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Ingomar Ltd. Partnership v. Current

March 6, 2008


The opinion of the court was delivered by: Judge Conner


Plaintiff Ingomar Limited Partnership ("Ingomar") brings this action to vindicate its interest in properties presently and formerly owned by defendants Jeffrey and Paula Current (collectively "the Currents"). In 1999, the Currents mortgaged adjacent properties in Perry County, Pennsylvania, granting Ingomar's predecessor in interest a lien on both parcels. Four years later, the Currents received a satisfaction piece that they believed discharged the mortgage lien as to both parcels, though they had not repaid the note in full. They sold one parcel to defendants Randal Spahr and Crystal James (collectively "Spahr and James"). Ingomar presently seeks to enforce the note against the Currents and to obtain a declaratory judgment that Spahr and James purchased their property subject to Ingomar's mortgage lien. It has filed a motion for summary judgment (Doc. 23) against the Currents. Spahr and James have also filed a motion for summary judgment (Doc. 25) seeking dismissal of Ingomar's declaratory judgment action as time-barred and because they acquired their property as bona fide purchasers. For the reasons that follow, Ingomar's motion (Doc. 23) will be granted. The motion (Doc. 25) of Spahr and James will be denied.

I. Statement of Facts*fn1

On May 24, 1999 the Currents executed a note in the amount of $101,000, in favor of Contimortgage Corporation ("Contimortgage"), Ingomar's predecessor in interest. (Doc. 27 ¶ 1.) The note was secured by a mortgage lien on two adjacent parcels that the couple owned in Perry County, Pennsylvania. (Id.; Doc. 30-3 at 8-9.) The smaller parcel encompassed ten acres (hereinafter "the small parcel") and included the Current's residence, which had been destroyed by fire and which was to be rebuilt with the loan proceeds. (Doc. 24, Ex. 2 at 18; Doc. 27 ¶ 1.) The larger unimproved parcel consisted for forty-five acres (hereinafter "the large parcel"). (Doc. 27 ¶ 1) The mortgage lien includes separate legal descriptions of each property along with their respective tax parcel identification numbers. (Doc. 30-3 at 8-9.) The small parcel appears as number 260-034-00-064, and the large parcel is described as number 260-034-00-063. (Id.)

Based on loan negotiations, the Currents believed that the mortgage lien attached only to the small parcel despite the identification of both properties in the mortgage. (Doc. 24, Ex. 2 at 20.) Jeffrey Current testified that he and his wife did not wish to encumber the large parcel, and they assumed that the mortgage documents reflected that request. (Id.) The Currents discovered that the mortgage lien attached to both parcels in 2003 when they applied for a loan to construct a new home on the large parcel. (Doc. 24, Ex. 2 at 20-21; Doc. 27 ¶ 9.) Jeffrey Current contacted Contimortgage and was transferred to Alta Real Estate Services ("Alta"), which was managing Contimortgage's assets during the its bankruptcy proceedings. (Doc. 27 ¶ 10.) He explained the situation to an Alta representative, who told him that Alta "would take care of it." (Doc. 24, Ex. 2 at 16, 21; Doc. 27 ¶ 11-12.)

Several weeks later, the Currents received a copy of a satisfaction piece bearing the tax parcel identification number for the large parcel and stating that the "Mortgage has been fully paid or otherwise discharged and that upon the recording hereof said Mortgage shall be and is hereby fully and forever satisfied and discharged." (Doc. 24, Ex. 8.) The postal address used for both the small and large parcels appears in the satisfaction piece and is the same address that appears in the note executed by the Currents.*fn2 (See Doc. 24, Ex. 1 at Note p. 1; Doc. 27 ¶ 13.) The mortgage lien contains no address. (See Doc. 30-3.) The satisfaction piece incorrectly referenced the deed book and page number at which the Current's mortgage was recorded. (Compare Doc. 24, Ex. 8, with Doc. 30-3.)

