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Brattleboro Savings and Loan Association v. Hardie

Supreme Court of Vermont

March 21, 2014

Brattleboro Savings and Loan Association
Richard E. Hardie, et al

Page 1133

Editorial Note:

This Opinion is subject to motion for reargument or formal revision before publication. See V.R.A.P. 40

On appeal from Superior Court, Windsor Unit, Civil Division. Theresa S. DiMauro, J.

James B. Anderson of Ryan Smith & Carbine, Ltd., Rutland, for Plaintiff-Appellant.

Richard E. Hardie, Pro se, Avon, New Jersey, Defendant-Appellee.

Robert S. DiPalma of Paul Frank Collins P.C., Burlington, for Intervenor-Appellee.

Present: Reiber, C.J., Dooley, Skoglund and Burgess, JJ., and Bent, Supr. J., Specially Assigned Burgess, J., concurring. Bent, Supr., J., Specially Assigned, concurring


Page 1134

 Dooley, J.

[¶1] Plaintiff Brattleboro Savings and Loan Association appeals a superior court decision denying plaintiff's motions for summary judgment and granting intervenor/appellee Lisa Mangini's cross-motion for summary judgment, ruling that Mangini holds title to a Weathersfield, Vermont property, free and clear of a mortgage to plaintiff. The superior court ruled that the mortgage was inoperative because Mangini's husband, defendant Richard Hardie, mortgaged the property without the participation of Mangini in violation of 27 V.S.A. § 141(a). We reverse the grant of Mangini's motion for summary judgment and the denial of Brattleboro Saving's motions for summary judgment, and remand.

[¶2] The essential facts are undisputed. In 2002, defendant Richard Hardie borrowed $209,000 from Brattleboro Savings in order to purchase a vacation home and surrounding land in Weathersfield, Vermont. The loan was secured by a mortgage on the property and included a " second home rider" clause, asserting that the property was not a primary residence. Hardie was married to Mangini at the time, but was the sole owner of the property, and Mangini did not sign either the promissory note or the mortgage. Hardie refinanced the property in 2004 and 2005, both times without Mangini's participation. These mortgages each contained a second home rider clause.

[¶3] By 2007, Hardie and Mangini's marriage was deteriorating. In April 2007, Mangini left the couple's New Jersey home and moved into the Weathersfield property. In February 2008, Mangini filed for divorce in the Windsor Superior Court, Family Division.[1] In her divorce filing, Mangini claimed that the property had become her primary residence as of May 2007. Also in the divorce filing, Mangini requested " an award of the Weathersfield home and the adjoining land either without any encumbrances, or, in the alternative, that [Hardie] be responsible for paying off and releasing the mortgage[] to [Brattleboro Savings]." [2]

[¶4] In April 2008, while Mangini was occupying the property and the divorce was pending, Hardie refinanced the mortgage on the Weathersfield property. The 2008 refinancing was completed without Mangini's participation, and Hardie again claimed that the property was a second

Page 1135

home only. In January 2011, Brattleboro Savings commenced a foreclosure action on the property, naming only Hardie as a defendant.

[¶5] Despite not being named in the foreclosure case, Mangini filed an answer asserting an affirmative defense that she had established a homestead interest in the property prior to the 2008 mortgage, and that therefore the 2008 mortgage was " inoperative to convey" her homestead interest. Due to the unusual posture of this case, Brattleboro Savings filed two motions for summary judgment, one requesting a foreclosure judgment against Hardie and the second seeking judgment against Mangini on her homestead claim. The motion directed at Mangini specifically alleged that Mangini did not have a homestead interest because she possessed neither a legal nor an equitable interest in the property. Brattleboro Savings made two alternative arguments in the event that the court found a valid homestead exemption. First, Brattleboro Savings argued that the 2008 refinancing fell under the exception in 27 V.S.A. § 141(a) for purchase money mortgages and therefore did not require participation by " execution and acknowledgement" of Mangini to give the mortgage priority over her homestead exemption. Second, Brattleboro Savings argued that if Mangini were to have a homestead interest, it would be subject to all preexisting causes of action against the homestead as provided in 27 V.S.A. § 107, which states that homestead interests " shall be subject to attachment and levy of execution upon causes of action existing at the time of acquiring the homestead." Mangini filed a cross-motion for summary judgment, detailing for the first time her claim that she had acquired an equitable interest in the property by her divorce filing.

[¶6] The court denied Brattleboro Savings's motions for summary judgment and granted summary judgment in favor of Mangini, declaring the entire 2008 mortgage on the property unenforceable against Mangini. The court reasoned that Mangini acquired an equitable interest in the property when she filed for divorce, thus fulfilling the dual requirement for establishing a homestead interest -- occupancy and equitable title -- as set out in In re Soter, 26 B.R. 838 (Bankr. D. Vt. 1983).[3] The court held that Mangini was entitled to full immunity from the note and mortgage, not merely protection for the $125,000 value of the homestead exemption as provided in 27 V.S.A. § 101. Following the denial of Brattleboro Savings's motion to reconsider, the superior court granted permission to appeal its summary judgment decisions. Brattleboro Savings subsequently appealed.

[¶7] We review summary judgment decisions de novo. Doe v. Forrest, 2004 VT 37, ¶ 9, 176 Vt. 476, 853 A.2d 48. As provided in Vermont Rule of Civil Procedure 56(a), summary judgment will be granted only when " the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." V.R.C.P. 56(a). The nonmoving party, in this case Brattleboro Savings, is given " the benefit of all reasonable doubts and inferences." Forrest, 176 Vt. 476, 2004 VT 37, ...

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