Cmty. S. Bank v. Chernin, No. 593-8-09 Rdcv (Cohen, J., Apr. 27, 2010)

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                                                STATE OF VERMONT
                                                 RUTLAND COUNTY

                                    )
COMMUNITY SOUTH BANK,               )                                                      Rutland Superior Court
                                    )                                                      Docket No. 593-8-09 Rdcv
                     Plaintiff,     )
                                    )
v.                                  )
                                    )
ROBERT B. CHERNIN, CELESTE CHERNIN, )
NORTH AMERICAN SAVINGS BANK FSB, )
GMAC MORTGAGE LLC, and all UNNAMED )
OCCUPANTS RESIDING AT 1882 EAST     )
MOUNTAIN ROAD, KILLINGTON, VT,      )
                                    )
                     Defendants     )


 DECISION ON PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT, FILED
                       NOVEMBER 20, 2009

           Plaintiff Community South Bank moves for summary judgment on its foreclosure

action. In response, defendants Robert and Celeste Chernin argue that Community

South’s mortgages do not constitute mortgages under Vermont law. They further request

that if the mortgages are enforceable, the Court establish a redemption period of one year

and the Court schedule the sale of Defendant’s two lots at different times. Plaintiff

Community South Bank is represented by Elizabeth A. Glynn, Esq. Defendants Robert

and Celeste Chernin are represented by William B. Miller, Jr., Esq., James W. Swift,

Esq., and Benjamin L. Wilson, Esq.

                                         Summary Judgment Standard

           Summary judgment is appropriate where there is no genuine issue of material fact

and the party is entitled to judgment as a matter of law. V.R.C.P. 56(c)(3). In response to

an appropriate motion, judgment must be rendered "if the pleadings, depositions, answers
to interrogatories, and admissions on file, together with the affidavits, if any, ... show that

there is no genuine issue as to any material fact and that any party is entitled to judgment

as a matter of law." V.R.C.P. 56(c)(3). In determining whether a genuine issue of

material fact exists, the court accepts as true allegations made in opposition to the motion

for summary judgment, provided they are supported by evidentiary material. Robertson v.

Mylan Labs, Inc., 2004 VT 15, ¶ 15, 176 Vt. 356. The nonmoving party then receives the

benefit of all reasonable doubts and inferences arising from those facts. Woolaver v.

State, 2003 VT 71, ¶ 2, 175 Vt. 397.

                                     BACKGROUND

       Robert and Celeste Chernin are guarantors of two notes from Walzak Risk

Analysis, LLC to Community South Bank. The first note is in the original principal

amount of $990,000, and was secured by a mortgage from the Chernins dated November

4, 2005. The second note is in the original principal amount of $264,000, and is secured

by a mortgage dated February 15, 2007.

       The November 2005 note was secured by Tract #1 of the Chernin’s Killington

property, which included their house. The February 2007 note was secured by Tract #1

and Tract #2, which is a vacant lot. Both mortgages were recorded in the Killington

Town Records. Both notes are in default for nonpayment.

                                       DISCUSSION

       The Chernins argue that the two mortgages held by Community South Bank do

not convey legal title under Vermont law, only a lien interest. The basis of this argument

is language in paragraph 24 of both the 2005 and 2007 mortgage instruments that

provides that the mortgages are to “governed by, and construed and enforced in



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accordance with the laws of Florida.” The Chernins argue that this provision requires the

application of Florida law to govern the mortgage instruments. Because Florida is a “lien-

theory” state, as opposed to Vermont which is a “title theory” state, the mortgages do not

convey legal title under Vermont law. The Chernins’ argument lacks merit.

       The Vermont Supreme Court has stated that “[i]t is a well-established principle

that the law of the state in which land is situated must be looked to for the rules which

govern its descent, alienation, and transfer, and for the effect and construction of the

conveyances.” International Paper Co. v. Bellows Falls Canal Co., 91 Vt. 350, 367

(1917). Likewise, the validity and effect of a mortgage on land is determined by the law

of the state where the land is. Restatement (Second) Conflict of Laws § 225.

Furthermore, “[t]he capacity to make a valid mortgage, whether formal requirements of

the instrument have been complied with, its validity in other respects and the character of

the interests created in the mortgagee are determined, as in the case of conveyances in

general, by the law of the state in which the land is.” Id. at cmt. a.

       Also, both mortgages provide that any provision which is prohibited or

unenforceable in any jurisdiction shall, “as to such jurisdiction only, be ineffective only

to the extent of such prohibition or unenforceability without invalidating the remaining

provisions hereof or affecting the validity or enforceability of such provision in any other

jurisdiction.” Therefore, under the law of Vermont and the parties own agreement, the

law of Vermont applies to the mortgages.

       The Chernins’ land is in Killington, Vermont—the laws of Vermont apply. The

Chernins’ mortgages contain title granting language, are properly signed and




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acknowledged, and recorded as required by 27 V.S.A. § 342. The mortgages convey legal

title and are enforceable.

       The Chernins request that the Court establish a redemption period of one year for

Tract #1 of their Killington property. Under 12 V.S.A. § 4528, “the time of redemption

shall be six months from the date of the decree unless a shorter time is ordered.” While

there is statutory authority for the Court to decrease the time for redemption, there is no

authority for the Court to extend it. Thus, the redemption period shall be six months.

       Finally, the Chernins request that the sale of the two tracts occur at different

times. Under 12 V.S.A. § 4531a(a), the Court may “determine the time and manner of the

sale.” The Chernins may schedule the tract of land with the house on it to be sold first.

The sales of the two tracts will take place one week apart.

                                         ORDER

       (1) Plaintiff Community South Bank’s Motion for Summary Judgment, filed
           November 20, 2009, is GRANTED.

       (2) The redemption period shall be six months for both tracts of land.

       (3) Tract #1 (the house lot) may be sold one week before Tract #2 (the vacant lot).

       Dated at Rutland, Vermont this _____ day of ________________, 2010.


                                                      ____________________
                                                      Hon. William Cohen
                                                      Superior Court Judge




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