a Delaware Limited Partnership, and

CASE NO. 1D10-2690


From the decision…

Appellants seek reversal of the trial court’s summary denial of their motion to set aside and vacate a default judgment entered against them in the foreclosure proceedings below. For the reasons explained below, we reverse the trial court’s order.

Appellants were served with a foreclosure complaint in February 2009, to which they did not file a response due to what they understood to be assurances by the loan servicer representative.

Appellants were assured by the loan service representative that the foreclosure proceeding would be abated pending application for, and approval of, a loan modification agreement.

Appellants also alleged that between that date and October 2009 they had several conversations with representatives of the loan servicer involving additional required documents, and “[a]t no time during those conversations were [they] advised that the foreclosure had moved forward.”

Appellants further asserted that they did not receive any foreclosure documents after the initial complaint until receiving the notice that a foreclosure sale on their home was rescheduled for May 12, 2010. During the entire time preceding receipt of this notice, Appellants were “under the reasonable belief that the foreclosure action had been abated.”

According to Appellants’ motion and affidavits, in October 2009 they were told that the lender was willing to agree to a modification pursuant to certain terms, including an immediate payment of $8,500 to be applied toward satisfaction of outstanding interest…

While the foregoing alleged negotiations were taking place, Appellees filed a default motion on May 19, 2009, followed by a motion for summary judgment on July 16, 2009. Final summary judgment was entered on November 11, 2009. After this order was entered, Appellants made five payments in accordance with what they understood was a modified mortgage agreement. The last of these payments was made on March 28, 2010. The trial court entered an order on March 29, 2010, rescheduling the foreclosure sale for May 12, 2010, and the Notice of Sale was issued two days later. By letter dated April 29, 2010, Appellees returned Appellants’ final payment of $1,451 and informed Appellants that it would not be credited to their account “[d]ue to the pending foreclosure action” and that their account “needs to be reinstated through our attorney.”

On May 7, 2010, Appellants’ attorneys filed the motion to set aside the default judgment. Appellees filed no response to either the motion or affidavits. The trial court did not conduct an evidentiary hearing to address Appellants’ allegations, and entered its order denying the motion on May 11, 2010. This order contained no findings of fact or conclusions of law.

It is the trial court’s failure to conduct an evidentiary hearing that warrants reversal of the denial of Appellants’ motion to set aside the default judgment. This court has held that a trial court is required to conduct an evidentiary hearing before entering an order denying a motion to set aside a judgment.

Full decision below…


h/t Matt Weidner


Jorge Palacio and Elizabeth r. Palacio, V. Alaska Seaboard Partners Limited Partnership