South Bay Properties, LLC v. Bayside Property, Inc. et al

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
RALEIGH DIVISION
IN RE: 	CASE NO.
SOUTH BAY PROPERTIES, LLC 	10-04922-8-SWH
DEBTOR
SOUTH BAY PROPERTIES, LLC 	Adversary Proceeding No.
PLAINTIFF, 	10-00236-8-SWH
v.
BAYSIDE PROPERTY, INC.,
BONNIE N. CHARLTON, and
RONALD L. CHARLTON,
DEFENDANTS.
ORDER DENYING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT,
GRANTING SUMMARY JUDGMENT FOR DEFENDANTS AND
ALLOWING DEFENDANTS’ MOTION TO DISMISS ADVERSARY PROCEEDING
Two motions are before the court: the motion for summary judgment filed by the
debtor/plaintiff, South Bay Properties, LLC (“South Bay”), and the motion to dismiss filed by the
defendants, Bayside Property, Inc., Ronald and Bonnie Charlton (collectively, “Bayside”). South
Bay contends that a mortgage executed and delivered by South Bay to the defendants is invalid, a
SO ORDERED.
SIGNED this 15 day of June, 2011.
________________________________________
Stephani W. Humrickhouse
United States Bankruptcy Judge
____________________________________________________________
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nullity, and unenforceable due to a discrepancy in the dates of the mortgage and the promissory note
it purportedly secures. Bayside filed a motion to dismiss the complaint and a response in opposition
to South Bay’s motion for summary judgment, arguing that applicable South Carolina state law
would not require that the mortgage be deemed invalid, and that South Bay should not be allowed
to escape the mortgage due to a simple drafting error by South Bay’s own attorney. A hearing was
held in Raleigh, North Carolina, on April 6, 2011. For the reasons that follow, the court will deny
South Bay’s motion for summary judgment, enter summary judgment in favor of Bayside, and allow
Bayside’s motion to dismiss.
STATEMENT OF CASE
South Bay filed a voluntary petition under chapter 11 on June 18, 2010, and filed a complaint
against Bayside on September 16, 2010. Bayside moved to dismiss the adversary proceeding on
November 17, 2010. South Bay moved for summary judgment on December 30, 2010. The court
consolidated the two motions for hearing, and the issues have been thoroughly briefed by both
parties.
BACKGROUND
The pertinent facts are not in dispute, and the following recitation is taken directly from the
admitted allegations in the complaint. South Bay is a North Carolina limited liability company with
its principal place of business in Wake County, North Carolina. Defendant Bayside Property, Inc.
is a South Carolina corporation, and Ronald Charlton is its registered agent. Defendants Ronald L.
and Bonnie N. Charlton are individuals who reside in Charleston, South Carolina, and are the
owners and/or officers of defendant Bayside Property, Inc. Complaint ¶¶ 4-6.
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In early 2007, South Bay obtained a loan commitment from Sun Trust Bank to fund
acquisition and development of the infrastructure of a community to be located in Georgetown,
South Carolina, and known as Harbor Club on Winyah Bay, with an anticipated closing date in
August or September 2007. Complaint ¶ 7. In July 2007, South Bay obtained a performance bond
for infrastructure construction in the amount of $7,900,000 in order to record a subdivision plat and
to enable it to sell lots upon acquisition. Complaint ¶ 8. Less than three weeks prior to closing,
SunTrust rescinded its loan commitment, and the defendants agreed to provide seller financing.
Complaint ¶¶ 10-11. On or about August 22, 2007, Bayside conveyed to South Bay, by general
warranty deed, title to certain real property located in Georgetown and described in Exhibit A of the
Complaint. See Complaint ¶ 13. The purchase price recited in the deed is $20,850,000. Ex. A p. 1.
