The opinion of the court was delivered by: Herman J. Weber, Senior Judge United States District Court
This matter is before the Court on the appeal by Terrance R. Monnie ("Monnie") from the Bankruptcy Court's Order granting summary judgment in favor of Trustee/Appellee Eileen K. Field ("Trustee") and denying motions for summary judgment filed by Defendant/Appellee Wells Fargo Home Mortgage, Inc. ("Wells Fargo") and Monnie. (Doc. 1, Att. 20). The Order allowed the Trustee to avoid a mortgage in favor of Wells Fargo on the ground that the mortgage is defective under Ohio law because it is not signed. Monnie and the Trustee have filed briefs on appeal. (Docs. 7, 8, and 9). Monnie has requested oral argument. (Doc. 10).
I. Request for Oral Argument
The Court has determined, in compliance with Bankruptcy Rule 8012, that the facts and legal arguments are adequately presented in the briefs and record and that oral arguments would not significantly aid the Court in deciding the matter. The Court therefore denies the request for oral argument.
This Court has jurisdiction under 28 U.S.C. § 158(a), which grants federal district courts jurisdiction over appeals from the final judgments of bankruptcy courts. In reviewing the Bankruptcy Court's decision, the district court must apply a de novo standard of review to all conclusions of law drawn by the Bankruptcy Court. In re Eagle-Picher Industries, Inc., 164 B.R. 265, 269 (S.D. Ohio 1994) (citing In re Caldwell, 851 F.2d 852, 857 (6th Cir. 1988)).
Fed. R. Civ. P. 56 allows summary judgment to secure a just and efficient determination of an action. This Court may only grant summary judgment as a matter of law when the moving party has identified, as its basis for the motion, an absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986).
The party opposing a properly supported motion for summary judgment "may not rest upon the mere allegations or denials of his pleading, but . . . must set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986) (quoting First Nat'l Bank of Arizona v. Cities Serv. Co., 391 U.S. 253 (1968)). The evidence of the non-movant is to be believed and all justifiable inferences are to be drawn in his favor.
Anderson, 477 U.S. at 255 (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 158 (1970)).
The court is not to weigh the evidence and determine the truth of the matter but is to decide whether there is a genuine issue for trial. Anderson, 477 U.S. at 249. There is no genuine issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. Id. at 249 (citing Cities Serv., 391 U.S. at 288-289). If the evidence is merely colorable, Dombrowski v. Eastland, 387 U.S. 82, 84 (1967), or is not significantly probative, Cities Serv., 391 U.S. at 290, judgment may be granted. Anderson, 477 U.S. at 249.
III. Facts and Procedural History
The following facts are undisputed: Debtor Kimberly Marie Bross ("Debtor") filed a Chapter 7 bankruptcy petition on August 5, 2004. She listed residential real estate located at 2340 Buddleia Court, Cincinnati, Ohio 45239 on Schedule A of her petition. At the time, the real estate was purportedly encumbered by a mortgage in favor of Wells Fargo in the amount of $132,700.00. Monnie was the closing agent for the mortgage. The mortgage is dated March 28, 2003. The borrower listed on the mortgage is the Debtor and the lender is First Equity Mortgage Incorporated ("First Equity"). The eleventh page of the mortgage document contains a signature line with the Debtor's name typed underneath it. The signature line is blank. The page is initialed at the bottom by the Debtor with her initials "KMB," as are the 10 preceding pages of the mortgage. There is a notary stamp and a notary's signature on page 11 and a representation by the notary that "The foregoing instrument was acknowledged before me this March 28, 2003 (date) by Kimberly M. Bross, an umarried woman." Attached to the mortgage are a condominium rider and a mortgage insurance rider executed that same date. Both of those documents are initialed "KMB" on the bottom of the first page and are signed on the second page. There is no dispute the Debtor wrote either her name or her initials on every page of the mortgage and the riders.
On the same date that the Debtor initialed and assigned these documents, First Equity assigned the mortgage to Wells Fargo. Wells Fargo accepted the assignment, and the mortgage and assignment were recorded in the Hamilton County, Ohio Recorder's Office. The Debtor signed an Auditor's Conveyance Fee Statement in which she declared under penalty of perjury that she had validly executed the mortgage.
In April 2005, the Trustee filed an adversary proceeding seeking avoidance of the mortgage and possession of the real estate, free and clear of the mortgage, on the ground that the mortgage was not signed by the Debtor, and thus the mortgage created no binding obligation in favor of Wells Fargo. The Trustee named the Debtor and Wells Fargo as defendants to the adversary action. The Debtor filed a third-party complaint against Monnie for negligence. All parties filed motions for summary judgment. The Bankruptcy Court issued its decision on the motions on January 18, 2006. (Doc. 1, Att. 17). The Court noted that a bankruptcy trustee may avoid a transfer that is avoidable by a bona fide purchaser and that under Ohio law, only properly executed mortgages take priority over a bona fide purchaser. The Court further noted that in order for a mortgage to be properly executed in accordance with Ohio law, it must be signed by the mortgagor and the signing must be acknowledged by the mortgagor before a notary public. See Ohio Rev. Code. § 5301.01. The Court recognized that Ohio law requires "substantial compliance" with § 5301.01 but found that there was not substantial compliance in this case because not only was the mortgage not properly executed, it was not executed at all. The Court noted that ...