Wells Fargo Bank, N.A. v. Neil C. Gordon

Case: 11-14331 Date Filed: 08/24/2012 Page: 1 of 25
[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
____________
No. 11-14331
_____________
D.C. Docket Nos. 1:10-cv-00187-ODE ; 08-BKC-06612-JEM
In Re:
DENISE CODRINGTON,
Debtor.
__________________________________
WELLS FARGO BANK, N.A.,
Plaintiff - Appellant,
versus
NEIL C. GORDON,
Chapter 7 Trustee for the Estate
of Denise Codrington,
Defendant - Appellee.
______________
Appeal from the United States District Court
for the Northern District of Georgia
_____________
(August 24, 2012)
Case: 11-14331 Date Filed: 08/24/2012 Page: 2 of 25
Before TJOFLAT and PRYOR, Circuit Judges, and HUCK,* District Judge.
PER CURIAM:
CERTIFICATION FROM THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT TO THE SUPREME COURT OF GEORGIA
PURSUANT TO O.C.G.A. § 15-2-9.
TO THE SUPREME COURT OF GEORGIA AND ITS HONORABLE
JUSTICES:
This case involves unanswered questions of Georgia law that are central to
this appeal. Because these questions are determinative of the case and there are no
controlling precedents from the Supreme Court of Georgia, we respectfully certify
these questions for resolution.
I.
This case arose in the United States Bankruptcy Court for the Northern
District of Georgia. The primary issue is whether, under Georgia law, a deed to
secure a debt that lacks the signature of an unofficial witness on the deed’s
signature page provides constructive or inquiry notice to a hypothetical bona fide
*
Honorable Paul C. Huck, Senior United States District Judge for the Southern District
of Florida, sitting by designation.
2
Case: 11-14331 Date Filed: 08/24/2012 Page: 3 of 25
purchaser where a rider to the security deed contains the necessary attestation of
an unofficial witness. The facts are not in dispute.
In 2006, Denise Codrington and Alvina Codrington executed a security
deed to Wells Fargo Bank to secure a loan.1 The deed (the “Security Deed”)
conveyed real property located at 4253 Kensington Cove, College Park, Fulton
County, Georgia, described as Lot 1, Block A, Kensington Heights as per Plat
Book 269, Pages 28–38, Fulton County, Georgia records (the “Property”). The
Security Deed is dated September 21, 2006 and was recorded on October 13,
2006.
The Security Deed contains eight pages, with each page numbered at the
bottom.2 The Security Deed contains numerous standard provisions that we need
not discuss at any length. Of particular note, Paragraph 23 on Page 7 of the
Security Deed, “Riders to this Security Instrument,” provides:
If one or more riders are executed by Borrower and recorded together
with this Security Instrument, the covenants of each such rider shall
be incorporated into and shall amend and supplement the covenants
and agreements of this Security Instrument as if the rider(s) were a
part of this Security Instrument.
(Emphasis added.) Following Paragraph 23, there are five boxes available to
1
Denise Codrington is the debtor in this case.
2
The format of the pagination of the Security Deed is “Page __ of 8.”
3
Case: 11-14331 Date Filed: 08/24/2012 Page: 4 of 25
check if various types of riders are attached: (1) Condominium Rider, (2) Planned
Unit Development Rider, (3) Growing Equity Rider, (4) Graduated Payment Rider,
and (5) Other [specify]. Only one box, “Other [specify],” is checked. The only
specified rider is an “ARM Rider.”
Page 8 of the Security Deed contains the signature page. Page 8 reads: “BY
SIGNING BELOW, Borrower accepts and agrees to the terms contained in this
Security Instrument and in any rider(s) executed by Borrower and recorded with
it.” (Emphasis added.) The signature page contains ten signature lines—eight
lines labeled for the signatures of potential borrowers, one line without a label,
and one line designated for an “Unofficial Witness.” The signature page also
contains a designated space for the signature of a notary public.
The signatures of Denise Codrington and Alvina Codrington appear on two
of the eight lines labeled “Borrower.” The signature page also contains the
signature and seal of Kenneth S. Bray, a notary public of DeKalb County, Georgia.
The signature line labeled “Unofficial Witness,” however, is blank. There is no
other indication that anyone witnessed the execution of the Security Deed.
The next page, Page 9, is labeled as “Exhibit A.” This page contains the
legal description of the Property. Page 9 is not formatted in a similar manner as
the preceding eight pages; however, Exhibit A is expressly referenced on Page 2
4
Case: 11-14331 Date Filed: 08/24/2012 Page: 5 of 25
of the Security Deed.
