Date: 07-01-2003

Case Style: U.S. Mortgage v. Donald D. Laubach, et al.

Case Number: 2003 OK 67

Judge: Opala

Court: Oklahoma Supreme Court

Plaintiff's Attorney: No appearance

Defendant's Attorney:

Kelley L. Cornelius, Oklahoma City, Oklahoma, for Appellants William A. Strong II and Carolyn E. Strong

W. David Pardue, Jeffrey M. Love, Oklahoma City, Oklahoma, for Appellees Marquis Marie Hurst and Eagleton, Nicholson, Pordos & Pardue, P.C.

Robert C. Smith, Jr., Oklahoma City, Oklahoma, for Appellee Oak Tree Home Owners Association, Inc.

Description:

1 The issue presented by this appeal is whether Strong creditors' judgment lien retained its efficacy at the time the trial court was called upon to determine the order of priority among the competing liens. We answer in the negative.

I

THE ANATOMY OF LITIGATION

2 U.S. Mortgage, the holder of a mortgage on Donald Laubach's (Laubach) real property located in Oklahoma County, brought a foreclosure suit after Laubach defaulted on the mortgage payments. U.S. Mortgage named as defendants Laubach and three lienholders - Denny Hurst, William A. Strong II and Carolyn E. Strong (Strong creditors) and the Oak Tree Home Owners Association, Inc. (Association).

3 Strong creditors obtained in Missouri a federal-court judgment against Laubach and registered it on 21 August 1995 in the U.S. District Court of the Western District of Oklahoma.3 They then perfected the federal-court judgment as a lien by filing an affidavit of judgment in the Oklahoma County Clerk's office on 3 September 1998. Danny Hurst obtained a judgment against Laubach in Blaine County on 18 January 1995. His lien was created by filing a Statement of Judgment in the Oklahoma County Clerk's office on 18 August 1999. He renewed his judgment against Laubach by filing a notice of renewal in the Blaine County Court Clerk's office on 14 December 1999 and recording a certified copy of the notice of renewal in the Oklahoma County Clerk's office the following day. Association claims an assessment lien on the same property.

4 At mid-litigation Denny Hurst assigned all his interest in the judgment (and judgment lien) to Marquis Marie Hurst (75%) and to Eagleton, Nicholson, Pordos, & Pardue (25%) (collectively called Hurst creditors or third-party plaintiffs). Hurst creditors were granted leave to intervene as third-party plaintiffs. They named Laubach, Strong creditors and Association as third-party defendants. Strong creditors cross-claimed against Laubach, Hurst creditors and Association. Association counterclaimed against Hurst creditors and cross-claimed against Laubach and Strong creditors.

5 U.S. Mortgage moved for summary judgment, arguing that it held a valid first lien on the property in suit. All of the parties except Laubach conceded U.S. Mortgage's priority status. Laubach objected to summary adjudication on the ground that there were material issues of fact as to the amount owed, the escrow paid and the amount of attorney's fees. Strong and Hurst creditors countered with separate summary judgment motions. Strong creditors claimed that, based on priority in time, their judgment lien is superior to that of Hurst creditors and of the Association.4 According to Hurst creditors (a) Strong creditors' lien had expired and was hence ineffective and (b) they had a second lien which is prior to that of Association. Association adopted Hurst creditors' position that Strong creditors' lien had expired. It also conceded that its assessment lien was inferior to that of U.S. Mortgage and Hurst creditors.

6 The trial court struck Strong creditors' answer to Hurst creditors' motion for summary judgment, declaring that it was filed one day late in violation of local court Rule 37.5 The trial court (a) gave summary judgment to Hurst creditors and denied Strong creditors' motion for like relief, (b) declared that Strong creditors obtained a Missouri federal-court judgment and registered it for enforcement as a domestic judgment on 21 August 1995 in the U.S. District Court for the Western District of Oklahoma, (c) declared that Strong creditors failed to file in the county clerk's office either a notice of renewal of judgment, a garnishment summons issued against the judgment debtor (Laubach) or a notice of income assignment on or before 21 August 2000, concluding that Strong creditors' judgment lien expired by operation of 12 O.S.Supp.1997 §759(C)6 and was hence no longer efficacious, and (d) determined the order of priority among the liens upon the real property in suit - U.S. Mortgage (first lien), Hurst creditors (second lien), Association (third lien) - as well as the amount of Hurst creditors' and Association's lien, and (e) directed that Hurst creditors' lien be satisfied from the proceeds, if any remain, of the sale of the property in accordance with the order of priorities. The court denied Strong creditors' quest for new trial.

