Rogan v. American General Home Equity, Inc. (In re Brockman)

Summarized by Kevin Moore , St. John's University
14 years 9 months ago

Citation:

No. 10-8060 (6th B.A.P.)

Tag(s):

6th Circuit

Ruling:

The 6th Circuit Bankruptcy Appellate Panel AFFIRMED the Bankruptcy Court, which held that, under Kentucky law, a description of property to be mortgaged that is attached as an exhibit to a mortgage document and incorporated by reference prior to the signature on the document ("see Exhibit A") creates a valid mortgage. The Court noted that "[t]he practice of attaching property descriptions to mortgages and incorporating them by reference is common in Kentucky" and that any bona fide purchase of property would be on constructive notice.

Procedural context:

Appeal from summary judgment that the Eastern District of Kentucky Bankruptcy Court granted in favor of American General Home Equity, holding that it had a valid mortgage that could not be avoided under the Section 544 strong-arm powers of a Chapter 7 trustee.

Facts:

In 2006, a husband and wife sought to create a mortgage on their property in favor of American General Home Equity. The mortgage document contained the description of said property in an exhibit to the mortgage document. The parties to the mortgage sought to incorporate the description by reference ("See Exhibit A"), and Exhibit A was attached AFTER the signature page. In 2010, the wife (and her new spouse) filed Chapter 7. The Chapter 7 trustee sought to avoid the mortgage under Section 544, arguing that, while it was duly recorded, the mortgage contained an insufficient description of the property, by the mere fact of its placement and the legal jargon used to incorporate it by reference. As the 6th Circuit B.A.P. stated: "The Trustee's argument has no merit."

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