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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Barr v. Goldome Realty Credit Corp. (5/10/2002) sp-5566

Barr v. Goldome Realty Credit Corp. (5/10/2002) sp-5566

     Notice:   This opinion is subject to correction  before
     publication  in  the  Pacific  Reporter.   Readers  are
     requested to bring errors to the attention of the Clerk
     of  the  Appellate  Courts, 303  K  Street,  Anchorage,
     Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
     e-mail corrections@appellate.courts.state.ak.us.


            THE SUPREME COURT OF THE STATE OF ALASKA


DONNA M. BARR,           )
                              )    Supreme Court No. S-9413
             Appellant,            )
                              )    Superior Court No.
     v.                       )    3AN-98-7755 CI
                              )
GOLDOME REALTY CREDIT         )    O P I N I O N
CORPORATION, n/k/a            )
NATIONSBANC MORTGAGE          )    [No. 5566 - May 10, 2002]
CORPORATION,                  )
                              )
             Appellee.             )
________________________________)


          Appeal  from the Superior Court of the  State
          of    Alaska,   Third   Judicial    District,
          Anchorage, Peter A. Michalski, Judge.

          Appearances:   Rebecca S. Copeland,  Koval  &
          Featherly,  P.C., Anchorage,  for  Appellant.
          Richard   Ullstrom,  Routh  Crabtree,    APC,
          Anchorage, for Appellee.

          Before:    Fabe,  Chief  Justice,   Matthews,
          Eastaugh, Bryner, and Carpeneti, Justices.

          EASTAUGH, Justice.

I.   INTRODUCTION

          I.   Donna Barr appeals the superior courts grant of partial

summary   judgment   to  Nationsbanc  Mortgage   Corporation   on

Nationsbancs  claim for possession of real property  occupied  by

Barr  and  Barrs  counterclaim for  damages.   Barr  argues  that

Nationsbanc  did not apply surplus escrow funds to Barrs  monthly

note  obligations according to the terms of the  deed  of  trust,

resulting  in improper foreclosure on the property and damage  to

Barr.  Because we agree with Barr that genuine issues of material

fact  remain,  we  reverse the superior courts partial  grant  of

summary judgment to Nationsbanc, vacate its findings, and  remand

for further proceedings.

II.  FACTS AND PROCEEDINGS

          Donna  Barr assumed ownership of the property at  11840

Mary   Street   in  Anchorage  subject  to  a  deed   of   trust.

Nationsbanc,  as  beneficiary, initiated foreclosure  proceedings

against  the  property in January 1998 because  it  believed  the

underlying  note  was in default.  A notice of default  was  then

recorded  and  served  upon  Barr.  Barr  filed  for  Chapter  13

bankruptcy  in February 1998.  The foreclosure sale was  held  in

June 1998 after the bankruptcy court lifted the bankruptcy stay;1

Nationsbanc was the buyer at the foreclosure sale.

          Nationsbanc also filed a complaint against Barr in June

1998  for  forcible  entry and detainer to evict  Barr  from  the

property,  and for recovery of fair rental value of the  premises

and  any damages Barr might have caused to the property.  In  her

answer  to  the  complaint,  Barr  denied  that  Nationsbanc  was

properly  vested  with title to the property. Barr  alleged  that

Nationsbancs   declaration  of  default  was   improper   because

Nationsbanc  knowingly  failed to  credit  funds  in  Barrs  note

account   that   would   have   cured   any   deficiency.    Barr

counterclaimed, asserting that these acts caused  her  to  suffer

damages  exceeding $150,000, and requested that punitive  damages

be assessed against Nationsbanc.

          After  discovery, Nationsbanc moved for partial summary

judgment seeking both a judgment in its favor with respect to its

right   to   possess   the  property  and  dismissal   of   Barrs

counterclaim.   Among other things, the motion was  supported  by

Barrs  discovery answers in which she admitted she had  not  made

her  monthly  note  payments  in  the  three  months  before  the

foreclosure  November and December 1997, and January 1998.

          Barr  opposed  Nationsbancs  motion,  arguing  that  no

default occurred because an overpayment on the loan and a surplus

          in the escrow account should have been credited to some or all of

Barrs monthly note obligations for November and December 1997 and

January 1998.2  In support of her opposition, Barr submitted  her

own  affidavit  and an affidavit from Sherry Whah.   Whah  affied

that  she  was  an experienced accountant and that based  on  her

review of Barrs payment history, she had determined that Barr had

made excess payments, exceeding $7,465, on the note.

