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Smith v. Wells Fargo Bank

March 25, 2010

DARAL R. SMITH, APPELLANT,
v.
WELLS FARGO BANK, APPELLEE.



Appeal from the Superior Court of the District of Columbia (CA-3925-07) (Hon. Odessa F. Vincent, Trial Judge).

The opinion of the court was delivered by: Thompson, Associate Judge

Argued January 27, 2010

Before THOMPSON and OBERLY, Associate Judges, and FERREN, Senior Judge.

In 2005, Mary Smith, asserting power of attorney for her father, Willie Smith, conveyed to herself a parcel of real property that he owned. In 2006, Mary Smith executed a deed of trust conveying an interest in the property to a mortgage lender. Subsequently, after Mary Smith defaulted on the mortgage loan, Wells Fargo Bank, which had come to hold the note secured by the deed of trust, foreclosed on the property and eventually purchased it at a foreclosure sale. Appellant, who is Mary Smith's brother, and several of their siblings sued both Mary Smith and Wells Fargo in a quiet title action, alleging that the conveyances to and from Mary Smith (and any conveyances following from them) were invalid because the power-of-attorney instrument did not authorize Mary Smith to convey the property to herself and because, in any event, the instrument was a forgery. The trial court granted summary judgment in favor of Wells Fargo, (1) having stricken the affidavits that plaintiffs submitted to oppose summary judgment on the forgery issue, and (2) finding that Wells Fargo was a bona fide purchaser for value without notice of any defect in title (a "BFP"). This appeal followed.

We affirm as to the trial court's ruling that Wells Fargo was a BFP, as no evidence was presented showing that Wells Fargo was on inquiry notice of any irregularity in Mary Smith's conveyances of the property (and, as we also discuss, unless the power-of-attorney instrument was a forgery, we are satisfied that it gave Mary Smith apparent authority to convey the property as she did). We conclude, however, that the trial court erred in striking the affidavits that plaintiffs submitted in support of their forgery claim, and likewise erred in granting summary judgment, because the affidavits raised a material factual issue as to whether there was a forgery affecting the chain of title. We therefore reverse and remand for trial on the forgery issue.

I.

Willie Smith was the fee simple owner of real property located at 3061 Vista Street, N.E. ("the property"). The summary-judgment record contains a copy of a "Durable Power of Attorney" ("the POA"), purportedly executed by Willie Smith on November 4, 2005, that named "my daughter, Mary A. Smith . . . as my Attorney in Fact" and that bore a legend (required by D.C. Code § 42-101 (a) (2001) for a power of attorney to convey land) authorizing Mary Smith to "sell, lease, grant, encumber, release or otherwise convey any interest in my real property and to execute deeds and all other instruments on my behalf." The POA was notarized by notary public Marilyn Beckwith.

On November 15, 2005, Mary Smith executed a deed transferring the property from "Mary Smith, Agent for Willie Smith" to herself for the consideration of ten dollars. One day later, Willie Smith died intestate. He was survived by eight children: Daral Smith, Jennifer Hebron, Nathaniel Smith, Rickey Smith, William Smith, and Walter Smith (together, the plaintiffs), Michael Smith, and Mary Smith.

After Mary Smith applied for a loan to refinance the property on November 3, 2006, the lender caused a title search to be done regarding the property. The search revealed both the POA and the November 15, 2005 deed, which had been recorded simultaneously in the District of Columbia land records on December 12, 2005. Mary Smith obtained a mortgage loan on the property in the amount of $220,000 upon execution of a deed of trust in favor of trustees for Option One Mortgage Corporation. The deed of trust was recorded in the land records on November 14, 2006. At some point thereafter, Wells Fargo came to be the holder of the note as trustee for Option One Mortgage Loan Trust 2007-1 Asset-Backed Certificates, Series 2007-1.*fn1

On June 8, 2007, plaintiffs filed an action in the Superior Court to quiet title to the property, naming Wells Fargo ("as trustee for Option One Mortgage Loan") and Mary Smith as defendants. In their complaint, plaintiffs alleged that the POA did not grant Mary Smith the power to convey the property as a gift to herself and that the signature on the POA was not that of Willie Smith. They sought a declaration that the deed recorded on December 12, 2005, and the deed of trust recorded on November 14, 2006, were invalid, null and void, and that the estate of Willie Smith is the fee simple owner of the property. The complaint also sought an award of damages against Mary Smith and "any other relief the court deemed proper," but did not specifically seek monetary damages from Wells Fargo. A week after the complaint was filed, plaintiff/appellant Daral Smith was appointed personal representative of the estate of Willie Smith, which was opened for probate in the Superior Court.

Defendant/appellee Wells Fargo filed its motion for summary judgment on February 1, 2008. In support of the motion, Wells Fargo attached an affidavit from notary Beckwith, who averred that she notarized the POA after Willie Smith, accompanied by Mary Smith, came to Beckwith's office and Willie Smith presented photo identification that enabled Beckwith to verify his identity. Beckwith further stated that Willie Smith signed the POA voluntarily and did not appear to be under any duress.

Plaintiffs opposed the motion for summary judgment and attached to their opposition, inter alia, affidavits of Jennifer Hebron and Daral Smith. Hebron stated in her affidavit that she saw her father's signature many times, including during the last months of his life, was "very familiar" with his signature and handwriting, and "[b]ased upon my experience and knowledge of my father's handwriting, I do not believe that he executed the power of attorney." Hebron also stated that her father, who was 90 years old when he died from pancreatic cancer on November 16, 2005, was "extremely weak" when she saw him on November 4, 2005 and "rarely left his bed." She stated that, by November 4, 2005, her father's "mental state had deteriorated significantly and he was no longer able to understand even simple financial transactions" and "[h]is weak condition and mental state would have been obvious to anyone seeing him sign his name." Daral Smith's affidavit contained similar statements about Willie Smith's weakened condition in November 2005.

In response, Wells Fargo moved to strike the affidavits that plaintiffs had submitted. In an order dated May 13, 2008, the trial court granted Wells Fargo's motion to strike, denied plaintiffs' motion to strike Beckwith's affidavit,*fn2 and granted Wells Fargo's motion for summary judgment. The court found that Wells Fargo "is a bona fide purchaser for value," explaining that:

In preparation for closing on the loan, Wells Fargo, via a title company, undertook an investigation of the title history of the property. There was nothing untoward discovered during the title history investigation. Further, there was nothing about the nature of the conveyance of the property from defendant Mary A. Smith, as the agent for Willie Smith, to defendant Mary A. Smith that on its face, was sufficient to put Wells Fargo on notice of any potential deficiency in the ...


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