BLACKBURN, Senior Appellate Judge.
Following the entry of default judgment establishing liability in this personal injury case, defendant Latoria Newsome moved to set aside the judgment on the ground that she was never properly served with process. The trial court denied the motion, denied Newsome's related motion to dismiss the action, denied her request to conduct any discovery, denied her request for oral argument on these motions, and further granted plaintiff Jim Johnson's motion for attorney fees under OCGA § 9-15-14. With leave of this Court, Newsome appeals the orders, arguing primarily that the trial court erred in finding she was properly served. Because some evidence supported a finding of proper service, we affirm the order denying the motions to set aside and to dismiss. We also affirm the order denying oral argument on these motions. However, as conceded by Johnson, we must vacate the order awarding attorney fees in that the court failed to hold a hearing, to make findings of fact, or to designate which subsection of OCGA § 9-15-14 supported the award; we accordingly remand the case with the instruction that the court follow the requisite procedures in determining this issue. As also conceded by Johnson, we must reverse the discovery order insofar as it precludes Newsome from conducting any discovery on damages, as that issue remains to be tried before a jury.
The essential facts are undisputed. Following a July 2007 auto collision in which Newsome allegedly rear-ended Johnson, Johnson in September 2008 filed a personal injury action against Newsome (an Alabama resident) in a Georgia superior court. A nonparty private process server over the age of 18 tried repeatedly to serve Newsome, speaking with her several times on the phone and setting up times to meet her at her self-described Alabama residence to serve process. She was not there each time. In late February 2009, the process server eventually did appear at Newsome's residence when she was home and spoke to her through a closed opaque door, receiving verbal confirmation that she was Newsome; nevertheless, she refused to open the door or to show herself even though the process server announced that he only intended to serve her with legal documents. She instructed him to leave the documents at the door; he agreed, attaching the documents to the door and leaving. The initial affidavit of service was filed on May 1, 2009, which was amended by a more detailed affidavit on July 22, 2009. See OCGA § 9-11-4 (i).
When Newsome failed to file an answer more than two months after service, Johnson successfully moved for default judgment on the issue of liability. Three weeks following entry of default judgment, Newsome filed an answer and requested the opportunity to conduct discovery. When Johnson then moved to strike the answer as untimely, Newsome moved to set aside the default judgment, to dismiss the action for insufficient service, and to have the trial court hear oral argument on the motions. Johnson opposed Newsome's motions and also filed a motion for attorney fees under OCGA § 9-15-14. Without conducting any hearing, the trial court struck Newsome's untimely answer, denied Newsome's motions to set aside the default judgment and to dismiss the action for want of proper service, denied Newsome the right to conduct any discovery, denied Newsome's request for oral argument, and awarded Johnson attorney fees in the amount of $5,000. With leave of this Court, Newsome appeals these orders.
1. Newsome first argues that the trial court erred in denying her motions to set aside the default judgment and to dismiss the complaint, which motions claimed that service of process was insufficient. We hold that the evidence supported the trial court's factual finding that Newsome was properly served.
The relevant statutes provide as follows. OCGA § 9-10-94, which governs the service of process on nonresident defendants, states that such defendants "may be served with a summons outside [Georgia] in the same manner as service is made within [Georgia]," and that such service may be effectuated by any person authorized to make service by the laws of the foreign state. Here, Alabama authorized any person 18 years old and older, who was not a party to the action, to serve process. Ala. R. Civ. P. Rule 4 (i) (1) (B). "Under the facts of the case sub judice, the two methods of service in Georgia [were] to either serve the defendant personally or to leave `copies thereof at [her] dwelling house or usual place of abode with some person of suitable age and discretion then residing therein.' OCGA § 9-11-4 [(e)] (7)." Jacobson v. Garland.
Jacobson v. Garland, 227 Ga. App. 81, 81-82 ( 487 SE2d 640) (1997).
In determining whether the trial court erred in its factual finding that Newsome was personally served, we apply the following principles:
Where a defendant claims there was a failure of service, the trial court has the authority to decide as a factual matter whether service has occurred.
This finding will not be disturbed as long as there is some evidence to support it. Further, when a defendant in a lawsuit challenges the sufficiency of service, he bears the burden of showing improper service. The process server's return of service can only be set aside upon evidence which is not only clear and convincing, but the strongest of which the nature of the case will admit.
(Citation and punctuation omitted; emphasis supplied.) Jacobson, supra, 227 Ga. App. at 83-84. See Nesmith v. Landmark Dodge, Inc.
Nesmith v. Landmark Dodge, Inc., 302 Ga. App. 315, 315-316 ( 691 SE2d 240) (2010).
