In re Black
| Decision Date | 16 April 2020 |
| Docket Number | Case No. 3:19-bk-31280-SHB |
| Parties | In re TERRY BERNARD BLACK YOLANDA DENISE BLACK Debtors |
| Court | United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Eastern District of Tennessee |
LAW OFFICES OF MAYER & NEWTON
John P. Newton, Esq.
Richard M. Mayer, Esq.
1111 Northshore Drive
Suite S-570
Knoxville, Tennessee 37919
Attorneys for Debtors
FIDELITY NATIONAL LAW GROUP
Brian Linkowski, Esq.
4170 Ashford Dunwoody Road
Suite 475
Attorney for Creditors PHH Mortgage Corporation, as loan servicer for Wells Fargo Bank, N.A. as Trustee for Park Place Securities, Inc. Asset-Backed Pass-Through Certificate Series 2004-WHQ2
Debtors commenced this contested matter on July 22, 2019, by objecting to the claim filed by PHH Mortgage Corporation, as loan servicer for Wells Fargo Bank, N.A. as Trustee for Park Place Securities, Inc. Asset-Backed Pass-Through Certificate Series 2004-WHQ2 ("PHH") on July 22, 2019 [Claim No. 7] ("Objection to Claim"). [Doc. 41.] The matter is currently before the Court on PHH's Motion for Summary Judgment Against Debtors' Objection to its Proof of Claim ("Motion for Summary Judgment") filed on January 27, 2020. [Doc. 78.] The Motion for Summary Judgment is supported by PHH's Statement of Material Facts as to Which There Exists No Genuine Issue to be Tried [Doc. 80], the Declaration of PHH Mortgage Corporation with exhibits 1 through 7 ("PHH Declaration") [Doc. 78-3, 80-1], and the Memorandum of Law in Support of Motion for Summary Judgment [Doc. 79]. Debtors responded by filing their Response to Motion for Summary Judgment [Doc. 84] and their Response to Creditor' [sic] Statement of Material Facts [Doc. 85] with Affidavits of both Debtors attached ("Debtors' Affidavits") [Docs. 85-1, 85-2], to each of which is attached an identical exhibit, the Web Services Summary Data Results from the Knox County Register of Deeds [Docs. 85-1, 85-2 at pp. 4-5].1
Pursuant to Federal Rule of Evidence 201, the Court also takes judicial notice of documents filed in this and Debtors' Chapter 7 bankruptcy case filed on July 10, 2008 (Case No. 3:08-bk-32973-rs ("2008 Case")). See In re Morton, No. 3:15-bk-30892-SHB, 2015 WL 5731859, at *1 (Bankr. E.D. Tenn. Sept. 30, 2015); In re Leonard, No. 09-32725, 2009 WL 1475138, at *2 .
On August 16, 2002, a warranty deed was recorded in the Knox County Register of Deeds, reflecting the transfer to Debtors of the property at issue in this matter, 4501 Greendale Road, Knoxville, Tennessee (the "Property") and bearing instrument number 200208160013910 ("Warranty Deed"). [Docs. 85-1, 85-2 at p. 5.] On the same date, two trust deeds were recorded, respectively in favor of Conseco Bank Inc. and Cheryl Roach (the former owner from whom Debtors purchased the Property by the Warranty Deed), bearing instrument numbers 200208160013911 and 200208160013912. [Id.] Although Debtors did not explain these recorded documents, and although these facts do not appear to be material to the Court's determination here, it appears that Debtors purchased the Property with both owner-financing and third-party financing.
On August 19, 2003, another trust deed was recorded in favor of Argent Mortgage Company LLC, bearing instrument number 200308190020741 (the "2003 Trust Deed"). [Id.] Debtors acknowledge that they signed documents to refinance a loan of the Property with Argent Mortgage in 2003. [Docs. 85-1, 85-2 at ¶ 5.] Following recordation of the 2003 Trust Deed, on February 11, 2004, the trust deed in favor of Ms. Roach was released by instrument number 200402110076826. [Id. at pp. 4-5.] The trust deed in favor of Conseco Bank Inc. was not released until July 26, 2004, by instrument number 200407260007543. [Id. at p. 4.]
On October 7, 2004, another trust deed in favor of Argent Mortgage Company LLC was recorded, bearing instrument number 200410070029880 (the "2004 Trust Deed"). [Id.] The 2004 Trust Deed is the basis of PHH's secured claim in this matter. [Doc. 80 at ¶¶ 2-3; Doc. 85at ¶¶ 2-3.2] The 2004 Trust Deed was executed3 on the same date as the Fixed Rate Note (the "Note"), i.e., September 28, 2004. [Doc. 80-1 at pp. 17-18, 20-35.] Argent Mortgage Company LLC released the 2003 Trust Deed on November 10, 2004, by instrument number 200411100039396. [Docs. 85-1, 85-2 at p. 4; Doc. 54-2.]