The Currents ceased making payments on the note upon receiving the satisfaction piece because they believed that it released the mortgage on both parcels and extinguished their obligations under the note. (Doc. 27 ¶ 22.) Their most recent monthly payment was credited on September 5, 2003, after which the note's outstanding principal balance was $97,523.36. (Id.; Doc. 24, Ex. 10 at 6.) Jeffrey Current testified that he and his wife ceased payments because they believed that Contimortgage had "written off" the note as a component of its bankruptcy proceedings.*fn3 (Doc. 24, Ex. 2 at 49.) He provided no explanation for why he believed that a bankrupt entity would "writ[e] off" its legal right to receive incoming loan payments, but he acknowledged that such conduct was atypical of creditors.*fn4 (Id. at 62.) Paula Current testified that upon receiving the satisfaction piece, her reaction was: "Wow, cool." She admitted that it was strange for a mortgagee to release a mortgage lien unilaterally without receiving repayment of the entire balance of the indebtedness.*fn5 (Doc. 24, Ex. 3 at 39-41.)

Neither Contimortgage nor the subsequent holders of the note informed the Currents that the note had been forgiven. (Doc. 24, Ex. 2 at 49; Doc. 27 ¶ 21.) To the contrary, the Currents received notice as early as December 2003 that Contimortgage expected repayment of the note. Around that time, Countrywide Home Loans, Inc. ("Countrywide"), which Contimortgage retained to service its loans, contacted the Currents regarding their lapse in payments and sent them a foreclosure notice. (Doc. 24, Ex. 2 at 55.)*fn6

On September 26, 2003, the Currents sold the small parcel to Spahr and James and used the $155,000 in proceeds to build a new home on the large parcel.

(Doc. 24, Ex. 11; Doc. 27 ¶¶ 23-24.) Spahr and James arranged for a title search before purchasing the small parcel. (Doc. 26 ¶ 10; Doc. 31 ¶ 10.) The title search located the mortgage lien and the satisfaction piece.*fn7 (Doc. 25-2 at 3.) The Currents never disclosed to Spahr and James that they had failed to satisfy the note in full. (Doc. 26 ¶ 12; Doc. 31 ¶ 12.)

On November 17, 2003, an amended satisfaction piece was recorded that corrected the reference to the deed book and page where the Currents' mortgage was recorded. (Doc. 25-4 at 5.) A revocation of the satisfaction piece followed on July 23, 2004 and stated that the mortgage had not been satisfied and had been released in error. (Doc. 24, Ex. 9.) Ingomar acquired the Currents' note and mortgage in April 2006 after a series of ownership transfers. It instituted the present action three months later. (Doc. 26 ¶ 24; Doc. 31 ¶ 24; see also Doc. 1.)

Ingomar's complaint advances breach of contract and unjust enrichment claims against the Currents arising from their non-payment of the note, and it seeks declaratory judgment against Spahr and James establishing that the small parcel remains encumbered by the mortgage lien.*fn8 Ingomar moves for summary judgment on the contract claims against the Currents, who have not contested the motion. Spahr and James move for summary judgment on Ingomar's declaratory judgment claim, contending that it is time-barred and that their status as bona fide purchasers extinguishes the mortgage lien. The parties have fully briefed these issues, which are now ripe for disposition.

II. Standard of Review

Through summary adjudication the court may dispose of those claims that do not present a "genuine issue as to any material fact," and for which a jury trial would be an empty and unnecessary formality. See FED. R. CIV. P. 56(c). It places the burden on the non-moving party to come forth with "affirmative evidence, beyond the allegations of the pleadings," in support of its right to relief. Pappas v. City of Lebanon, 331 F. Supp. 2d 311, 315 (M.D. Pa. 2004); FED. R. CIV. P. 56(e); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). This evidence must be adequate, as a matter of law, to sustain a judgment in favor of the non-moving party on the claims. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250-57 (1986); Matsushita Elec. ...

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