Avakian v. Citibank N.A. et al

Filing 80

MEMORANDUM OPINION re 79 Order on Motion for Summary Judgment. Signed by District Judge Sharion Aycock on 1/30/2014. (bkl)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF MISSISSIPPI
ABERDEEN DIVISION
BURNETTE AVAKIAN
V.

PLAINTIFF
CIVIL ACTION NO. 1:12-CV-00139-SA-DAS

CITIBANK N.A.

DEFENDANT
MEMORANDUM OPINION

This cause comes before the Court on Defendant’s Motion for Summary Judgment [47].
Upon due consideration of the motion, responses, rules, and authorities, the Court finds that
Defendant’s Motion for Summary Judgment is not well taken and shall be DENIED.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff Burnette Avakian initially brought this suit in the Chancery Court of Lowndes
County, Mississippi seeking a temporary restraining order, preliminary injunctive relief, and a
declaratory judgment to prevent Defendant Citibank N.A. from foreclosing on her home.
Citibank removed the action to this Court and now seeks summary judgment. At issue is
whether Citibank holds a valid and enforceable deed of trust pursuant to which it may foreclose
on Plaintiff’s property.
Along with her husband, Plaintiff purchased property in Columbus, Mississippi on
September 18, 2002. The couple borrowed the purchase money from Southstar Financing, LLC,
and executed a deed of trust to secure the loan. Title to the property was vested in both their
names as joint tenants. In an attempt to prevent Plaintiff from being liable for the debt on the
property, Plaintiff’s husband executed a deed on November 2, 2004 that conveyed title to
Plaintiff alone. Then, in March 2006, Plaintiff and her husband refinanced their mortgage with
Citibank. Again attempting to prevent Plaintiff from incurring any liability for the debt on the

property, the Avakians sought to take out the new loan in Plaintiff’s husband’s name only.
However, as title was vested in Plaintiff’s name, Citibank required both Plaintiff and her husband
to execute a deed of trust.
At the time of the closing, Plaintiff’s husband was out of state. Rather than delay the
closing, Citibank forwarded one set of loan documents to Plaintiff’s husband for him to execute
and return and had Plaintiff execute a second set the following day.1 This resulted in two deeds
of trust on the property – one executed only by Plaintiff’s husband on March 7, 2006 and one
executed only by Plaintiff on March 8, 2006. Each deed of trust was recorded as a separate
instrument with the Chancery Clerk of Lowndes County, Mississippi.
Citibank now seeks to foreclose on the deed of trust signed only by Plaintiff and Plaintiff
brought this action seeking a declaration from the Court that the deed of trust is invalid and to
prevent Citibank from foreclosing. Citibank has filed a motion for summary judgment.
SUMMARY JUDGMENT STANDARD
Summary judgment is warranted under Rule 56(a) of the Federal Rules of Civil
Procedure when the evidence reveals no genuine dispute regarding any material fact and the
moving party is entitled to judgment as a matter of law. The rule “mandates the entry of
summary judgment, after adequate time for discovery and upon motion, against a party who fails
to make a showing sufficient to establish the existence of an element essential to that party’s
case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477
U.S. 317, 322, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986).

1

The parties dispute the reason for this unusual arrangement. Citibank contends the closing was conducted in such
a way as an accommodation to Plaintiff and her husband at their request. Plaintiff, however, contends the decision
to have her and her husband sign separate deeds of trust was Citibank’s alone. Though disputed, this issue of fact is
immaterial and does not preclude summary judgment.

