Nebraska Court of Appeals
Case Citation: 802 N.W.2d 146 (August 23, 2011)
Appellant Attorney: Jeffery A. Silver
Appellee’s Attorney: Donald J. Pavelka, Jr. and Michelle D. Epstein
Background: On November 5, 2004, Wells Fargo loaned $333,700 to the Hebners. The loan was secured by a deed of trust, for real property, which listed John Katelman, without his consent, as the trustee and Wells Fargo as the beneficiary. On May 14, 2008, Wells Fargo caused a “Substitution of Trustee” to be filed, naming another individual as the successor trustee. On May 3, 2007 Charter West loaned $181,755.09 to the Hebners. The loan was secured by a deed of trust for the same real property as the Wells Fargo deed of trust. On November 13, 2008, the Hebners filed for chapter 11 bankruptcy protection. Charter West was granted relief from the automatic stay of the bankruptcy court and exercised its right under the Charter West deed of trust to conduct a trustee’s sale and subsequently purchase the property for $180,247.01. Charter West sought a declaration that the Wells Fargo deed of trust was null and void and that Charter West’s title to the property pursuant to the trustee’s sale should not be encumbered by the Wells Fargo deed of trust.
Issue: Whether Wells Fargo’s deed of trust was valid when the designated trustee did not consent to serve as trustee?
Holding: The deed of trust does not fail for want of a trustee. The deed of trust was valid and created a priority interest despite the designated trustee’s failure to consent to serve, and that such is consistent with prevailing law. Charter West provided no authority which would indicate that the consent of a designated trustee is a prerequisite to the validity of a deed of trust. Although the trustee’s consent is certainly necessary to allow the trustee to act, the deed of trust remains valid despite the designated trustee’s failure to consent to act as trustee. If the designated trustee does not consent to act as trustee, a substitute trustee may be appointed, as provided in the Nebraska Trust Deeds Act. In the present case, a substitute trustee was effectively appointed, and thus the Wells Fargo deed of trust, created in 2004, has priority over the Charter West deed of trust, created in 2007.
The District Court’s order granting summary judgment in favor of Wells Fargo Bank, N.A. is affirmed.
To see the Court's complete opinion, please click here.