FI LED U.S. COURT OF APPEALS ELEV ENT H CI RCUI T J UNE 17, 2009 T HOMAS K . KAHN CLERK [PUBLIS H] IN THE UN ITED STATES COURT OF APPEALS FOR THE ELE VENTH CIRCUIT

__ __ __ __ __ __ __ __ __ __ __ __ No. 0 8- 16 10 5

__ __ __ __ __ __ __ __ __ __ __ __ D. C. Dock etNos . 08 -0 00 79 -CV-RW S-1 , 06 -6 60 24 BKC-C R IN RE: HONG JU KIM, Deb to r.

__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ NEIL C. GORDON, Ch ap te r 7 Tru st ee fo r th e Est at e o f Hon g J u Ki m , Pl ai nt iff -Ap pe ll ee, ve rs us TERRACE MORTGAGE COMPANY, Defen da nt -Ap pe ll an t.

__ __ __ __ __ __ __ __ __ __ __ __ App eal fro m

th e Uni te d S ta te s Di st ric t Co urt fo r th e North ernDis tri ctof Ge or gi a

__ __ __ __ __ __ __ __ __ __ __ __ _ (J un e 1 7, 2 00 9) Befo re WILSON, KRAVITCH an d ANDERSON, Ci rcu itJu dg es .ANDERSON, Circ ui t J ud ge :

Terrac e Mo rtg ag e Co m

pa ny, L LC (“ Terrac e”), ap pe al s t he di st ric t co urt’s
or de r affi rm in g t he ba nkrupt cy co urt’s g ran t o f su m

m ary jud gm en t i n fa vo r of Neil C. Gor do n (“ Trus te e”), t he Ch ap te r 7 Tru st ee fo r th e Est at e o f Hon g J u Ki m , al lo win g t he Trus te e to us e h is stro ng arm po wer t o a vo idth e li encrea te d b y Terrac e’s se cu rit y

de ed(th e “ Secu rit y

Deed ”) b ecau se th e Sec ur it y Deedwas de fect iv e. Terrac e al so ap pe al s t he de ni al of Terrace ’s m ot io n fo r su m m ary jud gm en t. The b an krup tc y co urt d eem edth e Sec ur it y Deedde fect iv e b ecau se th e 1 at te st at io n p ag e fai le d t o i nc lu de a no ta ry sea l; th eref

or e, th e Sec ur it y

Deedwou ld
no t co ns ti tu te co ns tru ct iv e n ot ic e to subs eque ntbo nafid e p ur ch as ers un de r se ct io n 44 -1 4- 33 of t he Geor gi a Co de Ann ot at ed . Accor di ng ly, th e b an krup tc y co urt de te rm in edth atth e li encrea te d b y th e Sec ur it y

Deedwas a vo id ab le by the Trus te e pu rs ua ntto th e Ban krup tc y Co de at 1 1 U.S.C. § 54 4( a). Fi rs t, Terr ace c on te nd s t ha t t he ba nkrupt cy co urt erredingra nt in g s umm ary jud gm en t i n fa vo r of

th e Tru st ee b ecau se ad di ti on al lan gu ag e in § 4 4- 14 -3 3, ad de d by a 19 95 am en dm en t, i nd ic at es th at , des pi te th e fai lu re t o i nc lu de a no ta ry sea l o n th e at te st at io n p ag e, th e Sec ur ity Deedwas s uf

fic ie nt ly recor de d t o p ro vi de
co ns tru ct iv e n ot ic e to a subs eque ntbo nafid e p ur ch as er. Inth e al te rn at iv e, Terrac e

The district cour

t adopted the ba

nkruptcy court’s de cision. 1 2co nt en ds th atth e b an krup tc y co urt erredby con cl ud in g t ha t the clo si ng att orne y ’s Affi da vi t (t he “ Affi da vi t” ), at ta ch edto an d i nc or po rat edin to th e Sec ur it y