2

The party moving for summary judgment “bears the initial responsibility of informing the
district court of the basis for its motion, and identifying those portions of [the record] which it
believes demonstrate the absence of a genuine issue of material fact.” Id. at 323, 106 S. Ct. 2548.
The nonmoving party must then “go beyond the pleadings” and “designate ‘specific facts
showing that there is a genuine issue for trial.’” Id. at 324, 106 S. Ct. 2548 (citation omitted). In
reviewing the evidence, factual controversies are to be resolved in favor of the nonmovant, “but
only when . . . both parties have submitted evidence of contradictory facts.” Little v. Liquid Air
Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (en banc).
However, “where . . . the evidentiary facts are not disputed, a court in a non-jury case
may grant summary judgment if trial would not enhance its ability to draw inferences and
conclusions.” Am. Century Proprietary Holdings, Inc. v. Am. Century Cas. Co., 295 F. App’x
630, 634 (5th Cir. 2008) (quoting Nunez v. Superior Oil Co., 572 F.2d 1119, 1124 (5th Cir.
1978)). “When the judge, as trier of fact, is in such a position, he ought to draw his inferences
without resort to the expense of trial.” Id. (internal quotations omitted). See also Prof'l
Geophysics, Inc. v. Placid Oil Co. (In re Placid Oil Co.), 932 F.2d 394, 398 (5th Cir. 1991) (“We
follow the Nunez court in recognizing that it makes little sense to forbid the judge from drawing
inferences from the evidence submitted on summary judgment when that same judge will act as
the trier of fact, unless those inferences involve issues of witness credibility or disputed material
facts.”). Thus, “in cases like the one at hand, where the relevant facts are not in dispute and the
critical questions turn purely on legal rights and relationships, summary judgment is
appropriately considered.” Canal Ins. Co. v. Owens, 2011 WL 4833045 at *2 (S.D. Miss. Oct.
12, 2011).

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ANALYSIS AND DISCUSSION
Citibank’s Motion for Summary Judgment
The parties agree that no genuine dispute of material fact exists with regard to the issues
raised by Defendant’s motion. Therefore, the task before the Court is to determine whether the
law favors those arguments set forth by Citibank or those set forth by Plaintiff. Because this is a
case of diversity jurisdiction, the Court must apply state substantive law pursuant to the “Erie
Doctrine.” Krieser v. Hobbs, 166 F.3d 736, 739 (5th Cir.1999) (citing Erie R. Co. v. Tompkins,
304 U.S. 64, 79–80, 58 S. Ct. 817, 82 L. Ed. 188 (1938)). “[The] court is Erie-bound to apply
state law as it currently exists, and may not change that law or adopt innovative theories of
recovery.” Solomon v. Walgreen Co., 975 F.2d 1086, 1089 (5th Cir. 1992) (citing Jackson v.
Johns–Manville Sales Corp., 781 F.2d 394, 396–97 (5th Cir.1986); United Parcel Serv., Inc. v.
Weben Indus., Inc., 794 F.2d 1005, 1008 (5th Cir.1986)).
Mississippi Homestead Rights
Plaintiff claims Citibank is precluded from foreclosing on her property because it
constitutes homestead property under Mississippi law and Citibank’s deed of trust was not
executed by both spouses. Section 89-1-29 of the Mississippi Code states:
A conveyance, mortgage, deed of trust or other encumbrance upon a homestead
exempted from execution shall not be valid or binding unless signed by the
spouse of the owner if the owner is married and living with the spouse or by an
attorney in fact for the spouse.
In briefing the instant motion, the parties do not dispute that the property at issue was subject to
the homestead exemption or that the deed of trust at issue was signed only by Plaintiff.2

2

On December 12, 2013, the Court issued an Order to Show Cause [63], notifying the parties of the possibility of a
finding of summary judgment in favor of Plaintiff pursuant to Federal Rule of Civil Procedure 56(f)(1). In response,
Citibank argues there are genuine disputes of material fact as to whether Plaintiff was entitled to homestead
protections. For the sake of clarity, the Court reserves discussion of this issue, as well as those issues raised by the
parties in response to the Court’s Order Requiring Additional Briefing [72], for the latter portion of this opinion.

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Instead, Citibank argues that the homestead exemption may be waived when mutual
contemporaneous assent of the spouses is demonstrated, regardless of whether both spouses
execute the same physical document. In support of this argument, Citibank cites several cases
evincing the importance of mutual assent as the key factor in determining whether the homestead
exemption has been waived. However, Citibank cites no case wherein a deed of trust on
homestead property has been held valid under Mississippi law without the signature of both
spouses or where separate deeds of trust, each executed by a single spouse, have been found
sufficient to waive homestead protections when taken together. Though the importance of
mutual assent is clearly established by the applicable case law, the Court is not persuaded that
the authority cited by Citibank goes so far as to negate the established precedent requiring both
spouses to sign the same instrument in order to waive the exemption. Rather, Mississippi law is
clear that: 
[t]he Mississippi Legislature, by the enactment of Miss. Code Ann. § 89–1–29,

