Bank of New York Mellon v. Helen E. Chamberlain

08/01/2022

IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

March 1, 2022 Session

BANK OF NEW YORK MELLON V. HELEN E. CHAMBERLAIN

Appeal from the Circuit Court for Davidson County

No. 18C326 Hamilton V. Gayden, Jr., Judge

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No. M2021-00684-COA-R3-CV

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This appeal arises from a detainer action filed by a bank following a foreclosure sale. The

defendant borrower filed a counterclaim for “Wrongful Foreclosure – Breach of Contract,”

alleging that the plaintiff bank breached the deed of trust by failing to provide proper notice

prior to acceleration. The trial court originally granted summary judgment in favor of the

plaintiff bank, finding that notice was properly sent, but this Court reversed, concluding

that genuine issues of material fact existed such that summary judgment could not be

awarded to either party. On remand, the trial court permitted both parties to amend their

answers. The plaintiff bank then asserted res judicata based on a prior lawsuit in federal

court and moved for summary judgment on that basis. The trial court ultimately granted

the plaintiff bank summary judgment, concluding that the defendant’s argument regarding

lack of notice either was raised or should have been raised in her prior action in federal

court in which she attempted to halt the foreclosure. The defendant appeals. We affirm

and remand for further proceedings.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed and

Remanded

CARMA DENNIS MCGEE, J., delivered the opinion of the court, in which FRANK G.

CLEMENT, JR., P.J., M.S., and ANDY D. BENNETT, J., joined.

Carol A. Molloy, Fitchburg, Massachusetts, for the appellant, Helen E. Chamberlain.

Alex McFall, Nashville, Tennessee, for the appellee, The Bank of New York Mellon fka

The Bank of New York.

OPINION

I. FACTS & PROCEDURAL HISTORY

In 1960, Helen Chamberlain and her husband purchased the property at issue in this

case: 514 Neilwood Drive, in Nashville, Tennessee. Ms. Chamberlain became sole owner

of the property when she and her husband divorced in 1993. On February 19, 2007, Ms.

Chamberlain deeded a one-half interest in the property to Delores-Rose Dauenhauer.1

Shortly thereafter, on March 30, 2007, Ms. Dauenhauer obtained a loan from America’s

Wholesale Lender in the amount of $555,000 “to finance the purchase” of the Neilwood

Drive property. As evidence of this indebtedness, Ms. Dauenhauer executed an interest

only fixed rate promissory note. Her monthly payment would be $3,179.69 for the first

120 months and then rise to $4,261.37. Both Ms. Dauenhauer and Ms. Chamberlain

executed a deed of trust on the Neilwood Drive property to secure the repayment of the

loan. The deed of trust was eventually assigned to Bank of New York Mellon (“Bank”).

Ms. Dauenhauer defaulted on the loan. She passed away in December 2015.

However, before her death, Ms. Dauenhauer conveyed her one-half interest in the property

to Ms. Chamberlain. The property was sold at a foreclosure sale in September 2017, and

Bank was the highest bidder. Bank initiated this detainer action seeking to remove Ms.

Chamberlain from the property. The case was transferred from general sessions to circuit

court, where Ms. Chamberlain filed a counterclaim for “Wrongful Foreclosure – Breach of

Contract,” asserting that Bank had breached the notice provisions in the deed of trust. The

deed of trust designated both Ms. Dauenhauer and Ms. Chamberlain as “Borrowers.” Thus,

Ms. Chamberlain relied on paragraph 22, which provided:

22. Acceleration; Remedies. Lender shall give notice to Borrower prior to

acceleration following Borrower’s breach of any covenant or agreement in

this Security Instrument . . . . The notice shall specify: (a) the default; (b) the

action required to cure the default; (c) a date, not less than 30 days from the

date the notice is given to Borrower, by which the default must be cured; and

(d) that failure to cure the default on or before the date specified in the notice

may result in acceleration of the sums secured by this Security Instrument

and sale of the Property. The notice shall further inform Borrower of the

right to reinstate after acceleration and the right to bring a court action to

assert the non-existence of a default or any other defense of Borrower to

acceleration and sale. If the default is not cured on or before the date

specified in the notice, Lender at its option may require immediate payment

in full of all sums secured by this Security Instrument without further demand

and may invoke the power of sale and any other remedies permitted by

Applicable Law. . . .

1

It is not clear from the record what, if any, relationship existed between Ms. Chamberlain and Ms.

Dauenhauer. Ms. Dauenhauer’s husband signed some documents along with her, but his involvement is

not relevant to the issues on appeal.

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Ms. Chamberlain argued that she did not receive “proper notice prior to acceleration” under

paragraph 22. She sought a declaration that she was the rightful owner of the property; an

order compelling Bank to transfer or release legal title and possession of the property; an

injunction preventing Bank from transferring, encumbering, or claiming any interest in the

property; and “damages and other compensatory relief” the court deemed proper.

Bank filed an answer to the counterclaim, asserting that it provided proper notice of

default, acceleration, and the foreclosure in accordance with the deed of trust. It also filed

a motion for summary judgment, contending that the counterclaim should be dismissed and

that it should be granted possession of the property. Bank claimed that a loan servicer,

acting as its agent, had sent notice of default and intent to accelerate the loan in accordance

with the deed of trust. Specifically, it pointed to two letters sent by the loan servicer in

2014, with the first being addressed to Ms. Chamberlain and the second being addressed

to Ms. Dauenhauer (although Ms. Chamberlain had accepted delivery according to the

return receipt). Thus, Bank asserted that it had fully complied with the notice provision of

the deed of trust and that it was entitled to summary judgment. It submitted numerous

documents in support of its motion, including an affidavit of the custodian of records for

the loan servicer with the 2014 notices attached.

Ms. Chamberlain filed a response and cross-motion for summary judgment. She

maintained that notice was never provided in accordance with paragraph 22. Ms.

Chamberlain attached a letter addressed to Ms. Dauenhauer from a former trustee, dated

May 23, 2011, which was entitled, “Notice of Acceleration and Foreclosure.” She also

submitted an affidavit from her attorney, who stated that she had been the attorney of record

for Ms. Chamberlain and Ms. Dauenhauer in a previous case in federal district court and

that she had obtained the May 2011 letter from Ms. Dauenhauer during her representation

of them during that matter. She referenced “case number 3:12-cv-01026 in the U.S. District

Court for the Middle District of Tennessee.” Relying on the attached May 2011 letter, Ms.

Chamberlain argued that the loan was accelerated on May 23, 2011, and therefore, any

notice of acceleration required by paragraph 22 “must have been sent to Defendant prior

to May 23, 2011.” Thus, she argued that the two 2014 notices produced by Bank were

insufficient to show proper notice because they came “three years after acceleration.” She

also argued that notice to Ms. Dauenhauer did not suffice as notice to her. Ms. Chamberlain

submitted her own affidavit stating that she had accepted certified mail addressed to Ms.

Dauenhauer on a number of occasions during the course of the foreclosure proceedings but

never opened it and instead forwarded it to Ms. Dauenhauer at her home in Washington.

She maintained that the failure to comply with paragraph 22 rendered the foreclosure sale

void, and therefore, Bank was not entitled to possession.

Bank filed a reply citing paragraph 15 of the deed of trust, which provided:

Notices. . . . Any notice to Borrower in connection with this Security

Instrument shall be deemed to have been given to Borrower when mailed by

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first class mail or when actually delivered to Borrower’s notice address if

sent by other means. Notice to any one Borrower shall constitute notice to all

Borrowers unless Applicable Law expressly requires otherwise. The notice

address shall be the Property Address unless Borrower has designated a

substitute notice address by notice to Lender.

Thus, Bank argued that notice was deemed given upon mailing. It also argued that the May

2011 letter should not be admissible based on counsel’s affidavit referencing a case number

of prior litigation without any further foundation. Alternatively, however, Bank argued

that even if the May 2011 letter was admitted, the 2014 notices were still valid notice prior

to the foreclosure sale, which did not occur until 2017.

On March 11, 2019, the trial court entered an order granting Bank’s motion for

summary judgment. Regarding Ms. Chamberlain’s “breach of contract argument,” the trial

court found that proper notice of the default prior to acceleration was sent, despite the May

2011 letter, because the foreclosure sale did not occur until September 2017 and Ms.

Chamberlain received at least one of the 2014 notices of default, as she signed the certified

mail return receipt. The trial court found that the other 2014 letter met the requirements in

the deed of trust as well and was also sufficient notice. The court found that both of the

2014 letters set forth amounts to be paid to cure the default prior to acceleration, and

therefore, Ms. Chamberlain was given at least two opportunities to cure the default before

the foreclosure sale in 2017. Tracking the language of paragraph 15, the trial court noted

that notice was deemed given when mailed, the notice address was the property address,

and notice to one borrower constituted notice to all borrowers. As for the second issue

regarding Bank’s claim for possession, the trial court found that it had established

constructive possession through the deed of trust and it was undisputed that Ms.

Chamberlain was still in possession of the property. As such, it found that Bank was

entitled to summary judgment and that Ms. Chamberlain’s “breach of contract claim” must

be dismissed.

