Opinion
Case No. 09-64616 Adv. Pro. No. 10-2198
08-31-2012
In re: MICHAEL J. DOUTT and STEPHANIE D. DOUTT, Debtors. Myron N. Terlecky, Chapter 7 Trustee, Plaintiff, v. National City Mortgage Co., et al., Defendants.
This document has been electronically entered in the records of the United States Bankruptcy Court for the Southern District of Ohio.
IT IS SO ORDERED.
______________
John E. Hoffman, Jr.
United States Bankruptcy Judge
Chapter 7
Judge Hoffman
MEMORANDUM OPINION AND ORDER DENYING
TRUSTEE'S MOTION FOR SUMMARY JUDGMENT
I. Introduction
In this adversary proceeding, Myron N. Terlecky ("Trustee"), the trustee appointed in the Chapter 7 case of Michael J. Doutt and Stephanie D. Doutt ("Debtors"), seeks a declaratory judgment that a mortgage on the Debtors' real property does not encumber Mrs. Doutt's interest in the property. Pending before the Court is the motion for summary judgment ("Motion") (Doc. 12) filed by the Trustee, the amended brief ("Amended Brief") (Doc. 14) filed by PNC Bank, National Association ("PNC") (the successor by merger to National City Mortgage Co. ("National City")) and the Trustee's reply ("Reply") (Doc. 15) to the Amended Brief. The Court heard oral argument on the Motion, the Amended Brief and the Reply. For the reasons explained below, the Court concludes that the Trustee is not entitled to summary judgment.
II. Jurisdiction
The Court has jurisdiction to hear and determine this adversary proceeding pursuant to 28 U.S.C. §§ 157 and 1334 and the general order of reference entered in this district. This is a core proceeding. See 28 U.S.C. § 157(b)(2).
III. Background
Before they commenced their bankruptcy case on December 16, 2009, the Debtors signed a mortgage dated July 31, 2003 ("Mortgage") with respect to the real property located at 4484 Canaday Court, Columbus, Ohio ("Property"). Under the Mortgage, the lien on the Property was granted by the "Borrower." The Trustee contends that, because Mrs. Doutt was not included within the defined term "Borrower" on the first page of the Mortgage, she did not grant a lien on her undivided one-half interest in the Property even though she signed the Mortgage. In response, PNC argues that the parties' intent that Mrs. Doutt grant a lien on her interest in the Property is evidenced by: (1) her signature on the Mortgage over a line identifying her as a "Borrower" and (2) the provisions of the Mortgage referencing a promissory note—which she also signed—secured by the Mortgage. The facts relevant to the parties' dispute are set forth below.
A copy of the Mortgage is attached as an exhibit to the Complaint (Doc. 1).
The following text appears on the first page of the Mortgage:
The Mortgagor isMortg. at 1-2.
Michael J Doutt
whose current mailing address is 4484 CANADAY CT, COLUMBUS, Ohio, 43228 ("Borrower"). . . .
Borrower owes Lender the principal sum of . . . $186,760.00 . . . . This debt is evidenced by Borrower's note dated the same date as this Security Instrument ("Note") . . . . This Security Instrument secures to Lender: (a) the repayment of the debt evidenced by the Note, with interest, and all renewals, extensions and modifications of the Note; (b) the payment of all other sums, with interest, advanced under paragraph 7 to protect the security of this Security Instrument; and (c) the performance of Borrower's covenants and agreements under this Security Instrument and the Note. For this purpose, Borrower does hereby mortgage, grant and convey to the Lender the [Property].
Paragraph 12 of the Mortgage, which the Court will refer to as the "Co-signer Provision," provides in pertinent part as follows:
Borrower's covenants and agreements shall be joint and several. Any Borrower who co-signs this Security Instrument but does not execute the Note: (a) is co-signing this Security Instrument only to mortgage, grant and convey that Borrower's interest in the Property under the terms of this Security Instrument; (b) is not personally obligated to pay the sums secured by this Security Instrument; and (c) agrees that Lender and any other Borrower may agree to extend, modify, forbear or make any accommodations with regard to the terms of this Security Instrument or the Note without that Borrower's consent.Mortg. at 5.