Following the Security Deed and Exhibit A is a three-page Adjustable Rate
Mortgage Rider (“ARM”). Although the Security Deed specifies that only the
ARM is attached, additional documents follow the ARM. There is a single-page
Planned Unit Development Rider and a second single-page document that contains
a Waiver of Borrower’s Rights Rider (the “Rider”), a Closing Attorney’s
Affidavit, and a Foreclosure Closing Disclosure.
The Waiver of Borrower’s Rights Rider contains five numbered terms.
Terms 1, 2, and 4 are not relevant to this dispute.3 Term 3 provides that “[the
Debtors have] read this deed and specifically this paragraph and paragraph 17 of
this deed . . . and grantor[s] [have] been afforded an opportunity to consult with
counsel of [their] choice prior to executing this deed.” (Emphasis added.) Term 5
states that Grantors expressly agree that “the provisions hereof are incorporated
into and made a part of the security deed.” (Emphasis added.)4 This section
contains the signatures of both Denise Codrington and Alvina Codrington, a valid
3
Term 1 of the Waiver of Borrower’s Rights Rider acknowledges the right to accelerate
the debt. Term 2 waives any due process rights to a judicial hearing before the lender exercises a
remedy. Term 4 acknowledges that any waivers were made knowingly, intentionally, and
willingly as part of the loan transaction.
4
The Rider does not contain a description or definition of “this deed” or “the security
deed.”
5
Case: 11-14331 Date Filed: 08/24/2012 Page: 6 of 25
notary (Kenneth S. Bray), and the signature of an unofficial witness.
Next, on this same page, is the Closing Attorney’s Affidavit. The affidavit
contains form language, noting that the attorney reviewed and explained the terms
and provisions of the “Deed to Secure Debt” and the Waiver of Borrower’s Rights
Rider to the debtors prior to execution.5 The signatures of the closing attorney
(Kenneth S. Bray) and the seal and signature of a notary (Melinda J. Seymour)
appear in this section.
Finally, below the affidavit is a Foreclosure Closing Disclosure executed by
both of the Codringtons. All of the above-described documents were filed and
recorded contemporaneously with the Security Deed.
II.
On June 9, 2008, Denise Codrington filed this Chapter 7 case. The
Bankruptcy Court appointed Neil C. Gordon as the Chapter 7 Trustee. Gordon
brought this proceeding in an effort to avoid Wells Fargo’s interest in the Property
under 11 U.S.C. § 544(a)(3). Section 544(a) provides, in pertinent part,
(a) The trustee shall have, as of the commencement of the case, and
without regard to any knowledge of the trustee or of any creditor, the
rights and powers of, or may avoid any transfer of property of the
debtor or any obligation incurred by the debtor that is voidable by –
5
This page contains no definition of what constitutes the “Deed to Secure Debt.”
6
Case: 11-14331 Date Filed: 08/24/2012 Page: 7 of 25
....
(3) a bona fide purchaser of real property, other than fixtures,
from the debtor, against whom applicable law permits such
transfer to be perfected, that obtains the status of a bona fide
purchaser and has perfected such transfer at the time of the
commencement of the case, whether or not such a purchaser
exists.
Georgia law determines whether Gordon, as the Chapter 7 Trustee, can use
the “strong-arm” power of Section 544(a)(3) of the Bankruptcy Code to avoid or
set aside a security deed that is valid but unattested by an unofficial witness. See
Butner v. United States, 440 U.S. 48, 55, 99 S. Ct. 914, 918, 59 L. Ed. 2d 136
(1979) (“Property interests are created and defined by state law.”). Wells Fargo
argues that an individual in this case would be charged with either (1) constructive
notice or, alternatively, (2) inquiry notice of its interest created by the Security
Deed, and thus the hypothetical party would not be a bona fide purchaser under
§ 544(a)(3). We discuss each argument in turn.
A.
O.C.G.A. § 44–14–61 states that “[i]n order to admit deeds to secure debt
. . . to record, they shall be attested or proved in the manner prescribed by law for
mortgages.” O.C.G.A. § 44–14–33 provides the requirements for attesting
mortgages:
7
Case: 11-14331 Date Filed: 08/24/2012 Page: 8 of 25
In order to admit a mortgage to record, it must be attested by or
acknowledged before an officer as prescribed for the attestation or
acknowledgment of deeds of bargain and sale; and, in the case of real
property, a mortgage must also be attested or acknowledged by one
additional witness. In the absence of fraud, if a mortgage is duly
filed, recorded, and indexed on the appropriate county land records,
such recordation shall be deemed constructive notice to subsequent
bona fide purchasers.
