Deutsche Bank National Trust Co. v. Pike

          ORDER

          Joseph DiClerico, Jr. United States District Judge

         Deutsche Bank brought suit against Jennifer Pike seeking a declaratory judgment that its mortgage on her property is not subject to her homestead interest or, alternatively, that Deutsche Bank is entitled to equitable subrogation for the amount it paid to satisfy a prior mortgage. Pike brought counterclaims, seeking to quiet title in the property in her favor and a declaratory judgment that she retains a homestead right in the property.^[1]

         The case was scheduled for a bench trial. Prior to trial and based on the parties' pretrial filings and briefs, the court dismissed Deutsche Bank's equitable subrogation claim. At the final pretrial conference, counsel for Deutsche Bank asked for an opportunity to move for reconsideration of the decision to deny Deutsche Bank's equitable subrogation claim. Counsel and the court agreed that the only other issue in the case was the effect of the divorce decree on Pike's homestead right and agreed that this is a legal issue which does not require a trial. The court granted Deutsche Bank the opportunity to move for reconsideration of the decision to dismiss its equitable subrogation claim. Deutsche Bank filed its motion, and Pike filed a response. The court denied the motion for reconsideration.

         As agreed during the final pretrial conference, the court directed Pike to file an additional brief on the issue of the effect of the divorce decree on her homestead right and provided time for Deutsche Bank to respond. Both the additional brief and the response have been filed. Therefore, the question of whether the divorce extinguished Pike's homestead interest in the property, the only remaining issue in the case, has been briefed and is ready for ruling.

         Background

         In June of 2000, William T. Pike, Jr. married Jennifer who became Jennifer L. Pike. On August 15, 2001, William bought the property at issue in this case, 34 Dogwood Lane, New London, New Hampshire. The purchase was financed in part with a mortgage from Mascoma Savings Bank.

         Thereafter, the property was conveyed between William and Jennifer and to and from a revocable trust and was mortgaged twice after the initial purchase.^[2] The last mortgage was granted by William in 2004 to secure a loan from First Franklin Financial Corporation. Jennifer did not sign the First Franklin loan or mortgage. The First Franklin mortgage was assigned to Deutsche Bank in 2009.

         Jennifer and William were divorced on July 3, 2013. At that time, William owned the property. Jennifer was living at the property with their son, Charlie.

         The Final Decree of Divorce provided, with respect to the property, that it was awarded to Jennifer "free and clear of any interest of William Pike." Despite the "free and clear" language, the decree continued on to state that "Jennifer may remain in the home until it goes into foreclosure, or Charlie graduates high school. The Parties will share equally any equity in the home." William was required to share equally in the costs of repairs to the home.

         William transferred the property to Jennifer by deed on July 26, 2013. The deed was recorded on August 8, 2013.

         Deutsche Bank's remaining claim seeks a declaratory judgment that its mortgage on the property is not subject to Jennifer's homestead interest in the property. In her remaining counterclaims, Jennifer seeks to quiet title in the property in her favor under RSA 498:5-a and seeks a declaratory judgment that she retains her homestead right in the property. William is not and has never been a party in this case.

         Discussion

         Deutsche Bank contends that the divorce decree extinguished Jennifer's homestead interest in the property as of July 3, 2013, and that when Jennifer acquired a new homestead interest on July 26, 2013, the new homestead interest was subject to the preexisting First Franklin mortgage. Jennifer contends that the divorce decree did not extinguish her homestead interest in the property because she was living at the property and was granted an interest in the property by the divorce decree. As a result, Jennifer argues, her homestead interest survived the divorce and is superior to the First Franklin mortgage. Deutsche Bank argues that the law of the case doctrine precludes the court from considering Jennifer's theory that her homestead right was not extinguished by the divorce.

         A. Law of the Case Doctrine

         The law of the case doctrine "posits that when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case." Harlow v. Children's Hosp., 432 F.3d 50, 55 (1st Cir. 2005) . A district court, nevertheless, retains the power to reconsider its interlocutory orders. Perez-Ruiz v. Crespo-Guillen, 25 F.3d 40, 42 (1st Cir. 1994). For that reason, the law of the case doctrine "'merely expresses the practice of courts generally to refuse to reopen what has been decided, not a limit to their power.'" Harlow, ...