Rush et al v. Metlife Bank NA
Filing
34
MEMORANDUM OPINION AND ORDER that MetLife's motion for judgment on thepleadings on plaintiffs' claims for breach of contract and conversion, and on MetLife's counterclaim for declaratory relief is GRANTED; Plaintiffs' claims for b reach of contract and conversion are DISMISSED. Further, this court holds that the transfer of the property from The Christopher C. Rush and Nell N. Rush Living Trust to Rhona Rush constituted valid grounds for acceleration of the debt, and that MetLife was entitled to require full payment of all sums due as more fully set out in order. Signed by Judge C Lynwood Smith, Jr on 11/9/2012. (AHI)
FILED
2012 Nov-09 AM 10:42
U.S. DISTRICT COURT
N.D. OF ALABAMA
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ALABAMA
NORTHEASTERN DIVISION
CHRISTOPHER C. RUSH and
NELL N. RUSH,
Plaintiffs/CounterDefendants,
vs.
METLIFE BANK, NATIONAL
ASSOCIATION,
Defendant/CounterPlaintiff,
vs.
CHRISTOPHER C. RUSH,
NELL N. RUSH, CHARLES E.
RUSH, LAURA D. GIVENS,
THE CHRISTOPHER C. RUSH
AND NELL N. RUSH LIVING
TRUST, and THE
CHRISTOPHER C. RUSH
IRREVOCABLE TRUST,
Counter-Defendants.
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Civil Action No. 5:12-cv-0234-CLS
MEMORANDUM OPINION AND ORDER
This action arises from a reverse mortgage issued by MetLife Home Loans, a
division of defendant, MetLife Bank, N.A., on property formerly owned by a trust for
the benefit of plaintiffs, Christopher C. Rush and Nell N. Rush. After the property
was damaged by a tornado, plaintiffs asserted claims against defendant for breach of
contract and conversion on the basis of its failure to release the proceeds of property
insurance to Christopher Rush.1 In turn, defendant petitioned for interpleader in order
to determine who was entitled to the property insurance proceeds.2 Further, defendant
sought a declaratory judgment stating that it was entitled to accelerate the debt on the
property based on plaintiffs’ transfer of the property to a third party in violation of the
mortgage agreement.3 The case is before the court on defendant’s motion for
judgment on the pleadings on plaintiffs’ claims for breach of contract and conversion,
and on defendant’s counterclaim for declaratory relief.4 Upon consideration, this
court will grant the motion.
I. STANDARD OF REVIEW
Federal Rule of Civil Procedure 12(c) provides that, “[a]fter the pleadings are
closed — but early enough not to delay trial — a party may move for judgment on the
pleadings.” Fed. R. Civ. P. 12(c) (2008) (alteration supplied). “Judgment on the
pleadings is appropriate only when the plaintiff can prove no set of facts in support
of his claim which would entitle him to relief.” Horsley v. Feldt, 304 F.3d 1125, 1131
(11th Cir. 2002) (quoting Moore v. Liberty National Life Insurance Co., 267 F.3d
1
Doc. no. 1 (Complaint).
2
Doc. no. 7 (Answer and Counterclaim). Defendant petitioned to interplead the following
parties: Christopher C. Rush, Nell N. Rush, Charles E. Rush, Laura D. Givens, The Christopher C.
Rush and Nell N. Rush Living Trust, and The Christopher C. Rush Irrevocable Trust. Id. at 7.
3
Id. Defendant asserted its claim for declaratory relief against the following parties:
Christopher C. Rush, Nell N. Rush, and/or The Christopher C. Rush and Nell N. Rush Living Trust.
Id. at 16.
4
Doc. no. 26 (Motion for Judgment on the Pleadings).