The Supreme Court of Georgia has held that the entirety of O.C.G.A.
§ 44–14–33 applies to the recording of security deeds. See U.S. Bank Nat’l Ass’n
v. Gordon, 709 S.E.2d 258, 260 (Ga. 2011).
In 2011, the Supreme Court of Georgia answered a certified question from
the United States District Court for the Northern District of Georgia in a similar
dispute regarding the proper application of O.C.G.A. § 44–14–33.6 In U.S. Bank
National Ass’n v. Gordon, the Supreme Court of Georgia emphasized that the
plain language of O.C.G.A. § 44–14–33 requires recordation of a “duly filed,
recorded, and indexed” deed, id. at 261 (emphasis in original), and that such a
recording would be deemed constructive notice to subsequent bona fide
purchasers.7 To determine whether a deed is “duly filed, recorded, and indexed,”
6
The Supreme Court of Georgia answered this question after the Bankruptcy Court in
this case had made its decision and while this matter was pending before the District Court.
7
It is worth noting that the parties in that case were represented by Neil C. Gordon and
Michael Fredrick Holbein, of Arnall, Golden & Gregory LLP, Atlanta (representing Neil C.
Gordon as the Chapter 7 Trustee), and Edward Davison Burch, Jr., of Smith, Gambrell &
Russell, LLP (representing the creditor).
8
Case: 11-14331 Date Filed: 08/24/2012 Page: 9 of 25
the court must look to see whether, from the perspective of the clerk responsible
for recording documents, the document appears on its face to comply with
O.C.G.A. § 44–14–33. See id. at 261 (“Thus, the first sentence of O.C.G.A.
§ 44–14–33 and the statutory recording scheme indicate that the word ‘duly’ in the
second sentence of O.C.G.A. § 44–14–33 should be understood to mean that a
security deed is ‘duly filed, recorded, and indexed’ only if the clerk responsible for
recording determines, from the face of the document, that it is in the proper form
for recording, meaning that it is attested or acknowledged by a proper officer and
(in the case of real property) an additional witness.”). A recorded mortgage or
security deed that lacked the required attestations, the court continued, would be
defective on its face. See id. (“[A] security deed which appears on its face to be
properly attested should be admitted to record, but . . . a deed that shows on its
face that it was not properly attested or acknowledged, as required by statute, is
ineligible for recording.” (internal quotation marks omitted) (internal citation
omitted)). Such a patently defective deed would not be deemed to provide
sufficient constructive notice to a hypothetical subsequent bona fide purchaser.
See id. Turning to the facts of the certified question in that case, the court then
concluded that, because the deed lacked both an official and unofficial witness, it
was not “duly” recorded, it did not provide sufficient constructive notice under
9
Case: 11-14331 Date Filed: 08/24/2012 Page: 10 of 25
Georgia law, and the trustee could validly employ its “strong-arm” powers under
11 U.S.C. § 544(a)(3). See id. at 262.
Here, there is no unofficial attestation on the signature page of the Security
Deed. The crux of this dispute, therefore, is the significance of the unofficial
attestation on the Waiver of Borrower’s Rights Rider.8
1.
Wells Fargo takes the position that the Security Deed was properly attested,
and thus “duly” recorded, because the unofficial witness’s attestation of the
Waiver of Borrower’s Rights Rider should be deemed a part of the Security Deed.
As an initial matter, Wells Fargo argues that the Supreme Court of Georgia has
never held that the attestation must appear in a particular location; so long as a
security deed appears on its face to contain the attestation of one official and one
unofficial witness, the statutory requirements will be met. Appellant’s Br. at 8.
Thus, Wells Fargo’s position hinges primarily on whether the Security Deed and
the Waiver of Borrower’s Rights Rider should be treated as one document, such
that the “single document” appears to contain the necessary attestations. Wells
8
We believe there is no plausible argument after the supreme court’s decision in U.S.
Bank National Ass’n v. Gordon, 709 S.E.2d 258 (Ga. 2011), that the Security Deed, standing
alone, would meet the requirements of O.C.G.A. § 44–14–33. The issue is what impact, if any,
the properly attested Rider has on the improperly attested Security Deed.
