UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Adel A. Fadili

v. Civil No. 12-cv-68-JD Opinion No.

Deutsche Bank National Trust Company, as Trustee for Long Beach Mortgage Loan Trust, 2006-5

O R D E R

Adel A. Fadili brought a petition to quiet title to property

located in Alton, New Hampshire. The defendant, Deutsche Bank

National Trust Company, as Trustee for Long Beach Mortgage Loan

Trust, 2006-5, removed the case to this court. The case was

consolidated with two related cases, and the cases are being

considered, ad seriatim, pursuant to the court's order of May 16,

2012, (document no. 13). Fadili and Deutsche Bank have filed

cross motions for summary judgment.

Standard of Review

Cross motions for summary judgment proceed under the same

standard applicable to all motions for summary judgment, but the

motions are addressed separately. Sun Capital Partners III, LP

v. New England Teamsters & Trucking Indus. Pension Fund,

(1st Cir. 2013) .

Summary judgment is appropriate 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." Fed. R. Civ. P. 56(a). "A genuine issue is one that can be resolved in favor

of either party, and a material fact is one which has the

potential of affecting the outcome of the case." Jakobiec v.

Merrill Lynch Life Ins. Co.,

(1st Cir. 2013)

(internal guotation marks omitted). In deciding a motion for

summary judgment, the court draws all reasonable factual

inferences in favor of the nonmovant. Kenney v. Floyd,

(1st Cir. 2012) .

Background

This case and the two related cases arose from the sale of

property located in Alton, New Hampshire, among members of the

Fadili family. The property was subject to mortgages entered

into for each transaction. Although the parties intended by the

pertinent transactions to transfer and mortgage lakefront

property that included a house and other buildings, the deeds and

mortgage documents described a different and unimproved lot.

Adel Fadili acguired property in Alton that was comprised of

several lots. Two parcels are at issue here: a lot without

improvements ("Vacant Lot") and a lakefront lot with a house,

garage, and dock ("House Lot"). A right of way, which was first

known as Mount Major Road, or Mount Major Park Road, and which is

now known as Roger Road, goes through both the Vacant Lot and the

House Lot. The Vacant Lot had no street address, while the House

Lot was referred to as 132 Roger Road. The Vacant Lot was

2 subject to a mortgage and conditional assignment of rents and

leases from Adel and Denise Fadili to the Trustee of the Apogee

Trust, which is dated January 3, 1997.

In December of 2001, Adel Fadili entered a into purchase and

sale agreement to sell property "located at Mount Major Rd" to

his son, Amir Fadili. Amir obtained a loan to purchase the

property, and the mortgage described the Vacant Lot as the

mortgaged property. The warranty deed dated January 16, 2002,

from Adel to Amir included the same legal description of the

Vacant Lot but the description included the phrase "with the

buildings thereon." There were no buildings on the Vacant Lot.

Amir's mortgage on the property was assigned several times to

different entities.

On January 20, 2006, Amir entered into a purchase and sale

agreement with his sister. Alia Fadili, to sell the property that

he had purchased from Adel. Alia obtained a loan to finance her

purchase from Long Beach Mortgage Company. The mortgage

described the property that secured the loan as the Vacant Lot

but also stated that the property had the address of 132 Roger

Road, which was the address of the House Lot. The warranty deed

from Amir to Alia, dated April 27, 2006, recites the same

property description as used in the warranty deed from Adel to

Amir and does not include a street address. Stewart Title

Company was the closing agent for that transaction. Alla's

mortgage was eventually assigned to Deutsche Bank.

3 In the meantime, on August 4, 2000, the Town of Alton

recorded a tax lien for unpaid real estate taxes on the Vacant

Lot. When the taxes were not paid, the Alton Tax Collector

conveyed the Vacant Lot to the Town of Alton by tax collector's

deed on October 1, 2002. On July 18, 2005, the Trustee of the

Apogee Trust, holder of Adel's mortgage on the Vacant Lot,

forwarded payment to the town, and the Vacant Lot was deeded back

to Adel, by guitclaim deed, on August 3, 2005.

