Burnette Avakian v. Citibank, N.A. , 773 F.3d 647 ( 2014 )


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  •      Case: 14-60175   Document: 00512863591        Page: 1   Date Filed: 12/09/2014
    IN THE UNITED STATES COURT OF APPEALS
    FOR THE FIFTH CIRCUIT
    No. 14-60175                  United States Court of Appeals
    Fifth Circuit
    FILED
    BURNETTE AVAKIAN,                                                 December 9, 2014
    Lyle W. Cayce
    Plaintiff - Appellee                                        Clerk
    v.
    CITIBANK, N.A.,
    Defendant - Appellant
    Appeal from the United States District Court
    for the Northern District of Mississippi
    Before HIGGINBOTHAM, CLEMENT, and HIGGINSON, Circuit Judges.
    EDITH BROWN CLEMENT, Circuit Judge:
    Defendant-Appellant Citibank, N.A. (“Citibank”) appeals the district
    court’s declaratory judgment in favor of Burnette Avakian (“Burnette”). The
    district court found that the deeds of trust signed by Burnette and her
    husband, Norair Avakian (“Norair”), were void because the Avakians signed
    separate but identical deeds of trust rather than a single instrument. The
    district court correctly recognized that, under Mississippi law, a deed of trust
    on a husband and wife’s homestead is void if it is not signed by both spouses.
    But we find that the Mississippi Supreme Court would likely hold that a valid
    deed of trust is created when a husband and wife contemporaneously sign
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    separate but identical deeds of trust.                Accordingly, we REVERSE and
    REMAND.
    FACTS AND PROCEEDINGS
    The relevant facts are essentially uncontested. 1                     The Avakians
    purchased a house by borrowing money that was secured by a properly-
    executed deed of trust on the property. The property served as the Avakians’
    homestead, where they lived together. 2 Citibank later refinanced the loan. 3
    Unlike the original loan, the note for the refinancing loan only listed Norair as
    the debtor. As part of the process of refinancing the loan, Citibank required
    that the Avakians execute another deed of trust on the property. Norair signed
    the Citibank deed of trust. The next day, Burnette signed a second, identical
    Citibank deed of trust. 4 The deeds of trust did not mention each other, and
    they did not contain a clause about the signature of counterpart documents.
    But, throughout the process of signing the deeds of trust, Burnette and Norair
    agreed to proceed with the refinancing. Citibank recorded the two deeds of
    trust as separate instruments, although it recorded them back-to-back in the
    land records.
    1 The only contested fact issue is which party requested that the Avakians sign
    different deeds of trust. This issue is irrelevant to whether the deeds of trust are valid under
    the Mississippi statute. See Miss. Code Ann. § 89-1-29.
    2At the district court level, Citibank challenged whether the property was actually
    the Avakians’ homestead and whether they were living together when they signed the
    Citibank deeds of trust. Citibank has not appealed the district court’s findings on these
    issues.
    3The refinancing loan was originally issued by EquiFirst Corporation, but it was later
    transferred to Citibank. For simplicity, the parties have treated the second loan as if it were
    issued by Citibank, and we do the same.
    4 The deeds of trust actually have slightly different handwritten notations that add
    Burnette’s name to the definition of “Borrower.” Burnette testified at a deposition that the
    handwritten notation was added to her copy of the deed of trust after she signed it. The
    parties have not made an issue about this discrepancy, however.
    2
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    The Avakians fell behind on their loan payments, and they received a
    loan modification. Around the time of Norair’s death, Burnette received notice
    that Citibank was taking steps to foreclose on their property.                  Burnette
    continued to negotiate with Citibank to attempt to prevent the foreclosure.
    After Norair’s death, Burnette brought a declaratory judgment action in
    Mississippi state court to halt Citibank’s foreclosure of her property. Citibank
    removed the case to federal court on the basis of diversity jurisdiction. It then
    moved for summary judgment, arguing that the deeds of trust were valid and,
    in the alternative, it should prevail under the equitable subrogation doctrine.
    The district court informed the parties that it was considering granting
    summary judgment to Burnette. In additional briefing, Citibank argued that
    the district court should not grant summary judgment to Burnette because
    there were genuine issues of material fact regarding Citibank’s affirmative
    defenses of waiver, estoppel, ratification, laches, and recoupment. The district
    court granted summary judgment to Burnette in part.                    It found that, if
    Burnette and Norair were living together at the time they signed the Citibank
    deeds of trust, the instruments were invalid and Citibank could not prevail on
    any of its equitable theories. Citibank appeals both of these holdings.