The Mortgage provides that "BY SIGNING BELOW, Borrower accepts and agrees to the terms contained in this Security Instrument and in any rider(s) executed by Borrower and recorded with it." Mortg. at 8. Below this statement there is a signature line over the preprinted name Michael J Doutt and the preprinted word "Borrower." Mr. Doutt placed his signature on that line. Below his signature are several signature lines with the preprinted word "Borrower" but no preprinted names. Mrs. Doutt handwrote her name on the first of the additional lines under which the word "Borrower" appears and then placed her signature on the line above her handwritten name. Both of the Doutts initialed the Mortgage on each of its pages. The signatures are followed by a certificate of acknowledgment that contains the names of both of the Debtors.
No riders were executed in connection with the Mortgage.
The parties have stipulated that "[b]oth [D]ebtors signed the Promissory Note which is attached as Exhibit A to the Motion for Relief from Stay filed [as] Doc. No. 13 in [the Debtors' bankruptcy case] ("Note")" and that "Exhibit A as therein filed is a true and exact copy of the Note." Doc. 18 ¶ 2. The Note states that "'Borrower' means each person signing at the end of this Note, and the person's successors and assigns." Note ¶ 1. Each of the Debtors signed the Note underneath the statement that "BY SIGNING BELOW, Borrower accepts and agrees to the terms and covenants contained in this Note." The Note also states that "Borrower's promise to pay is secured by a mortgage, deed of trust or similar security instrument that is dated the same date as this Note and called the 'Security Instrument.'" Note ¶ 3. Like the Mortgage, the Note is dated July 31, 2003.
In the Amended Brief, PNC relied on a Subordination of Mortgage between National City and U.S. Bank ("Subordination Agreement"). The Subordination Agreement, which is attached as Exhibit 1 to the Amended Brief, references a mortgage between National City and both Mr. Doutt and Mrs. Doutt. The parties stipulated that the copy of the Subordination Agreement submitted by National City is a true and exact copy. See Doc. 18 ¶ 1. During oral argument, however, counsel for PNC stated that the Subordination Agreement was not relevant for purposes of summary judgment.
IV. Legal Analysis
A. Summary Judgment Standard
Under Rule 56 of the Federal Rules of Civil Procedure ("Civil Rule(s)"), made applicable in this adversary proceeding by Rule 7056 of the Federal Rules of Bankruptcy Procedure, a court "shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "On a motion for summary judgment, facts must be viewed in the light most favorable to the nonmoving party only if there is a genuine dispute as to those facts." Ricci v. DeStefano, 129 S. Ct. 2658, 2677 (2009) (internal quotation marks omitted). A dispute is genuine only if it is "based on evidence upon which a reasonable [finder of fact] could return a [judgment] in favor of the non-moving party." Gallagher v. C.H. Robinson Worldwide, Inc., 567 F.3d 263, 270 (6th Cir. 2009). And a "factual dispute concerns a 'material' fact only if its resolution might affect the outcome of the suit under the governing substantive law." Id.
Pursuant to an amendment to Civil Rule 56 that became effective on December 1, 2010 (after this adversary proceeding was commenced), the summary judgment standard now appears in Civil Rule 56(a) rather than, as it formerly did, Civil Rule 56(c). See Fed. R. Civ. P. 56 Advisory Committee Notes (2010 Amendments) ("Subdivision (a) carries forward the summary-judgment standard expressed in former subdivision (c) . . . ."). The Court is citing the amended rule given that application of "the amended version of [Civil] Rule 56 in this case is just and practicable and would not work a manifest injustice, because the amendments do not change the summary judgment standard or burdens." Farmers Ins. Exch. v. RNK, Inc., 632 F.3d 777, 782 n.4 (1st Cir. 2011); see also Martinez v. Hutton (In re Harwell), 628 F.3d 1312, 1316-17 n.4 (11th Cir. 2010) ("Amendments to the Federal Rules of Civil Procedure govern proceedings after the date they are effective in an action then pending unless the Supreme Court specifies otherwise or the court determines that applying them in a particular action would be infeasible or work an injustice. Fed. R. Civ. P. 86(a). We apply the language of Rule 56 as amended.").
