BAC Home Loans Servicing, LP v. Trancynger

#26736-a-LSW

2014 S.D. 22

IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA

****
BAC HOME LOANS SERVICING, LP
f/k/a COUNTRYWIDE HOME
LOANS SERVICING, LP, Plaintiff and Appellee,

THOMAS C. TRANCYNGER;
SUSAN D. TRANCYNGER, Defendants and Appellants,

and

MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC.;
and ANY PERSON IN POSSESSION, Defendants.

****
APPEAL FROM THE CIRCUIT COURT OF
THE FOURTH JUDICIAL CIRCUIT
LAWRENCE COUNTY, SOUTH DAKOTA
****

THE HONORABLE RANDALL L. MACY
Judge

****

DAVID C. PIPER of
Mackoff Kellogg Law Firm
Dickinson, North Dakota Attorneys for plaintiff
and appellee.

DAVID L. CLAGGETT
Spearfish, South Dakota Attorney for defendants
and appellants.

****
CONSIDERED ON BRIEFS
ON FEBRUARY 18, 2014

OPINION FILED 04/16/14
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WILBUR, Justice

[¶1.] The circuit court granted summary judgment to BAC Home Loans

Servicing, LP (BAC) entitling BAC to foreclose on its residential real estate

mortgage. The circuit court also awarded attorney fees to BAC and reformed the

mortgage by changing the legal description. Thomas Trancynger and Susan

Trancynger (Trancyngers), husband and wife, appeal, arguing that a genuine issue

of material fact precludes summary judgment. We affirm.

Background

[¶2.] Trancyngers entered into a mortgage with Countrywide Home Loans

(Countrywide) in February 2003. 1 The mortgage secured a promissory note in the

original amount of $165,750 and encumbered the property commonly known as Lot

26. In July 2003, Lot 26 was subdivided into Lot 26A and Lot 26B. The plat was

recorded in December 2003. In May 2005, a modification of mortgage and partial

release of Lot 26B executed by Countrywide was filed with the Lawrence County

[¶3.] Trancyngers later refinanced the above-described loan by executing a

promissory note in May 2007 in favor of Countrywide in the original amount of

$236,900. On the same day, the Trancyngers executed a mortgage on the above-

1. BAC Home Loans Servicing, LP is frequently known as Countrywide Home
Loans Servicing, LP. Any mention of Countrywide throughout this opinion
refers to BAC.

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described property in favor of BAC. 2 The mortgage encumbered all of Lot 26

instead of Lot 26A.

[¶4.] Trancyngers defaulted under the terms of the subject note and

mortgage in 2009, and BAC initiated its lawsuit to foreclose the mortgage in June

2009. After learning the mortgage encumbered all of Lot 26, BAC amended its

complaint in September 2011 in order to reform the mortgage to encumber only Lot

26A. Trancyngers failed to file an answer to BAC’s original complaint.

Trancyngers filed an answer to the amended complaint in March 2013.

[¶5.] A summary judgment hearing was held on April 1, 2013. At this

hearing the circuit court granted BAC’s motion to reform the mortgage to encumber

only Lot 26A, but continued the hearing until May 3, 2013, to allow the parties to

further brief the issue of whether summary judgment of foreclosure was

appropriate. At the May 3 hearing the circuit court concluded there were no

genuine issues of material fact and granted BAC’s motion for summary judgment.

[¶6.] Trancyngers filed a notice of appeal on June 28, 2013. On June 25,

2013, Trancyngers received the notice of real estate sale, which was scheduled to

take place on August 16, 2013. On August 2, Trancyngers moved to stay the real

estate sale by way of supersedeas bond. A telephonic hearing was held August 12.

The circuit court set the bond at $9,000 and required Trancyngers to post the bond

2. The mortgage was initially executed in favor of Mortgage Electronic
Registration Systems, Inc. This mortgage was recorded in the office of the
Register of Deeds in Lawrence County, South Dakota in June 2007. The
mortgage was assigned to BAC prior to this action.

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with the court by August 15 in order to stay the August 16 sheriff’s sale. 3

Trancyngers did not provide the required bond and the property was sold to BAC at

the August 16 sheriff’s sale. BAC filed a satisfaction of judgment in October 2013.