    After a bench trial, the district court found that Burnette and Norair
    were living together at the time they signed the Citibank deeds of trust. 5 Thus,
    it granted Burnette’s motion for declaratory judgment.
    STANDARD OF REVIEW
    This court reviews the grant of summary judgment de novo. Rogers v.
    Bromac Title Servs., L.L.C., 
    755 F.3d 347
    , 350 (5th Cir. 2014). “In this diversity
    action, we apply Mississippi law as interpreted by the Mississippi state courts.”
    Keen v. Miller Envtl. Grp., Inc., 
    702 F.3d 239
    , 243 (5th Cir. 2012). If the
    5   Again, Citibank does not appeal this factual finding.
    3
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    Mississippi Supreme Court has not directly ruled on an issue, we make an Erie
    guess, relying on:
    (1) decisions of the Mississippi Supreme Court in analogous cases,
    (2) the rationales and analyses underlying Mississippi Supreme
    Court decisions on related issues, (3) dicta by the Mississippi
    Supreme Court, (4) lower state court decisions, (5) the general rule
    on the question, (6) the rulings of courts of other states to which
    Mississippi courts look when formulating substantive law and (7)
    other available sources, such as treatises and legal commentaries.
    Centennial Ins. Co. v. Ryder Truck Rental, Inc., 
    149 F.3d 378
    , 382 (5th Cir.
    1998).
    DISCUSSION
    Mississippi Code § 89-1-29 provides that:
    A conveyance, mortgage, deed of trust or other incumbrance upon
    a homestead exempted from execution shall not be valid or binding
    unless signed by the spouse of the owner if the owner is married
    and living with the spouse or by an attorney in fact for the spouse.
    An instrument that does not satisfy this statute is void and inoperative, even
    as to the spouse who signed the instrument. Welborn v. Lowe, 
    504 So. 2d 205
    ,
    207-08 (Miss. 1987).
    Here, it is undisputed that the property was the Avakians’ homestead
    and that they were living together when they executed the deeds of trust.
    Accordingly, to produce a valid deed of trust, both Burnette and Norair had to
    sign it. It is also undisputed that Burnette and Norair separately signed
    identical counterpart deeds of trust within one day of each other. The problem
    is that neither deed of trust was signed by both Avakians.
    The district court’s opinion takes it for granted that the Citibank deeds
    of trust do not comply with the requirements of Mississippi Code § 89-1-29.
    But the statute does not explicitly require that both spouses sign the same
    document to create a valid deed of trust. It seems consistent with the statute
    to construe the two Citibank deeds of trust as together presenting one
    4
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    integrated deed of trust that complies with Mississippi Code § 89-1-29. After
    all, the parties clearly intended to create a valid deed of trust at the time they
    executed the two identical counterpart instruments.
    “In construing a statute, the Court must seek the intention of the
    Legislature, and knowing it, must adopt that interpretation which will meet
    the real meaning of the Legislature.” Delta Reg’l Med. Ctr. v. Green, 
    43 So. 3d 1099
    , 1102 (Miss. 2010) (internal quotation marks and alteration omitted).
    Here, the statute was originally passed “primarily as a protection for the wife
    in lieu of dower which had been abolished by statute.” Hudson v. Bank of
    Leakesville, 
    249 So. 2d 371
    , 373 (Miss. 1971) (quoting Grantham v. Ralle, 
    158 So. 2d 719
    , 724 (Miss. 1963)).      Mississippi Code § 89-1-29 provided this
    protection by “prevent[ing] her husband from conveying or encumbering the
    homestead without the consent of his wife.” 
    Id. The statute
    has since been
    amended to afford both spouses the same protection. But the “basic purpose”
    of protecting each spouse remains.      See 
    id. at 373
    (describing this “basic
    purpose”). Here, construing the two Citibank deeds of trust together comports
    with this “basic purpose” of protecting the spouses because the deeds of trust
    provide a clear written record of the Avakians’ contemporaneous consent to the
    creation of a deed of trust.
