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Long v. Halliday

United States District Court, D. Utah, Central Division

February 23, 2018

DARWIN LEROY LONG, Plaintiff,
v.
PAUL M. HALLIDAY, JR., as Successor Trustee of the Deed of Trust; and WELLS FARGO BANK, N.A., Trustee for Option One Mortgage Loan Trust 2007-6, Asset-Backed Certificates, Series 2007-6, as Successor Lender on the Promissory Note and Beneficiary on the Deed of Trust, Defendants.

          MEMORANDUM DECISION AND ORDER

          Dee Benson United States District Judge

         Before the Court are three motions: Plaintiff Darwin Leroy Long (Long)'s Motion to Remand; Defendant Wells Fargo Bank's (Wells Fargo)'s Motion to Dismiss; and Defendant Paul Halliday, Jr. (Halliday)'s Motion to Dismiss. The motions have been fully briefed. Oral argument was held on February 21, 2018 at which Long was represented by David Bennett, Halliday was represented by Aaron Lancaster, and Wells Fargo was represented by Spencer Macdonald. Having considered the written and oral arguments of the parties and the relevant facts and the law, the Court enters the following Memorandum Decision and Order.

         BACKGROUND

         Long and his wife obtained title to the real property located at 7808 South Dolphin Circle, Cottonwood Heights, Utah 84121-5604 by warranty deed recorded on April 23, 2007, entry no. 10074950. Exh A. Dkt. 15. On April 17, 2007, the Longs executed a deed of trust to secure repayment of a promissory note with a principal amount of $270, 000. Exh. B. Dkt. 15. The trust deed was recorded on April 23, 2007, entry no. 10074951. Id. The trust deed names the Longs as borrowers, First American Title of Utah as trustee, and Option One Mortgage Corp. as beneficiary. Id.

         The beneficiary interest under the trust deed was conveyed to Wells Fargo by assignments recorded on June 22, 2010, entry no. 10975626, and October 28, 2013, entry no. 11749529. Exh. C Dkt. 15. On April 1, 2010, Wells Fargo executed a substitution of trustee appointing eTitle Insurance Agency (eTitle) as successor trustee under the Deed of Trust. That document was recorded on April 30, 2010, entry no. 10944796. Exh. D Dkt. 15.

         On March 22, 2010, eTitle executed a notice of default pertaining to the trust deed and recorded it on March 22, 2010, entry no. 10919509. Exh. E. Dkt. 15. On May 1, 2012, eTitle executed and recorded a cancellation of the notice of default, entry no. 11381518. Exh. F. Dkt. 15. On May 1, 2012, eTitle executed and recorded a second notice of default pertaining to the trust deed, entry no. 11381519. Exh. G. Dkt. 15.

         On October 22, 2010, the Longs filed a chapter 13 bankruptcy petition, Case No. 2:10-bk-34680, which was administratively dismissed on October 25, 2010. Exh. H. Dkt. 15. The automatic stay associated with this bankruptcy was in effect for a total of three days. On December 27, 2012, the Longs filed a chapter 7 bankruptcy petition, case no. 2:12-bk-35937, which was dismissed on February 19, 2013 for failure to comply with 11 U.S.C. §521(a)(1). Exh. I. Dkt. 15. The automatic stay associated with this bankruptcy was in effect for 54 days.

         On August 15, 2013, Long filed another chapter 13 bankruptcy petition, case no. 2:13-bk-29337. Exh. J. Dkt. 15. In connection with that petition, Long filed a summary of schedules that identify the subject property as having a secured claim against it of $343, 799.06. Exh. K. Dkt. 15. On October 23, 2013, that bankruptcy was dismissed. Exh. L Dkt. 15. The automatic stay associated with that bankruptcy was in effect for 69 days. On January 7, 2014, the bankruptcy court entered an order vacating its dismissal of Long's chapter 13 action, case no. 2:13-bk-29337. Exh. M. Dkt. 15. On January 20, 2014, Long filed a set of amended schedules, specifically identifying Ocwen Loan Servicing, LLC as a creditor for a secured claim against the subject property in the amount of $343, 799.06. Exh. M, N Dkt. 15. The claim is not listed as contingent, unliquidated, or disputed. Id. The next day, on January 21, 2014, Long filed a complaint in the adversary proceeding in which he states that a mortgage was taken out with the lender Option One Mortgage Company, and that he and his wife executed the above-referenced Deed of Trust. Exh. O Dkt. 15. On February 2, 2104, Long filed another set of amended schedules, which again identify the subject property as having a secured claim against it of $343, 799.06. Exh. P Dkt. 15. On February 27, 2014, the bankruptcy court dismissed this bankruptcy. Exh. Q Dkt. 15. The second iteration of the automatic stay in this matter was in effect for a total of 51 days.

         On August 17, 2015, Long's wife filed a chapter 13 bankruptcy petition, Case No. 2:15- bk-27655 which was later dismissed on September 22, 2014. The bankruptcy stay associated with this action was in place for 36 days.

         Just over one month later, on September 29, 2015, Long's wife filed another chapter 13 bankruptcy petition, case no. 2:15-bk-29124. Exh R. Dkt. 15. On November 16, 2015, the court in that case entered an order terminating the automatic stay. The bankruptcy stay associated with that action was in place for 48 days.

         On June 22, 2017, Long filed another chapter 13 bankruptcy petition, case no. 2:17-bk-15452, which was administratively dismissed on August 8, 2017. Exh. S. Dkt. 15. The bankruptcy stay associated with that action was in place for 47 days.

         On December 9, 2016, Wells Fargo executed an appointment or substitution of trustee appointing Halliday as successor trustee under the trust deed. This document was recorded on February 23, 2017, entry no. 12483014. Exh. T. Dkt. 15. On February 23, 2017, Halliday executed a “Notice of Default and Election to Sell” pertaining to the Deed of Trust. This document was recorded on February 23, 2017, entry no. 12483010. Exh. U Dkt. 15.

         In addition to the foregoing bankruptcy actions, Long also previously filed a lawsuit against eTitle in relation to the Deed of Trust. That case was filed in Third District Court in Salt Lake County on October 15, 2012, case no. 120907055, and was dismissed on March 18, 2013. Exh. V. Dkt. 15. The Amended Complaint filed in that action refers to the loan taken by Long in relation to the Deed of Trust. Exh. V. Dkt. 15.

         Long also filed a second state court action, case no. 140407618, on June 5, 2014 which was removed to the United States District court as case no. 2:14-cv-463-DN and dismissed on March 19, 2015. Exh.W, X Dkt. 15. Long filed an appeal with the Tenth Circuit Court of Appeals, case no. 15-4131, which upheld the district court's dismissal of the case. Exh. Y Dkt. 15.

         The present action now before this Court was originally brought by Long in state court seeking declaratory judgment that defendants' attempt to foreclose on the subject property is barred by the statute of limitations. The case was removed to this Court. Long then filed a motion to remand arguing this Court lacks subject-matter jurisdiction because there is not complete diversity among the parties. Wells Fargo and Long filed motions ...


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