Stacey Littlefield and Scott Littlefield v. Terry Daniel Smith, Staci Herring Smith, and Planet Home Lending, LLC (Appeal from Jefferson Circuit Court: CV-20-902963).

Rel: December 15, 2023




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   SUPREME COURT OF ALABAMA
                               OCTOBER TERM, 2023-2024
                                  ____________________

                                          SC-2023-0069
                                       ____________________

                       Stacey Littlefield and Scott Littlefield

                                                      v.

    Terry Daniel Smith, Staci Herring Smith, and Planet Home
                          Lending, LLC

                        Appeal from Jefferson Circuit Court
                                  (CV-20-902963)



PARKER, Chief Justice.

        This appeal arises from a summary judgment entered in favor of

the purchasers of a home that had been foreclosed on by the mortgagee
SC-2023-0069

but was still occupied by the defaulting mortgagors. The Jefferson Circuit

Court entered the summary judgment in favor of the purchasers in their

ejectment/declaratory-judgment       action      against    the    defaulting

mortgagors. It also entered a summary judgment in favor of the

purchasers    and   the   mortgagee       on   the   defaulting   mortgagors'

counterclaims against them. The defaulting mortgagors appealed. We

affirm.

                                  I. Facts

     In May 2019, Scott Littlefield and Stacey Littlefield purchased a

home with a loan from Planet Home Lending, LLC ("Planet"). The loan

was secured by a mortgage, which contained a provision requiring Planet

to send the Littlefields notice of intent to accelerate the loan in the event

the Littlefields defaulted. Under that provision, such notice had to

"specify … a date, not less than 30 days from the date the notice is given,

… by which the default must be cured."

     The Littlefields did not make any mortgage payments. Planet

prepared two identical letters notifying the Littlefields of its intent to

accelerate the loan. Although the letters were dated October 2, 2019, they



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were purportedly mailed on October 3, 2019. In the letters, Planet gave

the Littlefields until November 1, 2019, to cure the default.

     The Littlefields did not cure the default, and Planet foreclosed on

the Littlefields' home and purchased it at the foreclosure sale. Planet

then sold the home to Terry Daniel Smith and Staci Herring Smith. The

Smiths demanded that the Littlefields vacate the home, but the

Littlefields refused. The Smiths commenced an ejectment action against

the Littlefields. They later added a request for a judgment declaring that

the Littlefields had forfeited their redemption rights.

     In their answer, the Littlefields asserted affirmative defenses to the

Smiths' ejectment claim. They also asserted several counterclaims and

added Planet as a counterclaim defendant. Against both the Smiths and

Planet, the Littlefields sought a judgment declaring that the foreclosure

was void because Planet had failed to comply with the mortgage's notice

requirements. The Littlefields also asserted a slander-of-title claim

against the Smiths and Planet. Against Planet only, the Littlefields

asserted claims of breach of contract, wrongful foreclosure, and violation

of the Real Estate Settlement Procedures Act ("RESPA"), 

 et seq. The Smiths then asserted against Planet a breach-of-

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warranty-of-title cross-claim in the event that the Littlefields established

that the foreclosure was void.

     Planet moved for a summary judgment against the Littlefields on

their counterclaims and against the Smiths on their cross-claim. The

Smiths also moved for a summary judgment on their claims against the

Littlefields, on the Littlefields' counterclaims against them, and on their

cross-claim against Planet. The Littlefields moved for a summary

judgment on the Smiths' claims against them and on their counterclaims

seeking a declaratory judgment (against all counterclaim defendants)

and alleging breach of contract (against Planet only).

     The circuit court entered a summary judgment against the

Littlefields and in favor of the Smiths and Planet. It ruled that October

3 was day 1 of the 30-day cure period and that the notices were therefore

valid. It denied the Littlefields' motion for a summary judgment against

the Smiths and Planet on its counterclaims, and it dismissed as moot the

Smiths' cross-claim against Planet. The Littlefields filed a motion to

alter, amend, or vacate the judgment, which was denied by operation of

law. The Littlefields appealed.