2
1209, 1213 (11th Cir. 2001) (internal marks omitted)). Stated differently, “[j]udgment
on the pleadings is proper when no issues of material fact exist, and the movant is
entitled to judgment as a matter of law.” Ortega v. Christian, 85 F.3d 1521, 1524
(11th Cir. 1996) (alteration supplied). When reviewing a motion for judgment on the
pleadings, the court is required to accept the facts alleged in the complaint as true, and
to view them in the light most favorable to the nonmoving party. Swerdloff v. Miami
National Bank, 584 F.2d 54, 57 (5th Cir. 1978).5
II. FACTS AS ALLEGED
MetLife Home Loans, a division of defendant, MetLife Bank, N.A.
(“MetLife”), issued a reverse mortgage loan to The Christopher C. Rush and Nell N.
Rush Living Trust on September 22, 2010.6 The reverse mortgage loan was secured
by a mortgage on certain real property that was owned by the Trust, and that was
insured either by State Farm Mutual Automobile Insurance Company (“State Farm”),
or by Allstate Insurance Company (“Allstate”).7 The mortgage was recorded on
5
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), the Eleventh
Circuit adopted as binding precedent all decisions of the former Fifth Circuit handed down prior to
the close of business on September 30, 1981.
6
Doc. nos. 7 (Answer to Complaint) ¶ 12; 23 (Answer to Counterclaim), at 2. The
Christopher C. Rush and Nell N. Rush Living Trust was established by plaintiffs, Christopher C.
Rush and Nell N. Rush, allegedly “to own and control their property and estate and to govern the
use of and disposition of their property and estate.” Doc. 7 ¶ 7.
7
Throughout their complaint, plaintiffs allege that the property was insured by State Farm.
See doc. no. 1 (Complaint) ¶¶ 6, 8, 9. Although a court is required to accept the facts alleged in
plaintiffs’ complaint as true, see Swerdloff v. Miami National Bank, 584 F.2d 54, 57 (5th Cir. 1978),
this court notes that the property insurance checks at issue in this action (discussed infra) were
issued by Allstate. See doc. no. 27-1 (Allstate Draft). Even so, the identity of the insurer is not
3
October 28, 2010,8 as executed and delivered by Christopher Rush on behalf of
himself and his wife, Nell Rush, and by Rhona Rush, the successor co-trustee and
daughter-in-law of Christopher and Nell Rush.9
The mortgage agreement contains two provisions that are pertinent to this
action. With regard to insurance, the mortgage agreement states:
In the event of loss, Borrower shall give Lender immediate notice
by mail. Lender may make proof of loss if not made promptly by
Borrower. Each insurance company is hereby authorized and directed
to make payment for such loss to Lender instead of to Borrower and
Lender jointly. Insurance proceeds shall be applied to restoration or
repair of the damaged Property, if the restoration or repair is
economically feasible and Lender’s security is not lessened.10
With regard to grounds for acceleration of debt, the mortgage agreement states:
Lender may require immediate payment in full of all sums secured
by this Security Instrument if . . .
(ii)
All of a Borrower’s title in the Property (or his or her beneficial
interest in a trust owning all or part of the Property) is sold or
otherwise transferred and no other Borrower retains (a) title to the
Property in fee simple, (b) a leasehold under a lease for not less
than 99 years which is renewable or a lease having a remaining
material to the resolution of MetLife’s instant motion for judgment on the pleadings.
8
Doc. nos. 1 (Complaint) ¶ 5; 7 (Answer to Complaint) ¶ 7; 27-2 (Loan Agreement and
Security Instrument). The Loan Agreement and Security Instrument will be referred to, collectively,
as the “mortgage agreement.”
9
Doc. nos. 7 (Answer to Complaint) ¶ 13; 23 (Answer to Counterclaim), at 2. Christopher
Rush was allegedly authorized to act on behalf of Nell Rush because he was granted a power of
attorney on April 6, 2006. Doc. no. 27-4 (Power of Attorney). Rhona Rush is the widow of Wendell
Rush, who is the son of Christopher and Nell Rush, and the brother of Charles Edward Rush
(discussed infra).
10
Doc. no. 27-2 (Loan Agreement and Security Instrument) ¶ 3, Exh. B-6.