[¶7.] The following issues are raised on appeal:

1. Whether Trancyngers’ failure to post a supersedeas bond
to stay the foreclosure sale renders this appeal moot.

2. Whether the circuit court erred in granting BAC
summary judgment to foreclose the mortgage.

3. Whether the circuit court erred in awarding BAC
attorney fees and costs.

4. Whether the circuit court erred in reforming the
mortgage.

Standard of Review

[¶8.] Our review of summary judgment is well-settled:

We must determine whether the moving party demonstrated the
absence of any genuine issue of material fact and showed
entitlement to judgment on the merits as a matter of law. The
evidence must be viewed most favorably to the nonmoving party
and reasonable doubts should be resolved against the moving
party. The nonmoving party, however, must present specific
facts showing that a genuine, material issue for trial exists. Our
task on appeal is to determine only whether a genuine issue of
material fact exists and whether the law was correctly applied.
If there exists any basis which supports the ruling of the trial
court, affirmance of a summary judgment is proper.

De Smet Farm Mut. Ins. Co. of S.D. v. Busskohl, 2013 S.D. 52, ¶ 11, 834 N.W.2d

826, 831 (citation omitted). “[A] trial court’s award of attorney fees is reviewed

under an abuse of discretion standard.” Eagle Ridge Estates Homeowners Ass’n,

3. Aside from the facts presented in BAC’s brief, there is no transcript of this
hearing or any record of the trial court’s decision. However, Trancyngers do
not refute BAC’s facts.

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Inc. v. Anderson, 2013 S.D. 21, ¶ 13, 827 N.W.2d 859, 865 (citation omitted). “An

abuse of discretion is a discretion exercised to an end or purpose not justified by,

and clearly against, reason and evidence.” Roth v. Haag, 2013 S.D. 48, ¶ 11, 834

N.W.2d 337, 340 (citation omitted).

Decision

[¶9.] 1. Whether Trancyngers’ failure to post a supersedeas bond to stay
the foreclosure sale renders this appeal moot.

[¶10.] BAC argues that Trancyngers’ failure to post a supersedeas bond

resulting in the failure to stay the real estate foreclosure sale renders this appeal

moot because this Court is without power to rescind a foreclosure sale. This Court

only decides “actual controversies affecting people’s rights.” Sullivan v. Sullivan,

2009 S.D. 27, ¶ 11, 764 N.W.2d 895, 899 (citation omitted). “Accordingly, an appeal

will be dismissed as moot where, before the appellate decision, there has been a

change of circumstances or the occurrence of an event by which the actual

controversy ceases and it becomes impossible for the appellate court to grant

effectual relief.” Id. (citation omitted).

[¶11.] The actual controversy regarding this appeal is whether summary

judgment was appropriate. In essence, BAC is claiming that the foreclosure sale

eradicated that controversy so that even if we agree with Trancyngers on the

summary judgment issues, our decision cannot rescind the foreclosure sale. We

disagree. Courts of this state have the power to reverse judgments and set aside

foreclosure sales. See SDCL 15-30-2; DJBAS Living Trust v. Meinhardt, 2008 S.D.

84, 755 N.W.2d 501 (affirming a circuit court’s ruling to set aside a foreclosure sale);

Rist v. Hartvigsen, 70 S.D. 571, 19 N.W.2d 830 (1945) (this Court decided, on the

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merits, an action brought to set aside a foreclosure sale); Lipsey v. Crosser, 63 S.D.

185, 257 N.W. 125, 129 (1934) (reversing the circuit court and holding that

“appellants are entitled upon this record to have the deed canceled, the sale set

aside, and an accounting of respondent’s possession”).

[¶12.] Moreover, BAC was the purchaser at the foreclosure sale and is now a

party before this Court. We further note that the foreclosure sale is subject to

statutory rights of redemption. See SDCL chapter 21-49. “Based on equitable

principles, redemption has long provided a means for reversing sales of real

property. Where, as here, the creditor-purchaser is before the [C]ourt, the [C]ourt

could exercise similar equitable principles and reverse the sale.” In re Sun Valley

Ranches, Inc., 823 F.2d 1373, 1375 (9th Cir. 1987). Under these specific

circumstances, “it would not be impossible for the Court to fashion some sort of

relief.” Id. (citation omitted); see also Sullivan, 2009 S.D. 27, ¶ 11, 764 N.W.2d at

899 (citation omitted). Therefore, Trancyngers’ appeal is not moot.

[¶13.] 2. Whether the circuit court erred in granting BAC summary
judgment to foreclose the mortgage.

[¶14.] Trancyngers assert that BAC is not entitled to foreclosure on summary

judgment because BAC was precluded from initiating foreclosure proceedings and

utilized improper tactics throughout the proceedings. Trancyngers claim “that good

faith has not existed on the part of BAC” and “that the mortgage handling and

foreclosure practices of which Trancyngers complain mirror documented national

mortgage abuse practices.” In reference to the national mortgage abuse practices,

Trancyngers point to a consent judgment obtained in the United States District

Court, District of Columbia, United States, et al. v. Bank of America, et al., No. 12-

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361 (D.D.C.), which was the “result of settlements between government entities and

major mortgagees . . . for alleged misconduct in home-mortgage practices.” Ghaffari

v. Wells Fargo Bank. N.A., ___ F. Supp. 2d ___, 2013 WL 6070364, at *3 (D.D.C.

