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Mullaney v. Bank of America, N. A.

United States District Court, E.D. North Carolina

November 13, 2019

DAVID DUNN MULLANEY and ELISE HUMPHRIES MULLANEY, Appellants,
v.
BANK OF AMERICA, NATIONAL ASSOCIATION, AS SUCCESSOR BY MERGER TO MERRILL LYNCH BANK USA; and CITIMORTGAGE, INC., Appellee.

          ORDER

          LOUISE W. FLANAGAN United States District Judge.

         This matter is before the court on appeal of a final order of the United States Bankruptcy Court for the Eastern District of North Carolina granting summary judgment in favor of appellees, and related incorporated interlocutory orders. See generally In re: Mullaney, 2019 WL 1579691, No. 17-02594-5-SWH, Adversary Proceeding No. 17-00039-5-SWH (Bankr.E.D. N.C. April 11, 2019). Also before the court is appellants' motion (DE 20) to certify questions of law to the Supreme Court of Virginia. The issues raised have been briefed fully, and in this posture are ripe for ruling. For the reasons that follow, appellants' motion is denied and the judgment of the bankruptcy court is affirmed.

         STATEMENT OF THE CASE

         Appellants commenced the instant Chapter 11 bankruptcy case and adversary proceeding on May 26, 2017, wherein they seek to avoid a deed of trust (the “deed of trust”) securing a residential mortgage on their property in Wilmington, North Carolina, (the “Property”). In their Chapter 11 petition, appellants list the Property as having present value of $849, 700.00, with a disputed claim by appellees, in the amount of $491, 250.15.

         In their complaint in the adversary proceeding, appellees assert that the deed of trust is not valid or enforceable against appellants, as debtors-in-possession, under 11 U.S.C. §§ 544(a)(1) and (3), because it does not contain an acknowledgment of the signature of the female debtor, appellant Elise Humphries Mullaney (“Mrs. Mullaney”). Accordingly, appellants seek avoidance of the deed of trust, and assert that the avoided lien be preserved for the benefit of the bankruptcy estate under 11 U.S.C. §§ 550 & 551.

         Appellees filed answer, and amendment thereto, asserting affirmative defenses and counterclaims. On May 15, 2018, the bankruptcy court entered an order denying in part and deferring ruling in part on appellants' motion to dismiss and to strike such affirmative defenses and counterclaims. See In re: Mullaney, Adversary Proceeding No. 17-00039-5-SWH (Bankr.E.D. N.C. May 15, 2018).

         In the adversary proceeding, the parties filed cross-motions for summary judgment. In support of their motion, appellants relied upon answers to interrogatories and requests for admissions, as well as excerpts of depositions of appellants and Hyunah Choi, a notary (hereinafter, the “notary”).[1] In support of their motion, appellees relied upon additional excerpts of depositions of appellants, as well as affidavits of Choi and the following individuals: 1) Antonio Guerrero, 2) Steven F. Siegel (“Siegel”), and 3) William Parise (“Parise”). In addition, appellees relied upon exhibits to depositions, responses to interrogatories, certified copies, and a portion of the Virginia Notary Handbook.

         The court held a hearing on the cross-motions for summary judgment and entered a brief order denying appellants' motion and granting appellees' motion, on March 28, 2019. The court entered further and final order explaining the reasons for its decision on April 11, 2019. See In re Mullaney, 2019 WL 1579691 at *1.

         Appellants timely noticed appeal and the parties filed record on appeal on May 24, 2019. Appellants filed the instant motion to certify questions of law to the Supreme Court of Virginia on June 3, 2019, to which appellees responded in opposition. On June 28, 2019, the court held in abeyance decision on the motion pending completion of briefing on appeal, which completed on August 5, 2019.

         STATEMENT OF UNDISPUTED FACTS

         The undisputed facts may be summarized as follows. Appellants purchased the Property in May, 2006. (Siegel Aff. (DE 12-2 at 65-69) ¶ 10). To fund the purchase, appellants obtained two loans: 1) one in the principal amount of $527, 500.00, from ABN AMRO, now held by appellees (“appellees' loan”), and 2) the other in the principal amount of $350, 000.00 from Wells Fargo. (Id. ¶ 5). The closing attorney, Siegel compiled documents for both loans and conveyed them to appellants' home in Alexandria, Virginia, on May 19, 2006. (Id. ¶ 6). Appellants returned signed documents to Siegel on May 23, 2006, and closing was completed on that date. (Id. ¶¶ 6, 10).

         Among the documents signed and returned by appellants are the deed of trust at issue in the instant appeal, which secures appellees loan, as well a separate deed of trust securing the Wells Fargo loan (the “Wells Fargo deed of trust”). (Id. ¶¶ 7.r & 8.1). The deed of trust is signed by both appellants, with a notary certificate, as follows (for ease of reference, the court has copied an image below of the signatures and certificate, followed by a transcription of the words therein):

(Image Omitted)

(DE 12-1 at 23).

BY SIGNING UNDER SEAL BELOW, Borrower accepts and agrees to the terms and covenants contained in this Security Instrument and in any Rider executed by Borrower and recorded with it.
[David D. Mullaney] (Seal) [Elise H. Mullaney] (Seal) DAVID D MULLANEY ELISE H. MULLANEY
State of XXXXXXXXXXXXX Virginia [Arlington] County ss:
I, [Hyun Ah Park], a Notary Public of the County of [Arlington], State of [Virginia], do hereby certify that DAVID D. MULLANEY, personally appeared before me this day and acknowledged the due witness my hand and official seal this [22] day of [May, 2006].
My commission expires: [Dec. 31, 2009]
[Hyun Ah Park]
Notary Public

(DE 12-1 at 23).[2]

         The Wells Fargo deed of trust is signed by both appellants and notarized with the following notary certificate (again, with a copy of the image, followed by transcription):

         BY SIGNING UNDER SEAL I5FLOW, Borrower accepts and agrees to the terms and covenants contained in this Security Instrument and Li any Rider executed by Borrower and recorded with it.

(Image Omitted)

(DE 12-1 at 95-96). [3]

BY SIGNING UNDER SEAL BELOW, Borrower accepts and agrees to the terms and covenants contained in this Security Instrument and in any Rider ...

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