          Nationsbancs supplemental reply argued that the records

Barr  submitted  to  support  Whahs affidavit  were  inadmissible

hearsay, and that they actually supported Nationsbanc by  showing

that the foreclosure was proper.  Four days before the hearing on

Nationsbancs motion for partial summary judgment, Barr  submitted

her  own  supplemental affidavit in which she described her  note

payment  practices and swore that Nationsbanc had never  refunded

any excess escrow reserves.  Barr supported her affidavit with  a

package  of  documents  that  were intended  to  demonstrate  the

inconsistency  of  Nationsbancs  record-keeping  practices,   the

failure  of  Nationsbanc to refund any escrow reserves,  and  the

failure  of  Nationsbanc to credit Barrs account.  At  an  August

1999  hearing  Nationsbanc objected to the documents  because  it

claimed they were submitted too late to permit a reply, were  not

produced  in discovery, and were unauthenticated and inadmissible

hearsay.

          In  September  1999 the superior court granted  partial

summary  judgment  to Nationsbanc, dismissed  Barrs  counterclaim

with  prejudice, and determined that  under Alaska Rule of  Civil

Procedure 54(b)  there was no need to further consider the issues

Nationsbanc raised at the hearing.  The superior courts  findings

of  fact  and conclusions of law appear to have been  adopted  in

toto  from  the  proposed findings and conclusions  submitted  by

Nationsbanc  at  the  courts direction.  The court  denied  Barrs

motion for reconsideration.

          Barr appeals.

III. DISCUSSION

     A.   Standard of Review

          This  court reviews a grant of summary judgment de novo

and  affirms only if there are no genuine issues of material fact

and the moving party is entitled to judgment as a matter of law.3

In  making  this determination, we draw all reasonable inferences

in favor of the non-moving party.4

     B.   Granting Summary Judgment to Nationsbanc Was Error Because

          There Remained Factual Disputes Whether the Loan Was Current and

          Whether an Overpayment Was Available to Apply to Barrs Account.

          A.   Barrs affirmative defense contends that Nationsbanc failed

to  properly give credit on her account and that she was  not  in

arrears  on  her payments per the Deed of Trust.  On  appeal  she

explains that she had overpaid her account and excess funds  were

in  the escrow account at the time the foreclosure was commenced,

which  funds would have satisfied the default.  Barr argues  that

the alleged excess escrow funds, which were in the possession and

control  of  Nationsbanc, should have been applied to  avoid  the

default.

          There  is  a  genuine dispute of material fact  whether

Barrs  loan  was current and whether there was a surplus  in  her

escrow account when default was declared.

          Barr  affied  that  a  credit  balance  in  excess   of

$7,465.00  existed  in  her account on the date  foreclosure  was

initiated.  To support this assertion, and to overcome  a  motion

to  strike by Nationsbanc, Barr submitted copies of the documents

on  which  she  relied in arriving at the $7,465  figure.   These

documents  recorded monthly payments on the  loan  and  the  date

through  which  Barr  alleged  each  payment  rendered  the  loan

current.  The documents showed that in May 1997 the loan was paid

thru that month only; no payments were made in June or July 1997;

and payments in the amount of the monthly obligation were made in

August, September, and October 1997.  The documents do not record

escrow payments or an escrow balance for any period.  Thus, Barrs

affidavit is not sufficient on its own to create a material  fact

          dispute.

          However,  Barrs claim regarding the alleged surplus  is

supported  by Whahs affidavit, which stated that [b]ased  on  the

accounting undertaken by Affiant, it appears that the discrepancy

in  the  numbers between Nationsbanc and Affiant relate primarily

to late fees, payments and distributions from the escrow account,

and uncredited payments over the term of the mortgage.

          A  genuine  issue  of  fact exists when  the  evidence,

viewed  in  the light most favorable to the nonmoving  party,  is

such  that  reasonable jurors could differ in their  judgment  on

that  issue.5   Although Nationsbanc disputes  Barrs  claim,  the

evidence presented  when read in the light most favorable to Barr

could  permit a finding that there was an escrow surplus in Barrs

account in October 1997.  Whah affied that through January  1998,

the  month in which the foreclosure was initiated by Nationsbanc,

.  .  .  Barr had made excess payments and overpaid the  mortgage

with  Nationsbanc in prior years in excess of $7,465.00, and that

Barrs  loan  was  not in default at the time the foreclosure  was

initiated  by Nationsbanc.  If there was an account excess  three

months  after  Barr  last  made  a payment,  a  factfinder  could

permissibly infer that the excess also existed when she made  her

last payment in October.

