Watson v. Cartee, No. 15-5556 (6th Cir. 2016)Annotate this Case
In 2002, the Cartees placed a deed of trust on their Nashville home to secure a loan from Citizens Bank. Although the recorded deed's acknowledgement declares that it was acknowledged in Alabama, it was executed and acknowledged in Tennessee. A month later, the Citizens Deed of Trust was re-recorded; the acknowledgment was revised, with a note declaring that “THIS DOCUMENT IS BEING RERECORDED TO ADD THE DERIVATION CLAUSE AND TO CORRECT THE NOTARY ACKNOWLEDGMENT.” The rerecorded deed was not reexecuted or acknowledged by the Cartees, nor did they have any knowledge of the rerecording. In 2004, the Cartees and Regions Bank entered into a credit agreement secured by a second deed of trust, also recorded. After 2005, federal tax liens, judgment liens, and a mechanic’s lien were recorded against the property. Years later, the Cartees defaulted on their mortgage loan. The Cartees defaulted on several forebearance agreements; Diana Cartee filed for bankruptcy. A foreclosure sale resulted in proceeds that satisfied the debt to Citizens, with a surplus of $281,632.74. In an interpleader action, the court awarded Regions the surplus proceeds and granted the successful foreclosure bidder summary judgment. The Sixth Circuit affirmed, holding that the Cartees could not attempt to invalidate the foreclosure by challenging the validity of the bidder’s deed, based on the “defect” in the Citizens Deed.