On September 11, 2007, South Bay executed and delivered a mortgage in favor of Bayside,
pursuant to which South Bay acknowledged its indebtedness to Bayside in the amount of
$14,580,662.92. On September 12, 2007, South Bay executed and delivered a promissory note in
favor of Bayside with an original principal balance of $14,580,662.92. Complaint ¶¶ 14, 17. Both
Bonnie and Ronald Charlton state in their respective affidavits that due to the fact that South Bay
is located in North Carolina and Bayside in South Carolina, the parties’ financial transactions were
conducted wholly or partially via facsimile and/or U.S. Mail. 	The closing took place in South
Carolina and South Bay’s execution of the documents took place in North Carolina so “the parties
were unable to get both documents fully executed on the same day.” Bonnie Charlton Aff. ¶ 9;
Ronald Charlton Aff. ¶ 9. Both Bonnie and Ronald Charlton attest that it was their intent, and the
intent of all parties at the time South Bay drafted the document granting the mortgage to Bayside,
that the mortgage would secure South Bay’s payment obligation to Bayside under the promissory
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note. 	Bonnie Charlton Aff. ¶ 10; Ronald Charlton Aff. ¶ 10. Other than to opine that intent is
irrelevant for reasons to be discussed later in this order, South Bay does not assert any facts contrary
to those set forth in the Charltons’ affidavits, and has not contested the Charltons’ characterization
of the events surrounding the parties’ real estate transaction. The mortgage and promissory note
were drafted by South Bay’s counsel. The deed to the Georgetown property and the mortgage were
recorded in the Register of Deeds Office in Georgetown, South Carolina, on September 17, 2007.
Complaint ¶¶ 13-14.
The first three paragraphs of the mortgage include the problematic provision, and state:
THIS MORTGAGE is made this 11th day of September, 2007, between South
Bay Properties, LLC, whose address is 5511 Capital Center Drive, Suite 105,
Raleigh, North Carolina 27606 (collectively the “Mortgagor”) and Bonnie N.
Charlton, Ronald L. Charlton and Bayside Properties, Inc., (herein collectively
referred to as the “Mortgagee”), whose address is P.O. Box 1958, Georgetown, SC
29440.
WITNESSETH
WHEREAS, Mortgagor is now indebted to the Mortgagee in the principal
sum of Fourteen Million Five Hundred Eighty Thousand Six Hundred Sixty-Two and
92/100 ($14,580,662.92) Dollars, as evidenced by that certain Promissory Note of
even date herewith in the amount of Fourteen Million Five Hundred Eighty
Thousand Six Hundred Sixty-Two and 92/100 ($14,580,662.92) Dollars (the “Note”)
which by reference is made a part hereof to the same extent as though set out in full
herein.
NOW, KNOW ALL MEN, that the Mortgagor, in consideration of the
aforesaid debt, and in order to secure the payment thereof, and of any other and
further sums for which the Mortgagor may be indebted to the Mortgagee at any time
for advances made to or for its account by the Mortgagee, and to secure the
performance of all the covenants, conditions, stipulations and agreements contained
herein, and also in consideration of the further sum of Three ($3.00) Dollars to the
Mortgagor in hand well and truly paid by the Mortgagee at and before the sealing
and delivery of these presents, the receipt whereof is hereby acknowledged, has
granted, bargained, sold and released and by these presents does grant, bargain, sell
and release unto the Mortgagee, their successors and assigns, the following described
premises:
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SEE EXHIBIT A ATTACHED HERETO AND
INCORPORATED HEREIN BY REFERENCE
Complaint, Ex. B (Mortgage) (original emphasis omitted; all italics added by the court). South
Bay contends that the mortgage is unsecured because it purports to be secured by a promissory
note “of even date herewith” and no such note exists. 	The note, as established above, is dated
September 12 – one day later.1
Bonnie and Ronald Charlton state in their affidavits that South Bay made payments pursuant
to the note for approximately three years but eventually defaulted, leaving an approximate balance
of $15,442,099.18 as of the date South Bay filed the bankruptcy petition. 	Bonnie Charlton
Affidavit ¶ 7; Ronald Charlton Affidavit ¶ 7. 	At some point thereafter, South Bay determined that
the language in the mortgage, as drafted by its lawyers, would enable it to void the mortgage and
render the promissory note unsecured, which brings us to the present dispute.
DISCUSSION
The court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1334, 151 and 157, and
this matter is a core proceeding pursuant to 28 U.S.C. § 157. 	The court may hear this matter
pursuant to the General Order of Reference entered August 3, 1984, by the United States District
Court for the Eastern District of North Carolina.
1 The HUD Settlement Statement also is dated September 12, 2007. It reflects payment by
South Bay to Bayside of a deposit in the amount of $1,350,000. 	The HUD statement was delivered
to Bayside by South Bay’s attorneys on September 18, 2007, one day after the mortgage and general
warranty deed were filed with the Register of Deeds in South Carolina. The HUD Statement was
accompanied by a series of checks made out to the Charltons in connection with certain lot sales,
as well as a copy of the mortgage. All of these documents were prepared by South Bay’s counsel.