    Moreover, while no Mississippi case law is directly on point, several
    decisions indicate that we should not take an overly formalistic approach to
    Mississippi Code § 89-1-29. First, an old Mississippi Supreme Court case
    contains dicta that clearly supports Citibank’s position:
    There is much force in the argument of defendant’s counsel that the
    statute does not require a joint deed of husband and wife for the
    conveyance of the husband’s homestead, but only that the wife
    should “sign” the husband’s deed to signify her consent to the
    disposition made by the husband of his property; that the
    substantial thing is the written evidence of such consent; and that
    this may be as certainly shown by a separate instrument as by
    5
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    signing the deed of the husband. The present controversy does not
    call for a decision of what would be the effect of such separate deed
    made by the wife under the direction or consent of the husband,
    and we express no opinion on the subject. We are, however, of
    opinion that whatever be the form, it is, at least, essential to show
    the contemporaneous assent of both husband and wife to the
    conveyance.
    Duncan v. Moore, 
    7 So. 221
    , 221-22 (Miss. 1890) (emphases added). Here, it is
    uncontested that the Avakians both expressed contemporaneous assent to the
    creation of a deed of trust when they signed the two documents. 6 Thus, the
    situation here is precisely described by the Duncan dicta, and there is “much
    force in the argument” that the deeds of trust, taken together, comply with the
    statute.
    Burnette emphasizes that Duncan is only dicta, but she has pointed to
    no other Mississippi Supreme Court decision that undermines it.                         Thus,
    Duncan is an important guide in making our Erie guess. See 
    Keen, 702 F.3d at 244
    (holding that “the decisions and dicta of the Mississippi Supreme Court
    weigh more heavily in our Erie analysis” than even a holding from the
    Mississippi Court of Appeals (alteration omitted)); Centennial 
    Insurance, 149 F.3d at 382
    (listing state supreme court dicta as a factor in making an Erie
    guess).
    Second, a much more recent Mississippi Supreme Court case found a
    deed of trust valid where the wife signed only its attachments, not the deed of
    trust itself. United Miss. Bank v. GMAC Mortg. Co., 
    615 So. 2d 1174
    , 1176
    6Despite the one-day delay in Burnette’s signature of the deed of trust, the assent was
    contemporaneous because it is uncontested that Norair knew of and consented to Burnette’s
    signature of the deed of trust, and vice versa. See Howell v. Hill, 
    48 So. 177
    , 177 (Miss. 1909)
    (“While it is true that the husband signed and acknowledged the deed conveying the
    homestead in September, and the wife’s signature and acknowledgment bear date of the May
    following, yet both signed the same instrument in furtherance of an intention to which there
    was manifestly a common and contemporaneous assent . . . . In the case before us the wife
    signed with the full knowledge and consent of the husband, and this is surely sufficient.”).
    6
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    (Miss. 1993). There, the deed of trust itself was four pages long and contained
    lines for both spouses’ signatures on the fourth page. 
    Id. at 1175.
    The deed of
    trust attached an exhibit that described the land that would be used as
    collateral, as well as an adjustable-rate-mortgage rider. 
    Id. Both spouses
    signed the two attachments, but only the husband signed the deed of trust. 
    Id. at 1175-76.
    The deed of trust mentioned the attached exhibit and rider, and
    they were all recorded as a single instrument. 
    Id. The Mississippi
    Supreme
    Court found that the attached documents were “an integral part of the
    contested deed of trust,” and therefore signing the separate documents was
    sufficient. 
    Id. at 1176.
    The Court based its decision in part on the fact that
    Mississippi Code § 89-1-29 requires the spouses to “sign” rather than
    “subscribe” to the deed of trust. 
    Id. Under Mississippi
    law, the physical
    location of a signature is critical for “subscribing” but not for “signing.” 
    Id. Thus, the
    Court reasoned that the location of the signature was not critical to
    comply with Mississippi Code § 89-1-29. 
    Id. Here, the
    identical counterpart deeds of trust were also integral to each
    other, so the different physical locations of the spouses’ signatures should not
    matter. Obviously, though, this case differs from GMAC in at least three
    respects: the two deeds of trust were not attached to each other at the time of
    signature, they did not refer to each other, and they were not recorded as a
    single instrument. But, under Mississippi law, separate documents can be
    construed together to form a single instrument if they “are executed at the
    same time, by the same parties, as part of the same transaction.” Sullivan v.
    Mounger, 
    882 So. 2d 129
    , 135 (Miss. 2004). Such documents may be construed
    together even if they do not “include a written provision which specifically
    recites that all documents are part of an integrated, or global, transaction.”