has elected to place a restriction on the transfer or encumbrance of homesteads.
There can be no operative conveyance unless there is strict compliance with the
statute and no requirement of the statute may be waived by the husband and wife
or by either of them.
Marlow, LLC v. Bellsouth Telecomm., Inc., 2011 WL 381807 at *3 (S.D. Miss. Feb. 3, 2011)
(citing Ward v. Ward, 517 So. 2d 571 (Miss. 1987)). Further, “[t]he validity of [a] deed of trust
is judged by the circumstances existing at the time of its execution.” Craddock v. Brinkley, 671
So. 2d 662, 665 (Miss. 1996) (citing Hughes v. Hahn, 46 So. 2d 587, 589 (Miss. 1951)).
“Subsequent actions by the spouse who failed to join in the execution cannot cure the invalidity
of the instrument.” Id. (citing Welborn v. Lowe, 504 So. 2d 205, 206 (Miss. 1987)).
Though in the case of Howell v. Hill the Mississippi Supreme Court did hold a deed of
trust on homestead property to be valid where the signatures of the spouses were separated by

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some eight months, both spouses eventually signed the same instrument with the full knowledge
and consent of each. 48 So. 177, 177 (Miss. 1909). Here, though it is undisputed that Plaintiff
executed the second deed of trust with the knowledge and consent of her husband, she did in fact
execute a second instrument. Thus, Plaintiff’s actions did nothing to validate the first instrument
signed only by her husband. Additionally, Citibank does not seek to foreclose on the first deed
of trust but on the second, which was executed only by Plaintiff and as to which no action was
taken to conform it to the requirements of the statute. “The Mississippi Supreme Court has
steadfastly held that a deed of trust on a homestead, executed by [one spouse] alone, is void.” In
re Ramsey, 424 B.R. 217, 221 (Bankr. N.D. Miss. 2009) (collecting cases).
In interpreting Section 89-1-29, the Mississippi Supreme Court has said that it “is a clear,
unambiguous statute. Thus, we must apply its plain meaning.” Countrywide Home Loans, Inc. v.
Parker, 975 So. 2d 233, 234 (Miss. 2008). As the Fifth Circuit has recognized, under Mississippi
law “[a] homestead occupied by husband and wife cannot be conveyed without the signature of
both spouses, and any deed made without both signatures is absolutely void and passes no title.”
In re Northlake Dev., L.L.C., 614 F.3d 140, 144 (5th Cir. 2010). Given that the deed of trust at
issue here was not executed by both spouses, the Court finds that it fails to meet the statutory
requirements for conveyances of homestead property.
Equitable Subrogation
However, Citibank argues that, even if Plaintiff did not waive her homestead exemption
right, it is still entitled to be equitably subrogated to the rights and privileges of the purchase
money lender, including the right to foreclose on the property. See Spence v. Clarke, 120 So.
195, 196 (Miss. 1929) (“The mortgagee has the right to enforce, or foreclose, his mortgage,
without regard to the solvency or insolvency of the mortgagor, and in that respect the person

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subrogated succeeds to all the rights of the mortgagee.”). “Because equitable subrogation is a
state-law doctrine, whether equitable subrogation applies . . . presents a question of Mississippi
law . . . .” In re Shavers, 418 B.R. 589, 604 (Bankr. S.D. Miss. 2009).
Mississippi has long held that “[t]he equitable doctrine of subrogation applies whenever
any person, other than a mere volunteer, pays a debt or demand which in equity and good
conscience should have been paid by another, or where one finds it necessary for his own
protection to pay the debt for which another is liable.” First Nat’l Bank of Jackson v. Huff, 441
So. 2d 1317, 1319 (Miss. 1983) (citing Prestridge v. Lazar, 95 So. 837 (Miss. 1923)). Further,
“[o]ne who on the security of a mortgage advances money, at the instance of the owner of the
land mortgaged, to discharge a lien on the land is not a volunteer within the rule denying him the
benefit of subrogation; and that the lien to which he seeks to be subrogated was intended to be,
and was, paid, is immaterial, although the security given is ineffective because of defects
therein.” Russell v. Grisham, 170 So. 900, 901 (Miss. 1936) (internal citations omitted).
“The determination of whether subrogation is applicable is a factual determination of
each particular case with consideration of fairness and justice as its guiding principles.” Huff,
441 So. 2d at 1319. In situations governed by Section 89-1-29, the Mississippi Supreme Court
has previously declined to impose equitable liens. See Countrywide, 975 So. 2d at 234-35. In
Countrywide, the Mississippi Supreme Court held that it had no authority to issue “equitable
liens in cases where a statute declares that the lien is not valid or binding.” Id. In that case, the
Mississippi Supreme Court declared the relevant deed of trust invalid because it encumbered
homestead property but was signed by only one spouse. Id. at 234. Notably, the Court refused
to impose an equitable lien despite the deficiency in the deed of trust having resulted from the
executing spouse’s intentional deception of the lender. Id. In the case at bar, Citibank itself

