Brandon v. GMAC Mortg. LLC (In re Simmons)

• Decision Date: 24 May 2012
• Docket Number: Adv No. 11-00068,Case No. 11-61928-7
• Court: U.S. Bankruptcy Court — District of Montana
• Parties: In re MURIEL J SIMMONS, Debtor. CHRISTY L BRANDON, Plaintiff. v. GMAC MORTGAGE LLC, MOUNTAIN WEST BANK, N.A., DOUGLAS W. KIKKERT, CHERYL KIKKERT, KATIE L MCPHERSON, MILODRAGOVICH, DALE, STEINBRENNER & NYGREN, P.C., and MURIEL J SIMMONS, Defendants.

In re MURIEL J SIMMONS, Debtor.

CHRISTY L BRANDON, Plaintiff.

v.GMAC MORTGAGE LLC, MOUNTAIN WEST BANK, N.A., DOUGLAS W. KIKKERT,CHERYL KIKKERT, KATIE L MCPHERSON, MILODRAGOVICH, DALE, STEINBRENNER & NYGREN, P.C.,and MURIEL J SIMMONS, Defendants.

Case No. 11-61928-7

Adv No. 11-00068

UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MONTANA

Dated: May 24, 2012

MEMORANDUM OF DECISION

At Butte in said District this 24th day of May, 2012.

Pending in this adversary proceeding are: (1) Motion for summary judgment against Count I of Plaintiff's complaint (Docket No. 31) filed by Defendant GMAC Mortgage, LLC ("GMAC"), and objections thereto filed by Plaintiff and by Defendants/cross-claimants Douglas W. Kikkert and Cheryl Kikkert ("Kikkerts"); (2) Plaintiff's motion for summary judgment (Dkt. 37) on all counts of the complaint against GMAC, Mountain West Bank. N.A. ("MWB"), and other defendants, and objections thereto filed by GMAC and MWB. The Court has reviewed both motions, objections, GMAC's reply, statements of facts and issues, and applicable law. For the reasons set forth below GMAC's motion for summary judgment will be granted and Count Idismissed; and Plaintiff's motion for summary judgment will be denied.

This Court has jurisdiction in this adversary proceeding under 28 U.S.C. § 1334(b) as it arises in and relates to the above-captioned Chapter 7 case. GMAC and MWB admit the Plaintiff's contentions that this is a core proceeding under provisions of 28 U.S.C. § 157(b)(2). This Memorandum includes the Court's findings of fact based on the parties' statements, and conclusions of law.

The Plaintiff/Trustee's complaint seeks in Counts I and II to subordinate, pursuant to the Trustee's powers as a bona fide purchaser ("BFP") under 11 U.S.C. § 544, trust indentures regarding real property executed in favor of GMAC and MWB and treat their claims as unsecured nonpriority claims. Count III seeks judgement against Debtor's claim of homestead exemption in the exempt property under 11 U.S.C. § 551, assuming the Plaintiff prevails under Counts I and II. Count IV seeks declaratory relief as to distribution of proceeds from the sale of the subject property.

FACTS

GMAC's "Statement of Undisputed Facts" (Dkt. 32) asserts the following uncontroverted facts:

1. On September 30, 2011, Defendant Muriel J. Simmons filed her petition under Chapter 7 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Montana. Complaint, ¶ 2; Answer of GMAC Mortgage, LLC, ¶ 3.

2. Plaintiff, Christy L. Brandon, is the duly qualified and acting Chapter 7 Trustee appointed to serve in this case on October 3, 2011. Complaint, ¶ 3; Answer of GMAC Mortgage, LLC, ¶ 4.

3. Defendant GMAC Mortgage, LLC, is a Delaware corporation with its principal place of business at 1100 Virginia Drive, Fort Washington, MontgomeryCounty, Pennsylvania. Complaint, ¶ 4; Answer of GMAC Mortgage, LLC, ¶ 5.

4. The following described real property located in Missoula County, Montana is property of the bankruptcy estate:

Tract 1A-1 of Certificate of Survey No. 5439, located in and being an portion of the N1/2 of Section 27, Township 12 North, Range 17 West, P.M.M., Missoula County, Montana.

Commonly known as: 11055 Silver Street, Clinton, Montana 59825¹ .

Complaint, ¶ 8; Answer of GMAC Mortgage, LLC, ¶ 9.

5. GMAC Mortgage claims a security interest in the subject property by virtue of a document entitled "Deed of Trust" signed by Simmons and recorded May 12, 2008, Doc. 200810680, Book 818, Page 1056, records of Missoula County, and assigned to GMAC Mortgage on September 17, 2009, by a document entitled "Assignment of Trust Indenture" recorded September 25, 2009, Doc. No. 20093419, Book 848, Page 66, records of Missoula County. A true and correct copy of these documents are attached to the Complaint as EXHIBIT A. Complaint, ¶ 15; Answer of GMAC Mortgage, LLC, ¶ 16.

6. The security interest claimed by GMAC Mortgage purports to cover the entire subject property, which is more than forty acres. Complaint, ¶¶ 20-21; Answer of GMAC Mortgage, LLC, ¶ 21.

7. Plaintiff contends that GMAC Mortgage's security interest is defective, not authorized by statute, not to be accorded the status of a mortgage, and in violation of Montana public policy, since is [sic] covers acreage in excess of forty acres. Complaint, ¶ 24.

