure on the Property. The Borrower applied
for a loan modification but failed to make the monthly payments required to qualify for the
modification. The Borrower was notified that her loan would not be modified. On July 7,
2010, the Borrower was notified by counsel for CitiMortgage that the debt had been
accelerated because of her default. On July 26, 2010, counsel for CitiMortgage sent a letter
to the Borrower by certified mail informing her of foreclosure by trustee’s sale scheduled for
August 23, 2010. Notice of the sale was published in the Hamilton County Herald on July
30, 2010, August 6, 2010 and August 13, 2010.

The Property was sold at auction on September 20, 2010, at the Hamilton County
Courthouse. CitiMortgage was the high bidder at $79,993. The trustee’s deed to
CitiMortgage was recorded September 24, 2010.

The Borrower refused to vacate the Property and CitiMortgage filed this action as an
unlawful detainer action in general sessions court. The detainer case was stayed in sessions
court pending resolution of a federal action the Borrower filed challenging the
constitutionality of the foreclosure. The federal court in that case held that the foreclosure
did not offend the federal constitution because it involved only private enforcement of
contract rights rather than state action. Drake v. Citimortgage, Inc, No. 1:10-CV-305, 2011
WL 1396774 at *4 (E.D. Tenn., April 13, 2011)(“Drake I”). The federal court declined to
address the claims based on state law and dismissed the case in its entirety. After the
dismissal in Drake I, the Borrower removed the present case to the trial court and filed an
amended answer that includes a counterclaim challenging the constitutionality of the private

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“foreclosure process.” The counterclaim alleges that the “foreclosure process” is in
“violation of the Law of the Land Provision (Tenn. Const. Art. I, § 8), the Open Courts
Clause (Tenn. Const. Art. I, § 17), and the Right to a Remedy Clause (Tenn. Const. Art. I,
§ 17)” of the Tennessee Constitution. The counterclaim asserts that “[t]he following statutes
are wholly or partially unconstitutional: Tenn. Code Ann. §§ 35-5-101, 35-5-103, 35-5-106,
29-23-201, 29-18-119(c), and 29-18-125.” The counterclaim further alleges

that the protections given to [the Borrower] under Tennessee
law are illusory, and that the Tennessee statutes . . . are
unconstitutional as actually applied. Tennessee’s judicial
system fails to protect her essential property rights while
professing to do so. A borrower must run one or more of three
very difficult obstacle courses to contest foreclosure. For all
practical purposes, running any of the three courses is
impractical if not impossible, causing Tennessee attorneys to
refuse to take virtually all wrongful foreclosure cases.

To illustrate the first course, a suit to enjoin foreclosure is the
earliest possible, and most desirable, form of attack upon
wrongful foreclosure, but it is not practical. The homeowner
usually must do all of the following in a 15-day period: examine
a little-read newspaper like the Hamilton County Herald when
publication of notice occurs; find a lawyer willing to take the
case or represent himself or herself; give notice to the lender of
the intent to seek an injunction; prove that the notice has been
. . . served or show that proof of service is not required; file a
complaint in the proper court; and seek an injunction from a
judge or chancellor. It is virtually impossible for homeowners
to utilize this method of challenging a wrongful foreclosure.

The second course involves the assertion of an affirmative
defense or a counterclaim in a detainer action brought by the
lender. It is in the interest of lenders to bring detainer actions
soon after foreclosure occurs. They usually do so in a period of
days or a short number of weeks. Personal service of process is
not required to commence a detainer proceeding, and the posting
of notice at the property often occurs. The detainer action takes
place rapidly. Typically, the trial is about 14 days after process
is served. Tenn. Code Ann. § 29-18-119(c) recites: “The estate,
or merits of the title, shall not be inquired into” in a detainer