                          II. Standard of Review

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           "This Court's review of a summary judgment is de novo.
     We apply the same standard of review as the trial court
     applied. Specifically, we must determine whether the movant
     has made a prima facie showing that no genuine issue of
     material fact exists and that the movant is entitled to a
     judgment as a matter of law. In making such a determination,
     we must review the evidence in the light most favorable to the
     nonmovant. Once the movant makes a prima facie showing
     that there is no genuine issue of material fact, the burden
     then shifts to the nonmovant to produce 'substantial evidence'
     as to the existence of a genuine issue of material fact.
     '[S]ubstantial evidence is evidence of such weight and quality
     that fair-minded persons in the exercise of impartial
     judgment can reasonably infer the existence of the fact sought
     to be proved.' "

Dow v. Alabama Democratic Party, 

 (Ala. 2004)

(citations omitted). Moreover, "[w]e may affirm the circuit court's

judgment for any legal, valid reason, even one not raised in or considered

by the circuit court, unless due-process fairness principles require that

the ground have been raised below and it was not." State v. Epic Tech,

LLC, [Ms. 1210012, May 20, 2022] ___ So. 3d ___, ___ (Ala. 2022).

                              III. Analysis

     The Littlefields make two alternative arguments for reversal. First,

they contend that October 3, the date the notice letters were purportedly

mailed, was merely the triggering event from which the 30 days of the

cure period are counted, not day 1 of the cure period. Accordingly, they

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contend that the notice letters failed to strictly comply with the

mortgage's notice requirements, and, thus, that the foreclosure was

invalid. Second, they contend that, even if the date of mailing counts as

day 1 of the 30-day cure period, the notice letters in this case were still

not effective because Planet never sent them. The Littlefields contend

that their testimony that they never received the notice letters created a

genuine issue of material fact regarding whether they received the

letters.

      The Smiths and Planet raise several arguments in response, but we

find one argument made by Planet dispositive. Planet contends that,

even if the notice letters gave the Littlefields less than 30 days to cure

the default, and even if that defect was material, the foreclosure was

merely voidable, not void. They further contend that, because the

Littlefields did not directly challenge the foreclosure before the Smiths

purchased the home, the foreclosure cannot be set aside because the

Smiths were bona fide purchasers for value.

      Planet's argument is based on several decisions construing

Alabama's nonjudicial-foreclosure statutes. Section 35-10-8, Ala. Code

1975, sets forth various requirements for nonjudicial-foreclosure sales,

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one of which is that "[n]otice of said sale shall be given in the manner

provided in such mortgage." Section 35-10-9, Ala. Code 1975, provides

that foreclosure sales made "contrary to the provisions of this article [i.e.,

Title 35, Chapter 10, Article 1], shall be null and void." In Dewberry v.

Bank of Standing Rock, 

, 

 (1933), this

Court held that those statutes together provide that foreclosure sales

conducted contrary to the powers contained in mortgages are null and

void. However, only five years later, this Court interpreted those statutes

as providing that foreclosure sales that do not comply with the provisions

of the mortgage or the nonjudicial-foreclosure statutes are "voidable on

direct attack." Appelbaum v. First Nat'l Bank of Birmingham, 

, 

 (1938). See also Vick v. Bishop, 

, 

 (1949) (same).1 Thus, according to Planet, even if

the notice letters did not comply with the mortgage's notice



      1Although this Court's language in Appelbaum and Vick using the

term "voidable" appears to be in facial tension with the "null and void"
language of § 35-10-9, we do not address whether those cases were
correctly decided because none of the parties has asked us to revisit or
overrule them. Moore v. Prudential Residential Servs. Ltd. P'ship, 

 (Ala. 2002) ("Stare decisis commands, at a minimum, a
degree of respect from this Court that makes it disinclined to overrule
controlling precedent when it is not invited to do so.").
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requirements, the foreclosure was merely voidable, and the Littlefields

could not raise the defect in the notice letters after title had been

transferred to the Smiths.

      One of the differences between a void and a voidable foreclosure

sale is that a void sale can be set aside even if the property has passed to

a bona fide purchaser, whereas a voidable sale can be set aside only if the

property has not passed to a bona fide purchaser. Campbell v. Bank of

America, N.A., 

 (Ala. Civ. App. 2012). See also 12

Thompson on Real Property §§ 101.04(c)(2)(i) and 101.04(c)(2)(ii) at 402-

03 (David A. Thomas ed. 1994)). The rule that a voidable sale cannot be

set aside if legal title has passed to a bona fide purchaser " 'follows from

the traditional common law rule that a subsequent bona fide purchaser

of a legal title takes free of hidden equities.' " Campbell, 

(quoting 12 Thompson on Real Property § 101.04(c)(2)(ii) at 403). " 'The

right of an injured party to set aside a deed because of flaws that produce

only a voidable title is an equitable right cut off by transfer to a bona fide

purchaser.' " Id.