Defs.’ Brief in Support of Mot. to Dismiss, Ex. C.
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The familiar principles articulated in Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986),
guide the court’s disposition of a motion for summary judgment. Both parties assert, and the court
agrees, that no material facts are at issue and this matter is ripe for adjudication. 	In addition,
Bayside, as the party against whom relief is sought, seeks summary judgment on all or a part of the
claim and has filed supporting affidavits in connection with that request. See Fed. R. Civ. P. 56,
made applicable in bankruptcy by Fed. R. Bankr. P. 7056.
South Bay, the plaintiff and debtor-in-possession, asks the court to void the mortgage as an
invalid security interest pursuant to 11 U.S.C. § 544(a) for “one simple reason.” According to South
Bay,
under long-established South Carolina law, Defendants’ mortgage states that it was
given as consideration for a promissory note “of even date herewith,” and
Defendants have not produced and have admitted that they cannot produce such a
note. Accordingly, there are no genuine issues of material fact to be decided, and
Plaintiff is entitled to judgment as a matter of law.
South Bay Mem. of Law in Support of Mot. for Sum. J. at 1-2. Bayside agrees that South Carolina
law applies, but responds that the mortgage is valid under South Carolina state law and that South
Bay is barred from asserting the invalidity of the mortgage by principles of estoppel. Accordingly,
the court turns to the issue at hand: can the debtor-in-possession avoid the mortgage under § 544(a)?
As discussed below, to resolve that issue, the court must first determine whether the mortgage is
valid under South Carolina law.
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I. 	Strong Arm Powers under 11 U.S.C. § 544(a)
Section 544 extends to a trustee or chapter 11 debtor-in-possession certain strong arm powers
that come into effect as of the commencement of the case and enable the trustee or debtor-in-
possession to avoid an obligation of the debtor. In relevant part, it provides:
(a) The trustee shall have, as of the commencement of the case, and without regard
to any knowledge of the trustee or of any creditor, the rights and powers of, or may
avoid any transfer of property of the debtor or any obligation incurred by the debtor
that is voidable by–
(1) a creditor that extends credit to the debtor at the time of the
commencement of the case, and that obtains, at such time and with respect to such
credit, a judicial lien on all property on which a creditor on a simple contract could
have obtained such a judicial lien, whether or not such a creditor existed.
* * *
(3) a bona fide purchaser of real property, other than fixtures, from the
debtor, against whom applicable law permits such transfer to be perfected, that
obtains the status of a bona fide purchaser and has perfected such transfer at the time
of the commencement of the case, whether or not such a purchaser exists.
11 U.S.C. § 544(a)(1), (3).
At issue in this matter is application of § 544(a)(1)2, pursuant to which South Bay contends
that it has the standing of a judicial lien creditor without regard to any actual knowledge it may have.
2 Section 544(a)(3) is unavailable to South Bay. The Court of Appeals for the Fourth Circuit
held, in In re Hartman Paving Inc., 745 F.2d 307, 309 (4th Cir. 1984), that “a debtor-in-possession,
acting as a bona fide purchaser pursuant to Section 544(a)(3), cannot invalidate a deed of trust where
he is an original party to the deed of trust and had actual notice of its existence.” 	In re Law
Developers, LLC, 404 B.R. 136, 139 (Bankr. E.D.N.C. 2008) (interpreting Hartman and concluding
that “[a] debtor-in-possession with notice of the deed of trust is not ‘innocent’ and therefore cannot
prevent reformation of the deed of trust under North Carolina law”). South Bay has full knowledge
of the mortgage and deed of trust, given that its attorneys drafted them for South Bay’s benefit, and
thus cannot stand in the shoes of a bona fide purchaser under § 544(a)(3).
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Under that statute, the question before the court becomes whether a hypothetical lien creditor, i.e.
South Bay, with a judicial lien on the property as of the date of the bankruptcy petition, could void
the mortgage pursuant to controlling state law. Bayside does not contest South Bay’s construction
of § 544(a)(1).
II. 	South Carolina State Law
The real gravamen of the parties’ dispute is the validity of the mortgage under South
Carolina state law, which turns entirely on the court’s construction of the law of that state.