Some evidence supported the trial court's finding here that personal service occurred. First, we note that Newsome submitted no evidence whatsoever to carry her burden of showing improper service, let alone the strongest, clear, and convincing evidence required to overcome a return of service. For example, she did not even submit an affidavit from herself that denied she was served or that challenged any of the facts set forth in the affidavits of service. Rather, she relied solely on her interpretation of the wording in those affidavits so as to argue proper service did not occur. Thus, the trial court had no evidence controverting any of the facts set forth in the affidavits submitted as returns of service.
Second, Newsome's arguments regarding the wording of the affidavits have no merit. She argues that the first affidavit showed only that the process server tacked the documents to the door; that the second affidavit setting forth more details as to what occurred should not have been considered; that no evidence showed that the residence where service occurred was her residence; that the second affidavit did not state that she identified herself as Latoria Newsome; that her hiding behind the door so as to prevent the male process server from seeing her meant that he could not personally identify her as Newsome; that the affidavits contained conflicting information in that three dates (all within the same week) were identified as the dates of service and in that the first affidavit initially indicated her address was either 543 Uchee Road or 537 A Uchee Road (although both affidavits later described the address as 537 A Uchee Road); and that the affidavits were not timely filed. These arguments fail.
OCGA § 9-11-4 (i) specifically authorizes a court to consider subsequent affidavits that amend previous returns of service unless it clearly appears that material prejudice to the process receiver would result. As no such prejudice appeared here, the trial court properly considered the second affidavit of service, which identified Latoria Newsome as the person on whom service was being attempted and which for the sake of brevity referred to her as "Ms. Newsome" thereafter. The process server spoke repeatedly with "Ms. Newsome" on the phone, who identified her residential address to the server and who promised to be there at certain times for service. He went to that identified address, where a woman identified herself as "Ms. Newsome" but refused to open the door, despite his explanation that he was only there to serve legal documents. Per her instruction, he left the documents at the door and left.
"It is the duty of a defendant to accept and submit to the service of process when he is aware of the process server's purpose." (Punctuation omitted.) Jacobson, supra, 227 Ga. App. at 83. Indeed,
[i]t is generally held that if the process server and the defendant are within speaking distance of each other, and such action is taken as to convince a reasonable person that personal service is being attempted, service cannot be avoided by physically refusing to accept the summons.
(Punctuation omitted.) Id. Here, some evidence showed that Newsome gave her address to the process server, that she identified herself to him when he arrived at that address, that he informed her he intended to serve process on her, that she refused to open the door to allow him to see her or to allow him to physically hand the summons to her, and that at her instruction, he left the material at the door. This meets the standard set forth in Jacobson. See also Hickey v. Merrit. His failure to see her with his own eyes resulted from her refusal to open the door; she cannot seek to benefit from her own refusal to cooperate.
Hickey v. Merrit, 128 Ga. App. 764, 765-766 ( 197 SE2d 833) (1973).
The conflicting information as to the precise date of service (all dates were within the same week) or as to the precise address on Uchee Road is immaterial, as she failed to file any answer for several months, and as she was at the address at which service was made. Moreover, the trial court could certainly resolve any conflicts in the evidence. See Vibratech, Inc. v. Frost ("[f]actual disputes regarding service are to be resolved by the trial court, and the court's findings will be upheld if there is any evidence to support them") (punctuation omitted; emphasis in original).
The argument as to the timing of the filing of the return of service bears no weight in determining whether in fact proper service was made. As stated in Montgomery v. USS Agri-Chemical Div.:
Where there has been valid service and no return, the deficiency may be supplied before taking further steps in the cause. If there has been service and a voidable or defective return, it may be amended even after judgment, so as to save that which has been done under service valid in fact but incompletely reported to the court.
For in its last
analysis it is the fact of the service, rather than the proof thereon by the return, which is of vital importance. . . . [This comports with] the well settled rule that the critical question is the fact of service and not the nature of the return. . . . [Thus,] the actual facts control, and if jurisdiction was actually acquired over the persons of the defendants, that fact should govern. It is the fact of service which confers jurisdiction, and not the return, and the latter may be amended to speak the truth.
Montgomery v. USS Agri-Chemical Div., 155 Ga. App. 189, 191-192 (2) ( 270 SE2d 362) (1980).
(Citations and punctuation omitted; emphasis supplied.) See OCGA § 9-11-4 (h) ("[f]ailure to make proof of service shall not affect the validity of the service").