Deed , fai le d t o s at is fy

th e rem ed ia l p ro vi si on s n eces sa ry to cu re an im

pr op erl y att es te d de edun de r se ct io n 4 2- 2- 18 of t he Geor gi a Co de Ann ot at ed
. W e n eedno t i nt erp retth e am en de d l an gu ag e in § 4 4- 14 -3 3 b ecau se , eve n as su m in g a rg ue nd o t ha t t he Secu rit y Deedwas d efec ti ve be cau se itlac ke d ano ta ry se al , th e Affi da vi t ei th er co m pl ie d, o r ata m in im

um , subs tant ia ll y

co m pl ie d wi th th e rem ed ia l p ro vi si on s o f § 4 4- 2- 18 , th us cu rin g t he all eg edde fect . There fo re, we rev ers e th e o rd ers of t he co urts be lo w gra nt in g t he Trus te e’s m ot io n fo r su m m ary jud gm en t an d d en y in g Terrace ’s m ot io n fo r su m m ary jud gm en t. I. FACTS On Ap ril 24 , 20 05 , Hon g J u Ki m (th e “ Deb to r”) t oo k o uta lo anwit h Terrace an d g av e Terra ce t he Secu rit y Deedgra nt in g Terrace a se cu rit y in te res t i n h er co nd om in iu m

in DeKalb Co un ty, Geo rg iato sec ur e th e lo an . The Se cu rit y Deed
was reco rd edin DeKalb Co un ty on M ay 10 , 20 05 . The Deb to r fi le d fo r ba nkrupt cy on May 30, 2 00 6. The Secu rity

Deedwas re co rd edalo ng wit h aCo nd om in iu m Rid er, an Adju st ab le Rat e Ri de r, an d asi ng le pa ge do cu m en t i nc lu di ng a W ai ve r of Bo rro wer’s Ri gh ts Rid er an d t he Affid av it . The Se cu rity Deedwas s ig ne d b y

th e 3Deb to r, anun of fic ia l wi tn es s, an d b y

th e cl os in g a tt orne y

who was i nd ic at edas be in g ano tary

publ ic . Howev er, the att es ta ti on fai le d t o i nc lu de a no ta ry sea l. 2 The W ai ve r of

Bo rro wer’s Ri gh ts Rid er— ap pe ari ng on th e sa m e p ag e as th e Affi da vi t— st at es th atth e p ro vi si on s o f th e Ri de r are “ in co rp or at edin to an d m ad e pa rt o f th e Sec ur it y

Deed .” The Aff

id av itst at es th atth e at to rn ey rev ie wedwith
an d e xp la in edto th e Deb to r he r ri gh ts an d t he len de r’s rig ht s, an d a fte r su ch
rev ie w, th e “ [Deb to r] exec ut edth e Sec ur it y Deedan d ‘W ai ve r of

Bo rro wer’s Ri gh ts .’ ” The Affid av itin cl ud es th e cl os in g a tt orne y ’s si gn atur e, th e si gn atur e o f a
se pa rat e n ot ary publ ic , andth e n ot ary’ s s eal
. The Trus te e fi le d a n a dv ers ary pr oc eed in g i n t he ba nkrupt cy co urt s eek in g t o av oi d t he Secu rit y

Deedas p at en tl y

de fect iv e b ecau se th e Sec ur it y Deedlac ke d a n of fic ia l wi tn es s due to th e fai lu re t o i nc lu de a no ta ry sea l o n t he att es ta ti on pa ge . The refo re, the Trus te e arg ue d, t he Secu rity Deedfai le d t o p ro vi de co ns tru ct iv e no ti ce t o s ub se qu en t b on a fi de pu rch as ers . Terrace m ov edforsu m m ary jud gm en t, an d t he Trus te e fi le d acro ss -m ot io n fo r su m m ary jud gm en t. The ba nkrupt cy co urt gr an te d t he Trus te e’s m ot io n fo r su m m ary jud gm en t an d d en ie d Terrace ’s m ot io n. The bankrupt cy

co urt h el d t ha t t he fai lu re t o i nc lu de a no ta ry sea l i n t he att es ta ti on
A notary public is one ty

pe of of fice r authorized to attest to a sec urity deed a s an 2 officia l witness. See Ga. Code Ann. § 44-2-15. 4m ad e th e Sec ur it y Deedde fect iv e an d i na de qu at e fo r co ns tru ct iv e n ot ic e u nd er § 44 -1 4- 33 , andth atth e Affi da vi t d idno t s at is fy th e requi rem en ts to cu re the de fect
un de r § 4 4- 2- 18 . Accor di ng ly, th e b an krup tc y co urt h el d t ha t the li encrea te d b y th e Sec ur it y

