GARY DEAN LONGNECKER and SUE ANN LONGNECKER, Plaintiffs-Appellees,
DEUTSCHE BANK NATIONAL TRUST COMPANY, As Trustee for ABFC ASSET BACKED SECURITIES SERIES 2005-WF1, Defendant-Appellant.
Appeal from the Iowa District Court for Polk County, Robert B. Hanson, Judge.
Deutsche Bank appeals the district court's order dismissing its counterclaims for lack of subject matter jurisdiction and granting summary judgment to the Longneckers on their petition to quiet title.
Jesse Linebaugh of Faegre, Baker, & Daniels L.L.P., Des Moines, and Kathryn E. Olivier of Faegre, Baker, & Daniels L.L.P., Indianapolis, Indiana, for appellant.
Michael P. Holzworth, Des Moines, for appellees.
Heard by Doyle, P.J., and Tabor and Bower, JJ.
After Deutsche Bank purchased property owned by Gary and Sue Ann Longnecker at a 2011 sheriff's sale, the Longneckers filed a petition to quiet title alleging the bank failed to execute on its March 2007 foreclosure judgment during the limitations period in Iowa Code section 615.1 (2007). The bank responded by filing state law counterclaims based on the Longneckers' actions in federal bankruptcy court.
Ruling on an issue of first impression, the district court dismissed the bank's counterclaims, finding it lacked subject matter jurisdiction because the "Bankruptcy Code preempts state law claims based on actions within a bankruptcy proceeding." The district court quieted title in the Longneckers, holding: "While the Longneckers' actions of filing multiple bankruptcies and attempts to negotiate may have delayed the pending sheriff's sales, it was Deutsch Bank's" voluntary cancellation of the sheriff's sale set under the timely fourth "execution which ultimately foreclosed its ability to execute on its judgment."
We find no error in the district court's ruling that embraces the preemption analysis adopted by the clear majority of jurisdictions. Because Deutsch Bank failed to execute within the section 615.1 limitations period, we agree the 2011 sheriff's sale is void. Accordingly, we affirm.
I. Background Facts and Proceedings
In January 2005 the Longneckers obtained a $681, 000 loan from Wells Fargo that was secured by a mortgage on their Johnston, Iowa home. After Wells Fargo sought to foreclose on the Longneckers' note and mortgage, the district court entered judgment for the bank on March 21, 2007. Wells Fargo's December 2007 execution set a sheriff's sale for February 28, 2008. Gary filed a Chapter 7 bankruptcy petition on February 7 which automatically stayed the sale. Wells Fargo cancelled the sale and the sheriff filed the return of special execution unsatisfied. On May 14, 2008, the bankruptcy court granted Wells Fargo's request for relief from the automatic stay. This stay totaled eighty-eight days.
Two months later on July 23, Wells Fargo obtained a second special execution setting a December 30, 2008 sheriff's sale. Gary filed a Chapter 13 bankruptcy petition thirty minutes before the sale was scheduled to start, and the petition automatically stayed the sale. Wells Fargo assigned its foreclosure judgment to Deutsche Bank, Deutsche Bank cancelled the sheriff's sale, and the sheriff filed the return of special execution unsatisfied. On February 14, 2009, the bankruptcy court granted the bankruptcy trustee's motion to dismiss. The second bankruptcy stay totaled forty-six days.
Approximately one month later on March 12, Deutsche Bank obtained a third special execution for a July 2, 2009 sheriff's sale. Gary filed a Chapter 13 bankruptcy petition less than one hour before the sale was scheduled to start, and the petition automatically stayed the sale. Deutsche Bank cancelled the sale and the sheriff filed the third return of special execution unsatisfied. On July 24 the bankruptcy court granted Gary's motion to dismiss. The third bankruptcy stay totaled twenty-two days.
Almost a month later Deutsche Bank's fourth special execution, dated August 17, 2009, set a sheriff's sale for January 7, 2010. We note the special statute of limitations in Iowa Code section 615.1 expired on August 23, 2009 (calculated by adding two years to the March 21, 2007 foreclosure judgment, "exclusive of" the 156 days "during which execution on the judgment was stayed pending a bankruptcy action"). Therefore, Deutsche Bank's fourth execution was obtained a few days before the limitations period expired. Neither Gary nor Sue Ann Longnecker filed a bankruptcy petition staying the fourth sale.Deutsche Bank voluntarily cancelled this sale and the sheriff filed the return of special execution unsatisfied.
Deutsche Bank cancelled its fifth and sixth sheriff's sales set in 2010, after the sales were stayed by Sue Ann's filing of bankruptcy petitions. The sheriff filed the fifth and sixth returns of special execution unsatisfied.
On January 13, 2011, Deutsche Bank obtained a seventh special execution setting a May 12 sheriff's sale. On May 20, 2011, Deutsche Bank purchased the Longneckers' property at a rescheduled sheriff's sale, and the ...