Bank of America v. Greene

465 B.R. 789, 2012 WL 124278
CourtDistrict Court, E.D. Tennessee
DecidedJanuary 17, 2012
DocketNos. 3:11-CV-231, 3:11-CV-376
StatusPublished
Cited by1 cases

This text of 465 B.R. 789 (Bank of America v. Greene) is published on Counsel Stack Legal Research, covering District Court, E.D. Tennessee primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bank of America v. Greene, 465 B.R. 789, 2012 WL 124278 (E.D. Tenn. 2012).

Opinion

MEMORANDUM OPINION

THOMAS A. VARLAN, District Judge.

Appellant Bank of America (“Bank of America”) has appealed [Doc. 8] the Memorandum and Judgment (the “Judgment”) [Doc. 1-35; Doc. 1-36] of the United States Bankruptcy Court for the Eastern District of Tennessee (the “Bankruptcy Court”) in favor of Richard and Deana Greene and Trustee, John P. Newton, Jr. (the “Trustee”). Appellee, the Trustee, has submitted a response in opposition to that appeal [Doc. 12]. Bank of America has filed a reply [Doc. 13] to that response.

The Court has carefully reviewed the parties’ briefs in light of the entire record and the controlling law. For the reasons set forth below, the decision of the Bankruptcy Court will be affirmed and Bank of America’s appeals will be dismissed.

I. Relevant Facts and Procedural History1

In February 2009, Richard and Deana Greene (the “debtors”) executed a deed of trust (the “DOT”) in favor of Homeowners Mortgage of America, Inc. (“Homeowners Mortgage”), covering real property located at 825 Garners Landing Boulevard, Seymour, Tennessee (the “Property”) [Doc. 1-35, p. 2], On March 11, 2009, Homeowners Mortgage submitted the DOT via electronic filing to the Sevier County Register of Deeds (the “Register”) [Id., pp. 2, 7 n. 6; Doc. 1-22, ¶ 4]. The Register accepts instruments for registration via electronic filing through Business Information Systems (“BIS”), an electronic recording vendor [Doc. 1-35, p. 6; Doc. 1-22, ¶ 4]. The Register maintains a documents log which lists all instruments received for registration [Doc. 1-35, p. 6; Doc. 1-22, ¶ 5]. The documents log indicates the instrument numbers assigned to instruments upon receipt and the address to which a copy of the received instrument is to be returned after registration [Doc. 1-35, p. 7 n. 6; Doc. 1-22, ¶ 5]. The return address in the documents log for instruments delivered by BIS is typically listed as “Ingeo” or “Simplifile” [Doc. 1-35, p. 7 n. 6; Doc. 1-22, ¶ 5],

On March 11, 2009, the Register received an electronic copy of the DOT from Homeowners Mortgage [Doc. 1-35, pp. 6-7]. The Register accepted the DOT for registration, assigned it instrument number 09015404, and listed the instrument number and the return address of Simpli-file in the documents log [Id.]. Lois McCurry (“McCurry”), chief deputy of the Register, assigned the DOT book number 3300 and page number 584-594 [Id., p. 7]. A copy of the recorded DOT, including the assigned instrument, book, and page numbers, was transmitted to Network Closing Services, Inc. (“NCS”), the closing agent for the debtors’ loan [Id., pp. 7 n. 6, 12].

[792]*792McCurry then voided the DOT because it was labeled as a “miscellaneous document” and because the mortgage tax had not been received [Id., p. 12]. McCurry then accepted a subsequently filed, unrelated instrument, which was listed as instrument number 09015405 in the documents log, and assigned that instrument the identical book and page numbers previously assigned to the DOT [Id., pp. 12-13]. Neither the debtors or NCS received any information or indication that the DOT had been voided until December 15, 2009 [Doc. 1-32, ¶ 11].

In the meantime, on June 17, 2009, the debtors filed a Chapter 7 Voluntary Petition of bankruptcy (the “Chapter 7 petition”), and the Trustee was appointed to serve as trustee of the debtors’ bankruptcy estate [Doc. 1-35, p. 5]. In the Chapter 7 petition, the debtors listed the Property on the schedule and list of real property which, pursuant to 11 U.S.C. § 541, became part of the bankruptcy estate [Id.]. The Chapter 7 petition also indicated that the debtors had signed the DOT to secure a promissory note entered into in February 2009, and that Bank of America was the secured creditor [Doc. 1-1].

The Trustee reviewed the Chapter 7 petition, including the accompanying schedules, and investigated the Property listed on the schedules, along with Bank of America’s purported interest as the secured creditor [Doc. 1-35, pp. 5-6]. From the Trustee’s investigation and review of the applicable property records, the Trustee found no recorded deeds of trust encumbering the Property and therefore requested that Bank of America file a proof of claim with documentation establishing its security interest over the Property [Id., p. 5]. On March 18, 2010, Bank of America filed a proof of claim against the debtors based on the DOT in the amount of $203,938.18 [Id., p. 6]. Attached to the proof of claim was a copy of the electronically filed DOT containing the Register’s stamp, dated March 11, 2009, and reflecting that the DOT was, on that date, accepted by the Register, assigned instrument number 09015404, and assigned book number 3300 and page numbers 584-594 [Id.].

On May 4, 2010, the Trustee initiated an adversary proceeding by filing a complaint against Bank of America and seeking to avoid, pursuant to 11 U.S.C. § 544, Bank of America’s lien on the Property, along with a determination that the Property is free and clear of liens [Id., p. 7]. Bank of America moved for summary judgment and the Trustee responded in opposition [Id.]. After Bank of America filed the motion for summary judgment, the Bankruptcy Court advised the parties that it may grant summary judgment for the nonmov-ing Trustee independent of Bank of America’s motion [Id., p. 4]. On March 11, 2011, after additional briefing, including the submission of supporting exhibits and documents, along with oral argument, the Bankruptcy Court entered the Judgment in favor of the Trustee, denied Bank of America’s motion for summary judgment, and ordered that the Property could be sold free and clear of Bank of America’s lien [Id., pp. 4-5,19-20; Doc. 1-36].

Bank of America filed a notice of appeal of the Judgment to this Court, docketed as Case No. 3:11-CV-231. That appeal raises four issues [Doc. 8, p. 4]. First, based on the undisputed material facts, was the Bankruptcy Court correct in entering summary judgment in favor of the Trustee [Id.]. Second, whether Bank of America holds a valid security interest in the Property [Id.]. Third, whether the Trustee is entitled to sell the Property free and clear of Bank of America’s lien [M]. Fourth, whether Bank of America is entitled to an order granting relief from the automatic [793]*793stay in order to enforce its security interest in the Property [M]. The first and second issues are dispositive of the third and fourth.

After the Bankruptcy Court entered Judgment in favor of the Trustee, Bank of America moved the Bankruptcy Court to stay enforcement of the Judgment and for approval of a supersedeas bond. The Bankruptcy Court denied both motions. The Bankruptcy Court then authorized the sale of the Property free and clear of Bank of America’s lien and required the Trustee to retain the proceeds of the sale subject to further order. Bank of America appealed this order to this Court, docketed as Case No. 3:ll-CV-376.

Upon docketing of the second appeal, the magistrate judge deemed both appeals related.

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Bluebook (online)
465 B.R. 789, 2012 WL 124278, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bank-of-america-v-greene-tned-2012.