Deedis av oi dabl e b y

th e Tru st ee p ur su an t t o s ect io n 5 44 (a) o f th e Ban kr up tc y Co de
. The di stric t co urt af

firm edth e d eci si on of t he ba nkrupt cy co urt, ad op ti ng it s an al y si s an d c on cl us io ns . This ap pe al fol lo ws. II. STANDARD OF REVIEW Thi s C ou rt, a s a s eco ndco urt o f rev ie w in th e b an krup tc y co nt ex t, ap pl ie s t he
sa m e st an da rd s o f rev ie w as t he di st ric t co urt. IBT In t’l, In c. v. No rth ern (Inre In t’l Adm in . Serv s., In c.), 4 08 F.3d68 9, 6 98 (11 th Cir . 20 05 ). Thi s C ou rt r ev ie ws a g ran t o r de ni al of s umm ary jud gm en t d e n ov o. Ho ll om anv. Ma il -Well C or p., 44 3 F .3d83 2, 8 36 (11 th Cir . 20 06 ). The i ss ue be fo re u s p res en ts a qu es ti on of l aw. III. DISC USSION Fo r th e p ur

po se of t hi s ap pe al , we ass um e arg ue nd o wi th ou t d eci di ng th at th e o m is si on of t he sea l i s a d efec t wh ic h wo ul d p recl ud e co ns tru ct iv e n ot ic e to a 3 The issue of c onstructive notice is c ritically important in the Chapter 7 ba nkruptcy 3 context because a trustee may avoid a lien on r eal pr operty if a hy pothetical bona f

ide purc haser could have taken a

n interest greater than that held by the lienholder pur suant to 11 U.S.C. § 544(a) ; the failure to provide construc tive notice would pre sent such a c ircumstance . The Ba nkruptcy Code place s the trustee in the status of a bona fide purcha ser. See 11 U.S.C. § 544(a) (3). 5subs eque ntbo nafid e p ur ch as er u nd er § 44 -1 4- 33
. W e fo cu s o n Terrace ’s sec on d 4 arg um en t t ha t, ev enif t he no ta ry sea l wer e n eces sa ry

un de r § 4 4- 14 -3 3, t he Affi da vi t fi le d wi th th e Sec ur it y Deedcu redth e d efec t p ur su an t t o t he rem ed ia l pr ov is io ns of § 44 -2 -1 8. The rem ed ia l p ro vi si on st at es : If a d eedis ne it he r at te st edby norackno wled ge d b efo re o ne of t he of fic ers nam edin Co de Sect io n 4 4- 2- 15 , itm ay be reco rd edup on th e affi da vi t o f a s ub sc rib in g wi tn es s, wh ic h a ffi da vi t s ha ll be m ad e b efo re an y on e o f th e o ffi cers na m edin Co de Sect io n 4 4- 2- 15 an d s ha ll te st ify to t he ex ecu ti on of t he de edan d i ts att es ta ti on acco rd in g t o l aw. A subs ta nt ia l co m

pl ia nc e wit h t he requi rem en ts of t hi s C od e se ct io n sh al l b e h el d s uf

fic ie ntin th e ab se nc e o f al l s us pi ci on of f rau d. Ga. Co de Ann . § 4 4- 2- 18 (em ph as is ad de d)
. The s ta tu te is rem ed ia l, an d t he 5
Terr ace ’s first argument is that the failure to include a notar y seal doe s not destroy 4 constructive notice under the rec ordingstatute bec ause of languag e adde d to the statute in 1995. The statute r eads: In order to admit a mortg ag e to re cord, it must be attested by or ac knowledg ed befor e an of

fice r as pr escribed for theattestation or ac knowledgment of dee ds of barg ain and sa le; and, in the ca se of r eal pr operty , a mortg ag e must also be attested or a cknowledg ed by one additional witness. In the abse nce of fra ud, if a mortg ag e is duly

filed, re corde d, and indexed on the appr opriate c ounty land rec ords, such re cordation shall be deeme d constructive notice to subsequent bona fide purc haser s. Ga. Code Ann. § 44-14-33 ( emphasis adde d to identify the languag e adde d by

the 1995 amendment) . Terr ace ’s argument in essence is that the additional languag e should be interpr eted to mean that a r ecor ded sec urity deed—in the a

bsenceof fr aud—constitutes construc tive notice despite tec hnical def

ects or omissions in the attestation. We need not addr ess or de cide this issue. Instead, we assume arguendo that the omission of the sea l is a defe ct which would, e x cept for § 44- 2-18 discussed be low, prec lude construc tive notice.