          Nationsbanc   questions  the   admissibility   of   the

documents Whah relies upon in reaching her conclusions.  But Barr

has  not  sought to establish that the documents relied  upon  by

Whah are themselves admissible in evidence, only that they are  a

permissible  basis  for Whahs expert opinions.   Alaska  Evidence

Rule  703  provides that facts or data relied upon by experts  in

forming opinions need not be admissible in evidence, but must  be

of  a  type  reasonably relied upon by experts in the  particular

field  in  forming  opinions  or inferences  upon  the  subject.6

Nationsbanc  argues that Barr cannot establish that  all  of  the

documents meet this standard because Whah admitted that she  only

attached  to her affidavit some of the documents upon  which  she

          relied in forming her opinion.7  But Whah affied that many of the

records she relied upon were provided to Barr by Nationsbanc  and

are  certainly in [Nationsbancs] possession and control  although

they  were  not  attached  to Whahs affidavit.   Without  a  more

convincing  showing  by  Nationsbanc  that  the  documents   Whah

reviewed were so unreliable as to preclude an expert from forming

an  opinion in reliance on them, we conclude that for purposes of

summary judgment, Whahs affidavit was admissible evidence.

          Nationsbanc argues that the language of both  the  deed

of  trust  and regulations of the U.S. Department of Housing  and

Urban  Development  (HUD) prevented it from applying  the  escrow

surplus,  even  if  it existed, to future payments.   Nationsbanc

argues  that by failing to make her payments in at least November

1997   through  January  1998,  Barrs  loan  was  not   current.8

Nationsbanc correctly notes that an escrow surplus may be applied

to future payments only if the loan is current.9  As noted above,

however, the Whah affidavit contained evidence both that the loan

was current and that Barr had an escrow surplus in January 1998.10

Barr  argues that since the loan was current when the foreclosure

was  commenced, Nationsbanc should have applied [the surplus]  to

principal  and  interest  payment[s] [as]  was  the  practice  of

Nationsbanc and its predecessors in interest.  Barrs assertion in

her  affidavit that a surplus existed in January 1998, along with

Whahs  affidavit, creates a genuine issue of material fact as  to

whether the loan was current in October 1997.

          HUD regulations require a refund to the borrower of any

surplus  greater than $50.11  When the regulations  are  read  in

conjunction with the deed of trust, it would still be permissible

for  Barr to request that any surplus be applied to principal and

interest  payments.  A HUD regulation stating  that  the  surplus

shall . . . [be] refund[ed] . . . to the borrower12 does not,  by

itself,  forbid the borrower from requesting that the  refund  be

redirected to principal or interest payments.  Indeed,  paragraph

4  of  the deed of trust allows for this possibility.  It  states

          that any excess, if the loan is current, at the option of the

Trustor  [Barr], shall be credited on subsequent payments  to  be

made  by  the  Trustor, or refunded to the Trustor.  Barr  argues

that  it was Nationsbancs prior practice to apply the surplus  in

this  manner.  The same factual inferences favorable to Barr that

create  a  genuine issue of material fact as to whether the  loan

was  current  in  October 1997 also create  a  genuine  issue  of

material  fact as to whether Nationsbanc could have  applied  any

escrow surplus to Barrs monthly payments in November and December

1997 and January 1998.  Accordingly, we conclude that Nationsbanc

has  failed  to  meet its burden of disproving Barrs  affirmative

defense.13  It was therefore not entitled to summary judgment.

     C.   Dismissing Barrs Counterclaim Was Error Because There Was a

          Factual Dispute Whether Nationsbancs Foreclosure Was Proper.

          Barr  argues that the trial court wrongfully  dismissed

her  counterclaim for damages caused by Nationsbancs  purportedly

improper  foreclosure.   Like  Barrs  affirmative  defense,   her

counterclaim focuses on whether a surplus existed, and if it did,

whether it was available to be applied to the balance owed on the

property.  Because Nationsbanc did not conclusively show  that  a

surplus  did  not  exist, it has failed to  meet  its  burden  in

disproving  Barrs  damage  claim.   Hence,  the  genuine  factual

dispute that requires us to reverse Nationsbancs summary judgment

motion  also  requires  us  to reverse  the  dismissal  of  Barrs

counterclaim.

