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Legacy Auto Sales LLC v. Bank of New York Mellon

Court of Appeals of Tennessee, Memphis

April 29, 2015

LEGACY AUTO SALES, LLC, ET AL.
v.
BANK OF NEW YORK MELLON, ET AL.

Session February 24, 2015

Direct Appeal from the Chancery Court for Shelby County No. CH-11-1634-2 Arnold B. Goldin, Judge

Drayton Durell Berkley, Memphis, Tennessee, for the appellants, Rodney Hayes, Equilla Hayes and Legacy Auto Sales, LLC.

Lauren Paxton Roberts, Nashville, Tennessee, for the appellee, Bank of New York Mellon.

Brandon O. Gibson, J., delivered the opinion of the court, in which J. Steven Stafford, P.J., W.S., and Kenny Armstrong, J., joined.

MEMORANDUM OPINION [1]

BRANDON O. GIBSON, JUDGE

I. Background and Procedural History

In 2004, Rodney and Equilla Hayes purchased property located at 485 Military Cove in Collierville, Tennessee. In September 2005, the Hayeses obtained a loan to refinance the property, executing a promissory note (the "Note") in favor of America's Wholesale Lender in the amount of $376, 000.00. The Note was endorsed in blank by Countrywide Home Loans, Inc. ("Countrywide"). To secure the loan, the Hayeses executed a Deed of Trust granting the property in trust, with a power of sale, to Arnold M. Weiss, as trustee for the benefit of America's Wholesale Lender.

According to Bank of New York Mellon (hereinafter "BNY Mellon"), Countrywide transferred the Note to BNY Mellon as Trustee for CWABS, Inc., Asset Backed Certificates 2005-13 ("CWABS Trust") on November 21, 2005, and the Note has not been transferred since. BNY Mellon contends that the transfer of the Note automatically carried with it the assignment of the Deed of Trust to BNY Mellon. Accordingly, BNY Mellon asserts that it has been the owner and holder of both the Note and Deed of Trust since November 21, 2005.

On September 27, 2008, BNY Mellon appointed Shellie Wallace of Wilson & Associates, PLLC ("Wilson & Associates") as substitute trustee, replacing Arnold M. Weiss. The appointment was recorded with the Shelby County Register of Deeds on October 3, 2008.

The Hayeses eventually defaulted on their payment obligations under the Note. In July 2011, the Hayeses received notice from Wallace that the holder of the Deed of Trust was planning to foreclose on the property. On September 16, 2011, the Hayeses executed and recorded a quitclaim deed, transferring the entirety of their interest in the property to Legacy Auto Sales, LLC ("Legacy Auto Sales"). On September 27, 2011, Wallace advertised that the non-judicial foreclosure sale was scheduled for October 28, 2011.

On October 7, 2011, Appellants brought the underlying action in Shelby County Chancery Court against BNY Mellon, CWABS Trust, Shellie Wallace, and Wilson & Associates seeking to enjoin the non-judicial foreclosure sale. Appellants alleged that because Wallace was not appointed substitute trustee of the Note prior to initiation of the non-judicial foreclosure proceedings, Wallace and Wilson & Associates had no authority to initiate the proceedings. Appellants sought temporary and permanent injunctions against the non-judicial foreclosure sale and damages for alleged violations of the Tennessee Consumer Protection Act (hereinafter "TCPA") and the Racketeer Influenced and Corrupt Organizations Act (hereinafter "RICO") by the Bank, Wallace, and Wilson & Associates. On December 7, 2011, the trial court issued a temporary injunction preventing the sale, pending further orders of the court.

On December 16, 2011, BNY Mellon filed a motion to dismiss. On January 5, 2012, Appellants filed an amended complaint. The amended complaint contained many of the same allegations as the original complaint, including those regarding violations of TCPA and RICO, but added a challenge to the assignment of the Note and Deed of Trust to BNY Mellon.

On March 2, 2012, BNY Mellon filed a motion to dismiss Appellants' first amended complaint. On August 21, 2012, Shellie Wallace and Wilson & Associates filed a separate motion to dismiss the amended complaint. The trial court denied BNY Mellon's motion to dismiss, but, in a separate order, granted the motion to dismiss filed ...


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