In re Foster

Decision Date23 March 2011
Docket NumberAdversary No. 10–2016.,Bankruptcy No. 09–63067.
PartiesIn re Jenny FOSTER, Reese Foster, Debtors.Susan L. Rhiel, Trustee, Plaintiff,v.BAC Home Loans Servicing, LP, et al., Defendant(s).
CourtU.S. Bankruptcy Court — Southern District of Ohio

OPINION TEXT STARTS HERE

Treisa L. Martin, Columbus, OH, for Plaintiff, Trustee.Amelia A. Bower, Columbus, OH, for Defendants.

MEMORANDUM OPINION AND ORDER ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

C. KATHRYN PRESTON, Bankruptcy Judge.

This cause came on for consideration of Trustee's Motion for Summary Judgment (the “Motion”) (Doc. 21), filed by Susan L. Rhiel (the Trustee or Plaintiff), the Response (Doc. 24) filed by BAC Home Loans Servicing, LP (the Defendant or “BAC”), and Trustee's Reply (Doc. 29) filed in the above captioned adversary proceeding. The Court having considered the record and the arguments of the parties makes the following findings and conclusions.

The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the General Order of reference entered in this District. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A) and (K). Venue is properly before this Court pursuant to 28 U.S.C. §§ 1408 and 1409.

This adversary proceeding stems from the Chapter 7 bankruptcy case of Reese Foster and Jenny Foster (collectively, the Debtors). Trustee's amended complaint seeks a determination of the extent or validity of a mortgage held by BAC (the “Mortgage”). Trustee contends that the Mortgage grants a lien only on Mr. Foster's one-half interest in real property located at 7877 Lydia Drive, Lewis Center, Ohio, jointly owned by Debtors (the “Property”). Trustee argues that Mrs. Foster's one-half interest in the Property is not encumbered by the Mortgage because the Mortgage uses the term “Borrower” to denote the mortgagor, and “Borrower” is defined as Mr. Foster solely. Additionally, Trustee argues that the Mortgage does not satisfy the statute of frauds with respect to Mrs. Foster's conveyance of a lien on her one-half interest in the Property.

BAC argues in its response that Mrs. Foster's one-half interest in the Property is encumbered by the Mortgage because the Adjustable Rate Rider (the “Rider”) amends the definition of “Borrower” to include Mrs. Foster.1

For the reasons stated below, the Court concludes that summary judgment should be entered in favor of BAC. The Court further concludes that BAC's request to dismiss the adversary proceeding should be granted.

I. Applicable LawA. Standard of Review for Motions for Summary Judgment

Rule 56 of the Federal Rules of Civil Procedure, made applicable to adversary proceedings by Federal Rule of Bankruptcy Procedure 7056, provides that a court “shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a).2 The party seeking summary judgment bears the initial burden of “informing the ... court of the basis for its motion, and identifying those portions of the [record] which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

If the movant satisfies this burden, the nonmoving party must then assert that a fact is genuinely disputed and must support the assertion by citing to particular parts of the record. Fed.R.Civ.P. 56(c)(1). The mere allegation of a factual dispute is not sufficient to defeat a motion for summary judgment; to prevail, the non-moving party must show that there exists some genuine issue of material fact. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). When deciding a motion for summary judgment, all justifiable inferences must be viewed in a light most favorable to the non-moving party. Matsushita Elec Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Anderson, 477 U.S. at 255, 106 S.Ct. 2505.

The Sixth Circuit Court of Appeals has articulated the following standard to apply when evaluating a motion for summary judgment:

[T]he moving [party] may discharge its burden by “pointing out to the ... court ... that there is an absence of evidence to support the nonmoving party's case.” The nonmoving party cannot rest on its pleadings, but must identify specific facts supported by affidavits, or by depositions, answers to interrogatories, and admissions on file that show there is a genuine issue for trial. Although we must draw all inferences in favor of the nonmoving party, it must present significant and probative evidence in support of its complaint. “The mere existence of a scintilla of evidence in support of the [nonmoving party's] position will be insufficient; there must be evidence on which the jury could reasonably find for the [nonmoving party].”Hall v. Tollett, 128 F.3d 418, 422 (6th Cir.1997) (internal citations omitted). A material fact is one whose resolution will affect the determination of the underlying action. Tenn. Dep't of Mental Health & Mental Retardation v. Paul B., 88 F.3d 1466, 1472 (6th Cir.1996). An issue is genuine if a rational trier of fact could find in favor of either party on the issue. Schaffer v. A.O. Smith Harvestore Prods., Inc., 74 F.3d 722, 727 (6th Cir.1996) (citation omitted). “The substantive law determines which facts are ‘material’ for summary judgment purposes.” Hanover Ins. Co. v. American Eng'g Co., 33 F.3d 727, 730 (6th Cir.1994) (citations omitted). However, determinations of credibility, weight to be given the evidence, and inferences to be drawn from the facts remain the province of the jury. Anderson, 477 U.S. at 255, 106 S.Ct. 2505.