There does not appe ar to be any alleg ation or suspicion of fr aud. 5 6la ng ua ge of t he sec ti on all owi ng for“ subs ta nt ia l co m pl ia nc e” s ug ge st s a l ib eral
co ns tru ct io n. Fu rth erm or e, th e Geo rg iaSupr em e Co urt h as in di cat edth atan affi da vi t o f a s ub sc rib in g wi tn es s n eedno t b e p erfe ctin ord er t o s ub st an ti al ly
co m pl y with § 44 -2 -1 8. Se e Will ie v. Hi ne s- Yelt on Lum be r Co ., 14 6 S .E. 90 1, 9 04 (Ga. 1 92 9) (de te rm in in g t ha t t he co urt was no t “ co ns tra in edto ho ldth atth e affi da vi t [wa s] infactno t an affi da vi t fo r la ck of t he st at em en t t ha t t he same was ‘sub sc rib ed ’ be fo re the off ic er ad m in is te rin g t he oa th ” an d h ol di ng th atth e affi da vi t s ub st an ti al ly com pl ie d wi th th e st atut e fo r pr op er re co rd at io n a ndto pr ov id e co ns tru ct iv e n ot ic e to an y subs eque ntpu rch as er). The Affid av itwas fi le d wi th th e Sec ur ity Deedan d s ta te s i n p ert in en t p art : Inclo si ng th e ab ov e lo an , bu t p rio r to th e ex ecu ti onof t he Secu rity Deedan d ‘W ai ve r of

Bo rro wer’s Ri gh ts ’ by the Bo rro wer(s ), I rev ie wedwith a ndex pl ai ne d t o t he Bo rro wer(s ) th e te rm s an d pr ov is io ns th ereo f au th or iz in g t he Lend er t o s el l t he sec ur edpro pe rty by a no nju di ci al for ecl os ur e u nd er a p owe r of sal e, to ge th er wi th th e ‘W ai ve r of

Bo rro wer’s Ri gh ts ’ an d i nf orm edth e Bo rro wer(s ) of Bo rro wer’s ri gh ts . . . . After s ai d re vi ew wit h a ndex pl an at io n t o Bo rro wer(s ), Bo rro wer(s ) ex ecu te d t he Secu rit y Deedan d ‘W ai ve r of Bo rro wer’s Ri gh ts . (em ph as is ad de d) . The Affi da vi t was si gn edby the clo si ng att orne y an d wi tn es se d by a no ta ry

publ ic , andth e d oc um en t co nt ai ns th e n ot ary’ s s eal . The b an kr up tc y co urt ac kn owl ed ge d t ha t § 44 -2 -1 8 p ro vi de d a“ sa fet y va lv e” fo r ov erco m in g e rro rs in att es ta ti on . Howev er, the ba nkrupt cy co urt n ot edth at§ 4 4- 2- 18 requi res th atth e 7subs cri bi ng witne ss m us t t es ti fy to th e ex ecu ti onan d t o t he att es ta ti on of the de ed
. The co urt h el d t ha t t he Affid av iton ly test ifi edto th e ex ecu ti on of t he Secu rit y Deedan d fa il edto ad dr es s t he is su e o f at te st at io n. W e d is ag ree wi th th e b an krup tc y co urt. We ho ldth atth e b an krup tc y co urt erre d i n c on cl ud in g t ha t t he Affid av itfai le d t o s at is fy bo thpro ng s o f § 4 4- 2- 18 . At
a m in im um , we con cl ud e th atth e Affi da vi t s ub st an ti al ly com pl ie s wi thth e requi rem en ts of § 44 -2 -1 8. Th e b an krup tc y co urt was co rrec t i n c on cl ud in g t ha t th e Affi da vi t t es ti fie s t o t he ex ecu ti on of t he Secu rit y Deedas i s ev id en t fr om

