                     IN THE COURT OF APPEALS OF IOWA

                                     No. 17-0513
                                 Filed July 18, 2018


U.S. BANK NATIONAL ASSOCIATION,
      Plaintiff-Appellant,

vs.

MICHAEL PARROTT, HEIRS OF DOLORES MARIE LISK, ERIC LISK,
UNKNOWN HEIRS OF DOLORES MARIE LISK, CREDITORS OF DOLORES
MARIE LISK, STATE OF IOWA, and PARTIES IN POSSESSION,
     Defendants-Appellees.
________________________________________________________________


       Appeal from the Iowa District Court for Scott County, Mark J. Smith, Judge.



       In an interlocutory appeal, plaintiff challenges the district court decision

denying its motion for a default judgment in a foreclosure action. REVERSED AND

REMANDED.

       Donald J. Pavelka Jr. of Locher Pavelka Dostal Braddy & Hammes, L.L.C.,

Council Bluffs, for appellant.

       Thomas J. Miller, Attorney General, and Donald D. Stanley, Jr. and Laura

A. Steffensmeier, Assistant Attorneys General, for appellee State.

       Eric Lisk, Wilson, appellee pro se.

       Michael Parrott, appellee pro se.



       Considered by Vogel, P.J., Bower, J., and Mahan, S.J.*

       *Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2018).

BOWER, Judge.
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       In an interlocutory appeal, U.S. Bank National Association (U.S. Bank)

challenges the district court decision denying its motion for a default judgment in a

foreclosure action where the mortgagor is deceased.               We find U.S. Bank

adequately provided notice to those with an interest in the foreclosure proceedings.

We conclude the district court abused its discretion in denying U.S. Bank’s motion

for a default judgment.

       I.     Background Facts & Proceedings

       On April 24, 2015, Dolores Lisk obtained a loan of $58,500 from U.S. Bank.

The loan was secured by a mortgage on real estate she owned in Davenport. Lisk

died on January 28, 2016. An estate was not opened after her death. The loan

went into default.

       On September 22, 2016, U.S. Bank filed a petition seeking foreclosure of

the mortgage without redemption, under Iowa Code section 654.20 (2016), and

waived its right to a deficiency judgment. The petition named as defendants Lisk’s

sons Michael Parrott and Eric Lisk, unknown heirs of Lisk, creditors of Lisk, and

“all persons known and unknown claiming any right, title, or interest and all of their

heirs, spouses, assigns, grantees, legatees, devisees, and all beneficiaries of each

and all the above-named defendants.”1 U.S. Bank mailed notice to Lisk’s two sons.

The district court entered an order permitting service by publication for the

unknown defendants. U.S. Bank placed an official notice of the foreclosure action




1
   The notice additionally named the Internal Revenue Service (IRS). The IRS consented
to the foreclosure and asked to be dismissed from the case. The district court granted the
request for dismissal. The Iowa Department of Revenue and the State of Iowa also
consented to the foreclosure.
                                          3


in the Quad-City Times on three occasions. The property which was the subject

of the foreclosure was vacant.

       On November 1, U.S. Bank gave notice of its intent to file a written

application for default. No defendants responded to the foreclosure petition or the

notice of intent to seek a default judgment. U.S. Bank filed an application for

default judgment on January 4, 2017. The district court denied the motion, finding

an estate should be opened to determine the real parties in interest concerning the

property in question. The court also stated, “Plaintiff has provided no authority to

support its methods.”

       U.S. Bank filed a motion to reconsider, stating it relied upon Iowa Title

Standard 7.8. It noted Lisk’s obituary stated she was survived by two sons and

other relatives, and the sons had been given notice of the foreclosure proceedings.

Additionally, the bank pointed out it was seeking an in rem judgment against the

real estate. The district court denied the motion to reconsider. The court stated,

“In order to quiet title and grant Plaintiff’s motion, the Court would need to make

findings that the defendants are the real parties in interest.” Also, “This Court

cannot make a finding that it has jurisdiction over persons with an interest because

this court does not know the identity of the persons with an interest in the estate of

a deceased borrower because no estate has been opened in probate to identify

said persons.” The court concluded, “Opening a creditor’s estate would solve

these problems.”
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       U.S. Bank filed an application for an interlocutory appeal.2          The Iowa

Supreme Court granted the application. The case was subsequently transferred

to the Iowa Court of Appeals.

