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Sherry v. Bank of America, N.A.

Supreme Court of West Virginia

May 19, 2017

George Kendall Sherry, Defendant Below, Petitioner
v.
Bank of America, N.A. and Selene Finance, LP, Plaintiffs Below, Respondents

         Hampshire County 15-C-72

          MEMORANDUM DECISION

         Petitioner George Kendall Sherry, by counsel Jonathan G. Brill, appeals the Circuit Court of Hampshire County's August 10, 2016, memorandum opinion and order wherein the circuit court ordered that a deed of trust be reformed to include the real property serving as security under that deed of trust, rescinded a trustee sale and the conveyance of the subject property to Respondent Bank of America, N.A. ("Bank of America"), and reinstated indebtedness owed under the deed of trust owned by Respondent Selene Finance, LP ("Selene"). In that order, the circuit court also nullified a transfer on death deed. Respondents Bank of America and Selene, by counsel R. Terrance Rodgers, filed a response in support of the circuit court's order.

         This Court has considered the parties' briefs and the record on appeal. The facts and legal arguments are adequately presented, and the decisional process would not be significantly aided by oral argument. Upon consideration of the standard of review, the briefs, and the record presented, the Court finds no substantial question of law and no prejudicial error. For these reasons, a memorandum decision affirming the circuit court's order is appropriate under Rule 21 of the Rules of Appellate Procedure.

         On or about February 20, 1989, Mrs. Anne Elizabeth Besecker and Mr. John Albert Besecker (both now deceased) purchased real estate in Hampshire County, West Virginia, designated as Lots 19 and 21 in the Whitson's Point subdivision from Billy and Drema Whitson. Approximately four months later, Mr. and Mrs. Besecker purchased Lots 17 and 23 in that same subdivision from the Whitsons. Thereafter, Mr. and Mrs. Besecker constructed a home on Lot 19. Between 2001 and 2006, Mr. and Mrs. Besecker executed four deeds of trust in favor of various financial institutions whereby they pledged as collateral for mortgage loans all four lots they owned in the Whitson's Point subdivision. In December of 2008, Mr. and Mrs. Besecker obtained a mortgage from respondents' predecessor-in-interest, Real Estate Mortgage Network, Inc. On the same date, Mr. and Mrs. Besecker executed a deed of trust, which was recorded in the county clerk's office. According to the circuit court, Lots 17 and 23 were described in the property description to the deed of trust, but Lots 19 and 21 were not included in that property description. That transaction is the one currently at issue.

         The appraisal for the mortgage loan from respondents to Mr. and Mrs. Besecker provided a fair market value of Lots 17, 19, 21, and 23, including Mr. and Mrs. Besecker's residence situated on Lot 19. As part of their loan application with respondents, the Beseckers submitted an occupancy affidavit in which they certified that at that time they were occupying the property being pledged to secure the loan. They also submitted a Uniform Residential Loan Application in which they stated that the present market value of their real property was $215, 000 and that the property being pledged by them had one unit on it built in 1989. They completed additional documentation that clearly included their residence as part of the collateral for the mortgage loan.[1] Mr. Besecker passed away in May of 2011. In 2012, by an Assignment of Deed of Trust, the deed of trust securing the mortgage loan was assigned to Bank of America, and that deed of trust was recorded with the county clerk.

         On March 24, 2014, petitioner became successor attorney-in-fact for Mrs. Besecker pursuant to a durable unlimited power of attorney, and the same was recorded with the county clerk. On April 3, 2014, as a result of a default on the mortgage loan, a trustee's sale was conducted pursuant to the deed of trust that secured the mortgage loan, and Bank of America was the highest bidder at that sale.[2] A Trustee's Report of Sale Under Deed of Trust related to that sale was recorded with the county clerk. A Trustee's Deed related to that sale and conveying the property sold to Bank of America was also recorded with the county clerk. As the circuit court stated in its order,

[t]he undisputed facts show [that Bank of America] believed it was purchasing all of the property which the parties to the Deed of Trust intended would secure the Mortgage Loan, and in particular, that it was purchasing Lot 19 and Lot 21 of the Whitson's Point subdivision and the Beseckers' residence. The property which it bought, however, did not include Lot 19 or Lot 21 of the Whitson's Point subdivision or the Beseckers' residence. The undisputed facts show that [Bank of America] first learned of the mistake in the property description in or about May of 2014, after the trustee's sale. The undisputed facts show [that Bank of America] further learned of the mistake in the property description in connection with its institution of an unlawful detainer proceeding against Mrs. Besecker in the Magistrate Court of Hampshire County, West Virginia, in about July 2014, when [petitioner], responding to the initiation of said unlawful detainer proceeding, expressed the belief that [Bank of America] was mistaken in its belief as to the real property it had purchased at the trustee's sale.

