In re: Beverlyann Lee ( 2020 )

FILED
FEB 10 2020
NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK
U.S. BKCY. APP. PANEL
OF THE NINTH CIRCUIT
UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE NINTH CIRCUIT
In re: BAP No. OR-19-1140-FBS
BEVERLYANN LEE, Bk. No. 3:16-bk-32793-pcm13
Debtor. Adv. Pro. 3:16-ap-03156-pcm
BEVERLYANN LEE,
Appellant,
v. MEMORANDUM*
NATIONSTAR MORTGAGE, LLC, dba
Champion Mortgage Company; WAYNE
GODARE, Chapter 13 Trustee,
Appellees.
Submitted Without Argument on January 30, 2020
Filed – February 10, 2020
Appeal from the United States Bankruptcy Court
for the District of Oregon
*
This disposition is not appropriate for publication. Although it may be cited for
whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential
value, see 9th Cir. BAP Rule 8024-1.
Honorable Peter C. McKittrick, Bankruptcy Judge, Presiding
Appearances: Appellant Beverlyann Lee, pro se, on brief; John Thomas
of McCarthy & Holthus, LLP on brief for appellee
Nationstar Mortgage, LLC dba Champion Mortgage
Company.
Before: FARIS, BRAND, and SPRAKER, Bankruptcy Judges.
INTRODUCTION
Chapter 131 debtor Beverlyann Lee is the borrower under a reverse
mortgage issued by lender Nationstar Mortgage, LLC dba Champion
Mortgage Company (“Nationstar”). The loan documents require Ms. Lee to
pay the property taxes on her residence in a “timely manner.” Ms. Lee
failed to pay in full the taxes for six years, so Nationstar paid the taxes on
her behalf and charged the payments to her loan account. When Ms. Lee
filed for bankruptcy protection, she complained that Nationstar had
(among other things) paid the taxes too soon. The bankruptcy court
disagreed with her.
Ms. Lee appeals, arguing that the bankruptcy court misconstrued the
loan documents and state law and committed evidentiary errors. We reject
1
Unless specified otherwise, all chapter and section references are to the
Bankruptcy Code, 11 U.S.C. §§ 101-1532, all “Rule” references are to the Federal Rules
of Bankruptcy Procedure, and all “Civil Rule” references are to the Federal Rules of
Civil Procedure.
2
all of Ms. Lee’s arguments and AFFIRM.
FACTUAL BACKGROUND2
A. Prepetition events
1. The loan documents
In early 2009, Ms. Lee entered into a reverse mortgage transaction3
with Bank of America concerning her residence in Portland, Oregon.
Nationstar is the current owner and servicer of the mortgage.
The reverse mortgage transaction involved an adjustable rate deed of
trust (the “DOT”), an adjustable rate note (the “Note”), and a loan
agreement (the “Loan Agreement”).
The Loan Agreement set a principal limit4 of $392,730, which
2
We exercise our discretion to review the bankruptcy court’s docket, as
appropriate. See Woods & Erickson, LLP v. Leonard (In re AVI, Inc.), 389 B.R. 721, 725 n.2
(9th Cir. BAP 2008).
3
Ms. Lee’s reverse mortgage is apparently federally insured and is called a
Home Equity Conversion Mortgage (“HECM”). “Reverse mortgage lenders advance
funds to borrowers as a lump sum, in monthly payments, through a line of credit, or a
combination of these options.” Tara Twomey, Crossing Paths: The Intersection of Reverse
Mortgages and Bankruptcy, 89 Am. Bankr. L.J. 363, 370 (2015) (footnotes omitted). “The
entire balance for a HECM loan is due at maturity, which occurs when the borrower
dies, sells the home, or fails to occupy the home for at least a year.” Id. at 373 (footnote
omitted). “[B]orrowers are generally required to pay taxes, insurance premiums,
ground rents, and assessments, and keep the property in good repair.” Id. at 370.
4
“The principal limit is the maximum gross amount of money that the borrower
can receive under the reverse mortgage.” Twomey, supra, at 372. It is calculated by
determining the “maximum claim amount,” which is the maximum amount that the
U.S. Department of Housing and Urban Development (“HUD”) will insure, then
(continued...)
3
included a $93,153.44 line of credit. Ms. Lee intermittently obtained
advances varying between a few hundred dollars and $25,000.