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prepared the separate deeds of trust and facilitated their execution in the manner giving rise to
the present controversy, further weighing against Citibank’s cries for consideration of the
equities.3
Citibank has offered no authority in which a Mississippi court imposed an equitable lien
on homestead property involving a deed of trust executed by only one spouse. Thus, in light of
the Mississippi Supreme Court’s holding in Countrywide, the Court finds it lacks the authority to
impose an equitable lien in the present case. See In re Ramsey, 424 B.R. at 226 (“This Court
declines to impose an equitable lien in a situation governed by Section 89-1-29, when it appears
that the Mississippi Supreme Court has never done so.”).
Additionally, even were the Court to find it had the authority to impose an equitable lien
in the instant circumstances, it is clear that under Mississippi law the equitable doctrine of
subrogation creates a cause of action and that Citibank’s claim, if asserted, would be barred by
the applicable statute of limitations.

Though Citibank argues in its Motion for Summary

Judgment [47] that it is entitled to be equitably subrogated to the prior lien on Plaintiff’s
property, it has not filed a counterclaim asserting such a right. Instead, Citibank attempts to treat
equitable subrogation as an affirmative defense, arguing that it put Plaintiff on notice of its intent
to pursue all available equitable rights through its pleading of other affirmative defenses such as
estoppel and payment.

However, in countering Plaintiff’s argument that its equitable

subrogation claim is barred by the statute of limitations, Citibank appears to concede that
equitable subrogation is a right of action, arguing that its “right to sue” has not yet become
vested.

3

The Court notes only that the documents were prepared by Citibank and makes no determination with regard why
two deeds of trust were prepared. As previously stated, this issue is disputed by the parties but is immaterial.

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Under Mississippi law, “[t]he right of action by a subrogee accrues when and not before
the date of the payment or payments which make him a subrogee. The statute of limitations
would begin to run against him, therefore, from and not before the date or dates of such
payments by him.” Neely v. Johnson-Barksdale Co., 12 So. 2d 924, 925 (Miss. 1943); see also
Burton v. John Hancock Mut. Life Ins. Co., 157 So. 525, 526 (Miss. 1934). Given such
precedent specifically applying a statute of limitations to the right of equitable subrogation, it is
clear that Mississippi law treats the doctrine of equitable subrogation as a cause of action and not
as an affirmative defense. Citibank’s argument that its right of action for equitable subrogation
would not arise until the Court finds Citibank’s deed of trust invalid is simply incorrect.
Assuming for purposes of the instant motion that the property was homestead property,
Citibank’s deed of trust was invalid at the time of execution, and therefore, any right of action
for equitable subrogation accrued at the time Citibank satisfied Plaintiff’s purchase-money
mortgage debt.
Mississippi’s general statute of limitations is codified by statute at Section 15-1-49 of the
Mississippi Code. “All actions for which no other period of limitation is prescribed shall be
commenced within three (3) years next after the cause of such action accrued, and not after.”
Miss. Code Ann. § 15-1-49(1). The Avakians refinanced their home in March 2006, at which
time Citibank paid the outstanding amount of the purchase-money mortgage debt on the property
and any cause of action for equitable subrogation accrued. Citibank took no action to establish
and enforce its right to be subrogated to the prior lien until after Plaintiff instituted the instant
action in May 2012, more than six years later. Thus, Citibank’s claim of equitable subrogation,