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     In Campbell, the Court of Civil Appeals identified the relatively few

circumstances that Alabama courts have held render a foreclosure sale

void. Those circumstances include:

     "(1) when the foreclosing entity does not have the legal right
     to exercise the power of sale, as, for example, when that entity
     is neither the assignee of the mortgage, nor the holder of the
     promissory note at the time it commences the foreclosure
     proceedings; (2) when 'the debt secured by the mortgage was
     fully paid prior to foreclosure'; (3) when the foreclosing entity
     failed to give notice of the time and place of the foreclosure
     sale; and (4) when the purchase price paid is ' "so inadequate
     as to shock the conscience, it may itself raise a presumption
     of fraud, trickery, unfairness, or culpable mismanagement,
     and therefore be sufficient ground for setting the sale aside." ' "

Campbell, 

 (citations omitted). None of those

situations exists here. Thus, it appears that Planet's failure to give the

notice required by the mortgage rendered the foreclosure only voidable,

not void.

     The Littlefields respond by noting that their declaratory-judgment

counterclaim was a direct challenge to the foreclosure and, thus, that it

does not matter whether Planet's failure to provide sufficient time to cure

rendered the foreclosure void or voidable. The Littlefields' argument

picks up on a different, but related, difference between a void foreclosure

sale and a voidable one. As the Court of Civil Appeals explained:

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SC-2023-0069

           "In a direct attack on a foreclosure -- that is, an action
     seeking declaratory and injunctive relief to halt the
     foreclosure sale before it occurs or an action to set aside the
     sale after it has occurred -- any circumstance in the
     foreclosure process that would render the foreclosure sale void
     or voidable may be asserted. In a proceeding involving a
     collateral attack on a foreclosure, however, only those
     circumstances that would render the foreclosure sale void
     may be raised as an affirmative defense."

Campbell, 

 (some emphasis added; citations omitted).

But even if the Littlefields are correct that their counterclaim was a

direct action under Campbell, meaning that they could raise an issue that

would render the foreclosure sale voidable, they could not raise such an

issue once title to the property passed to a bona fide purchaser. In other

words, there are two independent restrictions that apply when a party

challenges a foreclosure on grounds that render it merely voidable: (1)

the challenge must be brought in a direct action and (2) the challenge

must be brought before title passes to a bona fide purchaser. Here, the

second restriction is not satisfied because title had already passed to the

Smiths when the Littlefields asserted their counterclaim.

     The Littlefields also contend that, in Ex parte Turner, 

 (Ala. 2017), this Court held that a foreclosure was void because the

mortgagee had failed to notify the mortgagors of their right to bring a

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court action challenging the foreclosure. Turner is unavailing because

this Court did not decide whether the mortgagee's failure to comply with

the mortgage's notice requirements rendered the foreclosure sale void or

voidable. It did not need to do so because title had not passed to a bona

fide purchaser. Instead, the mortgagee bought the property at the

foreclosure sale and continued to hold title to the property when the

mortgagors commenced their action. "A mortgagee purchasing at a sale

conducted by the mortgagee will not likely qualify as a bona fide

purchaser, since the mortgagee/purchaser should be aware of the

irregularity [that] makes the sale voidable." 12 Thompson on Real

Property § 101.04(c)(2)(ii) at 403-04. Because there was no bona fide

purchaser, the mortgagors could challenge the foreclosure as either void

or voidable. Accordingly, this Court held that the foreclosure in Turner

"failed" without specifying whether it was void or voidable. 2 

.



       2Turner could be read as necessarily holding that the foreclosure

was void because the mortgagors challenged the validity of the
foreclosure in a defense to the mortgagee's ejectment action, which was a
collateral attack. Had the foreclosure been merely voidable, the
mortgagors would have had to challenge it in a direct action. There, the

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     Finally, the Littlefields made no effort to demonstrate that there

was any genuine issue of material fact regarding whether the Smiths

were bona fide purchasers. Because of that omission, and because the

foreclosure was merely voidable, not void, the Littlefields' counterclaims

challenging the validity of the foreclosure and sale to the Smiths -- i.e.,

their declaratory-judgment claim and their slander-of-title claim -- fail as

a matter of law. Accordingly, the Smiths and Planet were entitled to a

judgment as a matter of law on those claims.

