Davis v. SCBT, N.A. (In re Davis)
| Citation | 490 B.R. 221 |
| Decision Date | 03 April 2013 |
| Docket Number | Bankruptcy No. 11–06003–dd.,Adversary No. 12–80190–dd. |
| Court | United States Bankruptcy Courts. Fourth Circuit. U.S. Bankruptcy Court — District of South Carolina |
| Parties | In re Wesley O'Neal DAVIS, Debtor. Wesley O'Neal Davis, Plaintiff, v. SCBT, N.A. f/k/a South Carolina Bank and Trust, N.A., Crop Production Services, Inc., Helena Chemical Co., Blakes Service Center, and Meherrin Agricultural and Chemical Co., Defendants. |
OPINION TEXT STARTS HERE
Reid B. Smith, Price Bird Smith & Boulware PA, Columbia, SC, for Plaintiff.
Edward L. Grimsley, Jonathan M. Milling, Milling Law Firm, LLC, Richard R. Gleissner, Gleissner Law Firm, LLC, Columbia, SC, Michael Kevin McCarrell, Smith Moore Leatherwood LLP, Greenville, SC, for Defendants.
ORDER GRANTING SCBT'S MOTION FOR PARTIAL SUMMARY JUDGMENT
This matter is before the Court on a motion for partial summary judgment entered by defendant SCBT, N.A. f/k/a South Carolina Bank and Trust, N.A. (“SCBT”) on January 4, 2013. Defendant Crop Production Services, Inc. (“CPS”) responded in opposition. The Court held a hearing on the motion for summary judgment on January 22, 2013. After careful consideration, the Court grants SCBT's motion for partial summary judgment for the reasons set forth below.
The debtor, Wesley O'Neal Davis (“Debtor”) filed a petition under chapter 12 of the Bankruptcy Code on September 28, 2011. Debtor filed this adversary proceeding on July 27, 2012, to determine the value and priority of liens creditors hold on three parcels of real property located in Orangeburg County, South Carolina in which Debtor owns a 50% interest. Creditors named as defendants in the adversary proceeding are SCBT, CPS, Helena Chemical Co. (“Helena”), Blakes Service Center, and Meherrin Agricultural and Chemical Co. Blakes Service Center and Meherrin Agricultural and Chemical Co. did not answer the complaint, the Clerk of Court entered their default, and the Court entered an Order valuing their judgment liens at zero. SCBT, CPS, and Helena answered the complaint. In its answer, CPS asserted counterclaims to which SCBT responded and treated as crossclaims. SCBT moved for summary judgment on the issue of priority of the various lien holders with respect to their interests in the three parcels of real estate, and CPS was the only party to respond in opposition.
The facts surrounding this dispute are essentially not in question. Between 2005 and 2008, Debtor executed at least three promissory notes and two mortgages to SCBT. First, Debtor and his wife, Mary Jane Davis, executed a promissory note dated June 2, 2005, to SCBT in return for a loan in the amount of $191,375. As security for the loan, Mr. and Mrs. Davis executed a mortgage dated June 2, 2005, on the three parcels of property in Orangeburg County, and the mortgage was recorded. The June 2005 mortgage defines borrower as “WESLEY ONEAL DAVIS AND MARY JANE DAVIS JOINTLY” and contains a future advances clause that states “[t]he lien of this Security Instrument shall secure the existing indebtedness under the Note and any future advances made under this Security Instrument up to 150% of the original principal amount of the Note plus interest thereon, attorneys' fees and court costs.”
Second, Debtor executed a promissory note dated March 14, 2007, to SCBT in return for a loan in the amount of $138,600. In the area for describing the security for the note, the note states “SEE ADDENDUM.” The addendum to the March 14, 2007 note is signed by Debtor and lists various security agreements Debtor executed during the preceding years, including the entry: “Mortgage dated 06–02–2005 in the name of Wesley O'Neal Davis and Mary Jane Davis.” Mrs. Davis did not execute either the March 14, 2007 note or the addendum. There is also no indication these two documents were ever recorded.
