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 1        IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

 2 BANK OF AMERICA, N.A.,

 3          Plaintiff-Appellee,

 4 v.                                                                                   NO. 34,567

 5 JEROME T. ROYBAL, and
 6 AMY J. ROYBAL,

 7          Defendants-Appellants.

 8 APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY
 9 Raymond Z. Ortiz, District Judge

10 Weinstein & Riley, P.S.
11 Jason Bousliman
12 Albuquerque, NM

13 for Appellee

14 Gleason Law Firm, LLC
15 Deirdre Gleason
16 Heath, MA

17 for Appellants

18                                 MEMORANDUM OPINION

19 VANZI, Chief Judge.
 1   {1}   Husband and wife, Jerome Roybal and Amy Roybal (Homeowners), appeal

 2 from the district court’s order denying their motion to vacate a foreclosure judgment

 3 due to the foreclosing bank’s, Bank of America (BOA), lack of standing. This appeal

 4 implicates a recent New Mexico Supreme Court case that clarified that a party who

 5 fails to challenge standing prior to the completion of a trial on the merits or while

 6 litigation is still active waives his standing arguments. See Deutsche Bank Nat’l Tr.

 7 Co. v. Johnston, 2016-NMSC-013, ¶¶ 15-19, 369 P.3d 1046. Given this clarification,

 8 we affirm the district court and hold that Homeowners waived their right to challenge

 9 BOA’s standing because service was proper and they did not raise their standing

10 challenge prior to the district court’s entry of the final judgment. Because resolution

11 of this issue is dispositive of this appeal, we need not reach the other issues raised by

12 Homeowners.

13 BACKGROUND

14   {2}   BOA filed a foreclosure complaint against Homeowners, and after three failed

15 attempts at personal service, the district court granted BOA leave to complete service

16 by posting and required the posting to be followed by a first class mailing of the

17 summons and complaint. Homeowners made no appearance nor did they answer the

18 summons and complaint, and the district court granted BOA a default judgment. BOA

19 then purchased the foreclosed property at a special master’s sale.


                                               2
 1   {3}   Subsequently, Homeowners filed a motion to reinstate the case, alleging that

 2 they were never served with any of the documents filed in the case, including the

 3 foreclosure complaint. Homeowners additionally alleged that BOA failed to establish

 4 its standing because the promissory note attached to the foreclosure complaint did not

 5 contain a special indorsement indicating that BOA was the holder at the time the

 6 complaint was filed. Homeowners also filed a motion to vacate the default judgment

 7 and foreclosure sale and dismiss for lack of subject matter jurisdiction, which the

 8 district court denied. This appeal followed.

 9 DISCUSSION

10   {4}   This case turns on whether Homeowners properly raised the issue of BOA’s

11 standing after entry of the default judgment. “We review the district court’s denial of

12 a motion to set aside a default judgment for abuse of discretion.” Ortiz v. Shaw, 2008-

13 NMCA-136, ¶ 12, 145 N.M. 58, 193 P.3d 605. Homeowners argue that the default

14 judgment should be set aside under Rule 1-060(B) NMRA because they did not have

15 the opportunity to raise the standing issue prior to entry of the default judgment since

16 they were improperly served under Rule 1-004(F) NMRA. In light of our Supreme

17 Court’s recent holding in Johnston, however, we hold that under the facts of this case,

18 Homeowners were properly served under Rule 1-004 and, as a result, the district court




                                              3
 1 did not err when it also ruled that Homeowners waived any standing arguments by

 2 failing to raise them before the entry of the default judgment.




 3 Service Was Proper Under Rule 1-004

 4   {5}   As a preliminary matter, we address the question of whether Homeowners were

 5 properly served with the summons and complaint. We defer to the district court’s

 6 findings of fact when its findings are supported by substantial evidence. See Bank of

 7 N.Y. v. Romero, 2014-NMSC-007, ¶ 18, 320 P.3d 1 (explaining that an appellate court

 8 reviews a district court’s findings of fact for substantial evidence). “Substantial

 9 evidence means relevant evidence that a reasonable mind could accept as adequate to

10 support a conclusion.” Id. (internal quotation marks and citation omitted). On appeal,

11 the appellate courts “resolve all disputed facts and indulge all reasonable inferences

12 in favor of the trial court’s findings.” Id. (internal quotation marks and citation

13 omitted). Under Rule 1-004(F)(1),

14         [p]ersonal service of process shall be made upon an individual by
15         delivering a copy of a summons and complaint or other process . . . to the
16         individual personally; or if the individual refuses to accept service, by
17         leaving the process at the location where the individual has been found;
18         and if the individual refuses to receive such copies or permit them to be
19         left, such action shall constitute valid service; or . . . by mail or
20         commercial courier service.


