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Francis J. Kerrigan, An Individual v. Bank of American

August 12, 2011


The opinion of the court was delivered by: Dean D. Pregerson United States District Judge


This matter comes before the court on Defendant Bank of America's Motion for Summary Judgment, or in the alternative, Summary Adjudication of Issues. (Dkt. No. 42.) Plaintiff Francis J. Kerrigan opposes the motion. Having reviewed the parties papers and considered the arguments therein, the court GRANTS in part and DENIES in part Defendant's Motion for Summary Judgment.

I. Background

In 2002, Plaintiff and his wife, Catherine Kerrigan, purchased property and a manufactured home at 34261 Tractor Trail, Wildomar, CA 92595 (the "Property"). (Plaintiff's Memorandum in Opposition to Motion for Summary Judgment as to Plaintiff's Complaint ("Pl.'s Supp. Opp'n") 8:6, 6:19.) At that time, they were advised by their lender that the home should be in Catherine Kerrigan's name due to Plaintiff's previous bankruptcy and credit score issues. (Id. 8:9.) Accordingly, in February 2002, Plaintiff executed a quitclaim deed for the Property in favor of his wife, Catherine Kerrigan. (Id. 8:11.) The same day, Catherine Kerrigan recorded a grant deed with Future of Five K, Inc. to Property in her favor as "a married woman, as her sole and separate property." (Defendant's Motion For Summary Judgment ("Def.'s Mot."), Grant Deed, Exhibit A.)*fn1 Ms. Kerrigan then executed a deed of trust ("DOT") in the amount of $170,733 in favor of Accubanc Mortgage. (Id., Deed of Trust, Exhibit C.)

On February 25, 2004, Ms. Kerrigan executed a DOT in the amount of $212,135 in favor of Accubanc Mortgage. (Id., Deed of Trust, Exhibit D.) On July 20, 2006, Ms. Kerrigan executed a DOT in the amount of $250,000 in favor of Chase Bank USA ("Chase DOT"). (Id., Deed of Trust, Exhibit E.) A reconveyance of the $212,135 Accubanc DOT was recorded on August 14, 2006. (Id., Reconveyance, Exhibit F.)

On March 20, 2007, Plaintiff and Ms. Kerrigan participated in a counseling session with an independent Home Equity Mortgage counselor. (Def.'s Mot., Exhibit G.) At that time, Ms. Kerrigan received a Certificate of Home Equity Mortgage Counseling signed by Jan Hartwyk of Springboard Non-Profit Consumer Credit Management, Inc. (Id.) Plaintiff, however, was told that because he was not on the title at the time of the HECM loan, only Ms. Kerrigan could be issued a certificate. (Pl.'s Supp. Opp'n 10:7.) Furthermore, during the reverse mortgage application process, Plaintiff was told that since his name was not on title to the home, he did not need to be listed as a co-borrower on the reverse mortgage application. (Pl.'s Opp'n 3:20.) After the loan application was completed, Plaintiff did not sign the "Notice to Non-Borrowing Spouse or Resident" form describing the consequences to non-borrowing spouses should their borrowing spouse predecease them. (Id., Exhibit G.)

On March 26, 2007, Ms. Kerrigan completed the Residential Loan Application for Reverse Mortgage ("Application"), listing herself as the sole borrower. (Def.'s Mot., Exhibit K.) The same day, Ms. Kerrigan completed the HUD/VA Addendum to Uniform Residential Loan Application ("Addendum"), listing Home Capital Funding ("HCF") as the Lender and Seattle Mortgage Company ("SMC") as the Sponsor. (Pl.'s Supp. Opp'n, Exhibit I.)

The loan that Ms. Kerrigan obtained was a home equity conversion mortgage ("HECM"). She secured the HECM through the Housing and Urban Development's ("HUD") reverse mortgage program for elders. (Pl.'s Opp'n 3:15.) A HECM is insured by the United States government. (Id. 7 n.2.)

On May 9, 2007, Ms. Kerrigan recorded a DOT in favor of HCF ("HCF DOT") paying all amounts due and owing on the Chase DOT. (Def.'s Mot., Exhibit M.) All Truth in Lending Disclosure documents pertaining to the HCF DOT were signed by Ms. Kerrigan on May 2, 2007. (Id., Exhibit P.)

On August 29, 2007, HCF recorded an assignment of the HCF DOT in favor of SMC. (Def.'s Mot., Exhibit X.) On June 13, 2007, SMC sent a letter to Ms. Kerrigan explaining that through its relationship with HCF it would now be servicing her loan. (Id., Exhibit S.) In June 2007, Defendant purchased the SMC reverse mortgage division and sent a letter to Ms. Kerrigan dated June 15, 2007, advising her of the acquisition. (Id., Exhibit T.) After discovering that no assignment of the HCF DOT had been recorded in favor of Defendant, Defendant recorded an assignment of the HCF DOT in its favor on November 20, 2009. (Id., Exhibit BB.)

Ms. Kerrigan died on June 19, 2007, only weeks after the HECM loan was completed. On July 17, 2007, Defendant's default department sent a letter to the Kerrigans' daughter advising her that the loan was due and payable upon Ms. Kerrigan's death. (Id., Exhibit V.) Bank of America's foreclosure trustee ReconTrust Company recorded a notice of default on June 24, 2008. (Id., Exhibit Y.) ReconTrust Company then recorded a notice of trustee's sale for Property on June 16, 2009, (Id., Exhibit Z), and another on October 16, 2009, (Id., Exhibit AA).

On July 20, 2007, Charles E. Clung, Jr., Plaintiff's former attorney, advised in a written letter that Plaintiff should have been informed that the HECM loan would become due and payable in the event that Ms. Kerrigan predeceased Plaintiff. (Def.'s Mot., Exhibit KK.)

Plaintiff now brings suit alleging that the counselor failed to adequately counsel him and Ms. Kerrigan as required by the HUD Housing Counseling Program Handbook (HUD Housing Counseling Program Handbook 7610.1, Chapter 4 - Reverse Mortgage Housing Counseling, Section 4-5) and that the HECM loan should have included Plaintiff as a co-borrower. (Pl.'s Opp'n 5:3.)

II. Legal Standard

Summary judgment and summary adjudication are appropriate where "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c); see also Celotex Corp. v. Catrett , 477 U.S. 317, 324 (1986). In deciding a motion for summary judgment, the evidence is viewed in the light most favorable to the non-moving party, and all justifiable inferences are to be drawn in its favor. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 255 (1986).

A genuine issue exists if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party," and material facts are those "that might affect the outcome of the suit under the governing law." Id. at 248. No genuine issue of fact exists "[w]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party." Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587 (1986).

It is not enough for a party opposing summary judgment to "rest on mere allegations or denials of his pleadings." Anderson, 477 U.S. at 259. Instead, the nonmoving party must go beyond the pleadings to designate specific facts showing that there is a genuine issue for trial. Celotex, 477 U.S. at 325. The "mere existence of a scintilla of evidence" in support of the nonmoving party's claim is insufficient to defeat summary judgment.

Anderson, 477 U.S. at 252. "Credibility determination, the weighing Of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge [when he or she] is ...

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