B. Applicable Law
Where, as here, the Bankruptcy Code "does not specifically address an issue that arises in bankruptcy, the bankruptcy court looks to state law, to the extent that it does not conflict with the [B]ankruptcy [C]ode[.]" Reinhardt v. Vanderbilt Mortg. & Fin., Inc. (In re Reinhardt), 563 F.3d 558, 563 (6th Cir. 2009) (internal quotation marks omitted). The Mortgage is on real property located in Ohio. Thus, the Court must look to Ohio law to determine whether the Mortgage encumbers Mrs. Doutt's interest in the Property. See Simon v. Chase Manhattan Bank (In re Zaptocky), 250 F.3d 1020, 1024 (6th Cir. 2001) ("Since this mortgage concerns real property located in Ohio, this inquiry is governed by Ohio law.").
Because the Ohio Supreme Court has not yet addressed the precise issue presented in this adversary proceeding, the Court must predict how the Ohio Supreme Court would rule. See Meridian Mut. Ins. Co. v. Kellman, 197 F.3d 1178, 1181 (6th Cir. 1999). "While engaged in this predictive process, [t]he Court must employ the appropriate [state] methodology to decide th[e] issue the way that [it] believe[s] the Supreme Court of [the state] would decide it." Drown v. Wells Fargo Bank, N.A. (In re Scott), 424 B.R. 315, 330 (Bankr. S.D. Ohio 2010) (internal quotation marks omitted), aff'd, 2011 WL 1188434 (S.D. Ohio Mar. 29, 2011). Furthermore, in making the prediction "the Court may rely upon analogous cases and relevant dicta in the decisional law of the State's highest court, opinions of the State's intermediate appellate courts to the extent that they are persuasive indicia of the State Supreme Court direction, and persuasive opinions from other jurisdictions, including the majority rule." In re Kimble, 344 B.R. 546, 552 (Bankr. S.D. Ohio 2006) (internal quotation marks omitted). In addition, "[w]here an intermediate appellate state court rests its considered judgment upon the rule of law which it announces, that is a datum for ascertaining state law which is not to be disregarded by a federal court unless it is convinced by other persuasive data that the highest court of the state would decide otherwise." West v. Am. Tel. & Tel. Co., 311 U.S. 223, 237 (1940). See also Grantham & Mann, Inc. v. Am. Safety Prods., Inc., 831 F.2d 596, 608-09 (6th Cir. 1987) ("[A]lthough a decision by a lower state court is not controlling where the highest state court has not spoken, the decision of an intermediate appellate state court . . . is a datum for ascertaining state law which is not to be disregarded by a federal court unless it is convinced by other persuasive data that the highest court of the state would decide otherwise." (citations and internal quotations marks omitted)); Rhiel v. Cent. Mortg. Co. (In re Kebe), 469 B.R. 778, 788 (Bankr. S.D. Ohio 2012).
Mortgages are subject to "the same rules of interpretation and the same framework of analysis which apply to contracts generally." Ogan v. Ogan, 702 N.E.2d 472, 474 (Ohio Ct. App. 1997). The Court, therefore, will apply the legal principles governing the interpretation of contracts in Ohio. See Hardesty v. Huntington Nat'l Bank (In re Payne), 450 B.R. 711, 718 (Bankr. S.D. Ohio 2011). And those principles are well established. "When confronted with an issue of contractual interpretation, the role of a court is to give effect to the intent of the parties to the agreement." Cincinnati Ins. Co. v. CPS Holdings, Inc., 875 N.E.2d 31, 33 (Ohio 2007). In determining intent, a promissory note and a mortgage executed at the same time—as the Mortgage and Note were—must be construed together. See Edward A. Kemmler Mem'l Found. v. 691/733 E. Dublin-Granville Rd. Co., 584 N.E.2d 695, 699 (Ohio 1992) ("When a note and mortgage are made at the same time and in relation to the same subject as parts of one transaction, they will be construed together as if they were parts of the same instrument.") (internal quotation marks omitted); Ross v. Roberson, 1987 WL 5532, at *4 (Ohio Ct. App. Jan. 13, 1987) ("[T]he general rule we gather from the cases is that a series of writings drafted contemporaneously as part of a single real estate transaction are to be read together in order to determine the intent of the parties.").