10
Case: 11-14331 Date Filed: 08/24/2012 Page: 11 of 25
Fargo presents two arguments in support of its conclusion that the Security Deed
and Waiver of Borrower’s Rights Rider, taken together, comply with O.C.G.A.
§ 44–14–33 and provide constructive notice to a hypothetical bona fide purchaser.
First, the Security Deed and Waiver of Borrower’s Rights Rider were
signed, executed, and filed contemporaneously with each other and therefore
“appear[] from the perspective of a recording clerk” to be properly attested.
Appellant’s Br. at 5. Wells Fargo claims that “[t]he Rider is the last page attached
to the Security Deed, where the clerk could expect to find the borrower’s
execution and the attestations.” Appellant’s Br. at 12. Whether something
appears in recordable form should not turn on a clerk’s “legal determination as to
whether the attestations apply to only a part or to the whole of the Security Deed
and whether that affects recordability.” Appellant’s Br. at 13. Wells Fargo argues
that “if the Security Deed appears to have the required attestations, it may be
recorded, and once recorded, the Security Deed affords constructive notice[;] . . . .
[t]he clerk cannot be required to employ a test that moves beyond visual
inspection and into legal interpretation and deconstruction.” Appellant’s Br. at
13–14. The facts here, therefore, indicate that the single package of documents
would appear on its face to comply with the statutory requirements of O.C.G.A.
§ 44–14–33. Id.
11
Case: 11-14331 Date Filed: 08/24/2012 Page: 12 of 25
Second, the incorporation clauses of the Security Deed and the Waiver of
Borrower’s Rights Rider are material because both the contents and the
attestations of the Waiver of Borrower’s Rights Rider are incorporated into the
Security Deed. Incorporation of the Rider’s attestation should be deemed an
attestation of the Security Deed. In the alternative, even if the attestation cannot
serve as the actual attestation for the Security Deed and the documents would
otherwise appear on their face to be distinct, the incorporation clauses would make
the Security Deed and Rider appear to be a single, indivisible document for the
purposes of meeting the requirements of O.C.G.A. § 44–14–33.9
Wells Fargo states that “the witnessing and notarization of the Rider also
constitute a witnessing and notarization of the execution of the Security Deed
itself.” Appellant’s Br. at 15. Wells Fargo cites precedent of the Supreme Court
of Georgia in support of its position, see Bowman v. Walnut Mountain Property
Owners Ass’n, Inc., 553 S.E.2d 389, 393 (2001) (“A written and filed agreement
may also incorporate by reference . . . other documents by specific reference and
identification so that such documents are treated as if a part of the document
9
This argument is basically the same as Wells Fargo’s primary argument, with the only
difference being that Wells Fargo’s primary argument is, in essence, that the documents appear to
be one, single document irrespective of the incorporation provisions, while the secondary
argument hinges on the application of the incorporation clauses to reach the conclusion that the
documents would appear as one document.
12
Case: 11-14331 Date Filed: 08/24/2012 Page: 13 of 25
making the reference.”), and precedent from this court interpreting Georgia law,
see Gordon v. Terrace Mortgage Co. (In re Kim), 571 F.3d 1342 (11th Cir. 2009).
In Terrace Mortgage, this court held that the execution of a security deed lacking a
notary seal of an official witness nevertheless substantially complied with a
remedial statute10 when a closing attorney’s affidavit contained sufficient
attestations to the execution of the deed and was incorporated into the security
deed.11 Id. at 1346. In so holding, that panel of this court stated, “It is thus clear
that the Affidavit was specifically incorporated into and became part and parcel of
a single document . . . .” Id.12 Wells Fargo cites Terrace Mortgage Co. for the
proposition that if incorporation makes one document (the Waiver of Borrower’s
Rights Rider, in this case) “part and parcel” of another (the Security Deed), then
the attestation of the Waiver of Borrower’s Rights Rider should also “provide[] the
10
See O.C.G.A. § 44-2-18 (“If a deed is neither attested by nor acknowledged before one
of the officers named in Code Section 44-2-15, it may be recorded upon the affidavit of a
subscribing witness, which affidavit shall be made before any one of the officers named in Code
Section 44-2-15 and shall testify to the execution of the deed and its attestation according to law.
A substantial compliance with the requirements of this Code section shall be held sufficient in
the absence of all suspicion of fraud.”).
11
Of note, the affidavit was on the same page as a Waiver of Borrower’s Rights
Rider—just as is the case here—and involved the same attorneys who are adverse in this matter.
See supra note 7.