4
period of not less than 50 years beyond the date of the 100th
birthday of the youngest Borrower, or (c) a life estate in the
Property (or retains a beneficial interest in a trust with such an
interest in the Property).11
On January 31, 2011, Christopher Rush executed a warranty deed on behalf of
Nell Rush that transferred the property to Rhona Rush, without informing MetLife of
his plans to do so.12 Later that day, Rhona Rush executed a warranty deed conveying
the property to The Christopher C. Rush Irrevocable Trust.13
A tornado struck the property on April 27, 2011, causing $87,000 in damage.14
In his capacity as a contractor, Christopher Rush either personally repaired the
damage, or paid various contractors to do so.15 He also apparently submitted an
insurance claim for the cost of repair.
MetLife then received a letter, dated May 18, 2011, from Charles Edward
Rush, the son of Christopher and Nell Rush,16 which informed MetLife of the transfer
of the property to Rhona Rush and, subsequently, to The Christopher C. Rush
11
Doc. nos. 7 (Answer to Complaint) ¶ 33; 23 (Answer to Counterclaim) ¶ 33; 27-2 (Loan
Agreement and Security Instrument) ¶ 9, Exh. B-7.
12
Doc. nos. 7 (Answer to Complaint) ¶ 29; 23 (Answer to Counterclaim) ¶ 29; 27-6 (Title
Report).
13
Doc. nos. 7 (Answer to Complaint) ¶ 31; 23 (Answer to Counterclaim) ¶ 31; 27-6 (Title
Report).
14
Doc. no. 1 (Complaint) ¶¶ 6-7.
15
Id. ¶ 7.
16
As will be seen in the following text, Charles Edward Rush typically uses his middle name,
Edward.
5
Irrevocable Trust.17 The letter also stated that the mortgage loan and property
transfers had been procured fraudulently, and that Christopher Rush was not entitled
to the insurance proceeds from the damage to the property.18 More specifically,
Edward Rush alleged that Nell Rush had granted a power of attorney to Christopher
Rush on April 6, 2006, but that Nell Rush had revised the power of attorney on March
25, 2008, by revoking the appointment of Christopher Rush, and by granting the
appointment to Edward Rush.19 Because Christopher Rush was divested of power of
attorney on March 28, 2008, Edward Rush alleged that Christopher Rush lacked the
authority to execute the mortgage loan and property transfer on behalf of Nell Rush
in 2010 and 2011.20
Christopher Rush received a check for $51,433.49 in property insurance
proceeds in or around June of 2011.21 The check listed the following parties as
17
Doc. no. 27-3 (Letter Dated May 18, 2011).
18
Doc. nos. 1 (Complaint) ¶ 15; 27-3 (Letter Dated May 18, 2011).
19
Doc. nos. 27-4 (Power of Attorney); 27-5 (Alleged Revised Power of Attorney).
20
Doc. nos. 7 (Answer to Complaint) ¶ 20; 23 ¶ 20.3; 27-3 (Letter Dated May 18, 2011).
Plaintiffs argue that the allegations made by Edward Rush have no basis because he is a convicted
felon, because he is estranged from his father, Christopher Rush, and because the power of attorney
granted to Christopher Rush was revoked when Nell Rush was incompetent and suffering from
Alzheimer’s disease. Doc. no. 1 (Complaint) ¶ 15. Indeed, Nell Rush was alleged to be
incapacitated, and was appointed a guardian ad litem, in The Matter of Estate of Nell N. Rush, an
alleged incapacitated person, Case No. 09-414 (Cir. Ct. Marshall County, Ala.). Doc. no. 7
(Answer to Complaint) ¶ 6. Because a court is required to accept the facts alleged in plaintiffs’
complaint as true, see Swerdloff v. Miami National Bank, 584 F.2d 54, 57 (5th Cir. 1978), this court
only notes that there existed a controversy over the correct recipient of the insurance proceeds, and
does not attempt to determine whether Edward Rush’s statements were true.
21
Doc. no. 1 (Complaint) ¶ 8. Although plaintiffs allege that the check was sent by State
Farm, see id., this court notes that the check appears to have been issued by Allstate. See doc. no.
