Deutsche Bank Nat'l Trust Co. v. Lom Prop. Corp. (In re Allen)

• Decision Date: 15 October 2014
• Docket Number: Bankruptcy No. 10–40857–659.,Adversary No. 14–4010–659.
• Citation: 520 B.R. 281
• Court: U.S. Bankruptcy Court — Eastern District of Missouri
• Parties: In re Iva Mae ALLEN, Debtor. Deutsche Bank National Trust Company, Plaintiff, v. Lom Property Corp. et al., Defendants.

520 B.R. 281

In re Iva Mae ALLEN, Debtor.Deutsche Bank National Trust Company, Plaintiff,

v.Lom Property Corp. et al., Defendants.

Bankruptcy No. 10–40857–659.

Adversary No. 14–4010–659.

United States Bankruptcy Court,

E.D. Missouri,

Eastern Division.

Signed Oct. 15, 2014.

James R. Brown, Castle Law Office of St. Louis, St. Louis, MO, for Debtor.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

KATHY A. SURRATT–STATES, Chief Judge.

The matter before the Court is Defendant LOM Property Corporation's Notice of Removal of Civil Action,¹ Motion for Summary Judgment filed by LOM Property Corp., Defendant LOM Property Corp[.]'s Memorandum in Support of Motion for Summary Judgment, Memorandum in Opposition to LOM Property Corp.'s Motion for Summary Judgment and Defendant LOM Property Corp [.]'s Reply Memorandum in Support of Its Motion for Summary Judgment. Oral argument was presented on June 3, 2014 at which both LOM Property Corp. and Deutsche Bank National Trust Co. appeared by counsel. The matter was then taken under submission. Upon consideration of the record as a whole, the Court issues the following FINDINGS OF FACT:

Debtor Iva M. Allen (hereinafter “Debtor”) filed a Voluntary Petition for relief under Chapter 13 of the Bankruptcy Code on June 18, 2004 (hereinafter “2004 Case”). Debtor owns Real Property located at 6155 Westminster, St. Louis, Missouri, legally described as “the Eastern 32 Feet of Lot No. 43 in Block No. 6 of Washington Heights and in Block No. 5420 of the City of St. Louis Missouri, fronting 32 feet on the North Line of Westminster Place, by a depth northwardly of 125 Feet to an alley” (hereinafter “Property”). On or about August 23, 1996, Debtor signed and delivered to Boatmen's National Bank of St. Louis a Promissory Note in the principal sum of $150,000.00 (hereinafter “1996 Note”) secured by a Deed of Trust against the Property (hereinafter “Boatmen's Deed of Trust”) as well as a Deed of Trust against Debtor's nonresidential property located at 3903 Goodfellow Street, St. Louis, Missouri (hereinafter “Goodfellow Property”). The Boatmen's Deed of Trust was recorded on September 24, 1996 in Book 1238, Page 2038 of the St. Louis City Recorder of Deeds. The Deed of Trust for the Goodfellow Property was recorded on September 24, 1996 in Book 1238, Page 2027 of the St. Louis City Recorder of Deeds.

Boatmen's National Bank of St. Louis was purchased in late 1996 by NationsBank, which later merged with BankAmerica to form Bank of America, N.A. (hereinafter “Bank of America”). Therefore, Bank of America acquired the 1996 Note, the Boatmen's Deed of Trust and the Deed of Trust for the Goodfellow Property.

On September 14, 2001, by way of Deed of Release, Bank of America released its Deed of Trust that encumbered the Goodfellow Property as security for the 1996 Note (hereinafter “First Goodfellow Deed of Release”). The First Goodfellow Deed of Release is recorded in Book 1720, Page 6042 in the St. Louis City Recorder of Deeds.

On June 5, 2002, the 1996 Note and the Boatmen's Deed of Trust were sold and assigned to WAMCO XXX Ltd (hereinafter “WAMCO”). WAMCO did not record the assignment of the Boatmen's Deed of Trust at this time.

First City Servicing Corporation (hereinafter “First City”) as servicing agent for WAMCO is the predecessor to Defendant LOM Property Corporation (hereinafter “LOM”). First City filed Claim Number 4–1 in the 2004 Case in which First City claimed that WAMCO held a Secured Claim in the amount of $178,947.39 which was secured by the Property which First City estimated to be worth $215,000.00. Attached to Claim 4–1 was the Boatmen's Deed of Trust, as well as the 1996 Note and the unrecorded assignment of the Boatmen's Deed of Trust from Bank of America to WAMCO. First City filed an Amended Motion for Relief from Automatic Stay which states when the Boatmen's Deed of Trust was recorded and mentions that the Boatmen's Deed of Trust was assigned to WAMCO.

