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Borries v. Goshen Mortgage, LLC

Court of Appeals of Mississippi

May 16, 2017

KENNETH R. BORRIES AND FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF PASCAGOULA-MOSS POINT APPELLANTS
v.
GOSHEN MORTGAGE, LLC, AS ASSIGNEE MNH SUB 1 LLC, ASSIGNEE OF CITIMORTGAGE INC., ASSIGNEE OF MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., AND NOMINEE OF FIRST CHOICE FUNDING, INC. APPELLEE

          DATE OF JUDGMENT: 07/09/2015

         JACKSON COUNTY CHANCERY COURT HON. JAYE A. BRADLEY JUDGE

          ATTORNEYS FOR APPELLANTS: MATTHEW WARD MCDADE DAVID ELIAS KIHYET DONALD ALAN WINDHAM MATTHEW EARL PERKINS

          ATTORNEY FOR APPELLEE: GENE D. BERRY

          BEFORE LEE, C.J., BARNES AND FAIR, JJ.

          BARNES, J.

         ¶1. This appeal stems from a complaint filed in the Chancery Court of Jackson County where Goshen Mortgage LLC (Goshen) requested a declaratory judgment that it held the first-priority deed of trust on an approximately 8.9-acre tract of real property. Goshen moved for summary judgment alleging that a deed of trust filed on behalf of Defendant Kenneth Borries did not provide notice to any party under Mississippi Code Annotated section 89-5-37 (Rev. 2011) because it did not identify a beneficiary; thus, Goshen's deed of trust had first priority over Borries's deed of trust. The chancery court agreed, and granted summary judgment in favor of Goshen. Defendants appealed. Finding no error, we affirm.

         STATEMENT OF FACTS AND PROCEDURAL HISTORY

         ¶2. In June 2005, Michael and Mary Ann Rogers purchased a residence and 8.9 acres of land located on Ramsay Road in Vancleave, Mississippi. They executed a deed of trust for $174, 600 in favor of Coastal Mortgage Group Inc. (Coastal).[1] On August 1, 2005, the Rogerses executed a $20, 000 deed of trust on 2.17 acres, which included the residence, and was within the 8.9-acre tract purchased by the Rogerses. No beneficiary was named on this deed of trust (Blank Beneficiary Deed of Trust). In October 2005, the Rogerses executed a deed of trust in the amount of $26, 5000 in favor of the United States Small Business Administration (SBA). In March 2007, the Rogerses refinanced their loans, and at the closing on March 21, 2007, executed a deed of trust on the 8.9 acres for $243, 695 to First Choice Funding Inc. (First Choice), Goshen's predecessor-in-interest. It was filed on April 30, 2007. As a result of the refinance, the Rogerses' Coastal and SBA loans were paid off.

         ¶3. On April 9, 2008, the Blank Beneficiary Deed of Trust was corrected to name Borries as the beneficiary, and it was re-recorded in the land records. The deed of trust was recorded again in May 2008. Borries then foreclosed on the deed of trust, and the Rogerses abandoned the property sometime in 2008.[2] On July 17, 2008, a trustee's deed was recorded, conveying the 2.17-acre tract to Borries after he bid $25, 272.18 for it. In February 2010, Borries executed a deed of trust on the 2.17-acre tract in the amount of $194, 000 to First Federal Savings and Loan Association of Pascagoula-Moss Point (First Federal).

         ¶4. In May 2014, Goshen filed suit in the Jackson County Chancery Court seeking a declaratory judgment that, among other matters, Goshen had the first-priority deed of trust on the 8.9-acre tract. On April 7, 2015, Goshen moved for summary judgment against Borries and First Federal, arguing that the Blank Beneficiary Deed of Trust was defective and void; thus, it could not provide record notice under section 89-5-37. Additionally, Goshen argued that because this deed of trust was corrected one year later to name Borries as beneficiary after the First Choice deed of trust was recorded, Goshen's deed of trust had first priority over the corrected Borries deed of trust. Attached to Goshen's motion was an affidavit by Jacques B. Favret, who was retained by First Choice to close the refinancing and pay off any liens on the property. Favret ordered a title search of the property, which revealed Coastal's first-priority deed of trust and the SBA's second-priority deed of trust; however, no other deed of trust executed by the Rogerses was found.[3]

         ¶5. In July 2015, following a hearing, the chancery court issued an order granting Goshen's motion for summary judgment. The court found that under Mississippi statutes, Goshen held the first-priority deed of trust on the subject property. Borries and First Federal filed a motion for reconsideration, which was denied. They appealed, raising three issues: (1) whether Goshen had the priority interest ahead of Borries without showing it had either record or actual notice of a prior encumbrance; (2) whether Goshen bears the burden of proving lack of actual notice at the summary-judgment stage of a declaratory-judgment action; and (3) whether the chancery court erred in granting summary judgment without Goshen's offering evidence of actual notice of a prior encumbrance. As these issues are intertwined, we shall discuss them together.

         STANDARD OF REVIEW

         ¶6. The appellate court applies a de novo standard of review when analyzing a trial court's grant or denial of a motion for summary judgment. Kihullen v. Kan. City S. Ry., 8 So.3d 168, 174 (¶14) (Miss. 2009). The evidence will be viewed in the light most favorable to the nonmoving party. Id. Summary judgment is proper "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." M.R.C.P. 56(c). The moving party has the burden of proving there is no genuine issue of material fact. Buckel v. Chaney, 47 So.3d 148, 153 (ΒΆ10) (Miss. 2010) (citation omitted). Once shown, "the burden of rebuttal ...


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