Finally, the cases cited by Newsome as showing that the leaving of the process at the door was insufficient ( Benton v. Modern Finance Investment Co.; Fain v. Hutto; Thomas v. Johnson ) are all distinguishable in that in each of these cases, the process server left the summons at the defendant's door without first speaking with the defendant at that door to confirm that the defendant was at home and was aware service was being attempted. Physically seeing the defendant is not the critical factor; rather, interacting or speaking with that defendant at the location at the time of service so as to alert her to the fact that service was being attempted is the critical factor, at least under the facts of the present case. This fact addresses the concern expressed by Benton that otherwise the defendant might be absent from the abode for an extended length of time or might be in the process of moving from one residence to another, or that the copy might be destroyed by inclement weather or be removed by other persons. Supra, 244 Ga. at 535.
Benton v. Modern Finance Investment Co., 244 Ga. 533, 535 ( 261 SE2d 359) (1979).
Fain v. Hutto, 236 Ga. 915, 917 (1) ( 225 SE2d 893) (1976).
Because some evidence supported the trial court's finding that personal service occurred, we affirm the trial court's orders striking the untimely answer, denying the motion to set aside default judgment, and denying the motion to dismiss the action.
2. Newsome contends that the trial court erred in failing to allow her to present oral argument on the motions to strike the answer, to set aside the default judgment, to dismiss the action, and to make discovery. However, Uniform Superior Court Rule 6.3 states: "Unless otherwise ordered by the court, all motions in civil actions, including those for summary judgment, shall be decided by the court without oral hearing, except motions for new trial and motions for judgment notwithstanding the verdict. . . ." "Accordingly, unless a hearing is specifically required by Rule 6.3, a trial court's failure to conduct a hearing will not constitute reversible error absent abuse of discretion." Stewart v. Turner. Newsome has failed to show any abuse of discretion here. Accordingly, we affirm the order denying oral argument on the referenced motions.
Oral argument on summary judgment motions is required when timely and properly requested. Id.
Stewart v. Turner, 229 Ga. App. 119, 120 (1) ( 493 SE2d 251) (1997).
3. Newsome complains that the trial court erred in awarding Johnson attorney fees under OCGA § 9-15-14. Specifically, Newsome notes that the court neither held any hearing on the matter nor made any findings of fact specifying the conduct that justified the award. Johnson concedes that due to these defects, the award should be vacated. See MacDonald v. Harris ("[w]here the trial court fails to hold a required hearing on a motion for attorney fees, or fails to support the award with requisite findings, our normal procedure is to vacate the award and remand for further proceedings"). See also DeRossett Enterprises v. Gen. Elec. Capital Corp. ("[t]he trial court must conduct a hearing on a motion for attorney fees and make findings of fact that specify the conduct upon which the award is made").
MacDonald v. Harris, 266 Ga. App. 287, 288 ( 597 SE2d 125) (2004).
DeRossett Enterprises v. Gen. Elec. Capital Corp., 275 Ga. App. 728, 731 (4) ( 621 SE2d 755) (2005).
We agree with the parties but state further that on remand, the trial court must also "identify the statutory basis under either subsection (a) or (b) [of OCGA § 9-15-14] for the award." Meacham v. Franklin-Heard County Water Auth. Accordingly, we vacate the order awarding Johnson attorney fees and remand the case for proceedings consistent with the instructions contained in this Division.
Meacham v. Franklin-Heard County Water Auth., 302 Ga. App. 69, 77 (4) ( 690 SE2d 186) (2009).
4. Finally, Newsome argues that the trial court erred in refusing to allow her to make discovery on the issue of damages, which issue remained pending for jury trial. Johnson readily concedes that the trial court erred in this regard.
We agree with the parties that the trial court erred.
Even though liability was resolved by the default of defendant, the question of damages remained for resolution by a jury. Defendant has the right to introduce evidence on [her] own behalf on the issue of damages. It follows that [she] has
the right to engage in discovery to include the taking of plaintiffs deposition on the issue.
Taylor v. Stapp. SeeRussaw v. Burden (as defendant "was entitled to introduce evidence on his own behalf on the issue of damages, it follows that he also had the right to engage in discovery") (punctuation omitted). We reverse the trial court's order insofar as it does not allow Newsome any discovery on the issue of damages.
Taylor v. Stapp, 134 Ga. App. 468, 469 (3) ( 215 SE2d 23) (1975).
Russaw v. Burden, 272 Ga. App. 632, 635 (2) (b) ( 612 SE2d 913) (2005).
Judgment affirmed in part, reversed in part, and vacated in part, and case remanded with instruction. Barnes, P. J., and Andrews, P. J., concur.
BLACKBURN, Senior Appellate Judge.