                                               4
 1 However, Rule 1-004(J) provides that, where it has been shown by affidavit that

 2 service cannot otherwise be reasonably made under Rule 1-004, a moving party may

 3 seek leave of the court to effect service “by any method or combination of methods

 4 . . . that is reasonably calculated under all of the circumstances to apprise the

 5 defendant of the existence and pendency of the action and afford a reasonable

 6 opportunity to appear and defend.”

 7   {6}   Here, BOA attempted to personally serve Homeowners with the summons and

 8 complaint at Homeowners’ residence on three separate occasions. In his affidavit of

 9 attempted service, the process server stated that he first attempted to serve

10 Homeowners on August 13, 2013, at 10:45 a.m., but that there was no answer, so he

11 left a note on their door. On that date, he verified with a neighbor that Homeowners

12 lived at that address. On August 15, 2013, the process server attempted service again

13 at 2:00 p.m. and again received no response. He verified with a different neighbor that

14 Homeowners lived at that address. Noticing that the first note had been removed from

15 the door, the process server left a card taped to the garage door. The process server

16 made a third attempt to serve Homeowners on August 19, 2013 at 6:00 p.m. Despite

17 “several times ringing the doorbell, knocking and calling out ‘Hello[,]’ ” there was no

18 response even though the garage door was open and two vehicles registered to

19 Homeowners were parked in the garage. The process server testified to the same


                                              5
 1 effect. On August 22, 2013, BOA filed a motion with the district court for leave to

 2 effect personal service of process by posting pursuant to Rule 1-004(J). The district

 3 court granted leave for BOA to serve the summons and complaint for foreclosure by

 4 posting it at Homeowners’ residence, followed by a first class mailing of the summons

 5 and complaint to that address. In compliance with the court’s order, the process server

 6 posted two copies of the summons and complaint along with the district court’s order

 7 “in the most public part of [Homeowners’] premises,” while BOA mailed the same

 8 documents along with a copy of the certificate of mailing to Homeowners’ address via

 9 first class mail.

10   {7}   Homeowners allege that they were never served with any of the documents filed

11 in the case, including the foreclosure complaint. Homeowners provided affidavits to

12 the district court stating that they never received the posting of the foreclosure

13 complaint. Further, Homeowners stated that they were both working when the process

14 server attempted service the first two instances and that on the third occasion, they

15 were likely out for their regular evening walk. Finally, Homeowners alleged that they

16 did not receive the complaint by mail or posting.

17   {8}   The district court denied Homeowners’ motion to vacate default judgment and

18 foreclosure sale and dismiss for lack of jurisdiction because it found that the process

19 server’s testimony and affidavits were credible and that Homeowners were properly


                                              6
 1 served by posting. In addition, the district court found that Homeowners had

 2 attempted to deliberately avoid service. We defer to the court’s factual findings and

 3 conclude that they were supported by substantial evidence as established by the

 4 process server’s affidavits and testimony. See Romero, 2014-NMSC-007, ¶ 18; Perez

 5 v. Int’l Minerals & Chem. Corp., 1981-NMCA-022, ¶ 13, 95 N.M. 628, 624 P.2d 1025

 6 (“We will not weigh the evidence or determine the credibility of witnesses [as t]he

 7 trier of facts is the sole judge of the credibility of witnesses and the weight to be given

 8 their testimony.” (internal quotation marks omitted)). Accordingly, we hold that

 9 service was proper and that Homeowners had an opportunity, but failed, to file a

10 responsive pleading raising their standing challenge before entry of the default

11 judgment.