Although a copy of the 2003 Trust Deed is not of record before this Court, the release of the 2003 Trust Deed identifies the date of the 2003 Trust Deed as August 1, 2003. [Doc. 54-2.] This is important because the record contains documents related to the closing of the Note and 2004 Trust Deed [Ex. 3 to Doc. 80-1], created and maintained in the ordinary course of business, such documents including a Customer Identification Documentation Patriot Act and an I.D. Verification Form, both of which reference Debtors' Tennessee driver's licenses, and a copy of Debtor Yolanda Black's driver's license. [Doc. 80-1 at pp. 39, 41-42.] As it happens, Ms. Black's driver's license contained within the closing file related to the Note and 2004 Trust Deed was issued on August 14, 2003.4 [Doc. 80-1 at p. 39.] Debtors assert (in argument, not in sworn statements) that "[b]oth the Debtors and lender were defrauded in 2004 by a local title company along with their employees, notary and agents." [Doc. 86 at p. 3.] The date of Mrs. Black's driver's license located in PHH's records matters because the 2003 Trust Deed was executed on August 1, 2003, before issuance of the driver's license on August 14, 2003, so that the "local titlecompany" could not have used a copy of the driver's license provided for the August 1, 2003 closing to further a fraudulent scheme relating to the Note and 2004 Trust Deed.5
On July 10, 2008, Debtors filed a Chapter 7 petition in this Court. [Voluntary Petition, 2008 Case (July 10, 2008), ECF No. 1.] They included the Property on Schedule A and scheduled a "[f]irst mortgage" in favor of HomeEq Servicing for an "[a]ccount opened 10/04." [Id. at pp. 10, 15 (emphasis added); see Doc. 80 at ¶¶ 6-7; Doc. 85 at ¶¶ 6-7.] Debtors admit that they scheduled a first mortgage but say that they "believed this was the original loan since they were not given a copy of the forged 'loan' papers as part of this case and had never seen the forged Note or [2004 Trust] Deed." [Doc. 85 at ¶ 6.] Notably, however, Debtors expressly scheduled the mortgage as having been opened in October 2004 even though they now say that "[a]t all times [they] assumed the loan on [their] home was the loan we went to sign to refinance with Argent mortgage in 2003." [Docs. 85-1, 85-2 at ¶ 5 (emphasis added).]
In the 2008 Case, Debtors also filed a Chapter 7 Individual Debtor's Statement of Intention, indicating their intent to reaffirm the debt owed to HomeEq Servicing. [2008 Case (July 10, 2008), ECF No. 9.] On September 3, 2008, the owner of the Note and 2004 Trust Deed filed a Reaffirmation Agreement that had been executed by Debtors. [Reaffirmation Agreement, 2008 Case (Sept. 3, 2008), ECF No. 19; Doc. 80 at ¶ 10; Doc. 85 at ¶ 10.] Relevant to this contested matter, the Reaffirmation Agreement provides:
[Id. at pp. 4-6, 8 ()6; Doc. 80 at ¶¶ 11-13; Doc. 85 at ¶¶ 11-13.]
Debtors were represented in the 2008 Case by Justin A. Brackett7 [Doc. 80 at ¶ 15; Doc. 85 at ¶ 15], who the Court recognizes as an experienced bankruptcy practitioner who filed more than 150 cases in 2008 alone. Mr. Brackett certified that "(1) th[e Reaffirmation Agreement] represents a fully informed and voluntary agreement by the debtor; (2) this agreement does not impose an undue hardship on the debtor or any dependent of the debtor; and (3) I have fully advised the debtor of the legal effect and consequences of this agreement and any default under this agreement." [Reaffirmation Agreement, 2008 Case (Sept. 3, 2008), ECF No. 19, p. 9; Doc. 80 at ¶ 16; Doc. 85 at ¶ 16.] Debtors state that the Note and 2004 Trust Deed "were not seen or known to [them] until sometime around 2016." [Docs. 85-1, 85-2 at ¶ 5.] Thirteen days after the Reaffirmation Agreement was filed with the Court, however, Wells Fargo Bank, N.A. filed its proof of claim. [Proof of Claim, 2008 Case (Sept. 16, 2008), Claim No. 1-1.] Attached to the proof of claim were the Note and 2004 Trust Deed. [Id.] Although ...
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