Ms. Chamberlain timely filed a notice of appeal to this Court. On appeal, we

recognized that “a defendant may defend against an unlawful detainer action by showing

wrongful foreclosure under the deed of trust.” Bank of New York Mellon v. Chamberlain,

No. M2019-00876-COA-R3-CV, 2020 WL 563527, at *5 (Tenn. Ct. App. Feb. 5, 2020).

We also noted that “[p]rovisions in a deed of trust directing that notice shall be given in a

particular matter are mandatory and must be strictly followed.” Id. at *6. Ms. Chamberlain

argued on appeal that the 2014 notices were insufficient because they were not mailed to

the “designated” address as required by the deed of trust. Id. Again, Paragraph 15

provided, “The notice address shall be the Property Address unless Borrower has

designated a substitute notice address by notice to Lender.” Id. at *1. The 2014 notices

were both sent to the property address in Nashville. Id. at *6. However, Ms. Chamberlain

argued that because the May 2011 letter was mailed to Ms. Dauenhauer at her address in

Washington, a genuine issue of material fact existed as to whether the Nashville address or

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the Seattle address was the “designated notice address” under the deed of trust. Id. at *7.

This Court noted that the deed of trust allowed a borrower to designate another notice

address in writing, but we found that “this argument was not fully considered by the trial

court.” Id. at *9. We concluded that the May 2011 letter constituted sufficient evidence

to create a genuine dispute as to the proper address where notices of acceleration may be

sent under the deed of trust. Id. at *10. As a result, “summary judgment in favor of either

party was inappropriate.” Id. We therefore reversed the order granting Bank’s motion for

summary judgment and the dismissal of the “counterclaim for breach of contract.” Id. In

a final footnote, we noted that Bank had argued on appeal that if the May 2011 letter was

sufficient evidence of a change of address, it should also be sufficient to constitute a notice

of acceleration that would itself satisfy paragraph 22 of the deed of trust. Id. at *10 n.9.

However, we noted that Bank had not argued in the trial court that the May 2011 letter

evidenced compliance with paragraph 22, as it relied instead on the 2014 letters. Id. We

gathered that Bank may not have been in possession of the May 2011 letter until after its

motion for summary judgment was filed, but we noted that Bank never amended its motion

to rely on the May 2011 letter. Id. Accordingly, we said that if Bank wished to make this

argument or to submit any other notices as evidence of compliance with the deed of trust

on remand, it was free to do so. Id.

The first document that appears in the record after remand is a motion by Bank

seeking leave to amend its answer to the counterclaim for breach of contract in order to

assert affirmative defenses. Bank’s original answer had only asserted that proper notice

was given, and it sought to add twelve affirmative defenses, including res judicata. Bank

suggested that it had requested leave to amend “now that the factual and legal issues are

more developed,” in addition to the fact that it had retained new counsel on remand. Bank

noted that no scheduling order had been entered and no trial date had been set.

Ms. Chamberlain filed a response in opposition to Bank’s motion for leave to amend

its answer. She noted that the case had already been appealed and remanded over the

course of two years. In addition, according to Ms. Chamberlain, this Court had “laid out

in detail exactly what [Bank] would need to establish” on remand regarding proper notice.

Thus, she suggested that the amendment should not be permitted based on undue delay,

undue prejudice, and futility. Bank filed a response, stating that the case had only been

pending in the trial court for a few months after its original answer was filed before

summary judgment was granted, and the process of discovery had not even begun. Bank

also suggested that any delay in the proceedings was not prejudicing Ms. Chamberlain, as

she was “living in a half-a-million-dollar Property for free” while Bank was paying all of

the expenses.

After a hearing, the trial court entered an order granting Bank’s motion for leave to

amend its answer. The court noted that leave to amend is to be freely given when justice

so requires. It found the proposed amendment timely, as no scheduling order had been

entered and no trial date had been set. It also found that Ms. Chamberlain would suffer no

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prejudice, as no discovery had taken place. It further noted that Ms. Chamberlain had made

an oral motion for leave to amend her own answer to assert additional affirmative defenses,

which the trial court granted for the same reasons. Consequently, Ms. Chamberlain also

filed an amended answer to include affirmative defenses, including the affirmative defense

of wrongful foreclosure for failure to comply with paragraph 22 of the deed of trust.

After Bank was permitted to file its amended answer, Ms. Chamberlain filed a

motion to strike its twelve affirmative defenses, arguing that they were “improperly pled”

and futile in light of the prior decision of the Court of Appeals that “narrowed the issue” to

proper notice. Ms. Chamberlain analyzed each of the twelve affirmative defenses and

asserted that each one lacked merit. The trial court granted in part and denied in part Ms.

Chamberlain’s motion to strike Bank’s affirmative defenses. The court granted the motion

to strike only to the extent that it addressed the affirmative defense of the statute of frauds.

The remainder of the motion to strike was denied.

Ms. Chamberlain filed a motion for summary judgment on the issue of improper

notice. She maintained that the note was accelerated on May 23, 2011, and she claimed

that she “did not receive notice of default prior to acceleration at any time” from the

inception of the loan through the foreclosure sale. She submitted an affidavit stating that

she had never received a notice of default “informing [her] of the amount due to cure any

alleged default.” Thus, Ms. Chamberlain argued that the foreclosure sale was void and the

Bank lacked constructive possession of the property.

Bank filed its own motion for summary judgment. It argued that the designated

address issue had become moot and unnecessary to resolve because the 2014 notices were

sent to the Nashville address and the May 2011 notice was sent to the Washington address,

so it did not matter which one was the “designated” address. Bank contended that the loan

had been in default since January 2009 and that Bank and its predecessors had been “trying

to foreclose” since that time. According to Bank, Ms. Chamberlain and Ms. Dauenhauer

had filed a prior lawsuit in 2012, seeking to enjoin a previously scheduled foreclosure sale

on the basis that the debt was invalid “under a plethora of legal theories” that were all

“soundly rejected” by federal courts. Bank explained that it had moved forward with

foreclosure and completed the sale after the federal litigation was resolved and then filed

this detainer action seeking to remove Ms. Chamberlain from the property, which led to

her filing the counterclaim for breach of contract. Thus, Bank argued that any challenge

to the May 2011 notice (or anything earlier) was barred by res judicata. Bank noted that

the 2012 complaint had specifically alleged that the plaintiffs had not received proper

“notice.” Bank also noted that the federal court opinion expressly stated that Ms.

Chamberlain and Ms. Dauenhauer had received “at least two letters indicating they were

in default,” in 2009 and 2011. Bank explained that the district court had dismissed the

complaint for failure to state a claim, and the Sixth Circuit had affirmed. Bank

acknowledged that Ms. Chamberlain did not assert any claim for “breach of contract” in

the federal case but argued that she “should have” if she had any complaints about the

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notices that had been provided to date.

Bank attached the 2012 complaint filed by Ms. Chamberlain and Ms. Dauenhauer,

which sought to enjoin the scheduled foreclosure sale. Within the factual allegations of

the complaint, they alleged that the trustee had “failed to comply with the specific

advertisement and/or notice requirements in the deed of trust” and that “Tennessee law

requires strict compliance with the terms of the deed of trust in order for any . . . foreclosure,

to be valid.” The complaint specifically alleged that the trustee had sent them a letter on

May 23, 2011, “seeking payment from Plaintiff and indicating that the current principal

balance on the loan is $667,243.70.” However, the complaint asserted that the May 2011

letter contained false representations. The complaint asserted six counts: complaint to quiet

title; fraud; violation of the Fair Debt Collections Practices Act; violation of the Tennessee

Consumer Protection Act; civil conspiracy; and slander of title. They sought a declaration

that they were the rightful holders of title to the property and that the defendants (including

Bank) had no interest in the property; an injunction preventing them from claiming any

interest in the property; and compensatory as well as statutory damages.

Ms. Chamberlain filed a response to Bank’s motion for summary judgment

admitting that the designated address issue was moot. However, she maintained that Bank

still had not shown that it provided notice of default prior to the acceleration in May 2011

in compliance with the deed of trust. Ms. Chamberlain admitted virtually all of the

undisputed facts submitted by Bank. She admitted that at the time of the actual foreclosure

sale in 2017, the loan was due for the January 2009 payment. She admitted that prior

foreclosure sales had been scheduled for July 1, 2011, and for October 15, 2012. She

admitted to obtaining a temporary restraining order to enjoin the foreclosure sale set for

October 15, 2012, although it was later dissolved. She admitted that the federal district

court dismissed the complaint in its entirety and “held that [Ms. Dauenhauer] and Ms.

Chamberlain received at least two letters indicating they were in default on the Loan.”

Still, Ms. Chamberlain insisted that the issue in the present lawsuit “is not whether [she]

received letters of default but whether the letters of default complied with the requirements

set forth in the deed of trust” by giving her “the amount necessary to cure any alleged

default.” She argued that her 2012 lawsuit concerned the Bank’s “right to foreclose based

on the note and deed of trust” but that it did not prevent her from raising a breach of contract

claim once Bank actually completed the foreclosure in violation of the notice provision in

the deed of trust. She argued that her claim was not ripe until the foreclosure was complete.