     Further, the Littlefields make no argument that there is a genuine

issue of material fact regarding the Smiths' ejectment claim, including



notice was deficient because it failed to notify the mortgagors of their
right to bring a court action directly challenging the foreclosure. A
holding that that defect made the foreclosure merely voidable, and thus
subject to only a direct attack, would have deprived the mortgagors of
any notice of their only method of challenging the foreclosure. As we
noted in Turner, the requirement that a party be given notice of his right
to challenge a foreclosure by a court action is important because it
preserves his right to raise defects that might render the foreclosure only
voidable. See Turner, 

 n.2. Thus, to the extent that
Turner can be read as necessarily holding that the foreclosure was void,
it appears that that holding was limited to the type of defect present in
that case. In other words, in addition to Campbell's limited list of defects
that render a foreclosure void, Turner potentially added the failure to
notify a party of his right to directly challenge a foreclosure. It did not
alter the general rule that deficient notice renders a foreclosure merely
voidable.
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the circuit court's award of damages for mesne profits. And as explained

above, the only affirmative defense to the Smiths' ejectment claim that

they assert on appeal -- that the foreclosure was invalid because of the

deficient notice -- is barred by the transfer of title to a bona fide purchaser

and as a collateral attack on the foreclosure on a basis that would render

the foreclosure only voidable. Campbell, 

 ("In a

proceeding involving a collateral attack on a foreclosure, however, only

those circumstances that would render the foreclosure sale void may be

raised as an affirmative defense."). Accordingly, the Smiths were entitled

to a judgment as a matter of law in their favor on their ejectment claim.

      We turn next to the Smiths' one claim that the Littlefields do not

challenge on the basis that the foreclosure was invalid, namely, their

claim for a judgment declaring that the Littlefields forfeited their

redemption rights. In its judgment, the circuit court ruled that the

Littlefields forfeited their right to redeem the property because they did

not deliver possession of the property to Planet within 10 days after

Planet demanded possession. The Littlefields do not challenge that ruling

on appeal. "When an appellant fails to argue an issue in its brief, that

issue is waived." Boshell v. Keith, 

 (Ala. 1982).

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Accordingly, the circuit court's judgment on that claim is due to be

affirmed on that basis alone.

      Similarly, the Littlefields do not make any arguments challenging

the circuit court's rulings on their counterclaims against Planet alleging

wrongful foreclosure and violation of the RESPA. Even after Planet

included arguments in its appellate brief offering alternative reasons

why it was entitled to a judgment as a matter of law on those claims, the

Littlefields did not reply to those arguments in their reply brief.

Accordingly, the Littlefields are deemed to have abandoned those

counterclaims on appeal, and the circuit court's judgment on those claims

is due to be affirmed.

      The only remaining claim is the Littlefields' counterclaim against

Planet alleging breach of contract for failing to comply with the notice

requirements of the mortgage. In their briefs, the parties discuss the

Littlefields'   breach-of-contract   claim   against   Planet   with   their

declaratory-judgment claim because both claims involve the question

whether Planet strictly complied with the terms of the mortgage. But

even though both claims involve that question, the two claims are

fundamentally different. As discussed above, the declaratory-judgment

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claim sought a declaration that Planet's failure to comply with the

mortgage's notice requirements rendered the foreclosure void. By

contrast, the breach-of-contract claim did not require a finding that the

foreclosure was void; even if the foreclosure itself was valid, the

Littlefields might have had a viable claim for damages resulting from

Planet's alleged breach of the notice requirements. But in their briefs, the

Littlefields asserted only that Planet's alleged breach of the mortgage's

notice requirements rendered the foreclosure void. That argument is

irrelevant to the breach-of-contract claim. Accordingly, the Littlefields

appear to have abandoned the breach-of-contract claim on appeal.

     Because the foregoing holdings are dispositive as to each of the

claims before us, we do not reach the issues whether the circuit court

erred in concluding that October 3 was day 1 of the 30-day cure period or

whether the 30-day notice requirement was material.

                              IV. Conclusion

     For these reasons, we affirm the circuit court's judgment.

     AFFIRMED.

     Shaw, Bryan, Mendheim, and Mitchell, JJ., concur.



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