In the interest of clarity, the court acknowledges at the outset its agreement with Bayside’s
argument to the effect that this court is not bound by another decision from this district, In re Head
Grading Co., Inc., 353 B.R. 122 (Bankr. E.D.N.C. 2006) (holding that a deed referring to a
promissory note “of even date herewith,” when the note has a one-day discrepancy as in this case,
is invalid under North Carolina law). 	As Bayside points out, Head Grading was decided with
reference to the law of North Carolina, not South Carolina. The court’s review of South Carolina
law dating back to 1881, beginning with three early South Carolina Supreme Court cases, convinces
the court that the mortgage is valid under the laws of that state.
The South Carolina Supreme Court’s decision in McCaughrin & Co. v. Williams, 15 S.C.
505, 517 (S.C. 1881), also involved a date discrepancy. In that case, a mortgage cited a “certain
bond or obligation, bearing date December 8th, 1874,” but “no such bond as described [in the
mortgage] had been executed.” Id. at 515. A bond “was, however, executed on December 21st,
1875, one year after the mortgage,” and there were two notes dated December 8th, 1874, in a total
amount differing from the one set forth in the mortgage. The court framed the question thusly: “Is
a mortgage of land a valid security, which recites a bond to be secured by it, which bond in fact was
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not executed before the mortgage or at the same time with it?” Id. at 516. The answer, the court
held, is yes. The court cited with approval this explanation of the applicable doctrine:
In Jones on Mort., § 353, we find the doctrine laid down in these words: “A deed of
trust or mortgage is valid without any note or bond, although it purports to secure a
note or bond and substantially describes it. The mortgage debt exists independently
of the note. The inquiry is: Does the debt exist? If it does, it is not essential that
there should be any evidence of it beyond what it furnished by the recital of the deed.
The validity of a mortgage does not depend upon the description of the debt
contained in the deed, nor upon the form of the indebtedness, whether it be by note
or bond or otherwise; it depends rather upon the existence of the debt it is given to
secure. . . .
Id. at 516-17.
Several years later, in Plyler v. Elliott, 19 S.C. 257 (S.C. 1883), the same court concluded
that a note had been rendered void due to material alteration after its execution (the payee had added
the words “with 15% interest,” then scraped them off with a knife), but that the mortgage remained
enforceable. “It must be kept in mind,” the court explained, “that there is a difference between the
debt itself and the securities for it” – in particular, “in no proper sense can the mortgage be regarded
as a security merely for the bond, which, being only the evidence of the debt, may be displaced by
substitutes or lost or destroyed, leaving the mortgage as a subsisting security for the debt in a new
form.” 	Id. at 263-64. 	The Plyler court also made short shrift of an error in the mortgage with
respect to the promissory note it secured; indeed, the court literally disregarded it. 	“Even
disregarding the mistake in the description of the note,” the court wrote, “it does not seem to us that
such an erroneous reference in the defeasance of the mortgage should be allowed to have the great
effect claimed for it,” which would have been to “change the whole structure and effect of the
instrument.” Id. at 266.
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Shortly thereafter, the court allowed parol testimony to “show what debt the mortgage was
really intended to secure.” Moses v. Hatfield, 27 S.C. 324 (S.C. 1887). In Moses, a mortgage was
given “to secure the payment of a certain note described in the mortgage,” but the note “was never
given” and, instead, future advances were made. The court concluded that the mortgage was valid
and secured the advances, reasoning as follows:
First, it is contended that the court erred in receiving parol testimony to show what
debt the mortgage was really intended to secure. Now, while it is quite true that a
written contract cannot be contradicted or varied by parole evidence, yet such
evidence is competent to apply a written contract to its proper subject-matter; as for
example, in case of a mortgage, to the debt really intended to be secured thereby. . . .
“A deed of trust or mortgage is valid without any note or bond, although it purports
to secure a note or bond, and substantially describes it. The mortgage debt exists
independently of the note. The inquiry is, does the debt exist? * * * The validity of
a mortgage does not depend upon the description of the debt contained in the deed,
nor upon the form of the indebtedness, -whether it be by bond, note, or otherwise.
It depends, rather, upon the debt it is given to secure.” So, . . . “[i]t is not necessary
that the mortgage should express on its face that it is given to secure future advances.
It may be given for a specific sum, and it will then be security for a debt to that
amount.