She also suggested that relief could not have been granted in the prior lawsuit because no

foreclosure had taken place.

Bank filed a reply, claiming that Ms. Chamberlain’s entire case rested on her

argument about improper notice of default prior to acceleration on May 23, 2011, when

this argument either was or should have been raised in her 2012 lawsuit. For purposes of

summary judgment, Bank admitted that the loan was accelerated on May 23, 2011. Thus,

Bank noted that the breach of contract of which Ms. Chamberlain complains must have

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occurred at least a year before she filed suit to enjoin the foreclosure sale in August 2012.

It reiterated that she even attached the May 23, 2011 letter to her complaint and made

arguments related to it. Bank also pointed out that the May 23, 2011 letter itself recited

the total amount owed on the loan. In a further reply, Ms. Chamberlain acknowledged that

the May 2011 letter stated the total loan payoff amount, but she clarified her position that

she was never provided the amount necessary to cure the loan prior to acceleration,

representing the amount of past due payments, fees, and costs that must be paid to cure the

default. She maintained that she could not have litigated the issue currently before the

court in her former lawsuit because the suits were grounded in different conduct and sought

different relief.

The trial court held a hearing on both parties’ motions for summary judgment and

then entered a written order granting summary judgment to Bank. Recounting the history

of the litigation, the court noted that a default had occurred as early as 2009 and that

foreclosure sales had been set for July 2011 and October 2012, but Ms. Chamberlain and

Ms. Dauenhauer filed suit challenging Bank’s authority to foreclose and the existence of

the default. The court noted that their complaint alleged that they did not receive proper

notice. The trial court recited the finding of the district court that the plaintiffs had received

at least two letters indicating that they were in default on the loan, including one in 2009

and one on May 23, 2011. It noted that the district court dismissed the complaint for failure

to state a claim, and the dismissal was affirmed by the Sixth Circuit, which rejected each

challenge to the validity of the loan and Bank’s standing to foreclose. The trial court noted

that Ms. Chamberlain’s only claim (and defense) in this action was for breach of contract,

alleging that Bank failed to send notice in accordance with paragraph 22 of the deed of

trust. The court noted that Ms. Chamberlain had abandoned her “designated address”

argument regarding the 2014 notices on remand and instead argued that notice was not

properly sent prior to acceleration in May 2011. However, the trial court concluded that

this argument was barred by res judicata. The court applied the elements of res judicata

under federal law and found that each was satisfied here. Specifically, it found that a final

decision was rendered on the merits by a court of competent jurisdiction; this subsequent

action was between the same parties; the issue of improper notice prior to May 2011 either

was raised and rejected or should have been raised in the 2012 lawsuit; and there was

identity of the causes of action. The trial court found that even though Ms. Chamberlain

did not specifically assert a breach of contract claim in the first action, she did assert a

broad challenge to the scheduled foreclosure sale and underlying debt, so if she had issues

with the notice of acceleration or any alleged breach of the deed of trust, they should have

been raised at that time. Therefore, the trial court determined that res judicata barred Ms.

Chamberlain’s claim and defense based on improper notice.

Next, the court addressed Bank’s unlawful detainer action and whether Bank was

entitled to possession of the property. It found that the proper avenue to remove occupants

of property following a deed of trust foreclosure sale is an unlawful detainer action. It

noted that in order to establish an immediate right to possession, the claimant must show

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constructive possession and a loss of possession by the occupant’s act of unlawful detainer.

The court found that where a deed of trust foreclosure sale occurs and the terms of the deed

create a landlord-tenant relationship between the foreclosure sale purchaser and the

borrower, the purchaser’s constructive possession attaches upon passing of title following

the sale. Thus, it explained that constructive possession can be established by production

of the deed of trust and promissory note bearing the borrower’s signature, providing that

the borrower has an obligation to make payments, advising that failure to do so will result

in default that confers the power of sale on the holder of the note, and stating that the

borrower is required to surrender possession immediately upon completion of a foreclosure

sale. The court found that Bank “has presented all of that evidence here” and went on to

describe the evidence regarding each element. Accordingly, the court found that Bank had

established constructive possession and that Ms. Chamberlain was occupying the property.

The trial court noted that wrongful foreclosure can be asserted as a defense in an

unlawful detainer action and that Ms. Chamberlain had done so here, asserting that Bank

violated the terms of the deed of trust by failing to send notice required by paragraph 22.

Accordingly, the court noted that Ms. Chamberlain’s wrongful foreclosure defense was

“premised entirely on a breach of contract theory.” The court concluded, “[b]ecause Ms.

Chamberlain’s counterclaims and defenses are barred by res judicata, she cannot oppose

[Bank’s] claim for possession.” In any event, the court also noted that Ms. Chamberlain

had “conceded that they received notice of default from [Bank] prior to the foreclosure sale

in the First Action.” The court noted that notices were sent to both the Seattle address in

2011 and the property address in 2014. It also noted that all parties were aware that the

loan was in default, that no mortgage payment had been made since December 2008, and

that Bank was seeking to foreclose, because those issues were the subject of the first action.

In light of “all the evidence that Ms. Chamberlain and [Ms. Dauenhauer] received the

requisite notices,” the court found that Ms. Chamberlain could not maintain that Bank

breached the notice provisions of the deed of trust. For all these reasons, the court

concluded that Bank was entitled to judgment as a matter of law on its claim for possession,

Ms. Chamberlain’s breach of contract claim, and her wrongful foreclosure defense. Ms.

Chamberlain timely filed a notice of appeal to this Court.

II. ISSUES PRESENTED

Ms. Chamberlain presents the following issues, which we have slightly restated, for

review on appeal:

1. Whether the trial court abused its discretion by allowing Bank to amend its answer to

include affirmative defenses after remand where the Court of Appeals had narrowed the

issue to that of notice;

2. Whether the trial court erred in denying Ms. Chamberlain’s motion to strike Bank’s

affirmative defenses;

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3. Whether the trial court erred in finding that res judicata applied to bar Ms.

Chamberlain’s claim/defense of “Wrongful Foreclosure - Breach of Contract”;

4. Whether the foreclosure sale is void for failure to provide proper notice of default prior

to acceleration as required by paragraph 22 of the deed of trust;

5. Whether Bank is in constructive possession of the property.

In its posture as appellee, Bank responds to each of Ms. Chamberlain’s issues and also

presents the following additional issues:

1. Whether Ms. Chamberlain’s breach of contract claim and wrongful foreclosure defense

fail on alternate grounds even if they are not barred by res judicata;

2. Whether Ms. Chamberlain is precluded from challenging the order granting both parties

leave to amend their answers to include additional affirmative defenses;

3. Whether Ms. Chamberlain waived arguments raised for the first time in her appellate

brief;

4. Whether Ms. Chamberlain waived review of the circuit court’s denial of her motion to

strike by failing to sufficiently challenge it on appeal.

For the following reasons, we affirm the decision of the circuit court and remand for further

proceedings.

III. DISCUSSION

A. Amendment of Answer on Remand

We will begin with Ms. Chamberlain’s argument that the trial court erred by

permitting Bank to amend its answer on remand to include affirmative defenses. She

argues that the trial court “went beyond the mandate of the Court of Appeals” when this

Court had “narrowed the issue for the trial court to decide upon remand.” We disagree.

“When a remanded cause has been re-entered on the docket, it stands exactly as it

did when the appeal was granted, except insofar as changed by the appellate courts.”

Hawkins v. Hart, 86 S.W.3d 522, 532 (Tenn. Ct. App. 2001) (citing Raht v. Southern Ry.

Co., 215 Tenn. 485, 387 S.W.2d 781, 787 (1965)). However, “appellate courts have the

power to remand cases with limiting instructions to the trial courts.” Melton v. Melton, No.

M2003-01420-COA-R10-CV, 2004 WL 63437, at *5 (Tenn. Ct. App. Jan. 13, 2004).

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The appellate court directs actions and dictates results through its orders,

judgments, and mandates and may limit the scope of a remand. Such orders

and mandates are controlling, and the lower court does not have the authority

to expand the directive or purpose of the higher court imposed upon remand.

Raleigh Commons, Inc. v. SWH, LLC, 580 S.W.3d 121, 129-30 (Tenn. Ct. App. 2018)

(quotations omitted). Thus, “‘the scope of a trial court’s authority upon remand’ is limited

to ‘the directions contained in the mandate from the appellate court.’” In re Alexis S., No.

E2020-00405-COA-R3-PT, 2020 WL 6375876, at *2 (Tenn. Ct. App. Oct. 30, 2020)

(quoting Raleigh Commons, Inc., 580 S.W.3d at 129-30). “Any proceedings on remand

which are contrary to the directions contained in the mandate from the appellate court may

be considered null and void.” Raleigh Commons, Inc., 580 S.W.3d at 129 (quoting Silvey

v. Silvey, No. E2003-00586-COA-R3-CV, 2004 WL 508481, at *3 (Tenn. Ct. App. Mar.

16, 2004)).

