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Lender Must Join All Property Owners in Ejectment Action says Alabama Court of Civil Appeals

On October 19, 2018, the Alabama Court of Civil Appeals issued an opinion in Chandler v. Branch Banking & Trust Company (No. 2160999), holding that a joint owner of property at issue in an ejectment action is a necessary and indispensable party, even where the non-party property owner’s interests are closely aligned with a named party.

Practically, this ruling emphasizes the importance of joining all necessary parties to an ejectment action when it is filed. Mortgage servicers should examine all mortgage documents as well as the property’s deed to ensure that all potential parties with rights in the property subject to the mortgage are added to the action prior to filing. This case in particular shows that even though the named defendant was the only party reflected on the mortgage, the deed would have revealed that his wife was a joint owner with rights in the property.

In October of 2011, Thomas Chandler obtained a mortgage on residential property in Shelby County, Alabama. On April 1, 2013, the mortgage was assigned to Branch Banking & Trust Company (BB&T). At some point after October of 2011 but before September 20, 2013, Thomas married Rebecca Chandler. On September 20, 2013, Thomas executed a deed granting Rebecca a joint interest in the property. Thomas subsequently defaulted on the mortgage and BB&T then purchased the property at a foreclosure sale. Thereafter, BB&T sent a letter to Thomas demanding possession of the property and giving him 10 days to vacate. When Thomas failed to leave, BB&T filed an action for ejectment in the trial court against Thomas, without naming Rebecca as a party.

Months later, Rebecca filed a motion in the trial court seeking to intervene in the action, giving proof of the deed conveying her an interest in the property and asserting that she had received no notice of the previous proceedings in the action. The trial court denied her motion to intervene and subsequently entered summary judgment against Thomas, issuing a writ of possession in favor of BB&T. On appeal, the Court of Civil Appeals considered whether the trial court erred in denying Rebecca’s motion to intervene and ultimately reversed and remanded.

The Court of Civil Appeals, on its own motion, raised the issue of whether Rebecca was an indispensable party. Based on precedent and the Court’s reading of Alabama Rules of Civil Procedure 19 and 24(a)(2), the Court held that joinder or intervention of a property owner whose rights in property at issue are being litigated is mandatory. In reaching its conclusion that Rebecca was a necessary and indispensable party, the Court reasoned that it was undisputed that she was a joint owner of the property and her rights in that property were being litigated in the ejectment action. This was true regardless of whether Thomas was already protecting rights aligned with hers in the action. In addition, the Court noted that the joinder of Rebecca promoted judicial economy since she would not be bound by a judgment entered solely against Thomas.