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Bank of America, N.A. v. Citizens Bank

United States District Court, D. New Hampshire

December 21, 2015

Bank of America, N.A.
v.
Citizens Bank Opinion No. 2015 DNH 233

Kenneth D. Murphy, Esq., Brenna A. Force, Esq., Geoffrey Williams Millsom, Esq. Kelly Martin Malone, Esq. Michael Kily, Esq.

MEMORANDUM AND ORDER

Paul Barbadoro United States District Judge

This case arises from a series of loans issued to nonparty Linda Burke that were secured by mortgages on Burke’s home (the “Property”). Burke defaulted on her loans and her lenders, Bank of America and Citizens Bank, anticipate they will need to foreclose on the Property. Before initiating foreclosure, however, Bank of America brought this suit to determine which bank’s lien takes first priority position. The case is before me on cross-motions for summary judgment.

I. BACKGROUND

In May 2005, Countrywide, Bank of America’s predecessor in interest, loaned Burke $342, 000, secured by a mortgage on the Property. Doc. No. 16-5 at 1-3. Countrywide recorded the mortgage at the Rockingham County Registry of Deeds in first priority position. Id. at 1. Then, in April 2006, Burke obtained a $150, 000 home equity line of credit from Citizens, also secured by a mortgage on the Property. Doc. No. 18-5 at 3-4. The home equity line was open-ended, meaning that Burke could “borrow, repay and re-borrow such amounts as desired, subject to the terms and conditions of the Agreement.” Id. at 4. According to its terms, the mortgage securing the equity line could only be discharged if Burke paid down and terminated the equity line. Doc. No. 18-6 at 9. Citizens recorded its mortgage in second priority position behind Countrywide’s 2005 mortgage. Doc. No. 18-5 at 1.

In 2008, Burke negotiated with Countrywide to refinance her debt on the Property. During the refinancing process, Countrywide discovered Citizens’ equity line and requested a payoff amount in an attempt to close the equity line and terminate Citizens’ mortgage. See Doc. No. 16-1 at 2. On March 21, 2008, Citizens faxed Countrywide a notice requesting $140, 647.18 to close the equity line. Doc. No. 16-6; 18-1 at 3-4. The fax stated that “the payoff” was “valid” through March 28, 2008, and included a notice, which provided:

Any unposted checks or charges that are not included in the above payoff amount are the responsibility of the customer upon payoff. The customer is also responsible for the entire balance on the account regardless of the quoted payoff amount. If the account is secured by a mortgage, the mortgage will not be released until the above conditions are met.

Doc. No. 16-6. The payoff amount included a $250.00 prepayment penalty and a $17.00 “recording fee” to cover Citizens’ expense to record the discharge of the mortgage.[1] Id.

That same day, Countrywide loaned Burke $417, 000, secured by a mortgage on the Property, in an attempt to discharge and replace its own 2005 mortgage and pay off Citizens’ equity line.[2]Doc. Nos. 16-1 at 1-2; 16-3. The equity line was not closed that day, however, and three days later, on March 24, 2008, Burke borrowed $10, 000 more against the equity line. Doc. No. 18-1 at 4. Thus, when Citizens finally received Countrywide’s $140, 647.18 check on March 27, 2008, the check was insufficient to pay off the equity line. Id. Citizens nonetheless deposited Countrywide’s check, reducing the balance on the equity line to $8, 695.91. Doc. No. 18-11 at 4. The equity line remained open and the mortgage securing it was not discharged.

On April 1, 2008, Citizens notified Burke by letter that it was unable to close the home equity line. Doc. No. 16-15. The letter requested that Burke pay down the rest of the balance so that Citizens could “close the account and release the collateral.” Id. Instead of paying off the equity line, however, Burke continued to borrow against it and later defaulted on her payment obligations. See Doc. No. 18-11 at 4-8. As of October 2, 2015, Burke owed $154, 714.68 on the equity line. Doc. No. 18-2 at 1.

Although Citizens accepted Countrywide’s payoff check and later notified Burke that it could not close the home equity line, it did not inform Countrywide that the equity line remained open.

II. STANDARD OF REVIEW

Summary judgment is appropriate when 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). The evidence submitted in support of the motion must be considered in the light most favorable to the nonmoving party, drawing all reasonable inferences in its favor. See Navarro v. Pfizer Corp., 261 F.3d 90, 94 (1st Cir. 2001).

A party seeking summary judgment must first identify the absence of any genuine dispute of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A material fact “is one ‘that might affect the outcome of the suit under the governing law.’” United States v. One Parcel of Real Prop. with Bldgs., 960 F.2d 200, 204 (1st Cir. 1992) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). If the moving party satisfies this burden, the nonmoving party must then ‚Äúproduce evidence on which a reasonable finder of fact, under the appropriate proof burden, could base a verdict for it; if that party ...


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