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in addition to not being pled as a cause of action or counterclaimed, is now barred by the statute
of limitations and cannot be sustained.4
Newly Raised Disputes of Fact
Pursuant to Federal Rule of Civil Procedure 56(f)(1), and in light of the parties’
contentions in the briefing of Citibank’s Motion for Summary Judgment that no genuine disputes
of material fact existed in this matter, the Court issued an Order to Show Cause [63] as to why a
ruling on the instant motion should not be dispositive, whether the motion was granted or denied.
In response, Citibank argues that there are genuine disputes of fact regarding whether Plaintiff
was entitled to a homestead exemption and whether Plaintiff’s husband claimed the home as a
homestead. In support of its contention, Citibank submits the affidavit of Gregory D. Andrew,
the Tax Assessor and Tax Collector for Lowndes County, Mississippi, as well as copies of
applications for homestead exemption filed by Plaintiff and her husband and other public
records. Citibank also claims in its supplemental response to the Court’s order that it is asserting
a number of affirmative defenses which involve issues of fact.
Seeking clarification regarding these newly raised issues, the Court issued an Order
Requiring Additional Briefing [72] on January 10, 2014. Based upon the parties’ responses, the
Court now addresses the following issues: (1) whether Plaintiff and her husband were living
together at the time the deed of trust at issue was executed and whether such a determination
would affect the application of the homestead protections of Section 89-1-29; (2) whether
Plaintiff and/or her husband used the property for commercial purposes at the time the deed of
trust at issue was executed and whether such a determination would affect the application of the

4

Whereas the Court has determined that the doctrine of equitable subrogation is inapplicable on other grounds, the
Court need not address Plaintiff’s argument that Citibank has waived any claim to such relief. Accordingly,
Citibank’s Objection to Certain of Plaintiff’s Exhibits [52], which Plaintiff filed in support of her waiver argument,
is moot.

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homestead protections of Section 89-1-29; and (3) whether any affirmative defenses asserted by
Citibank involve genuine disputes of material fact that would necessitate a trial.
As to the first issue, the homestead protections of Section 89-1-29 clearly apply only to
married couples who live together. Miss. Code. Ann. § 89-1-29 (“A . . . deed of trust . . . upon a
homestead exempted from execution shall not be valid or binding unless signed by the spouse of
the owner if the owner is married and living with the spouse . . . .”) (emphasis added). As the
Fifth Circuit has recognized, “[t]he requirement that the owner be living with the spouse is
essential in determining whether encumbered property is homestead” and “the question whether
an owner of property is living with a spouse is factual.” Merchants Nat’l Bank, Vicksburg v. Se.
Fire Ins. Co., Inc., 751 F.2d 771, 777 (5th Cir. 1985) (citing Hendry v. Hendry, 300 So. 2d 147,
149 (Miss. 1974); Philan v. Turner, 13 So. 2d 819, 821 (1943)). Further, “[w]hen a husband
removes himself from homestead property without any intent to return and his wife consents, the
homestead is abandoned, notwithstanding the wife’s continued residence on the land.” Id. (citing
Lewis v. Ladner, 172 So. 312, 313-14 (Miss. 1937)).
Citibank contends that Plaintiff and her husband were not living together at the time the
deed of trust was executed. In support of this argument, Citibank submits to the Court records
from the office of the Tax Assessor and Collector of Lowndes County, Mississippi showing that
Plaintiff applied for a homestead tax exemption in 2005, listing her marital status as
“separated.”5 In response, Plaintiff contends that she and her husband were never separated and
that “[a]t trial, she will offer testimony from herself, friends and family to demonstrate this. She
will also introduce documents to refute the notion that she and her husband were separated.”
5

These records are attached as exhibits to the affidavit of Gregory D. Andrews, Lowndes County Tax
Assessor/Collector. In his affidavit, Andrews states Plaintiff “filed for homestead exemption in her name only and
applied with a marital status of ‘separated’” each year from 2005 to 2008. Plaintiff submits a letter signed by
Andrews in which he now seeks to correct those statements. In the letter, Andrews states Plaintiff “physically
signed up for homestead” in 2005 and made no changes until 2009.