    Sullivan v. Protex Weatherproofing, Inc., 
    913 So. 2d 256
    , 259-60 (Miss. 2005).
    Here, the two identical Citibank deeds of trust, which were signed within one
    7
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    day of each other, are clearly part of one global transaction, so they can be
    construed together. Similarly, the two documents do not have to be attached
    to each other to form an integrated document. See 
    id. at 260-61
    (construing
    two documents together without mentioning whether they were attached).
    Finally, the fact that Citibank recorded the Avakians’ two deeds of trust as
    separate instruments is irrelevant because recording an instrument does not
    alter whether it is effective as between the parties, which is the matter at issue
    here. See Miss. Code Ann. § 89-5-3 (providing that unrecorded instruments
    are valid “as between the parties and their heirs”).                  Thus, the factual
    distinctions between this case and GMAC should not alter the end result that
    the Avakians created a valid deed of trust, even though they signed it at
    different places.
    Burnette argues that GMAC is inapplicable because, there, the
    Mississippi Supreme Court construed the attachments as being part of the
    deed of trust itself. But she does not explain why the Court would not similarly
    consider the Avakians’ identical counterpart deeds of trust as making up one
    integrated whole. And, as mentioned previously, Mississippi Supreme Court
    precedent strongly suggests that the Court would construe them together.
    Further, in finding that the deeds of trust were void, the district court
    did not mention GMAC or Duncan. Instead, it relied on cases that generally
    hold that a deed of trust must strictly comply with Mississippi Code § 89-1-29.
    Unlike GMAC and Duncan, none of the cases cited by the district court deal
    with instruments that contain the spouses’ signatures at different physical
    locations (as in GMAC) or the contemporaneous signature of separate
    instruments (as in Duncan). 7
    7 One case cited by the district court, Craddock v. Brinkley, 
    671 So. 2d 662
    (Miss.
    1996), involves the signature (but not the contemporaneous signature) of two separate
    documents. Curiously, Burnette barely mentions this case in her appellate brief. Regardless,
    8
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    Similarly, on appeal, Burnette does not point to any cases that are as
    analogous as GMAC and Duncan. Instead, she argues that policy reasons
    counsel against considering the two separate instruments together.                        For
    example, she argues that difficulties could arise if two instruments contained
    different terms. But that is not the situation presented here, and we need not
    decide whether two instruments containing different terms could satisfy
    Mississippi Code § 89-1-29. We similarly need not decide the outcome of
    Burnette’s various other hypotheticals.
    Burnette also argues that Citibank cannot foreclose on two instruments
    at the same time. But we construe the two Citibank deeds of trust as together
    creating a single, valid deed of trust. Accordingly, if Citibank decides to pursue
    foreclosure, it must rely upon a single deed of trust, albeit one that is composed
    of two identical counterpart deeds of trust that are recorded back-to-back in
    the land records.
    Thus, based on Duncan and GMAC, we conclude that the Mississippi
    Supreme Court would likely construe the two identical deeds of trust as
    it is readily distinguishable. In Craddock, the husband signed a deed of trust in 1974, but
    the wife did not sign it or any other deed of trust. 
    Id. at 665.
    A year later, the husband and
    wife both signed a promissory note secured by the 1974 deed of trust. 
    Id. The Mississippi
    Supreme Court found that the wife’s subsequent act of signing a promissory note referring to
    the deed of trust could not save it. 
    Id. at 665-66.
    But the Court did not dismiss the signature
    of the subsequent promissory note simply because it was a separate document. See 
    id. at 665.
    Instead, the Court reasoned that the promissory note was not “an attachment to, or an
    integral part of the 1974 deed of trust as the note was signed nearly one year later.” 
    Id. In contrast,
    here, the two deeds of trust were signed within a day of one another. The Court
    also reasoned that “[a] promissory note and a deed of trust are two separate and distinct
    instruments.” 
    Id. Again in
    contrast, both documents signed by the Avakians were deeds of
    trust, not one deed of trust and another entirely different type of instrument.
    9
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    together creating a valid deed of trust signed by both spouses. The district
    court erred in holding to the contrary. 8
    CONCLUSION
    For the foregoing reasons, we REVERSE the district court’s declaratory
    judgment in Burnette Avakian’s favor and REMAND for further proceedings
    consistent with this opinion.
    8  Because we find that the Citibank deeds of trust together form a valid and
    enforceable instrument, we do not reach Citibank’s alternative arguments that are based on
    equitable theories.
    10