Hooks v. Alaska USA Federal Credit Union , 413 P.3d 1192 ( 2018 )

Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER.
Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,
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THE SUPREME COURT OF THE STATE OF ALASKA
RAND JOSEPH HOOKS, )
) Supreme Court No. S-16521
Appellant, )
) Superior Court No. 3AN-16-05824 CI
v. )
) OPINION
ALASKA USA FEDERAL CREDIT )
UNION and DENNIS ALBERT, ) No. 7227 – March 2, 2018
)
Appellees. )
)
Appeal from the Superior Court of the State of Alaska, Third
Judicial District, Anchorage, Dani Crosby, Judge.
Appearances: Rand Joseph Hooks, pro se, Anchorage,
Appellant. Richard Ullstrom, RCO Legal-Alaska, Inc.,
Anchorage, for Appellee Alaska USA Federal Credit Union.
Mario L. Bird, Ross, Miner & Bird, PC, Anchorage, for
Appellee Dennis Albert.
Before: Stowers, Chief Justice, Winfree, Maassen, Bolger,
and Carney, Justices.
BOLGER, Justice.
I. INTRODUCTION
A borrower defaulted on a loan, leading to a non-judicial foreclosure of a
deed of trust on his property. He filed suit against the property’s new owner and the
credit union that initiated the foreclosure, arguing the foreclosure and the transactions
preceding it were fraudulent and invalid. The superior court granted summary judgment
for the defendants. We affirm the superior court’s conclusion that the borrower failed
to demonstrate an issue of material fact concerning the loan origination and the
foreclosure. We also reject the borrower’s claims that the superior court judge was
biased and that the borrower’s right to due process was violated.
II. FACTS AND PROCEEDINGS
In December 2002 Rand Joseph Hooks Jr. obtained a loan from Homestate
Mortgage Company LLC (Homestate) to refinance an existing loan secured by his
property. Hooks signed a promissory note evidencing an obligation to repay the loan
and a deed of trust giving Homestate a security interest in the property. The day the loan
closed, Homestate sold the promissory note and the beneficial interest in the deed of trust
to Alaska USA Federal Credit Union (Alaska USA). A Homestate agent signed and
transferred the note and also signed a document assigning the beneficial interest to
Alaska USA.
In 2015 the loan went into default. Alaska USA referred the defaulted loan
and the deed of trust for foreclosure, and through the statutory nonjudicial deed of trust
foreclosure process, the property was sold to Dennis Albert. Hooks remained in the
property despite the sale, and he filed a pro se complaint against Albert and Alaska USA.
Hooks alleged that Alaska USA had committed fraud, that it did not possess the
document needed to initiate a foreclosure, and that banks and credit unions are legally
prohibited from owning property. Hooks also claimed that he, not Albert, owned the
property.
Alaska USA and Albert filed motions for summary judgment in July 2016.
After Hooks failed to respond to the motions in a timely manner, the superior court
issued a “Notice Regarding Motion for Summary Judgment” that described the
requirements for opposing summary judgment and extended the deadline for responding
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to the motions. However, Hooks did not file an opposition before the new deadline.
When Hooks failed to appear at the August 22 trial call, the court took the trial off the
calendar and instead held oral argument on the summary judgment motions on the date
originally set for trial. At the court’s request, Alaska USA sent Hooks a letter explaining
the change.
The oral argument took place on August 25, and all parties were present.
Before presenting his arguments, Hooks told the court he had not received the
defendants’ summary judgment motions or the court’s notice explaining how to oppose
summary judgment; he also said he had not known about the trial call. Hooks explained
he had not opened the court’s emails because he had not recognized the email address
the court had used to send them.
At the oral argument, Hooks contested the legality of the loan origination
and the foreclosure on several grounds. He argued that the promissory note he signed
during the loan origination process was itself an asset equal in value to the loan he
received, that any debt was paid in full when he transferred this asset to the lender, and
that he had never received a loan at all. Hooks argued the lender had fraudulently
concealed this information, causing him to mistakenly make payments for a number of
years. He also argued that there were technical defects in the deed of trust and that
Alaska USA had failed to adequately validate the debt upon request.
After oral argument the superior court verified that Hooks had copies of the
summary judgment motions and the notice describing how to oppose a motion. The
court gave him 15 days to file a written opposition. Hooks filed an opposition on
September 2 and a second opposition on September 23. In his oppositions Hooks
presented several of the same arguments he had made during oral argument. He also
asserted that the loan constituted ultra vires activity and that Alaska USA did not possess
the note when the foreclosure was initiated. Alaska USA’s and Albert’s replies argued
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that the loan origination and foreclosure were valid and that Hooks’s factual assertions
were not based on personal knowledge as required under Alaska Civil Rule 56(e).