6
payees: Christopher C. Rush, Nell N. Rush, and MetLife Bank.22 Christopher Rush
endorsed the check on behalf of himself and Nell Rush, and forwarded the check to
MetLife for endorsement and return “in seven to ten days.”23 Instead of returning the
check, however, MetLife endorsed the check and deposited it into an interest-bearing
escrow account.24
Christopher Rush then received a second check for $23,000 in property
insurance proceeds in or around August of 2011.25
That check again listed
Christopher C. Rush, Nell N. Rush, and MetLife Bank as payees.26 Instead of
forwarding the second check to MetLife for endorsement, however, Christopher Rush
retained the check.27 Christopher Rush later explained that he was “waiting to see
what [would] be done with the first check.”28 Christopher Rush was also due to
receive a third insurance check for approximately $14,000, which presumably would
have listed the same payees.29
27-1 (Allstate Draft); footnote 7, supra.
22
Doc. no. 1 (Complaint) ¶ 8.
23
Id. It is not clear from the complaint whether plaintiffs simply believed that the check
would be returned within seven to ten days, or whether plaintiffs and MetLife specifically agreed
on the seven-to-ten-day time frame.
24
Doc. nos. 1 (Complaint) ¶ 8; 7 (Answer to Complaint) ¶ 8.
25
Doc. no. 1 (Complaint) ¶ 9. Although plaintiffs again allege that the check was sent by
State Farm, see id., this court notes that the check appears to have been issued by Allstate. See doc.
no. 27-1 (Allstate Draft); footnotes 7 and 20, supra.
26
Doc. no. 1 (Complaint) ¶ 9.
27
Id.
28
Id. (alteration supplied).
29
Id. ¶ 10. As of January 23, 2012, the date plaintiffs filed their complaint, the third check
7
In a letter dated August 31, 2011, and addressed to Christopher Rush, Nell
Rush, Edward Rush, and Laura D. Givens,30 MetLife explained its uncertainty
regarding the proper party to receive the insurance proceeds, and requested that each
party sign an agreement that was enclosed in the letter, permitting the disbursement
of the full amount of the first check for $51,433.49 directly to the contractor, in
accordance with MetLife’s Reverse Mortgage Checklist for Insurance Claims, which
authorized disbursement once the repairs had been completed by a contractor and
verified by an inspector.31
In response, MetLife received a letter dated September 13, 2011 from Edward
Rush, stating that Christopher Rush had fraudulently procured the mortgage loan, and
that Edward Rush would not sign the agreement to disburse the insurance proceeds
directly to the contractor, either on behalf of himself, or on behalf of Nell Rush, under
her allegedly revised power of attorney.32 Edward Rush also alleged that the property
had been improved, as opposed to repaired, and that Christopher Rush was seeking
to collect the insurance proceeds for himself.33
was allegedly due to arrive “any day now.” Id. It is not clear from the record whether plaintiffs ever
received that check and, if so, what became of it.
30
Laura D. Givens was appointed the guardian ad litem for Nell Rush in The Matter of Estate
of Nell N. Rush, an alleged incapacitated person, Case No. 09-414 (Cir. Ct. Marshall County, Ala.).
Doc. no. 7 (Answer to Complaint) ¶ 6.
31
Doc. nos. 7 (Answer to Complaint) ¶ 22; 23 (Answer to Counterclaim) ¶ 22; 27-7 (Letter
Dated August 31, 2011).
32
Doc. no. 27-8 (Letter Dated September 13, 2011).
33
Doc. nos. 7 (Answer to Complaint) ¶ 23; 23 (Answer to Counterclaim) ¶ 23; 27-8 (Letter
8
On or around October 1, 2011, an attorney demanded that MetLife return the
first check.34 In a letter dated October 11, 2011, a second attorney demanded that
MetLife disburse the full amount of the first check to Christopher Rush, without
requiring execution of the agreement to disburse the insurance proceeds directly to the
contractor.35
In its December 29, 2011 response to the attorneys’ demands, MetLife stated
that it could not return the first check based on Edward Rush’s allegations.36
Contemporaneously with the filing of its counterclaim for interpleader on March 13,
2012, MetLife deposited the proceeds of the first check, plus the interest on those
proceeds, with the court.37
III. DISCUSSION
A.