12
The panel assumed for the sake of argument that the omission of the seal constituted a
patent defect under O.C.G.A. § 44–14–33. See Gordon v. Terrace Mortgage Co. (In re Kim),
571 F.3d 1342, 1344–45 (11th Cir. 2009).
13
Case: 11-14331 Date Filed: 08/24/2012 Page: 14 of 25
necessary attestation” for the Security Deed.13 Appellant’s Br. at 15–16; see also
Appellant’s Reply Br. at 4. Thus, under Wells Fargo’s reasoning, the Security
Deed viewed in combination with the Waiver of Borrower’s Rights Rider
complies with O.C.G.A. § 44–14–33.
2.
Gordon takes the opposite position. He argues that the unofficial witness’s
attestation of the Waiver of Borrower’s Rights Rider does nothing to change the
fact that the Security Deed still lacks the proper attestation of an unofficial
witness; while not precisely on point, the Supreme Court of Georgia’s holding in
U.S. Bank National Ass’n is persuasive to the dispute at hand.
First, Gordon argues that the Security Deed does not “appear” to be properly
attested and does not comply with O.C.G.A. § 44–14–33. The Security Deed,
Gordon highlights, is clearly numbered as including eight pages, with the bottom
of each page identified as Page __ of 8. Appellee’s Br. at 13. Moreover,
following Paragraph 23 of the Security Deed, where all of the attached Riders
should be listed, the only specified additional rider is the ARM rider; the Waiver
13
This court expressly refused to address this issue in Terrace Mortgage; any citation to
that decision for the proposition asserted by Wells Fargo is, at best, pure dicta. See id. at 1346
n.7 (“We are not holding that the attestation or the notary’s seal on the Affidavit substitutes for
the necessary attestation in the Security Deed. We are holding that the Affidavit meets the
requirements under § 44–2–18 to cure a defective attestation and that the Affidavit testifies to
both the execution and the attestation of the Security Deed as required by the statute.”).
14
Case: 11-14331 Date Filed: 08/24/2012 Page: 15 of 25
of Borrower’s Rights Rider is not listed. In short, Gordon argues that the Security
Deed would not “appear” to a clerk to be properly attested. To the contrary, a
clerk who actually noticed the specific pagination and read Paragraph 23 would
have good reason to conclude that the Security Deed was limited to eight pages;
and, even assuming the clerk would look to the ARM Rider, the clerk could
reasonably conclude his or her inspection at that point. Nowhere in those eight
pages of the Security Deed itself, Gordon claims, does an attestation of an
unofficial witness appear. He continues, noting that Wells Fargo’s attempts to
recharacterize the holding of this court’s decision in Terrace Mortgage are without
merit because the court in that case expressly focused its analysis on the impact of
a remedial statute not relevant in this case. Appellee’s Br. at 12–14. The Security
Deed and the Waiver of Borrower’s Rights Rider should be treated as two distinct
documents. Thus, the Security Deed itself would appear on its face to lack the
proper attestations.14
14
Gordon also argues that the signature page was “the only place where a notary and an
additional witness could certify to the execution of the Security Deed.” Appellee’s Br. at 14–15.
The argument that the only place for a witness’s attestation is on the last page of the Security
Deed (page 8, the signature page) is less convincing in light of precedent from the Supreme
Court of Georgia. See Horton v. Murden, 43 S.E. 786, 787 (1903) (concluding that the
“signature need not necessarily be at the end of the instrument”). As we note infra, both the
Bankruptcy Court and District Court adopted Gordon’s position on this particular issue. We
think that Wells Fargo appears to have a colorable argument that Georgia law does not require
the attestations to be found in a particular place in every document (the signature page), as
Gordon’s position seems to imply. Whether the signature page is the only page where a
15
Case: 11-14331 Date Filed: 08/24/2012 Page: 16 of 25
Second, Gordon argues that the incorporation clauses are irrelevant to the
question of whether the Security Deed complies with O.C.G.A. § 44-14-33.
Appellee’s Br. at 17. Gordon’s response to Wells Fargo is essentially twofold: (1)
the incorporation clauses of these documents do not make the attestation to the
execution of a rider tantamount to the execution of a security deed, and (2) the
presence of an incorporation clause similarly does not make it “appear” as if a
security deed is properly executed.