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action. This statute indicates that a homeowner may not raise
substantive issues by affirmative defenses or counterclaims in
detainer actions. Even if such defenses and counterclaims may
be raised, this still means that, during approximately 14 days, the
homeowner must find a foreclosure lawyer, reach a satisfactory
fee agreement with him or her, file an appropriate pleading, and
litigate the issue. Alternatively, the homeowner can
theoretically appeal to Circuit Court for a de novo hearing
without having raised the issue of wrongful foreclosure
previously in General Sessions Court. But this presents separate
and usually insurmountable problems. The biggest of them is
furnishing a bond in the amount of a full year’s rent. As still
another illusory alternative, the homeowner may seek to remove
the case to the Circuit Court pursuant to Tenn. Code Ann. § 16-
15-732. But this alternative is available only when “the
defendant’s defense will be of such a complex or expensive
nature that the interests of justice require that the defendant not
be required to present the defense at the general sessions level.”
Few defendants will be able to persuade a General Sessions
Court Judge that their cases involve such complexity or expense,
unlike this case in which constitutional issues are involved.
Thus, once again, there is no practical remedy provided in
Tennessee courts for raising substantive arguments in a detainer
action.

The third course of action entails the filing of a suit to set aside
a wrongful foreclosure. However, the grounds for doing so are
extremely limited: “If a foreclosure sale is legally held,
conducted and consummated, there must be some evidence of
irregularity, misconduct, fraud, or unfairness on the part of the
trustee or the mortgagee that caused or contributed to an
inadequate price, for a court of equity to set aside the sale.”
Holt v. Citizens Central Bank, 688 S.W.2d 414 (Tenn.
1984)(emphasis added). If this kind of suit were not difficult
enough already, Davis v. Williams, 2011 WL 335069 (Tenn.
App. Jan. 31, 2011) makes it impossible for almost all
borrowers. It holds that a litigant must raise constitutional (and
presumably other substantive) issues by an affirmative defense
or counterclaim in a detainer action or forever hold his peace

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 because res judicata prohibits a later suit to set aside the
foreclosure.

(Emphasis in original; paragraph numbering in original omitted.) The counterclaim also
alleges that the statutes, by allowing non-judicial foreclosure and possession to the purchaser
through a detainer action, violate public policy.

The Attorney General intervened to defend the constitutionality of the challenged
statutes. The Attorney General and CitiMortgage each filed a motion to dismiss the
counterclaim for failure to state a claim. The motions assert that the state constitutional
claims fail as a matter of law because (1) non-judicial foreclosure does not involve state
action and (2) the statutes are an expression of public policy and therefore do not violate
public policy. The trial court granted the motions to dismiss.

CitiMortgage then moved for summary judgment on its unlawful detainer claim.
CitiMortgage submitted certified copies of the recorded deed of trust and the trustee’s deed;
the affidavit of a CitiMortgage employee that the required notices were mailed to Ms. Drake
on multiple occasions, along with copies of the notices; and the affidavit of CitiMortgage’s
counsel that the notice of the foreclosure sale was mailed to the Borrower and published in
the Hamilton County Herald newspaper. The Borrower did not submit an affidavit of her
own disputing any of the assertions made on behalf of CitiMortgage, but she argued that the
affidavits CitiMortgage submitted were insufficient proof of default, notice and publication,
because there was no proof of mailing and no affidavit from the newspaper. The trial court
granted the motion for summary judgment.

II.

We decline to use the phraseology of Borrower’s statement of the issues because it
is in the form of a summary of her arguments. CitiMortgage has accurately phrased the
issues raised by the Borrower:

Was the Trial Court correct in dismissing [the Borrower’s]
constitutional and public policy challenges to the Tennessee
non-judicial foreclosure process for failure to state a claim as a
matter of law?

Was the Trial Court correct in granting CitiMortgage, Inc.’s
motion for summary judgment on its claim for unlawful
detainer?

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 III.

The determination of whether a statute is unconstitutional

is a question of law, which we review de novo, affording no
presumption of correctness to the trial court’s conclusion. See
Lynch v. City of Jellico, 205 S.W.3d 384, 390 (Tenn. 2006). In
addressing this issue, we must be mindful that “[s]tatutes
enacted by the legislature are presumed constitutional. Thus, we
must ‘indulge every presumption and resolve every doubt in
favor of constitutionality.’ ” City of Oakland v. McCraw, 126
S.W.3d 29, 38 (Tenn. Ct. App. 2003) (citing Vogel v. Wells
Fargo Guard Servs., 937 S.W.2d 856, 858 (Tenn. 1996)).