Plaintiffs’ Claims for Breach of Contract and Conversion
Dated September 13, 2011).
34
Doc. no. 1 (Complaint) ¶ 13 (alteration supplied). The complaint states that the demand
was “made on behalf of Mr. And Ms. Rush,” without specifying whether the attorney who made the
demand represented only Christopher Rush, or both Christopher and Nell Rush, and whether the
attorney demanded that MetLife return the check to only Christopher Rush, or to both plaintiffs. Id.
In a subsequent letter to MetLife regarding the first check, however, an attorney described the
individual who made the October 1 demand as “another of Mr. Rush’s lawyers.” Doc. no. 27-9
(Letter Dated October 11, 2011). Further, the complaint does not specify whether the demand was
made orally or in writing.
35
Doc. nos. 1 (Complaint) ¶ 14; 27-9 (Letter Dated October 11, 2011). The complaint does
not state whether the attorney represented only Christopher Rush, or both Christopher and Nell
Rush. Based on the fact that the October 11 letter only mentioned Christopher Rush, and did not
mention Nell Rush, it appears that the attorney represented Christopher Rush alone.
36
Doc. no. 1 (Complaint) ¶ 15. The complaint does not state whether MetLife responded
orally or in writing.
37
Doc. no. 11 (Notice of Deposit of Funds into the Registry of the Court).
9
Plaintiffs assert claims against MetLife for breach of contract and conversion
on the basis of its failure to release the first check for $51,433.49 in insurance
proceeds to Christopher Rush.38 MetLife correctly argues that the Alabama Supreme
Court has rejected the viability of breach of contract claims against stakeholders in
interpleader actions as a matter of law because the act of interpleading the funds at
issue automatically negates the “refusal to pay” element necessary to prove such
claims.39
By initiating an interpleader action, the stakeholder is admitting
that it holds funds that are not its own, but says that it owes those funds
to an undetermined party. “Historically, interpleader was available to
protect a party who recognized an indebtedness, was willing to pay it, but
was only interested in paying it once. The interpleader procedure affords
the payor an opportunity to clothe his disbursement with the protection
of a judicial determination.” Champ Lyons, Jr., Alabama Rules of Civil
Procedure Annotated, vol. 1, p. 344 (2d ed. 1986) (emphasis added).
Because filing an interpleader action is equivalent to the plaintiff’s
admitting that it is willing to pay the legitimate claimant, an
interpleading stakeholder cannot logically be subjected to a claim
alleging bad faith refusal to pay, under the circumstances of this case.
As we held in Stone v. Southland National Ins. Corp., 589 So. 2d 1289
(Ala.1991), a stakeholder who interpleads the funds claimed has not
refused to pay. “To the contrary, by interpleading, [the stakeholder] paid
to the court an amount that the parties do not dispute is the full amount
due, although it did not pay those proceeds to [any particular claimant].”
Id. at 1291.
Monumental Life Insurance Co. v. Lyons-Neder, 140 F. Supp. 2d 1265, 1270 (M.D.
38
Doc. no. 1 (Complaint).
39
Doc. no. 26-1 (Brief in Support of Motion for Judgment on the Pleadings on Plaintiffs’
Claims), at 11-12.
10
Ala. 2001) (quoting Gilbert v. Congress Life Insurance Co., 646 So. 2d 592, 594 (Ala.
1994)) (emphasis and alterations in original).
Further, MetLife correctly argues that a district court located in Alabama has
rejected the viability of conversion claims against stakeholders in interpleader actions
because such stakeholders have no legal duty to elect among adverse claimants.40
“[W]here a stakeholder is blameless with respect to the existence
of the ownership controversy, the bringing of an interpleader action
protects it from liability to the claimants both for further claims to the
stake and for any claims directly relating to its failure to resolve that
controversy.” Prudential Insurance Co. v. Hovis, 553 F.3d 258, 265 (3rd
Cir. 2009). That is, the “failure to choose between the adverse claimants
(rather than bringing an interpleader action) cannot itself be a breach of
a legal duty.” Id. . . . This is precisely the dilemma against which the
interpleader mechanism offers protection.