7 It is Strong creditors' appeal that stands retained for this court's disposition and is now under review.

II

STANDARD OF REVIEW ON SUMMARY PROCESS

8 Summary process - a special pretrial procedural track pursued with the aid of acceptable probative substitutes7 - is a search for undisputed material facts which, sans forensic combat, may be utilized in the judicial decision-making process.8 Summary process is applied where neither the material facts nor any inferences that may be drawn from uncontested facts are in dispute, and the law favors the movant's claim or liability-defeating defense.9 Only those evidentiary materials which eliminate from trial some or all fact issues on the merits of the claim or defense afford legitimate support for nisi prius resort to summary adjudication.10

9 Summary relief issues stand before us for de novo examination.11 All facts and inferences must be viewed in the light most favorable to the non-movant.12 Just as nisi prius courts are called upon to do, so also appellate tribunals bear an affirmative duty to test all evidentiary material tendered in summary process for its legal sufficiency to support the relief sought by the movant.13 Only if the court should conclude that there is no material fact in dispute and the law favors the movant's claim or liability-defeating defense is the moving party entitled to summary judgment in its favor.14

III

THE BASIS FOR STRONG CREDITORS' CLAIM TO AN EFFECTIVE JUDGMENT LIEN

10 Strong creditors claim an enforceable judgment lien on the property, superior to the later-recorded liens of Hurst creditors and Association. According to Strong creditors their lien has not expired because the statutory five-year dormancy period15 runs from the date the judgment lien was created (3 September 1998),16 not the date the judgment was registered in Oklahoma (21 August 1995). Strong creditors argue that their judgment was kept from lapsing into dormancy by the issuance of several garnishment summons by the federal court clerk within the initial five-year life of their judgment. On 13 September 2002 they filed one of the garnishment summons in the Oklahoma County Clerk's office. Strong creditors claim that each garnishment summons renewed and extended the life of the judgment by five years from the date of its issuance. They argue that judgment liens are created by filing a statement of judgment with the county clerk (§706(B)) and are continued in force in accordance with §759(C)17 by filing a general execution, renewal of judgment, or garnishment summons within five years of the judgment lien's perfection and then within five years after each filing of a general execution, renewal of judgment, or garnishment summons in the county clerk's office. Strong creditors base their view on a historical analysis of these statutes.18 Because their judgment lien was filed 3 September 1998, they claim it was still effective when the trial court was called upon to determine the order of priority among competing liens.

11 Hurst creditors counter that Strong creditors' 1998 lien expired on 21 August 2000, five years after their judgment was registered in the Western District of Oklahoma. They argue that Strong creditors have not succeeded in reviving their lien by recording an undated uncertified garnishment summons in the county clerk's office. This is so, they assert, because once the lien expired, Strong creditors were required to file a new statement of judgment in the county clerk's office to extend the lien's efficacy in accordance with 12 O.S.2001 §706.19 According to Hurst creditors all judgments have an initial life of five years and the corresponding judgment lien that is perfected cannot exceed or outlive the life of the judgment which it secures. Even if we assume that Strong creditors' judgment had retained its efficacy by the issuance of successive garnishments, Hurst creditors argue that Strong creditors did not succeed in keeping their judgment lien alive because they failed to record in the county clerk's office (as required by §759(C)) a certified copy of one of the three types of processes/execution. In other words, the life of a judgment lien is only as long as that of the judgment it secures. According to Hurst creditors, Strong creditors' construction of §§706, 735 and 759(C) violates these fundamental premises. We agree.

IV

THE EFFECT OF THE DORMANCY STATUTE UPON THE CONTINUED EFFICACY OF A JUDGMENT LIEN

12 Strong creditors assert that this case presents a first-impression question whether the § 759(C) five-year dormancy period for a judgment lien begins to run upon the lien's perfection or upon the judgment's entry (or registration). The tendered issue requires an analysis of the state dormancy statute's impact upon a registered federal-court judgment and upon the judgment lien which secures that obligation.