In the prior opinion of this Court, we held that genuine issues of material fact existed

regarding whether proper notice was given, and therefore, “summary judgment in favor of

either party was inappropriate.” Bank of New York Mellon, 2020 WL 563527, at *10. We

reversed the trial court’s ruling granting Bank’s motion for summary judgment and

dismissing Ms. Chamberlain’s counterclaim for breach of contract. Id. The opinion itself

remanded “for further proceedings” without elaboration. Id. at *11. Our judgment

remanded “for further proceedings consistent with the Opinion.” Thus, we discern nothing

in this Court’s prior opinion that limited the scope of remand. Having concluded that

summary judgment could not be awarded to either party, the remanded case stood exactly

as it did prior to the appeal, except insofar as it was changed by our opinion. The trial court

was authorized to entertain Bank’s motion to amend its answer to the counterclaim on

remand.

The situation before us is much like the one presented in Freeman Industries LLC

v. Eastman Chemical Company, 227 S.W.3d 561 (Tenn. Ct. App. 2006). That case was

remanded by the Tennessee Supreme Court to a trial court “for further proceedings

consistent with [its] opinion.” Id. at 562. The Tennessee Supreme Court’s decision, via

interlocutory appeal, had established a new pleading standard for Tennessee Trade Practice

Act claims and held that the plaintiff’s complaint did not state a cause of action under that

new standard. Id. It also held that the trial court erred in denying the defendants’ motion

for summary judgment on the only other claim (for unjust enrichment). Id. On remand,

the plaintiff moved to amend its complaint in order to plead its TPPA claim under the new

standard. Id. at 565. However, the trial court denied the motion to amend, interpreting the

remand “for further proceedings consistent with this opinion” to mean that the case was

“over” and that the trial court would lack jurisdiction to grant a motion to amend the

complaint on remand. Id.

On appeal, this Court reversed. Id. at 562. We first explained that “Tennessee law

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has a history of favoring amendments,” as “[a] plethora of cases illustrates the willingness

of Tennessee courts to permit amendments under Rule 15.01.” Id. at 566. We concluded

that the trial court had correctly expressed a willingness to permit the amendment but that

it ultimately “did not believe that it had the authority to allow such an amendment after the

Supreme Court’s remand.” Id. at 567. On this latter point, we disagreed with the trial

court. We acknowledged that “a trial court may not disregard or modify the opinion of an

appellate court” but also emphasized that “a trial court is not necessarily powerless to

conduct any proceedings on remand.” Id. We explained,

Once the mandate [from an appellate court] reinvests the trial court’s

jurisdiction over a case, the case stands in the same posture it did before the

appeal except insofar as the trial court’s judgment has been changed or

modified by the appellate court. . . . [T]he trial court does not have the

authority to modify or revise the appellate court’s opinion, or to expand the

proceedings beyond the remand order. The trial court’s sole responsibility is

to carefully comply with directions in the appellate court’s opinion.

Id. (quoting Earls v. Earls, No. M1999-00035-COA-R3-CV, 2001 WL 504905, at *3

(Tenn. Ct. App. May 14, 2001)). Applying these principles, we noted that the Supreme

Court had remanded for further proceedings consistent with its opinion but that it “did not

give particular instructions upon remand.” Id. Notably, the Supreme Court “did not direct

the trial court to enter an order dismissing [the] TPPA claim, nor did the Supreme Court

enter a final judgment itself.” Id. The instruction to conduct “further proceedings

consistent with this opinion,” we concluded, “did not restrict the trial court’s authority to

allow an amendment to [the] complaint.” Id. We continued,

As we noted earlier, on remand a trial court is vested with authority to

proceed with the case in accordance with the appellate court’s instructions.

The absence of specific language from the Supreme Court allowing [the

plaintiff] to amend its Complaint on remand does not mean that the trial court

is forbidden from granting leave to amend; such would only be the situation

if the Supreme Court had directed entry of a judgment in the case or

otherwise stated in unequivocal terms that [the plaintiff] was not entitled to

amend its Complaint on remand. We find no such language in the Supreme

Court’s opinion or mandate in this case.

Id. at 568. As such, we concluded that “the trial court did indeed have the authority to

grant [the] motion to amend,” and we further held that it abused its discretion by denying

the motion. Id. We remanded for the trial court to permit the amendment. Id. at 569.

As in Freeman Industries, we conclude that this Court’s prior opinion did not

deprive the trial court of the authority to grant a motion to amend on remand. We now

address Ms. Chamberlain’s alternative argument that the trial court abused its discretion in

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permitting an amendment under the circumstances of this case. Again, the trial court found

that Rule 15 provides for amendments to be freely given when justice so requires. It also

noted that the rule was intended to ensure that cases and controversies are determined on

their merits and not legal technicalities. The trial court recited the factors to be considered

in deciding whether to allow an amendment and concluded that they weighed in favor of

permitting an amendment here. It found the motion timely because no scheduling order

had been entered and no trial date had been set. It also found that Ms. Chamberlain would

not suffer prejudice because no discovery had taken place. Finally, it noted that Ms.

Chamberlain had also made an oral motion for leave to amend her own answer to assert

additional affirmative defenses, which the court granted for the same reasons. We discern

no abuse of discretion under these circumstances. See Pratcher v. Methodist Healthcare

Memphis Hosps., 407 S.W.3d 727, 741 (Tenn. 2013) (recognizing “the time-honored

principle that the determination of whether to allow an amendment to the pleadings is left

to the sound discretion of the trial court”) (internal quotation omitted); Harris v. St. Mary’s

Med. Ctr., Inc., 726 S.W.2d 902, 904 (Tenn. 1987) (“Amended pleadings may be filed

before trial, after trial, or even after appeal so long as the trial court has jurisdiction and so

long as the trial court does not abuse its discretion in allowing the amendment.”).2

B. Res Judicata

Next, we will address Ms. Chamberlain’s contention that the trial court erred in

finding that res judicata barred her claim/defense of “Wrongful Foreclosure – Breach of

Contract.” “A trial court’s determination of the applicability of res judicata . . . is a question

of law, which we review de novo with no presumption of correctness.” In re Taylor B.W.,

397 S.W.3d 105, 111 (Tenn. 2013).

At the outset, we note the parties’ disagreement as to whether the issue of res

judicata should be decided under federal law or state law. “For judgments in diversity

cases, federal law incorporates the rules of preclusion applied by the State in which the

rendering court sits.” Taylor v. Sturgell, 553 U.S. 880, 891 n.4 (2008) (citing Semtek Int’l

Inc. v. Lockheed Martin Corp., 531 U.S. 497, 508 (2001)). As a result, “state claim-

preclusion law controls the preclusive effect of a federal dismissal in a diversity case unless

state law sufficiently undermines federal interests.” Cooper v. Glasser, 419 S.W.3d 924,

929 (Tenn. 2013). In the case at bar, the 2012 complaint was filed by Ms. Chamberlain

and Ms. Dauenhauer in Tennessee state court, but it was removed to federal district court

2

We note that Bank presented an alternative issue regarding whether Ms. Chamberlain should be

“precluded from challenging” the order granting both parties leave to amend because she received the same

relief. However, we do not have a transcript of the hearing at which her oral motion was made in order to

fully examine the circumstances surrounding her request. Thus, we deem it appropriate to resolve this issue

on its merits rather than Bank’s alternative argument. See, e.g., In re Montana R.T., No. E2011-00755-

COA-R3-PT, 2012 WL 2499498, at *5 (Tenn. Ct. App. June 29, 2012) (assuming arguendo that a party

could contest an order and finding his arguments unpersuasive on the merits). Bank’s alternative issue is

pretermitted.

- 13 -

based on diversity of the parties. See Dauenhauer v. Bank of New York Mellon, No. 3:12-

CV-01026, 2013 WL 209250, at *2 (M.D. Tenn. Jan. 16, 2013) (explaining that the

defendants had removed the case to federal court and applying the rules for “actions

brought under federal diversity jurisdiction”). Thus, Tennessee’s claim preclusion law

controls the preclusive effect of the federal dismissal. Neither party argues that state law

would undermine federal interests in this circumstance, and we do not find that to be the

case.

Under Tennessee law,

A party relying on res judicata must establish four elements: “(1) that the

underlying judgment was rendered by a court of competent jurisdiction; (2)

that the same parties or their privies were involved in both suits; (3) that the

same claim or cause of action was asserted in both suits; and (4) that the

underlying judgment was final and on the merits.”

Recipient of Final Expunction Ord. in McNairy Cnty. Cir. Ct. Case No. 3279 v. Rausch,

645 S.W.3d. 160, 172 (Tenn. 2022) (quoting Regions Bank v. Prager, 625 S.W.3d 842,

848 (Tenn. 2021)).3 Ms. Chamberlain does not appear to dispute three elements -- that the

first action resulted in a judgment rendered by a court of competent jurisdiction; the same

parties were involved in both suits; and the underlying judgment was final and on the

merits. She only appears to challenge the third element – whether the same claim or cause

of action was asserted in both suits.