         On November 17, 2014, Bank of America assigned the mortgage loan to Selene. On February 11, 2015, petitioner signed a transfer on death deed, the intent of which was to transfer title to Lots 19 and 21 to himself upon Mrs. Besecker's death; that transfer was recorded with the county clerk. This was done despite petitioner's knowledge that Bank of America and/or Selene claimed a security interest in those lots at the time he signed the transfer. Mrs. Besecker died in June of 2015, and petitioner was appointed administrator of the estate.

         On July 14, 2015, Bank of America filed an action in the circuit court seeking to set aside the transfer on death deed, set aside the foreclosure sale, and reform the underlying deed of trust to include lots 19 and 21 as collateral for the loan made in 2008. Petitioner filed a motion to dismiss for lack of standing regarding Bank of America's request to void the transfer on death deed. That motion was denied by order entered on November 12, 2015. Bank of America sought leave to amend the complaint, and its amended complaint was filed on April 13, 2016. Respondents filed a motion for judgment on the pleadings or, in the alternative, for summary judgment. According to the circuit court, petitioner's only defenses were laches and lack of standing as to respondents with regard to a single count in the first amended complaint. In its "Memorandum Opinion and Order" filed on August 10, 2016, the circuit court ruled on respondents' motion for judgment on the pleadings or, in the alternative, for summary judgment, ordering that the 2008 deed of trust be reformed to include the real property serving as security under that deed of trust, specifically Lots 19 and 21 in the Whitson's Point subdivision. In its order, the circuit court also rescinded the trustee sale and voided both the conveyance of the subject property to Bank of America and the trustee's report of sale deed of trust. However, it reinstated the indebtedness owed under the deed of trust owned by Selene. It also nullified the transfer on death deed.

         In its order, the circuit court also found that the undisputed facts show that Bank of America instituted suit approximately fourteen months after becoming aware of the error in the description of the real property securing the loan. It further held that there was no prejudice to petitioner due to that delay because petitioner knew of Bank of America's security interest claim with regard to Lots 19 and 21 when he purportedly conveyed those lots to himself. Petitioner appeals from that order.

         "A circuit court's entry of summary judgment is reviewed de novo." Syl. Pt. 1, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994). On appeal, petitioner asserts three assignments of error. First, he contends that the circuit court erred when it permitted respondents to reform the deed of trust at issue and set aside the foreclosure sale, due in large part to the timeliness of those actions. He contends that he is at a significant disadvantage because respondents unreasonably delayed pursuing the action. Petitioner states that after the April of 2014 foreclosure sale, Bank of America sought to evict Mrs. Besecker and her family from the home situated on Lot 19. At that point, petitioner provided written correspondence to Bank of America notifying it that it had no interest in Lot 19. However, Bank of America took no action for approximately twelve months after petitioner sent that letter. Petitioner asserts that Bank of America's assignment of the loan to Selene further illuminates Bank of America's "lackadaisical course of action . . . ." He further claims that the "unreasonable delay" caused him to be at a significant disadvantage because the title to Lots 19 and 21 changed in the interim, Mrs. Besecker passed away, and he lost Mrs. Besecker's testimonial evidence.

         This Court has long held that

"[e]quity has jurisdiction to reform and correct a deed executed through a mutual mistake of fact to conform to the actual agreement of the parties to the deed when such mistake results from the mistake of the scrivener in the preparation of the deed." Syllabus point 1, Edmiston v. Wilson, 146 W.Va. 511, 120 S.E.2d 491 (1961).

Syllabus, Reed v. Toothman, 176 W.Va. 241, 342 S.E.2d 207 (1986). In addition, this ...


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