The Loan Agreement further provided that Ms. Lee could elect either
to pay her taxes and other property charges directly or to have Nationstar
make those payments for her and charge them to her line of credit. See
Loan Agreement at § 2.10.1. If she opted to pay the property charges
herself, but failed to do so “in a timely manner,” Nationstar had the right to
pay them and charge them to her account:
If Borrower fails to pay the property charges in a timely manner, and
has not elected to have Lender make the payments, Lender shall pay
the property charges as a Loan Advance as required under Section
2.16. If a pattern of missed payments occurs, Lender may establish
procedures to pay the property charges from Borrower’s funds as if
Borrower elected to have Lender pay the property charges.
Id. at § 2.10.5 (emphasis added).5 Section 2.16 provided that “Loan
Advances made pursuant to Section[ ] . . . 2.10.5 . . . shall be made from a
line of credit under Section 2.6 or 2.7 to the extent possible.”
Similarly, the DOT provided (at paragraphs 2 and 5 of the uniform
covenants) that Ms. Lee was to pay governmental real property taxes “in a
4
(...continued)
multiplying that by the applicable principal limiting factor set by HUD. Id. at 371.
5
Loan Advances were defined as “all funds advanced from or charged to
Borrower’s account under conditions set forth in this Loan Agreement, whether or not
actually paid to borrower.” Loan Agreement at § 1.2.
4
timely manner” and that Nationstar may pay the taxes and charge them to
her indebtedness if she failed to do so.
2. Ms. Lee’s failure to pay real property taxes
Ms. Lee elected to pay the property charges herself but failed to pay
some or all of the real property taxes between 2010 and 2015. Nationstar
paid the state of Oregon $39,669.77 on Ms. Lee’s behalf and charged the
payments to her principal balance as loan advances. Ms. Lee repaid
Nationstar a total of $8,581.55.6
Ms. Lee’s failure to pay timely the real property taxes placed her in
default under the loan documents. Nationstar scheduled a foreclosure sale.
B. Bankruptcy events
1. Ms. Lee’s bankruptcy filings
Shortly before the foreclosure sale, Ms. Lee filed a chapter 13 petition
and scheduled Nationstar’s $535,000 undisputed claim.
Ms. Lee filed a proposed chapter 13 plan, which provided that she
would cure the prepetition arrearage due to Nationstar at 0% interest over
sixty months. The bankruptcy court confirmed the plan.
2. Nationstar’s proof of claim
Nationstar timely filed a proof of claim (the “Claim”). It attached
6
Ms. Lee apparently entered into multiple repayment agreements with
Nationstar that allowed her to repay the loan advances over time, although the record
in this respect is unclear.
5
documents concerning her account, including the loan payoff history, the
DOT, the Note, and the assignment of the DOT from Bank of America to
Nationstar, but it did not attach the Loan Agreement.
3. Ms. Lee’s adversary complaint and objection
Ms. Lee filed an adversary complaint against Nationstar for breach of
contract, unfair debt collection practices, false representations, and
financial abuse. She alleged that Nationstar breached the DOT when it paid
the property taxes and charged her principal balance without her approval.
Ms. Lee also objected to Nationstar’s Claim. She contended that the
Claim should be disallowed because Nationstar failed to provide the
proper documentation, she was not liable for any arrears, and Nationstar
engaged in improper accounting practices.
The bankruptcy court consolidated the objection and the adversary
proceeding.
4. The cross-motions for summary judgment
Ms. Lee filed a motion for summary judgment (“Motion”). She
pointed out that, under the Loan Agreement, Nationstar could pay the
property taxes only if she did not do so in a “timely manner.” She stated
that, under state law, taxes are due by May 15 following the tax
assessment, and the state can only declare a tax default three years after a
delinquency. She took the position that payments were timely if made
before the three-year default date.
6
She further argued that Nationstar failed to provide a copy of the
Loan Agreement and was time-barred from belatedly doing so. Thus, it
could not establish her obligations under the agreement.
Ms. Lee also contended that Nationstar’s accounting was incorrect
and that it misapplied her repayments.