DECIDED AUGUST 13, 2010.
xcept by an instrument which designates the grantor by name or otherwise, and purports to convey his property. Grantor must be a party to the efficient and operative parts of the instrument on conveyance.");
Daly v. Willis, 73 Tenn. (5 Lea) 100 (1880) ("A mortgage of land, purporting on its face to be by the husband alone, will not bind the wife who merely signs it.").
See also Ethridge v. TierOne
Bank, 226 S.W.3d 127 (Mo. 2007) ("`Signing, sealing, and acknowledging a deed by the wife in which her husband is the only grantor, . . . will not convey her estate.'");
Manning v. Wingo, 577 So.2d 865 (Ala. 1991) ("`When a conveyance is subscribed by more than one person and one of the signers' names is not shown in the granting clause or body of the instrument, such conveying instrument is void as to that person.'");
Whitaker v. Langdon, 302 Ky. 666,
195 S.W.2d 285 (1946) ("It is fundamentally necessary that a conveyance shall use the specific names of its grantors in the body of the instrument in order to pass valid title out of such grantors.").
See below for further discussion.
As later Tennessee decisions recognize, many of the cases just referenced "were dealing with an attempt by a married woman to convey her interest in land by merely signing the instrument following the name of her grantor husband." Polston v. Scandlyn, 21 Tenn.App. 252, 108 S.W.2d 1104, 1108 (1937). During the early history of Tennessee, a married woman's ability to own or convey property was highly circumscribed. "The power of married women to convey their general estate in lands by deed is vested in them by . . . statute only when their husbands join in the execution of the deed, or, in other words, their incapacity to convey real estate so held by them is removed, so as to enable them to convey by joint deed of the husband and wife, with proper privy examination of the latter, . . . in order to effect a valid conveyance of the title of a married woman to her general estate the statute must be strictly pursued." Insurance Co. of Tenn. v. Waller, 116 Tenn. 1, 95 S.W. 811, 814 (1906).
Also, the traditional rule grew up at a time when technical words and phrases in conveyances (and wills) were strictly observed and enforced by the courts. In a battle between the "premises" and the "habendum" clauses in a deed in 1931 in Pryor v. Richardson, 37 S.W.2d 114 (1931), the Supreme Court of Tennessee had this to say about the passing of these technical rules and the new focus on ascertaining intent from the whole of an instrument:
Technical rules in the construction of conveyances in this state have been abandoned, and, where possible, the intention of the grantor, as ascertained from a consideration of the entire instrument, is given effect.
. . . .
"The true rule is to look to the whole instrument, without reference to formal divisions, in order to ascertain the intention of the parties, and not to permit antique technicalities to override such intentions."
. . . .
. . . "A deed must be so interpreted as to make it operative and effective in all its provisions."
. . . .
. . . The intention of the grantor is to be ascertained and given effect by examination of the entire instrument, "regardless of the mere formal divisions of the instrument"; and in this search for intent, no preference is to be given to premises over habendum because of position or form.
. . . .
. . . [I]t is clearly the duty of the court to . . . reconcile the apparently conflicting terms when consistent with well recognized rules of construction.
Pryor, 37 S.W.2d at 114-16 (internal citations omitted).
See also Ballard v. Farley,
143 Tenn. 161, 226 S.W. 544 (1920) ("[I]f clauses or parts are conflicting or repugnant the intention is gathered from the whole instrument instead of from particular clauses, and if it is the clear intent of the grantor that apparently inconsistent
provisions shall all stand, it will be given that effect if possible. According to the trend of modern decisions, the technical rules of the common law as to the division of deeds into formal parts will not prevail as against the manifest intention of the parties as shown by the whole deed.").
Often the traditional rule produced harsh outcomes and was almost as often modified by the courts based on fine factual distinctions. In Kelton v. Brown, 39 S.W. 541 (Tenn.Ch.App. 1897), the Tennessee Court of Chancery Appeals rejected an attempt to defeat a mortgage deed based on the absence of the wife's name in the conveyance portion of the deed when the wife had signed the deed. In Kelton, the only name to appear in the deed was that of the grantee. The deed used the pronouns "I" and "We" when referring to the grantor(s) but did not name the wife. The court concluded that "[n]o particular form of words is essential. It is sufficient if the deed, however short and inartificial it may be, contains words showing the intention of the maker." Id. at 543. The repetitive use of the plural "we" in the deed was "sufficient to show the purpose and intention of the parties, and to show that the wife intended to and did join the husband in the execution of the deed[.]" Id. Even as early as 1897, the Kelton court distinguished earlier Tennessee cases — Berrigan v. Fleming, 70 Tenn. 271 (1879), and Daly v. Willis, 73 Tenn. 100 (1880) — in which a wife's signature was challenged as insufficient to convey an interest in property absent operative words of conveyance. See also Conyers v. Frye, 58 S.W. 1126, 1128 (Tenn.Ch.App. 1900) ("[l]f a married woman signs a deed with her husband, . . ., she is bound by it, although her name does not appear in the body of the instrument. It is immaterial whether the binding force of such deed results technically by way of estoppel, or in some other form, she cannot attack it.").