Moreover, "[i]t is a well-settled principle, applicable to the construction of deeds and other instruments, that all their parts are to be construed together, and the meaning ascertained from a consideration of each and every part . . . ." Dodd v. Bartholomew, 5 N.E. 866, 867 (Ohio 1886). In Dodd, the Ohio Supreme Court construed a mortgage and its accompanying certificate of acknowledgment together. The principle requiring all the parts of a real estate instrument to be construed together extends to the signature line. In fact, the Bankruptcy Appellate Panel of the Sixth Circuit ("BAP") has relied on the signature line when determining the intent in signing a mortgage. See Menninger v. Accredited Home Lenders (In re Morgeson), 371 B.R. 798, 804 (B.A.P. 6th Cir. 2007). See also Helbling v. ABN AMRO Mortg. Grp., Inc. (In re Zver), No. 08-1322, slip op. at 4 (Bankr. N.D. Ohio Apr. 18, 2009) (denying summary judgment on the issue of who was a "Borrower" under a mortgage based in part on the signature line). Ohio courts have included the signature blocks in their analysis when determining who is a "Borrower" within the meaning used in mortgages. See, e.g., SFJV 2005, LLC v. Ream, 933 N.E.2d 819, 825 (Ohio Ct. App. 2010); Mortg. Elec. Registration Sys., Inc. v. Kaehne, 2008 WL 3271249, at *5 (Ohio Ct. App. Aug. 8, 2008). See also Babyak v. DSLangdale One, Inc., 2009 WL 2579517 (Ohio Ct. App. Aug. 20, 2009) ("In the case at bar, we find that the [contract] contains an ambiguity as to whether NCT is a party to the contract. As appellants point out, the agreement identifies only Babyak and DSI (now known as DSLangdale One) as parties. Additionally, the agreement obligates DSI—not NCT—to make the various payments to Babyak. Thus, according to appellants' reading . . . NCT is not a party to the contract. On the other hand, NCT was the only Langdale-controlled entity to sign the [contract].").
"When the language of a written contract is clear, a court may look no further than the writing itself to find the intent of the parties. As a matter of law, a contract is unambiguous if it can be given a definite legal meaning." Cincinnati Ins. Co., 875 N.E.2d at 34 (citation omitted). By contrast, "where a contract is ambiguous, a court may consider extrinsic evidence to ascertain the parties' intent." Westfield Ins. Co. v. Galatis, 797 N.E.2d 1256, 1261 (Ohio 2003). See also Taylor v. Squires Constr. Co., 964 N.E.2d 500, 504 (Ohio Ct. App. 2011) ("Here, the alleged defects in the contract render it ambiguous, requiring the consideration of parol evidence.").
Ambiguity exists if the meaning of contractual terms "cannot be deciphered from reading the entire instrument or if the terms are reasonably susceptible to more than one interpretation." Look v. H&M Custom Home Builders Co., 2012 WL 2522647, at *3 (Ohio Ct. App. June 29, 2012). Once ambiguity is established, intent is a question to be determined by the trier of fact, and summary judgment should not be granted. See Inland Refuse Transfer Co. v. Browning-Ferris Indus. of Ohio, Inc., 474 N.E.2d 271, 273 (Ohio 1984) ("[W]e conclude there is also an absence of any provision whose sole possible interpretation clearly and unambiguously supports only one party's position . . . . Inasmuch as reasonable minds could differ . . . summary judgment on the issue was inappropriate."); Wells v. Am. Elec. Power Co., 548 N.E.2d 995, 997 (Ohio Ct. App. 1988) ("From a summary judgment standpoint, the intent of the parties controls. If the contract or the deed shows exactly what the parties intended then there is no question of law or fact. If, however, the language is capable of two reasonable, but conflicting interpretations, then there is an issue of fact on what the parties intended.").
Under such circumstances, the trier of fact—here the Court—may consider extrinsic evidence "to ascertain the circumstances which surrounded the parties at the time [the contract] was made, the object intended to be accomplished, and the construction which the acts of the parties show they gave to their agreement . . . ." Mosier v. Parry, 54 N.E. 364, 364 (syllabus ¶ 1) (Ohio 1899). The ultimate goal is "to give proper construction to the words they have used in the instrument, and to determine its legal effect." Id. See also Ream, 933 N.E.2d at 824 ("[E]xtrinsic evidence may include (1) the circumstances surrounding the parties at the time the contract was made, (2) the objectives the parties intended to accomplish by entering into the contract, and (3) any acts by the parties that demonstrate the construction they gave to their agreement." (internal quotation marks omitted)). Extrinsic evidence may also include the testimony of the parties. See Baker v. DiSilvestro, 1993 WL 243085, at *2 (Ohio Ct. App. July 1, 1993) ("Parol evidence such as the testimony from the parties of their contractual intent may be admitted to resolve questions of ambiguity."); Frank Novak & Sons, Inc. v. Crest Masonry, Inc., 1991 WL 117965, at *3 (Ohio Ct. App. June 20, 1991) ("[P]arol evidence and the testimony of the parties may be considered when the language of the agreement is ambiguous and subject to more than one interpretation.").