In determining whether each party has met its burden, the court must keep in mind that [o]ne of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses....” Celotex, 477 U.S. at 323–24, 106 S.Ct. 2548. If otherwise appropriate, summary judgment may also be entered for a nonmoving party. Fed.R.Civ.P. 56(f); K.E. Resources, LTD. v. BMO Fin. Inc. (In re Century Offshore Mgmt. Corp.), 119 F.3d 409, 412 (6th Cir.1997); see also Celotex, 477 U.S. at 326, 106 S.Ct. 2548 ([D]istrict courts are widely acknowledged to possess the power to enter summary judgments sua sponte, so long as the losing party was on notice that she had to come forward with all of her evidence.”).

B. Ohio Mortgage Law

“Since the mortgage deed takes effect as a contract between the parties, the deed must be interpreted according to Ohio contract law.” Menninger v. Accredited Home Lenders (In re Morgeson), 371 B.R. 798, 804 (6th Cir. BAP 2007); see also Stein v. Creter (In re Creter), 2007 WL 2615214, at *4, 2007 LEXIS 3088, at *11 (Bankr.N.D.Ohio 2007) (holding that “the Court must interpret the ... mortgage according to Ohio contract law in order to determine the extent of the [mortgagee's] interest.”) (citing Morgeson, 371 B.R. at 804).

In construing a written contract, the court's paramount objective is to ascertain and give effect to the parties' intention. Generally, courts presume that the parties' intent resides in the language they employ in the contract. When contract terms are unambiguous, courts will not, in effect, create a new contract by finding an intent not expressed in the clear contractual language.

Rosepark Props. v. Buess, 167 Ohio App.3d 366, 375, 855 N.E.2d 140 (Ohio Ct.App.2006) (citations omitted). “When the language of a written contract is clear, a court may look no further than the writing itself to find the intent of the parties.” Cincinnati Ins. Co. v. CPS Holdings, Inc., 115 Ohio St.3d 306, 308, 875 N.E.2d 31(2007) (citation omitted).

The interpretation of such a contract “is a matter of law and there is no issue of fact to be determined.” Inland Refuse Transfer Co. v. Browning–Ferris Industries, Inc., 15 Ohio St.3d 321, 322, 474 N.E.2d 271 (1984) (citation omitted). “If, however, the language is capable of two reasonable, but conflicting interpretations, then there is an issue of fact on what the parties intended.” Wells v. American Electric Power Co., 48 Ohio App.3d 95, 97, 548 N.E.2d 995 (Ohio Ct.App.1988). “It is not the responsibility or function of this court to rewrite the parties' contract in order to provide for a more equitable result.” Foster Wheeler Enviresponse v. Franklin County Convention Facilities Auth., 78 Ohio St.3d 353, 362, 678 N.E.2d 519 (1997). “A contract ‘does not become ambiguous by reason of the fact that in its operation it will work a hardship upon one of the parties thereto.’ Foster Wheeler Enviresponse, 78 Ohio St.3d at 362, 678 N.E.2d 519 (quoting Ohio Crane Co. v. Hicks, 110 Ohio St. 168, 172, 143 N.E. 388 (1924)). “A court will resort to extrinsic evidence in its effort to give effect to the parties' intentions only where the language is unclear or ambiguous, or where the circumstances surrounding the agreement invest the language of the contract with a special meaning.” Kelly v. Medical Life Ins. Co., 31 Ohio St.3d 130, 132, 509 N.E.2d 411 (1987) (citations omitted). Extrinsic evidence may include: (1) the circumstances that surrounded the transaction; (2) the parties' intended objectives in entering into the contract; and (3) any acts by the parties that demonstrate what they intended in the contract. Crane Hollow, Inc. v. Marathon Ashland Pipe Line, LLC, 138 Ohio App.3d 57, 740 N.E.2d 328, 339 (2000) (citations omitted).

II. Factual Background

The facts pertinent to the resolution of this matter are without dispute and can be summarized as follows: Debtors filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code on November 6, 2009. Debtors acquired title to the Property by Survivorship Deed on October 16, 2003. On October 14, 2005, Mr. Foster executed a promissory note (the “Note”) payable to America's Wholesale Lender (“AWL”) in...

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