Quite simply, the attestation of the Waiver of Borrower’s Rights Rider is not
an attestation of the Security Deed. Gordon draws a distinction between the
incorporation of the contents of one document and the incorporation of the
attestation of one document. Appellee’s Br. at 21–22. It is clear under Georgia
law that the contents of one document can be incorporated into another; Wells
Fargo cites many of those precedents.15 It is an entirely different matter, Gordon
urges, when one attempts to incorporate the attestation of one document to serve
witness’s signature could appear is not the essential issue in this dispute, however.
15
Gordon argues that Wells Fargo misses this crucial distinction, relying on cases such as
Gordon v. Terrace Mortgage Co. (In re Kim), 571 F.3d 1342 (11th Cir. 2009), Bowman v.
Walnut Mountain Property Owners Ass’n, Inc., 553 S.E.2d 389 (2001), and Crooke v. Property
Management Services, Inc., 110 S.E.2d 677 (1959), which all discuss the incorporation of the
contents of one document into another, rather than citing cases where the attestation of one
document can serve as the attestation of another document by incorporation. See Appellee’s Br.
at 19–20. Gordon also distinguishes another case cited by Wells Fargo, Cocke v. Bank of
Dawson, 180 S.E. 711 (1935), as concerning another unrelated issue. See Appellee’s Br. at
21–22.
16
Case: 11-14331 Date Filed: 08/24/2012 Page: 17 of 25
as the attestation for another.
Under Gordon’s view, an attestation of one document cannot be
incorporated by reference to serve as the attestation of another document.
Attestations involve only the document that the individual observes being
executed. To attest means “to bear witness,” or “to affirm to be true or genuine,”
or “to authenticate by signing as a witness.” Black’s Law Dictionary 124 (7th ed.
1999). To authenticate means “to prove the genuineness of (a thing).” Id. at 127
(7th ed. 1999). Thus, when O.C.G.A. § 44-14-33 prescribes the requirement that
the deed be “attested or acknowledged by one additional witness,” it is requiring
an individual to “bear witness” and to “prove the genuineness” of the execution of
the Security Deed. Gordon argues that just because an unofficial witness has
“b[orn] witness” and has “prove[n] the genuineness” of the execution of the Rider
does not necessarily mean that the same witness can swear as to the execution of
the Security Deed. Indeed, whether a witness can attest to the execution of the
Security Deed is entirely contingent on whether that individual actually witnessed
the deed’s execution. Attestations, therefore, cannot be incorporated by reference
in the same way as the contents of a document. Appellee’s Br. at 18.
Even if it is possible to incorporate an attestation by reference, Gordon also
highlights that the incorporation clauses in both the Security Deed and the Waiver
17
Case: 11-14331 Date Filed: 08/24/2012 Page: 18 of 25
of Borrower’s Rights Rider expressly incorporate the contents of the Rider into the
Security Deed, not the attestations. The language of the Security Deed refers only
to the “covenants” and the “terms” of any incorporated riders, while the Rider’s
incorporation language states that the “provisions” of the Rider are incorporated
into the Security Deed.16 Thus, even assuming incorporation of attestation is
possible, the plain language of the incorporation clauses at issue in this agreement
does not do so.
Moreover, Wells Fargo’s attempts to use the incorporation clause of
Paragraph 23 to claim that the Security Deed would “appear” as properly attested,
even if the clause would not result in the Security Deed actually being properly
attested, are wholly without merit. In essence, Gordon frames Wells Fargo’s
argument thusly: (1) the incorporation clause makes the Waiver of Borrower’s
Rights Rider “part and parcel” of the Security Deed under this court’s decision in
16
Paragraph 23 on Page 7 of the Security Deed provides
If one or more riders are executed by Borrower and recorded together with this
Security Instrument, the covenants of each such rider shall be incorporated into
and shall amend and supplement the covenants and agreements of this Security
Instrument as if the rider(s) were a part of this Security Instrument.
(Emphasis added.) Page 8 of the Security Deed reads: “BY SIGNING BELOW, Borrower
accepts and agrees to the terms contained in this Security Instrument and in any rider(s) executed
by Borrower and recorded with it.” (Emphasis added.) And Term 5 of the Rider states that
Grantors the expressly agree that “the provisions hereof are incorporated into and made a part of
the security deed.” (Emphasis added.)
18
Case: 11-14331 Date Filed: 08/24/2012 Page: 19 of 25
Terrace Mortgage, such that they constitute a single document; (2) the clerk would
be compelled to review the entire “document” for attestations, including the Rider;
(3) the clerk would find the necessary attestations on the Rider; (4) the “single
document” would appear on its face to be in recordable form; (5) the clerk would
only be able to detect a defect if he or she scrutinized whether the attestation
applied only to one part of the document (the Rider) and did not attest to other
parts (the Security Deed); and (6) the clerk cannot be required to employ a test that
moves beyond visual inspection and into legal interpretation and deconstruction.