The Trustee relies on the principle that ambiguous contracts are to be construed against the drafter, Mot. at 6, 14, but that "rule of construction is merely a guiding principle the court uses in determining the parties' intent after viewing the extrinsic evidence presented by the parties." 7 Med. Sys., L.L.C. v. Open MRI of Steubenville, 2012 WL 2522646, at *3 (Ohio Ct. App. June 18, 2012) (internal quotation marks omitted). In fact, "[a] court should only resort to construing an ambiguous contract against the drafter when the court is unable to determine the intent of the parties." Glenn Med. Sys., Inc. v. RT Servs., L.L.C., 2009 WL 2772554, at *1 (Ohio Ct. App. Aug. 31, 2009). See also Beverly v. Parilla, 848 N.E.2d 881, 887 (Ohio Ct. App. 2006) ("The general rule of construing an ambiguous contract against the drafter does not mean automatically holding in favor of the other party in a case such as this. . . . Otherwise, extrinsic evidence would be irrelevant.").
C. Application of Ohio Law
Applying the foregoing legal principles, the Court predicts that the Ohio Supreme Court would determine that the term "Borrower" as used in the Mortgage is reasonably susceptible to more than one interpretation and is therefore ambiguous, rendering summary judgment inappropriate.
The first page of the Mortgage defines only Mr. Doutt as the "Borrower." A reasonable interpretation of the Mortgage, therefore, is that Mrs. Doutt is not a "Borrower." And yet, on the other hand: (1) Mrs. Doutt signed the Mortgage over the designation "Borrower" without any indication that she was doing so for a purpose other than mortgaging her interest in the Property; and (2) the Mortgage provides that the debt it secures "is evidenced by Borrower's note dated the same date as this Security Instrument ("Note") . . . ." Mortg. at 1. If the Mortgage must be construed so as to substitute Mr. Doutt's name wherever the word "Borrower" appears—as the Trustee contended during oral argument—then the statement that the debt "is evidenced by Borrower's note" means that the debt "is evidenced by [Mr. Doutt's] note . . . ." The latter statement, however, is only half true because Mrs. Doutt also signed the Note. Put another way, if someone asked the Doutts whose note was secured by the Mortgage and they replied "the Borrower's, and the Borrower is Mr. Doutt," their response would certainly be considered misleading. Thus, in light of Mrs. Doutt's signature over the word "Borrower" and the Mortgage's statement that the debt the Mortgage secures is evidenced by the Note, which she signed, another reasonable interpretation of the Mortgage is that Mrs. Doutt is a "Borrower."
Given these two reasonable but competing interpretations, the Mortgage is ambiguous. And the ambiguity present in the Mortgage with respect to the meaning of the term "Borrower" counsels against summary judgment just as much as contractual ambiguity would in any other context. See Zver, slip op. at 7 ("The trustee next argues that ABN AMRO's mortgage does not extend to Patrick Zver's interest in the property based on the unambiguous terms of the mortgage. However, a review of the mortgage leads the court to conclude that the mortgage is ambiguous on that point. . . . When a mortgage is ambiguous, the court turns to extrinsic evidence to determine the parties' intent. Neither party has addressed intent, by affidavit or otherwise. That dispute must, therefore, be resolved at trial, rather than at the summary judgment stage.").
In Zver, "[t]he note [was] not in evidence, so no information [could] be gleaned from that part of the transaction." Zver, slip op. at 7. Instead, the bankruptcy court found ambiguity because "[a]lthough Lisa Zver is defined as the borrower and mortgagor, both Lisa and Patrick Zver signed the mortgage as borrowers [over lines that included their preprinted names] and initialed each page" and "there [was] no indication that Patrick Zver was signing the mortgage for a limited purpose, such as to release any dower rights." Id.