Randstad North America, L.P. v. Tennessee Dept. of Labor and Workforce Development,
372 S.W.3d 98, 101 (Tenn. Ct. App. 2011). The determination of whether a contract, or
some procedure specified in a contract, is in violation of public policy is also a question of
law which we review de novo. Baugh v. Novak, 340 S.W.3d 372, 381 (Tenn. 2011). Also,

[t]he standard of review of a summary judgment determination
is de novo without any presumption of correctness accorded the
trial court’s judgment. See McClung v. Delta Square Ltd.
P’ship, 937 S.W.2d 891, 894 (Tenn.1996); Carvell v. Bottoms,
900 S.W.2d 23, 26 (Tenn. 1995). Our only task in deciding a
motion for summary judgment is to determine whether “the
pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law.” Tenn.
R. Civ. P. 56.04; Byrd v. Hall, 847 S.W.2d 208, 211 (Tenn.
1993).

Guy v. Mutual of Omaha Ins. Co., 79 S.W.3d 528, 534 (Tenn. 2002).

IV.

Although the trial court did not explicitly state the reasons for dismissing the
counterclaim, the parties agree that the court dismissed it because it found that foreclosure
involves private action rather than state action. On appeal, the Borrower argues that state
action is not required to invoke the state constitutional provisions, and, even if it were, such

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action is present in this case. CitiMortgage and the Attorney General argue that state action
is required and that it is not present.

The central theme of the Borrower’s argument is that the power of private sale in the
deed of trust allows a home to be sold without a borrower even knowing that it is going to
be sold. She contends that the problem is compounded because the purchaser at a foreclosure
sale can obtain possession through a detainer action, in which the borrower is prohibited
from challenging the validity of the purchaser’s title. Thus, she contends that she lost her
home without ever having reasonable notice and an opportunity to be heard which are
essential to due process of law.

The Borrower made these same arguments in Drake I. The district court held that,
with regard the federal constitution, the allegations in the counterclaim did not set forth a
prima facie case of state action for the following reasons:

It is well-established that the Fourteenth Amendment Due
Process clause applies to state action, not private conduct. See
Flagg Brothers, Inc. v. Brooks, 463 U.S. 149, 156 (1978).
Thus, on its face, Plaintiff’s complaint seems not to state a claim
since the non-judicial foreclosure at issue is by definition a
contractually-determined act involving private parties, not the
state. Plaintiff recognizes this hurdle to her claim, but argues
that Tennessee statutes recognizing, enforcing, and regulating
non-judicial foreclosure effectively “convert” such foreclosures
into state action. This argument is unpersuasive.

“[T]he actions of a private party will not be attributed to the
state unless the state actually compels the action.” King v.
Emery, No. 87-5419, 1988 WL 1101, *1 (6th Cir. 1988); see
also United States v. Coleman, 628 F.2d 961, 964 (6th Cir.
1980) (“where state involvement in private action constitutes no
more than acquiescence or tacit approval, the private action is
not transformed into state action even if the private party would
not have acted without the authorization of state law”). Plaintiff
provides a laundry-list of terms in Tennessee’s non-judicial
foreclosure statutes that purportedly make the state “pervasively
involved” in the foreclosure process. However, these provisions
show only that Tennessee recognizes the right of private parties
to contract for power of sale, provides some default terms in the
event contracts authorizing power of sale are silent on some

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issues, and will enforce such contracts. They do not show that
Tennessee compels non-judicial foreclosure, or is otherwise so
entwined with the non-judicial foreclosure process that its
apparent private character is only illusory. In fact, if
Tennessee’s recognition and willingness to enforce private
contracts authorizing non-judicial foreclosure amounts to State
action, it is difficult to see why the enforcement of almost any
private contractual remedy in Tennessee would not be State
action.

