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Nationstar Mortgage LLC v. Goeke

Supreme Court of New York, Third Department

June 8, 2017

NATIONSTAR MORTGAGE LLC, Doing Business as CHAMPION MORTGAGE COMPANY, Appellant,
v.
ANNE C. FULLAM GOEKE, Respondent, et al., Defendants.

          Calendar Date: March 31, 2017

          Bradley Arant Boult Cummings, LLP, Birmingham, Alabama (Marc James Ayers and Richard Aaron Chastain, admitted pro hac vice), for appellant.

          Rapport Meyers, LLP, Hudson (Victor M. Meyers of counsel), for respondent.

          Before: McCarthy, J.P., Egan Jr., Lynch, Devine and Clark, JJ.

          MEMORANDUM AND ORDER

          McCarthy, J.P.

         Appeal from an order of the Supreme Court (Nichols, J.), entered November 4, 2015 in Columbia County, which, among other things, granted defendant Anne C. Fullam Goeke's cross motion for summary judgment dismissing the complaint against her.

         In June 2008, defendant Anne C. Fullam Goeke (hereinafter defendant) and her husband executed a home equity conversion mortgage (hereinafter the mortgage), more commonly referred to as a reverse mortgage, [1] to secure an adjustable rate note signed solely by defendant's husband. Under identical terms contained in both the note and the mortgage, the lender may require payment in full if a "[b]orrower dies and the [p]roperty is not the principal residence of at least one surviving [b]orrower." Defendant's husband died in September 2012. In October 2012, plaintiff sent a letter to defendant's husband's estate, demanding payment of the loan in full in the amount of $152, 813.65. In June 2013, plaintiff commenced this foreclosure action, naming, among others, defendant. Thereafter, plaintiff moved and defendant cross-moved for summary judgment. Supreme Court denied plaintiff's motion and granted defendant's cross motion for summary judgment dismissing the complaint against her. Plaintiff appeals and contends that Supreme Court erred in granting defendant's cross motion and denying its motion for summary judgment as to foreclosure.

         As an initial matter, Supreme Court erred as a matter of law in its conclusion that 12 USC § 1715z-20 (j) prohibits plaintiff's foreclosure on the property due to defendant's residency there. That provision refers to conditions that prevent the Secretary of Housing and Urban Development from insuring a home equity conversion mortgage (see 12 USC § 1715z-20 [j]). Whether the mortgage at issue is insurable pursuant to that provision does not affect plaintiff's rights to foreclose pursuant to the note and mortgage (see Jeansonne v Generation Mtge. Co., 644 F.Appx. 355, 357 [5th Cir 2016]).

         Generally, "instruments [that] were executed at substantially the same time, relate[] to the same subject-matter, [and are] contemporaneous writings... must be read together as one" (Nau v Vulcan Rail & Constr. Co., 286 NY 188, 197 [1941]; accord Fundamental Long Term Care Holdings, LLC v Cammeby's Funding LLC, 20 N.Y.3d 438, 445 [2013]; see Matter of Hennel, 133 A.D.3d 1120, 1121 [2015]). This principle readily applies to the note and mortgage here, both of which refer to the other and were executed on the same day (see Wranovics v Finnerty, 277 A.D.2d 841, 842-843 [2000]; Oneida Natl. Bank v Gulla, 122 A.D.2d 590, 591 [1986]). The fundamental rule guiding the construction of such instruments is to give effect to the parties' intentions (see Stone Mtn. Holdings, LLC v Spitzer, 119 A.D.3d 548, 549 [2014]; Wilshire Credit Corp. v Ghostlaw, 300 A.D.2d 971, 972 [2002]). To the extent that the terms of the instruments are ambiguous as to the parties' intentions, extrinsic evidence may be considered (see Stuyvesant Plaza v Emizack, LLC, 307 A.D.2d 640, 640 [2003]). Moreover, in the context of a motion for summary judgment, when "the parties' intent depends upon the credibility of extrinsic evidence or a choice among inferences to be drawn from extrinsic evidence, then the issue is one of fact" (Amusement Bus. Underwriters v American Intl. Group, 66 N.Y.2d 878, 880 [1985]; accord Rapp v 136 Oak Dr. Assoc., 70 A.D.3d 914, 916 [2010]; see Sutton v East Riv. Sav. Bank, 55 N.Y.2d 550, 554 [1982]; CV Holdings, LLC v Artisan Advisors, LLC, 9 A.D.3d 654, 657 [2004]).

