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Jones v. Centennial Bank

Court of Appeals of Arkansas, Division I

May 30, 2018



          Jurist Law Group, PLLC, by: J. Shane Cox, for appellant.

          Peel Law Firm, P.A., by: John R. Peel; and Brett D. Watson, Attorney at Law, PLLC, by: Brett D. Watson, for appellee.

          LARRYD. VAUGHT, Judge

         Dwight C. Jones appeals the foreclosure decree entered by the Yell County Circuit Court on July 14, 2017, in favor of Centennial Bank f/k/a Liberty Bank of Arkansas (Centennial Bank). On appeal, Dwight raises multiple arguments in support of reversal: (1) he was not provided notice of the foreclosure hearing in violation of his due-process rights; (2) Centennial Bank failed to plead waiver of his right of redemption in its foreclosure complaint; (3) Centennial Bank failed to comply with 12 C.F.R. § 1024.36; and (4) the multipurpose note and security agreement did not contain a legal description of the foreclosed property. We hold that Dwight's due-process rights were violated when he was denied the opportunity to attend the foreclosure hearing; therefore, we reverse and remand.

         In 2005, Dwight and his mother, Margaret Jones, borrowed $64, 137.10 from Centennial Bank. They secured the loan by executing a promissory note in favor of Centennial Bank and by executing a mortgage that granted the bank a lien on their property situated at 105, 107, and 111 North Front Street, Dardanelle, Yell County, Arkansas (the property).[1] Thereafter, Dwight and his mother entered into notes, mortgage-modification agreements, and other documents related to the property that extended the maturity date of the note, amended the payment schedule, and included additional terms concerning late charges.

         On December 25, 2015, Margaret died. On May 1, 2017, Centennial Bank filed a complaint for foreclosure against the administrator of Margaret's estate, Dwight, and the Commissioner of State Lands.[2] The complaint alleged that Margaret and Dwight were the owners of the property, they had executed mortgages in favor of Centennial Bank, and they had granted Centennial Bank a security interest in the property. The complaint further alleged that Margaret ceased making monthly payments to Centennial Bank, she was in arrears despite demands for payments, and Centennial Bank elected to declare the entire principal and accrued interest due based on Margaret's default. Centennial Bank sought judgment of the unpaid principal of $27, 952.93, plus interest, late fees, and expenses in rem against the administrator of Margaret's estate. Centennial Bank further requested that its lien be foreclosed and the property sold should the estate fail to pay the judgment within a time specified by the circuit court.

         The record reflects that all three defendants were served with the foreclosure complaint; specifically, Dwight was personally served with the complaint on May 12, 2017. Dwight filed a timely pro se response to the complaint on June 12, 2017. Dwight stated in his response that his name is on the deed to the property; he had made payments on the loan in question; he had requested information about the loan from Centennial Bank, but the bank would not talk to him; he requested access to the loan papers; and he did not want to default on the land and would "secure said debt paid in full and or secure a debt on such lands to satisfy any and all part[ies] . . . ."

         The record further reflects that on July 14, 2017, the circuit court held a foreclosure hearing. There is nothing in the record to suggest that Dwight was notified of this hearing. In attendance were counsel for Centennial Bank and Centennial Bank senior loan officer, Mark Rezanka. Centennial Bank's counsel reported to the circuit court that the administrator of Margaret's estate and staff counsel for the Commissioner of State Lands had approved a proposed foreclosure decree. Counsel for Centennial Bank further advised the court that Dwight had filed an answer but was not at the hearing. The court asked the bailiff to call for Dwight outside the courtroom. The bailiff did and reported that there was no response. The circuit court stated, "No response. All right. Well, we're going to take, I guess, testimony for the record."

         Centennial Bank called Rezanka, who testified about the mortgages and notes executed by Margaret. He further testified that Margaret had passed away, that she and Dwight were co-owners of the property, that Margaret had not paid on the note, that the note was in default, and that Centennial Bank was seeking foreclosure. Thereafter, the circuit court granted Centennial Bank a judgment against the property in rem against Margaret's estate. The circuit court entered a foreclosure decree later in the day on July 14, 2017. In the decree, the court appointed Sharon Barnett as the commissioner of the court to execute the decree and directed her to conduct the foreclosure sale.

         On the morning of July 19, 2017, Barnett filed a notice of sale stating that the property would be offered for public sale on August 16, 2017. On the afternoon of July 19, 2017, Dwight, still proceeding pro se, filed a document with no title asserting that he had filed a timely response to the foreclosure complaint, yet was not provided notice of the foreclosure hearing. He stated that he was "in wonder of how such a hearing and or meeting could take place without his knowledge or being notified." He further stated that he had owned and possessed the property for fifteen years and prayed that the court "stop any and all proceedings on such matter until the involving issues can be resolved." Centennial Bank did not respond to Dwight's filing. On August 14, 2017, Dwight filed a notice of appeal of the July 14, 2017 foreclosure decree. This appeal followed.

         In bench trials, the standard of review on appeal is not whether there is substantial evidence to support the findings of the circuit court, but whether the circuit court's findings were clearly erroneous or clearly against the preponderance of the evidence. Parker v. BancorpSouth Bank, 369 Ark. 300, 305, 253 S.W.3d 918, 922 (2007). A finding is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with a firm conviction that a mistake has been committed. Id., 253 S.W.3d at 922.

         Dwight's first point on appeal is that his due-process rights were violated when he was not provided notice of the foreclosure hearing. The fundamental requirement of due process is the opportunity to be heard at a meaningful time and in a meaningful manner. Villanueva v. Valdivia, 2016 Ark.App. 107, at 4, 483 S.W.3d 308, 310-11 (citing Tsann Kuen Enters. Co. v. Campbell, 355 Ark. 110, 117-118, 129 S.W.3d 822, 826 (2003)). An elementary and fundamental requirement of due process in any proceeding that is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections. Id. at 5, 483 S.W.3d at 311.

         In Jones v. Vowell, 99 Ark.App. 193, 200, 258 S.W.3d 383, 388 (2007), the appellant's dental-malpractice case was dismissed with prejudice pursuant to Arkansas Rule of Civil Procedure 41(b) because she failed to attend a hearing. On appeal, she contended that the dismissal was in error because she received no notice of the hearing, which violated her due-process rights, and that the circuit court abused its discretion in dismissing her complaint under Rule 41(b). 99 Ark.App. at 196, 258 S.W.3d at 385. On appeal, specifically on the due-process point, our court reversed and remanded, holding that based on the record in that case, the dismissal of the ...

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