Nationstar opposed the Motion and filed its own cross-motion for
summary judgment (“Cross-Motion”). In essence, Nationstar argued that
the “timely manner” requirement means that borrowers must pay real
property taxes before they are “delinquent” under applicable law, i.e., by
May 15. Nationstar represented that it paid Ms. Lee’s real property taxes
from 2010 to 2014 when they were delinquent. As a result of the
delinquency, the state assessed interest totaling $3,205.42. Nationstar said
that it made an early payment in 2015 to avoid incurring interest and
obtain a three-percent discount. It also argued that its accounting was
correct and that it “credited dollar-for-dollar” Ms. Lee’s repayments.
The bankruptcy court held a hearing on the motions.7 It issued a
letter decision denying the Motion and granting in part the Cross-Motion.
The court first ruled that it could consider the Loan Agreement. It did
not find Nationstar’s failure to attach the document to the Claim fatal,
7
Ms. Lee failed to provide the Panel with any hearing transcript. Accordingly,
we assume that nothing said at the hearing would aid Ms. Lee’s case. Gionis v. Wayne (In
re Gionis), 170 B.R. 675, 680-81 (9th Cir. BAP 1994).
7
because Nationstar could easily amend the Claim to include the Loan
Agreement. The court further accepted Nationstar’s representation that the
failure to attach a copy of the Loan Agreement to the Claim was
inadvertent and held that Ms. Lee would not be prejudiced by such an
amendment: she admitted that she signed a loan agreement and never
directly stated that the Loan Agreement submitted by Nationstar is not the
one that she signed, that she was unaware of the terms of the Loan
Agreement, or that she did not have a copy of the document.
The court also rejected Ms. Lee’s evidentiary objections to the Loan
Agreement. It noted that Ms. Lee had never argued that the mortgage
transaction was invalid or unenforceable. Indeed, she relied on the Loan
Agreement when arguing that Nationstar violated its terms.
Regarding the substantive objections, the court held that Ms. Lee had
failed to make the tax payments “in a timely manner,” so Nationstar was
within its rights to pay the taxes on her behalf. It agreed with Nationstar
that, when the taxes became “delinquent” under Oregon law, Ms. Lee had
not made payment “in a timely manner.”8 It rejected her position that
payment was only warranted once the state declared a default or imposed
a penalty after three years of delinquency.
8
The court further rejected Ms. Lee’s argument that Nationstar should not have
paid the 2015 taxes early, because she had “established a pattern and practice of failing
to pay the taxes when due,” and early payment would secure a discount. It found that
Nationstar acted reasonably under the DOT and Loan Agreement.
8
The bankruptcy court also rejected Ms. Lee’s argument that the tax
advances were improper because they exceeded the principal limit under
the Loan Agreement. The court noted that the Loan Agreement dictated
limits when the borrower requests a loan advance, but such a limitation
was not applicable to protective advances by the lender.
The bankruptcy court next denied summary judgment on the various
accounting issues. It held that questions of fact precluded summary
judgment concerning the application of Ms. Lee’s repayments: the parties
did not provide copies of the repayment agreements or explain the effect of
the repayment agreements. It also held that the parties did not sufficiently
address the propriety of certain charges challenged by Ms. Lee.
The court granted Nationstar summary judgment “to the extent that
the claims asserted in the Complaint are dependent on the Debtor’s
contention that Nationstar improperly paid the 2010-2015 taxes” and
issued an order denying the Motion and granting in part the Cross-Motion.
Later, the court denied Ms. Lee’s motion for reconsideration.
Nationstar filed its amended proof of claim, which included a copy of
the Loan Agreement.
Still later, for reasons that are not the subject of this appeal, the
bankruptcy court dismissed all remaining claims in the adversary
proceeding.
Ms. Lee timely appealed.
9
JURISDICTION
The bankruptcy court had jurisdiction pursuant to 28 U.S.C. §§ 1334and 157(b)(1). We have jurisdiction under 28 U.S.C. § 158. The dismissal of
the remaining claim in the adversary proceeding rendered the prior
interlocutory summary judgment orders appealable. See Munoz v. Small
Bus. Admin., 644 F.2d 1361, 1364 (9th Cir. 1981) (“[A]n appeal from the final
judgment draws in question all earlier non-final orders and all rulings
which produced the judgment.”).
ISSUES
(1) Whether the bankruptcy court erred in considering the Loan
Agreement.
