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Federal National Mortgage Association v. Pace

Court of Appeals of Missouri, Eastern District, Fourth Division

May 16, 2017

FEDERAL NATIONAL MORTGAGE ASSOCIATION, Respondent,
v.
HARVEY L. PACE and CHRISTINE PACE, Appellants.

         Appeal from the Circuit Court of St. Louis County 11SL-CC04507-01 Honorable Patrick J. Clifford

          Gary M. Gaertner, Jr, Judge

         Introduction

         This case is here for the second time on appeal. In the first appeal, this Court reversed a prior summary judgment in favor of Respondent Federal National Mortgage Association (Fannie Mae), which had quieted title to certain property in Fannie Mae's name. Fed. Nat'l Mortgage Assoc, v. Pace, 415 S.W.3d 697 (Mo. App. E.D. 2013) (Pace I). This Court concluded that the deed of trust at issue failed to convey the property and remanded to the trial court. Id. Upon remand, the trial court reformed the deed of trust and granted summary judgment in favor of Fannie Mae, again quieting title to the property at issue in Fannie Mae's name. The trial court also entered judgment against Appellants Harvey Pace[1] (Husband) and Christine Pace (Wife) (collectively, the Paces) on Appellants' counterclaims. The Paces now appeal, arguing that reformation of the deed of trust was improper and genuine issues of material fact precluded summary judgment. Bound by Missouri Supreme Court precedent, we must reverse.

         Background

         On June 28, 2002, the Paces attended a closing for the purchase of property located in Olivette, Missouri (the Property). Prior to closing, on June 20, 2002, the Property's seller, who lived out of state, executed a special warranty deed conveying the Property to "Harvey L. Pace and Christine Pace, husband and wife, " and mailed the deed to Missouri for the closing. Husband executed a promissory note for $197, 000 to purchase the property, secured by a deed of trust to First Horizon Home Loan Corporation (First Horizon). The promissory note identified only Husband as borrower, and Wife did not sign the promissory note or deed of trust.

         At the closing on June 28, 2002, Wife signed a document entitled "Assent to Execution of Deed, " which stated that Wife "expressly assent[ed] to the conveyance of real estate by [Husband], and . . . any such conveyances are not to be deemed to be in fraud of [Wife's] marital rights." The deed of trust incorporates the marital assent by reference. After the closing, the special warranty deed, deed of trust, and marital assent were contemporaneously recorded on July 10, 2002.

         Fannie Mae purchased the Property at a foreclosure sale on September 2, 2010. Fannie Mae then filed an action to quiet title to the Property in favor of Fannie Mae, which was the underlying action in Pace I. The trial court had found that the deed of trust constituted a valid first-priority lien on the Property and quieted title in favor of Fannie Mae. This Court reversed, finding that the deed of trust, executed only by Husband, did not validly encumber the Property because the special warranty deed conveyed the Property to both Husband and Wife. Pace I, 415 S.W.3d at 703-04. This Court noted that while Fannie Mae had alleged a mutual mistake in preparation of the closing documents, Fannie Mae had not sought to reform the deed of trust based on mutual mistake. Id. at 705.

         Upon remand, Fannie Mae amended its petition to include a count requesting reformation of the deed of trust. The trial court found that the Paces intended that Husband would be the sole owner of the Property, but at the time of the closing they were not aware that the special warranty deed conveyed the Property to both Husband and Wife. The trial court found that the Paces intended that the deed of trust would encumber the Property, and that due to a mutual mistake that the special warranty deed conveyed the Property solely to Husband, First Horizon erroneously drafted the deed of trust in Husband's name only. The trial court granted summary judgment in favor of Fannie Mae, reforming the deed of trust to include Wife's name, and quieting title to the Property in Fannie Mae's name. Additionally, the Paces had filed several counterclaims, including quiet title, breach of warranty, ejectment, wrongful foreclosure, and conversion. The trial court entered judgment against the Paces on each of their counterclaims. This appeal follows.

         Standard of Review

         Our review of summary judgment is essentially de novo. ITT Commercial Fin. Corp. v. Mid-Am. Supply Corp.. 854 S.W.2d 371, 376 (Mo. banc 1993). We review the record in the light most favorable to the party against whom summary judgment was entered, according the non-movant the benefit of all reasonable inferences from the record. Id. A movant must show that there is no genuine dispute as to any material fact, and that he or she is entitled to judgment as a matter of law. Rule 74.04(c); ITT Commercial Fin. Co.. 854 S.W.2d at 380. A genuine dispute "exists where the record contains competent materials that evidence two plausible, but contradictory, accounts of the essential facts." Id. at 382.

         Discussion

         The Paces raise four points on appeal. First, they argue that the trial court erred in quieting title in Fannie Mae's name because Fannie Mae's petition failed to adequately plead its count to quiet title. In Point II, the Paces argue that the trial court erred in reforming the deed of trust as a matter of law because Fannie Mae failed to establish the elements required for reformation. In Point III, the Paces argue that genuine issues of material fact regarding the intent of the parties at closing precluded summary judgment. In their final point, the Paces argue that the trial court erred in entering judgment against them on their counterclaims because they were not rendered moot by the summary judgment in favor of Fannie Mae. Point II is dispositive.

         Poin ...


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