Countrywide Home Loans Inc. v. King

After the expiration of 15-day statutory grace period, the mortgagee became entitled to a verdict and judgment by default in its suit for breach of warranty of title, fraud and intentional misrepresentation, as if proper evidence supported every item and paragraph of its complaint, since the trial court did not extend time for filing an answer and the defendants never filed an answer or sought to have default opened as matter of right.

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After the holders of a first priority security interest in the home of James and Marie King foreclosed on the property, Countrywide Home Loans, Inc., which held a second priority security interest in the property, sued the Kings for, among other things, breach of warranty of title, fraud, and intentional misrepresentation. The Kings failed to answer the complaint, and on March 25, 2008, Countrywide filed a motion for entry of a default judgment. After the trial court denied its motion, Countrywide appealed, claiming that the trial court abused its discretion in failing to enter a default judgment against the Kings. We agree. Accordingly, we reverse the ruling below and remand to the trial court to determine the amount of Countrywide’s unliquidated damages. On appeal, we will reverse a trial court’s denial of a motion to enter a default judgment only if there has been an abuse of discretion.1 Here, the record shows that on January 7, 2004, the Kings obtained a loan for $160,000 from a predecessor in interest to Countrywide. To secure repayment of the loan, the Kings executed a security deed to their home the “Property”, and that security deed was later assigned to Countrywide. In connection with their receipt of the loan proceeds, the Kings also executed a mortgagor’s affidavit, in which they swore that the mortgage they were taking out on the Property would constitute a valid first lien and that they had not executed any other loan documents in the past 90 days that would constitute a lien on the Property. The Kings did not disclose that on November 19, 2003, they had borrowed over $80,000 from Bank One, N.A. and had secured that loan with a security deed to the Property.

The Kings failed to make required payments under either of the loan agreements, and the successor in interest to the Bank One loan commenced foreclosure proceedings on the Property in 2006. As a result of the subsequent foreclosure, Countrywide’s interest in the Property was eliminated.

Countrywide Home Loans Inc. v. King

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