Resolution Trust Corporation as Receiver for Security Homestead Federal Savings and Loan Association v. John J. Eitmann, Jr.

PER CURIAM:

Defendant John J. Eitmann, Jr. appeals an adverse summary judgment in Security Homestead Association’s suit to assess a deficiency judgment against him and to enforce that judgment against property which Eit-mann owns. Concluding that the trial court erred in entering summary judgment and that a third party needs to be brought in to adequately determine the rights of all parties in this proceeding, we vacate the summary judgment and remand for further proceedings consistent with this opinion.

In June 1984 Eitmann and his sister obtained a loan from Security Homestead, secured by property the Eitmanns owned at 1408 Beron Dr., in the Parish of Jefferson, Louisiana. Security Homestead required that Eitmann pay the premiums on a policy of private mortgage insurance issued by United Guaranty Residential Insurance Company to Security Homestead. Although Eit-mann paid the premiums on the insurance policy, the insurance agreement was solely between United Guaranty and Security Homestead. The only documents evidencing the agreement between Eitmann and Security Homestead regarding payment of these premiums were the notations inserted on the closing statement prepared by the title company when Eitmann originally acquired the property with money borrowed from Security Homestead. In 1988 Eitmann defaulted on the loan payments and Security Homestead instituted foreclosure proceedings in Louisiana State Court. At the time of commencement of these foreclosure proceedings, in March 1988, Eitmann was living at 1609 Airline Park Blvd., Metairie, Louisiana, and not at the address of the Beron Drive property. Security Homestead purchased the Beron Drive property at judicial auction in August 1988, and in January 1989, Security Homestead obtained a deficiency judgment against Eitmann for the balance owed after crediting the value of the Beron Drive property.

On February 9, 1989, United Guaranty paid $12,149.34 to Security Homestead pursuant to a claim made by Security Homestead on the private mortgage insurance policy. Shortly thereafter Security Homestead requested the Louisiana Clerk of Court to issue a writ of fieri facias to seize and sell the property owned by Eitmann on Airline Park Blvd. where he was then residing. The day before the judicial sale of Eitmann’s Airline Park property was to take place, Eitmann filed a motion to enjoin the sale and a petition to annul the deficiency judgment. Eitmann alleged that the deficiency judgment failed to reflect that he was entitled to a credit for $12,149.34 paid to Security by Homestead by United Guaranty. The state court issued a temporary restraining order, enjoining the sale of the Airline Park Blvd. property.

In December 1989, the Resolution Trust Corp. (“RTC”) was substituted for Security Homestead as plaintiff in the state court action and removed the state case to federal court. In May 1990 the RTC filed a motion for summary judgment on the grounds that, under the policy issued by United Guaranty, Eitmann had no right to obtain a credit, for amounts paid to Security Homestead by United Guaranty. Because the policy was not before the district court, that motion was denied. The RTC filed a second summary judgment motion when the original of the policy between United Guaranty and Security Homestead was submitted to the court pursuant to an affidavit by the vice president of Security Homestead Federal Savings Assn., who was the successor to the assets of Security Homestead. Pursuant to a pretrial order entered into by the parties and the court on November 23,1990, some 40 uncontested material facts were identified and agreed upon but there were also seven contested material facts identified, and 13 contested issues of law. The pretrial order also set December 3, 1990, at 10:00 a.m. as the trial date for the matter before the district judge without a jury. One of the contested material facts was whether United Guaranty “is attempting to directly collect its payment from Eitmann.”

OPINION

This dispute revolves around the question of whether or not United Guaranty has' a right of subrogation against Eitmann for the sums it paid to Security Homestead on the private mortgage insurance contract. In the letter of February 9, 1989, by which United Guaranty sent its check to Security Homestead, United Guaranty advised Security Homestead that it intended to contact the borrower (Eitmann) in an effort to recover its loss and concluded that letter to Security Homestead with the following words:

Your involvement will not be necessary unless the matter reaches the point of . litigation, at which time we will contact your office to discuss assignment of subro-gation rights. If this does not meet with your approval, please let us know within 15 days of the date of this letter.

Then on April 7, 1989, United Guaranty sent a letter to Eitmann at his address on Airline Park Blvd. advising him as follows:

Under State Law and the particular facts of this case the lender has a legal right to recover its loss from you up to $12,149.34 plus interest from the date of the foreclosure sale and that right now rests with us as a result of our claim, payment to the lender. (Emphasis added.)

This letter went on to request Eitmann to contact United Guaranty and discuss a repayment arrangement. The subrogation rights of United Guaranty are defined in paragraph 19 of the private mortgage insurance agreement, which provides as follows:

19. Limited Subrogation Rights: The Company [United Guaranty] shall be sub-rogated to all of the rights of the insured [Security Homestead] against the Borrower [Eitmann] and/or all other parties liable for the payment of the Loan arising out of or connected with the loan to the extent of the payment of benefits by the company under the Policy (I) In all cases where the Real Estate [the Beron Drive property] does not consist of a single family dwelling occupied by the borrower, and (II) when the Insured agrees that the company shall have subrogation rights. Except as herein provided, the company shall have no subro-gation rights against the Borrower.

Relying on various affidavits furnished by Security Homestead personnel that “neither Security Homestead nor its successors have ever agreed that United Guaranty would have subrogation rights in connection with the Eitmann loan,” the trial court concluded, that “since United Guaranty has no right to recover from Eitmann the amount it. paid to Security Homestead, defendant is not in any danger of paying twice.” We disagree with this conclusion of the trial court for two reasons:

A. First, there is nothing in the summary judgment record which determines whether the Beron Drive property was or was not a “single family dwelling occupied by the borrower” within the meaning of subelause (I) of paragraph 19. The record infers that at the time of the commencement of the foreclosure proceeding and thereafter, Eitmann was residing in the Airline Park Blvd. property and this could well afford United Guaranty a basis for claiming a right of subrogation; and

B. Second, the letters described above from United Guaranty to Security Homestead and to Eitmann both strongly infer that United Guaranty thought it had the right to assert a subrogation claim against Eitmann.

Paragraph 19 of the private mortgage insurance agreement is certainly not a paragon of clarity; and we think a genuine issue of material fact exists as to the intentions of the parties regarding subrogation rights of United Guaranty against Eitmann under the facts of this case.

More fundamentally, absent the joinder of United Guaranty in this proceeding, we do not see how any conclusions which might be made in this proceeding would be binding upon United Guaranty; and in order to avoid ttle possibility that- Eitmann might be required to pay the full deficiency balance being asserted .by the RTC and also the $12,-149.34 subrogation claim being asserted by United Guaranty, we think justice will be better served by vacating the summary judgment herein, and remanding this case to the district court with instructions that the district court afford Eitmann an opportunity to file a third party claim against United Guaranty to .determine its subrogation rights against him.

Judgment of the trial court is VACATED and’ case REMANDED to the trial for further proceedings consistent herewith.