RBC Bank (USA) v. Holiday Isle, LLC, Case No. 09-0038, 2009 U.S. Dist. LEXIS
84307, at *9-10 (S.D. Ala. Sept. 14, 2009) (emphasis supplied, alteration in original).
In response, plaintiffs make no attempt to distinguish the cases expressly
denying the viability of breach of contract and conversion claims against stakeholders
in interpleader actions. Indeed, plaintiffs admit that “MetLife didn’t claim the
insurance proceeds as its own,”41 which negates the “refusal to pay” element
necessary to prove a claim for breach of contract under Monumental Life, 140 F. Supp.
2d at 1270.42 Further, plaintiffs object to “the withholding of the funds for 6 months
40
Id., at 14-15.
41
Doc. no. 30 (Opposition to Motion for Judgment on the Pleadings), at 8.
42
In an effort to overcome the fact that MetLife did not attempt to keep the funds for itself,
11
based upon the letter of a convicted felon,”43 an argument barred by the holding in
RBC Bank, that a stakeholder need not “resolve the controversy” between adverse
claimants to avoid liability for conversion and, presumably, need not evaluate their
credibility.44 2009 U.S. Dist. LEXIS 84307 at *10.
Plaintiffs’ authorities do not apply to this action. For example, plaintiffs cite
a list of cases in which the courts denied motions for judgment on the pleadings where
the record showed a disputed issue of material fact.45 Because plaintiffs have not
alleged the existence of any disputed issues of material fact, and because this court has
independently reviewed the record and has not identified any such issues, it appears
that all material facts are undisputed. Additionally, plaintiffs cite Brown v. Campbell,
536 So. 2d 920 (Ala. 1988), for the proposition that “recovery of converted property
by the plaintiffs (in this case the filing of the interpleader) does not bar a suit for
conversion but merely reduces the damages by the value to the property at the time of
plaintiffs make the colorful claim that MetLife “exercised dominion and control in unjustly trying
to cover its own rear.” Id. In addition to being legally nonsensical, this contention is obviously
inappropriate for inclusion in a formal brief.
43
Id.
44
Instead of withholding the funds, plaintiffs argue that MetLife should have disbursed them
directly to the contractor. Id. at 7. In their complaint, plaintiffs allege that Christopher Rush, “being
a contractor, repaired the damage himself and/or paid for the repairs to various contractors.” Doc.
no. 1 (Complaint) ¶ 7 (emphasis supplied). Thus, it is not clear whether plaintiffs argue that MetLife
should have disbursed the insurance proceeds to Christopher Rush, or to an unspecified third party
or parties. In order to pay any contractor, however, MetLife would have had to “resolve the
controversy” between Christopher and Edward Rush, by accepting the claims of Christopher Rush,
and by rejecting the claims of Edward Rush.
45
Doc. no. 30 (Opposition to Motion for Judgment on the Pleadings), at 5-7.
12
its return.”46 Brown, however, involved a stock certificate, which fluctuates in value,
while this case involves an insurance check, which is for a specific, non-negotiable
sum of money.
In sum, plaintiffs’ claims for breach of contract and conversion are barred by
the holdings in Monumental Life, 140 F. Supp. 2d at 1270, and RBC Bank, 2009 U.S.
Dist. LEXIS 84307 at *10. Accordingly, MetLife’s motion for judgment on the
pleadings with respect to those claims is due to be granted.
C.
Defendant’s Counterclaim for Declaratory Relief
MetLife seeks a declaratory judgment against Christopher and Nell Rush and/or
The Christopher C. Rush and Nell N. Rush Living Trust stating that MetLife was
entitled to accelerate the debt on the property and require full payment of all sums
due.47 Under the terms of the mortgage agreement, MetLife could require immediate
payment if
(ii)
All of a Borrower’s title in the Property (or his or her beneficial
interest in a trust owning all or part of the Property) is sold or
otherwise transferred and no other Borrower retains (a) title to the
Property in fee simple, (b) a leasehold under a lease for not less
than 99 years which is renewable or a lease having a remaining
period of not less than 50 years beyond the date of the 100th
birthday of the youngest Borrower, or (c) a life estate in the
Property (or retains a beneficial interest in a trust with such an
interest in the Property).48
46
Id. at 8.
