NATIONWIDE ADVANTAGE MORTGAGE COMPANY, Plaintiff-Appellee, vs. SERGIO J. ORTIZ, a/k/a SERGIO ORTIZ, Defendant-Appellant, CITY OF SIOUX CITY, Defendant.
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IN THE COURT OF APPEALS OF IOWA
No. 9-585 / 08-1420
Filed September 2, 2009
NATIONWIDE ADVANTAGE MORTGAGE COMPANY,
Plaintiff-Appellee,
vs.
SERGIO J. ORTIZ, a/k/a
SERGIO ORTIZ,
Defendant-Appellant,
CITY OF SIOUX CITY,
Defendant.
________________________________________________________________
Appeal from the Iowa District Court for Woodbury County, Steven J.
Andreasen, Judge.
Sergio Ortiz appeals the district court decision granting summary
judgment to the plaintiff in this foreclosure action.
REVERSED AND
REMANDED.
Jennifer Cerutti and Andrea Buckley, Iowa Legal Aid, Sioux City, for
appellant.
Mollie Pawlosky and Jon Sullivan of Dickinson, Mackaman, Tyler &
Hagen, P.C., Des Moines, for appellee.
Thomas J. Miller, Attorney General, and Grant Dugdale, Assistant
Attorney General, for defendant.
Considered by Vaitheswaran, P.J., and Mansfield, J., and Schechtman,
S.J.*
*Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2009).
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SCHECHTMAN, S.J.
Sergio Ortiz, the mortgagor, appeals from the district court‟s granting of a
motion for summary judgment to the mortgagee assignee, Nationwide Advantage
Mortgage Company (Nationwide), resulting in a decree of foreclosure upon his
homestead. We reverse and remand.
I. Scope of Review.
Although foreclosure proceedings rest in equity, our review from the grant
of summary judgment is for corrections of error at law. Norwest Credit, Inc. v.
City of Davenport, 626 N.W.2d 153, 155 (Iowa 2001). The court “cannot find
facts de novo in an appeal from summary judgment.” Moser v. Thorp Sales
Corp., 312 N.W.2d 881, 886 (Iowa 1981).
When our review requires an
interpretation of the scope and meaning of a statute, it is also for corrections at
law. State v. Eickelberg, 574 N.W.2d 1, 3 (Iowa 1997). The grant or denial of a
motion for summary judgment is reviewed in the light most favorable to the nonmoving party. Keokuk Junction Ry. Co. v. IES Indus., Inc., 618 N.W.2d 352, 355
(Iowa 2000). Judgment is rendered if the pleadings, discovery, and affidavits on
file show there is no genuine issue of material fact such that the moving party is
entitled to a judgment as a matter of law. Iowa R. Civ. P. 1.981(3).
II. Relevant Statute.
Iowa Code section 561.13 (2007) provides, in relevant part:
A conveyance or encumbrance of . . . the homestead, if the
owner is married, is not valid, unless and until the spouse of the
owner executes the same or a like instrument, or a power of
attorney for the execution of the same or a like instrument, and the
instrument or power of attorney sets out the legal description of the
homestead.
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A mortgage, not signed by the spouse of the owner, is void, as to both the
owner and the spouse. Beal Bank v. Siems, 670 N.W.2d 119, 124 (Iowa 2003).
The case of Martin v. Martin, 720 N.W.2d 732, 738 (Iowa 2006), had a similar
holding as it relates to a deed (“Section 561.13 makes a deed invalid—that is,
void—without the signature of both spouses, not merely voidable by the spouse
who did not sign.”).
III. Summary Judgment Proceeding.
The petition has attached the mortgage and note, each signed by Sergio
J. Ortiz, on March 26, 2004, in South Sioux City, Nebraska.
The mortgage
encumbers Lot 21, The Glen, 1st Filing, an Addition to Sioux City, Woodbury
County, Iowa. It describes the mortgagor as “Sergio J. Ortiz, a single person.”
The mortgage provides, among other provisions:
Borrower shall occupy, establish, and use the Property as
Borrower‟s principal residence within sixty days after the execution
of this Security Instrument . . . and shall continue to occupy the
Property as Borrower‟s principal residence for at least one year
after the date of occupancy.
Also attached to the petition was an assignment by the mortgagee, Dakota
County State Bank, to Nationwide Advantage Mortgage Company, dated the
same day.
Ortiz‟s answer admits its execution, and sets forth his statement of
material facts: “The mortgage is void as to both husband and wife, without the
signature of the wife.” The motion for summary judgment contained an affidavit
that the time of payment on the note was accelerated due to default, and verified
4
the amounts due. The resistance contained an affidavit from Ortiz that set forth
these facts:
[M]y primary language is Spanish.
