In re Rowe v. Fifth Third Mortgage Co.

• Decision Date: 24 June 2011
• Docket Number: No. 10-8050,10-8050
• Parties: In re: BOYD WAYNE ROWE AND LINDA LOU ROWE, Debtors. J. JAMES ROGAN, Plaintiff-Appellee, v. FIFTH THIRD MORTGAGE COMPANY, Defendant-Appellant.
• Court: U.S. Bankruptcy Court — Eastern District of Kentucky

In re: BOYD WAYNE ROWE AND LINDA LOU ROWE, Debtors.
J. JAMES ROGAN, Plaintiff-Appellee,
v.
FIFTH THIRD MORTGAGE COMPANY, Defendant-Appellant.

No. 10-8050

BANKRUPTCY APPELLATE PANEL OF THE SIXTH CIRCUIT

Argued: May 3,2011
Decided and Filed: June 24, 2011

ELECTRONIC CITATION: 2011 FED App. 0007P (6th Cir.) File Name: llb0007p.06
Appeal from the United States Bankruptcy Court for the Eastern Division of Kentucky, at Lexington. No. 09-53453; 10-8050.
Before: BOSWELL, RHODES, and SHEA-STONUM, Bankruptcy Appellate Panel Judges.
COUNSEL

ARGUED: John P. Brice II, WYATT, TARRANT & COMBS, LLP, Lexington, Kentucky, for Appellant. Jon Jay Lieberman, ATKINSON, SIMMS & KERMODE PLLC, Lexington, Kentucky, for Appellee. ON BRIEF: John P. Brice II, WYATT, TARRANT & COMBS, LLP, Lexington, Kentucky, for Appellant. J. D. Kermode, ATKINSON, SIMMS & KERMODE PLLC, Lexington, Kentucky, for Appellee.

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OPINION

MARILYN SHEA-STONUM, Bankruptcy Appellate Panel Judge. This is an appeal from an order granting summary judgment to the Chapter 7 Trustee (the "Trustee") and denying summary judgment to Fifth Third Mortgage Company ("Fifth Third") on the Trustee's complaint pursuant to 11 U.S.C. § 544 seeking to avoid the mortgage held by Fifth Third on real property owned by the Debtors.

I. ISSUES ON APPEAL

This appeal raises the issue of what is necessary to create a valid, enforceable mortgage against a person's interest in real property when that person is not personally liable on an obligation, but rather is making his or her interest in real property available as collateral to a lender for the benefit of that person's spouse.

II. JURISDICTION AND STANDARD OF REVIEW

The Bankruptcy Appellate Panel (the "BAP") of the Sixth Circuit has jurisdiction to decide this appeal. The United States District Court for the Eastern District of Kentucky, Lexington Division has authorized appeals to the BAP and none of the parties elected to have this appeal heard by the district court. 28 U.S.C. § 158(b)(6), (c)(1). A bankruptcy court's final order may be appealed as of right. 28 U.S.C. § 158(a)(1), (b)(6) and (c)(1). For purposes of an appeal, a final order "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Midland Ashpalt Corp. v. United States, 489 U.S. 794, 798, 109 S. Ct. 1494, 1497 (1989) (citations omitted). The bankruptcy court's order granting the Trustee's motion for summary judgment and denying Fifth Third's motion for summary judgment is a final order. See Thomas v. United States, 166 F.3d 825, 828 (6th Cir. 1999) (The denial of summary judgment presented together with an appeal from a grant of summary judgment is final and appealable).

The bankruptcy court's final order granting the Trustee's motion for summary judgment and denying Fifth Third's motion for summary judgment is reviewed de novo, using the same standard applied by the trial court. B.F. Goodrich Co. v. U.S. Filter Corp., 245 F.3d 587, 595-96 (6th Cir.

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2001). Thus, the appellate court decides the issues of law independently of, and without deference to, the trial court's determinations. Drown v. Nat'l City Bank (In re Ingersolt), 420 B.R. 414, 415 (B.A.P. 6th Cir. 2009). The bankruptcy court's findings of fact are reviewed under the clear-error standard. Behlke v. Eisen (In re Behlke), 358 F.3d 429, 433 (6th Cir. 2004). Summary judgment on issues of contract interpretation, which are ordinarily considered to be matters of law, is permissible when the language of the contract is unambiguous. Royal Insurance Co. of Amer. v. Orient Overseas Container Line Ltd., 525 F.3d 409, 421-422 (6th Cir. 2008); see also B.F. Goodrich Co., 245 F.3d at 595-96. Cross-motions for summary judgment do not alter this standard. See Wells Real Estate Inv. Trust II, Inc. v. Chardon/Hato Rey P'ship, S.E., 615 F.3d 45, 51 (1st Cir. 2010).

III. FACTS

Boyd Wayne Rowe and Linda Lou Rowe ("Debtors") filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code on October 30, 2009. The Debtors own and have title to real property located at 115 Juniper Drive, Waynesburg, Kentucky ("Property").

Prior to the Petition Date, Boyd Wayne Rowe borrowed $85,000 from Fifth Third. This loan was reflected by a promissory note signed only by Boyd Wayne Rowe, as "Borrower." The term "Note" is defined in the Mortgage as the promissory note signed by Borrower and dated November 11, 2005.

On the same date, a mortgage granting Fifth Third a mortgage on the Property was executed ("Mortgage"). The last paragraph of the Mortgage provides, "By signing below, Borrower accepts and agrees to the terms and covenants contained in this Security Instrument and in any Rider executed by Borrower and recorded with it." The signature block for the Mortgage consists of several lines under which the word "Borrower" is pre-printed. Under one of those lines, Boyd W. Rowe's name is pre-printed along with the word Borrower. His signature appears above that line. In addition, Linda Lou Rowe's signature appears above one of the lines, underneath which her hand-printed name and the pre-printed word "Borrower" appear.

Paragraph B of the Definition section of the Mortgage defines "Borrower" as "Boyd W. Rowe, a married man. Borrower is the mortgagor under this Security Instrument."

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"Security Instrument" is defined in the body of the Mortgage to mean "this document, which is dated November 11, 2005 together with all Riders to this document."

A Second Home Rider was executed in conjunction with the Note and Mortgage. The Second Home Rider does not contain a definition section, but provides that the Second Home Rider "is incorporated into and shall be deemed to amend and supplement the Mortgage ... of the same date given by the undersigned (the 'Borrower' whether there are one or more persons undersigned)." On the last page...