Admittedly on different facts, the Tennessee Court of Appeals recently rejected an argument analogous to that made here by HHP. In Thornton v. Countrywide Home Loans, Inc., No. W1999-02086/02087-COA-R3-CV, 2000 WL 33191366 (Tenn.Ct.App. Oct. 23, 2000), Ms. Thornton sought to avoid the effect of her signature at the end of a deed of trust by arguing that she was not identified as a grantor elsewhere in the document. The Tennessee Court of Appeals rejected this argument based on two findings: (1) Ms. Thornton was identified elsewhere in the deed of trust as a "party of the first part" which the court found was a substitute for "grantor"; and (2) Ms. Thornton "signed the deed of trust at the bottom, under her husband's signature, in order to convey her interest in the home." Thornton v. Countrywide Home Loans, Inc., 2000 WL 33191366, at *5. The Court of Appeals said:
While we agree with [Ms. Thornton] that she is not termed a "grantor" on the Countrywide deed, we do not find this fact dispositive. The Countrywide deed of trust secured the loan which the couple used to purchase their home. Ms. Thornton signed the deed of trust at the bottom, under her husband's signature, in order to convey her interest in the home. We do not believe that Countrywide's failure to list Ms. Thornton as a grantor has any effect upon her conveyance. It is simply unbelievable that a bank would consent to secure the entire amount of the purchase price of a home with something less than a complete interest in the property.
Thornton,
2000 WL 33191366, at *5.
The two cases most nearly on point cited by the parties are ironically both from Missouri but reach opposite conclusions on slightly different facts.
HHP relies most heavily on the opinion of the Missouri Supreme Court in Ethridge. In Ethridge, husband and wife refinanced the home they owned as tenants by the entireties. The loan documents identified the husband as a married man, and stated incorrectly that the home was his sole and separate property. The deed of trust defined "Borrower" as "David Ethridge." The deed of trust contained only one signature line with the husband's name typed beneath it. The wife signed the deed of trust below her husband's signature. They both initialed each page. Ethridge, 226 S.W.3d at 129-30. The husband died, and the wife sought to retain the home free of the refinanced debt.
The Missouri Supreme Court found 19th Century case law controlled its decision in favor of the wife: "The party in whom the title is vested, [sic] must use appropriate words to convey the estate. Signing, sealing, and acknowledging a deed by the wife in which her husband is the only grantor, [sic] will not convey her estate.'" Ethridge, 226 S.W.3d at 132 (quoting Bradley v. Missouri Pac. Ry. Co., 91 Mo. 493, 4 S.W. 427, 428 (1887)) (alteration in original).
Aurora relies on a more recent Missouri bankruptcy court decision that distinguished Ethridge: Rouse v. Wells Fargo Bank, N.A. (In re Suhrheinrich), 2009 WL 3335027. Michael Suhrheinrich borrowed $208,000 to purchase real property. To secure repayment, Michael and his wife, Barbara Suhrheinrich, executed a deed of trust. The deed of trust referred to the grantor as "Borrower" and in the definitions section "Borrower" was defined as "Michael J. Suhrheinrich, A Married Man." In re Suhrheinrich, 2009 WL 3335027, at *1. However, on the signature page at the end of the deed of trust and on a cover page, both Michael and Barbara Suhrheinrich were referred to as "Borrowers." On the signature page Barbara Suhrheinrich's name was typed along side the preprinted word "Borrower."
The Suhrheinriches filed bankruptcy and their Chapter 7 trustee challenged the validity of the deed of trust on the basis of Ethridge. The trustee argued that the real property was owned by the Suhrheinriches as tenants by the entirety but only Michael was a grantor under the deed of trust — a defect that rendered the deed of trust invalid under Missouri law. The bankruptcy court analyzed Ethridge and found "slight" but important distinctions that warranted a different outcome:
[T]he Court finds it significant that Barbara Suhrheinrich's name was typed below the line where her signature appears, alongside the preprinted word "Borrower." The presence of these notations on the DOT takes Barbara Suhrheinrich's signature beyond the mere "signing, sealing, and acknowledging a deed by the wife in which her husband is the only grantor will not convey her estate" described in
Ethridge — it is an indication that the DOT was drafted, and Barbara Suhrheinrich signed it, with the intention that she be a grantor ("Borrower") under the DOT.