In 2009, the Tennessee Supreme Court joined “the majority of the federal courts and

numerous states” by adopting “the transactional standard for determining whether a prior

judgment and a pending suit are the same cause of action for purposes of applying res

judicata.” Creech v. Addington, 281 S.W.3d 363, 380 (Tenn. 2009). As the Court

explained,

[T]he “transactional” standard, provides as follows:

When a valid and final judgment rendered in an action

3

For comparison, under federal law,

“A claim is barred by the res judicata [or claim preclusive] effect of prior litigation if all of

the following elements are present: (1) a final decision on the merits by a court of

competent jurisdiction; (2) a subsequent action between the same parties or their privies;

(3) an issue in the subsequent action which was litigated or which should have been

litigated in the prior action; and (4) an identity of the causes of action.”

Trustees of Operating Engineers Loc. 324 Pension Fund v. Bourdow Contracting, Inc., 919 F.3d 368, 380

(6th Cir. 2019) (quoting Browning v. Levy, 283 F.3d 761, 771 (6th Cir. 2002)).

- 14 -

extinguishes the plaintiff's claim . . . , the claim extinguished

includes all rights of the plaintiff to remedies against the

defendant with respect to all or any part of the transaction, or

series of connected transactions, out of which the action arose.

Restatement (Second) of Judgments § 24(1). Under the Restatement

standard, “the concept of a transaction is . . . used in the broad sense,” and

“connotes a natural grouping or common nucleus of operative facts.” Id. §

24 cmt. b.

Id. at 379-80. The transactional approach “reflects the expectation that parties who are

given the capacity to present their ‘entire controversies’ shall in fact do so.” Id. at 381

(quoting Restatement (Second) of Judgments § 24 cmt. a). “Two suits, therefore, shall be

deemed the same ‘cause of action’ for purposes of res judicata where they arise out of the

same transaction or a series of connected transactions.” Id. The Supreme Court noted,

however, that “even where two claims arise out of the same transaction, the second suit is

not barred by res judicata unless the plaintiffs had the opportunity in the first suit to fully

and fairly litigate the particular issue giving rise to the second suit.” Id. at 382.

This Court has repeatedly applied these principles in cases involving foreclosure.

In Davis v. Williams, No. E2010-01139-COA-R3-CV, 2011 WL 335069, at *1 (Tenn. Ct.

App. Jan. 31, 2011), the first suit was an unlawful detainer action in general sessions court,

and the second was a suit to set aside the foreclosure sale on the basis that the note and

deed of trust listed an incorrect amount owed, and therefore, the buyers were not in default.

Id. The trial court found the second suit barred by res judicata. Id. at *2. On appeal, the

sellers conceded that the general sessions court in Loudon County did not have jurisdiction

to entertain the question of title acquired through the foreclosure. Id. The buyers conceded

that they could have asserted wrongful foreclosure as a defense to possession in the prior

detainer action, but the alleged fraud could not have been asserted “as an original claim to

set aside the foreclosure sale.” Id. They argued that “even though the general sessions

court could have denied the Sellers possession based on the defense of wrongful

possession, its inability to set aside the foreclosure and vest title in them rather than the

Sellers means that its judgment does not have preclusive effect.” Id. We disagreed,

explaining:

It is a fundamental principle of jurisprudence that material facts or questions,

which were in issue in a former action, and were there admitted or judicially

determined, are conclusively settled by a judgment rendered therein, and that

such facts or questions becomes res judicata and may not again be litigated

in a subsequent action between the same parties or their privies, regardless

of the form the issue may take in the subsequent action whether the

subsequent action involves the same or a different form or proceedings, or

whether the second action is upon the same or a different cause of action,

- 15 -

subject matter, claim, or demand, as the earlier action. In such cases, it is also

immaterial that the two actions are based on different grounds, or tried on

different theories, or instituted for different purposes, and seek different

relief.

Id. at *3 (quoting Gerber v. Holcomb, 219 S.W.3d 914, 919 (Tenn. Ct. App. 2006)). As

such, by failing to raise the matters concerning fraud in the foreclosure, “which could have

been litigated and decided as an incident to or essentially connected with the subject matter

of the prior litigation,” the buyers forfeited their opportunity to assert fraud in a later action.

Id. at *4. Both cases “arose out of the same transaction or series of connected transactions”

and were considered the same cause of action for purposes of res judicata. Id.; see also

Foster v. Fed. Nat’l Mortg. Ass’n, No. E2012-02346-COA-R3-CV, 2013 WL 3961193, at

*4 (Tenn. Ct. App. July 31, 2013) (“[T]he unlawful detainer action . . . decided by the

general sessions court . . . and this second action, including all claims asserted by the

Fosters, each of which is based on or pertaining to the alleged wrongful foreclosure, arose

out of the same series of connected transactions.”). “It is therefore clear from the relevant

case law that the doctrine of res judicata may serve to preclude a challenge to foreclosure

when a final judgment in a previous adjudication of that same foreclosure has been

rendered in general sessions court.” Love v. Fed. Nat’l Mortg. Ass’n, 472 S.W.3d 272, 278

(Tenn. Ct. App. 2015).

The same holds true when the previous lawsuit was in federal court. For instance,

in Whitsey v. Williamson Cnty. Bank, 700 S.W.2d 562, 562-63 (Tenn. Ct. App. 1985), the

plaintiffs filed suit against a bank seeking damages for wrongful foreclosure of a trust deed,

but they had previously filed a complaint in federal district court challenging the

foreclosure on various grounds. The trial court dismissed the second action, and this Court

affirmed. Id. at 564-65. The plaintiff argued that “the right of action concluded by the

Federal judgment was not the same right of action asserted in the present action.” Id. at

564. However, we disagreed, concluding that both were based on an alleged failure to

inform the plaintiffs of the details of the loan as required by law. Id. The “verbose

embellishments” added to the second complaint did not “amount to assertion of a separate

and distinct right of action” for purposes of res judicata. Id. We explained that “[a]

judgment in a particular action is res judicata as to all claims and issues which were relevant

to and which could reasonably have been litigated in the prior action,” and this holds true

“even though the prior case was in Federal Court and the subsequent suit is brought in a

State Court.” Id.

Likewise, in King v. Bank of America, N.A., No. W2018-01177-COA-R3-CV, 2020

WL 7861368, at *1 (Tenn. Ct. App. Dec. 29, 2020), the plaintiff filed suit in state court

seeking to set aside a foreclosure after she had filed two unsuccessful lawsuits in federal

district court and unsuccessfully defended against an unlawful detainer action in general

sessions court. The trial court dismissed on the basis of res judicata, and this Court

affirmed. Id. The plaintiff argued that “not all claims raised by her in the instant complaint

- 16 -

were addressed in prior actions.” Id. at *8. However, this was not the appropriate inquiry.

We emphasized that res judicata bars “‘all issues which were, or could have been, litigated

in the former suit.’” Id. (quoting Jackson v. Smith, 387 S.W.3d 486, 491 (Tenn. 2012)).

Applying the transactional standard, the prior cases all involved “the same cause of action.”

Id. at *9. Although the plaintiff had attempted to refashion the allegations to assert claims

not stated before, they “either had been adjudicated or could have been litigated

previously.” Id. Thus, the complaint was barred by res judicata because the allegations

arose “from the same transaction: the foreclosure sale or impending foreclosure sale of the

Property.” Id.

As previously discussed, in Ms. Chamberlain’s lawsuit that was removed to federal

court, she and Ms. Dauenhauer sought to enjoin the foreclosure sale and asserted six

counts: complaint to quiet title; fraud; violation of the Fair Debt Collections Practices Act;

violation of the Tennessee Consumer Protection Act; civil conspiracy; and slander of title.

Although they did not assert a claim for breach of contract, within the factual allegations

of the complaint, they alleged that the trustee had “failed to comply with the specific

advertisement and/or notice requirements in the deed of trust” and that “Tennessee law

requires strict compliance with the terms of the deed of trust in order for any . . . foreclosure,

to be valid.” They acknowledged that they were sent a letter on May 23, 2011, “seeking

payment from Plaintiff and indicating that the current principal balance on the loan is

$667,243.70,” but they made no allegation about a failure to provide notice of acceleration

prior to the May 2011 letter. In describing the factual background of the case, the district

court’s opinion stated:

Plaintiffs received at least two letters indicating they were in default on their

loan. A letter dated Sept. 9, 2009, stated that a default had occurred and

Defendant BNYM—which then claimed to be the beneficiary of Plaintiffs’

DoT—had named Defendant ReconTrust as a substitute trustee for the DoT.

(Doc. No. 1–1 at 48.) Plaintiffs also received a letter and notice from

ReconTrust, dated May 23, 2011, stating that Plaintiffs’ default had triggered

acceleration of their loan and that ReconTrust would hold a non judicial

foreclosure sale of the property on July 1, 2011. (Doc. No. 1–1 at 136–41.)

Dauenhauer v. Bank of New York Mellon, No. 3:12-CV-01026, 2013 WL 2359602, at *1

(M.D. Tenn. May 28, 2013), aff’d, 562 F. App’x 473 (6th Cir. 2014). The opinion states

that Ms. Chamberlain and Ms. Dauenhauer alleged “they have not received an accounting

of their loan and, until they receive one, they deny they are in default.” Id. In dismissing

the fraud claim, however, the district court stated that “[the plaintiffs] have provided no

facts to indicate that they were not in default and that the Note holder did not have the right

to initiate foreclosure proceedings.” Id. at *8. The Sixth Circuit reached the same

conclusion: “Borrowers provide no facts to indicate that they were not in default, or that

the Note holder did not have the right to initiate foreclosure proceedings.” Dauenhauer v.

