Deutsche Bank National Trust Company et al v. Annie Thompson

Filing 11

ORDER affirming the Bankruptcy Court's Order granting summary judgment in favor of Appellee; and directing the Clerk to terminate all deadlines and motions, and close this case. Signed by Judge J. Randal Hall on 08/11/2014. (jah)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF GEORGIA
AUGUSTA DIVISION
IN RE:
*

*

ANNIE THOMPSON,

*

CV 113-181

*

Debtor.

*
*

Bankruptcy Case

*

ANNIE THOMPSON, and Huon Le,
Chapter 13 Trustee,

*

No.

10-10982

*
*

Appellants,

*

Adversary Case

*

No.

12-01027

v.
*

DEUTSCHE BANK NATIONAL TRUST
CO., as Trustee for Soundview
Home Loan Trust, Asset-Backed

*

*

Certificates, Series 2006-2,
*

Appellee.

ORDER

Annie

Thompson

Court's July 9,

("Appellant")

appeals

from

the

Bankruptcy

2013 Order reforming the legal description in the

October 26, 2005 Security Deed and setting aside the March 12, 2010
Quitclaim Deed and the April 5,

there

is

sufficient

evidence

2011 Deed Under Power.

supporting

Because

the Bankruptcy Court's

finding that the incorrect legal description was the result of a

mutual mistake and the weight of authority supports the Bankruptcy
Court's

determination

avoidance powers

that

under

Bankruptcy Court's Order.

11

Appellant

U.S.C.

cannot

§ 544,

assert

this

the

Court

Trustee's

AFFIRMS

the

I.

JURISDICTION AND STANDARD OF REVIEW

This Court has appellate jurisdiction pursuant to 28 U.S.C.

158(a)(1) and Bankruptcy Rules 8001 et seq.
reviews the bankruptcy court's factual

and its legal conclusions de novo.

On appeal,

§

the Court

findings for clear error,

In re Globe Mfg.

Corp.,

567

F.3d 1291, 1296 (11th Cir. 2009).

II.

DISCUSSION

This appeal presents two issues:

(1)

whether the Bankruptcy

Court erred in finding that Appellee is entitled to reformation of

the Security Deed and cancellation of the Quitclaim Deed and Deed

Under Power due to mutual mistake; and (2) whether the Bankruptcy
Court

erred

in

determining

the

Appellant

could

not

invoke

the

Trustee's avoidance powers under 11 U.S.C. § 544(a)(3).
A. Mutual Mistake

Appellant

challenges

the

Bankruptcy

Court's

conclusion

that

Appellee is entitled to reformation of the Security Deed due to the
parties'

mutual mistake.

clear error.
Cir.

1969)

The Court reviews this determination for

See Dodge v. United States,
(stating

that

the existence

law,

*[i]f

413 F.2d 1239,
of

a mutual

1242

mistake

(5th
is a

question of fact).1
Under

Georgia

accident or mistake,
their contract,
O.C.G.A.

1

§

the

form

of

conveyance

is,

by

contrary to the intention of the parties in

equity shall interfere to make it conform thereto."

23-2-25.

WA

^mutual

mistake'

in

an

action

for

See Bonner v. City of Prichard, Ala., 661 F.2d 1206, 1207 (11th Cir.

1981) (holding Fifth Circuit decisions made on or before September 30,
are binding precedent in the Eleventh Circuit).
2

1981,

reformation means one in which both parties had agreed on the terms
of the contract, but by mistake of the scrivener the true terms of

the agreement were not set forth."

First Nat'l Bank of Polk Cnty.

v- Carr, 260 Ga. App. 439, 440 (2003).

correctly

determined

description

was

that

the

the

result

Here, the Bankruptcy Court

Security

of

a

Deed's

mutual

incorrect

mistake

legal

because

the

undisputed facts show that Appellant and Appellee intended for the

Security Deed's legal description to include Tract 2 only.
mutual

mistake

scrivener's

occurred

error,

on

Tracts

October

26,

1 and 3 were

2005, .when

included

due

in the

description in the executed and recorded Security Deed.

The
to

a

legal

Appellee's

own post-closing letter acknowledges the Security Deed's incorrect
legal description.

Accordingly, the Bankruptcy Court did not err

in its determination that the incorrect legal description was the
result of a mutual mistake.

