Hennington v. First National Bank of Crossett

          MEMORANDUM OPINION

          Susan O. Hickey Chief United States District Judge

         Before the Court is the Motion for Summary Judgment filed by Separate Defendant Wells Fargo Bank, N.A. (“Wells Fargo”). (ECF No. 16). Separate Defendant First National Bank of Crossett (“First National”) has adopted and joined in the motion. (ECF No. 19). Plaintiffs Johnny Hennington and Vikki M. Hennington (“Mr. Hennington” and “Mrs. Hennington” or, collectively, “the Henningtons”) have responded. (ECF No. 24). Wells Fargo has replied. (ECF No. 27).

         Also before the Court is the Henningtons' Countermotion for Summary Judgment. (ECF No. 24). Wells Fargo has responded.^[1] (ECF No. 28). The Henningtons have replied. (ECF No. 33). The Court finds that these matters are ripe for consideration.

         I. BACKGROUND

         On August 24, 2012, Mr. Hennington traveled to a law office in Hamburg, Arkansas, and signed a mortgage and note in connection with a loan, putting up as collateral his property located at 140 Timberbend Drive, Crossett, Arkansas, 71635 (the “collateral property”). Afterwards, Mr. Hennington received a call from the law office and was informed that his wife, Mrs. Hennington, must also sign the loan documents pursuant to state law. Mr. Hennington returned to the law office with Mrs. Hennington, and she signed the mortgage and note without reading the documents, despite having the opportunity to do so.

         On June 9, 2015, the mortgage and note were assigned to Wells Fargo. On June 29, 2015, Mr. Hennington filed a Chapter 7 Voluntary Petition in the United States Bankruptcy Court for the Western District of Arkansas. On October 7, 2015, the bankruptcy court entered a debtor-discharge order in Mr. Hennington's bankruptcy case. Mr. Hennington did not reaffirm or redeem his mortgage debt with Wells Fargo in the bankruptcy filings.^[2] Wells Fargo filed a motion for relief from stay and motion to abandon in the bankruptcy case and, on October 19, 2015, the bankruptcy court granted Wells Fargo's motion for abandonment of the collateral property. In doing so, the bankruptcy court stated that the collateral property was abandoned from Mr. Hennington's bankruptcy estate and that Wells Fargo was free to pursue state-law remedies against the collateral property.

         On September 5, 2017, Wells Fargo hired Wilson & Associates, P.L.L.C. (“Wilson & Associates”) as its attorney-in-fact to foreclose on the collateral property due to the Henningtons' continued default. On December 6, 2017, the collateral property was sold at a foreclosure sale and was purchased by Separate Defendant First National Bank of Crossett for $140, 218.97. On December 14, 2017, the mortgagee's deed was recorded with the Circuit Clerk for Ashley County, Arkansas. To date, the Henningtons continue to reside in the collateral property despite the foreclosure.

         On December 28, 2017, the Henningtons filed this case in the Circuit Court of Ashley County, Arkansas, seeking to vacate the foreclosure sale and quiet title as to the collateral property on two bases: (1) because Mrs. Hennington was not provided with proper notice and disclosures under the Truth in Lending Act (“TILA”) when she signed the mortgage documents on August 24, 2012, and (2) because the foreclosure sale of the collateral property did not strictly comply with the provisions of Arkansas' foreclosure statutes, codified at Ark. Code Ann. § 18-50-101, et seq. On January 30, 2018, Wells Fargo removed the case to this Court pursuant to 28 U.S.C. § 1441, asserting that the Court possesses original, federal question jurisdiction over the Henningtons' TILA claim and supplemental jurisdiction over their state-law claim.

         Wells Fargo now moves for summary judgment, contending that the Henningtons' state-law claim fails because it was not brought before the foreclosure sale and, alternatively, because the Henningtons cannot show that Wells Fargo failed to comply with Arkansas' applicable foreclosure statutes. Wells Fargo also argues that the Henningtons' TILA claim fails for various reasons. The Henningtons oppose the motion and have filed a countermotion for summary judgment, asserting that Wells Fargo failed to strictly comply with Arkansas' foreclosure statutes.

         II. LEGAL STANDARD

         The standard for summary judgment is well established. When a party moves for summary judgment, “[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact, and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); Krenik v. Cnty. of LeSueur, 47 F.3d 953, 957 (8th Cir. 1995). This is a “threshold inquiry of . . . whether there is a need for trial-whether, in other words, there are genuine factual issues that properly can be resolved only by a finder of fact because they reasonably may be resolved in favor of either party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). A fact is material only when its resolution affects the outcome of the case. Id. at 248. A dispute is genuine if the evidence is such that it could cause a reasonable jury to return a verdict for either party. Id. at 252.

         In deciding a motion for summary judgment, the Court must consider all the evidence and all reasonable inferences that arise from the evidence in a light most favorable to the nonmoving party. Nitsche v. CEO of Osage Valley Elec. Co-Op, 446 F.3d 841, 845 (8th Cir. 2006). The moving party bears the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. See Enter. Bank v. Magna Bank, 92 F.3d 743, 747 (8th Cir. 1996). The nonmoving party must then demonstrate the existence of specific facts in the record that create a genuine issue for trial. Krenik, 47 F.3d at 957. However, a party opposing a properly supported summary judgment motion “may not rest upon mere allegations or denials . . . but must set forth specific facts showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 256.

         III. DISCUSSION

         As a preliminary matter, the Court must address the Henningtons' statement of disputed facts, filed as part of their opposition papers to Wells Fargo's summary judgment motion. Federal Rule of Civil Procedure 56(e) states that a court may deem undisputed a moving party's assertion of fact if it is not properly controverted by the nonmoving party pursuant to Rule 56(c). Similarly, Local Rule 56.1(c) states that all material facts asserted in the moving party's statement of facts shall be deemed admitted if they are not controverted by the nonmoving party's own statement of facts. Federal Rule of Civil Procedure 56(c)(1) provides that a party asserting a genuine dispute of ...