The conclusion that Tennessee’s statutes recognizing and
enforcing non-judicial foreclosure do not “convert” such
foreclosures into State action is consistent with the consensus of
courts, including the Sixth Circuit and this District. In King,
1988 WL 1101 at *1, the Sixth Circuit held Tennessee’s
statutory recognition of non-judicial foreclosures “falls short of
the compulsion required to establish state action,” and affirmed
this Court’s dismissal of a case bringing constitutional
challenges to the statutes. On facts quite similar to the case at
bar, the Sixth Circuit stated:

. . . . The Supreme Court has held that where
state involvement in a private action constitutes
no more than acquiescence or tacit approval, the
private action is not transformed into state action
even if the private party would not have acted
without authorization of state law. Flagg Bros. v.
Brooks, 436 U.S. 149, 98 S.Ct. 1729, 56 L.Ed.2d
185 (1978). Indeed, under the Flagg standard, the
actions of a private party will not be attributed to
the state unless the state actually compels the
action. United States v. Coleman, 628 F.2d 961,
964 (6th Cir.1980).

Tennessee does not compel the use of private
nonjudicial foreclosure sales in financing
agreements, but rather allows the creditor to
choose between judicial sale or private
nonjudicial sale. . . . This recognition of private
nonjudicial foreclosure falls short of the

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 compulsion required to establish state action. See
Flagg, 436 U.S. 149, 98 S.Ct. 1729, 56 L.Ed.2d
185; Adikes v. S.H. Kress & Co., 398 U.S. 144,
90 S.Ct. 1598, 26 L.Ed.2d 142 (1970).

King, 1988 WL 1101 at *1. . . .

Other jurisdictions, too, have found non-judicial foreclosures are
not state action. In Garfinkle v. Superior Court of Contra
Costa Cnty., 21 Cal.3d 268, 146 Cal.Rptr. 208, 578 P.2d 925
(1978), the California Supreme Court, in a quite thorough
opinion, held non-judicial foreclosure was not state action either
for purposes of the 14th Amendment or the California
Constitution’s similar provision. The court recognized the
non-judicial foreclosure statutes at issue did not compel the
inclusion of a power of sale in a deed, but only “restrict and
regulate the exercise of the power of sale once a choice has been
made by the creditor to foreclose the deed of trust in that
manner.” Id. at 279, 146 Cal.Rptr. 208, 578 P.2d 925. The
court addressed and rejected many contentions of the petitioner
similar to those contained on Plaintiff’s “laundry list” of
purported state action in this case.

In the Ninth Circuit case Apao v. Bank of New York, 324 F.3d
1091, 1094-95 (9th Cir. 2003), the court surveyed numerous
cases, and noted that at least six federal circuits have addressed
the issue of whether non-judicial foreclosure is state action, and
all six found no state action:

When the constitutionality of such [non-judicial
foreclosure] statutes was challenged in a series of
cases beginning in the 1970s, six circuits,
including our own, found that the provisions did
not violate the Fourteenth Amendment. They
held there was no state action in either the
availability of such private remedies or their
enforcement. See Mildfelt v. Circuit Court of
Jackson Cnty., 827 F.2d 343, 346 (8th Cir.1987)
. . . Charmicor, Inc. v. Deaner, 572 F.2d 694,
696 (9th Cir.1978) . . . Levine v. Stein, 560 F.2d

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 1175, 1176 (4th Cir.1977) . . . Northrip v. Fed.
Nat’l Mortg. Ass’n, 527 F.2d 23, 28-29 (6th
Cir.1975) . . . Barrera v. Security Bldg. & Inv.
Corp., 519 F.2d 1166, 1174 (5th Cir.1975) . . .
and Bryant v. Jefferson Fed. Sav. & Loan Ass’n,
509 F.2d 511, 513 (D.C. Cir.1974) . . . . Those
decisions have not been seriously questioned in
the intervening years.

The Apao Court went on to hold, consistent with the above
cases, that there was insufficient state involvement to attribute
the non-judicial foreclosure at issue to the state itself. . . .