On September 30 the court entered an order granting the defendants’
motions for summary judgment.1 The court concluded that there was no issue of material
fact regarding the existence of a loan and a lien on the property, that Alaska USA was
entitled to enforce the promissory note through foreclosure, and that Hooks’s arguments
that the loan was ultra vires and had been paid off by the promissory note were
groundless. The court also held Albert was a bona fide purchaser entitled to possess the
property and recover a money judgment from Hooks to compensate for lost rent, and it
ordered Hooks to vacate the property. Hooks now appeals arguing that: (1) summary
judgment was inappropriate; (2) the superior court was biased; and (3) the superior court
violated his due process rights.
III. DISCUSSION
A. Summary Judgment
During the superior court proceedings, Hooks argued the foreclosure sale
was void because the underlying debt was settled, unenforceable, or nonexistent; the
deed of trust was deficient; and Alaska USA lacked the authority to foreclose. “We
review grants of summary judgment de novo”2 and will affirm when “the evidence in the
1
The court appears to have reviewed only Hooks’ September 2 opposition.
The September 23 opposition was filed after the deadline the court established during
oral argument.
2
Thomas v. Archer, 384 P.3d 791, 795 (Alaska 2016) (quoting Christensen
v. Alaska Sales & Serv., Inc., 335 P.3d 514, 516 (Alaska 2014)).
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record presents no genuine issue of material fact and the moving party is entitled to
judgment as a matter of law.”3
Hooks attacks the debt on three closely related grounds. First, he argues
that the debt was satisfied in full when he transferred the promissory note to Homestate.
He claims his signature imbued the note with a value equal to the value of the loan itself,
so after Homestate took possession of the note no further payments were required.
Second, he argues Homestate loaned him “credit” rather than “money,” as evidenced by
the fact he did not personally receive the amount loaned. Hooks claims that the National
Bank Act does not authorize Homestate to lend credit4 and that the loan was therefore
ultra vires.5 Lastly, he argues he never received a loan at all, meaning the promissory
note is void for lack of consideration.
Hooks’s claims appear to be premised on two “interrelated and
overlapping” legal theories, which other courts have characterized as the “vapor money”
theory and the “unlawful money” theory.6 In McLaughlin v. CitiMortgage, Inc., a federal
district court analyzed both theories in detail:
The essence of the “vapor money” theory is that
promissory notes (and similar instruments) are the equivalent
3
Id. (quoting Copper River Sch. Dist. v. Traw, 9 P.3d 280, 283 (Alaska
2000)).
4
See 12 U.S.C. § 24 (2012) (setting forth powers of national banks).
5
See First Nat’l Bank of Tallapoosa v. Monroe, 69 S.E. 1123 (Ga. 1911);
Howard & Foster Co. v. Citizens’ Nat’l Bank of Union, 130 S.E. 758, 759 (S.C. 1925)
(“[A] national bank . . . , being limited in its powers and capacity, cannot lend its credit
by guaranteeing the debt of another. All such contracts, entered into by its officers, are
ultra vires . . . .”).
6
McLaughlin v. CitiMortgage, Inc., 726 F. Supp. 2d 201, 209 (D. Conn.
2010).
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of “money” that citizens literally “create” with their
signatures. . . . Bolstering this argument (at least for its
adherents) is the fact that once received, banks typically
deposit promissory notes into their own accounts and list
them as assets. . . .
At this point in the argument, plaintiffs relying on the
vapor money theory typically introduce an additional
wrinkle: whereas they gave the banks valuable “money” (in
the form of a promissory note), the banks gave them
something that is essentially worthless: “mere” credit . . . .
As allegedly established by the “unlawful money” theory,
issuing credit violates the Constitution[] . . . .
This “fact” has at least two clear benefits to the
[]borrower . . . . First, it means that the bank-lender gave
essentially no consideration, and risked nothing, in making
the purported loan, rendering the transaction void (or at least
voidable) under general principles of contract law.
. . . [S]econd[,] . . . the []borrower actually comes out
ahead in the transaction — after all, she is the only one who
gave anything of value, and it would constitute unjust
enrichment for the bank to “keep” the value of what the
[]borrower gave it.[7]
Hooks’s suit deviates from this archetype in a single respect: he argues the
National Bank Act, rather than the United States Constitution, barred Homestate from
issuing credit. This argument is untenable; it rests on a misreading of cases interpreting
7
Id. at 212-13 (emphasis omitted) (citations omitted).