(2) Whether the bankruptcy court erred in interpreting the loan
documents and statutes regarding the payment of real property taxes.
(3) Whether the bankruptcy court erred in denying summary
judgment as to accounting-related issues.
STANDARDS OF REVIEW
We review de novo the bankruptcy court’s rulings on a summary
judgment motion. Ilko v. Cal. St. Bd. of Equalization (In re Ilko), 651 F.3d 1049,
1052 (9th Cir. 2011). “De novo review requires that we consider a matter
anew, as if no decision had been made previously.” Francis v. Wallace (In re
Francis), 505 B.R. 914, 917 (9th Cir. BAP 2014) (citations omitted).
A bankruptcy court’s evidentiary rulings are reviewed for an abuse
10
of discretion and should not be reversed unless the error was prejudicial.
See Johnson v. Neilson (In re Slatkin), 525 F.3d 805, 811 (9th Cir. 2008).
Similarly, we review for abuse of discretion the court’s ruling on a motion
for reconsideration. Determan v. Sandoval (In re Sandoval), 186 B.R. 490, 493
(9th Cir. BAP 1995).
To determine whether the bankruptcy court has abused its discretion,
we conduct a two-step inquiry: (1) we review de novo whether the
bankruptcy court “identified the correct legal rule to apply to the relief
requested” and (2) if it did, whether the bankruptcy court’s application of
the legal standard was illogical, implausible, or without support in
inferences that may be drawn from the facts in the record. United States v.
Hinkson, 585 F.3d 1247, 1262-63 & n.21 (9th Cir. 2009) (en banc).
DISCUSSION
A. We apply the same summary judgment standard as the bankruptcy
court.
When reviewing a bankruptcy court’s summary judgment ruling, we
apply the same summary judgment standards as all other federal courts.
Marciano v. Fahs (In re Marciano), 459 B.R. 27, 35 (9th Cir. BAP 2011), aff’d,
708 F.3d 1123 (9th Cir. 2013). Summary judgment should be granted when
there are no genuine issues of material fact and when the movant is
entitled to prevail as a matter of law. Civil Rule 56(a) (made applicable in
adversary proceedings by Rule 7056). In resolving a summary judgment
11
motion, the court does not weigh evidence, but rather determines only
whether a material factual dispute remains for trial. Covey v. Hollydale
Mobilehome Estates, 116 F.3d 830, 834 (9th Cir.), opinion amended on denial of
reh’g, 125 F.3d 1281 (9th Cir. 1997). A material fact is one that, “under the
governing substantive law . . . could affect the outcome of the case.” Caneva
v. Sun Communities Operating Ltd. P'ship (In re Caneva), 550 F.3d 755, 760
(9th Cir. 2008). A factual dispute is considered genuine if there is sufficient
evidence to permit a reasonable trier of fact to make a finding in favor of
either party. Far Out Prods., Inc. v. Oskar, 247 F.3d 986, 992 (9th Cir. 2001)
(citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986)).
B. The bankruptcy court properly considered the Loan Agreement.
Ms. Lee argues that the bankruptcy court should not have considered
the Loan Agreement, because: (1) the Loan Agreement was hearsay; (2) the
Loan Agreement was not filed with the Claim; and (3) the Loan Agreement
was not properly signed by a Bank of America representative. We discern
no abuse of discretion.
First, Ms. Lee argues that the Loan Agreement was inadmissible
hearsay because Nationstar did not originate the loan and therefore could
not lay the required evidentiary foundation. But, at the summary judgment
stage, the issue is not whether the proffered evidence would be admissible
at trial. Rather, the question is whether that evidence “cannot be presented
12
in a form that would be admissible in evidence.” Civil Rule 56(c)(2).9 Thus,
the court “may consider hearsay evidence submitted in an inadmissible
form at the summary judgment stage.” Sec. & Exch. Comm’n v. Strategic
Glob. Invs., Inc., 262 F. Supp. 3d 1007, 1019 (S.D. Cal. 2017) (citing JL
Beverage Co., LLC v. Jim Beam Brands Co., 828 F.3d 1098, 1110 (9th Cir. 2016)).
Given that Ms. Lee did not deny the authenticity of the Loan Agreement,
and in fact relies on it to make her case, the bankruptcy court did not err in
considering it.10
Second, Ms. Lee argues that the bankruptcy court should not have
considered the Loan Agreement because it was not attached to the Claim.
