In re ROBERTS, Case No. 08-51945 (S.D. Ohio 3/25/2009)
| Decision Date | 25 March 2009 |
| Docket Number | Case No. 08-51945.,Adv. Pro. No. 08-2171. |
| Parties | In re: JOHN E. ROBERTS and JUDY K. ROBERTS, Chapter 7, Debtors. Clyde Hardesty, Trustee, Plaintiff, v. Citifinancial, Inc., Defendant. |
| Court | U.S. District Court — Southern District of Ohio |
This cause came on for consideration of the Motion for Summary Judgment (Doc. No. 11) filed by the Plaintiff, Chapter 7 Trustee Clyde Hardesty ("Trustee"), the Response (Doc. No. 12) filed by the Defendant, Citifinancial, Inc. ("Citifinancial"), and the Reply filed by the Trustee (Doc. 13). The Court, having considered the record and the arguments of the parties, makes the following findings of fact and conclusions of law.
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)(K). Venue is properly before this Court pursuant to 28 U.S.C. §§ 1408 and 1409.
This adversary proceeding arose in the Chapter 7 bankruptcy case of John E. Roberts and Judy K. Roberts ("Debtors" or "Roberts"). Based on an allegedly defective certificate of acknowledgment, the Trustee seeks to avoid the Debtor's mortgage with Citifinancial (Count I) and preserve the mortgage for the benefit of the Debtors' estates (Count II). For the reasons stated below, the Court concludes that the certificate of acknowledgment complied with Ohio law and that the Motion for Summary Judgment should be denied.
The facts upon which this adversary proceeding may be decided are without dispute and may be summarized as follows:
The Trustee is seeking to avoid a mortgage on residential real property located at 24 Van Buren Street, Muskingum County, Zanesville, Ohio ("Property"). Prior to their bankruptcy, on December 18, 2007, the Roberts obtained a loan from Citifinancial and granted it a mortgage on the Property ("Mortgage"), which was recorded on December 19, 2007. "Borrower" is defined on the first page of the Mortgage as "John E Roberts Judy K Roberts Husband and Wife[.]" The Mortgage's granting clause, which states that "Borrower has executed this Mortgage[,]" is followed by the signatures and printed names of John E. Roberts and Judy K. Roberts.
The signatures are followed by a certificate of acknowledgment ("Acknowledgment"), which states as follows:
STATE OF OHIO. Muskingum County ss:
Executed before me on 18th day of Dec. 2007 by John E. Roberts & Judy K. Roberts, the individuals who, under penalty of perjury in violation of Section 2921.11 of the Ohio Revised Code,[1] executed the foregoing instrument and that ___they___ did examine and read the same and did sign the foregoing instrument, and the same is their free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
My Commission Expires: 03-01-10 /s/ Stephanie K. DuBeck2
(seal) Stephanie K. DuBeck Notary Public
This instrument was prepared by
CITIFINANCIAL, INC. STEPHANIE K. DuBECK
3572 MAPLE AVE Notary Public State of Ohio
ZANESVILLE OH 43701 My Commission Expires 03-01-10
The notary public signed the Acknowledgment and stamped it with her official seal beside her signature.
Fed. R. Civ. P. 56(c), made applicable to adversary proceedings by Bankruptcy Rule 7056, provides as follows:
The motion [for summary judgment] must be served at least 10 days before the day set for the hearing. An opposing party may serve opposing affidavits before the hearing day. The judgment sought 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 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 (1986). If the movant satisfies this burden, the nonmoving party must then "set out specific facts showing a genuine issue for trial." Fed. R. Civ. P. 56(e)(2). The mere allegation of a factual dispute is not sufficient to defeat a motion for summary judgment; to prevail, the nonmoving party must show that there exists some genuine issue of material fact. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247—48 (1986). When deciding a motion for summary judgment, all justifiable inferences must be viewed in a light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Anderson, 477 U.S. at 255.
The Sixth Circuit 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. See 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). 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. If otherwise appropriate, summary judgment may also be entered for a nonmoving party. K.E. Res., Ltd. v. BMO Fin. Inc. (In re Century Offshore Mgmt. Corp.), 119 F.3d 409, 412 (E.D.K.Y. 1997); see also Celotex, 477 U.S. at 326 ().
The parties agree that, under § 544(a)(3),3 the Trustee's status as a hypothetical bona fide purchaser of the Property would survive any actual notice of the Mortgage and that, under Ohio Revised Code § 5301.25(A),4 the Trustee would not have constructive notice of the Mortgage if it were defectively executed. The parties, however, disagree on whether the Acknowledgment is defectively executed.
The Trustee contends that the Acknowledgment is defectively executed because it does not contain the words "acknowledged before me" or their substantial equivalent and does not follow a form of acknowledgment authorized by Ohio law. In particular, the Trustee argues that, even though the Acknowledgment identifies the Roberts by name and states that they executed the Mortgage before her, the Acknowledgment nonetheless is deficient in that it: (i) does not state that the notary public either knew, or had satisfactory evidence showing, that the persons acknowledging their signatures were in fact the Roberts; and (ii) does not state that the Roberts executed the Mortgage for the purposes therein stated.
Citifinancial contends that the Acknowledgment meets each of the requirements of Ohio law. According to Citifinancial, the phrase "executed before me"—when combined with other language in the Acknowledgment—is the substantial equivalent of the phrase "acknowledged before me." Citifinancial also points out that, although Ohio law authorizes certain acknowledgment forms, it expressly does not preclude the use of other forms, such as the one used in the Acknowledgment.
Because the Ohio Supreme Court has not yet ruled on the validity of a certificate of acknowledgment like the one at issue in the instant adversary proceeding, the Court's role is to "ascertain how that court would rule if it were faced with the issue." Meridian Mut. Ins. Co. v. Kellman, 197 F.3d 1178, 1181 (6th Cir. 1999). In so doing, the Court may consult "doctrinal trends embraced by [Ohio's] appellate courts" as well as "decisions from other jurisdictions . . . ." Rousey v. United States, 115 F.3d 394, 397 (6th Cir. 1997) (citations and internal quotation marks omitted)).
Ohio Revised Code § 5301.01(A) addresses the acknowledgment of mortgages as follows:
A . . . mortgage . . . shall be signed by the . . . mortgagor . . . The signing shall be acknowledged by the . . . mortgagor . . . before a judge or clerk of a court of record in this state, or a county auditor, county engineer, notary public, or mayor, who shall certify the acknowledgement and subscribe the official's name to the certificate of the acknowledgement.
Ohio Rev....
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