Second, the Court accepts [the bank's] contention that the cover page constitutes part of a deed of trust and should be considered in determining whether Barbara Suhrheinrich is a grantor under the DOT.
. . . .
Finally, Barbara Suhrheinrich's testimony bolsters the Court's conclusion that she is a grantor/borrower under the DOT. Barbara Suhrheinrich testified that she intended to convey an interest in her home to [lender] . . . and understood that she had to sign the DOT in order for it to be valid. In contrast to the wife in
Ethridge who signed the deed of trust because her husband "was
the `head of household' and made all the couple's financial decisions," Barbara Suhrheinrich previously worked as a bookkeeper for a mortgage company and testified that she understood the necessity for both spouses to sign a deed of trust intended to encumber jointly owned property.
. . . [T]he Court finds that the DOT'S failure to list Barbara Suhrheinrich as a Borrower on the second . . . page of the DOT does not invalidate the DOT. When the DOT is considered in its entirety, it unambiguously names both owners of the property subject to the DOT and is therefore valid under Missouri law. . . . [T]o the extent there is ambiguity in the DOT, the evidence shows that Barbara Suhrheinrich fully intended to convey to [lender] a mortgage lien interest in her home.
Id. at *3 (internal citations and footnote omitted).
4. The Aurora Deed of Trust places this case among the exceptions
This case is more like Suhrheinrich than Ethridge, however the facts here are more compelling than either case that Tarun Surti conveyed his interest to Aurora. Unlike Ethridge, there is no claim anywhere in the Aurora Deed of Trust that Lata Surti was the only owner of the Property. Just the opposite appears everywhere in the Aurora Deed of Trust — Lata Surti is identified as "a married person" and the incorporated derivation clause shows that the Property was conveyed to "Tarun N. Surti and wife, Lata T. Surti."
The Aurora Deed of Trust identifies a "Co-signer" who signs as a "Borrower" to "mortgage, grant and convey the co-signer's interest in the property" to secure the debt of another. "Co-signer" is a grantor on page 8 of the Aurora Deed of Trust as much as any other "Borrower" is a grantor on page 2. As in Suhrheinrich, Tarun Surti signed the Aurora Deed of Trust on page 11, on a line with "Borrower" preprinted, and in this case after a sentence stating that the Borrower(s) signing below accept and agree to the terms above — including the conveyance in Paragraph 13. This is all consistent with the conclusion that Tarun Surti intended to be a Borrower and clearly identifying him as the same person identified in the derivation clause as an owner of the Property.
There is no cover page here but the Aurora Deed of Trust contains the important Paragraph 13 that makes complete sense of Tarun Surti's initials on each page and of his signature on a "Borrower" line by explaining that he is a "Co-signer" who conveyed his interest in the Property to secure the Note signed by his wife. No separate clause of conveyance anything like Paragraph 13 appears in Ethridge. There is no separate grantor clause or reference to the possibility of a co-signer who is also a grantor in either Ethridge or Suhrheinrich. The second grantor clause in Paragraph 13 firmly cements the Aurora Deed of Trust as effective to convey Tarun Surti's interest in the Property.
As in Suhrheinrich, this conclusion is confirmed by the unchallenged affidavits of Lata Surti and Tarun Surti. This extrinsic evidence of intent becomes relevant only if the document is ambiguous. More about this below.
Other cases cited by the parties are distinguishable for many of the same reasons just addressed. In Sullivan v. Mortgage Electronic Registration Systems, Inc. (In re Wirth), 355 B.R. 60, 61 (N.D.Ill. 2005), the deed of trust defined "Borrower" as "Marilyn Marsha Williams, a single person." Similar to Ethridge, this definition was inaccurate. Williams was married to Wirth at the time though that relationship does not appear anywhere in the deed of trust or in any derivation clause.
Wirth signed the deed of trust on a "Borrower" line. The deed of trust in Wirth had a Paragraph 13 similar to Paragraph 13 in the Aurora Deed of Trust. The bankruptcy court in Wirth accepted the argument made here by HHP that Wirth could not be a "Co-signer" because Williams was the only "Borrower" defined in the deed of trust.
The coincidence of a Paragraph 13 in Wirth nearly identical to the Paragraph 13 in Aurora's Deed of Trust is not discussed by the parties but may be explained by the notation on the Aurora Deed of Trust, "Fannie Mae/Freddie Mac Uniform Instrument Form 3043."