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the Act8 and a misapplication of the holdings of those cases to a transaction involving
Homestate and Alaska USA — neither of which is governed by the Act.9
The vapor money and unlawful money theories “have been repeatedly
rejected by every court to consider the issue,”10 and we reject them as well. If loans
operated as Hooks claims they do, there would be no need for loans and no incentive to
provide them. The vapor money and unlawful money theories find no support in our
case law, and Hooks’s contention the note itself satisfied the debt is irreconcilable with
our statutes governing notes taken in exchange for an obligation.11 Furthermore, we have
indicated the transfer of money to a third party — what Hooks characterizes as a loan of
mere “credit” — can serve as a valid basis for an enforceable loan.12 Hooks’s vapor
8
See Sharpe v. Wells Fargo Home Mortg., No. 1:12-CV-04292-CC-GGB,
2013 WL 12109445, at *4 (N.D. Ga. Apr. 4, 2013) (“Even assuming that those cases
remain good law, they . . . merely stand for the proposition that a national bank cannot
extend its credit to guarantee a debt owed by another.”), report and recommendation
adopted, No. 1:12-CV-04292-CC, 2013 WL 12106955 (N.D. Ga. July 15, 2013).
9
See Colorado ex rel. Salazar v. Ace Cash Express, Inc., 188 F. Supp. 2d
1282, 1284 (D. Colo. 2002) (explaining that the National Bank Act “regulates national
banks and only national banks, which can be identified by the word ‘national’ in [their]
name[s]” (quoting Weiner v. Bank of King of Prussia, 358 F. Supp. 684, 687 (E.D. Pa.
1973))); Financial Institution Lists, OFFICE OF THE COMPTROLLER OF THE CURRENCY
(Nov. 30, 2017), https://www.occ.treas.gov/topics/licensing/national-banks-fed-savin
gs-assoc-lists/index-active-bank-lists.html (listing all national banks).
10
Demmler v. Bank One NA, No. 2:05-CV-322, 2006 WL 640499, at *4 (S.D.
Ohio Mar. 9, 2006); see also McLaughlin, 726 F. Supp. 2d at 214 (listing cases).
11
See AS 45.03.310(b)(2) (“[I]n the case of a note, suspension of [an]
obligation continues until dishonor of the note or until it is paid; payment of the note
results in discharge of the obligation to the extent of the payment.”).
12
See Johnson v. Schaub, 867 P.2d 812, 816-17 (Alaska 1994).
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money and unlawful money arguments present no genuine issue of material fact;13 the
superior court correctly concluded they are without merit.
Hooks’s remaining arguments allege various technical deficiencies in both
the loan origination process and the foreclosure proceeding. These arguments are
similarly unavailing. Hooks has abandoned most of his arguments related to the loan
origination by not raising them on appeal.14 The only such argument he has arguably
preserved — that the deed of trust was invalid because Homestate’s agent did not sign
it during the origination process — is meritless; our statutes governing conveyances of
interests in land15 and deeds of trust16 do not indicate a deed of trust must be signed by
a lender in order to be valid.17
13
In the superior court, Hooks pointed to a settlement statement indicating the
loan was paid “By/For Borrower” as evidence that he — not Homestate — paid off the
prior loan on the property. Hooks’s interpretation of this document is “too incredible to
be believed by reasonable minds” and thus does not create a genuine issue of material
fact. Christensen v. Alaska Sales & Serv., Inc., 335 P.3d 514, 520 (Alaska 2014)
(quoting Wilson v. Pollet, 416 P.2d 381, 384 (Alaska 1966)). The document clearly
describes a refinancing loan offered by Homestate. Homestate lent money to Hooks to
pay off the prior loan on the property. The document would not exist in the absence of
this refinancing loan.
14
See Wasserman v. Bartholomew, 38 P.3d 1162, 1171 (Alaska 2002);
Brandon v. Corr. Corp. of Am., 28 P.3d 269, 280 (Alaska 2001). Similarly, Hooks’s
complaint alleged that the foreclosure was invalid because credit unions and banks
“cannot own property” and “cannot sell what they do not own.” This argument has also
not been raised on appeal and is thus abandoned.
15
AS 34.15.010-.350.
16
AS 34.20.070-.135.
17
See AS 34.15.010(a) (“A conveyance of land, or of an estate or interest in
land, may be made by deed, signed and sealed by the person from whom the estate or
(continued...)