47
Doc. no. 7 (Answer to Complaint), at 17-18.
48
Id. ¶ 33; doc nos. 23 (Answer to Counterclaim) ¶ 33; 27-2 (Loan Agreement and Security
13
On January 31, 2011, Christopher Rush executed a warranty deed on behalf of
Nell Rush that transferred the property to Rhona Rush, without informing MetLife of
his plans to do so, and without retaining any interest in the property.49 Later that day,
Rhona Rush executed a warranty deed conveying the property to The Christopher C.
Rush Irrevocable Trust.50 Thus, under the plain language of the mortgage agreement,
MetLife Bank was entitled to “require immediate payment in full of all sums secured”
by the agreement.
In response, plaintiffs argue that they and their attorney consulted a specialist
attorney, who advised them that a transfer from The Christopher C. Rush and Nell N.
Rush Living Trust to The Christopher C. Rush Irrevocable Trust “would have been
a Medicare disqualifying event so a straw man, their widowed daughter-in-law, was
used.”51 Because the property was ultimately transferred to The Christopher C. Rush
Irrevocable Trust, plaintiffs note that the property “is still now in a trust for the benefit
of Mr. and Ms. Rush.”52
Instrument) ¶ 9, Exh. B-7.
49
Doc. nos. 7 (Answer to Complaint) ¶ 29; 23 (Answer to Counterclaim) ¶ 29; 27-6 (Title
Report).
50
Doc. nos. 7 (Answer to Complaint) ¶ 31; 23 (Answer to Counterclaim) ¶ 31; 27-6 (Title
Report).
51
Doc. no. 30 (Opposition to Motion for Judgment on the Pleadings), at 10.
52
Id. Based on the name of The Christopher C. Rush Irrevocable Trust, it is not clear if the
trust is, in fact, intended for the benefit of both Christopher and Nell Rush, or for the benefit of only
Christopher Rush. As that issue does not affect MetLife’s entitlement to declaratory judgment,
however, this court only notes that the property was transferred, and does not attempt to determine
the true beneficiary of that transfer.
14
MetLife correctly argues that it became entitled to accelerate the debt and
require immediate payment of all sums due upon the transfer of the property from The
Christopher C. Rush and Nell N. Rush Living Trust to Rhona Rush, and that the
subsequent transfer of the property from Rhona Rush to The Christopher C. Rush
Irrevocable Trust is irrelevant.53 That interpretation is consistent with the apparent
purpose of the acceleration clause: i.e., to enable MetLife to protect its security
interest by preventing the transfer of the property to an individual with whom MetLife
lacked privity of contract.
In sum, the mortgage agreement plainly allowed MetLife to accelerate the debt
and require immediate payment of all sums due once the property was transferred to
Rhona Rush. Accordingly, MetLife’s motion for a declaratory judgment is due to be
granted.
IV. CONCLUSION AND ORDERS
For the reasons explained above, MetLife’s motion for judgment on the
pleadings on plaintiffs’ claims for breach of contract and conversion, and on
MetLife’s counterclaim for declaratory relief, is due to be, and it hereby is,
GRANTED.
Plaintiffs’ claims for breach of contract and conversion are
DISMISSED. Further, this court holds that the transfer of the property from The
53
Doc. no. 33 (Reply in Support of Motion for Judgment on the Pleadings on MetLife’s
Counterclaims), at 7.
15
Christopher C. Rush and Nell N. Rush Living Trust to Rhona Rush constituted valid
grounds for acceleration of the debt, and that MetLife was entitled to require full
payment of all sums due.
DONE and ORDERED this 9th day of November, 2012.
______________________________
United States District Judge
16
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