Mulkanoor v. Am. Home Mortg. Corp (In re Mulkanoor)
| Decision Date | 28 October 2018 |
| Docket Number | Adversary No. 17 AP 00349,Bankruptcy No. 17 BK 18799 |
| Citation | 595 B.R. 795 |
| Parties | IN RE: Premsagar MULKANOOR, Debtor. Premsagar Mulkanoor, Plaintiff v. American Home Mortgage Corp, d/b/a HLB Mortgage, and Ocwen Loan Services, LLC, Defendants. |
| Court | U.S. Bankruptcy Court — Northern District of Illinois |
Ariel Weissberg, Weissberg & Associates, Ltd., Chicago, IL, for Plaintiff.
Maria A. Diakoumakis, Dykema Gossett PLLC, William S. Hackney, III, SmithAmundsen, LLC, Chicago, IL, for Defendants.
OPINION ON CROSS MOTIONS FOR SUMMARY JUDGMENT [DKT. NOS. 82 & 85]
Debtor-Plaintiff Premsagar Mulkanoor ("Plaintiff") filed the instant adversary complaint against Defendants American Home Mortgage Corp. d/b/a HLB Mortgage and Ocwen Loan Servicing, LLC. Deutsche Bank National Trust Company, as Indenture Trustee for American Home Mortgage Investment Trust 2005-1, as successor to HLB Mortgage was granted leave to intervene as a defendant on January 4, 2018. [Dkt. No. 54.] American Home Mortgage Corp. d/b/a HLB Mortgage was dismissed as a defendant party on February 1, 2018, upon Plaintiff's request. [Dkt. No. 62.] Plaintiff's pleads two counts in his Complaint. First, he seeks a determination as to the extent of the lien Defendants have on the property and to avoid the Mortgage on his residence, 21405 Saddle Lane, Mokena, IL. Second, Plaintiff alleges unjust enrichment on the part of Ocwen and seeks to have mortgage payments made to it returned to him.
The parties agree that there is no genuine dispute as to any material fact. Thus, both parties have filed Motions for Summary Judgment which are considered together here.
For the reasons articulated below, Defendants' Motion for Summary Judgment is granted and Plaintiff's Motion for Summary Judgment is denied.
Plaintiff is an individual and resident of Illinois who resides at 21405 Saddle Lane, Mokena, IL 60448 ("the Property"). He is the debtor in the underlying Chapter 11 bankruptcy reorganization case. On or about December 10, 2001, Plaintiff and his wife Mrs. Vijayageetha Mulkanoor ("Mrs. Mulkanoor") contracted with DeBello Builders, Inc., which conveyed to the couple as joint tenants fee simple interest in the Property by Warranty Deed. [Dkt. No. 81.] On June 26, 2002, Plaintiff and Mrs. Mulkanoor received a loan worth $880,000.00 from Marquette Bank, evidenced by a promissory note and construction mortgage on the Property. [Dkt. No. 87.] Plaintiff and Mrs. Mulkanoor moved into the Property in 2003.
ON November 17, 2003, Mrs. Mulkanoor sought and obtained a loan of $880,000.00 from First Home Mortgage and promised to repay that loan as evidenced by a promissory note. Plaintiff testified at his deposition that only his wife pursued that loan because he was seeking other business loans. [Dkt. No. 87, Exh. 3.] Debtor and Mrs. Mulkanoor executed a second mortgage on the Property to secured the indebtedness. The mortgage was recorded with the Will County Recorder of Deeds on January 22, 2004. [Dkt. No. 87, Exh. 4.]
On December 30, 2004, Plaintiff signed a Uniform Residential Loan Application as "co-borrower" with regards to the subject loan. [Dkt. No. 87, Exh. 5.] On January 24, 2005, Plaintiff signed a Truth-in-Lending Disclosure Statement as "borrower" with regards to the subject loan. [Dkt. No. 87, Exh. 6.] Contemporaneously, Mrs. Mulkanoor borrowed and proised to repay a loan of $945,000.00 from American Home Mortgage Corp., d/b/a HLB Mortgage ("HLB"). Only Mrs. Mulkanoor signed the note. [Dkt. No. 87, Exh. 7.]
Both Plaintiff and Mrs. Mulkanoor signed and executed the mortgage on the Property on January 24, 2005, and that mortgage was recorded with the Will County Recorder of Deeds on February 3, 2005 against Mrs. Mulkanoor. [Dkt. No. 87, Exh. 8.] Plaintiff's signature appears as a "Borrower" on the mortgage and he initialed each page of the mortgage, though he contends that he was told and understood that he would be signing only as a witness to the mortgage. Plaintiff asserts that he never intended to be bound by the note or the mortgage. [Dkt. No. 81, Exh. 6.]
Not long after the loan was originated and the note executed, American Home Mortgage Securities, LLC acquired the note and created the American Home Mortgage Investment trust 2005-1. The note was transferred to that trustee entity pursuant to a March 23, 2005 indenture agreement. [Dkt. No. 87, Exhs. 11 & 12.] Wells Fargo Bank, N.A. is the master servicer and securities administrator for the trust that holds the note, pursuant to an RMBS master servicing agreement dated March 23, 2005. [Dkt. No. 87.] Ocwen became the successor loan servicer for the trust in March of 2013, pursuant to the Notice of Servicing Transfer to Wells Fargo and Notice of Servicing Transfer to Borrower. [Dkt. No. 87, Exhs. 13 & 14.]
