Failure To Substitute Successor Mortgagee In The Lower Court Did Not Deprive It Of Standing In Georgia Appeal

The mortgagors in National City Mortgage Co. v. Tidwell, S12G2011 (Ga. Oct. 7, 2013) brought claims against the mortgagee for wrongful foreclosure. While the case was pending the mortgagee merged with another bank which was not substituted as a party. The Superior Court entered summary judgment for the mortgagors and the mortgagee’s successor-in-interest appealed. The Court of Appeals dismissed the appeal on the grounds that the original mortgagee was the appellant and the successor was not a party to the lawsuit. It therefore lacked standing to appeal the order entered against the mortgagee. The Supreme Court of Georgia granted the petition for writ of certiorari to consider whether the Court of Appeals correctly held the successor lacked standing to appeal on behalf of its predecessor and it reversed. Resolution of the issue centered on Rule 25(c) of the Georgia Civil Procedure Act. It states: In case of any transfer of interest, the action may be continued by or against the original party unless the court, upon motion, directs the person to whom the interest is transferred to be substituted in the action or joined with the original party. Based on this subsection, the Court determined that the case continues against the original mortgagee despite the transfer of its interest to the successor through a merger, unless the trial court directed the substitution or joinder of the successor as a party. No party filed a motion seeking to substitute or join the successor and the trial court did not enter an order or direct that the successor become a party, so the action continues against the original mortgagee as the original party and it retained the right to appeal the trial court’s order granting summary judgment against it. Regardless of the name of the party bringing the appeal, it was not filed by a non-party. Rule 25(c) is a procedural rule and does not alter the substantive rights of the parties or the successor corporation. The merger of two banks does not affect any claim or action pending by or against them.

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