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Hooks challenges the foreclosure itself by arguing Alaska USA did not
possess the promissory note when it initiated the foreclosure and was thus not entitled
to enforce it,18 and by asserting the debt was never “validated.” Alaska USA presented
an affidavit indicating it did possess the note, and — in contrast to Alaska USA’s
affiant — Hooks has not demonstrated that his claim to the contrary is “made on personal
knowledge” or that he “is competent to testify to the matter[].”19 Hooks’s second
argument — that the debt was not validated — is not developed beyond that bare
assertion; Hooks does not provide any support for this contention or explain the
implications of the alleged deficiency. “Even a pro se litigant . . . must cite authority and
provide a legal theory,”20 and we conclude that Hooks has not done so here. Hooks’s
remaining arguments are presented for the first time on appeal, and we hold that they
have been waived.21
17
(...continued)
interest is intended to pass, who is of lawful age, or by the lawful agent or attorney of the
person . . . .” (emphasis added)).
18
See AS 45.03.301.
19
Alaska R. Civ. P. 56(e). Hooks complains Alaska USA “never submitted
the original ‘note’ with the ‘wet ink signature.’ ” But he does not raise a genuine
question as to the validity of the note or provide any other support for his argument that
Alaska USA needed to present the original. See Kirby v. O’Dens, 673 F. App’x 880, 884
(10th Cir. 2016), cert. denied, 138 S. Ct. 265 (2017).
20
Wright v. Anding, 390 P.3d 1162, 1169 (Alaska 2017) (omission in
original) (quoting Casciola v. F.S. Air Serv., Inc., 120 P.3d 1059, 1063 (Alaska 2005));
see also id. (“[A] pro se litigant’s briefing must allow his or her opponent and this court
to discern the pro se’s legal argument.” (quoting Casciola, 120 P.3d at 1063)).
21
See id. at 1169-70 (citing O’Callaghan v. State, 826 P.2d 1132, 1133 n.1
(Alaska 1992)).
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Hooks has failed to demonstrate any issue of material fact concerning his
debt or Alaska USA’s entitlement to enforce that debt by requesting the trustee to initiate
a nonjudicial foreclosure. We conclude the superior court correctly granted summary
judgment in favor of the defendants.
B. Bias
Hooks argues the superior court’s conduct during and after the missed trial
call, legal conclusions, and use of supposedly demeaning language demonstrated judicial
bias. Hooks did not raise this claim in the trial proceeding, but we elect to review it “[i]n
light of [Hooks’s] status as a pro se litigant.”22 We have not determined what standard
of review should apply to unpreserved bias claims, but have noted the “choices seem to
be de novo review and abuse of discretion review.”23 However, “the choice is irrelevant
here, because we would reach the same conclusion under either standard.”24
The requirements for establishing judicial bias are exacting. Litigants
cannot rely solely on “adverse rulings” as evidence of bias;25 they must point to specific
actions, words, or aspects of the proceeding that show the court was not impartial.26
Furthermore, litigants alleging bias must prove “the judge formed an opinion . . . from
22
Michael M. v. Catherine T., No. S-16121, 2016 WL 6134804, at *9 (Alaska
Oct. 19, 2016).
23
Greenway v. Heathcott, 294 P.3d 1056, 1062-63 (Alaska 2013).
24
Id. at 1063.
25
Kinnan v. Sitka Counseling, 349 P.3d 153, 160 (Alaska 2015) (quoting
Khalsa v. Chose, 261 P.3d 367, 376 (Alaska 2011)).
26
See Williams v. Williams, 252 P.3d 998, 1010 (Alaska 2011); Tillmon v.
Tillmon, 189 P.3d 1022, 1027 n.13 (Alaska 2008); Ward v. Urling, 167 P.3d 48, 57-58
(Alaska 2007).
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extrajudicial sources, resulting in an opinion other than on the merits.”27 Bias that arises
from “knowledge . . . properly and necessarily acquired in the course of the proceedings”
does not have an extrajudicial source.28 In other words, bias stemming from “the facts
adduced or the events occurring at trial” will rarely support a judicial bias claim.29
We conclude Hooks’s bias claim does not satisfy these stringent
requirements. Hooks advances few examples of judicial behavior demonstrating bias,
and those that he does discuss are unconvincing. He alleges no extrajudicial source of
bias, and neither the evidence of bias he presents nor our review of the record suggests
the superior court’s interactions with Hooks were influenced by anything other than “the
facts adduced [and] the events occurring at trial.”30 Moreover, we note the court went
to great lengths to ensure Hooks had an opportunity to respond to the defendants’
summary judgment motions: it extended filing deadlines twice, provided an explanation
of how to file an opposition, and elected to schedule oral argument even though the
parties had not requested it. In light of the court’s “exemplary efforts in instructing and
advising” Hooks,31 the absence of any compelling evidence of bias, and Hooks’s failure
27
Williams, 252 P.3d at 1010.