In support of his request for summary judgment, the Trustee primarily relies on several bankruptcy court decisions from this district holding that individuals who had signed mortgages over the designation "Borrower" were not mortgagors because they were not expressly included in the defined term "Borrower." See Payne, 450 B.R. at 720; Menninger v. Mortg. Elec. Registration Sys., Inc. (In re Earl), No. 09-1097, slip op. at 6 (Bankr. S.D. Ohio July 2, 2010); Kindt v. ABN AMRO Mortg. Grp., Inc. (In re Wallace), 2007 WL 6510864, at *3 (Bankr. S.D. Ohio Nov. 15, 2007). In each of those decisions, however, the spouse who was not included within the defined term "Borrower" had not signed the associated promissory note, so the defendant made no arguments based on both spouses having signed the note. By contrast, here both spouses signed the Note, and the Mortgage provides that it secures the repayment of the debt evidenced by the Note. As explained above, this provision of the Mortgage, on which PNC relies, contributes to the ambiguity regarding whether Mrs. Doutt is a "Borrower" as that term is used in the Mortgage. See Zver, slip op. at 6 (distinguishing Wallace on the basis that, among other things, "the evidence presented [in Wallace] showed that only the husband had executed the note secured by the mortgage").
The Trustee also relies on Smith v. Turpin, 20 Ohio St. 478 (1870)—in which the Ohio Supreme Court held that an individual who signed a deed did not convey her interest in the property where it was undisputed that she was not included in the granting clause—as an indicator of how the Ohio Supreme Court would rule here. The Court could conclude that Mrs. Doutt is not included in the granting clause only if it were to determine that she is not a "Borrower" as that term is used in the Mortgage. As explained above, the meaning of the term "Borrower" as used in the Mortgage is ambiguous because Mrs. Doutt was not included within the defined term "Borrower" on the first page of the Mortgage, yet she signed the Mortgage over a line identifying her as a "Borrower," and the Mortgage states that the debt it secures is evidenced by a Note signed by her. Unlike in Smith, therefore, in this case the question of whether Mrs. Doutt is included in the granting clause is an open question.
For its part, PNC relies on the Ohio court of appeals decision in Ream, arguing that it should govern the outcome. In Ream, the court stated in pertinent part as follows:
[W]e find nothing ambiguous about the mortgage. The first page states that Donna Ream, the borrower, owes the lender a debt of approximately $64,000, which was evidenced by a note due and payable on May 1, 2034. These statements are followed by terms that provide that the "borrower" mortgages the property located at 471 Gwynne Street in Urbana as security for repayment of that debt. Paul initialed each page of the mortgage and signed the signature page on a line labeled "borrower."Ream, 933 N.E.2d at 825. After this matter was briefed, another Ohio court of appeals followed Ream in holding that an individual who was not identified as a "Borrower" on the first page of the mortgage but who signed the mortgage without signing the associated promissory note was a mortgagor. See CitiMortgage, Inc. v. Kermeen, 2012 WL 1264488, at *9 (Ohio Ct. App. Apr. 13, 2012). An Ohio court of appeals decision issued prior to Ream reached the same result. See Kaehne, 2008 WL 3271249, at *5.
There is no . . . provision that suggests that Paul Ream signed the mortgage for a purpose other than to mortgage his interest in this property.
As this quotation shows, and as the bankruptcy court noted in Payne, "the state court used the lower-case word 'borrower' in lieu of the defined term Borrower, which apparently included only Donna Ream" and it therefore was not clear whether "the mortgage at issue in Ream used the defined term Borrower in the granting clause . . . ." Payne, 450 B.R. at 722-23. In accordance with an order entered by the Court (Doc. 19), the parties filed a certified copy of the mortgage at issue in Ream, see Doc. 23, Ex. 1, which made clear that the mortgage in that case used the defined term Borrower in the granting clause. Thus, Ream is not distinguishable on the basis of the Mortgage's use of the defined term "Borrower." The Court also requested a copy of the mortgage at issue in PNC Mortg. v. Innis, 2011 WL 5146044, at *2 (Ohio Ct. App. Oct. 31, 2011) because Innis did not specify "whether the party who failed to sign the note also was not included within the mortgage's definition of grantor or borrower." Doc. 19 at 3. The parties filed a certified copy of the mortgage at issue in Innis, see Doc. 23, Ex. 2, which showed that both spouses in that case were included within the mortgage's definition of "Borrower," making Innis inapposite here.
