Burks v. ABN AMRO Mortgage Group, Inc.

OCR transcription for search; preserved printed pages are authoritative

Case 1:06-ap-01158 Doc 20 Filed 03/14/07 Entered 03/15/07 10:07:55 Desc Main
Document Page 1of3

This document has been electronically entered in the records of the United
States Bankruptcy Court for the Southem District of Ohio.

IT SS SO ORDERED.

di

Dated: March 14, 2007 IWvincent Aug, Jr.
United States Bankruptcy Judge

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION
In re Case No. 04-13555
James S. and Ann L. Price, Jr.
Debtor(s) Chapter 13 (Judge-Aug)
Margaret A. Burks, Trustee, Adv No. 06-1158
Plaintiff

Vv

ABN AMRO Mortgage Group, Inc.
Defendants.

ORDER DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT
This matter is before the Court on Defendant ABN AMRO Mortgage Group’s

(“ABN AMRO”) motion for summary judgment (Doc. 14), Plaintiff-Trustee’s response
(Doc. 17), ABN AMRO’s reply (Doc. 18), and the Trustee’s sur-reply (Doc. 19).

The Court has jurisdiction over this matter pursuant to 28 U.S.C. §1334 and the
general order of reference entered in this district. This is a core proceeding pursuant to 28

Case 1:06-ap-01158 Doc 20 Filed 03/14/07 Entered 03/15/07 10:07:55 Desc Main
Document Page 2 of 3

U.S.C. §157(b)(2)(K).

This matter involves a mortgage that both the Debtors and the Chapter 13 Trustee
contend to be invalid based on the allegation that the notary public was not present at the
closing. That question of fact is set to be heard at a trial scheduled for April 3, 2007. In
the instant motion for summary judgment, ABN AMRO contends that because the
property is registered land, and because its mortgage is noted on the certificate of title,
that the Trustee had notice of the mortgage and, therefore, that the mortgage can not be
avoided by the Trustee as a bona fide purchaser.

Summary judgment is appropriate when the pleadings, answers to interrogatories,
and admissions on file, if any, show that there is no genuine issue of material fact and that
the moving party is entitled to judgment as a matter of law. See Bankruptcy Rule 7056.

Citing Ohio Revised Code §5309.49, ABN AMRO contends that a mortgage on
registered land need only contain a “pertinent description of the land” and an “accurate
statement of the interest sought to be mortgaged.” Implicit is the further contention that,
when registered land is involved, the mortgage acknowledgment requirements set forth in
§5301.01 are inapplicable. We disagree.

The primary purpose of registered land is to eliminate “secret liens and hidden
equities.” Curry v. Lybarger, 11 N.E.2d 873 (Ohio 1937). Thus, all liens and other
interests on and in registered land are to be noted on a certificate of title. The primary
purpose of the need for an acknowledgment on a mortgage’ is to ensure that the person
signing the mortgage is indeed the person to whom the mortgage obligation runs. This
latter need is not eliminated when the property sought to be mortgaged is registered land.
Thus, we conclude that a mortgage on registered land must also comply with the
acknowledgment requirements set forth in §5301.01.

Contrary to ABN AMRO’s contention, Jn re Cowan, 273 B.R. 98 (6th Cir. B.A.P.
2002), aff'd 70 Fed. Appx. 797 (6th Cir. 2003), does not support its position. Rather, Jn
re Cowan stands for the proposition that when registered land is involved, the doctrine of
constructive notice does not apply so as to “save” a mortgage that while recorded at the
recorder’s office, is not noted on the certificate of title.

In its reply, ABN AMRO contends that pursuant to Ohio Revised Code §5309.03,
the certificate of title for registered land “shall be conclusive as to all matters contained in
it.” ABN AMRO has correctly stated the statute. However, a notation on the certificate
does not correct any defects in the mortgage itself. Nor is the Trustee required to initiate

And, under prior state law, the need for two witnesses.

Case 1:06-ap-01158 Doc 20 Filed 03/14/07 Entered 03/15/07 10:07:55 Desc Main
Document Page 3 of 3

a proceeding in state court under Ohio Revised Code §5309.43. First, the Trustee is
challenging the validity of the underlying mortgage, not the certificate of title. Second,
this Court clearly has the jurisdiction to challenge the efficacy of liens on property of the
estate.

Accordingly, ABN AMRO’s motion for summary judgment is hereby DENIED.

This matter will proceed to trial on the previously scheduled trial date of April 3,
2007.

IT IS SO ORDERED.

copy to:
Francis DeCesare, Esq.
Eugene Johnson, Esq.
U.S. Trustee

#H#