In this case, Plaintiff cannot surmount the strong consensus of
federal and state courts, including the Sixth Circuit and this
District, that non-judicial foreclosures do not involve state
action. None of the purported indicia of state “entanglement”
Plaintiff points to amount to more than State recognition,
regulation via “default” terms parties can adopt or change by
contract, and enforcement of private power of sale provisions.
To consider Tennessee’s non-judicial foreclosure process “state
action” because of this slight state involvement would be out of
step with clear precedent, and would also effectively render the
distinction between state and private action illusory. The Court
finds no state action was involved in the non-judicial foreclosure
of Plaintiff’s property. Accordingly, the Court will dismiss
Plaintiff’s Constitutional claim, because she has not stated a
federal cause of action pursuant to § 1983.

Drake I at *2 -4 (footnote omitted; emphasis added).

We find the analysis in Drake I to be well-reasoned and persuasive. The same
“laundry list” of statutory terms is at issue in the present case. We adopt the analysis of
Drake I and hold that private non-judicial foreclosure by auction does not involve state
action.

The court in Drake I did not address the state constitutional claims; therefore, it did
not reach the question of whether state action is required for a prima facie violation of the
Tennessee Constitution. We hold that state action is required before there can be a violation

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of the Tennessee constitutional provisions at issue in this case because those provisions limit
the actions of the government, but not private entities.

The “law of the land” clause found at Article 1, § 8 of the Tennessee Constitution
provides the “same” protection as the due process clause of the federal constitution. State
v. White, 362 S.W.3d 559, 566 (Tenn. 2012)(“Although the terminology differs slightly, the
phrases ‘law of the land’ and ‘due process of law’ have been construed to mean the same
thing.”). This has been the view of our Supreme Court for over 100 years. See, id.; State v.
James, 315 S.W.3d 440, 448 n.4 (Tenn. 2010)(“The phrase, ‘the law of the land,’ used in
[article I, section 8] of our State Constitution, and the phrase, ‘due process of law,’ used in
the Fifth Amendment and in the first section of the Fourteenth Amendment to the
Constitution of the United States, are synonymous phrases meaning one and the same thing.”
(quoting State v. Hale, 840 S.W.2d 307, 312 (Tenn.1992)(emphasis added)); Lynch v. City
of Jellico, 205 S.W.3d 384, 391 (Tenn. 2006)(“synonymous with the due process provisions
of the federal constitution”) (emphasis added); City of Knoxville v. Entertainment
Resources, LLC, 166 S.W.3d 650, 655 (Tenn. 2005)(“[A]s we have often observed, the ‘law
of the land’ proviso of our constitution is synonymous with the ‘due process of law’
provisions of the federal constitution.” (quoting State ex rel. Anglin v. Mitchell, 596 S.W.2d
779, 786 (Tenn.1980)(emphasis added); Daugherty v. State, 393 S.W.2d 739, 743
(Tenn.1965)(“Article 1, Section 8 of the Tennessee Constitution . . . is . . . of course,
synonymous with the ‘due process of law’ used in the Fifth Amendment and in the First
Section of the Fourteenth Amendment to the Constitution of the United States.”)(emphasis
added); Knoxville & O.R. Co. v. Harris, 43 S.W. 115, 120 (Tenn. 1897)(“This double
assailment may be treated as one objection, since ‘due process of law’ and the ‘law of the
land’ are synonymous phrases, and that which is violative of the one is violative of the other
also, and vice versa.”)(emphasis added).

The “fundamental protection provided by each [clause] is protection from the
government.” Bryant v. Tenet, Inc., 969 S.W.2d 923, 925 (Tenn. Ct. App. 1997). Thus,
there can be no violation of Article 1, § 8 unless there is state action. Id.; Ingle v. Head, No.
W2006-02690-COA-R3-CV, 2007 WL 4530825 at *7 (Tenn. Ct. App. W.S., filed Dec. 26,
2007)(complaint for violation of state constitutional rights arising out of seizure of an
automobile failed to state a claim for lack of state action); Burch v. McKoon, Billings &
Gold, P.C., M2004-00-83-COA-R3-CV, 2005 WL 2104611 at *11 (Tenn. Ct. App. M.S.,
filed Aug. 31, 2005) (constitutional claims without merit for lack of state action).