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Based upon the plain language of the statute, the Court finds the issue of whether Plaintiff and
her husband were living together at the relevant time to be material and disputed and appropriate
for trial.
With regard to the second issue, Plaintiff is correct in her contention that the filing of an
application for a homestead tax exemption is irrelevant to the determination of whether the
protections of Section 89-1-29 apply. See e.g. Snoddy v. Snoddy, 791 So. 2d 333, 342 (Miss. Ct.
App. 2001) (“Whether they claimed it on their tax return or not, the property was still the
homestead. The family lived there from 1984 until the present, and used the land as their
residence. It was clearly their homestead.”) However, “[t]o constitute a homestead there must be
actual occupation and use of the premises as a home for the family.” Thurman v. Thurman, 770
So. 2d 1015, 1016 (Miss. Ct. App. 2000). Indeed, in the case of non-contiguous parcels of land,
the Mississippi Supreme Court has commented that “the controlling factor is whether or not the
property is being devoted to homestead purposes and uses consistent with the purpose and use to
which his home tract is devoted.” Shows v. Watkins, 485 So. 2d 288, 291 (Miss. 1986) (quoting
Horton v. Horton, 48 So. 2d 850, 855 (1950)).
Still, “the statutes granting homestead exemption are entitled to be liberally construed. . .
.” Daily v. City of Gulfport, 54 So. 2d 485, 487 (Miss. 1951). The Mississippi Supreme Court
has held that:
[t]he homestead right is a favored one in the law, and the courts will not be on the
alert to defeat the assertion of those rights. Whenever there is serious doubt as to
whether or not property is or is not a homestead, the doubt should be solved, in
favor of the exemptionist, sustaining, instead of defeating, the estate, which is
created by a sound legal policy.
Levis-Zukoski Mercantile Co. v. McIntyre, 47 So. 435, 436 (Miss. 1908). In the present case,
Citibank has offered no authority holding that property which is occupied and used as a home

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may not constitute a homestead, subject to the statutory requirements of Section 89-1-29, if it is
also used for business or commercial purposes. Moreover, the Court has found no such authority
in its own research. Though there may be disputes of fact as to whether and/or when Plaintiff
operated a business at the subject property, such disputes are insufficient to preclude summary
judgment absent some basis in law that their resolution would affect the outcome of this matter.
Finding no such basis, these disputes of fact are not material to the question of whether Plaintiff
was entitled to the protections of Section 89-1-29. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986) (“Only disputes over facts that might affect
the outcome of the suit under the governing law will properly preclude the entry of summary
judgment. Factual disputes that are irrelevant or unnecessary will not be counted.”).
As to the third issue, Citibank asserts six affirmative defenses that it claims involve issues
of fact requiring the Court to resolve this matter through trial: waiver, estoppel, ratification,
laches, and recoupment.

Having reviewed each asserted defense, the Court finds no such

genuine disputes of material fact.
Citibank argues that Plaintiff has waived her rights under Section 89-1-29. However, the
Mississippi Supreme Court has clearly stated that “no requirement of the statute may be waived
by the husband and wife or by either of them.” Ward v. Ward, 517 So. 2d 571, 573 (Miss. 1987).
Accordingly, the Court finds Citibank’s argument to be without merit. Further, as the Court has
previously recognized, “[t]here can be no operative conveyance unless there is strict compliance
with the statute . . . .” Marlow, LLC, 2011 WL 381807 at *3 (citing Ward, 517 So. 2d at 573).
Thus, the Court finds Citibank’s reliance on the principles of estoppel and ratification to likewise
be without merit.