Gordon explains why Wells Fargo’s argument is flawed. Working
backward, a clerk must look to the face of a document to see whether it appears to
comply and the clerk “cannot be required to employ a test that moves beyond
visual inspection and into legal interpretation and deconstruction.” That said, how
can a clerk know whether the Waiver of Borrower’s Rights Rider is “part and
parcel” of the Security Deed such that they form a single document unless the
clerk searches through the deed for the incorporation clause? Gordon, therefore,
argues that even under Wells Fargo’s theory of the case, it would be patently
absurd to require a clerk to search through a security deed to determine whether
there is an incorporation clause, discern the legal effect of said clause, and then
identify whether a particular rider is one of the incorporated documents. In short,
19
Case: 11-14331 Date Filed: 08/24/2012 Page: 20 of 25
Gordon agrees that because “the clerk cannot be called upon to dissect the
Security Deed, the analysis ends there.” Appellant’s Br. at 14. Gordon simply
disagrees with the conclusion Wells Fargo reaches from that premise, arguing
instead that the legal analysis required to determine whether a rider has been
incorporated supports Gordon’s own theory that the attestation of the Rider should
not be included in determining whether the Security Deed was properly attested
under O.C.G.A. § 44-14-33. Appellee’s Br. at 15–16.
3.
The Bankruptcy Court held that the proper attestation of the Rider and
incorporation of the contents of the Rider into the Security Deed did not have any
effect on the improper attestation of the Security Deed in terms of meeting the
requirements of O.C.G.A. § 44-14-33. As an initial matter, the Bankruptcy Court
rejected Wells Fargo’s attempts to characterize the Security Deed, Exhibit A, and
all of the riders as one document. The Bankruptcy Court also concluded that the
attestation of the Rider, while giving rise to a presumption that the witness
observed the Rider’s execution, could not give rise to a similar presumption
regarding the execution of the Security Deed. An unofficial witness’s signed
attestation signifies that the witness can speak to the validity of the execution of a
particular document. The attestation of the Rider, therefore, cannot serve as the
20
Case: 11-14331 Date Filed: 08/24/2012 Page: 21 of 25
attestation of another document (the Security Deed) merely because there is an
incorporation clause. Rather, the court concluded that the signature page (page 8
of the Security Deed) is the “only place” where the attestation of the Security Deed
could properly be recorded.17
The District Court affirmed.18 In agreeing with the Bankruptcy Court, the
District Court drew a distinction between the incorporation of the contents of one
document into another document, on the one hand, and the attempt by Wells Fargo
to incorporate the attestation of the former document to the latter, on the other. An
attestation, the court reasoned, amounted to a declaration that the witness observed
the execution of the document. As such, one cannot incorporate an attestation in
the same way one can incorporate the contents—terms, promises, covenants,
provisions, and the like. Because the proper attestation of the Rider did nothing to
change the fact that the Security Deed lacked the attestation of an unofficial
witness, no constructive notice was given under O.C.G.A. § 44-14-33, and the
17
It is unclear to us the intendment of the Bankruptcy Court’s declaration that the
signature page was the “only” page where the attestation could have been written. See supra note
14 (noting that Wells Fargo’s argument that Georgia law does not require a signature in any
particular location within a document warrants consideration).
18
As we noted supra note 6, the Supreme Court of Georgia issued its opinion in U.S.
Bank National Ass’n v. Gordon after the Bankruptcy Court ruled on these issues but before the
District Court issued its order. For the sake of completeness, we summarize the orders of both of
the courts below.
21
Case: 11-14331 Date Filed: 08/24/2012 Page: 22 of 25
Bankruptcy Court correctly resolved the dispute.
B.
In the alternative, Wells Fargo maintains that the properly attested Rider
creates sufficient inquiry notice under Georgia law. O.C.G.A. § 23-1-17 provides
Notice sufficient to excite attention and put a party on inquiry shall be
notice of everything to which it is afterwards found that such inquiry
might have led. Ignorance of a fact due to negligence shall be
equivalent to knowledge in fixing the rights of parties.