We are also persuaded that neither the open courts clause nor the remedies clause
contained in Article 1, § 17 limits private action. In Deiters v. Home Depot, USA, Inc., 842
F. Supp. 1023 (M.D. Tenn. 1993), the issue before the court was whether Article I, § 17
“creates a clear and unambiguous public policy exception to the employment at-will

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doctrine” that prevents an employer from firing an employee for filing a lawsuit against the
employer. Id. at 1026. The court stated:

As a general rule, constitutional restrictions limit actions by the
government, as opposed to actions by private individuals.
Indeed, courts have uniformly applied Article I, § 17 only to
governmental action, not to private action.

Id. at 1027. After gathering and discussing analogous cases, the court held that “Article I,
§ 17 . . . limits only governmental actions; private entities are not so bound.” Id. at 1029.
“Courts in most other states have concluded . . . that constitutional ‘open courts’ provisions
limit only the actions of government and the courts themselves, but do not limit the actions
of private individuals . . .” Jersey v. John Muir Medical Center, 97 Cal. App. 4th 814, 118
Cal. Rptr. 2d 807, 816 (2002). Thus, we conclude that non-judicial foreclosure does not
violate Article 1, § 17 because it does not involve state action.

We also note that for nearly 100 years, Article 1, § 17 has been viewed to impose
limits on the judiciary, but not on the legislature. Scott v. Nashville Bridge Co., 223 S.W.
844 (Tenn. 1920). In Scott, the issue was the constitutionality of the worker’s compensation
law as then configured. An injured employee argued that the exclusive remedy provision
“close[d] the courts to him that were open prior to its passage.” Id. at 852. The Court found
no merit to the argument because “section 17 of article 1 of our state Constitution is a
mandate to the judiciary, and was not intended as a limitation of the legislative branch of the
government.” Id. The Borrower argues that Scott was wrongly decided and has not been
followed in more recent decisions. The Borrower is wrong. A similar argument was made
and rejected in Mize v. Conagra, Inc., 734 S.W.2d 334, 337 (Tenn. Ct. App. 1987) and in
Estate of Shultz v. Mumford, Inc., 650 S.W.2d 37, 39 (Tenn. Ct. App. 1982). Scott was
cited favorably in Harmon v. Angus R. Jessup Associates, Inc., 619 S.W.2d 522, 524 (Tenn.
1981) and Harrison v. Schrader, 569 S.W.2d 822, 827 (Tenn. 1978) for the proposition that
the legislature does not unconstitutionally close the courts by enacting statutes of repose.
Even if we saw some merit to the Borrower’s argument, which we do not, we would not be
free to disregard the High Court’s holding in Scott. See Shultz, 650 S.W. 2d at 39 (“Since
the issue before us has been passed on by the Supreme Court and since we are an
intermediate appellate court, we are not at liberty to depart from precedent decisions.”).
Thus, we hold that the statutes authorizing and regulating private foreclosure sales do not
violate Article 1, § 17 of the Tennessee Constitution.

Another constitutional issue that the Drake opinion did not address directly was
whether the statute authorizing eviction for unlawful detainer violates the Borrower’s

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constitutional rights by forbidding inquiry into the merits of the purchaser’s title. Tenn. Code
Ann. § 29-18-119(c) (2012)(“The estate, or merits of the title, shall not be inquired
into . . ..”). This court considered the question of whether a person who holds over after
foreclosure under a deed of trust may assert wrongful foreclosure as an affirmative defense
in Citifinancial Mortgage Co., Inc. v. Beasley, No. W2006-00386-COA-R3-CV, 2007 WL
77289 at *5 (Tenn. Ct. App. W.S., filed Jan. 11, 2007). We held that “in the unique case of
foreclosures conducted under a power of sale, however, the landlord/tenant relationship
[necessary to maintain an unlawful detainer action] may not arise when the trustee has
exercised the power of sale in violation of the deed of trust.” Id. at *7. Therefore, we held
that wrongful foreclosure is a defense to an unlawful detainer brought by a purchaser in
foreclosure. Id.; see Davis v. Williams, E2010-01139-COA-R3-CV, 2011 WL 335069 at *3
(Tenn. Ct. App. E.S., filed Jan. 31, 2011). In Davis, we stated,