Adel filed for Chapter 7 bankruptcy in early 2005. His

bankruptcy estate included the House Lot. The bankruptcy trustee

filed a notice of intent to sell the House Lot at public auction

in July of 2008. Adel and Washington Mutual, as servicer of the

Alia's mortgage, objected to the sale, arguing that Adel had

intended to convey the House Lot to Amir, which Amir then

conveyed to Alia, for which Alia obtained a mortgage. Washington

Mutual argued that the mortgage was intended to secure a loan

based on the value of the House Lot, not the Vacant Lot. The

objections were unavailing, and the House Lot was sold as part of

the bankruptcy proceeding.

Because Alia stopped making mortgage payments in August of

2008, Deutsche Bank notified Alia that it would foreclose on the

mortgaged property. When the issue about what property was

subject to the mortgage arose, Deutsche Bank brought suit against

Alia, Stewart Title Company, and Stewart Title Guaranty Company,

09-CV-385- JD, and Alia brought counterclaims against Deutsche

4 Bank. Adel brought a quiet title action against Deutsche Bank,

12-cv-68. Deutsche Bank brought a separate suit against Stewart

Title Guaranty Company seeking a declaratory judgment to require

Stewart Title Guaranty Company to provide a defense and

indemnification in Adel's suit, 12-cv-106. The three cases were

consolidated and then have proceeded, as previously noted,

beginning with 12-cv-106, which has been resolved by settlement.

The court will address 09-cv-385-JD after this case, Adel's suit,

has been resolved.

Discussion

In his amended complaint, Adel brings three claims aimed at

establishing his ownership of the Vacant Lot, free and clear of

Deutsche Bank's mortgage: Count I - Petition to Quiet Title;

Count II - Declaratory Judgment; and Count III - Petition to

Invalidate Mortgage and Nullify Effect of Recording Mortgage.

Deutsche Bank contends that it holds a mortgage on the Vacant

Lot, based on the loan to Alia for purchasing the property from

Amir, which is recorded. Deutsche Bank contends that estoppel by

deed precludes Adel's claims and that the mortgage on the Vacant

Lot is valid and enforceable.

I. Adel Fadili's Motion for Summary Judgment

In support of his motion for summary judgment, Adel contends

that he owns the Vacant Lot in fee simple pursuant to the Tax

5 Collector's deed to him in August of 2005. Adel does not

distinguish between his claims to guiet title. Count I, and for

declaratory judgment. Count II, for purposes of summary judgment.

In addressing Count III, Adel argues that the mortgage is invalid

because Deutsche Bank's mortgage depends on Alia's interest in

the property and Alia was not a bona fide purchaser for value

from Amir, leaving Adel as the owner of the Vacant Lot. Adel

further argues that Deutsche Bank has no right to foreclose

because Deutsche Bank cannot prove that he owes the underlying

debt on the loan.

A. Title to the Vacant Lot - Counts I and II

The burden is onthe party asserting title to prove good

title against all others whose rights might be affected by the

ruling. Porter v. Coco,

(2006). Therefore,

Adel bears the burden of showing that he has good title to the

Vacant Lot. "To be entitled to summary judgment, the party with

the burden of proof must provide evidence sufficient for the

court to hold that no reasonable trier of fact could find other

than in its favor." Am. Steel Fabricators, Inc. v. Local Union

N o . 7,

(1st Cir. 2008) .

Adel contends that he holds the title to the Vacant Lot

pursuant to the guitclaim deed from the town to him in August of

2005. Deutsche Bank contends that Adel is estopped from denying

that he sold the Vacant Lot to Amir in January of 2002, based on

6 Adel's warranty deed to Amir. Adel argues that estoppel by deed

does not apply in the circumstances of this case. He also

contends that Deutsche Bank cannot claim an interest in the

Vacant Lot because Alia was not a bona fide purchaser for value.

1. Estoppel by Deed

New Hampshire has long recognized the doctrine of estoppel

by deed through which a party who executes a deed is estopped

from denying the facts and covenants in the deed. See Pedersen

v. Brook,

(2004); Kellison v. Mclsaac,

(1989); White v. Ford,

(1984); 700 Lake A v e . Realty Co. v. Dolleman,

, 623-

25 (1981); Greenwood v. Wilton R.R., 3 Fost. 261,

at

*4 (N.H. 1851). Estoppel by deed prevents a grantor from denying

that he had lawful title to the property and that he conveyed the

property to his grantee. Hilco Prop. Servs., Inc. v. United

States,

(D.N.H. 1996). Further, between the

grantor and grantee, "the covenants of a warranty deed . . . are

not released or gualified by the public record that gives

incontrovertible notice of the falsity and conseguent utility [of

the covenants], . . . ." Fletcher v. Chamberlin,

,

, at *36 (N.H. 1881). By statute, a warranty deed

has "the force and effect of a deed in fee simple" with covenants

that the "grantor was lawfully seized in fee simple of the

granted premises, that the said premises were free from all

7 incumbrances [sic], except as stated, that the grantor had good

right to sell and convey the same to the grantee, . . ., and that

the grantor will . . . warrant and defend the same to the grantee

. . . RSA 477:27.