Third, Debtor executed a promissory note dated May 6, 2008, in return for a loan in the amount of $316,000. In connection with this promissory note, Mr. and Mrs. Davis executed a mortgage dated May 6, 2008, which was recorded. The May 2008 mortgage, under “DATE AND PARTIES,” lists “WESLEY O'NEAL DAVIS and Mary Jane Davis.” It also states in paragraph 2 that “[f]or good and valuable consideration, the receipt and sufficiency of which is acknowledged, and to secure the Secured Debt (hereafter defined), Mortgagor grants, bargains, conveys and mortgages to Lender the following described property.” The described property is the three parcels in Orangeburg County. Under paragraph 4, the mortgage provides that “[t]he term ‘Secured Debt’ includes, but is not limited to, the following: ... [a]ll obligations Mortgagor owes to Lender, which now exist or may later arise, to the extent not prohibited by law....” Additionally, it defines secured debt as including “[a]ll future advances from Lender to Mortgagor or other future obligations of Mortgagor to Lender under any promissory note, contract, guaranty, or other evidence of debt existing now or executed after this Mortgage whether or not this Mortgage is specifically referred to in the evidence of debt.” The mortgage further states in connection with future advances that “[i]f more than one person signs this Mortgage as Mortgagor, each Mortgagor agrees that this Mortgage will secure all future advances and future obligations described above that are given to or incurred by any one or more Mortgagor, or any one Mortgagor and others.” Under a clause entitled “JOINT AND INDIVIDUAL LIABILITY; CO–SIGNERS; SUCCESSORS AND ASSIGNS BOUND,” the May 2008 mortgage provides:
All duties under this Mortgage are joint and individual. If Mortgagor signs this Mortgage but does not sign the Evidence of Debt, Mortgagor does so only to mortgage Mortgagor's interest in the Property to secure payment of the Secured Debt and Mortgagor does not agree to be personally liable on the Secured Debt.
“Evidence of Debt” is defined under paragraph 4.A. as the “NOTE DATED 05–06–2008 I/A/O $316,000.00 I/N/O WESLEY O'NEAL DAVIS WITH A MATURITY DATE OF 05–06–2015.”
With respect to Helena, Mr. and Mrs. Davis executed a promissory note dated May 29, 2009, in return for a loan in the amount of $35,957.35. As security for the note, they signed a mortgage dated May 29, 2009, on the three Orangeburg County parcels. As for CPS, a judgment in its favor in the amount of $98,711.15 against Debtor was recorded on March 5, 2010 in Orangeburg County. This judgment is against Debtor and Davis Farms and not against Mary Jane Davis. Subsequently, Blakes Service Center and Meherrin Agricultural and Chemical Co. recorded judgments in Orangeburg County.
SCBT filed several claims in Debtor's bankruptcy case, including a secured claim in the amount of $132,597.31 with the June 2, 2005 note and mortgage attached as proof of the claim; a secured claim in the amount of $125,814.49 with the May 6, 2008 note and mortgage attached as proof of the claim; and a secured claim in the amount of $98,655.79 with the March 14, 2007 note, the June 2, 2005 mortgage, the May 6, 2008 mortgage, two UCC financing statements, and a commercial security agreement attached as proof of the claim. CPS filed a claim in the amount of $106,112.03 based on its judgment. Helena submitted a claim based on its promissory note and mortgage in the amount of $40,000, which it later amended to $40,561.26.
Debtor asserts in the complaint that all three of SCBT's claims and corresponding interests in Debtor's real property are entitled to priority, that Helena has second priority, and that CPS has third priority. SCBT agrees with Debtor's contentions.
CPS does not dispute the priority of SCBT's $125,814.49 claim and $132,597.31 claim arising from the June 2005 and May 2008 notes and mortgages or that these claims are secured. CPS does dispute the priority and secured status of the $98,655.79 claim arising from the March 14, 2007 note. CPS argues that SCBT's claims arising from the May 2008 and June 2005 notes and mortgages have first priority, that Helena's claim has second priority, and that its claim has third priority.
Pursuant to Federal Rule of Civil Procedure 56(a), made applicable by Bankruptcy Rule 7056, the moving party is entitled to summary judgment if the pleadings, responses to discovery, and the record reveal that “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” A genuine dispute of material fact exists “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). As the party seeking summary judgment, the moving party bears the initial responsibility of informing this Court of the basis for its motion. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). This requires that the moving party identify those portions of the “pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,” which it believes demonstrate the absence of a genuine dispute of material fact. Celotex, 477 U.S. at 323, 106 S.Ct. 2548;see also Anderson, 477 U.S. at 249, 106 S.Ct. 2505.
Though the moving party bears this initial responsibility, the nonmoving party must then produce “specific facts showing that there is a genuine issue for trial.” Celotex, 477 U.S. at 324, 106 S.Ct. 2548;seeFed. R. Civ. P. 56(e). In satisfying this burden, the nonmoving party must offer more than a mere “scintilla of evidence” that a genuine dispute of material fact exists, Anderson, 477 U.S. at 252, 106 S.Ct. 2505, or that there is “some metaphysical doubt” as to material facts, Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Rather, the nonmoving party must produce evidence on which a trier of fact could reasonably find in its favor. See Matsushita, 475 U.S. at 587, 106 S.Ct. 1348.
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