         Whether the condition precedent to foreclosure was satisfied here depends on whether defendant is a "[b]orrower." The terms of the note and mortgage clearly prevent plaintiff's foreclosure if defendant is a "[b]orrower, " because she continues to make the property her principal residence. The terms of the note and the mortgage are ambiguous as to whether defendant is a "[b]orrower" for the purposes of the condition precedent to foreclosure. According to the note, a "[b]orrower" is defined as each person signing at the end of the note, and defendant did not execute the note. In contrast, the first sentence of the mortgage states: "The [m]ortgagor is [defendant's husband], as to a [l]ife [e]state interest and [defendant], to the [r]emainder... ('[b]orrower')." Although unclear in its use of the singular term "[b]orrower" after reference to both defendant's husband and defendant, this language appears to identify defendant as a "[b]orrower." The mortgage introduces further ambiguity when it refers to notice to be afforded to any "borrowers, " this time using the plural term when referencing multiple borrowers.

         Because the note and mortgage are ambiguous, we consider the extrinsic evidence submitted on the motions. Notably, defendant and her husband signed two notices, approximately three weeks prior to the execution of the note and mortgage, that identified defendant as a non-borrower. However, those notices describe a non-borrower as someone who had no vested ownership interest in the property at issue. Defendant never divested her ownership interest in the property. Instead, she held a vested reversionary interest in the property while her husband held a life estate (see EPTL 6-3.2 [a] [1] [A]; 6-4.4; see generally Matter of Newton, 54 A.D.2d 452, 454 [1976]). Thus, inasmuch as those notices contemplate that defendant intended to be a non-borrower under circumstances that never came to pass, they are not dispositive of the parties' intentions.

         A "Residential Loan Application for a Reverse Mortgage" solely identifies defendant's husband as the borrower, and the box for "Co-Borrower's Name" and the line for "Co-Borrower Signature" are both empty. However, the names of defendant's husband and defendant are both listed as "NAME OF BORROWER" on a Department of Housing and Urban Development "Settlement Statement." Moreover, defendant submitted an affidavit explaining that, prior to the execution of the note and mortgage, the agent who had approached her and her husband about a reverse mortgage had explained to them that the mortgage would allow for defendant to remain in the home in the event of the death of defendant's husband and that this was the parties' intention in entering into the note and mortgage.

         Initially, and given this conflicting extrinsic evidence, we disagree with the dissent's conclusion that the ambiguity should be resolved as a matter of law by construing it against plaintiff as the drafter of the note and mortgage. Undoubtedly, where there is no extrinsic evidence relevant to an ambiguity in an agreement, "the issue is to be determined as a question of law for the court" (Hartford Acc. & Indem. Co. v Wesolowski, 33 N.Y.2d 169, 172 [1973]; see e.g. State of New York v Home Indem. Co., 66 N.Y.2d 669, 672 [1985] [ambiguity resolved against drafter after conclusion that "there are no questions of credibility and no inferences to be drawn from extrinsic evidence"]). In contrast, however, "[i]f there is ambiguity in the terminology used... and determination of the intent of the parties depends on the credibility of extrinsic evidence or on a choice among reasonable inferences to be drawn from extrinsic evidence, then such determination is to be made by the jury" (Hartford Acc. & Indem. Co. v Wesolowski, 33 N.Y.2d at 172). This precedent establishes that the rule "that any ambiguity in a document is resolved against its drafter[] is a rule of construction that should be employed only as a last resort" (Fernandez v Price, 63 A.D.3d 672, 676 [2009]; accord Birdsong Estates Homeowners Assn., Inc. v D.P.S. Southwestern Corp., 101 A.D.3d 1735, 1737 [2012]; Albany Sav. Bank, FSB v Halpin, 117 F.3d 669, 674 [2d Cir 1997]; see e.g. CV Holdings, LLC v Artisan Advisors, LLC, 9 A.D.3d at 657 ["The extrinsic evidence offered by the parties... points in different directions (and, therefore, ) the matter is not amenable to summary disposition."]).

         Here, the extrinsic evidence is relevant to the parties' intentions as to whether defendant is a "[b]orrower" and is also conflicting on that point. Viewing this evidence in the light most favorable to the nonmoving party in regard to the respective motions for summary judgment, the determination of the parties' intentions depends on the credibility of extrinsic evidence — including the credibility of defendant's claim that the parties to the note and mortgage intended for her to be able to remain in the home in the event of her husband's death — and the choices between the reasonable inferences that can be drawn from the extrinsic evidence. Accordingly, as material issues of fact exist as to whether the parties intended for plaintiff to be able to foreclose on the property despite defendant continuing to make it her principal residence, summary judgment was not appropriate in favor of either party (see Aquatic Pool & Spa Servs., Inc. v ...


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