Adel signed the warranty deed conveying the Vacant Lot to

Amir in January of 2002. At that time, the parties believed that

the transaction involved the House Lot. Adel acknowledges,

however, as he must, that the deed describes the Vacant Lot, not

the House Lot.1

Deutsche Bank contends that Adel is now precluded under the

doctrine of estoppel by deed from claiming that he did not convey

complete title to the Vacant Lot to Amir. In support, Deutsche

Bank relies on White v. Ford,

(1984) .

In White, the executor of an estate sought to guiet title to

property against the interests of the deceased's nephew. Ford,

when the deceased had conveyed the property by guitclaim deed to

Ford while it was held by the town under a tax collector's deed

and was subject to a mortgage held by a third party.

.

Evidence surrounding the conveyance suggested that Ford had

loaned his uncle money to pay back taxes and loaned him other

money over a period of years.

After the transaction with

1Although Adel cites White v. Ford,

(1984), to show that the parties' intentions "at the time of the conveyance are determinative," he does not argue that the deed should be reformed by parol evidence to convey the House Lot rather than the Vacant Lot. Ford, the deceased had purchased the property back from the town

and lived on the property until his death.

The court concluded that the deceased's after-acquired title

to the property obtained from the town passed to Ford under the

doctrine of estoppel by deed based on the covenants in the

quitclaim deed.

. The court also concluded, however,

that the quitclaim deed from the deceased to Ford was intended as

security for the money Ford lent to his uncle.

.

Therefore, to quiet title to the property in the estate, the

court ruled that the executor would have to do equity by

satisfyinq any claims made by Ford aqainst the estate. I_d. at

456.

Deutsche Bank asserts that Adel misrepresented the warranty

covenants in the deed because the Vacant Lot was not free of

encumbrances when he siqned the deed that purported to convey

qreater title than he held.2 At that time, the Vacant Lot was

subject to a tax lien by the town and a mortqaqe of $110,000 to

Apoqee Trust alonq with a conditional assiqnment of rents and

leases. Therefore, Adel siqned a deed that purported to convey

qreater title than he held. However, after Adel siqned the

warranty deed to Amir, he redeemed the Vacant Lot by payinq the

taxes and receivinq the quitclaim deed from the town.

2The court notes that there is no record evidence of any intentional misrepresentation. Instead, all of the parties to each transaction were mistaken as to which property was beinq conveyed, leadinq to the confusion about what encumbrances existed. Adel argues that estoppel by deed does not apply here

because he did have title to the Vacant Lot when he conveyed it

to Amir and he is not attempting to deny his covenant of title

that existed in January of 2002. Whether estoppel by deed might

apply when a grantor asserts title to a property that he has

conveyed by deed to another, without the problem of incomplete

title at the time of the conveyance, need not be decided here.

As Deutsche Bank has demonstrated, Adel did not disclose the tax

lien or the mortgage on the Vacant Lot when it was conveyed to

Amir, and therefore, at the time of the conveyance Adel did not

hold title to the Vacant Lot free and clear of all encumbrances.

Adel contends that despite the valid conveyance of the

Vacant Lot to Amir in January of 2002, he regained title to the

property in August of 2005 when the town issued a guitclaim deed

of the property to him after the back taxes were paid. Adel does

not explain, however, how the town's guitclaim deed could convey

title to the Vacant Lot to Adel in light of Adel's prior warranty

deed of the Vacant Lot to Amir.3 See MacNeill v. Brownell,

(1990) .

Adel also contends that, pursuant to RSA 80:89, the town

intended, by issuing the guitclaim deed to him, to reinstate

title to the Vacant Lot in Adel and to reinstate Apogee Trust's

mortgage and conditional assignment of rents and leases. Adel's

3Adel's reference to White as support for a theory that the town's intent to convey the Vacant Lot to him by guitclaim deed provided him with good title is not persuasive.