I can only understand a little written and spoken English.
....
. . . I was asked several questions. These questions were
translated through a realtor . . . . I was asked my marital status. I
answered that I was separated.
All of the documents were in English. They were not
translated line by line or paragraph by paragraph. . . .
In February/March 2002 I married Josefina Rodriguez De La
Torre in Mexico.
Josephina Rodriquez De La Torre and I separated in August
2002.
Josephina Rodriquez De La Torre and I were divorced in
August 2006 in Mexico.
The brief filed by Nationwide addressed the issue of equitable estoppel,
which was responded to by Ortiz. In its reply brief to the motion, Nationwide
raised the additional issues of bona fide purchaser for value and equitable
mortgage, though neither was pled.1
The material facts, about which there was no genuine issue, as set forth
by the district court in its ruling, were:
On March 26, 2004, Ortiz executed a note and mortgage to
secure financing from Dakota County State Bank for the purchase
of real property located at 3201 Sycamore Terrace in Sioux City,
Iowa. Ortiz has since used that real estate as his homestead. The
note and mortgage references Ortiz as a single person. Dakota
County State Bank thereafter assigned and otherwise transferred
its interest in the note and mortgage to Nationwide. Ortiz has failed
to make the required payments and, thus, has defaulted on his
obligations under the note and mortgage.
At the time Ortiz executed the note and mortgage, he spoke
and understood only Spanish. The terms of the note and mortgage
1
The reply brief of Nationwide sets forth other documents in English that Ortiz had
previously signed, that indicated a single status. These were not a part of an affidavit nor
shown that they were available at closing.
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and information obtained from Ortiz were translated by a Realtor,
Benito Molina, who worked at Century 21 at the time. The
documents, including the note and mortgage, were otherwise
written/printed only in English.
When asked about his marital status, Ortiz informed the
translator that he was separated. Through the translation, it was
then indicated on the note and mortgage that Ortiz was single.
When the note and mortgage were executed in March 2004,
however, Ortiz was, in fact, married. He married Josephina
Rodriquez De La Torre in Mexico in February or March 2002. Ortiz
and his spouse separated in August of 2002. He then obtained a
divorce in Mexico, which was not finalized until August of 2006.
The district court, after citing the Martin and Beal cases, concluded:
Despite the apparent inequities, the Court finds based upon
this record viewed in a light most favorable to Ortiz that the
mortgage executed by Ortiz on March 26, 2004, is invalid and void
due to the lack of execution by his spouse and pursuant to Iowa
Code section 561.13. Because the mortgage is invalid, foreclosure
is unavailable to Nationwide absent some other theory of recovery.
The district court then proceeded to address the issue of equitable
estoppel, determining that Nationwide had proven the four factors, set forth in
Rubes v. Mega Life & Health Insurance Co., 642 N.W.2d 263, 271 (Iowa 2002).2
The district court did consider Nationwide‟s alternative claim that as an assignee,
it was a bona fide purchaser for value without notice of any infirmities to the
mortgage. It concluded it was moot, due to its finding of equitable estoppel, but
“established.”
The district court granted the motion for summary judgment. The court
directed Nationwide to prepare a foreclosure decree, which it signed and filed
2
These factors are: (1) the opposing party misrepresented or concealed material facts;
(2) the party relying on estoppel lacked knowledge of the true facts; (3) the party
misrepresenting or concealing the true facts intended the deceived party to act on those
representations; and (4) detrimental reliance by the party to whom the representations
were made. Rubes, 642 N.W.2d at 271.
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several days later. A judgment in rem in the sum of $75,045.71 was entered.
The subject mortgage was foreclosed and the real estate, owned by Ortiz,
directed to be sold to satisfy the judgment and costs.
IV. Analysis.
Nationwide now contends that the district court was right for the wrong
reasons; that the court was in error to find that the mortgage was void, asserting
that section 561.13 does not apply to a purchase money mortgage. Nationwide
distinguishes Beal as not being a purchase money mortgage, but an
encumbrance on previously owned realty.
The purchase money mortgage issue was not addressed by the trial court
nor was it the subject of a motion to enlarge or amend under Iowa Rule of Civil
Procedure 1.904(2). Matters that are not brought to the attention of the district
court are not preserved for appeal. Meier v. Senecaut, 641 N.W.2d 532, 537
(Iowa 2002).
Nationwide addressed solely the issues of equitable estoppel,
equitable mortgage, and bona fide purchaser for value (though only in its reply
brief), which all assumed homestead status.