But there is no authority for the proposition that a failure to attach a
9
We disagree with the bankruptcy court’s holding that the Loan Agreement was
“properly authenticated and is admissible.” The only foundation was a declaration by
Nationstar’s attorney stating that the document was the Loan Agreement, which “was
provided to me by Defendant.” But the bankruptcy court went on to hold, correctly,
that admissibility is not the criterion at the summary judgment stage.
10
Nationstar probably could lay a proper foundation for the Loan Agreement at
trial. We have held that the business records exception to the hearsay rule, Rule 803(6)
of the Federal Rules of Evidence (“FRE”), “applies to records received by a business
from third parties, so long as the following conditions are met: (1) the ‘records are kept
in the regular course of that business;’ (2) the business relies upon those records; and,
(3) the ‘business has a substantial interest in the accuracy of those records.’” See Harms
v. Bank of N.Y. Mellon (In re Harms), 603 B.R. 19, 30 (9th Cir. BAP 2019) (quoting MRT
Constr. Inc. v. Hardrives, Inc., 158 F.3d 478, 483 (9th Cir. 1998)). The residual hearsay
exception, FRE 807, might also apply to this case. See United States v. Bonds, 608 F.3d 495,
501 (9th Cir. 2010) (“FRE 807 involves discretion. It exists to provide judges a ‘fair
degree of latitude’ and ‘flexibility’ to admit statements that would otherwise be
hearsay.” (citing United States v. Valdez–Soto, 31 F.3d 1467, 1471 (9th Cir. 1994))).
13
required document to a proof of claim renders that document
inadmissible.11 Moreover, the bankruptcy court correctly held that the
Ninth Circuit’s liberal amendment policy allows Nationstar to amend the
Claim to include the Loan Agreement. See Jackson v. United States (In re
Jackson), 541 B.R. 887, 891 (9th Cir. BAP 2015) (“It has long been established
in the Ninth Circuit that an amendment to a timely proof of claim ‘relates
back’ to a timely filed claim when the original claim provided ‘fair notice of
the conduct, transaction, or occurrence that forms the basis of the claim
asserted in the amendment.’” (citation omitted)). The amendment did not
prejudice Ms. Lee. She never denied that the Loan Agreement proffered by
Nationstar was authentic and binding. In fact, she relied on the terms of the
Loan Agreement to support her argument that the tax advances were
improper. Ms. Lee cannot have it both ways; she cannot rely on the Loan
Agreement while precluding Nationstar from doing the same.
Third, Ms. Lee contends that she cannot identify the name of the
Bank of America employee who signed the Loan Agreement and that it is
not notarized. This argument is meritless. An illegible signature is just as
11
Such a failure is not even fatal to the proof of claim itself. The failure to attach
documents may deprive the claim of presumptive validity but does not permit
disallowance of the claim. See Heath v. Am. Express Travel Related Servs. Co. (In re Heath),
331 B.R. 424, 433 (9th Cir. BAP 2005) (“It is generally held that failure to attach writings
to a proof of claim does not require a bankruptcy court to disallow a claim on that basis
alone. Rather, the claim is not entitled to be considered as prima facie evidence of the
claim’s validity.” (citation omitted)).
14
valid as a legible one. Further, she does not cite any requirement that the
Loan Agreement needed to be notarized.
Therefore, the bankruptcy court did not err in considering the Loan
Agreement in connection with its ruling on the Motion and Cross-Motion.
C. The bankruptcy court did not err in construing Ms. Lee’s obligation
to pay real property taxes “in a timely manner” and Nationstar’s
authority to pay the taxes on her behalf.
Ms. Lee argues that Nationstar should not have paid the taxes on her
behalf, so she does not have to repay the money that Nationstar advanced
to pay the taxes. She is wrong.
As we have noted, the Loan Agreement provides that, if Ms. Lee
“fails to pay the property charges in a timely manner, . . . [Nationstar] shall
pay the property charges as a Loan Advance as required under Section
2.16.” Loan Agreement at § 2.10.5 (emphasis added). Similarly, uniform
covenant 5 of the DOT provides that, if Ms. Lee “fails to make . . . the
property charges . . . , then [Nationstar] may do and pay whatever is
necessary to protect the value of the Property and [Nationstar’s] rights in
the Property, including payment of taxes . . . .”