Bank of New York Mellon, 562 F. App’x 473, 482 (6th Cir. 2014).

- 17 -

Applying the transactional approach, the claims asserted in the federal court action

clearly arose from the same transaction at issue in this case: the foreclosure (or impending

foreclosure) of the property. Nevertheless, Ms. Chamberlain argues on appeal that she

could not assert a “wrongful foreclosure” defense to a detainer action until the foreclosure

actually occurred in 2017 and Bank then filed a detainer action. She also argues that her

claim was not ripe until a foreclosure sale actually occurred.

It is helpful at this point to examine this Court’s recent discussion in Case v.

Wilmington Trust, N.A. as Trustee for Trust MFRA 2014-2, No. E2021-00378-COA-R3-

CV, 2022 WL 2313548, at *7 (Tenn. Ct. App. June 28, 2022), in which we sought to

“clarify any distinction between the causes of action of ‘wrongful foreclosure’ and ‘breach

of contract[.]’” In that case, the plaintiff’s “wrongful foreclosure claim” was “predicated”

on his argument that the defendants did not comply with the notice requirements outlined

in the deed of trust. Id. We recognized that “[w]rongful foreclosure can be asserted as a

‘primary cause of action when a mortgagor asserts that a foreclosure action is improper

under a deed of trust.’” Id. (quoting Garner v. Coffee Cnty. Bank, No. M2014-01956-

COA-R3-CV, 2015 WL 6445601, at *10 (Tenn. Ct. App. Oct. 23, 2015)). However, we

also explained:

Based on our review of Tennessee case law, the difference between a

wrongful foreclosure action and a breach of contract action in the context of

foreclosure is often unclear. Wrongful foreclosure may be asserted as its

own cause of action, an affirmative defense to an unlawful detainer action,

or as a theory of a breach of contract or tort claim. Garner, 2015 WL

6445601, at *10 (“Wrongful foreclosure can be asserted as an affirmative

defense by a mortgagor in an unlawful detainer action brought by a purchaser

of property in foreclosure or as a primary cause of action when a mortgagor

asserts that a foreclosure action is improper under a deed of trust.”) (internal

citations omitted); Jerles v. Phillips, No. M2005-1494-COA-R3-CV, 2006

WL 2450400, at *3 (Tenn. Ct. App. Aug. 22, 2006) (stating that the

plaintiff’s amended complaint included “breach of contract for wrongful

foreclosure”); Beal Bank, SSB v. Prince, No. M2011-02744-COA-R3-CV,

2013 WL 411452, at *1 (Tenn. Ct. App. Jan. 31, 2013) (plaintiffs alleging

negligent infliction of emotional distress arising out of an alleged wrongful

foreclosure of their residence); Miltier v. Bank of Am., N.A., No. E2010-

00537-COA-R3-CV, 2011 WL 1166746, at *1 (Tenn. Ct. App. Mar. 30,

2011) (“This is a tort action for wrongful foreclosure.”).

The United States District Court for the Middle District of Tennessee

has succinctly described the independent cause of action of wrongful

foreclosure in Tennessee as follows:

There are no specific elements for a wrongful

foreclosure claim under Tennessee law. Ogle v. U.S. Bank

- 18 -

Nat’l Ass’n for Residential Asset Sec. Corp., No. 1:17-CV-40-

TAV-CHS, 2018 WL 1324137, at *3 (E.D. Tenn. Mar. 14,

2018). As many federal district courts in this state have noted,

however, “Tennessee courts generally examine whether

contractual or statutory requirements were met in the

foreclosure of the property in question.” Ringold v. Bank of

Am. Home Loans, No. 2:12-cv-02344, 2013 WL 1450929, at

*6 (W.D. Tenn. Apr. 9, 2013).

Tennessee courts have historically required “strict

compliance with the advertisement and notice terms as

provided in the deed of trust.” Fed. Nat’l Mortg. Ass’n v.

Robilio, No. W2007-01758-COA-R3-CV, 2008 WL 2502114,

at *7 (Tenn. Ct. App. June 24, 2008) (citing Henderson v.

Galloway, 27 Tenn. 692, 695-96 (Tenn. 1848)). A trustee’s

failure to comply with the clear terms of the deed of trust

pertaining to foreclosure will render a subsequent conveyance

invalid. Id. (citing Progressive Bldg. & Loan Ass’n v.

McIntyre, 89 S.W.2d 336, 336 (Tenn. 1936)).

Amodio v. Ocwen Loan Servicing, LLC, No. 3:18-CV-00811, 2018 WL

6727106, at *3 (M.D. Tenn. Dec. 21, 2018).4 Within a wrongful foreclosure

cause of action, there is no requirement that a borrower establish damages as

with a breach of contract claim; instead, a trustee’s mere failure to comply

with the terms of a deed of trust will render the foreclosure sale invalid.

Id. at *8. Thus, the Court recognized that “wrongful foreclosure may be raised as a theory

of a breach of contract claim,” or alternatively, “a plaintiff may bring a wrongful

foreclosure claim independent and distinct from a breach of contract claim.” Id. at *9.

Here, Ms. Chamberlain entitled her counterclaim as one for “Wrongful Foreclosure

– Breach of Contract.” Within that single count, she asserted that Bank’s failure to provide

notice prior to acceleration pursuant to paragraph 22 of the deed of trust rendered the

foreclosure null and void and caused her to suffer damages. When she amended her answer

after remand, she also asserted the affirmative defense of wrongful foreclosure for failure

to comply with paragraph 22. Notably, then, the sole substantive basis asserted for her

claim and defense was that Bank breached the deed of trust by failing to provide notice

prior to acceleration as required in paragraph 22. We conclude that Ms. Chamberlain could

have pursued this substantive issue in her federal court action in which she sought to

4

In citing Amodio, we noted: “‘Cases from other jurisdictions, including federal cases, are always

instructive, sometimes persuasive, but never controlling in our decisions.’” Case, 2022 WL 2313548, at

*8 n.5. (quoting Summers Hardware & Supply Co., Inc. v. Steele, 794 S.W.2d 358, 362 (Tenn. Ct. App.

1990)). However, we found “the Amodio district court’s analysis of wrongful foreclosure under Tennessee

law to be instructive and reflective of Tennessee case law.” Id.

- 19 -

prevent foreclosure in the first place.

We do recognize, as noted by a federal district court within the Sixth Circuit, that

“several district courts have dismissed wrongful foreclosure claims because a foreclosure

sale had not occurred at the time the complaint was filed or dismissed.” Poole v. Fed. Nat’l

Mortg. Ass’n, No. 1:15-CV-1261, 2016 WL 3085765, at *3 (W.D. Mich. June 2, 2016)

(discussing cases). As one example, the district court in Poole cited Harris v. LNV Corp.,

No. 3-12-0552, 2014 WL 3015293, at *4 (M.D. Tenn. July 2, 2014). In Harris, the district

court reasoned,

Since Defendants have not yet conducted a foreclosure sale, (DE 59,

p. 20), Plaintiff’s claim of wrongful foreclosure is not yet ripe for review.

See Tenn. Code. Ann. § 35-5-101 (providing the requirements for foreclosure

proceedings). . . .

Though there are no specific elements of wrongful foreclosure, to

state such a claim the claimant must show that a “legally held, conducted and

consummated” foreclosure involved “irregularity, misconduct, fraud, or

unfairness on the part of the trustee or the mortgagee that caused or

contributed to an inadequate price, for a court of equity to set aside the sale.”

CitiMortage, Inc. v. Drake, 410 S.W.3d 797, 802 (Tenn. Ct. App. 2013),

appeal denied (Aug. 14, 2013) (citation removed) (emphasis removed)).

Defendants have not yet held, conducted, or consummated a foreclosure

proceeding, and until they do so, the Court lacks jurisdiction to consider

Plaintiff’s wrongful foreclosure claim.

Id. at *11. In Sandlin v. CitiMortgage, Inc., No. 2:19-cv-02368-JTF-atc, 2021 WL

1581771, at *9 (W.D. Tenn. Mar. 1, 2021), report and recommendation adopted, 2021 WL

1156627 (W.D. Tenn. Mar. 26, 2021), another district court reached the same result,

relying on additional language from Harris, stating, “Though Tennessee courts have not

announced specific elements for wrongful foreclosure, the commonality between all

reported and non-reported cases alike is the occurrence of an actual foreclosure on

property. Until a foreclosure has occurred, the issue is not ripe for review[.]” (internal

quotations omitted). See also Parker v. Regions Bank, No. 3:19-CV-00973, 2020 WL

6493995, at *2 (M.D. Tenn. Mar. 4, 2020) (dismissing a wrongful foreclosure claim for

lack of ripeness where the foreclosure sale had not yet occurred, relying on Harris).5

The district court in Poole therefore recognized that, under the reasoning of the cases

it discussed from Tennessee and elsewhere, “a so-called wrongful foreclosure claim—one

seeking to set aside a foreclosure sale for noncompliance with the statutory requirements—

5

Our research has not revealed any cases from appellate courts of this State dismissing claims for

wrongful foreclosure based on lack of ripeness, and we express no opinion as to the accuracy of the district

courts’ conclusions regarding Tennessee law on this issue. We simply discuss those decisions to the extent

that they are relevant to Ms. Chamberlain’s claimed inability to pursue her claim in district court.