10 reasoning on the application of RSA 80:89 in this situation is

opaque at best. RSA 80:89 establishes the requirements for

notice and opportunity for repurchase to a former owner of

property acquired by a town through a tax deed. Those

requirements, apparently, were met in this case, and the property

was redeemed. Because Adel had sold the Vacant Lot to Amir years

before he received the quitclaim deed from the town, however, RSA

80:89 has no apparent effect on the title to the Vacant Lot.

2. Bona Fide Purchaser

Adel also contends that Deutsche Bank cannot claim an

interest in the Vacant Lot because Deutsche Bank's interest is

dependent on Alla's title to the property. Adel argues that Alia

cannot claim valid title because she was not a bona fide

purchaser who could defeat Adel's interest conveyed by the town's

quitclaim deed. Adel argues that because the town's tax lien and

quitclaim deed to him were recorded. Alia and Deutsche Bank

should have discovered them and were on notice of his competing

interest in the Vacant Lot.

When competing interests in real estate exist, any

unrecorded interests will be extinguished by a bona fide

purchaser for value. RSA 477:3-a; Hawthorne Trust v. Maine Sav.

Bank,

(1992). "A bona fide purchaser for value

is one who acquires title to property for value, in good faith,

and without notice of competing claims or interests in the

11 property." Thomas v. Finger,

(1999) (internal

quotation marks omitted).

The primary and fatal problem with applying the bona fide

purchaser theory here is that Adel has not shown that he held a

competing interest in the Vacant Lot when Alia bought the

property from Amir. Even if Adel held an interest in the Vacant

Lot through the town's quitclaim deed, he was not a bona fide

purchaser because he was on notice that he had previously

conveyed the property to Amir. In addition, to the extent Adel's

theory challenges the rights of Amir and Alia to the property,

that cannot be resolved here when neither Amir nor Alia is a

party in this case.

Therefore, Adel has not shown, for purposes of his motion

for summary judgment, that he owns the Vacant Lot and that he is

entitled to summary judgment on his quiet title claim. Count I,

and declaratory judgment claim. Counts II.

B. Mortgage

In Count III, Adel seeks to invalidate Deutsche Bank's

mortgage on the Vacant Lot. Adel alleged in the amended

complaint that the mortgage was invalid because Alia did not

intend to grant a mortgage on the Vacant Lot and Deutsche Bank

did not intend to receive a mortgage on that property. He also

alleged that Alia could not grant a mortgage because she did not

hold title to the Vacant Lot.

12 For purposes of summary judgment, however, Adel makes a

different argument. He now contends that because a mortgage

serves as security for a loan, Deutsche Bank cannot foreclose on

the mortgaged property when he does not owe the debt for the

loan. Deutsche Bank asserts that Adel's mortgage theory is a non

seguitur because the undisputed facts, admitted by Adel,

establish that the loan to Alia to buy the Vacant Lot was secured

by the mortgage on the Vacant Lot.

Adel's mortgage and debt theory again depend on proof that

he holds title to the Vacant Lot. He has not shown that to be

the case. In the absence of an interest in the mortgaged

property, Adel does not appear to have standing to contest the

mortgage that was granted on Alla's loan.

II. Deutsche Bank's Motion for Summary Judgment

Deutsche Bank seeks summary judgment in its favor on Adel's

claims.4 As the party moving for summary judgment, Deutsche Bank

must show that based on the undisputed material facts, it is

entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a).

As the party with the burden of proof, Adel "must present

4In its memorandum in support of its motion for summary judgment, Deutsche Bank asks for "summary judgment guieting title to the vacant lot in Alia Fadili. Subject to the Note and Mortgage." Mem. doc. no. 17 at 6. Deutsche Bank did not bring a counterclaim seeking to guiet title in Alia Fadili. Therefore, to the extent Deutsche Bank seeks a guiet title judgment on a claim that has not been raised, that relief is not available here.

13 definite, competent evidence sufficient to establish the elements

of [his] claim in order to survive a motion for summary

judgment." Pina v. Children's Place,

(1st Cir.

2014) (internal quotation marks omitted).