A.

The Registration of An Out-Of-District Federal Judgment Is a Prerequisite For Securing a Judgment Lien

13 An out-of-district federal-court judgment may be registered either in the state20 or in federal district court21 as a prerequisite for its enforcement in Oklahoma. Its vitality begins with the registration process,22 which confers on the obligee the status, rights and remedies afforded by state law to any judgment creditor. We accord a federal-court judgment the very same effect as that which we must give to a sister-state judgment under the full-faith-and-credit command of the U.S. Constitution.23

B.

Dormancy's Impact On A Registered Federal Judgment

14 A non-Oklahoma (namely, sister-state, foreign-nation and federal-court) judgment that is enforceable at the time of its registration24 in Oklahoma is to be considered a new judgment25 for purposes of the five-year dormancy statute. 12 O.S.1991 §735.26 The dormancy period begins to run from the date of registration.27 A judgment will become dormant and ineffective unless within five years from its registration (a) execution is issued upon it by the court clerk and filed in the county clerk's office as provided by §759,28 (b) a notice of renewal is filed in the court clerk's office or (c) garnishment is issued by the court clerk.29

15 It is uniformly the registrant (the judgment creditor) who bears the burden of proof and persuasion to show the continued efficacy of its non-Oklahoma judgment that has been registered in the state for enforcement as a domestic judgment.30

C.

The Mechanics of Securing a Judgment Lien

16 A domestic (or registered) judgment is perfected as a judgment lien (operable against the real property of the judgment debtor) by filing a "statement of judgment" in the county clerk's office. 12 O.S.2001 §706.31 The judgment constitutes the obligation, which is secured by the lien that is impressed on the debtor's real property. The lien is created by operation of statute.32 It attaches to the property when the statutory requirements have been met.33

17 A judgment lien retains its efficacy when prior to the expiration of the initial or "subsequent statutory period," a certified copy of one of the following documents is filed and indexed in the county clerk's office: (a) a general execution issued upon the judgment, (b) a filed notice of renewal of judgment or (c) an issued garnishment summons. 12 O.S.Supp.1997 §759(C).34

D.

Dormancy's Impact on Judgment Liens

18 When an out-of-state judgment is perfected as a lien, its enforceability continues from the point in time that coincides with its registration. The life of a domestic judgment and that judgment's lien run parallel and concurrently from the point of entry. A judgment lien's continued life is measured by the period that applies to enforceability of judgments. When the obligation that lien secures is extinguished, the lien itself ceases to operate.35 The dormancy act affects solely executions on judgments. Judgment liens are subject to dormancy only because of its negative impact upon the judgment's enforceability. A judgment lien retains its efficacy by the filing of a certified copy of an execution or a garnishment summons in all counties where the statement of judgment has been filed.36

19 In short, there is no such thing as dormancy of a judgment lien. The five-year dormancy period for judgments begins with a judgment's entry (or registration) and expires five years from that date. When the judgment loses its efficacy, the lien itself ceases to operate for want of an obligation which it secures.37 The lien expires because it cannot survive the point of time beyond which a judgment ceases to be enforceable.38

V

THE ORDER OF PRIORITIES FOR THE LIENS IN CONTROVERSY

20 The parties to this appeal concede the mortgage lender's lien commands the highest priority status. The efficacy of that lien is not in issue here. Tendered for this court's resolution is the priority among the remaining judgment liens. The key lien contest is waged between the Strong and Hurst creditors. Association adopts the position advanced by Hurst creditors.

A.

Strong Creditors Failed to Meet Their Burden of Proof

21 Strong creditors' federal-court judgment (registered on 21 August 1995) and the judgment lien which secures that obligation (perfected on 3 September 1998) ran concurrently from their separate points of entry. The period for measuring the enforceability of their judgment also applies to assess the judgment lien's continued life.

22 It was Strong creditors' burden to prove (a) the continued efficacy of their non-Oklahoma judgment by showing that it had not become dormant for want of issuance of process or garnishment since its registration in August 1995 and (b) that the judgment lien which secures that obligation had retained its efficacy by creditors' compliance with the statutory filing requirements. The other lien creditors bore no more than the burden of proving the efficacy status of their own judgments (and judgment liens).

