Tenney's Win In The Judicial Foreclosure Kansas Appellate Court Case This was Danny Hammond's 1st Complete and Correct Win

 “I was playing for time. Just for time. I played the wrong way, of course.”

Raymond Chandler

by Danny Hammond of the 3/4 Court Press

Case No. 110.359

IN THE COURT OF APPEALS OF THE STATE OF KANSAS

U.S. BANK NATIONAL ASSOCIATION as Trustee for THE Certificateholders of CITIGROUP MORTGAGE LOAN TRUST INC., Asset-Backed Pass-Through Certificates Series 2007- AMC1, Appellee, 

v. 

DENNIS W. TENNEY and BECKY TENNEY, et aI., Appellants the appellate court stated:

“Per Curiam: “Dennis and Becky Tenney filed a motion to set aside an agreed
judgment of mortgage foreclosure, claiming that the judgment was void. They argued that
U.S. Bank had not shown that it properly held the note secured by the mortgage therefore it was not the real party in interest, and it therefore lacked standing to sue. 

The district court denied the motion, finding that it was untimely. We disagree, because in Kansas lack of standing is jurisdictional and can be raised at any time, and Kansas Law is in lock step with Article III. 

We reverse and remand for a hearing on the question of whether the agreed judgment was void for U.S. Bank's lack of standing.

The district [Kansas state] court heard that motion the same day it was filed. The judge declined to take evidence, but it did hear arguments of counsel. 

The greatest part of the hearing consisted of a colloquy between the district court and the Tenneys' new attorney. Counsel advised the district court that the Tenneys were claiming the judgment was void under Article III and Kansas UCC statute, stating: "I think the judgment is void if they're [U.S. Bank] not the proper party in interest." 

The Tenneys' attorney maintained that the issue of whether a judgment was void for lack of standing could be raised at any time. The district court disagreed.

The following is representative of the discussions between the district court and the
Tenneys' attorney, James F. McMahon:

"Mr. McMAHON: What I'm trying to deal with is what there is. And what there
is you can raise the fact that there's not a real party in interest at any point in time.

"THE COURT: That's a defense that needs to be timely raised, real party in
interest, and it goes to standing, and those are issues that should be raised right up front.
And at this point there isn't any basis for me to believe they weren't the real party in
interest. You want me to believe they weren't the real party in interest. You want to argue
that now but that would have required them to come up with assignments and all sorts of
stuff that show a chain of title, and that's the kind of merits issue that should have been
decided long ago. And I assume US Banks attorney Mr. Schwartz knew that, because he's pretty thorough when I've seen him in every other case I've ever had him in, he demands wet-ink stuff, he talks to the opposing counsel, he makes sure he understands their basis for proceeding; and if that was a real issue in this case, it should have been raised instead of a consent judgment.

"Mr. McMAHON: Well, he didn't raise it.

"THE COURT: Then he caved in because, apparently, she demonstrated the
basis for it.

"Mr. McMAHON: Well, I asked her if there's anything else, and she-when I
talked with her, she said there's-just what's in the file. There is nothing in the file to
show if the note had been transferred I looked at every document in the file. There's
nothing. No Contract and no Note.

"THE COURT: Do they possess the note?

"Mr. McMAHON: Pardon me?

"THE COURT: Do they possess the note?

"Mr. McMAHON: It doesn't say in the file.

"THE COURT: Okay.

"Mr. McMAHON: There's no allegation that they did in any of the pleadings.

"THE COURT: Well, maybe Mr. Schwartz figured that out, that they possess the
note and as a holder they have a right to proceed. You know. I'm not going to get into the
merits of the case.

 As far as I'm concerned, you either demonstrate fraud or you're out, because you've got one year to bring suit on a 60-260 motion to show mistake or something that happened, I don't see any of these issues at this point in time.

"Mr. McMAHON: Well-

"THE COURT: So finish your argument and then I'm going to hear from Ms.
Cello.

"Mr. McMAHON: Okay. Standing, I believe, can be raised at any point in time.
There's a recent case from the Court of Appeals affirming that. And it was-I think that's
still a valid argument that can be raised at this point in time." (Emphasis added.)

In spite of the above discussion, U.S. Bank did not attempt to offer evidence that it

was a duly assigned and proper holder of the note.

Kansas Court of Appeals continues Opinion:
After hearing the arguments of counsel, the district court denied the motion. It
indicated that whether U.S. Bank was a real party in interest was a factual “merits issue”
that should have been resolved before the agreed judgment was entered. It noted that the Tenneys’ motion “smacks of bad faith delay.” The district court held that the Tenneys’
motion was “untimely.”

