Court Opinion

ID: 993281
Source: CourtListenerOpinion
Date Created: 2013-07-04 00:05:35.244522+00
Date Added: 2024-06-11T09:18:40.223043
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

SIGNET MORTGAGE CORPORATION,
Plaintiff-Appellee,

v.
                                                               No. 96-2810
THE HUNTINGTON MORTGAGE
COMPANY,
Defendant-Appellant.

SIGNET MORTGAGE CORPORATION,
Plaintiff-Appellee,

v.
                                                               No. 97-1011
THE HUNTINGTON MORTGAGE
COMPANY,
Defendant-Appellant.

Appeals from the United States District Court
for the Eastern District of Virginia, at Richmond.
Richard L. Williams, Senior District Judge.
(CA-96-418-3)

Argued: October 2, 1997

Decided: October 24, 1997

Before LUTTIG and MOTZ, Circuit Judges, and MICHAEL,
Senior United States District Judge for the
Western District of Virginia, sitting by designation.

_________________________________________________________________

Affirmed by unpublished per curiam opinion.

_________________________________________________________________
COUNSEL

ARGUED: Alan Durrum Wingfield, MAYS & VALENTINE,
L.L.P., Richmond, Virginia, for Appellant. Earle Duncan Getchell,
Jr., MCGUIRE, WOODS, BATTLE & BOOTHE, L.L.P., Richmond,
Virginia, for Appellee. ON BRIEF: Stephen A. Northrup, MAYS &
VALENTINE, L.L.P., Richmond, Virginia, for Appellant. J. William
Boland, H. Carter Redd, MCGUIRE, WOODS, BATTLE &
BOOTHE, L.L.P., Richmond, Virginia, for Appellee.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

Huntington Mortgage Corporation appeals from the district court's
order granting summary judgment in favor of Signet Mortgage Cor-
poration. We affirm.

Huntington and Signet entered into a loan purchasing agreement
(Agreement) in which Huntington agreed to sell to Signet the servic-
ing rights to 13,781 mortgage loans. One of these mortgage loans was
originally created between U.S. Funding, Inc. of America and home-
owner Donald Tucker. U.S. Funding loaned Tucker $105,000 secured
by a mortgage creating a first lien on Tucker's home. Huntington
thereafter acquired from U.S. Funding the servicing rights to the
Tucker loan and then sold those rights to Signet pursuant to the
Agreement.

In anticipation of a foreclosure action by Signet, Tucker notified
Signet by letter that he was rescinding the mortgage and security
interest in his house. Tucker based his right to rescind the mortgage
on certain alleged defects in the original loan with U.S. Funding,
which he asserted violated the Truth in Lending Act. Upon receipt of

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Tucker's rescission letter, Signet demanded that Huntington assume
the defense of Tucker's claim pursuant to the Agreement. Huntington
refused.

Signet then filed this action for a declaratory judgment, requesting
that the court find Huntington obligated to assume the costs of Sig-
net's defense of Tucker's claims under the Agreement. On cross-
motions for summary judgment, the district court ruled in favor of
Signet.

We review a district court's grant of summary judgment de novo.
Jakubiak v. Perry, 101 F.3d 23, 26 (4th Cir. 1996).

In ¶ 8.1 of the Agreement, Huntington promised to indemnify and
provide legal counsel to Signet to defend against any material breach
of warranty. In ¶ 3.9(a) of the Agreement, Huntington warranted that:

          The Mortgage Loans are valid and enforceable in accor-
          dance with their terms and the laws of the jurisdiction in
          which the properties securing the Mortgage Loans are
          located.

In ¶ 3.9(h) of the Agreement, Huntington also warranted that:

          Seller and to the best of Seller's knowledge any other party
          originally named as payee under the promissory notes with
          respect to the Mortgage Loans have complied in all material
          respects with, and Seller will continue to so comply through
          the Transfer Date(s) with every applicable federal, state or
          local law, statute, and ordinance, and any rule, regulation, or
          order issued thereunder . . . including, without limitation,
          . . . truth-in-lending . . . and also including, without limita-
          tion, . . . Truth-in-Lending Law, in particular, Regulation Z
          as amended . . . .

Signet argues that Huntington breached the warranty provided in
¶ 3.9(a) of the Agreement because Tucker's rescission claims, if suc-
cessful, would render the loan invalid and unenforceable. Huntington
responds that because it neither caused nor knew about the alleged

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Truth-in-Lending violations of the original payee, U.S. Funding,
which form the basis of Tucker's rescission claim, Huntington did not
breach the warranty set forth in ¶ 3.9(h). Furthermore, Huntington
contends that because ¶ 3.9(a) and ¶ 3.9(h) directly conflict, and
¶ 3.9(h) is more specific than the general warranty provision in
¶ 3.9(a), only ¶ 3.9(h) applies to the Tucker loan. We disagree.

After careful reading of the Agreement as a whole, it is clear that
the warranties provided in ¶¶ 3.9(a) and 3.9(h) afford Signet separate
and distinct protections, and thus do not directly conflict. Paragraph
3.9(a) warrants that all loans are valid and enforceable, whereas
¶ 3.9(h) warrants that Huntington, itself, neither committed nor knew
of any violations of the myriad laws mentioned in¶ 3.9(h). It is clear
that each warranty offers Signet different protections when consider-
ing that not all violations of laws covered in ¶ 3.9(h) would render the
loan invalid or unenforceable under ¶ 3.9(a). Indeed, Signet clearly
demonstrated, in its brief and at oral argument, that ¶ 3.9(a) and
¶ 3.9(h) could be reconciled in this manner, and Huntington does not
successfully challenge this analysis. Thus, Signet could encounter sit-
uations where Huntington may have breached its warranty under
¶ 3.9(h) by knowingly committing a violation of law with respect to
a particular loan that does not render that same loan invalid or unen-
forceable under ¶ 3.9(a).

Here, neither party disputes that the Tucker claim, if successful,
would make the loan invalid and unenforceable, constituting a breach
of the warranty set forth in ¶ 3.9(a) of the Agreement. The Tucker
claim does not trigger ¶ 3.9(h); however, this is just one of the many
other, distinct warranty provisions included in the Agreement that
may not be triggered by the Tucker claim. Accordingly, the judgment
of the district court is

AFFIRMED.

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