Oregon state statutes specify when real property taxes are to be paid.
Oregon Revised Statutes (“ORS”) § 311.250 directs the tax collector to send
taxpayers by October 25 a written statement of real property taxes “payable
on the following November 15.” If the taxpayer pays the taxes in full by
November 15, the taxpayer is entitled to a discount of three percent. ORS
15
§ 311.505(3)(b). If the taxpayer does not make this full payment, one-third
of the taxes “shall be paid” on or before November 15, February 15, and
May 15. ORS § 311.505. The title of the statutory section refers to “due
dates.” Interest accrues on taxes “not paid when due” at 1.33% per month,
or 16% per annum. ORS § 311.505(2). The statute provides that “[t]axes on
real property not paid on or before May 15 are delinquent.” ORS § 311.510.
The state may institute foreclosure proceedings three years after the taxes
become delinquent: “real property within this state is subject to foreclosure
for delinquent taxes whenever three years have elapsed from the earliest
date of delinquency of taxes levied and charged thereon.” ORS § 312.010(1).
Finally, ORS § 86.050 provides that a mortgagee may pay taxes on
behalf of a mortgagor who fails to pay taxes “when due”:
Whenever a mortgagor fails to pay when due any taxes . . . , the
mortgagee may pay the same, and such payments shall be
added to the mortgage debt and secured by the mortgage held
by the mortgagee, and shall bear interest at the same rate as
specified in the mortgage.
ORS § 86.050.
In essence, Ms. Lee contends that she could make her tax payments
“in a timely manner” under the Loan Agreement at any time before the
taxing authority was entitled to foreclose its lien. In other words, she
argues that her payment would be “timely” even if made up to three years
after the taxes were “delinquent” under state law. The bankruptcy court
16
did not err in rejecting this argument.
Under Oregon law, “[w]hen we interpret any written instrument, our
objective is to ascertain the meaning that most likely was intended by the
parties that entered into it.” McKay’s Mkt. of Coos Bay, Inc. v. Pickett, 212 Or.
App. 7, 12 (2007) (citing ORS § 42.240). The court undertakes a three-step
process to interpret a contract:
First, the court must determine whether, as a matter of law, the
relevant provision is ambiguous. . . .
The analysis ends if the meaning of the provision is clear
from the text and context of the contract. The court then applies
the contractual term to the facts. If the provision is ambiguous,
however, the court proceeds to the second step. At the second
step, the trier of fact examines extrinsic evidence of the
contracting parties’ intent and construes the contractual
provision consistent with that intent, if such a resolution can be
determined. . . . If, after examining extrinsic evidence, the
contract is still ambiguous, the court applies appropriate
maxims of construction at the third step.
Heine v. Bank of Oswego, 144 F. Supp. 3d 1198, 1209 (D. Or. 2015) (citations
omitted).
We first consider “whether the term at issue has a plain meaning. The
meaning of a term is ‘plain’ – that is, unambiguous – if the term is
susceptible to only one plausible interpretation.” Groshong v. Mut. of
Enumclaw Ins. Co., 329 Or. 303, 308 (1999) (citations omitted); see Batzer
Constr., Inc. v. Boyer, 204 Or. App. 309, 313 (2006) (“A contract provision is
17
ambiguous if it has no definite significance or if it is capable of more than
one sensible and reasonable interpretation[.]” (citation omitted)).
The Loan Agreement and DOT are not ambiguous. They require
Ms. Lee to make real property payments “in a timely manner.” Under ORS
§ 311.510, taxes not paid by May 15 are “delinquent.” No reasonable or
plausible interpretation would conclude that taxes can be paid in a “timely
manner” after they have become “delinquent.”12
Even looking beyond the contractual language, the purpose of these
provisions of the loan documents supports the bankruptcy court’s
conclusion. Real estate lenders insist that their borrowers pay real property
taxes because, in most if not all states (including Oregon), those taxes are
secured by paramount liens with priority over the lien of the mortgage or
deed of trust.13 The existence of such a lien reduces the value of the lender’s
collateral, particularly where the tax debt accrues interest at the alarming
rate of sixteen percent per annum. See ORS § 311.505(2). No reasonable
interpretation of the Loan Agreement or the DOT would expose the lender
12
Ms. Lee also argues that the phrase “in a timely manner” in the Loan
Agreement must have a meaning different from the phrase “on time” in the DOT. She
apparently thinks that, for purposes of contract interpretation, different phrases must
always be given different meanings. This is not correct, at least where the two different
phrases unambiguously mean the same thing (as is the case here).