The Johnson County Sheriff held a sale of the property on June 20, 2013, at which
U.S. Bank was the successful bidder. The trial court conftrmed the sale over the Tenneys’
objections. The Tenneys timely appealed from the denial of their motion to set aside the
judgment.

ANALYSIS:

On appeal, the Tenneys maintain that the trial court erred when it found their
motion to be untimely. The legal basis for the Tenneys' motion was that, without a proper
note, U.S. Bank had no standing to foreclose on the mortgage. 

They argue that they can raise lack of standing at any time and that, if U.S. Bank had no
standing to sue, the trial court lacked subject matter jurisdiction to enter even an agreed
judgment. Thus, the Tenneys contend that the foreclosure judgment is void.

We note that the Tenneys also made below other arguments (e.g., fraud, excusable
neglect, mistake) for setting aside the judgment under K.S.A. 60-260(b). The district
court also rejected those arguments. The Tenneys did not brief any arguments against the propriety of the district court's rejection of those other claims. 

They have abandoned, then, all issues other than their claim that U.S. Bank lacked standing to sue them. See Superior Boiler Works, Inc., v. Kimball, 292 Kan. 885, 889,259 P.3d 676 (2011).

U.S. Bank contends that the district court was correct in denying the motion,
although it suggests that the motion was untimely as barred by laches, an argument it did identify in the district court. It also asserts that the Tenneys stipulated to facts in the
agreed judgment which establish that U.S. Bank is a real party in interest.

The existence of jurisdiction and standing are both questions of law over which
this court's scope of review is unlimited. Schmidtlien Electric, Inc. v. Greathouse, 278
Kan. 810, 830, 104 P.3d 378 (2005) (jurisdiction); 312 Education Ass'n v. U.S.D. No.
312,273 312,273 Kan. 875, 882, 47 P.3d 383 (2002) (standing). 

As the Tenneys' correctly note, our Supreme Court has determined that standing is an aspect of subject matter jurisdiction, and lack of such jurisdiction can be raised by the parties or the court at any time. Vorhees v. Baltazar, 283 Kan. 389, 397, 153 P.3d 1227 (2007).

In Mid-Continent Specialists, Inc. v. Capital Homes, 279 Kan. 178, 106 P.3d 483
(2005), our Supreme Court explained:

"We first note that standing is a jurisdictional issue in Kansas (As In New Jersey). Families Against Corporate Takeover v. Mitchell, 268 Kan. 803, 807, 1 P.3d 884 (2000) citing Moorhouse v. City of Wichita, 259 Kan. 570,574,913 P.2d 172 [1996]). 

Additionally, an objection based on lack of subject matter jurisdiction may be raised at any time, whether it be for the first time on appeal or even upon the appellate court's own motion. Rivera v Cimarron Dairy, 267 Kan. 865, 868, 988 P.2d 235 (1999).
"As a result, standing is not waivable”. See Tex. Ass'n of Business v. Air Coneot.
Bd., 852 S.W.2d 440,446 (Tex. 1993) “Standing is a component of subject matter
jurisdiction and may be raised for the first time on appeal; it may not be waived by the
parties.). 

Consequently, we agree with the court in Pace Const. v. Mo. Hwy. & Transp.
Com'n, 759 S.W.2d 272,274 (Mo. App. 1988), which held:

'The question of standing "does not relate to the legal capacity to sue, a defense
[see K.S.A. 2004 Supp. 60-209(a)] waived unless timely asserted ... but to the interest of an adversary in the subject of the suit as an antecedent to the right to relief." [Citation
omitted.] 

Furthermore, standing is said to be, "in a sense, jurisdictional in limine and so
within the notice of a court, even on appeal, for dismissal." [Citation omitted.] 

There can be no question that this court does indeed have the power to entertain the issue of standing. The lack of standing cannot be waived. [Citation omitted.]  "Regardless of the
merits of appellants' claims, without standing, the court cannot entertain the action."
[Citation omitted.]'

