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Avakian v. Wilmington Trust, National Association

Court of Appeals of Mississippi

April 10, 2018

BURNETTE AVAKIAN, INDIVIDUALLY AND AS EXECUTRIX OF THE ESTATE OF NORAIR AVAKIAN, DECEASED APPELLANT/ CROSS-APPELLEE
v.
WILMINGTON TRUST, NATIONAL ASSOCIATION, AS SUCCESSOR TRUSTEE TO CITIBANK, N.A., AS TRUSTEE FOR BEAR STEARNS ASSET BACKED SECURITIES TRUST 2007-2, ASSET-BACKED CERTIFICATES, SERIES 2007-2 APPELLEE/ CROSS-APPELLANT

          DATE OF JUDGMENT: 01/27/2017

          LOWNDES COUNTY CHANCERY COURT HON. H.J. DAVIDSON JR. TRIAL JUDGE

          ATTORNEY FOR APPELLANT: STEVEN CRAIG PANTER

          ATTORNEYS FOR APPELLEE: WILLIAM JACOB LONG IV CHRISTOPHER DANIEL MEYER

          BEFORE LEE, C.J., GREENLEE AND TINDELL, JJ.

          LEE, C.J.

         ¶1. This case is the latest in a series of litigation between the parties regarding Wilmington Trust, National Association's right to foreclose on Burnette Avakian's home. In this appeal, we must decide whether the chancery court-finding that res judicata applied-properly granted Wilmington Trust's motion for partial summary judgment on its claims for judicial foreclosure, breach of contract, and declaratory judgment. On cross- appeal, we must also decide whether the chancery court properly granted Burnette's motion for partial summary judgment on Wilmington Trust's claim for unjust enrichment. Following a de novo review, we affirm the judgments of the chancery court.

         ¶2. We acknowledge the facts and circumstances giving rise to the instant action on appeal are identical to those in previous actions between these same parties. See Estate of Avakian v. Wilmington Tr. Nat'l Ass'n, 231 So.3d 208 (Miss. Ct. App. 2017) (probate action); Avakian v. Citibank N.A., 773 F.3d 647 (5th Cir. 2014); Avakian v. Citibank N.A., No. 1:12-CV-00139-SA-DAS, 2015 WL 4643129 (N.D. Miss. Aug. 4, 2015) (federal action).

         ¶3. Because the chancery court's decision to grant summary judgment on certain claims in the instant case was based on the doctrine of res judicata, it is necessary to detail not only the facts and procedural history of the instant case, but also the prior actions between the parties.

         FACTS

         ¶4. In September 2002, Norair and Burnette Avakian, husband and wife, purchased a house in Columbus, Mississippi, and executed a deed of trust to secure a loan for the purchase from Southstar Financing LLC. At that time, the title to the property was vested in both their names as joint tenants. Then, in November 2004, Norair executed a deed conveying title to the property to Burnette alone. In March 2006, the Avakians refinanced the mortgage with EquiFirst Corporation, and Norair took out a loan in his name only and executed a promissory note in favor of EquiFirst. It was undisputed that the Avakians intention was to structure the ownership and debt so that Burnette would not be liable for the debt if Norair died. However, because title was vested in Burnette alone, EquiFirst required both Burnette and Norair to execute a deed of trust. Norair was out of state at the time of the closing, so Burnette and Norair each signed separate deeds of trust on the property. This resulted in two deeds of trust on the property-one executed by Norair on March 7, 2006, and one executed by Burnette on March 8, 2006. Each deed of trust was recorded as a separate instrument with the Lowndes County Chancery Clerk.

         ¶5. Norair's promissory note to EquiFirst was later sold to Citibank N.A. in its capacity as trustee of the Bear Sterns Asset Backed Securities Trust. J.P. Morgan became the servicing agent for Citibank. On December 3, 2012, Wilmington Trust replaced Citibank as the trustee for Bear Sterns. So, J.P. Morgan served as the servicer for the loan, and EquiFirst, Citibank, and Wilmington Trust were the successive creditors.

         ¶6. Norair defaulted on the promissory note and died shortly after in July 2010. In early 2012, Citibank, the trustee/creditor at that time, noticed Burnette its intention to foreclose on the house and set the foreclosure sale for May 10, 2012. On May 9, 2012, the day before the scheduled foreclosure sale, Burnette filed suit in the chancery court against Citibank seeking to enjoin the foreclosure. This began the series of litigation between the parties present on appeal (through Wilmington Trust's predecessor, Citibank).

         PROCEDURAL HISTORY

         1. Federal Action

         ¶7. On May 9, 2012, Burnette filed a lawsuit in chancery court to enjoin Citibank from foreclosing on the property. She argued that the two deeds of trust on the home were both void pursuant to Mississippi Code Annotated section 89-1-29 (Rev. 2011) because neither deed contained the signatures of both Burnette and Norair. Citibank removed the lawsuit to the United States District Court for the Northern District of Mississippi. Following a trial, the district court entered a final judgment on February 10, 2014, in favor of Burnette, holding that the deeds of trust on the house were unenforceable. See Avakian v. Citibank N.A., No. 1:12-CV-00139-SA-DAS, 2014 WL 346861 (N.D. Miss. Jan. 30, 2014), rev'd and remanded, 773 F.3d 647 (5th Cir. 2014).

         ¶8. Citibank appealed the decision to the Fifth Circuit Court of Appeals. See Avakian, 773 F.3d at 649. During the appeal, the Fifth Circuit issued a stay on May 12, 2014, that prohibited foreclosure of the property during the pendency of the appeal. On December 9, 2014, the Fifth Circuit reversed the district court, finding that the Mississippi Supreme Court would likely construe the two deeds of trust as together creating a valid deed of trust. Id. at 653. Thus, the Fifth Circuit found the two deeds of trust together formed a valid and enforceable instrument and remanded the case for further proceedings. Id.

         ¶9. On remand in the district court, Citibank filed a motion for entry of final judgment. See Avakian, 2015 WL 4643129, at *1. In response, Burnette filed a motion to dismiss the action without prejudice, arguing that it became moot on December 3, 2012, when Wilmington Trust succeeded Citibank as trustee for the lienholder. Id. at *2. Citibank responded by filing a motion to substitute Wilmington Trust as the defendant and then renewed its request for entry of a final judgment. Id. The district court noted that "[Rule 25 of the Federal Rules of Civil Procedure] states that when 'an interest is transferred, the action may be continued by or against the original party unless the court, on motion, orders the transferee to be substituted in the action or joined with the original party.'" Id. (quoting Fed.R.Civ.P. 25(c)). In applying the rule, the district court found that it was proper for Citibank to continue as the named defendant even after it ceased to have any interest in the subject property. Id. Further, the district court noted that "[Burnette] [did] not dispute that Wilmington succeeded Citibank as trustee on December 3, 2012. In fact, [Burnette relied] upon the complete transfer of Citibank's interest to Wilmington in arguing that th[e] action [was] ...


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