- 20 -

cannot be ripe until a foreclosure sale actually occurs.” Poole, 2016 WL 3085765, at *3

(emphasis added). “However,” the district court continued, it saw “no reason why a

homeowner cannot seek relief from a court before a foreclosure sale occurs by seeking a

declaratory judgment that the lender is not entitled to foreclose because it fails to meet one

or more of the statutory requirements.” Id. The district court opined that “a borrower’s

request for a declaratory judgment that an impending foreclosure sale will not meet the

statutory requirements would satisfy the ripeness test.” Id. at *4.

Applying the same rationale, we conclude that Ms. Chamberlain’s claimed inability

to assert a so-called “wrongful foreclosure” claim or defense in the prior action in district

court does not mean that she could not have asserted her underlying argument regarding

improper notice under the deed of trust. In fact, some of the very opinions in federal district

courts dismissing claims for “wrongful foreclosure” on grounds of ripeness have permitted

other claims, such as those for breach of contract, to proceed. See, e.g., Parker v. Regions

Bank, No. 3:19-CV-00973, 2020 WL 6493995, at *2-3 (M.D. Tenn. Mar. 4, 2020)

(dismissing “Count I, for wrongful foreclosure” for lack of ripeness where the sale had not

occurred but considering a separate breach of contract claim alleging that sections of the

deed of trust were breached); Harris v. LNV Corp., No. 3-12-0552, 2014 WL 3015293, at

*10-11 (M.D. Tenn. July 2, 2014) (concluding that a “claim of wrongful foreclosure” was

not yet ripe but considering the separate claim for breach of contract); see also Hossain v.

Ocwen Loan Servicing, LLC, No. 3:14-0002, 2016 WL 6138628, at *2 (M.D. Tenn. Oct.

21, 2016), report and recommendation adopted, 2016 WL 6995657 (M.D. Tenn. Nov. 30,

2016) (stating that “a claim for wrongful foreclosure . . . under Tennessee law . . . requires

that a foreclosure actually occur” but noting that “[t]o the extent that Plaintiff complains

that [Defendant] took actions related to the proposed foreclosure that violated ‘contractual

requirements’ . . . , he has already asserted a breach of contract claim”). We note that in

Ross v. Wells Fargo Bank, N.A., No. 13-CV-11858, 2013 WL 5291671, at *5 (E.D. Mich.

Sept. 19, 2013), a district court found that a plaintiff’s breach of contract claim “should

have been litigated” in his prior lawsuits seeking to halt the foreclosure where the

agreements at issue “necessarily must have existed and been breached prior to the

foreclosure” and his “claims for breach of those agreements therefore were ripe at the time

the prior cases were filed.” Similarly, in Chapman v. JPMorgan Chase Bank, N.A., 651 F.

App’x 508, 509-10 (6th Cir. (Tenn.) 2016), the Sixth Circuit rejected an argument that the

plaintiffs’ claim seeking damages for “lack-of-notice” could not have been asserted in a

previous lawsuit that was filed in an effort to prevent foreclosure. The notice at issue was

allegedly not provided at the time of closing. Id. at 510. As such, the Sixth Circuit

concluded that the plaintiffs “could have, and ‘should have,’ brought their claims for failure

to provide notice in their earlier lawsuit.” Id. The alleged violation occurred “long before”

their first suit and “[n]othing prevented the [plaintiffs] from incorporating their lack-of-

notice claims in the previous complaint.” Id.

Thus, Ms. Chamberlain’s argument regarding her claimed inability to bring a so-

called “wrongful foreclosure” claim or defense in the federal court action is not dispositive.

- 21 -

Aside from seeking declaratory or injunctive relief, Ms. Chamberlain could have asserted

that Bank failed to comply with the notice provision of the deed of trust through a breach

of contract claim. See Case, 2022 WL 2313548, at *8; see, e.g., Sandlin v. Citibank, N.A.,

No. 2:15-cv-02768-JTF-dkv, 2018 WL 2370769, at *2-8 (W.D. Tenn. Mar. 26, 2018)

(considering a plaintiff’s pre-foreclosure breach of contract claim and request for

declaratory relief alleging that the defendant breached the mortgage agreement by

improperly accelerating the debt); Robertson v. US Bank, N.A., No. 14-2677, 2015 WL

12532148, at *9-11 (W.D. Tenn. Oct. 20, 2015), aff’d, 831 F.3d 757 (6th Cir. 2016)

(considering the plaintiffs’ pre-foreclosure argument that they were not provided with an

acceleration letter complying with paragraph 22 and therefore the bank should be precluded

from foreclosing on the property); Kinard v. Nationstar Mortg. LLC, 572 S.W.3d 197, 201

(Tenn. Ct. App. 2018) (considering a “Petition to Enjoin Foreclosure Sale and Complaint

for Damages” seeking injunctive relief with regard to a scheduled foreclosure and asserting

a claim for breach of contract for failure to provide payoff information); Robinson v. MERS,

Inc., No. E2010-01592-COA-R3-CV, 2011 WL 1642104, at *1 (Tenn. Ct. App. Apr. 29,

2011) (considering a pre-foreclosure breach of contract claim asserted in an effort “to stop

what [plaintiff] alleged was a wrongful foreclosure”).

“Requiring the subsequent cause of action to be identical in all respects to the

original cause of action is too narrow a reading of the doctrine of res judicata.” XL Sports,

Ltd. v. $1,060,000 Plus Int. Traceable to Respondent, No. W2005-00689-COA-R3-CV,

2006 WL 197103, at *9 (Tenn. Ct. App. Jan. 26, 2006). Res judicata “applies not only to

issues that were raised and adjudicated in the prior lawsuit, but to all claims and issues

which were relevant and which could reasonably have been litigated in a prior action.”

Davidson v. Bredesen, 330 S.W.3d 876, 884-85 (Tenn. Ct. App. 2009) (emphasis added,

quotation omitted); see, e.g., Brooks v. First Franklin Fin. Corp, No. 3:17-0953, 2018 WL

4677844, at *2-3, 7 (M.D. Tenn. Apr. 13, 2018), report and recommendation adopted,

2018 WL 3018947 (M.D. Tenn. June 18, 2018) (dismissing a “complaint for wrongful

foreclosure” on the basis of res judicata despite the plaintiffs’ argument that their claim

“was not yet ripe” before foreclosure occurred and concluding that they had “full and fair

opportunities in the state courts to raise every legal and factual claim they had regarding

their legal rights to the Property and the legality of the foreclosure of the Property”). In

fact, Ms. Chamberlain did allege in her prior suit that the trustee had “failed to comply with

the specific advertisement and/or notice requirements in the deed of trust” and that

“Tennessee law requires strict compliance with the terms of the deed of trust in order for

any . . . foreclosure, to be valid.” Thus, we find no merit in her suggestion that she was

unable to raise her improper notice argument in her prior action seeking to prevent the

foreclosure.

Ms. Chamberlain next argues that res judicata does not bar a subsequent suit when

it alleges “new facts.”6 She concedes that “foreclosure had been initiated prior to the first

6

“The doctrine of res judicata does not prevent courts from reconsidering a claim when ‘the facts

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lawsuit” but suggests that a new fact has now occurred due to the actual completion of the

foreclosure sale and the filing of the detainer action. Ms. Chamberlain argues that once

the federal court determined that Bank had the right to foreclose, it was required to do so

in compliance with the deed of trust. However, the alleged failure to provide notice prior

to acceleration of which Ms. Chamberlain complains (prior to May 2011) had already

occurred at the time she filed suit to prevent the foreclosure in 2012. We faced a similar

situation, procedurally speaking, in Collins v. Greene County Bank, 916 S.W.2d 941 (Tenn.

Ct. App. 1995). The plaintiff had filed a previous lawsuit seeking to enjoin foreclosure on

his home, and he later filed a second suit alleging fraudulent inducement to enter into the

deed of trust. Id. at 945. The trial court found the second suit barred by res judicata, noting

that

[the prior action’s] sole purpose [was] the enjoining of the foreclosure by the

bank on the deed of trust. At that time, everything that could have been

known about that situation was known. There were no belated revelations of

fact. The only thing that occurred after that suit was the foreclosure and it

occurred because the Court refused to enjoin it.

Id. at 946. On appeal, this Court agreed that the second action was barred by res judicata.

Id. We concluded, “There are no new facts which were not known or new issues which

could not have been presented at that time.” Id. Simply put, we noted that “[a] plaintiff

may not reserve a theory which supports his action for a second lawsuit.” Id.; see also

Bank of New York Mellon v. Berry, No. W2017-01213-COA-R3-CV, 2018 WL 930967, at

*4 (Tenn. Ct. App. Feb. 15, 2018) (“Based on the transactional approach Tennessee

follows, Ms. Berry was required to present all of her arguments regarding her challenge to

the foreclosure of the Property in her 2012 lawsuit [in which she sought to prevent

foreclosure]. To the extent she failed to do this, she is precluded from pursuing these claims

now.”).

