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Parrish v. Federal Nat’l Mortgage Assoc., Record No. 150454, June 16, 2016

General District Courts Do Not Have Jurisdiction In All Unlawful Detainer Actions!

The facts of this case are pretty straightforward – Homeowners borrowed a sum of money from lender using the home as collateral. The trustee foreclosed on the property and conveyed the land to the lender. The lender eventually filed an unlawful detainer action in the general district court. In the general district court, the homeowners asserted that the foreclosure was invalid because the deed of trust prohibited foreclosure if the homeowners submitted a completed loss mitigation application more than 37 days prior to the foreclosure sale. The homeowners alleged that they had submitted such application, and that the lender instigated the foreclosure despite the pending application. The general district court awarded the lender possession, and the homeowners appealed to the circuit court.

In the circuit court, the lender moved for summary judgment asserting that the deed of trust was evidence of its right of possession. The lender also argued that the circuit court should not consider the homeowners defense contesting the validity of the foreclosure because the general district court lacked subject matter to try title in an unlawful detainer action. The homeowners argued that the circuit court could not consider the pleadings filed in the general district court, and referred to in the lender’s motion, because the appeal was de novo.

The Supreme Court reiterated that a circuit court’s appellate jurisdiction is derivative of and limited to the jurisdiction of the general district court. The Court explained that a general district court has no subject matter jurisdiction to try title to real property, even though some actions for unlawful detainer turn on the question of title.
The Court elaborated on types of unlawful detainer, stating that there are two general types: (1) that in which the plaintiff must show prior actual possession, and (2) that in which the plaintiff must show a right of possess acquired after the defendant’s entry. The Court explained that in the second category of cases, there are situations in which the defendant could have a good-faith basis to contest the title, and in those cases, the general district court does not have subject matter jurisdiction. In such cases, if the general district court determines that allegations are sufficient to assert a bona fide question of title, it lacks the subject matter jurisdiction to proceed with the unlawful detainer action.

In this case, because the homeowners alleged that the deed of trust prohibited foreclosure if a completed loss mitigation application was pending 37 days prior to foreclosure, that they had timely submitted such an application, and the application was pending when the foreclosure was instigated, the homeowners raised a bona fide question of title and the general district court and the circuit court lacked jurisdiction.

For practitioners, this case serves a useful lesson – where there could be a legitimate question of title, bring the unlawful detainer action in circuit court to avoid having it kicked on jurisdictional grounds.

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