[t]here is absolutely no doubt that wrongful foreclosure can be
raised as an affirmative defense to an unlawful detainer action
brought by the purchaser of property in foreclosure. Beas[le]y,
2007 WL 77289 at *6-7; Federal Nat’l Mortgage Ass’n v.
Robilio, No. W2007-01758-COA-R3-CV, 2008 WL 2502114 at
*5 (Tenn. Ct. App. W.S., filed June 24, 2008). “Where title
bears directly upon the right of possession . . . a party may
legitimately interpose the issue.” Beas[le]y, 2007 WL 77289 at
*6. It is the purchaser’s “constructive entry” onto the premises
through the title obtained in foreclosure that “provides the basis
for maintaining the unlawful detainer action.” Id. at *7.

2011 WL 335069 at *3. Since the Borrower was free to assert wrongful foreclosure as a
defense to the unlawful detainer action, and raise her constitutional issues in circuit court,
we hold that the trial court correctly determined the Borrower’s counterclaim does not state
a prima facie constitutional violation.

The Borrower argues that the power of sale provisions in the deed of trust are in
violation of the public policy that she be afforded reasonable notice and a meaningful
opportunity to be heard. She argues that power of sale provisions are unconscionable and
should be denied enforcement for the same reason exculpatory negligence clauses are not
enforced in some contexts. See, e.g., Olson v. Molzen, 558 S.W.2d 429, 432 (Tenn.
1977)(doctor cannot escape negligence through such a clause); Crawford v. Buckner, 839
S.W.2d 754, 760 (Tenn. 1992)(exculpatory clause in a residential lease); Carey v. Merritt,
148 S.W.3d 912, 918 (Tenn. Ct. App. 2004)(home inspector’s exculpatory clause). The
Borrower’s public policy argument fails because once the legislature acts, this court is not
free to substitute its public policy judgment for that of the legislature. Griffin v. Shelter Mut.

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Ins. Co., 18 S.W.3d 195, 200-01 (Tenn. 2000). The legislature has determined that the
public policy of the state is to allow foreclosure through non-judicial sale in the very statutes
the Borrower attacks in her counterclaim.1 We hold that there is no merit in the Borrower’s
assertions that the foreclosure process violates public policy. Therefore, for all the reasons
we have articulated, the trial court correctly held that the counterclaim failed to state a claim.
This is true whether the statutory attack is treated as a “facial” attack on the statutes, or an
“as applied” attack.

We turn now to the Borrower’s argument that the trial court improperly granted
summary judgment to CitiMortgage. The Borrower’s first argument in this regard is that the
affidavit submitted in support of summary judgment is from an affiant who cannot have the
personal knowledge necessary to lay the foundation that all the records submitted are
business records. She argues that the records are not the records of the affiant’s employer,
but of “five unrelated entities or individuals.”

The Borrower argues that “[t]here was no proof that notice of acceleration of the note
was given as required by Section 22 of the deed of trust.” The part of section 22 that pertains
to acceleration states as follows:

Lender shall give notice to Borrower prior to acceleration
following Borrower’s breach of any covenant or agreement in
this Security Instrument . . . . The notice shall specify: (a) the
default; (b) the action required to cure the default; (c) a date, not
less than 30 days from the date the notice is given to Borrower,
by which the default must be cured; and (d) that failure to cure
the default on or before the date specified in the notice may
result in acceleration of the sums secured by this Security
Instrument and sale of the Property. The notice shall further
inform Borrower of the right to reinstate after acceleration and
the right to bring a court action to assert the non-existence of a
default or any other defense of Borrower to acceleration and

1
Because the legislature allows the parties to contract for private foreclosure, but does not compel
it, there is no inconsistency in holding that the public policy as established by the legislature is to “allow”
private foreclosure and, on the other hand, holding that there is no state action involved in a private
foreclosure. See Drake I at *2. An example may be helpful. The legislature has determined that, subject
to some restrictions, a “client” may receive a “tattoo” and a “tattoo artist” or “operator” may provide a tattoo
to the client. See Tenn. Code Ann. §§ 62-38-201 - 211 (2009). They are free to form that agreement, subject
to the restrictions related to health, and age, and licensure. Id. It cannot be against public policy to run a
“tattoo parlor” because the legislature has established that is permissible. No state action is involved because
the legislature has not compelled anyone to have a tattoo.