th e cl ear l an gu ag e in th e Affi da vi t, b utwe be li ev e th atth e Affi da vi t al so tes ti fie s t o t he at te st at io n o f th e Sec ur it y Deed
. Sev eral reas on s l eadus to co nc lu de th atth e b an krup tc y co urt was in co rrec t in ho ld in g t ha t t he Affid av itdo es no t t es ti fy to th e at te st at io n o f th e Sec ur it y Deed
. The do cu m en t tha t co nt ai ns th e Affi da vi t was in co rp or at edin to th e Sec ur it y Deed by spe ci fic lan gu ag e in th e Waive r of Bo rro wer’s Ri gh ts Rid er tha t ap pe ars on th e sa m e p ag e as th e Affi da vi t. The Se cu rit y Deedin to whi ch sai d d oc um en t was 6 in co rp or at edis id en ti fie d a s t he Secu rit y Deedat i ss ue da te d Ap ril 25 , 20 05 ,

The Waiver of

Bor rowe r’s Rig hts Rider states that the Gra ntor “[a]gre es that the 6 provisions hereof

are incorpora

ted into and made a

part of theSecurity

Dee d.” This document was attached to the Sec urity Dee d and appe are d only

four pa g es af

ter the attestation pag e in the Security Dee d. 8ex ecu te d b y

Hon g J u Ki m

sec ur in g t he lo anfro m

Terrac e, an d t he do cu m en t was reco rd edalo ng with t he Secu rit y Deedin th e d eedbo ok . Sim il arl y , th e Sec ur it y Deedit se lf ( in it s d efi ni ti on sec ti on ) ex pr es sl y in co rp or at es all att ach edRid ers , in cl ud in g e xp res sl y

th e “ W ai ve r of

Bo rro wer’s Ri gh ts /C lo si ng Att orne y Affid av it .” It i s t hu s cl ear t ha t t he Affid av itwas s pe ci fic al ly inc or po rat edin to an d b ecame part an d p arce l o f a s in gl e d oc um en t co m pr is in g, i nt er al ia , th e Sec ur it y Deedan d t he Affi da vi t, al l o f whi ch were re co rd edto ge th er i n t he de edbo ok
. The att es ta ti on pa ge of t he Secu rit y Deed , si gn edby H on g J u Ki m , an un of fic ia l wi tn es s, an d ano ta ry publ ic (th e cl os in g a tt orne y ), ap pe ars in th e d eed bo okon ly fou r pa ge s p rio r to th e Affi da vi t. Alt ho ug h the att es ta ti on pa ge do es la cka no ta ry

sea l, the Affid av itis si gn edby the clo si ng att orne y an d asep arat e no ta ry publ ic , anditco nt ai ns a pr op er n ot ary se al
. As quo te d abo ve , th e Affi da vi t 7 refe rs sp eci fic al ly to t he “ ab ov e lo an ” an d s ta te s t ha t t he bo rro wer ex ecu te d t hi s

The Tr ustee c ontends that Stone v. Dec atur F ed. Sav. & L oan Ass’n ( In re 7 Flee man), 81 B .R. 160 (Ba nkr. M.D. Ga . 1987) supports the argument that the Aff idavit does not cure the er

ror in attesta

tion. In Stone, the court he ld that a prope rly attested ride r only

signifie s that the individual witnessed the execution of that pa rticular doc ument, and, eve n if the rider is incorpora ted into the terms of the de ed, it does not provide substitute attestation to the dee d under § 44- 14-33. 81 B .R. at 162-63. Stone is simpl y not on point because it only addre sses whether the attestation in a ride r satisfies the attestation require ment of the de ed under § 44-14- 33. Stone does not addre ss whether an af fidavit from a

witness that specific ally

testifies to the execution of the ac tual security deed at issue satisfies the re medial re quirements under § 44-2-18. We are not holding that the attestation or the notary ’s sea l on the Affidavit substi tutes for the nece ssary attestation in the Security Dee d. We are holding that the A ffidavit mee ts the require ments under § 44- 2-18 to cure a def ective attestation and that the Aff idavit testifies to both the execution and the attestation of the Security Dee d as re quired by

the statute. 9pa rti cu la r Sec ur it y Deed
. The Trus te e arg ue d t ha t t he Affid av itdi d n otsat is fy th e se co ndpro ng of § 44 -2 -1 8 b ecau se itrefe rs on ly to t he ex ecu ti on of t he Secu rit y Deedbu t n otit s at te st at io n. W e rejectth is arg um en t. By te st ifyin g t o t he ex ecu ti on of t hi s