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Citibank also asserts the doctrine of laches, arguing that Plaintiff failed to assert her
rights in a reasonable amount of time. However, as already stated, “[t]he validity of the deed of
trust is judged by the circumstances existing at the time of its execution.” Craddock, 671 So. 2d
at 665. Plaintiff’s husband did not sign the deed of trust as required by Section 89–1–29.
Subsequent actions or events cannot cure the invalidity of the instrument. See Welborn, 504 So.
2d at 207 (“The cases are legion construing the above section to mean that a conveyance of
homestead without a spouse joining in the execution of the deed is absolutely void. No
subsequent action by the non-joining spouse cures the invalidity of it.”); Ramsey, 424 B.R. at
224-25 (“[A]ny period of silence on the part of [the non-signing husband] after [the wife’s]
forgery cannot make legitimate the Deed of Trust that was null and void from the beginning.”).
Though Citibank asserts the defense of laches based upon the silence of the executing spouse
rather than the non-executing spouse, the Court finds the principle to be the same. Cummings v.
Busby, 62 Miss. 195, 197 (1884).

If the subject property was subject to the statutory

requirements of Section 89-1-29 at the time of the execution of the deed of trust at issue, the
Court finds no subsequent action by Plaintiff could validate the necessarily void deed of trust.
Finally, Citibank asserts the affirmative defense of “recoupment,” claiming that
Mississippi law requires the reduction of any damages awarded to Plaintiff. As Citibank admits
“there are no disputed facts relevant to this defense,” the Court finds this issue to be purely legal
in nature.

More importantly, however, recoupment is not an affirmative defense under

Mississippi law. Prior to the adoption of the Mississippi Rules of Civil Procedure:
[r]ecoupment, at common law, [wa]s the right of the defendant, in the same
action, to cut down the plaintiff’s demand either because the plaintiff has not
complied with some cross obligation of the contract on which he sues, or because
he has violated some duty which the law has imposed on him in the making or
performance of that contract.

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Criss v. Bailey, 137 So. 2d 160, 162 (Miss. 1962) (citations omitted). Unlike a set-off, a claim
interposed by way of recoupment:
(1) . . . ar[ose] out of matters connected with the transaction or contract on which
the plaintiff’s cause of action [wa]s founded. (2) It matter[ed] not whether it be
liquidated or unliquidated. (3) It [wa]s not dependent on any statutory regulation,
but it [wa]s controlled by the principles of the common law.
Id. at 163.
The adoption of Rule 13 of the Mississippi Rules of Civil Procedure replaced the
common law doctrine of recoupment with the more liberal, modern rules regarding
counterclaims. Caterpillar Fin. Servs. Corp. v. Burroughs Diesel, Inc., 125 So. 3d 659, 673
(Miss. Ct. App. 2013) (“Under Rule 13(a), some claims may now be asserted as counter-claims
which heretofore could have been interposed only by way of recoupment or set-off at law, or by
cross-bill in equity.”); Miss. R. Civ. P. 81(f) (“Plea of recoupment or recoupment shall refer to a
compulsory counterclaim”) (emphasis in original). Though recoupment, as a common law
means for a defendant to bring a claim against a plaintiff, was limited only to defensive
application, Criss, 137 So. 2d at 163, “Rule 13(a) . . . makes it immaterial whether the
counterclaim . . . has any connection whatever with the plaintiff’s claim.” Miss. R. Civ. P. 13(a).
Thus, even if recoupment was at one time akin to an affirmative defense under Mississippi law,
this is clearly no longer the case. Accordingly, the Court finds that Citibank’s assertion of
recoupment as an affirmative defense is without merit and an insufficient basis to require this
matter to proceed to trial.
Conclusion
For the foregoing reasons, the Court finds that, in order to be valid, a deed of trust on a
homestead must be signed by both spouses pursuant to Section 89-1-29 of the Mississippi Code.
Additionally, the Court finds that it lacks the authority to impose an equitable lien in situations

15

governed by Section 89-1-29. Further, the Court finds that under Mississippi law the doctrine of
equitable subrogation must be pled as a cause of action and is subject to a statute of limitations.
Accordingly, Defendant’s Motion for Summary Judgment [47] is DENIED.
The Court also finds the only genuine dispute of material fact to be whether Plaintiff and
her husband were living together at the time of the execution of the deed of trust at issue such
that Section 89-1-29 would apply. As such, the Court hereby GRANTS summary judgment in
part in favor of Plaintiff and orders that this matter shall proceed to trial on this sole remaining
issue. A separate order to that effect shall issue this day.
SO ORDERED on this, the 30th day of January, 2014.
_/s/ Sharion Aycock__________________
UNITED STATES DISTRICT JUDGE

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