Nelson v. Countrywide Home Loans, Inc. (In re Larry)
| Decision Date | 03 July 2012 |
| Docket Number | Bankruptcy No. 09–12251.,10–1179,10–1180.,Adversary Nos. 10–1178 |
| Parties | In re Larry and Mary BARGER, Debtors. Richard D. Nelson, Chapter 7 Trustee, Plaintiff v. Countrywide Home Loans, Inc., Defendant. Richard D. Nelson, Chapter 7 Trustee, Plaintiff v. Countrywide Home Loans, Inc., Defendant. Richard D. Nelson, Chapter 7 Trustee, Plaintiff v. BAC Home Loans Servicing, LP, Defendant. |
| Court | United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Southern District of Ohio |
OPINION TEXT STARTS HERE
Gary Allen Billig, Fairfield, OH, for Debtors.
Donald W. Mallory, Richard D. Nelson, Cayce A. Stoneburner, Cincinnati, OH, for Trustee.
DECISION DENYING MOTIONS FOR SUMMARY JUDGMENT
The chapter 7 trustee seeks a declaratory judgment finding that the defendants' mortgages do not encumber the debtor-wife's dower interests in three properties owned by the debtor-husband. The chapter 7 trustee maintains that he is entitled to judgment as a matter of law because the debtor-wife is neither obligated on the underlying notes nor is she a “Borrower” (as that term is defined in the mortgages) and, therefore, her dower interests in the properties are not subject to the terms of the mortgages. Moreover, the chapter 7 trustee contends that the debtor-wife's dower interests in the properties were not effectively released by virtue of her signing the mortgages because there is no express release of her dower interests in the mortgages nor is it clear from the terms of the mortgages that the parties intended for the debtor-wife to relinquish her dower interests in the properties to the defendant-mortgagees.
For the reasons set forth below, this Court concludes that the debtor-wife effectively relinquished her dower interests in the properties to the defendant-mortgagees by joining in the mortgages, the terms of which adequately express the parties' intent to subject the debtor-wife's dower interests in the properties to the terms of the mortgages. Accordingly, the chapter 7 trustees' motions for summary judgment are denied.
Plaintiff, Richard D. Nelson, Chapter 7 Trustee's (the “ Trustee ”) commenced three adversary proceedings seeking a declaration from this Court that certain mortgages held by Countrywide Home Loans, Inc. and BAC Home Loan Servicing, LP (collectively, the “ Defendants ”) do not encumber Debtor Mary Barger's dower interest in three parcels of real estate owned by her husband, Debtor Larry Barger. Although each adversary proceeding involves a difference parcel of real property, the facts of each case are similar and are not in dispute.
On July 20, 2007, Debtor Larry Barger (“ Mr. Barger ”) became the owner of certain real property located at 1830 Huron Avenue, Cincinnati, Ohio. The deed conveying the property to Mr. Barger identifies Mr. Barger as “Larry Barger, married.” On that same day, Mr. Barger executed a note in favor of Countrywide Home Loans, Inc. in the amount of $52,500, which note is secured by a mortgage on the Huron Avenue property. On August 22, 2007, Mr. Barger became the owner of certain real property located at 18 Tower Street, Cincinnati, Ohio. The deed conveying the property to Mr. Barger identifies Mr. Barger as “Larry Barger, unmarried.” On that same day, Mr. Barger executed a note in favor of Countrywide Bank, FSB (predecessor in interest to Defendant Countrywide Home Loans, Inc.) in the amount of $57,000, which note is secured by a mortgage on the Tower Street property. On August 22, 2007, Mr. Barger also became the owner of certain real property located at 809 Lincoln Avenue # B, Cincinnati, Ohio.1 The deed conveying the property to Mr. Barger identifies Mr. Barger as “Larry Barger, unmarried.” On that same day, Mr. Barger executed a note in favor of Countrywide Bank, FSB (predecessor in interest to Defendant BAC Home Loan Servicing, LP) in the amount of $58,500, which note is secured by a mortgage on the Lincoln Avenue property.2
The relevant provisions of each of the Mortgages are the same.3 Each Mortgage provides that “Borrower does hereby mortgage, grant and convey to MERS (solely as nominee of Lender and Lender's successors and assigns) and to the successors and assigns of MERS the following described property....” Paragraph 13 of each of the Mortgages further provides in relevant part that “any Borrower who co-signs this Security Instrument but does not execute the Note (a ‘cosigner’): (a) is co-signing this Security Instrument only to mortgage, grant and convey the co-signer's interest in the Property under the terms of this Security Instrument.”