The district court in Wirth acknowledged that Wirth's signature on a line designated for a "Borrower" could not be easily reconciled with the fact that only Williams was defined as a Borrower elsewhere in the document. As in Ethridge, the district court in Wirth cited early 19th Century Illinois case law to support its conclusion that Wirth was "not a party" to the deed of trust and "his interest in signing the agreement is irrelevant." Wirth, 355 B.R. at 61.
The district court in Wirth did not address the possibility that "Borrower" was used in more than one sense in the deed of trust or the possibility that "Borrower" was ambiguous in light of Paragraph 13 if it meant only a Borrower who had not signed the note. There is no mention of the definition of "Note" in the Wirth deed of trust — a provision of the Aurora Deed of Trust that challenges the logic in Wirth. There is no mention in Wirth of a derivation clause. The derivation clause is incorporated into the Aurora Deed of Trust reveals that Tarun Surti is not a stranger to the document but was married to the other "Borrower" at the time the "married person" took title to the Property. Perhaps more importantly, Wirth too lightly dismisses all inquiry into the intent of the parties.
In Kindt v. ABN AMRO Mortgage Group, Inc. (In re Wallace), No. 06-1322, 2007 WL 6510864, at *1-*2 (Bankr. S.D.Ohio Nov. 15, 2007) (unpublished), an Ohio bankruptcy court relying in part on Tennessee decisions, concluded that a mortgage which "contains no reference whatsoever" to Mrs. Wallace did not encumber Mrs. Wallace's one-half interest in the property mortgaged — notwithstanding that Mrs. Wallace signed and acknowledged the mortgage. Wallace is distinguishable because there is no Paragraph 13 or similar clause that would explain the presence of Mrs. Wallace's signature at the end of the deed of trust. Unlike Tarun Surti in the Aurora Deed of Trust, Mrs. Wallace was not identified as a "Borrower" by a preprinted line — her handwritten addition at the end of the Wallace deed of trust was without explanation.
Finally, Schlarman v. Chase Home Finance, LLC (In re Padgitt), No. 07-2063, 2008 WL 4191517, at *2 (Bankr.E.D.Ky. Sept. 11, 2008) (unpublished), stands for the proposition that under Kentucky law a spouse not identified as a grantor in a deed of trust does not convey their interest in mortgaged property unless "they were named or otherwise sufficiently identified in the body of the instrument to make it clear that they were grantors." There is no mention in Padgitt of anything like Paragraph 13 of the Aurora Deed of Trust. In Padgitt, only a "bare" signature appears — there is no indication that the signer was a "Borrower" of any sort under the deed of trust. There was no separate granting or conveyancing clause in Padgitt for a co-signer to explain the extra signature.
5. Contractual ambiguity would not change the result
The outcome here respects rules of construction recognized by the Tennessee courts. If the language of a contract is not ambiguous, the court determines the intention of the parties from the four corners of the contract as written. See, e.g., Petty v. Sloan, 197 Tenn. 630, 277 S.W.2d 355, 361 (1955). Carolyn B. Beasley Cotton Co. v. Ralph, 59 S.W.3d 110, 113-14 (Tenn.Ct.App. 2000). "[W]here the intention is uncertain, resort may be had to subordinate rules of construction." Hicks v. Sprankle, 149 Tenn. 310, 257 S.W. 1044, 1045 (1924) (citations omitted). A contract is ambiguous if "it is of uncertain meaning and may fairly be understood in more ways than one." Empress Health Beauty Spa, Inc. v. Turner, 503 S.W.2d 188, 190-91 (Tenn. 1973).
Here, an argument could be made that the Aurora Deed of Trust is ambiguous insofar as "Borrower" is defined both as one who signed the Note and as a "Cosigner" who did not sign the Note but signed the Deed of Trust to convey an interest in the Property to secure the Note. As explained above, this dual use of the word "Borrower" does not create uncertainty with respect to the outcome determinative issue here: all Borrowers — those that have and those that have not signed the Note — conveyed their interests in the Property by signing the Aurora Deed of Trust. But if this dual use of Borrower can be construed to be a material ambiguity, the further analysis then permitted by Tennessee law does not change the outcome for HHP.
"If the language of the contract is not free of ambiguity, extrinsic evidence, such as evidence of the interpretation the parties themselves have given the contract, may be received to determine the intention of the parties." Beaty v. Brock Blevins Co., 319 F.2d 43, 46 (6th Cir. 1963) (citing Fidelity-Phenix Fire Ins. Co. of New York v. Jackson, 181 Tenn. 453, 181 S.W.2d 625 (1944)). Uncontested affidavits of Lata Surti and Tarun Surti confirm the couple's understanding and intention to encumber their combined interests in the Property to secure repayment of the Aurora debt. The Surti's bankruptcy schedules list the Aurora mortgage as secured by both debtors' interests in the Property. There is no contrary evidence.