13
“The liens for ad valorem taxes, . . . created under this section are superior to,
have priority over and shall be fully satisfied before all other liens, judgments,
mortgages, security interests or encumbrances on the property without regard to date of
creation, filing or recording.” ORS § 311.405(9)(a).
18
to this risk.
Ms. Lee complains that Nationstar had no authority to pay the real
property taxes and charge her principal line of credit. But the loan
documents explicitly allow Nationstar to pay the taxes and charge the
amounts to her principal balance. The Loan Agreement states that “Loan
Advances . . . shall be made from a line of credit under Section 2.6 or 2.7 to
the extent possible.” Loan Agreement at § 2.16. Oregon statutes also
authorize Nationstar to make tax payments, where “such payments shall
be added to the mortgage debt and secured by the mortgage held by the
mortgagee, and shall bear interest at the same rate as specified in the
mortgage.” ORS § 86.050. Thus, because Ms. Lee failed to make some or all
of her real property tax payments “in a timely manner,” both the loan
documents and state law allowed Nationstar to charge the loan advances to
her line of credit.14
Ms. Lee argues that Nationstar was precluded from paying the taxes
because the tax advances plus her principal balance exceeded the principal
limit set out in the Loan Agreement. She cites the Loan Agreement’s section
2.6.1, but the bankruptcy court correctly pointed out that this section is
14
Although it is unclear if Ms. Lee is pursuing her argument that Nationstar
made the 2015 tax payment early, we agree with the bankruptcy court that Nationstar’s
actions were reasonable under the Loan Agreement. Ms. Lee had demonstrated a
pattern of failing to pay in full the real property taxes for the prior five years. Nationstar
paid the 2015 taxes before November 15 in order to secure a three-percent discount and
avoid accruing interest; in doing so, it saved Ms. Lee $245.
19
only applicable to borrower-requested loan advances. The Loan Agreement
does not constrain Nationstar from charging the tax advances to the
principal balance, even if it would exceed the principal limit. To hold
otherwise would lead to an absurd result: if Ms. Lee were correct, the
lender could not protect its lien without paying the borrower’s debt at the
lender’s sole expense. The bankruptcy court was correct in declining to
read such a requirement into the Loan Agreement.
Ms. Lee contends that, while the Loan Agreement permitted loan
advances, it did not permit “corporate advances.” This argument is
meritless. The loan documents do not distinguish between a “corporate
advance” and a “loan advance.” Rather, the Loan Agreement specifically
provides that a loan advance includes “all funds advanced from or charged
to Borrower’s account under conditions set forth in this Loan Agreement,”
see Loan Agreement at § 1.2, and that “Lender shall pay the property
charges as a Loan Advance . . . [,]” see id. at § 2.10.5.
Finally, Ms. Lee intimates that the tax advances were gifts that she
does not have to repay. She argues that the loan was non-recourse; that
Nationstar knew that the payments were gifts; and that Nationstar has
other sources (such as HUD and private mortgage insurance) from which
to seek repayment. These arguments are wholly inconsistent with the loan
documents, which unambiguously require Ms. Lee to repay loan advances
or face foreclosure. In other words, she is not entitled to refuse to repay
20
Nationstar and retain her property.
Therefore, the court correctly construed the statutes and loan
documents when it held that Nationstar had authority to pay the real
property taxes and charge the loan advances to Ms. Lee’s principal account.
D. The bankruptcy court did not err in declining to rule on the
accounting issues.
Finally, Ms. Lee repeats her arguments related to alleged accounting
errors and misapplication of her payments. But the bankruptcy court ruled
that neither party had offered sufficient evidence or argument to permit it
to grant summary judgment. We agree with the bankruptcy court that the
record was insufficient to grant summary judgment on these issues.
CONCLUSION
The bankruptcy court did not err in denying Ms. Lee’s Motion,
granting in part Nationstar’s Cross-Motion, and denying the motion for
reconsideration. We AFFIRM.
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