Mr. and Mrs. Barger signed each of the Mortgages on the pre-printed “Borrower” signature lines; 4 however, the definitions section of each Mortgage defines only Mr. Barger as the “Borrower.” Both Mr. and Mrs. Barger's signatures are acknowledged before a notary who certified the acknowledgment.
Each Mortgage contains a 1–4 Family Rider (the “ Rider ”) dated the same date as the respective Mortgages. The terms of the Rider provide that the Rider “is incorporated into and shall be deemed to amend and supplement the Mortgage, Deed of Trust, or Security Deed (the “Security Instrument”) of the same date given by the undersigned (the “Borrower”) to secure the Borrower's Note.” The Rider further provides that “BY SIGNING BELOW, Borrower accepts and agrees to the terms and covenants contained in this 1–4 Family Rider.” Mr. and Mrs. Barger signed the Riders on the pre-printed “Borrower” signature lines. 5
Mr. Barger's marital status is not stated in the Mortgages, however the parties stipulated at oral argument that Mr. and Mrs. Barger were married at the time of the execution of each of the Mortgages. The parties further agree that Mrs. Barger held a dower interest in the Properties at the time the Mortgages were granted.
The Trustee filed a motion for summary judgment in each of the three adversary proceedings (the “ Motions for Summary Judgment ”).6 The legal issues presented to this Court in the Motions for Summary Judgment are identical. The Trustee maintains that the Mortgages do not encumber Mrs. Barger's dower interests in the Properties because she is not a “Borrower” under the terms of the Mortgages nor is she obligated on the underlying debt. The Trustee further contends that Mrs. Barger's dower interests in the Properties were not effectively released because the Mortgages make no specific reference to release of her dower interests nor is it clear from the terms of the Mortgages that she intended to do so.7
The Defendants contend that Mrs. Barger relinquished her dower interests in the Properties pursuant to the terms of the Mortgages. The Defendants maintain that Mrs. Barger is a “Borrower” as such term is used in the Mortgages because the Riders to each of the Mortgages define Mrs. Barger as a “Borrower” and the Riders, by their own terms, amend each Mortgage.8 The Defendants further contend that Mrs. Barger does not need to specifically release her dower interests in the Mortgages in order to effectively relinquish such rights and that Mrs. Barger's signature alone on the Mortgages is sufficient to subordinate her dower interest to the Defendant mortgagees.
This Court has subject matter jurisdiction over these adversary proceedings pursuant to 28 U.S.C. §§ 157 and 1334 and the general order of reference entered in this district. This is a core proceeding. See28 U.S.C. § 157(b)(2)(K).
III. Legal AnalysisA. Summary Judgment Standard
The standard for summary judgment is set forth in Rule 56(a) of the Federal Rules of Civil Procedure (the “ Civil Rules ”), made applicable to this proceeding by Rule 7056 of the Federal Rules of Bankruptcy Procedure. Civil Rule 56(a) 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). 9 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In reviewing a motion for summary judgment, this Court must view all inferences to be drawn from the underlying facts in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587–88, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Anthony v. BTR Auto. Sealing Sys., Inc., 339 F.3d 506, 511 (6th Cir.2003).
“One of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses.” Celotex Corp. v. Catrett, 477 U.S. 317, 323–24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). As such, the summary judgment process should not be regarded “as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed ‘to secure the just, speedy and inexpensive determination of every action.’ ” Id. at 321, 106 S.Ct. 2548.
B. Legal Principles For Interpreting State Law Issues
Where the Bankruptcy Code does not directly address the nature, existence or extent of an interest in property, this Court must look to applicable state law to determine the relative property interests of the parties. See Butner v. United States, 440 U.S. 48, 55, 99 S.Ct. 914, 59 L.Ed.2d 136 (1979) ( ); Drown v. JPMorgan Chase Bank, N.A. ( In re Barnhart ), 447 B.R. 551, 555 (Bankr.S.D.Ohio 2011) (). In this regard, the substantive law of Ohio...
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