Plaintiff and Mrs. Mulkanoor made mortgage payments to these various entities over the course of several years. On July 26, 2013, Mrs. Mulkanoor passed away. [Dkt. No. 81.] Ocwen continued to send mortgage loan statements addressed to Mrs. Mulkanoor to the Property. [Dkt. No. 87.] Plaintiff informed Ocwen through his attorney at the time that he was the executor of his wife's will. [Dkt. No. 87.] Subsequently, Ocwen continued to send the mortgage loan statements to the Property, addressed to the estate of Mrs. Mulkanoor. [Dkt. No. 87.] Plaintiff continued to make forty-seven (47) loan payments from the same joint checking account that he and Mrs. Mulkanoor paid the mortgage out of prior to her death. [Dkt. No. 87.] The payments totaled $475,020.03. [Dkt. No. 87.] Ocwen received the payments, remitted them to Wells Fargo and the principal balance of the loan was reduced accordingly. [Dkt, No. 87.] The principal balance of the loan was reduced from $510,144,72 to $231,630.82 during the four year period in which Plaintiff continued to make the loan payments. [Dkt. No. 87.] Plaintiff has continued to use the Property as his primary residence. [Dkt. Nos. 81 & 87.]
On June 21, 2017, Debtor filed his petition for Chapter 11 bankruptcy relief. He initiated the instant adversary proceeding on June 27, 2017 against American Home Mortgage Corp. d/b/a HLB Mortgage and Ocwen Loan Servicing, LLC. Ocwen Loan Servicing was originally found in default, but Plaintiff and the correctly named party, Ocwen Loan Services presented an agreed order vacating that judgment [Dkt. No. 45]. Defend ant-Intervenor Deutsche Bank National Trust filed a Motion to Intervene as a defendant which was granted [Dkt. No. 54]. Plaintiff's Complaint alleged two counts. First, he sought a determination as to the extent and validity of the lien against the Property. Plaintiff alleged that only his now-deceased wife signed the note and mortgage. As he himself did not sign, Plaintiff argued that pursuant to Illinois law, as an owner of the property in joint tenancy with his wife, upon her death the property passed to him free and clear of all liens. Second, Plaintiff alleged that the Defendants had been unjustly enriched as a result of his continued payments on the mortgage after his wife's death totaling approximately $461,783.27. Debtor argued that because he never signed the note or mortgage, there was no contract obligating him to make these payments and as such, the Defendants should reimburse the amount he has paid on the mortgage and note he did not sign. [Dkt. No. 1.]
Defendants jointly filed an Answer and Amended Answer to Plaintiff's Complaint. [Dkt. Nos. 72 & 76.] The Defendants denied that only Mrs. Mulkanoor signed the mortgage, but admitted that she was the only party to sign the note. [Dkt. No. 76.] Defendants also asserted six affirmative defenses to Plaintiff's Complaint. First, Defendants asserts that by continuing to live in the home and making mortgage payments, Plaintiff has waived a right he had to enforce with conduct inconsistent with that right. Second, Defendants assert that pursuant to Illinois law a party that accepts the benefits of an agreement is estopped from denying its existence or from performing any obligations under its terms. By continuing to live in the home and paying the mortgage, Plaintiff is estopped from asserting that the mortgage ceased upon his wife's death. Third, Defendants argue that Plaintiff inexcusably delayed filing this action, materially prejudicing them, asserting that Plaintiff waited nearly four years after he alleged the mortgage was invalidated. Fourth, Defendants assert that having used the proceeds of the Loan and Note to pay off and obtain release of the 2003 mortgage held by First Home Mortgage, HLB obtained whatever perfected security interest that First Home Mortgage had in the Property. Fifth, Defendants alternatively argue that even if there were no formal agreement between HLB, Plaintiff and Mrs. Mulkanoor as to what rights HLB obtained upon the use of the loan to pay off the 2003 mortgage, it should have the same rights that First Home Mortgage had in the Property because it did not do so voluntarily, but rather to get some benefit in the bargain. Sixth, Defendants assert that because Plaintiff continued to pay the Mortgage for four years after his wife's death, he ratified the mortgage through his compliance with its terms and receipt of benefits.
Plaintiff answered these affirmative defenses, essentially denying the applicability of each, and only admitting that he and his wife entered jointly into the 2002 and 2003 notes and mortgages, but not the instant note and mortgage. Plaintiff also stated that he continued to pay the mortgage after his wife's death and continues to reside in the Property. [Dkt. No. 74.]
The adversary was set for trial by a final pre-trial order entered on February 2, 2018. [Dkt. No. 60.] The trial was scheduled to take place on the afternoons of September 24 and 25, 2018. However, the parties indicated at the pre-trial conference that they did not believe there were any genuine...
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