On October 19, 2004, First City was granted relief from the automatic stay by stipulation between Debtor and First City (hereinafter “Relief from Stay Stipulation”).² In the Relief from Stay Stipulation, Debtor and First City agreed that First City held a lien against the Property, the lien was partially unsecured, and as part of the Relief from Stay Stipulation, Debtor would grant First City a Deed of Trust against the Goodfellow Property in the amount of $40,000.00 to secure the unsecured portion of the 1996 Note. In the 2004 Case, Creditor Select Portfolio Servicing, Inc. filed Claim 1–1, a Secured Claim in the amount of $88,792.72 which was secured by the Property. ³ Debtor had not made any payments to First City in over one (1) year at the time of the Relief from Stay Stipulation.⁴

At Debtor's request, a series of Deeds of Release were executed by Bank of America after the assignment of the Boatmen's Deed of Trust. First, on December 23, 2004, Kathy Clark, Assistant Vice President of Bank of America, executed a Deed of Release of the Boatmen's Deed of Trust (hereinafter the “2004 Deed of Release”). The 2004 Deed of Release was never recorded. Second, on January 14, 2005, Charlene Covil, Assistant Vice President of Bank of America, executed a Deed of Release which contained conflicting information as to the Deed of Trust it purported to release (hereinafter “January 2005 Deed of Release”). The January 2005 Deed of Release described the subject property to be released as “Lots 1–5 in Block 5 of Home Site and in City Block 5721 of the City of St. Louis. Together fronting 1567 ft. more or less, on the West Line of Goodfellow Blvd by a depth westardly of 6014 ft on the South Line of Lot 1 and 5824 Ft on the North Line of Lot 5, to an alley, and having an aggregate width thereon 148 ft 8 1/2 inches, bounded on the south by Ferris Avenue” which is the legal description for the Goodfellow Property. The January 2005 Deed of Release however referenced indebtedness mentioned in a Deed of Trust executed by Debtor and recorded in Book 1238 at page 2038, which is the Boatmen's Deed of Trust for the Property, and not a Deed of Trust for the Goodfellow Property which was recorded in Book 1238, Page 2027 of the St. Louis City Recorder of Deeds. The January 2005 Deed of Release was recorded on January 24, 2005 in Book 01242005, Page 296 of the St. Louis City Recorder of Deeds. Third, on March 24, 2005, Kathy Clark executed a Deed of Release of the Boatmen's Deed of Trust, which was recorded on April 5, 2005 in Book 04052005 at Page 200 of the St. Louis City Recorder of Deeds (hereinafter “April 2005 Deed of Release”). The 2004 Deed of Release, the January 2005 Deed of Release and the April 2005 Deed of Release were all executed by Bank of America without the knowledge or consent of either First City or WAMCO.

On February 16, 2005, Debtor filed a Motion For Permission to Incur Debt to Refinance (hereinafter “Refinance Motion”) in which Debtor stated that she had the opportunity to refinance the debt on the Property with sufficient funds received after payment of valid liens against the property to pay in full all unsecured claims in the 2004 Case.⁵ Debtor stated that any excess funds received through the refinance would be paid over to the Chapter 13 Trustee for distribution to Debtor's unsecured creditors. Based on these representations, the Refinance Motion was granted on February 17, 2005.

On March 21, 2005, Debtor executed and delivered a Promissory Note in the amount of $244,000.00 (hereinafter “2005 Note”) to Option One Mortgage Corporation (hereinafter “Option One”), secured by a Deed of Trust recorded on March 30, 2005 in Book 03302005, Page 214 of the St. Louis City Recorder of Deeds (hereinafter “2005 Option One Deed of Trust”). Old Republic, the closing agent for Option One, was provided with the unrecorded 2004 Deed of Release and the defective January 2005 Deed of Release at the time the 2005 Note was closed. Debtor did not initially pay any of the funds received from Option One to WAMCO. Debtor did use the Option One funds to satisfy a secured lien against the Property held by Creditor Select Portfolio Servicing, Inc.⁶

On May 3, 2005, WAMCO commenced Adversary Proceeding 05–4109 in which WAMCO requested that this Court deem the Deeds of Release executed by Bank of America void, reinstate WAMCO's lien on the Property and subordinate all subsequent liens executed by Debtor on the Property.⁷ On August 8, 2005, Affidavit of Bank of America was filed in which Bank of America affirmed that the 1996 Note and the Boatmen's Deed of Trust once held by Bank of America were sold and assigned to WAMCO on June 5, 2002 and therefore the 2004 Deed of Release, the January 2005 Deed of Release and the April 2005 Deed of Release were executed in error (hereinafter “August 2005 Bank of America Affidavit”).

On August 12, 2005, Debtor and WAMCO settled Adversary Number 05–4109 and a stipulated order was entered whereby Debtor agreed to pay WAMCO $50,000.00, the remainder of the debt to WAMCO would be excepted from discharge, the Deeds of Release executed by Bank of America would be null and void, WAMCO would be granted a first priority lien against the Goodfellow Property and the Boatmen's Deed of Trust held by WAMCO would be reinstated as the First Priority Deed of Trust (hereinafter “2005 Adversary Stipulation”).⁸ The 2005 Adversary Stipulation was recorded on August 26, 2005 in Book 08262005, Page 160, of the St. Louis City Recorder of Deeds. Option One was not a party to Adversary Number 05–4109 or the 2005 Adversary Stipulation. WAMCO received the $50,000.00 pursuant to the 2005 Adversary Stipulation.⁹ Debtor received a discharge for successful completion of the 2004 Case on September 6, 2005 and the 2004 Case was closed on September 29, 2005.

On September 13, 2005, WAMCO recorded the June 5, 2002 assignment of the Boatmen's Deed of Trust from Bank of America in Book 09132005, Page 80 of the St. Louis City Recorder of Deeds.

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