Pettie v. RBC Mortg. Co. (In re Jackson)
| Decision Date | 17 September 2019 |
| Docket Number | ADVERSARY PROCEEDING NO. 18-5064-BEM,CASE NO. 15-55379-BEM |
| Parties | IN RE: McArthur Jackson and Dorothy Ann Jackson, Debtors. Jason L. Pettie, Plaintiff, v. RBC Mortgage Company, Nationstar Mortgage LLC, and Citibank, Federal Savings Bank, Defendants. |
| Court | U.S. Bankruptcy Court — Northern District of Georgia |
IT IS ORDERED as set forth below:
This proceeding comes before the Court on RBC Mortgage Company's ("RBC") Motion for Summary Judgment filed November 19, 2018 (the "Motion") [Doc. 9]. For the reasons below, the Court will grant the Motion.
Jason L. Pettie, Chapter 7 Trustee ("Plaintiff" or the "Trustee") for the estate of McArthur Jackson and Dorothy Ann Jackson ("Debtors"), commenced this adversary proceeding on March 23, 2018 with his Complaint to Determine the Validity, Priority, and Extent of Liens and Interests (the "Complaint") [Doc. 1]. In the Complaint, Plaintiff seeks, among other relief, a determination from the Court that Dorothy Ann Jackson's ("Debtor Wife") undivided interest in certain real property is free and clear of three encumbrances, one of which is a security deed held by RBC. [Doc. 1 at 6 ¶ 39]. Plaintiff asks the Court to enter an order "conclusively establishing the validity, extent and priority of Defendants' interests in the Property . . . and declaring the RBC Security Deed does not attach to Mrs. Jackson's undivided one-half interest in the Property[.]" [Id. at 7].
On November 19, 2018, RBC moved for summary judgment on Plaintiff's claims against RBC. [Doc. 9]. Oral argument was held on the Motion on February 5, 2019. On June 22, 2019, the Court issued an Order and Notice advising the parties that the Court intended to take judicial notice of the Schedules filed by Debtors in the main bankruptcy case and providing the parties an opportunity to object to the Court's taking judicial notice (the "Notice"). [Doc. 22] Neither Plaintiff nor Defendant objected. [Docs. 24, 26]. After the Notice, both RBC and the Trustee filed supplemental briefs. [Docs. 24, 26, and 27] In addition, RBC filed a motion requesting oral argument (the "Request for Oral Argument"). [Doc. 25]. The Court has jurisdiction over this proceeding pursuant to 28 U.S.C. § 157(b)(2)(K).
Summary judgment is governed by Fed. R. Bankr. P. 7056 and Fed. R. Civ. P. 56, which provides that the "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). The substantive law applicable to the case determines which facts are material. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510 (1986). A dispute of material fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict in favor of the nonmoving party. Id.
The moving party has the burden of establishing its entitlement to summary judgment. Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991). The moving party must identify the pleadings, discovery materials, or affidavits that show the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 2553 (1986). Once this burden is met, the nonmoving party cannot merely rely on allegations or denials in its own pleadings to defeat summary judgment. Anderson, 477 U.S. at 249, 106 S. Ct. at 2510 (citations omitted). Rather, the nonmoving party must present specific facts supported by evidence that demonstrate there is a genuine material dispute. Id.
A party asserting that a fact cannot be or is genuinely disputed must support the assertion by: (A) citing to particular parts of materials in the record, ... or (B) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.
Fed. R. Civ. P. 56(c)(1). Material facts contained in the moving party's statement of material facts that are not specifically controverted by the nonmoving party will be deemed admitted. Bankr. L. R. N.D. Ga. 7056-1(a)(2).
RBC filed its statement of material facts (the "SOMF") [Doc. 11] and Plaintiff, with the reservation that it was admitting certain statements with respect to the deeds at issue in this proceeding to the extent not inconsistent with the documents, admitted each of the statements of material fact. [Docs. 14, 21]. RBC admitted some of the allegations in its answer to the Complaint, [Doc. 8] and these facts are undisputed.
Debtor McArthur Jackson ("Debtor Husband") acquired title to real property located at 3914 Box Wood Walk, Ellenwood, Georgia (the "Property") pursuant to a warranty deed dated December 15, 2004, in consideration of the purchase price of $339,900.00 (the "Warranty Deed"). [Doc. 8 at 3 ¶ 9]. The Warranty Deed was filed and recorded on the real property records with the clerk of the Superior Court of DeKalb County, Georgia at Deed Book 16957, Page 183 and bearing a recording date of December 30, 2004 at 12:10 pm. [Id.]