Given that assumption, with the pleadings and affidavits before it, we
agree with the district court that the real estate mortgage was invalid and void at
the time of its execution. It was conclusive that Ortiz was married on the date of
the note and mortgage.
That he was separated at the time is of no
consequence, as the statute applies “if the owner is married.” See Iowa Code §
561.13. Because the mortgage was not signed by Josefina, and constituted her
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husband‟s homestead,3 it is void as to both she and Ortiz as they were husband
and wife at the time. See Beal, 670 N.W.2d at 124.
It is undisputed that Ortiz, at closing, stated that he was “separated” in
answer to a query concerning his marital status. The fact that the question was
proposed would infer that his status had not been determined up to that juncture.
The record of the response the Spanish translator, a realtor, gave to the
scrivener is absent.
The mortgage document was prepared by Nationwide‟s
assignor. Viewing the undisputed material facts, as determined by the motion
court, in the light most favorable to Ortiz, they support the annulment of the
mortgage. See Keokuk Junction Ry. Co., 618 N.W.2d at 355.
We do not agree with the district court that the doctrines of equitable
estoppel and/or equitable mortgage4 are available to overcome a void mortgage;
that is, that Ortiz is estopped from raising the defense of the statute. As we read
Martin, the district court was obligated to apply section 561.13 in the absence of
“fraud or mistake.” 720 N.W. 2d at 738. The district court fell victim to the
tendency to attempt to mold a fair result, in equity, under the particular
3
Though Nationwide did not dispute the homestead status in district court, it contests
that factual finding, on appeal, for the reason that Josefina never lived in the house or in
the U.S. Our focus is not on where the spouse lives, but rather on “whether „the owner‟
used the house as a home. . . .” See Beal Bank, 670 NW 2d at 124. “It has been the
well-settled law of this court to construe the homestead status liberally in favor of the
owner of the home.” Hunt, Hill & Betts v. Moore, 219 Iowa 451, 453, 258 NW 114, 115
(1934).
4
The district court foreclosed the mortgage that it had held void under the statute,
reciting its recording data in the Woodbury County recorder‟s office in its decree of
foreclosure. Thus it created an equitable mortgage from the same instrument and terms
as the voided mortgage (a lien created by contract but not sufficient as a legal mortgage
will generally be recognized as an equitable mortgage.). Klotz v. Klotz, 440 NW 2d 406,
408 (Iowa Ct. App. 1989).
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circumstances that it faced. Our supreme court recognized this bent in Martin,
720 N.W.2d at 738:
Moreover, while it may be tempting for trial judges to fashion
remedies viewed to be fair and just under the particular
circumstances of a case, the law has defined those concepts and
must dominate the decision making process. Absent constitutional
concerns, it is not for courts to overlook the language of a statute to
reach a particular result deemed unjust under the particular
circumstances of a case.
(Citations omitted).
In Iowa State Bank & Trust v. Michel, 683 N.W.2d 95, 107 (Iowa 2004),
the district court fashioned an equitable mortgage in face of a different
homestead statute. “[C]ourts of equity are bound by statutes and follow the law
in [the] absence of fraud or mistake.”
Michel, 683 N.W.2d at 107 (quoting
Mensch v. Netty, 408 N.W.2d 383, 386 (Iowa 1987)). “This rule preserves the
integrity of the legislature‟s judgment that certain transactions will be given effect
only if they comply with the requirements set out in the statute.” Id.; see also
Brunsdon v. Brunsdon, 199 Iowa 1099, 1113, 200 N.W. 823, 829 (1924) (“The
conclusion arrived at in this case may result in a grave injustice being done to
appellees, but a court of equity cannot so expand its proper jurisdiction as to
completely override statutes or ignore established doctrines.”)
Accordingly, we hold that the district court erred in relying on the concepts
of equitable estoppel and equitable mortgage to grant relief to Nationwide,
notwithstanding section 561.13. The district court had no justification, in equity,
to scrap the statute and leap to a remedy that negates the statute designed to
protect a homestead. We decline to consider the bona fide purchaser argument
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as we agree with Ortiz that he did not have an adequate opportunity to respond
to it below, which was first raised in Nationwide‟s summary judgment reply brief.
As previously noted, we also decline to consider the purchase money mortgage
argument, as not raised at the summary judgment level.
V. Conclusion.
The granting of summary judgment is reversed and the foreclosure decree
emanating therefrom vacated. The matter is remanded to the district court, back
to square one. For further clarification on remand, the issues of fraud, mistake,
purchase money mortgage, and bona fide purchaser for value are all on the table
(if appropriately raised), as their merits were not addressed in the motion for
summary judgment and/or on this appeal.
REVERSED AND REMANDED.
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