8 pa rti cu la r Sec ur it y

Deed , whi ch is pa rt a ndpa rcel of t he same Secu rit y Ins tru m en t reco rd edin th e d eedbo ok , th e cl os in g a tt orne y was i n e ffec t t es ti fy in g t ha t the Secu rit y Deedwas e xe cu te d b y

Hon g J u Ki m

an d wi tn es se d b y

anun of fic ia l wit ne ss an d t he clo si ng att orne y (th e cl os in g a tt orne y

was t he no ta ry

publ ic on th e at te st at io n p ag e). Inot he r wor ds , in th e Affi da vi t, the clo si ng att orne y tes ti fie d t o a cert ai n fa ct , andth atfactwas t he ex ecu ti on of t hi s p art ic ul ar Se curit y Deedwith i ts at te st at io n; th atfact , with i ts att es ta ti on de ta il , was cl ear a ndob vi ou s a m ere f ou r pa ge s earli er i n the de edbo okreco rd in g o f th e si ng le do cu m en t co m pr is in g, i nt er al ia , th e Sec ur it y

Deedan d t he Affid av it
. Fo r th e fo reg oi ng reas on s, we t hi nkth atth e cl os in g a tt orne y actua ll y

At oral a rgument, the Trustee ’s counse l argued that the Af fidavit did not satisfy

§ 8 44-2-18 be cause the Aff

idavit served a

purpose other

than to cure the def

ect in the attestation pag e. The fac t that the Affida vit serves a

nother func tion is i rre levant. The Affidavit contains the nece ssary languag e to cur e the de fec t under § 44-2- 18. There is nothing in the statute sug g esting that an af fidavit that cure s a def

ect must only

serve that purpose. The Trustee also arg ues that the Affida vit does not specifica lly

identify the sec urity

deed to whic h it refe rs or the pr operty . This argument is frivolous as the Aff idavit is part of the last pag e of the Security Instrument, a sing le document consistingof the Sec urity Dee d and the Riders, r ecorded tog ether in the deed book. It is obvious that the Affidavit is ref erring spe cifica lly

to the Security

Dee d at issue in this case. 10te st ifi edto bo th pro ng s re qu ire d b y § 4 4- 2- 18 in th e Affi da vi t, b utif t he re were an y do ub t i n t hi s re ga rd , th e Affi da vi t ce rta in ly con st itut es “ subs ta nt ia l co m pl ia nc e wit h t he requi rem en ts of t hi s C od e se ct io n,” whi ch is all th atis requi redto cu re the de fectcau se d b y

th e ab se nc e o f th e n ot ary se al on th e Sec ur it y Deed ’s att es ta ti on pa ge . See Ga. Co de Ann . § 4 4- 2- 18 ; Will ie , 14 6 S .E. at 9 04 . W e b el ie ve th atou r de ci si on is in ful l co m

pl ia nc e with t he rem ed ia l p ur po se of § 44 -2 -1 8, i n a dd it io n to th e le tt er an d the sp iri t o f § 4 4- 2- 18 an d Geo rg iareco rd in g l aw ge ne ral ly. That is , itis ob vi ou s t ha t an y

subs eque ntbo nafid e p ur ch as er wh o e xa m in edth e ti tl e to th is real est at e wou ldbe aware o f th e li encrea te d b y th e Sec ur it y

Deedat i ss ue . W e h ol d t ha t t he ba nkrupt cy co urt erredingra nt in g t he Trus te e’s cro ss m ot io n fo r su m

m ary jud gm en t an d d en y in g Terrace ’s m ot io n fo r su m m ary jud gm en t, an d t ha t t he di st ric t co urt erredin affi rm in g. IV. CONCLUSION The jud gm en t o f th e co urts be lo w, grant in g s umm ary jud gm en t i n fa vo r of th e Tru st ee, i s re ve rs ed , andth e cas e is rem an de d wi th in stru ct io ns to en te r su m m ary jud gm en t i n fa vo r of Terrac e. REVERSED an d R EMANDED.

11