A. Quiet Title and Declaratory Judgment - Counts I and II

In support of summary judgment, Deutsche Bank asserts that

Adel cannot deny that he conveyed valid title to the Vacant Lot

to Amir through the warranty deed in January of 2002.5 As in its

opposition to Adel's motion for summary judgment, Deutsche Bank

relies on the doctrine of estoppel by deed, as applied in White

v. Ford,

(1984).Adel contends that the mutual

mistake between Adel and Amir as to what property was conveyed

makes that transaction voidable as between Adel and Amir and that

estoppel by deed does not apply.

1. Effect of Mistake as to Identity of Property Conveyed

Deutsche Bank contends that under Bell v. Morse,

,

, (1833), a grantor of land cannot change the

terms of a deed by asserting that the description of the property

5Although Deutsche Bank states in the introduction to its memorandum that Adel is seeking to invalidate a mortgage "on a vacant parcel of land he owns on Lake Winnipesauke in Alton, New Hampshire," that statement appears to be a typographical error as Deutsche Bank strongly challenges Adel's claim that he owns the Vacant Lot.

14 in the deed was a mistake. In response, Adel argues that the

transaction is voidable as a mutual mistake.

" 'Where a mistake of both parties at the time a contract was

made as to a basic assumption on which the contract was made has

a material effect on the agreed exchange of performances, the

contract is voidable by the adversely affected party.'" Gray v.

First NH Banks,

(1994) (guoting Restatement

(Second) of Contracts § 152(1) (1979)). Further, "[a] party

seeking to avoid an agreement on the basis of mutual mistake must

ordinarily avoid the entire contract, including any part that has

already been performed." Derouin v. Granite St. Realty, Inc.,

(1983).

To the extent the mutual mistake theory would apply to the

transaction between Amir and Adel, Amir would appear to be the

adversely affected party because he intended to buy and paid for

the House Lot but received property of lesser value, the Vacant

Lot. It is undisputed that Amir did not avoid the conveyance of

the Vacant Lot, and Amir is not a party to this suit. Even if

Adel were able to avoid the deed to Amir under the doctrine of

mutual mistake, he has not given up the consideration Amir paid

in the transaction. Therefore, Adel's argument based on mutual

mistake is inapposite to the circumstances of this case.

15 2. Estoppel by Deed

As is discussed above in the context of Adel's motion for

summary judgment, a grantor is estopped from denying the warranty

covenants he gave to the grantee by signing a deed. Adel does

not dispute that he signed the warranty deed to Amir, conveying

the Vacant Lot. Adel argues, however, that despite the deed to

Amir, the town's guitclaim deed to Adel "had the effect of

vesting [Adel] with fee simple ownership interest in the

property," and that estoppel by deed does not apply in this case.

Mem., doc. no. 37 at 4.

Contrary to Adel's arguments, estoppel by deed does apply in

the circumstances of this case as is explained above in Part I .

Therefore, based on the facts and covenants in the warranty deed

to Amir, Adel is estopped from denying that he conveyed good

title to the Vacant Lot. Further, Adel provides no persuasive

argument to show that the town's guitclaim deed invalidated the

warranty deed to Amir. Therefore, Adel cannot show that he holds

title to the Vacant Lot free and clear of Deutsche Bank's

mortgage.

B. Mortgage

Deutsche Bank asserts that its mortgage on the Vacant Lot is

enforceable. Adel argues, without citation to authority, that

Deutsche Bank cannot profit from Stewart Title Company's

negligence in conducting the title search in 2006 and that

16 Deutsche Bank's recourse is against Stewart Title. Because Adel

cannot show that he holds the title to the Vacant Lot, he has not

persuasively contested Deutsche Bank's mortgage on that property.

Therefore, Adel cannot succeed on his claim in Count III to

invalidate Deutsche Bank's mortgage.

Conclusion

For the foregoing reasons, the plaintiff's motion for

summary judgment (document no. 23) is denied. The defendant's

motion for summary judgment (document no. 17) is granted. The

plaintiff's claims in Counts I, II, and III are dismissed by

summary judgment.

The clerk of court shall enter judgment accordingly and

close the case.

SO ORDERED.

Sl^eph1 A. DiClericd, Jr. V United States District Judge. SjpJeph1 A. DiCrericb, Jr. V United States District Judge

March 6, 2014

cc: Philip A. Brouillard, Esq. Peter G. Callaghan, Esq. Robert E. Murphy Jr., Esq.

17