23 As a general rule, acceptable probative substitutes may be used as evidentiary materials in the summary process of adjudication to eliminate from the adversary contest any disputed fact issues.39 The evidentiary materials required to show the present efficacy of the judgment lien are not controlled by Rule 13's40 evidentiary substitutes in summary process. To show the judgment lien's present effectiveness Strong creditors must tender documentation that meets the standards of §759(C.)41 That documentation must (a) bear the federal court clerk's certificate which identifies the document as a true and correct copy of the original on file in the clerk's office42 as well as (b) be filed in the Oklahoma County Clerk's office before the dormancy period has run on the registered federal-court judgment.43

24 Attached to Strong creditors' motion for summary judgment is a garnishment summons represented as having been issued in the federal-court case. The summons, which bears a notation that it was recorded in the Oklahoma County Clerk's office on 13 September 2002, neither reflects the date of its issuance nor bears a certificate that it is a true and correct copy of the document in the custody of the federal court clerk.44 Without the court clerk's certificate the tendered document fails to meet the §759(C) standard for keeping the judgment lien alive.45 Moreover, in the form submitted, the garnishment summons does not meet the general evidence law's requirement for certification when there is reliance on a document from another court.46 In sum, absent the required certification we cannot recognize the garnishment summons attached to Strong creditors' motion for summary judgment as a legitimate or acceptable Rule 13 probative substitute.

25 Because Strong creditors' failed to show that they had filed in the county clerk's office a certified copy of the garnishment summons timely issued by the federal court clerk, the trial court correctly concluded that their judgment lien was no longer efficacious.

B.

The Hurst Creditors' and Association's Liens

26 The efficacy status of Hurst creditors' and Association's liens is not in dispute. The trial court concluded that Hurst creditors' lien was second in priority and the Association's had a third lien on the property.

VI

STRONG'S QUEST FOR NEW TRIAL

27 Strong creditors' quest for new trial urged the court either (a) to modify its summary judgment to include certain conclusions of law and other declarations establishing undisputed facts from which but a single inference may be drawn in favor of the moving party or (b) to grant a new trial for the purpose of admitting the evidentiary material that was stricken at nisi prius. They urge on appeal that the trial court erred in denying their motion and in failing to make the requested conclusions and declarations.

A.

The Trial Court's Failure to Make Certain Conclusions of Law and Declarations

28 Strong creditors claim that the trial court erred in failing to make a conclusion of law or declaration of undisputed fact (from which but a single inference may be drawn in favor of the moving party) that their registered federal-court judgment from Missouri is valid as a matter of law. They reason that if the court determined that the validity of their lien presents a question of law, it must have concluded that the evidentiary materials attached to their motion for summary judgment were acceptable. According to Strong creditors, all factual allegations must be assumed admitted in accordance with Rule 13(b) and (e), Rules for District Courts.47 They argue that the trial court should hence amend its summary judgment to include the requested conclusion (or declaration) that the judgment is valid as a matter of law for the purpose of making a final disposition of all the parties' motions for summary judgment.

29 When entering summary judgment, the trial court is not required to recite sua sponte in the journal entry any of the material facts that are undisputed.48 There is no showing in the record that Strong creditors made a timely pre-judgment request for the conclusions of law and declarations of undisputed fact which they sought in their new trial motion.49 They cannot hence complain of these omissions.50

30 Absent a record to the contrary, we are duty-bound to indulge in a presumption of correctness that attaches by force of law to the trial court's rulings.51 They are presumptively deemed to include a finding of every fact necessary to support them.52 Strong creditors have not met their burden to provide for our review a record that would overcome the nisi prius presumption of correctness.

31 Moreover, what Strong creditors desire is a nisi prius conclusion of law that their Missouri judgment is an enforceable obligation. Even if they had timely requested the sought conclusion, they could not be deemed harmed or aggrieved by the trial court's failure to make it. This is so because in a summary judgment review an appellate court has the same power as the trial court to resolve any disputed issues of law.

B.