Georgia law “imputes knowledge of an earlier interest to a later purchaser of
an interest in land whenever there is any circumstance which would place a man of
ordinary prudence fully upon his guard.” Gordon v. Novastar Mort., Inc., (In re
Hedrick), 524 F.3d 1175, 1183 (11th Cir. 2008) (internal punctuation and citations
omitted).
1.
Wells Fargo argues that a subsequent bona fide purchaser would have been
put on inquiry notice by virtue of the “duly filed, recorded, and indexed” Waiver
of Borrower’s Rights Rider. Appellant’s Br. at 16–17. Specifically, Wells Fargo
asserts that the Rider identifies the borrowers and the lender, contains the same
date as the Security Deed, expressly refers to “this deed” and “the security deed,”
and states that “the provisions hereof are incorporated into and made a part of the
22
Case: 11-14331 Date Filed: 08/24/2012 Page: 23 of 25
security deed.” Id.
Gordon takes the opposite position. Appellee’s Br. at 23–25. He argues
that a man of ordinary prudence would not think that further investigation is
appropriate because there is nothing in the Waiver of Borrower’s Rights Rider
“sufficient to excite attention.” Id. The Rider, viewed alone, does not describe the
Property and does not appear in the Property’s chain of title; what’s more, any
general references to “this deed” and “the security deed” are too ambiguous to
create sufficient inquiry notice of the particular deed in this case. Id. Gordon
concludes that “[i]n short, the [Waiver of Borrower’s Rights Rider] cannot create a
duty to inquire into the existence of encumbrances on a property it does not
specifically identify.” Appellee’s Br. at 25.
2.
The Bankruptcy Court and District Court rejected Wells Fargo’s arguments.
Both courts held that the Rider does not indicate which particular security deed it
refers to and is incorporated into, does not identify the location of the deed, and
would not appear in the chain of title of the Property. In short, the recording of a
waiver of rights rider simply does not provide sufficient notice to a hypothetical
bona fide purchaser when the waiver would not be included in the Property’s
chain of title. See Va. Highland Civic Ass’n, Inc. v. Paces Props., Inc., 550 S.E.2d
23
 Case: 11-14331 Date Filed: 08/24/2012 Page: 24 of 25
128, 130 (Ga. App. 2001) (“[A] purchaser is not charged with constructive notice
of interests or encumbrances which have been recorded outside the chain of
title.”).
III.
Definitive resolution of this dispute by the Supreme Court of Georgia will
add clarity and stability to a critical area of the law. We hereby respectfully certify
the following questions for resolution:
1. WHETHER A SECURITY DEED THAT LACKS THE
SIGNATURE OF AN UNOFFICIAL WITNESS SHOULD BE
CONSIDERED “DULY FILED, RECORDED, AND INDEXED” AS
REQUIRED BY O.C.G.A § 44-14-33, SUCH THAT A
SUBSEQUENT HYPOTHETICAL BONA FIDE PURCHASER
WOULD HAVE CONSTRUCTIVE NOTICE WHEN THE DEED
INCORPORATES THE COVENANTS, TERMS, AND
PROVISIONS OF A RIDER THAT CONTAINS THE
ATTESTATIONS REQUIRED BY O.C.G.A § 44-14-33 AND SAID
RIDER IS FILED, RECORDED, AND INDEXED WITH THE
SECURITY DEED?
2. IF THE ANSWER TO QUESTION ONE (1) IS IN THE
NEGATIVE, WHETHER SUCH A SITUATION WOULD
NONETHELESS PUT A SUBSEQUENT HYPOTHETICAL BONA
FIDE PURCHASER ON INQUIRY NOTICE?
We do not intend the phrasing of these questions to limit the court in its
consideration of the problem posed by the case. As we have noted previously:
[T]he particular phrasing used in the certified question is not to
restrict the Supreme Court’s consideration of the problems involved
24
Case: 11-14331 Date Filed: 08/24/2012 Page: 25 of 25
and the issues as the Supreme Court perceives them to be in its
analysis of the record certified in this case. This latitude extends to
the Supreme Court’s restatement of the issue or issues and the manner
in which the answers are given, whether as a comprehensive whole or
in subordinate or even contingent parts.
Swire Pac. Holdings v. Zurich Ins. Co., 284 F.3d 1228, 1234 (11th Cir. 2002)
(alteration in original) (quoting Martinez v. Rodriquez, 394 F.2d 156, 159 n.6 (5th
Cir. 1968)).
In order to assist the court’s consideration of the case, the entire record,
along with the briefs of the parties, shall be transmitted to the court.
QUESTION CERTIFIED.
25