     D.   We  Vacate  the Superior Courts Findings  of  Fact  and

          Conclusions of Law.

          A.   Barr argues that the superior court erred by adopting

Nationsbancs  proposed findings and conclusions in  toto  without

carefully considering their content. Barr also alleges that those

findings  and  conclusions contained multiple  errors.   Barr  is

correct to the extent that any of the findings or conclusions  go

to issues which remain in genuine dispute.  On the other hand, we

recognize that many of the findings and conclusions may not  have

          been erroneously entered and may stand alone, regardless of the

genuine factual dispute discussed in Part III.B.  But there is no

reason  to decide which findings and conclusions those  might  be

because the parties have not briefed that proposition and because

there  is no present dispute about the validity of the individual

findings  and  conclusions  beyond  the  narrow  issues  we  have

discussed  above.  Instead we simply vacate the  superior  courts

findings  of  fact  and  conclusions  of  law  because  we   have

determined  that  there  are genuine factual  disputes  that  are

material to the issues discussed above.

IV.  CONCLUSION

          Because there are genuine issues of material fact about

the  extent  or existence of a surplus that could be credited  to

Barrs  account,  we REVERSE the partial summary judgment  entered

for  Nationsbanc, VACATE the findings of fact and conclusions  of

law,  and  REMAND  for further proceedings consistent  with  this

opinion.

_______________________________
     1     The bankruptcy court lifted the stay after determining
that Barr had violated the stays conditions.  The court explained
that  Barrs  reasoning for not delivering her  payment  to  local
counsel  in  June 1998, as required by a May 1998  order  of  the
bankruptcy court, was vague and unsatisfactory.

     2    Nationsbanc moved to strike Barrs opposition on grounds
that  it  was  not signed by her counsel of record  and  that  it
relied  upon matters not disclosed in discovery despite  specific
requests by Nationsbanc.  This motion was denied.

     3     Moore  v. Allstate Ins. Co., 995 P.2d 231, 233 (Alaska
2000) (citations omitted).

     4    Id.

     5     Bliss  v. Bobich, 971 P.2d 141, 145 n.4 (Alaska  2000)
(citation  omitted); see also Schneider v. Pay N Save Corp.,  723
P.2d  619,  623  (Alaska 1986) (stating material  issue  of  fact
exists  where  reasonable  jurors  could  disagree  in  resolving
factual issues presented by moving papers) (citation omitted).

     6     See also Norris v. Gatts, 738 P.2d 344, 349-50 (Alaska
1987)  (stating expert witness entitled to rely upon inadmissable
evidence meeting reasonable reliance element of Rule 703).

     7    Nationsbanc notes that Alaska Civil Rule 56(e) requires
that  [s]worn or certified copies of all papers or parts  thereof
referred to in an affidavit [opposing summary judgment] shall  be
attached thereto or served therewith. (Emphasis added.)

     8       24    Code    of   Federal   Regulations    (C.F.R.)
3500.17(f)(2)(ii) (2000) states:

          A   borrower  is  current  if  the   servicer
          receives  the  borrowers payments  within  30
          days  of  the  payment  due  date.   If   the
          servicer   does  not  receive  the  borrowers
          payment  within  30 days of the  payment  due
          date,  then  the  servicer  may  retain   the
          surplus in the escrow account pursuant to the
          terms of the mortgage loan documents.
          
     9    Paragraph 4 of the deed of trust states:

          If  the total of the payments made [under the
          note  plus  taxes and insurance]  exceed  the
          amount   of   payments   actually   made   by
          Beneficiary  for  ground  rents,   taxes   or
          assessments, of (sic) insurance premiums,  as
          the case may be, such excess, if the loan  is
          current, at the option of the Trustor,  shall
          be credited on subsequent payments to be made
          by the Trustor, or refunded to the Trustor.
          
     10    Even if the loan was not current, the beneficiary could
not simply keep the escrow surplus without accounting for it.

     11    24 C.F.R.  3500.17(f)(2)(i) (2000).

     12    Id.

     13    Wassink v. Hawkins, 859 P.2d 712, 713-14 (Alaska 1993)
(reversing  grant  of summary judgment where  genuine  issues  of
material fact exist regarding affirmative defenses).