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 sale. If the default is not cured on or before the date specified
in the notice, Lender at its option may require immediate
payment in full of all sums secured by this Security Instrument
without further demand and may invoke the power of sale and
any other remedies permitted by Applicable Law. . . .

Among the documents CitiMortgage submitted in support of summary judgment was the
affidavit of Shellie Wallace, an attorney who was appointed successor trustee under the deed
of trust and who supervised the foreclosure at issue. She states in her affidavit that

[o]n July 7, 2010, [I] mailed a letter to [the Borrower] notifying
her that she was in default under the terms of the Note and Deed
of Trust and the debt had been accelerated. A true and correct
copy of the letter is attached . . . . The signature at the bottom
of the letter is my signature.

The letter contains the following statements:

. . . . You are currently in default under the terms of your note
and deed of trust/mortgage in that you have failed to make the
payments due through the date of this letter. The debt has been
accelerated. The amount of the debt that we are attempting to
collect and the total amount currently due on your loan as of the
date of this letter is $120,682.44. . . .

We are required by your security instrument to advise you that
you have a right to reinstate the loan after acceleration and a
right to assert in any foreclosure proceeding that no default
exists, or any other defense you may have to acceleration and
foreclosure. . . .

The file also contains the “supplemental” affidavit of Cindy Swan stating that, based on her
personal knowledge, the documents submitted in support of summary judgment are all from
the business records of CitiMortgage, Inc., “maintained in the usual course and regular
practice of business by CitiMortgage.” Several of those documents are letters from
CitiMortgage to the Borrower advising her of her default and stating the amount owed and
the date by which cure must be made. The affidavit further states that “[i]t is CitiMortgage’s
regular custom and practice to mail those letters to the address listed by regular first class
mail, and to place a copy of the letter in the debtor’s file.”

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 We hold that the affidavit of Ms. Wallace and attached documents are admissible
proof that the Borrower received notice of her default. We further hold that Ms. Swan’s
supplemental affidavit provides sufficient foundation to admit the letters from CitiMortgage
to the Borrower as business records. CitiMortgage shifted the burden to the Borrower to
come forward with evidence that she did not receive the notices of default. See Hannan v.
Alltel, 270 S.W.3d 1, 9, n.6 (Tenn. 2008). Since the Borrower did not submit an affidavit
stating that she did not receive the notices, there was no genuine issue left for trial on that
material fact.

The Borrower argues that because no affidavit from a representative of a newspaper
was submitted in support of the motion for summary judgment, it cannot be determined from
the record whether the sale was advertised three times in a local newspaper as required by
Tenn. Code Ann. § 35-5-101 (Supp. 2012). One of the documents submitted in support of
summary judgment is a certified copy of the trustee’s deed as recorded with the Hamilton
County Register of Deeds. The trustee’s deed states that “advertisement and notice of the
sale was made and given [in] conformity with the terms and provisions of [the] Deed of
Trust,” and that “advertisement began on July 30, 2010 and was advertised a total of three
times, prior to actual sale date.” By statute, the recitations in the deed of trust provide prima
facie evidence that the sale was properly advertised in the newspaper. Tenn. Code Ann. §
24-5-101 (2000)(statements in a conveyance are “prima facie evidence of the facts in such
instruments recited”). Thus, again, CitiMortgage shifted the burden to the Borrower to come
forward with evidence that the sale was not properly advertised. Since she did not,
CitiMortgage was entitled to summary judgment granting it possession of the Property.

V.

The judgment of the trial court is affirmed. Costs on appeal are taxed to the appellant,
Angeline Renee Drake. This case is remanded, pursuant to applicable law, for enforcement
of the trial court’s judgment and for collection of costs assessed by the trial court.

__________________________________________
CHARLES D. SUSANO, JR., PRESIDING JUDGE

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