"Similarly, the Minnesota Supreme Court held in State by McClure v. Sports &
Health Club, 370 N.W.2d 844, 850 (Minn. 1985): 'It is well settled that an issue not
litigated below may not be asserted for the first time on appeal. [Citation omitted.]
However, an objection to want of "standing" goes to the existence of a cause of action, is jurisdictional, and may be raised at any time. (Emphasis added.) See 59 Am. Jur. 2d,
Parties § 363. f

Regarding proof of standing in a foreclosure summary judgment context, this court
said in MetLife Home Loans v. Hansen, 48 Kan. App. 2d 213,218,286 P.3d 1150
(2012):

"'The main purpose of a mortgage is to insure the payment of the debt for which
[it] stands as security; and foreclosure is allowed when necessary to carry out that
objective.' United States v. Loosley, 551 P.2d 506,508 (Utah 1976). Accordingly, in
order to properly grant summary judgment in a mortgage foreclosure action, the district
court must find undisputed evidence in the record that the defendant signed a promissory
note secured by a mortgage, that the plaintiff is the valid holder of the note and the mortgage, and that the defendant has defaulted on the note. See Cornerstone Homes v. Skinner, 44 Kan. App. 2d 88, 97-98, 235 P.3d 494 (2010)."

Another panel of this court has applied the same standing requirement, i. e., that
the plaintiff be a valid holder of the note, in the context of a default judgment. See US.
Bank, NA. v. Tomlinson, No. 111.081, 2014 WL 4627608 (Kan. App. 2014) (unpublished opinion). 

There a panel of our court addressed a standing issue similar to the one raised by the Tenneys. In Tomlinson, over a year after a default judgment of foreclosure was entered, Tomlinson moved to set aside the default. She contended that U.S. Bank never possessed her note and, therefore, lacked standing to bring the foreclosure action. The hearing on the motion was continued three times to allow U.S. Bank time to prove its newly challenged standing. It eventually obtained an affidavit attesting to the authenticity of the note attached to the foreclosure petition. 

Once the affidavit was received, Tomlinson's counsel admitted the authenticity of the assigned note.

The trial court ultimately denied Tomlinson's motion to set aside the judgment.
On appeal, the panel was able to conduct its review of the standing issue because
of the well-developed record in the district court. The Tomlinson panel determined that,
although U.S. Bank was not the original holder of the note, it later became an assignee of the original lender. 

Thus, the record confirmed that U.S. Bank had standing to foreclose. 2014 WL 4627608, at *5. The panel affirmed the denial of Tomlinson's motion.

We know, then, that standing is jurisdictional and the parties cannot waive standing. Mid-Continent Specialists, Inc. v, Capital Homes, 279 Kan. at 185. Therefore, the fact that the judgment here was entered by agreement cannot create jurisdiction that otherwise did not exist if, after all, U.S. Bank lacked standing. 

Further, since lack of standing is jurisdictional, our Kansas Supreme Court has held that lack of standing can be raised at any time, even on appeal. Here it was raised in the district court, albeit after judgment, but before appeal. Finally, we know that the foreclosing plaintiff must be a "valid holder" of the note that the mortgage secures. Metlife Home Loans v. Hansen, 48 Kan. App. 2d at 218. 

We appreciate that, if the appearances of fairness were a consideration, at first glance they would seem to favor U.S. Bank. The Tenneys raised and then abandoned their standing complaints when their attorney signed the agreed foreclosure journal entry.

Then Dennis caused delay by filing bankruptcies that the trustee of that court determined were in bad faith. 

On the other hand, though, if U.S. Bank was not after all a valid holder of the rights under the note, the appearance of fairness would, or at least should, rotate 180 degrees to favor the Tenneys. After all, if U.S. Bank was not a valid holder of the note, it should not have sued the Tenneys in the first place.

We find that the Tenneys' motion was timely because its attack on U.S. Bank's standing could be asserted at any time. Since standing cannot be waived, the apparent abandonment of their standing defense in the agreed judgment does not deprive the Tenneys of the opportunity to challenge standing now. 

The district court correctly stated that the question of "real party in interest ... goes to standing" but it erred when it ruled that "those are issues that should be raised right up front." Its ultimate holding that the Tenneys' motion was "untimely" was in error.

Because the district court did not take evidence at the motion hearing, U.S. Bank was never allowed to or required to present evidence to show that it was a proper holder of the note. We have conducted our unlimited review of the record, but it is impossible for us to determine from that sparse record whether U.S. Bank had standing to sue the Tenneys. 

We therefore reverse the denial of the Tennys' motion to set aside the judgment and remand for an evidentiary hearing on the issue of U.S. Bank's standing to sue.

REVERSED and REMANDED for an evidentiary hearing on the issue of U.S. Bank's
standing to sue the Tenneys.”