Id. at 540 (internal citations to sections of 1 Jones, Mortgages omitted).
Old and dusty as these cases may be, this court has found no more recent precedent to
contradict them, and they appear to have established a lasting legal footprint.3 See also, e.g., Platt
v. Carroll, 119 S.E. 180, 183 (S.C. 1923) (reaffirming that “the validity of a mortgage does not
depend upon the description of the debt contained in the deed”). An opinion from the Court of
Appeals for the Fifth Circuit brings this point home:
As to this issue it is well established that the validity of a mortgage is dependent only
on the existence of a debt actually secured by the mortgage and not on the
3 The McCaughrin decision was most recently cited in In re Daufuskie Island Properties,
LLC, 431 B.R. 649, 656-57 (Bankr. D.S.C. 2010), for a proposition different from (though not in
contradiction to) the precedent relevant to the instant case.
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description of the debt contained in the instrument. [citations omitted] The actual
existence of a subsisting debt at the time of foreclosure may be established by parol
testimony, [citing Moses, among others], and where it is established that the notes
or bonds, or other evidence of indebtedness described in the mortgage did not exist,
the mortgage may, nevertheless, be foreclosed. Moses v. Hatfield, supra.
Tropicana Shipping, S.A. v. Empresa Nacional Elcano De La Marina Mercante, 366 F.2d 729, 733
(5th Cir. 1966) (internal citations omitted).
The evident trend among those cases is to focus on substance over form and to reject efforts
to assign undue weight to minor errors in descriptions of debt. South Carolina courts also have
expressed a corresponding willingness to allow parol evidence as necessary to illuminate the
purpose of the mortgage. Parol evidence “may be admitted to apply a written contract to its proper
subject-matter, as, per example, a mortgage to the debt really intended to be secured thereby.”
Lindsay v. Garvin, 9 S.E.862, 862 (S.C. 1889); see also, e.g., Dangerfield v. Brown, 186 S.E. 641,
644-45 (S.C. 1936) (citing Moses and noting that the “strict constructionist may sometimes make
a fetish of the rule which rejects evidence which it is claimed varies the terms of a written contract,
and thus sacrifice the substance to the shadow”).
In a perfect legal world, this court would be able to review more current South Carolina case
law addressing modern iterations of these issues, but in this matter that opportunity simply does not
exist. The court is reassured, however, by recent decisions from other federal courts which, in cases
construing similar scenarios, reach conclusions that align with those cited above. 	In Tilden
Commercial Alliance v. Brucap Assocs., 158 B.R. 10 (Bankr. E.D.N.Y. 1993), for example, the
debtor gave guarantees to Tilden on August 21, 1984, and then executed a mortgage in favor of
Tilden on January 6, 1985, which purported to secure “certain guarantees by the mortgagor of even
date herewith.” A third party, the FDIC, also had a mortgage with the debtor and had recorded it
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a year after the Tilden mortgage was recorded. The FDIC sought to establish priority, arguing that
“because the Guarantees were not in fact created ‘of even date’, the Tilden Mortgage [was] void for
lack of consideration.” Tilden, 158 B.R. at 12-13.
The bankruptcy court looked to New York law, and concluded that where there is “‘no
mistake about the agreement, and the only mistake alleged is in the reduction of that agreement to
writing, such mistake of the scrivener, or of either party, no matter how it occurred, may be
corrected.’” Id. at 14 (citation omitted). In that case, the debtor prepared the documents, and readily
attested to its intent in doing so – a refreshing contrast to the case at bar. 	See also Chemical Bank
v. United States Lines (S.A.), 132 B.R. 271, 278 (Bankr. S.D.N.Y. 1991) (construing New York law
and pointing out that “where the intentions of parties are clear, the court will not elevate form over
substance and allow a windfall to a party”), quoted in Tilden, 158 B.R. at 14.
Another court reluctant to grant a windfall, the Court of Appeals of Michigan, cited Tilden
with approval in Knapp v. National City Bank of Michigan/ Illinois, 2003 WL 22113984 (Mich.