6. HHP's notice of the Aurora Deed of Trust
Even if HHP could prevail as a matter of contract construction, HHP's position fails to account for the effect of inquiry notice under Tennessee case law. The Tennessee Supreme Court exhaustively set forth the relevant forms of notice in Blevins v. Johnson County, 746 S.W.2d 678, 682-83 (Tenn. 1988):
Notice is generally said to take two forms, actual or constructive. Constructive notice is notice implied or imputed by operation of law and arises as a result of the legal act of recording an instrument under a statute by which recordation has the effect of constructive notice. "It has been well said that `constructive notice is the law's substitute for actual notice, intended to protect innocent persons who are about to engage in lawful transactions. . . .'" Nevertheless, "[a]ctual notice must be given in the absence of a statute providing some means for constructive notice." Constructive notice encourages diligence in protecting one's rights and prevents fraud. If either no statute requires recordation to create constructive notice or a recordable instrument has not been
property recorded, then actual notice is required to estop a person.
While "[i]t is true that recordation creates constructive notice as distinguished from actual notice, in that ordinarily actual notice is when one sees with his eyes that something is done," another kind of notice occupying what amounts to a middle ground between constructive notice and actual notice is recognized as inquiry notice. . . . [I]n Tennessee, [inquiry notice] has come to be considered as a variant of actual notice. "The words `actual notice' do not always mean in law what in metaphysical strictness they import; they more often mean knowledge of facts and circumstances sufficiently pertinent in character to enable reasonably cautious and prudent persons to investigate and ascertain as to the ultimate facts.'" Even a good faith failure to undertake the inquiry is no defense. Thus, "`[w]hatever is sufficient to put a person upon inquiry, is notice of all the facts to which that inquiry will lead, when prosecuted with reasonable diligence and good faith.'"
. . . .
. . . [A] recital in a deed may give rise to the necessity to make an inquiry to determine the facts recited or be estopped from asserting a state of affairs different from those that would have been revealed by diligent investigation. This rule controlling inquiry notice is well-established in Tennessee.
Blevins v. Johnson County, 746 S.W.2d at 682-83 (internal citations omitted). Facts sufficient to put a party upon inquiry will not allow the party to "`protect himself upon the ground that he intentionally omitted to make inquiry in order to avoid knowledge[.]'"
Id. at 684 (quoting
Haywood v. Ensley Haywood,
27 Tenn. 460, 467 (1847)).
See also Fitzpatrick v. Fredenberg (In re Wilson), Adv. No. 09-3162,
2010 WL 56080 (Bankr.E.D.Tenn. Jan. 5.2010).
HHP does not contest that the Aurora Deed of Trust is in the chain of title of the Property. Nor does HHP assert that it was unaware of the Aurora Deed of Trust when it extended its loan and took its mortgage. HHP does not claim that Debtors in anyway led HHP to believe that the Aurora Deed of Trust was limited to Lata Surti's survivorship interest. HHP has not offered any evidence that it believed the Aurora Deed of Trust encumbered only Lata Surti's survivorship interest at the time it extended its loan. Indeed, the Aurora Deed of Trust is listed as a "permitted encumbrance" in Exhibit B of HHP's Deed of Trust. (J. Stip. Ex. 8, at Ex. B.)
To paraphrase the Tennessee Court of Appeals in Thornton v. Countrywide Home Loans, Inc., 2000 WL 33191366, at *5, it is "simply unbelievable" that Aurora's predecessor would loan Lata Surti $1.2 Million on the strength of her survivorship interest alone. HHP does not claim by affidavit or otherwise that it made any inquiry with respect to Tarun Surti's signature on the Aurora Deed of Trust. If HHP had any question regarding the scope of the Aurora Deed of Trust, "[e]ven a good faith failure to undertake inquiry is no defense." Blevins v. Johnson County, 746 S.W.2d at 683.
III. CONCLUSION
The Aurora Deed of Trust encumbers the interests of both Lata Surti and Tarun Surti in the property located at 899 South Curtiswood Lane, Nashville, Tennessee. A separate order will be entered granting Aurora's motion for summary judgment.
ORDER
For the reasons stated in the Memorandum filed contemporaneously herewith, IT IS ORDERED that Defendant's Motion for Summary Judgment is granted; Plaintiff's Motion for Summary Judgment is denied.
IT IS SO ORDERED.