Nov. 19, 2013).

[¶15.] General allegations which do not set forth specific facts will not

prevent summary judgment. Citibank S.D., N.A. v. Schmidt, 2008 S.D. 1, ¶ 8, 744

N.W.2d 829, 832 (citing Bordeaux v. Shannon Cnty. Sch., 2005 S.D. 117, ¶ 14, 707

N.W.2d 123, 127). Trancyngers liken their unsuccessful loan modification to the

unfair mortgage practices outlined in national news publications. Trancyngers

further link the unfair mortgage practices to the consent judgment settlement and

claim that because a settlement was reached, BAC is not entitled to a foreclosure

and must refinance the mortgage. Trancyngers’ reliance on national mortgage

abuse practices without setting forth any particular mistreatment regarding their

loan fails to raise any genuine issue of material fact because the assertion relies on

general allegations at an aggregate level.

[¶16.] Trancyngers attempt to set forth specific facts by arguing that BAC’s

loan modification process was improper because BAC returned two payments—one

for failure to submit a certified check and the other for lack of the necessary funds

to bring the default current. Aside from their vague reliance on the consent

judgment, Trancyngers fail to cite to any authority that requires BAC to accept

partial payment and renegotiate the loan. Even if the Trancyngers could articulate

what part of the consent judgment requires BAC to renegotiate the loan, they

cannot enforce the consent judgment because they are not a party to that action.

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Ghaffari, ___ F. Supp. 2d at ___, 2013 WL 6070364, at *3 (“[T]hird parties to

government consent decrees cannot enforce those decrees absent an explicit

stipulation by the government to that effect.”). 4

[¶17.] Indeed, no genuine issue of material fact exists. There is no dispute

that the Trancyngers borrowed money from BAC and secured that loan with a

mortgage in favor of BAC. Trancyngers do not dispute the interest rate, the

payment amount, or their default. Further, Trancyngers presented evidence that

matched what BAC claimed was due under the mortgage and admitted the intent of

the mortgage was to encumber Lot 26A. They were allowed almost four years to

avoid foreclosure by bringing their default current, but failed to do so. Therefore,

the circuit court did not err in granting summary judgment to BAC.

[¶18.] Finally, Trancyngers claim that summary judgment was improper

because the circuit court incorrectly concluded that Trancyngers had not made an

appearance or filed responsive pleadings in the case. “We will affirm the circuit

court’s ruling on a motion for summary judgment when any basis exists to support

its ruling.” DRD Enters., LLC v. Flickema, 2010 S.D. 88, ¶ 10, 791 N.W.2d 180, 184

4. Trancyngers also argue they were improperly “dual-tracked.” “Dual-
tracking” is when a lender allows a borrower to pursue loss mitigation
options (e.g., loan modification, deed in lieu of foreclosure, short sale) while
simultaneously pursuing foreclosure. Trancyngers claim that “dual-tracking”
has been banned by government banking regulators, but fail to cite to any
authority stating the same. Trancyngers also fail to explain whether any
alleged ban applies to them. Therefore, we decline to address the argument.
SDCL 15-26A-60(6) (“The argument shall contain the contentions of the party
with respect to the issues presented, the reasons therefore, and the citations
to the authorities relied on.”).

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(citation omitted). Because we conclude that the circuit court correctly ruled that

no genuine issue of material fact exists, we decline to address this argument.

[¶19.] 3. Whether the circuit court erred in awarding BAC attorney fees
and costs.

[¶20.] Trancyngers agree attorney fees and costs may be awarded in this

case. 5 However, they argue that the circuit court did not properly analyze the

factors necessary in determining attorney fees. “[T]he calculation of attorney fees

must begin with the hourly fee multiplied by the attorney’s hours.” Eagle Ridge,

2013 S.D. 21, ¶ 28, 827 N.W.2d at 867 (citation omitted). In addition, “[t]he award

of attorney fees must be reasonable for the services rendered.” Id. (citation and

internal quotation marks omitted). A number of factors are to be considered when

determining a reasonable award of attorney fees. 6 Id. However, no one factor

predominates as all factors should be taken into consideration. Id. Furthermore,

5. Trancyngers mistakenly reason that attorney fees and costs are allowed
under SDCL 21-50-4, which governs attorney fee awards in foreclosures of
real estate contracts. In the instant case, attorney fee awards are allowed
under SDCL 21-49-13(2), which governs attorney fee awards in short-term
redemption mortgages, and paragraph 14 of the subject mortgage.

6. These factors include:
(1) the time and labor required, the novelty and difficulty of the
questions involved, and the skill requisite to perform the legal
service properly; (2) the likelihood, if apparent to the client, that
the acceptance of the particular employment will preclude other
employment by the lawyer; (3) the fee customarily charged in
the locality for similar legal services; (4) the amount involved
and the results obtained; (5) the time limitations imposed by the
client or by the circumstances; (6) the nature and length of the
professional relationship with the client; (7) the experience,
reputation, and ability of the lawyer . . . performing the services;
and (8) whether the fee is fixed or contingent.
Eagle Ridge, 2013 S.D. 21, ¶ 28, 827 N.W.2d at 867 (citation omitted).

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“[t]he trial court is required to make specific findings based upon the factors.” Id. ¶

29, 827 N.W.2d at 868 (citation and internal quotation marks omitted).

[¶21.] At the May 3, 2013 summary judgment hearing Judge Macy

articulated his position on the award of attorney fees: “[B]ased on the size of this

file and the litigation that’s been necessary, your claim appears to be reasonable.”

During the same exchange, he said, “Before I sign off on the attorney fees, I’m going

to require that you provide an affidavit that shows the actual time spent on the

file.” Again, he stated, “It appears, based on the size of the file and all the work

that’s been done, that [the] fee is reasonable, but I want to review that before I sign

off on that.” On May 10, BAC’s attorney filed an affidavit itemizing the amount of

time worked on the file and analyzing the factors considered in determining

whether the attorney fees are reasonable.

[¶22.] The amount of time spent and hourly rate were itemized by BAC’s

attorney, which totaled $3,460.75. However, BAC’s attorney had previously agreed

to represent BAC for a flat rate. BAC’s attorney agreed to litigate the case at a flat

fee of $950 for the default residential foreclosure, $875 for litigated attorney fees,

and $875 for clearing title. Including $108 for sales tax, the total amount requested

was $2,808, which the circuit court awarded as part of the judgment.

[¶23.] The circuit court did not abuse its discretion in awarding BAC its

attorney fees and costs. In making the determination, Judge Macy made a ruling

based on the type of litigation, the length of the litigation, the amount of time spent

on the case, and the fee customarily charged for similar services. In doing so, and

after receiving an affidavit outlining the same, he concluded that the fee was

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reasonable by awarding the fees as part of the judgment. “Although this Court has

expressed a preference for written findings and conclusions, it has accepted oral

findings and conclusions where the basis of the trial court’s ruling is clear.” State v.

Fifteen Impounded Cats, 2010 S.D. 50, ¶ 23, 785 N.W.2d 272, 281 (citing In re

Guardianship & Conservatorship of Fischer, 2008 S.D. 51, ¶ 8, 752 N.W.2d 215,

217; State v. Stevenson, 2002 S.D. 120, ¶ 10, 652 N.W.2d 735, 739). Here, it is clear

Judge Macy based his decision on the length and type of litigation, the amount of

time spent on the case, and the affidavit of BAC’s attorney. Judge Macy’s decision

was supported by sound reason and evidence and therefore, was not an abuse of

discretion.

[¶24.] 4. Whether the circuit court erred in reforming the mortgage.

[¶25.] Trancyngers argue the circuit court erred when it reformed the

mortgage to only encumber Lot 26A instead of all of Lot 26 because at the time

when Trancyngers signed the mortgage, no legal description was attached.

Trancyngers argue that because there was no legal description, the circuit court

created a lien on the real estate that had not previously existed. Even assuming

Trancyngers’ factual allegations are correct, 7 the circuit court did not err in

reforming the mortgage.

[¶26.] When a mutual mistake is made between two parties, the contract

may be revised by the court. SDCL 21-11-1. In revising the contract, the court may

inquire into the parties’ intentions. SDCL 21-11-3. When asked in open court

whether he intended to mortgage Lot 26A, Mr. Trancynger responded affirmatively.

7. BAC’s Exhibits show Lot 26’s legal description was attached to the mortgage.

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The circuit court’s revision of the mortgage reflected the true intention of the

parties and therefore, was not error. 8

[¶27.] Affirmed.

[¶28.] GILBERTSON, Chief Justice, and KONENKAMP, ZINTER and

SEVERSON, Justices, concur.

8. Trancyngers advance a hearsay argument based on a letter BAC used to
prove the intention of Trancyngers to encumber Lot 26A. Because Mr.
Trancynger admitted his intention was to encumber Lot 26A, the letter is
unnecessary and our opinion on the hearsay issue is of no value.

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