12 Homeowners Waived Their Rule 1-060(B) Standing Arguments

13   {9}   In Johnston,1 our Supreme Court clarified New Mexico law on whether

14 standing is jurisdictional. The Court explained that,



           1
19           We acknowledge Homeowners’ supplemental brief in chief, which addresses
20   the Johnston case. We note, however, that while the supplemental brief accurately
21   reflects our Supreme Court’s statement that prudential standing is a “vital procedural
22   safeguard,” see Johnston, 2016-NMSC-013, ¶ 21, Homeowners did not address the
23   Court’s emphasis on “active litigation” and subsequent discussion clarifying that “a
24   final judgment from a cause of action that may have lacked standing . . . is not
25   voidable under Rule 1-060(B) due to a lack of prudential standing.” See Johnston,
26   2016-NMSC-013, ¶¶ 18, 33-34.

                                                7
 1          [a]s a general rule, standing in our courts is not derived from the state
 2          constitution, and is not jurisdictional. However, when a statute creates a
 3          cause of action and designates who may sue, the issue of standing
 4          becomes interwoven with that of subject matter jurisdiction. Standing
 5          then becomes a jurisdictional prerequisite to an action. . . . [W]e take this
 6          opportunity to clarify . . . and hold that mortgage foreclosure actions are
 7          not created by statute. Therefore, the issue of standing in those cases
 8          cannot be jurisdictional.

 9 Johnston, 2016-NMSC-013, ¶ 11 (alteration, internal quotation marks, and citations

10 omitted). Johnston further explained that, because a cause of action to enforce a

11 promissory note is not created by statute, standing is not jurisdictional in such a case.

12 Id. ¶ 10; see also id. ¶ 12 (stating that “an action to enforce a promissory note fell

13 within the district court’s general subject matter jurisdiction . . . because it was not

14 created by statute”). Accordingly, standing in foreclosure cases is a prudential

15 consideration that “can be raised for the first time at any point in an active

16 litigation[.]” Id. ¶¶ 10, 18. Our Supreme Court went on to hold that “standing must be

17 established as of the time of filing suit in mortgage foreclosure cases[.]” Id. ¶ 20. It

18 nevertheless stated that, because standing is not jurisdictional, the possibility remains

19 that a homeowner can waive the issue. Id. ¶ 15.

20   {10}   Moreover and important to our analysis here, Johnston held that “a final

21 judgment on any . . . cause of action [other than one that lacks standing as a

22 jurisdictional matter], including an action to enforce a promissory note . . . is not

23 voidable under Rule 1-060(B) due to a lack of prudential standing.” Johnston, 2016-

                                                 8
 1 NMSC-013, ¶ 34 (emphasis added). Because a default judgment necessarily precludes

 2 trial and is a final order thus ending “active litigation,” see Gallegos v. Franklin,

 3 1976-NMCA-019, ¶ 25, 89 N.M. 118, 547 P.2d 1160, in the present case, the final

 4 judgment granting BOA default judgment is not voidable under Rule 1-060(B) due

 5 to a lack of prudential standing. See Gallegos, 1976-NMCA-019, ¶ 25 (noting that a

 6 default judgment is a final judgment).

 7   {11}   In Johnston, the Court held that the homeowner did not waive standing because

 8 he raised the issue during “active litigation,” i.e., in a motion prior to trial. 2016-

 9 NMSC-013, ¶¶ 17-18. In contrast, in this case, Homeowners filed their first motion

10 challenging BOA’s standing over two months after the default judgment was entered,

11 and they filed the motion to vacate the default judgment and foreclosure sale because

12 of BOA’s alleged lack of standing ten months after the entry of the default judgment.

13 Based on the record before us, service was proper and Homeowners had ample

14 opportunity to raise the issue of standing before entry of the default judgment. Yet

15 Homeowners did not challenge BOA’s standing until months after “active litigation”

16 was complete. Consequently, under Johnston, they waived their right to do so. See id.

17 ¶¶ 15-19. The district court did not abuse its discretion in denying Homeowners’ Rule

18 1-060(B) motion to vacate the default judgment and foreclosure sale in this case.

19 CONCLUSION


                                              9
1   {12}   We affirm.

2   {13}   IT IS SO ORDERED.

3                               __________________________________
4                               LINDA M. VANZI, Chief Judge

5 WE CONCUR:


6 _________________________________
7 JAMES J. WECHSLER, Judge


8 _________________________________
9 TIMOTHY L. GARCIA, Judge




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