On appeal,

Tracts

Appellant

does

not

contest

1 and 3 in the Security Deed's

result

of

a

mutual

mistake.

that

legal

Appellant,

the

inclusion of

description was

the

instead, .focuses

on

Appellee's insufficient attempt to cure the mutual mistake via the

Quitclaim

Deed.

Appellant's

She

notification

claims

that

[via

the

unilateral mistake by Appellee."
however,

has not

shown that

Ma]ny

mistake

post-closing

letter]

(Doc. no. 6 at 10.)

the

made

after
is

a

Appellant,

Bankruptcy Court committed clear

error in determining that Tracts 1 and 3 were included in the legal
description of the Security Deed by mutual mistake.
Moreover,

the Court

finds

that

the Bankruptcy Court

did not

err in concluding that Appellant is not prejudiced by reformation
3

of the Security Deed's

legal description.

The undisputed facts

show that Appellant contracted and intended to pledge Tract 2 as

collateral for the loan, had use of the loan proceeds to satisfy an

earlier debt on Tract 2, and was not required to pay more than what

she initially contracted for.

On appeal, Appellant vaguely argues

that she would be prejudiced by reformation because she *would lose
the

benefit

of

her

bargain"

in

the

confirmed

insufficient to preclude reformation.

order.

Indeed,

This

is

the Court agrees

with the Bankruptcy Court that absent reformation Appellee would be
prejudiced by the loss of its security interest and Appellant would
receive a windfall.
commit

clear

error

Consequently,
in

reforming

the Bankruptcy Court

the

Security

Deed

did not

due

to

the

parties' mutual mistake.
B. Trustee

Powers

Appellant also contends that the Bankruptcy Court erred in its

determination that she could not assert the Trustee's
powers

under

11

U.S.C.

§

544(a)(3).

The

Court

statutory

reviews

the

Bankruptcy Court's legal conclusion de novo.

Section 544(a)(3) states that Mt]he trustee shall have,

as of

the commencement of the case, and without regard to any knowledge
of the trustee or of any creditor, the rights and powers of, or may

avoid any
incurred

transfer

by

the

of

debtor

property of
that

purchaser of real property

exists."

11

proceedings,
trustee.

U.S.C.

.

is
.

the

debtor

voidable

by

or

any obligation

...

a

bona

fide

. whether or not such a purchaser

§ 544(a)(3)

(emphasis added).

In Chapter 13

debtors have certain powers otherwise reserved to the

MT]he debtor shall have,
4

exclusive of

the

trustee,

the

rights and powers of a trustee under sections 363(b),

363(d),

363(e),

363(f),

§ 1303.

However,

there

and 363(1),

of this title."

11 U.S.C.

is no statutory authorization

for a Chapter

debtor to exercise the trustee's § 544 avoidance powers.

13

See In re

Richardson, 311 B.R. 302, 304 (Bankr. S.D. Fla. 2004) (noting that
a majority of courts do not allow a Chapter 13 debtor to exercise a

trustee's avoidance powers);
(Bankr. N.D. Ala.

On

appeal,

2001)

In re Holcombe,

284 B.R.

141,

144

(same).

Appellant

argues

"completely

disregarded

the

purchaser."

(Doc. No. 6 at 14.)

that

Trustee's

the

equity

Bankruptcy
as

a

Court

bona

fide

Acknowledging that the trustee in

this case chose not to assert his avoidance powers under section
544 and that many courts do not permit Chapter 13 debtors to assert
a trustee's long arm powers, Appellant cites to In re Reddit,

B.R.

693,

696

(Bankr.

S.D.

Miss.

1992).

Importantly,

146

Reddit

ultimately determined, like the Bankruptcy Court, that "the chapter
13 debtor does not have the power to seek avoidance under Section

544 ... of the Bankruptcy Code."

Id^ at 701.

Appellant has not

demonstrated error in following the majority of cases interpreting
the clear statutory language of Sections 1303 and 544.
Court

concludes

determination

that

that

the

Bankruptcy

Appellant

could

avoidance powers under section 544.

Court
not

did
assert

not

Thus, the
err

the

in

its

Trustee's

III.

As discussed above,

CONCLUSION

the Court AFFIRMS the Bankruptcy Court's

Order granting summary judgment in favor of Appellee.

The Clerk

shall terminate all deadlines and motions, and CLOSE this case.

ORDER ENTERED at Augusta, Georgia, this //^day of August,
2014.

A
HONORABLE J.

RANDAL HALL

UNITED/STATES DISTRICT JUDGE
£RN DISTRICT OF GEORGIA