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Tenants’ Standing in Foreclosures in Kansas

Posted By USFN, Monday, February 17, 2020

by Blair Gisi, Esq. 
SouthLaw, P.C. 
USFN Member (IA, KS, MO, NE)

A pro se mother and daughter recently challenged a foreclosure in the Kansas Court of Appeals that, in part, resulted in clarification of the rights of a tenant/occupant of a property subject to the foreclosure.

Citimortgage, Inc. v. Scott-Jacobs, 2019 Kan. App. Unpub. LEXIS 863 (Ct. App. Dec. 27, 2019) was an appeal brought by a borrower and her daughter appealing the district court’s awarding of an in rem summary judgment to Citimortgage and claiming the district court erred by entering judgment in favor of Citimortgage and erred again by dismissing the appellants’ counterclaims

Angela Connell, daughter and occupant of the property, joined her mother, Maejean Scott-Jacobs, and her husband (who passed away while the litigation was pending), the original borrowers, in contesting the foreclosure.  Angela was not on the loan in any capacity, yet moved the district court for dismissal of the foreclosure action and filed an “Answer, New Matter, and Counterclaims.”  After addressing several procedural issues (including telling Connell she could not represent her parents in court as a nonlawyer and Scott-Jacobs subsequently affirming Connell’s pleadings), the district court ultimately entered an order dismissing the Connell’s counterclaims for lack of standing, dismissing Scott-Jacobs’ counterclaims for failing to state a claim upon which relief could be granted, and granting Citimortgage’s motion for summary judgment.

The first issue the Court of Appeals analyzed was whether it was an error to dismiss the counterclaims.  Upon review of the district court’s dismissal of Connell’s counterclaims, the dismissal was found appropriate since Connell lacked privity to the contracts at issue and was not a qualified third-party beneficiary. Connell was not a party to either the Note or Mortgage and had was unable to meet her burden of showing the existence of some provision in the contract that operated to her benefit, therefore, the Court of Appeals found her “seek[ing] to enforce alleged rights Maejean has under the note and mortgage” and the dismissal of counterclaims to be correct. 

Of particular note, the Court of Appeals found that even though Connell was later named a party in the foreclosure due to her occupancy of the property, she still lacked standing:

 

Kansas law requires that tenants and occupants of property subject to foreclosure must be included in the foreclosure action ‘to ensure that a tenant may not have his or her leasehold interest in property automatically forfeited without the due process right of a day in court.’  However, Angela has not asserted a leasehold in the property; thus, she is without standing to raise her counterclaims and cross-claims.

 

Scott-Jacobs at *10 quoting Citizens Bank & Trust v. Brothers Constr. & Mfg., Inc., 18 Kan. App. 2d 704, 709, 859 P.2d 394 (1993).

This ruling serves as an important reminder to assess fully the interest held and the standing of a party contesting the foreclosure when that party is not a borrower.

Also of interest, the Court took a staunch position on the “liberal construction of pro se pleadings” dismissing Scott-Jacobs’ counterclaims for failure to comply with K.S.A. 2018 Supp. 60-208(a) and elaborating on the importance of Kansas Supreme Court Rule 141 to a Motion for Summary Judgment as well as each element necessary to grant a lender summary judgment in a foreclosure action.

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February USFN e-Update

 

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