On December 16, 2004, Debtor Husband executed a security deed encumbering the Property in favor of RBC (the "Security Deed"). [Doc. 11 ¶ 1; Doc. 14 at 2]. In the Security Deed, Debtor Husband covenanted that he [Doc. 11 ¶ 5; Doc. 1 at 15].1 In the Security Deed, Debtor Husband did not limit the conveyance of the Property in any way nor did he reserve or exclude any interest in the Property in favor of Debtor Wife. [Doc. 11 ¶ 6; Doc. 1 at 11].2 Debtor Husband granted the Security Deed to RBC in consideration of the purchase money loan recited therein. [Doc. 11 at 1 ¶ 4; Doc. 21 at 2]. Debtor Husband executed the Security Deed at the law offices of Harger W. Hoyt, P.C. [Doc. 11 ¶ 2; Doc. 21]. Debtor Husband delivered the Security Deed to the lawyer for RBC at the law offices of Harger W. Hoyt, P.C. on December 16, 2004. [Doc. 11 ¶ 3; Doc. 21 at 2]. Debtor Wife is not expressly named as a party to the Security Deed. [Doc. 1 ¶ 17; Doc. 8 ¶ 17].
Also on December 16, 2004, Debtor Husband executed a "Joint Tenancy with Survivorship Warranty Deed" (the "Gift Deed" and with the Security Deed, the "Deeds") in favor of Debtor Wife, wherein Debtor Husband stated that "the purpose of this deed is to convey a one-half interest to my spouse with love and affection." [Doc. 11 at 2 ¶ 7; Doc. 14 at 3]. The only consideration expressly identified in the Gift Deed is: "LOVE AND AFFECTION." [Doc. 11 at 3 ¶ 9; Doc. 14 at 4] (emphasis in the original). Debtor Husband executed the Gift Deed at the law office of Harger W. Hoyt, P.C. [Doc. 11 at 2 ¶ 7; Doc. 21 at 2].
Like the Warranty Deed, the Security Deed and the Gift Deed were both recorded at 12:10 p.m., December 30, 2004. [Doc. 11 at 3 ¶ 10; Doc. 14 at 4]. As noted above, the Warranty Deed was recorded at page 183 in the county deed book. The Gift Deed received a page number of 184 in the county deed book, and the Security Deed received a page number of 185 in the same deed book. [Doc. 11 at 3 ¶ 11; Doc. 14 at 4].
Section 544(a)(3) of the Bankruptcy Code gives the Trustee the "rights and powers" of a bona fide purchaser of real property and the power to avoid any transfers such a bona fide purchaser could avoid.3 Section 544 "does not give the trustee any greater rights than he, or any other person, would have as a bona fide purchaser or creditor under applicable state law. . . ." In re Henderson, 284 B.R. 515, 519 (Bankr. N.D. Ga. 2002) (Mullins, J.) (quoting Maine Nat'l Bank v. Morse (In re Morse), 30 B.R. 52, 54 (B.A.P. 1st Cir. 1983)); c.f. In re Hagendorfer, 803 F.2d 647, 650 (11th Cir. 1986) (). State law governs who may be a bona fide purchaser and the rights of such a purchaser. In re Hagendorfer, 803 F.2d at 649 ( Alabama state law). Therefore, the issue in this proceeding is one of Georgia law.
"To qualify as a bona fide purchaser for value without notice, a party must have neither actual nor constructive notice of the matter at issue." Stearns Bank, N.A. v. Rent-a-Tent, Inc. (In re Rent A Tent, Inc.), 468 B.R. 442, 456 (Bankr. N.D. Ga. 2012) (Drake, J.) (quoting Virginia Highland Civic Ass'n, Inc. v. Paces Properties, Inc., 250 Ga. App. 72, 550 S.E.2d 128 (2001) (internal citations omitted)). Id. (quoting Va. Highland Civic Ass'n, 250 Ga. App. at 74). "Chain of title includes all recorded instruments pertaining to the property that are executed by an entity holding a recorded interest in the property at the time of the execution of the instrument." Id. at 457 (citing Suntrust Bank v. Equity Bank, S.S.B., 312 Ga. App. 644, 719 S.E.2d 539 (2011) (internal citations omitted)).
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