In sum, we conclude that the elements of res judicata have been established and that

Ms. Chamberlain’s argument regarding improper notice under the deed of trust is barred

due to her failure to raise it along with the host of other issues she asserted in the federal

court litigation.7 We affirm the trial court’s ruling regarding res judicata.

have changed or new facts have occurred’ that have altered the parties’ legal rights and obligations.”

Jackson, 387 S.W.3d at 495 n.12 (quoting Creech, 281 S.W.3d at 381).

7

We note that in a subsequent appeal in a separate case, the Sixth Circuit included the following

observation regarding the Dauenhauer case and others filed by counsel for Ms. Chamberlain:

Over the past few years, the district courts in this circuit, particularly in Tennessee, have

entertained a spate of civil actions that advance legal theories similar to [Appellant’s]. Like

[Appellant’s], many of these civil actions are scattershot affairs, tossing myriad (sometimes

contradictory) legal theories at the court to see what sticks. To assist the district courts in

addressing this wave of creative litigation, we will address each of [Appellant’s] theories

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C. Motion to Strike

As a separate issue on appeal, Ms. Chamberlain questions whether the trial court

erred in denying her motion to strike Bank’s affirmative defenses. This Court provided a

thorough explanation of the standards for appellate review of such motions in Doe v. Mama

Taori’s Premium Pizza, LLC, No. M1998-00992-COA-R9-CV, 2001 WL 327906, at *2-3

(Tenn. Ct. App. Apr. 5, 2001):

The purposes of a motion to strike under Tenn. R. Civ. P. 12.06 are

(1) to eliminate redundant, immaterial, impertinent, or scandalous matter

from pleadings, (2) to object to insufficient defenses, and (3) to enforce Tenn.

R. Civ. P. 8.05’s requirement that pleadings be simple, concise and direct.

5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure

§ 1380 (2d ed. 1990) (“Federal Practice and Procedure”). When used for

their intended purpose, these motions help the parties and the courts avoid

the time and money wasted litigating spurious issues by dispensing with

these issues prior to trial. Sidney-Vinstein v. A .H. Robbins Co., 697 F.2d 880,

885 (9th Cir. 1983); United States v. Smuggler-Durant Mining Corp., 823

F.Supp. 873, 875 (D. Colo. 1993); Cameron v. Graphic Mgmt. Assocs., Inc.,

817 F.Supp. 19, 22 (E.D. Penn. 1992). Despite their salutary purpose,

motions to strike are not favored because the remedy they offer is drastic and

because they are frequently used simply as a dilatory tactic.

Stabilisierungsfonds Fur Wein v. Kaiser Stuhl Wine Distribs., Pty., Ltd., 647

F.2d 200, 201 (D.C. Cir. 1981); Morell v. United States, 185 F.R.D. 116, 117

(D. P.R. 1999); 5A Federal Practice and Procedure § 1381, at 672; 2A

James W. Moore, Moore’s Federal Practice ¶ 12.21[2] (2d ed. 1995)

(“Moore's Federal Practice ”).

A Tenn. R. Civ. P. 12.06 motion may be used to test the “legal

sufficiency” of an affirmative defense. Usrey v. Lewis, 553 S.W.2d 612, 614

(Tenn. Ct. App. 1977). To succeed with a Tenn. R. Civ. P. 12.06 motion, the

moving party must show both that the challenged claim or defense does not

involve a question of fact or law on which the non-moving party can succeed

and that failure to strike the challenged claim or defense will be prejudicial

to the moving party. SEC v. McCaskey, 56 F.Supp.2d 323, 326 (S.D.N.Y.

1999); Abrams v. Lightolier, Inc., 702 F.Supp. 509, 511 (D. N.J. 1988); 5A

Federal Practice and Procedure § 1380. Prejudice for the purpose of a Tenn.

R. Civ. P. 12.06 motion arises when the challenged claim or defense has the

in detail.

Thompson v. Bank of Am., N.A., 773 F.3d 741, 748 (6th Cir. 2014). The Sixth Circuit cited specific cases

as examples, including Dauenhauer, and noted that several of the cases “all involve the same attorney.” Id.

at 748 n.2.

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effect of confusing the issues or is so lengthy and complex that it places an

undue burden on the moving party. Hoffman-Dombrowski v. Arlington Int’l

Racecourse, Inc., 11 F.Supp.2d 1006, 1009-10 (N.D. Ill. 1998).

Whether a particular defense is insufficient for the purposes of a Tenn.

R. Civ. P. 12.06 motion depends on the nature of the claim. 5A Federal

Practice and Procedure § 1381. An affirmative defense is insufficient if, as

a matter of law, the defense cannot succeed under any circumstance or if it

bears no possible relationship to the matters in controversy. Brown &

Williamson Tobacco Corp. v. United States, 201 F.2d 819, 822 (6th Cir.

1953); FSLIC v. Burdette, 696 F. Supp. 1183, 1186 (E.D. Tenn. 1988). A

motion to strike a defense should not be granted if there is any doubt that the

challenged claim or defense might raise an issue of fact or law, Nwakpuda v.

Falley’s, Inc., 14 F.Supp.2d 1213, 1215 (D. Kan. 1998); Sunshine Cellular

v. Vanguard Cellular Sys., Inc., 810 F. Supp. 486, 499-500 (S.D. N.Y. 1992);

2A Moore’s Federal Practice ¶ 12:21[2], or if the insufficiency of the

defense is not readily apparent. 5A Federal Practice and Procedure § 1381,

at 678.

Trial courts have considerable discretion with regard to granting

Tenn. R. Civ. P. 12.06 motions. Stanbury Law Firm v. IRS, 221 F.3d 1059,

1063 (8th Cir.2000); Alvarado-Morales v. Digital Equip. Corp., 843 F.2d

613, 618 (1st Cir. 1988); Krisa v. Equitable Life Assurance Soc’y, 109

F.Supp.2d 316, 319 (M.D. Penn. 2000). Accordingly, appellate courts review

decisions regarding Tenn. R. Civ. P. 12.06 motions using the deferential

“abuse of discretion” standard of review.

Id. at *2-3 (footnote omitted).

On appeal, Ms. Chamberlain fails to mention any of these standards for review. She

simply argues, “[Bank] raised affirmative defenses in response to [Ms. Chamberlain’s]

breach of contract claim. None of [Bank’s] affirmative defenses have merit.” She then

proceeds to analyze the merits of Bank’s affirmative defenses. We have already concluded,

in the previous section of this opinion, that Bank’s res judicata defense was meritorious.

As such, we reject Ms. Chamberlain’s sole argument on appeal as to why the affirmative

defense of res judicata should have been stricken.8 We decline to analyze the merits of

Bank’s other affirmative defenses, ranging from the statute of limitations to lack of

8

We note that Ms. Chamberlain raises one additional argument in this section of her brief that was

not raised in the section regarding res judicata. She suggests that any breach regarding failure to provide

proper notice would not have been a material breach until the foreclosure sale was completed. However,

as noted by Bank, she cites no authority in support of this argument. Therefore, we deem it waived. See

Sneed v. Bd. of Prof’l Resp. of Sup. Ct., 301 S.W.3d 603, 615 (Tenn. 2010) (“It is not the role of the courts,

trial or appellate, to research or construct a litigant's case or arguments for him or her, and where a party

fails to develop an argument in support of his or her contention or merely constructs a skeletal argument,

the issue is waived.”).

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standing to unclean hands. Those defenses, while included in Bank’s answer, were not the

basis for Bank’s motion for summary judgment in this case. As a result, any opinion as to

the merits of those affirmative defenses or whether they should have been stricken from

the answer would not affect the outcome of this appeal. We therefore deem those issues

pretermitted. See Certain Underwriters at Lloyds, London v. Winestone, 182 S.W.3d 342,

349 (Tenn. Ct. App. 2005) (“[O]ur holding above . . . pretermits Lloyd’s final argument,

since a specific request for contribution and indemnification would not affect the outcome

of this appeal.”); State v. R.A.W., No. E2003-00847-COA-R3-PT, 2003 WL 22794471, at

*8 (Tenn. Ct. App. Nov. 25, 2003) (“Due to our resolution of the preceding issues, all

remaining issues are pretermitted as they would not affect the outcome of this appeal.”).

D. Constructive Possession

Finally, Ms. Chamberlain argued on appeal that the trial court erred in finding that

Bank was in constructive possession of the property. However, the basis for her argument

is that “[Bank] did not conduct the sale pursuant to paragraph 22 and therefore they lacked

authority to sell [her] property at foreclosure.” Having found that Ms. Chamberlain is

barred from raising this argument in this litigation, we affirm the trial court’s finding on

this issue.

IV. CONCLUSION

For the aforementioned reasons, the decision of the circuit court is hereby affirmed

and remanded. All other issues are pretermitted. Costs of this appeal are taxed to the

appellant, Helen E. Chamberlain, for which execution may issue if necessary.

_________________________________

CARMA DENNIS MCGEE, JUDGE

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