App. Sept. 11, 2003) (citing Tilden). In Knapp, the appellate court applied Michigan state law in
concluding that a mortgage referring to a “Note of even date herewith” was valid and did secure the
debts it purported to secure, even though there was no “note” in existence. The mortgage should
have referred to a forbearance agreement, not a note. The court held that insertion of the wrong term
in the document was not fatal because, based on all the circumstances, it was “clear that the parties
were referencing the forbearance agreement.” Knapp, 2003 WL 22113984 at *3 (citing a 1863
Michigan case in which the Michigan Supreme Court “upheld a mortgage where the debt was
unspecified but there were other means to ascertain the unpaid balance”).
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Facts similar to those in the instant case also were at issue in Carmack v. Tri-County Trust
Co., 94 B.R. 148 (W.D. Miss. 1988). In that case, the debtor executed four separate promissory
notes between March 1983 and April 1985. 	The court described the ensuing issue as follows:
“Although all appeared in order with respect to the transactions, a problem was concealed in the
paperwork. Notes 1 through 4 inclusive stated that they were ‘secured by a collateral agreement of
3-4-81.’ No such collateral agreement existed at the time of execution or at any time subsequent,
The execution date of Collateral Agreement A was 9-4-81.” Id. at 149. In the face of a challenge
from a creditor, the court allowed testimony from the lending bank and the debtor, and held that
[i]n light of [those] observations, it is clear the error in the collateral reference date
in the promissory notes is a clerical error. 	“[Clerical errors] do not defeat the
intentions of the parties.” 	[citation omitted] 	“Errors or inaccuracies in the
description of the note secured by the mortgage will not invalidate the mortgage if
the intention of the parties is apparent, or the intention of the parties can be otherwise
identified.” 59 C.J.S. Mortgages § 112(d) (1974 & Supp. 1988).
Id. at 152. The court discussed multiple other cases in which “the mortgagors could not escape [the
mortgage] because of an erroneous description of the obligation.” Id. at 152, quoting E.E.E., Inc.
v. Hanson, 318 N.W.2d 101, 106-07 (N.D. 1982); see also, e.g., Mortgage Assoc., Inc. V. Hendricks,
187 N.W.2d 313, 316 (Wis.1971) (court found note to be secured and held “a mistake in reciting the
date of the note will not in and of itself invalidate the mortgage if the note can be identified by other
means”).
While the cases just discussed do resonate in that they present similar facts, the court must
emphasize that in this case, as in the cases above, the paramount factor is whether the mortgage
could be avoided under controlling state law. This case turns wholly on the court’s construction of
the applicable law of the State of South Carolina.
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Notably, in this case, South Bay makes no mention of its intention at the time the mortgage,
guarantees, and deed were prepared. 	It also is telling that South Bay does not contest the
representations made by Bonnie and Ronald Charlton in their affidavits, wherein they assert that it
was the intent of all parties, South Bay included, to ensure that the mortgage secured the debt
evidenced by the promissory note. In fact, it would strain credulity long past the breaking point to
suggest otherwise.4 Accordingly, the court assumes that the debtor originally entered into the
mortgage in good faith, and in fact did intend for the mortgage to secure its debt to Bayside. Had
the debtor and its counsel intentionally drafted the documents and proceeded through the related
transactions with the intent of ultimately disavowing them on the grounds asserted here, such an
effort would, obviously, raise a host of new and exceedingly serious questions.
The court’s review of South Carolina case law persuades it that the law of that state
embodies the same common sense, anti-windfall approach outlined in Tilden and Carmack. 	The
court has little difficulty concluding that under the laws of South Carolina, the mortgage would not
be found void or a nullity. Because that conclusion is dispositive of South Bay’s effort to avoid the
4 Evidence that the mortgage was intended to secure the promissory note dated September
12, 2007 is abundant and uncontroverted. Both the mortgage and note are for the same amount,
$14,580,662.92. Both list Bonnie Charlton, Ronald Charlton, and Bayside Property, at identical
addresses, as the lenders. Both list South Bay as the borrower. Both show a Georgetown County,
South Carolina caption. The promissory note at issue is the only one between these parties, and is
the only note to which the mortgage could possibly refer. 	The South Carolina court decisions
discussed above, in which challenged mortgages were found valid, had far fewer facts to work with
than appear in this case. Those cases also did not feature a debtor who drafted the problematic
documents, made payments pursuant to them for years, and then sought to take advantage of its own
error.
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mortgage under § 544(a), the court will deny South Bay’s motion for summary judgment, enter
summary judgment in favor of Bayside, and dismiss the adversary proceeding.
SO ORDERED.
END OF DOCUMENT
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