Burton Perlman
This document has been electronically entered in the records of the United States Bankruptcy Court for the Southern District of Ohio.
IT IS SO ORDERED.
______________________
Burton Perlman
United States Bankruptcy Judge
Chapter 7
Judge Burton Perlman
DECISION ON CROSS-MOTIONS FOR SUMMARY JUDGMENT
In this Chapter 7 bankruptcy case, the panel trustee, Eileen K. Field, (hereafter "Plaintiff") seeks to avoid the lien on the one-half interest held by Debtor in certain real estate. Wells Fargo Home Mortgage, lender on the real estate, (hereafter "Defendant" or "Wells Fargo") contests Plaintiff's position. The parties have filed cross-motions for summary judgment.
I. Jurisdiction.
This Court has jurisdiction of this matter pursuant to 28 U.S.C. § 1334(b) and the General Order of Reference entered in this district. This is a core proceeding arising under 28 U.S.C. § 157.
II. The Present Motions.
In support of her Motion for Summary Judgment, Plaintiff includes a copy of the General Warranty Deed conveying the property to Debtor and his wife. Plaintiff includes also a copy of the Mortgage here in question.
Defendant in its Motion for Summary Judgment includes a copy of the General Warranty Deed and a copy of the Note secured by the Mortgage.
III. Summary Judgment.
As set forth in Federal Rule of Civil Procedure 56(a), made applicable to these proceedings by Federal Rule of Bankruptcy Procedure 7056, "[t]he 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." With regard to what is material, "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248,106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986).
The filing of cross-motions does not alter the standards governing the determination of summary judgment motions.
See
Taft Broad. Co. v. United States,
929 F.2d 240, 248 (6th Cir.1991);
Collins, 292 B.R. at 845. But " 'cross motions for summary judgment do authorize the court to assume that there is no evidence which needs to be considered other than that which has been filed by the parties.' "
Schafer v. Rapp (In re Rapp),
375 B.R. 421, 428 (Bankr. S.D. Ohio 2007) (quoting
Greer v. United States,
207 F.3d 322, 326 (6th Cir. 2000)).
In re Peed,
403 B.R. 525, 529-530 (Bankr. S.D. Ohio 2009).
IV. The Facts.
The material facts in this controversy are not in dispute. Debtor, Christopher McKinney ("Debtor"), filed a Chapter 7 bankruptcy petition on March 1, 2011. At the time of the filing, Debtor and his wife, Defendant Tina McKinney, jointly owned the real estate at 5921 Country View Drive, Hamilton, Ohio 45011 (the "Real Estate"). A General Warranty Deed transferring the Real Estate to Debtor and Defendant Tina McKinney's names was recorded in the Butler County Recorder's Office on December 11, 1995. On the date of the petition filing, Defendant Wells Fargo held a Mortgage on the Real Estate. The Mortgage was recorded in the Butler County Recorder's Office on October 1, 2010.
The second sentence of the Mortgage states: "The Mortgagor is Tina M. McKinney, a married person, whose current mailing address is 5921 Country View Drive, Hamilton, Ohio 10000 ('Borrower')." The granting clause reads "For this purpose, Borrower does hereby mortgage, grant and convey to the Lender" the Real Estate. The Mortgage contains the following at paragraph 12:
Successors and Assigns Bound; Joint and Several Liability; Co-Signers. The covenants and agreements of this
Security Instrument shall bind and benefit the successors and assigns of Lender and Borrower, subject to the provisions of paragraph 9(b). Borrower's covenants and agreements shall be joint and several. Any Borrower who co-signs this Security Instrument but does not execute the Note: (a) is co-signing this Security Instrument only to mortgage, grant and covey that Borrower's interest in the Property under the terms of this Security Instrument; (b) is not personally obligated to pay the sums secured by this Security Instrument; and (c) agrees that Lender and any other Borrower may agree to extend, modify, forbear or make any accommodations with regard to the terms of this Security Instrument or the Note without that Borrower's consent.
Page ten of the Mortgage is signed by Defendant Tina M. McKinney and Debtor. Both Debtor and Defendant Tina M. McKinney are named in the notary acknowledgment.
The Note accompanying the Mortgage is signed only by Defendant Tina M. McKinney. Debtor did not sign the Note.
V. Discussion.
In approaching the issues presented in the controversy before us, we must look to Ohio law. This Court has said:
The Bankruptcy Court must look to state law to determine whether a mortgage is valid.
Drown, supra
403 B.R. at 531, citing
Butner v. United States,
440 U.S. 48, 55,
99 S. Ct. 914,
59 L. Ed.2d 136 (1979). In Ohio, "[o]nly properly executed mortgages take priority over a bona fide purchaser. . . ."
Drown, supra
403 B.R. at 531, citing
Kovacs v. First Union Home Equity Bank (In re Huffman),
408 F.3d 291, 293 (6th Cir. 2005);
Menninger v. First Franklin Fin. Corp. (In re Fryman),
314 B.R. 137, 138 (Bankr. S.D. Ohio 2004).
In re Earl, 2010 Bankr. LEXIS 1993, at *5 (Bankr. S.D. Ohio 2010)
The same principles are applicable here.