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If these decisions by Ohio courts of appeals were factually on all fours with the present case, then the Court could not disregard them "unless it [were] convinced by other persuasive data that the highest court of the state would decide otherwise." West, 311 U.S. at 237. But Ream, Kermeen and Kaehne—as well a bankruptcy case on which PNC relies, HHP-Brentwood, L.L.C. v. Aurora Loan Servs., LLC (In re Surti), 434 B.R. 515 (Bankr. M.D. Tenn. 2010)—are distinguishable in that in each of those cases the spouse who was not included within the defined term "Borrower" had not signed the associated promissory note. Thus, in each of those decisions a provision substantially similar to the Co-signer Provision (stating that "[a]ny Borrower who co-signs this Security Instrument but does not execute the Note . . . . is co-signing this Security Instrument only to mortgage, grant and convey that Borrower's interest in the Property") applied. See Kermeen, 2012 WL 1264488, at *10 ("Paragraph 12 of the mortgage in Ream contained similar language to that of paragraph 13 of the Mortgage herein . . . . Pursuant to Ream, we conclude that despite the omission of Kimberly's name from the granting clause in the Mortgage, pursuant to the co-signer provision, Kimberly signed the Mortgage for the purpose of mortgaging her interest in the property."); Ream, 933 N.E.2d at 825 ("Although Paul Ream is not listed as a borrower/mortgagor on the first page of the mortgage, paragraph 12 of the mortgage makes clear that a 'borrower' who signs the mortgage instrument but does not execute the note mortgages his interest in the property without assuming liability for repayment of the debt; Paul signed as a 'borrower.'"); Kaehne, 2008 WL 3271249, at *5 ("I find the mortgage ambiguous on its face. Mr. Kaehne is the sole person defined as a 'Borrower' in the definitions portion of the mortgage: Ms. Reichard is not included. And yet, she initialed the pages of the mortgage, signed the final page as a 'Borrower,' and signed the various riders. It appears MERS relies on paragraph 13 of the mortgage to explain this ambiguity.") (O'Toole, J., dissenting); Surti, 434 B.R. at 520-21 ("'Borrower' is used in two different senses in the Aurora Deed of Trust. The document contemplates a Borrower who has signed the Note and a Borrower who has not signed the Note. A Borrower who has not signed the Note is renamed a 'Cosigner' by Paragraph 13 for purposes of conveying his interest in trust to secure the debt of a Borrower who has signed the Note.").
The Co-signer Provision, however, does not apply here. During oral argument, PNC also relied on Rogan v. Fifth Third Mortg. Co. (In re Rowe), 452 B.R. 591 (B.A.P. 6th Cir. 2011). In Rowe, the definition of "Borrower" set forth in the mortgage under consideration did not include Linda Lou Rowe, but the definition set forth in a rider to the mortgage did. The mortgage rider also stated that "its terms were meant to 'amend and supplement'" the terms of the mortgage. Rowe, 452 B.R. at 597. The BAP, therefore, held that the terms of the mortgage and rider were not ambiguous, that Ms. Rowe was a "Borrower" under the definition set forth in the rider and that summary judgment therefore should have been entered for the lender. Id. PNC's attempt during oral argument to equate the Note with the rider in Rowe is misplaced. Although the Mortgage and the Note must be construed together, there is no provision of the documents under which the definition of "Borrower" set forth in the Note amends and supplements the definition in the Mortgage. Thus, unlike in Rowe, the ambiguity remains as to whether the parties intended Mrs. Doutt to be a "Borrower" for purposes of the Mortgage. In light of this ambiguity, an issue of fact exists, making summary judgment inappropriate.
V. Conclusion
For the foregoing reasons, the Court DENIES the Motion. The Court will schedule a status conference in this adversary proceeding by separate order.
IT IS SO ORDERED. Copies to: James A. Coutinho, Attorney for Myron N. Terlecky, Trustee
Amelia A. Bower and Holly N. Wolf, Attorneys for PNC Bank, National Association