28
Hanson v. Hanson, 36 P.3d 1181, 1184 (Alaska 2001) (quoting Liteky v.
United States, 510 U.S. 540, 551 (1994)).
29
Id. (quoting Liteky, 510 U.S. at 551). An opinion that “is so extreme as to
display clear inability to render fair judgment” can evince judicial bias even when it
arises from knowledge gained during a proceeding. Id. (quoting Liteky, 510 U.S. at 551).
This exception is rarely applied, see Loranger v. Stierheim, 10 F.3d 776, 780 (11th Cir.
1994), and we conclude that it is inapplicable here.
30
Hanson, 36 P.3d at 1184 (quoting Liteky, 510 U.S. at 551).
31
Olivit v. City & Borough of Juneau, 171 P.3d 1137, 1147 (Alaska 2007).
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to allege bias stemming from an extrajudicial source, we hold that Hooks’s contentions
of bias are unwarranted.
C. Due Process
Hooks claims the superior court violated his procedural due process rights32
by providing him with insufficient notice of the trial call and by not holding a trial. He
notes that the court sent him notice of the trial call in an email rather than by letter, and
that the court used “an unfamiliar email, . . . and not . . . the email address that was given
[to him] in Court.” He further argues the superior court deprived him of a “fair
opportunity to present his case through trial call and trial.” “Whether the superior court
violated a party’s due process rights is a question of law, which we review de novo.”33
Hooks essentially argues the superior court’s decision to resolve his case
on the summary judgment motions deprived him of his day in court. However, as we
explained in Capolicchio v. Levy,34 summary judgment “is adequate to prevent the
violation of a party’s due process right,” as it is applied only in cases “in which the
pleadings and evidence show ‘that there is no genuine issue as to any material fact and
that [the moving] party is entitled to a judgment as a matter of law.’ ”35
Hooks was afforded a full opportunity to contest the defendants’ motions
for summary judgment. At the conclusion of oral argument, the superior court allowed
32
While Hooks refers to “due process” generally without distinguishing
between substantive and procedural due process, his claim is based on deficiencies in the
superior court’s procedures.
33
Easley v. Easley, 394 P.3d 517, 520 (Alaska 2017) (quoting McCarrey v.
Kaylor, 301 P.3d 559, 563 (Alaska 2013)).
34
194 P.3d 373 (Alaska 2008).
35
Id. at 381 (alteration in original) (quoting Alaska R. Civ. P. 56(c)); see also
Foondle v. O’Brien, 346 P.3d 970, 976 n.36 (Alaska 2015).
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Hooks to file a written opposition to the motions for summary judgment, and gave him
15 days to do so. The court ensured Hooks had copies of the summary judgment
motions and the court’s order explaining how to oppose a motion for summary judgment.
And Hooks did in fact file an opposition before the deadline, which the court considered
before granting the defendants’ motions. This level of process was, at a minimum,
equivalent to the level of process this court found satisfactory in Capolicchio.36
Hooks claims that inadequate notice of the impending trial call deprived
him of “a fair opportunity to present his case through trial call.” However, a trial call is
an administrative conference, not a hearing during which the merits of a case are
“present[ed]” and “judged.”37 The only practical consequence of Hooks’s absence at the
trial call appears to have been the court’s decision to take the trial off the calendar. As
Capolicchio established, a court’s decision to resolve a case on motions for summary
judgment does not violate a litigant’s right to due process.38 We thus conclude Hooks’s
due process claim is without merit.
IV. CONCLUSION
For the foregoing reasons, we AFFIRM the superior court’s judgment.
36
In fact Hooks was afforded an opportunity to participate in the summary
judgment procedure more fully than the pro se litigant in Capolicchio. The pro se
litigant in that case received no guidance on how to file an opposition, and did not do so.
Capolicchio, 194 P.3d at 377-79. In contrast the superior court’s assistance and decision
to extend the filing deadline meant Hooks had a full and fresh opportunity to file an
opposition after the argument.
37
Matson v. State, Commercial Fisheries Entry Comm’n, 785 P.2d 1200,
1206 (Alaska 1990).
38
Capolicchio, 194 P.3d at 380-81.
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