       II.    Standard of Review

       This action was brought in equity, and our review is therefore de novo. See

Iowa R. App. P. 6.907. “A decision to grant or deny a motion for default judgment

rests in the sound discretion of the trial court.” Jack v. P & A Farms, Ltd., 822

N.W.2d 511, 515 (Iowa 2012) (quoting Wilson v. Liberty Mut. Grp., 666 N.W.2d

163, 165 (Iowa 2003)). We will reverse the district court’s decision on a motion for

default judgment only when the court has abused its discretion. Id.

       III.   Default Judgment

       U.S. Bank claims the district court abused its discretion by denying their

motion for default judgment. They state it should not be necessary to open an

estate for the property interests of unknown heirs because the foreclosure action

is in rem, so its action is against the property, not individual defendants. U.S. Bank

states it served notice to the known interested parties by mail and unknown

interested parties by publication, which it states is the same as it would be required

to do for a probate estate. It claims opening an estate would not provide greater

protection for any unknown heirs.

       A foreclosure action is final and cannot be collaterally attacked unless the

court lacked jurisdiction. See Kriv v. Nw. Sec. Co., 24 N.W.2d 751, 755 (Iowa 1946

(“The order may be attacked collaterally only if it was entered without jurisdiction.”).


2
    No appellees are participating in the appeal. The Iowa Supreme Court determined the
listed appellees are still parties to the appeal.
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A foreclosure proceeding will cut off the rights of all persons made a party to the

foreclosure proceedings. See Teachout v. Duffus, 119 N.W. 983, 983 (Iowa 1909)

(noting the rights of entities not made a party to the foreclosure proceedings were

not cut off).

       At the time of the district court’s order, U.S. Bank knew of no estate having

been opened for Lisk in Iowa or any other state. Accordingly, U.S. Bank made

Lisk’s known and unknown heirs parties to the foreclosure petition, and it provided

notice to them as directed in the rules of civil procedure. See Iowa Rs. Civ. P.

1.311 (allowing notice by ordinary mail to known defendants), 1.312 (allowing

notice against unknown parties to “be directed to the unknown claimants of the

property involved”). U.S. Bank also published notice of foreclosure for persons

“whose identity is not reasonably ascertainable,” as required in section 654.4A(5).

By doing so, the foreclosure proceeding should be able to extinguish the claims of

all known and unknown heirs, and the purchaser in the sheriff’s sale will be able to

obtain a clear title. See Iowa Code § 654.5(1)(c).

       In discussing the Iowa Land Title Standards, our supreme court has

instructed us “to give serious consideration to these standards.” Tesdell v. Hanes,

82 N.W.2d 119, 124 (Iowa 1957). On the question, “What showing is needed

where a mortgage granted by a now deceased borrower is foreclosed on in rem,”

Standard 7.8(1) states:

               If a foreclosure court had in rem jurisdiction of the persons
       with an interest in the estate of a deceased borrower, and entered a
       decree of foreclosure, there is generally no need to open an estate
       for the deceased borrower. Under the doctrine of res judicata, a title
       problem can only arise in such a case if a person in interest objects
       to the procedure in the foreclosure case and the court upholds the
       objection.
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      Also, under Standard 7.8(4), if there is no estate, “the foreclosure should

name as defendants all known persons who are reasonably believed to have a

right to inherit the property, and also all unknown persons with an interest in the

estate.” U.S. Bank followed this standard by naming all known and unknown

persons reasonably believed to have an interest in the property. Even if U.S. Bank

were forced to open an estate, the administrator would notify the known and

unknown heirs of the decedent in the same manner, giving no greater notice than

U.S. Bank has already provided. See Iowa Code § 633.230(1) (requiring notice of

an intestate estate by mail to known interested parties and notice by publication to

unknown interested parties).

      We find the district court abused its discretion in denying U.S. Bank’s motion

for a default judgment. U.S. Bank adequately provided notice to those with an

interest in the foreclosure proceedings. We reverse the district court’s decision

and remand for further proceedings.

      REVERSED AND REMANDED.
