ST. LOUIS — A three-judge panel of the Missouri Court of Appeals Eastern District has reversed a judgment in favor of Federal National Mortgage Association (Fannie Mae) in a quiet title action against Olivette property owners.
It is the court's second time ruling in a case that Fannie Mae had brought against Harvey and Christine Pace after purchasing their property at a foreclosure sale in September 2010, and it is the second time the appeals court has ruled against the secondary mortgage guarantor.
In a three-judge panel ruling that included Justices Gary Gaertner Jr., James Dowd and Kurt Odenwald, the court concluded that it was bound by Missouri Supreme Court precedent to reverse Fannie Mae "even if we disagree with the result."
In the first case before the appeals panel, "Pace 1," the court reversed summary judgment for Fannie Mae, which had quieted title to the property in Fannie Mae's name, according to background information in the ruling filed May 16.
It found that the deed of trust at issue failed to convey the property and remanded the case to the trial court. At the trial court, the judge "reformed" the deed of trust and again quieted title to Fannie Mae and granted it summary judgment.
The trial court also ruled against the Paces in their counterclaims. In their appeal, the Paces argued that the trial court’s "reformation" of the deed of trust was improper and that genuine issues of material fact should have precluded summary judgment for Fannie Mae.
Although the ruling notes that Harvey Pace was deceased at the time of the current appeal, it refers to the "Paces," who are the appellants "for the sake of clarity."
The underlying controversy involves the original promissory note signed only by Harvey Pace at closing in June 2002, according to the ruling.
However, Christine Pace signed a document entitled "Assent to Execution of Deed," at the closing, the ruling states. The deed of trust incorporated the marital assent by reference, and all documents were recorded the following month.
When Pace 1 went back to the trial court, Fannie Mae amended its petition to include a count requesting reformation of the deed of trust.
Subsequently, the trial court held that the Paces intended for Harvey Pace to be the sole owner, but at closing they were not aware that the special warranty deed conveyed the property to both.
"The trial court found that the Paces intended that the deed of trust would encumber the Property, and that due to a mutual mistake that the special warranty deed conveyed the Property solely to Husband, First Horizon erroneously drafted the deed of trust in Husband's name only," the ruling states.
The trial court granted summary judgment to Fannie Mae, reforming the deed to include Christine Pace's name and quieting title to Fannie Mae.
The appeals panel concluded that the trial court erred because the record failed to establish the elements required for reformation.
"We find the trial court's summary judgment in favor of Fannie Mae, quieting title to the Property in Fannie Mae's name, was based on the deed of trust as reformed, and therefore was improper," the ruling states.