In the Earl case, this Court had before it a case whose facts are virtually indistinguishable from those in the present case. In the Earl case, the mortgage document identified only the debtor husband, Edward Earl, as "Borrower." Earl was a joint case for Edward Ray Earl and his wife Judith Ann Earl. Both husband and wife signed at the end of the mortgage. In the Earl case, this Court said:
The mortgage instrument, as described above, does not satisfy the requirements of Ohio law for a valid mortgage, at least in respect to the interest of Judith Earl. Here, the borrower is defined in the singular, Edward Ray Earl. The mortgage document itself only refers to the borrower in the singular. That both husband and wife have signed at the end of the document cannot carry defendant's case, for apart from Judith Ann Earl's single signature, there in no predicate in the language of the mortgage itself in reference to debtor Judith Ann Earl.
In re Earl, 2010 Bank. LEXIS 1993, at *6-7.
On the basis of the foregoing language, we held that the mortgagee's security interests did not extend to the non-"Borrower" wife, Judith Ann Earl. If the name Christopher D. McKinney is substituted for that of Judith Ann Earl, the quoted paragraph is directly applicable in the present case. We reached the conclusion that we did in
Earl, even though in
Earl both debtors had initialed each page of the mortgage. Neither Christopher nor Tina did so in the present case, so that the present case is even less favorable to Defendant than was
Earl.
Based upon our ruling in the Earl case, we hold that Defendant does not have a mortgage interest in property titled to Christopher D. McKinney.
Defendant argues for a contrary outcome on the strength of paragraph 12 of the Mortgage. Defendant contends that because of the language in paragraph 12, where a non-borrowing spouse signs the mortgage, that spouse should be held to have committed his interest to satisfaction of the mortgage. The Court cannot agree with this contention. Paragraph 12 cannot apply to Debtor, because Debtor is not a "Borrower." The portion of paragraph 12 upon which Defendant relies begins: "Any Borrower who co-signs this Security Instrument . . . ." (emphasis added). Borrower is defined in Black's Law Dictionary (9th Ed.): "A person or entity to whom money or something else is lent." The mortgage document itself identifies Tina M. McKinney as the "Borrower". Only Tina M. McKinney fits the definition of "Borrower," for only Tina signed the Note secured by the Mortgage. Christopher did not. Only Tina is identified as a person "to whom money . . . is lent." Money was not lent to Christopher, and there is no expectation of repayment from him.
Ohio law requires that, as contracts, mortgages must be interpreted under Ohio contract law. In re Morgeson, 371 B.R. 798, 804 (B.A.P. 6th Cir. 2007). As a matter of Ohio contract law, where a term is defined in a contract, that definition applies throughout the contract. Sherock v. Ohio Municipal League Joint Self-Ins. Pool, 2004 WL 605105, at *4 (Ohio App.11th Dist. 2004); Uzhca v. Derham, 2002 WL 506808, at *4 (Ohio App.2d Dist. 2004), aff'd, 100 Ohio St. 3d 323, 799 N.E.2d 634 (2003). Because Debtor is in fact not a Borrower as defined in the Mortgage, Defendant cannot invoke paragraph 12 against Debtors. See also Hardesty v. The Huntington National Bank, et al. (In re Payne), 450 B.R. 711 (Bankr. S.D. Ohio 2011); (Wallace did not contain a paragraph 12).
In support of its contrary contention, Defendant cites SFJV 2005, L.L.C. v. Ream, 187 Ohio App. 3d 715 (Ohio App. 2d Dist. 2010) and Mtge. Electronic Registration Sys. v. Kaehne, 2008 WL 3271249 (Ohio App. 11th Dist. 2008). These cases admittedly have fact patterns similar to those before us, and those courts have upheld the contract provision at issue here in paragraph 12 of the Mortgage. This Court, however, is not bound by those decisions. As we have stated, Ohio law is controlling in this case. The Ohio Supreme Court has not yet addressed the issue before this Court, and the issue that was before the court in Ream and Kaehne. Where the Ohio Supreme Court has not decided an issue, this Court must reach a conclusion as to what that Court would decide if the question were before it. Terlecky v. National City Mortgage Co. (In re Doutt), 2012 WL 3838767, at *3 (Bankr. S.D. Ohio 2012). The controlling principle has been stated thus by the U.S. Supreme Court:
Where an intermediate appellate state court rests its considered judgment upon the rule of law which it announces, that is a datum for ascertaining state law which is not to be disregarded by a federal court unless it is convinced by other persuasive data that the highest court of the state would decide otherwise. (citations omitted).
West v. American Telephone & Telegraph Co.,
311 U.S. 223, 237,
61 S.Ct. 179, 183,
85 L. Ed. 139, (1940).
This Court believes that the Ohio Supreme Court would decide the present issues otherwise than did the courts in
Ream and
Kaehne, because the courts in
Ream and
Kaehne failed to take into consideration fundamental propositions of Ohio law to which we have alluded in reaching our conclusions.
VI. Conclusion.
There being no genuine dispute as to any material fact, and because of our ruling that Plaintiff is entitled to judgment as a matter of law, the Court holds that the Mortgage at issue does not encumber Debtor Christopher McKinney's one-half interest in the Property. Therefore, Defendant's Motion for Summary Judgment will be DENIED and Plaintiff's Motion for Summary Judgment will be GRANTED. Copies to: Eileen Field
632 Vine Street, Suite 1010
Cincinnati, OH 45202
Amelia A. Bower
300 East Broad Street
Suite 590
Columbus, OH 43215
James E. Tebbutt
P.O. Box 165028
Grandview, OH 43216
Christopher McKinney
481 E. Sharon Road
Cincinnati, OH 45246
Tina McKinney
5921 Country View Drive
Hamilton, OH 45011
U.S. Trustee
36 East Seventh Street
Suite 2050
Cincinnati, OH 45202
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