8. Plaintiff further contends that under 11 U.S.C. §544, GMAC Mortgage's security interest is subordinate to and unenforceable against Trustee as a bona fide purchaser of the subject property without knowledge of the existence of the indenture upon the subject property and should be treated as a general, unsecured claim. Complaint, ¶ 25.

9. GMAC Mortgage contends that its security interest is a valid mortgage under the laws of Montana and superior to any interest of and enforceable against the Trustee. Answer of GMAC Mortgage, LLC, p. 5.

The Plaintiff filed a Statement of Genuine Issues (Dkt. 36) which stipulates to GMAC's facts 1 through 9 subject to the following clarification and asserted genuine issues:

I. Trustee stipulates to GMAC Mortgages, LLC's Statement of Undisputed Facts ("GMAC's SOUF")(Doc #32) 1 through 9 subject to the following clarification:

GMAC SOUF 5 is clarified as follows: GMAC Mortgage claims a security interest in the subject property by virtue of a document titled "DEED OF TRUST - Trust Indenture Under the Small Tract Financing Act of Montana," signed by Simmons and recorded May 12, 2008, Doc. No. 200810680, Book 818, Page 1056, records of Missoula County and assigned to GMAC Mortgage by a document titled "Assignment of Trust Indenture", recorded September 25, 2009, Doc. No. 200923419, Book 848, Page 66, records of Missoula County. A true and correct copy of these documents are attached to the Complaint as EXHIBIT A. Complaint, ¶ 15; Answer of GMAC Mortgage, LLC ¶16.

II. Trustee submits the following, additional undisputed facts:

10. The subject property is a small ranch located in Clinton along the Clark Fork River and consisting of a single tract of land, approximately 77 acres, with a home, barn, outbuildings, and extra building site. Complaint, ¶9.

11. GMAC appointed Charles J. Peterson, Attorney at Law, Mackoff, Kellogg Law Firm as successor trustee under the trust indenture by document titled "Substitution of Trustee" dated September 17, 2009, and recorded September 25, 2009, Doc. No.

200923420, Book 848, Page 67, records of Missoula County.

12. Successor Trustee Peterson signed and recorded a Notice of Trustee's Sale dated September 24, 2009, and recorded September 25, 2009, under Document No.

200923421, Book 848, Page 68, records of Missoula County, Montana, stating, "Beneficiary has elected, and has directed the Trustee to sell the above described property to satisfy the obligation" and setting a nonjudicial trustee's sale for February 1, 2010.

13. Affidavits of mailing, posting and publication were recorded on January 6, 2010, under Document No. 201000329, Book 853, Page 610, records of Missoula County.

14. The attempted non-judicial sale was subsequently cancelled by Cancellation of Notice of Trustee's Sale dated February 9, 2010, recorded February 12, 2010, under Document No. 201002955, Book 855, Page 438, records of Missoula County, Montana.

15. Defendant Muriel J. Simmons waived her homestead exemption in the subject property by Stipulation filed January 14, 2012 (Doc #88), approved by Order filed February 3, 2012 (Doc #102) in the underlying bankruptcy case.

III. Trustee submits the following genuine issues:

16. Plaintiff further contends that under 11 U.S.C. §544, GMAC Mortgage's security interest is subordinate to and unenforceable against Trustee as a subsequent judgment lien creditor on the subject property as of the petition date without notice of the existence of the trust indenture. Complaint, ¶25² .

Kikkerts filed a statement of genuine issues which combines statements of fact, including facts set forth above regarding the deed of trust transaction and size of the subject property, with Kikkerts' interpretation of GMAC's intent and goal. Kikkerts' statement does not create genuine issues of material fact³ . Plaintiff filed her own Statement of Uncontroverted Facts (Dkt. 38) in support of her motion for summary judgment, which includes most of the above-quoted facts and issues⁴ . In response, both GMAC and MWB filed statements (Dkt. 50 & 52) which stipulate to the Plaintiff's statement of facts, except MWB does not stipulate to paragraphs 20 and 21 of Plaintiff's Statement because MWB contends, correctly, that paragraphs 20 and 21 are presented as contentions of the Plaintiff. Along with the above-quoted paragraph 16 from Dkt. 36, Plaintiff's contentions are not statements of specific facts required under Montana Local Bankruptcy Rule 7056-1(a)(2) which can establish genuine issues of material fact precludingsummary judgment in favor of the moving party. Rather than facts, they are simply a rehash of Plaintiff's claims for relief under Counts I and II based on § 544.

DISCUSSION

I. Summary Judgment.

Summary judgment is governed by FED. R. BANKR. P. 7056. Rule 7056, incorporating FED. R. CIV. P. 56(c), states that summary judgment "should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." "The proponent of a summary judgment motion bears a heavy burden to show that there are no disputed facts warranting disposition of the case on the law without trial." Younie v. Gonya (In re Younie), 211 B.R. 367, 373 (9th Cir. BAP 1997) (quoting Grzybowski v. Aquaslide "N" Dive Corp. (In re Aquaslide "N" Dive Corp.), 85 B.R. 545, 547 (9th Cir. BAP 1987)).

When seeking summary judgment, the moving party must initially identify those portions of the record before the Court which it believes establish an absence of material fact. T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors...