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Ocwen Loan Servicing, LLC v. Mickna

Court of Appeals of Arkansas, Division IV

September 6, 2017



          Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, by: Jay A. Ebelhar, for appellants.

          Keith, Miller, Butler, Schneider & Pawlik, PLLC, by: Mason L. Boling and George M. Rozzell IV, for appellee.

          MIKE MURPHY, Judge

         Ocwen Loan Servicing, LLC (Ocwen), and Federal Home Loan Mortgage Corporation (Freddie Mac) appeal the June 16, 2016 Washington County order dismissing their action against Jamie Mickna for priority determination, rescission, and foreclosure of a certain mortgage and note secured by property owned by Mickna. We affirm.

         In December 2009, Ocwen statutorily foreclosed on certain Washington County property that was owned by Jamie Mickna and secured by a mortgage held by Ocwen. Mickna had acquired the property in 2005. Ocwen was the high bidder at the foreclosure sale and conveyed its interest to Freddie Mac. Ocwen then filed an affidavit of rescission in May 2011 to rescind the original foreclosure and transfer ownership back to Mickna.

         Subsequently, in July 2012, Ocwen petitioned for judicial foreclosure. That action was dismissed without prejudice for insufficient and ineffective service of process because Ocwen failed to conduct a diligent inquiry into the whereabouts of Mickna prior to applying for permission to serve by warning order.

         Ocwen filed a second petition for judicial foreclosure in 2014, adding Freddie Mac as a party. Mickna filed a motion to dismiss, arguing that the action was filed beyond the applicable statute-of-limitations period. Ocwen and Freddie Mac then amended their complaint. On October 31, 2014, the circuit court's staff attorney emailed the parties to let them know that the court had decided to grant Mickna's motion to dismiss, and directed Mickna's counsel to prepare an order to that effect. After receiving this email, but before the judge could review and sign the order, the appellants filed another amended complaint and removed the case to federal court. See Ocwen Loan Servicing, LLC v. Mickna, No. 5:14-CV-05330, 2015 WL 685264 (W.D. Ark. Feb. 17, 2015).

         At the motion hearing in federal court, however, counsel for Freddie Mac apparently admitted "that removal was sought because his client disagreed with Judge Beaumont's decision . . . [and] desired a second bite at the apple." Id. Calling it "forum shopping at its worst, " the federal court remanded the case. Id. Upon remand, the trial court permitted the appellants to supplement their response to the motion to dismiss. The trial court then ultimately denied Mickna's motion.

         Thereafter, Mickna served interrogatories on Ocwen and Freddie Mac, requesting, among other things, the identities of individuals with knowledge of the matter and the identities of potential witnesses. Ocwen and Freddie Mac each objected, more or less, on the ground that the interrogatories were "unduly burdensome, " and both provided, without waiving any objections, that Ocwen would designate a corporate witness "who possesses information relevant to the claims in this case."

         Trial was set for February 11, 2016, with discovery due sixty days prior. The appellants did not supplement their discovery responses. On December 28, 2015, nonparty Residential Credit Solutions (RCS) moved to be substituted as a plaintiff and for a continuance. RCS claimed that Ocwen had transferred the note in this case to RCS and it needed adequate time to prepare for trial. The trial was continued to May 19, 2016. On March 17, 2016, Ocwen and Freddie Mac served supplemental discovery responses and updated answers. These mirrored the former, except that they now indicated that yet another third party, Ditech Financial, LLC (Ditech), was actually servicing the loan.

         Mickna filed a motion to dismiss on April 4, 2016, under Arkansas Rule of Civil Procedure 41(b) for failure to comply with the court's discovery deadlines. The same day, nonparty Ditech and Ocwen jointly moved for another continuance, so that now Ditech could have time to sufficiently prepare. The circuit court denied the motion and ordered mediation. Mickna and a representative from Ditech appeared at the mediation, but no representative was there on behalf of Ocwen or Freddie Mac. Mediation was unsuccessful.

         On the morning of trial, counsel for Ocwen and Freddie Mac withdrew their motion to substitute RCS based on the discovery that Ocwen had not yet endorsed the note to RCS, and Freddie Mac and Ocwen were the appropriate plaintiffs all along. The appellants advised they were ready to proceed in Ocwen's name but that they would prefer a continuance to allow the endorsement from Ditech to occur so that Ditech may be substituted as the proper party. The circuit court denied the requests and granted Mickna's motion to dismiss.

         Because the action had been dismissed once before, the second dismissal necessarily operated as a dismissal ...

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