Error in Not Allowing Strong Creditors Additional Time to Respond to Hurst's Motion For Summary Judgment

32 Strong creditors argue that they should have been given 15 days to respond to Hurst creditors' motion for summary judgment pursuant to Rule 4(e), Rules for District Courts.53 They claim that Rule 4(c)54 allows counsel to submit a verified statement of what the proof will show until a hearing or stipulation can be provided. Strong creditors urge that the evidentiary material attached to their motion for summary judgment contains a sufficient recital of fact, including their counsel's verified statement of what the proof would show. Because the tendered evidentiary material is of record in Oklahoma County, Strong creditors argue that the trial court should take judicial notice of it.55

33 Strong creditors' reliance on Rule 4 is misplaced. Summary process is governed by Rule 13.56 Review in this case must be strictly confined to the content of the nisi prius summary-process record. Judicial notice will not be taken of any document the trial judge did not have before him when the case was submitted for summary relief.57

C.

The Exclusion of Strong Creditors' Evidentiary Material

34 Strong creditors argue that the trial court erred in striking their answer (to Hurst creditors' motion for summary judgment) as well as in excluding from the record the attached evidentiary materials.58 In their new trial motion they not only attempt to incorporate by reference the excluded materials, but also attach to their motion one of the documents, their own affidavit. Strong creditors claimed that the excluded materials were necessary to present a complete record on appeal.

35 Although the trial judge rejected Strong creditors' renewed quest to place the materials in the record, the summary judgment indicates that he did take cognizance of one item - the Missouri federal-court judgment.59 That judicial record had been certified by the court clerk of the Missouri federal court (as well as by the court clerk of the Oklahoma federal court as having been registered in that court). We likewise take cognizance of its existence.

36 Even if the trial court had recognized all the excluded documents and rescinded his exclusionary ruling, the order declaring priority could not be altered on appeal. There is simply nothing in the excluded documents that would inject efficacy into Strong creditors' claim to an efficacious lien.

37 Strong creditors' affidavit deals with the present efficacy of the judgment lien. Their affidavit (or that by their counsel) cannot be substituted for the best evidence - a certificate of the federal court clerk placed upon the required statutory document.

D.

The Strong Creditors' post-judgment Attempt to Revive Their Judgment Lien

38 Strong creditors attached to their new trial motion two new documents that had been executed and filed in the Oklahoma County Clerk's office on 25 November 2002, three days after the hearing on summary judgment - a certified copy of the notice of renewal of judgment and an affidavit of judgment. They urged the court to amend its summary judgment to include a declaration of undisputed fact that their judgment lien was reinstated on November 25. According to Strong creditors, a new trial or modification is authorized by 12 O.S.2001 §§651(7), 1031(7).60 The trial court ruled that their belated attempt to file the new documents does not constitute newly discovered evidence warranting new trial or modification of summary judgment.

39 We agree. Strong creditors' postjudgment attempt to revive their judgment lien comes too late for consideration in this litigation. A determination of their November 25 judgment lien's efficacy and its priority status vis-a-vis other lien claimants must await another day.

Outcome: ¶40 An out-of-district federal-court judgment registered in a federal court sitting in Oklahoma is accorded the same effect as that given to sister-state and foreign-nation judgments. At the time of its local registration, a federal-court judgment is deemed enforceable and subject to the five-year statutory dormancy period. When a judgment is perfected as a lien, its enforceability continues from the point in time that extends from its registration. A judgment lien retains its efficacy when prior to the expiration of the initial five-year period (or expiration of the subsequent statutory period) a certified copy of a general execution, garnishment summons or notice of renewal is filed in the county clerk's office. Once a judgment becomes dormant, its judgment lien ceases to operate by extinction of the obligation which it secures.

¶41 Strong claimants failed to meet their burden of proving the continued efficacy of their judgment lien by documentation which bears a certificate by the federal court clerk with custody of the documents that they constitute a true and correct copy of the original on file. The judgment lien's efficacy is not governed by the standards for evidentiary substitutes acceptable in summary process, but rather by the documentation required by the provisions of 12 O.S.Supp.1997 §759. An affidavit of the parties (or their counsel) cannot be substituted for the critical statutory documents.

¶42 We hold that, on this record, the nisi prius order of priority among competing liens is correct.

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Click the case caption above for the full text of the Court's opinion.

Plaintiff's Experts: Unknown

Defendant's Experts: Unknown

Comments: Digested by Kent Morlan