Louisiana’s Strict Procedural Requirements Surrounding Mortgages and Foreclosures on Display in Wells Fargo Bank, N.A. v. Doyle

In the intricate dance of legal proceedings, every step must be taken with precision, as missteps can lead to reversals. The recent case of Wells Fargo Bank, N.A. v. Doyle, 2023-1368 (La. App. 1 Cir 11/09/23), serves as a stark reminder of the importance of procedural accuracy within the legal system. The appellate court’s decision to vacate the trial court’s judgment sheds light on the pitfalls of deviating from Louisiana’s particular legal procedures.

The foreclosure, sheriff’s sale, and discovery of a faulty mortgage document:

The saga began with Wells Fargo’s foreclosure against John and Deborah Doyle for defaulting on a note and mortgage. Wells Fargo obtained a default judgment and then purchased the property at a sheriff’s sale. The plot thickened when Wells Fargo sought to set aside the sheriff’s sale and reform the mortgage after realizing the mortgage description did not match the property the parties allegedly intended to mortgage. Specifically, Wells Fargo alleged that the Doyles had purchased two lots, but the mortgage described only one lot—the lot not containing the residence.

The legal proceedings to attempt to cure the mortgage document and sheriff’s sale:

Wells Fargo filed a Petition to Set Aside Sheriff’s Sale and Reform Mortgage in the same proceeding, naming the Doyles as defendants. Following some motion practice, Wells Fargo filed a “Motion to Set Aside Sheriff’s Sale and Reinstate Liens and Mortgages” with an accompanying proposed judgment. The trial court signed this judgment, ex parte (i.e., without hearing from the opposing party), which declared the sheriff’s sale null and void, set aside the sheriff’s sale, and reinscribed and reinstated the mortgage in favor of Wells Fargo.

The vacated trial court judgment on appeal:

The appellate court delved into the legal procedures governing actions to nullify sheriff’s sales. It clarified that such actions must be instituted as direct actions in ordinary proceedings, requiring formalities such as citations and petitions. In contrast, motions to set aside sheriff’s sales are summary proceedings that do not entail the same formalities.

In this case, the court highlighted the procedural misstep by Wells Fargo. Despite initially filing a petition to set aside the sheriff’s sale, Wells Fargo later attempted to transform it into a motion, seeking to resolve the matter summarily. The court determined that the trial court’s ex parte judgment in favor of Wells Fargo was erroneous since it failed to adhere to the requirements of an ordinary proceeding.

In light of the procedural missteps, the appellate court vacated the trial court’s judgment and assessed the costs of the appeal to Wells Fargo.

This case serves as a reminder of the importance of procedural compliance in legal proceedings, particularly in matters as significant as foreclosure and mortgage enforcement. It serves as a reminder of the complexities involved in such cases and the necessity for meticulous adherence to legal procedures.

Contact J.P. Graf with Gordon Arata Montgomery Barnett with any questions or assistance with banking law and litigation.

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