at 10:00 the Court of Appeals will hear In re The Estate of Norair Avakian, Deceased: Burnette Avakian, Executrix v. Wilmington Trust, National Assoc. as Successor Trustee to Citibank, N.A, as Trustee for Bear Stearns Asset Backed Securities Trust 2007-2, Asset-Backed Certificates, Series 2007-2 and J.P. Morgan Chase Bank, NA.
Norair Avakian passed away in July 2010. His wife opened an estate. J.P. Morgan Chase Bank filed a statement of claim on behalf of a lender based upon a promissory note signed only by Mr. Avakian (a note now held by Wilmington Trust). Mrs. Avakian contested the claim as barred by the statute of limitations. The chancery court ruled for Wilmington Trust.
In 2002, the Avakians purchased a house (Shadowlawn) in Columbus with a loan from Southstar Financing. In November 2004, Mr. Avakian executed a deed that conveyed title to the property to Mrs. Avakian alone. In March 2006, Mr. Avakian refinanced the mortgage with EquiFirst Corporation and took out the new loan in his name only. Because the house was homestead property, EquiFirst required both Mrs. Avakian and Mr. Avakian to execute a deed of trust. Because Mr. Avakian was out of state at the time of closing. the lender forwarded one set of loan documents to Mr. Avakian for him to execute and return and had Mrs. Avakian execute a second set the following day. This resulted in two deeds of trust. Mr. Avakian’s note was sold to Citibank with J.P. Morgan servicing the note. Mr. Avakian fdell behind on the note and then died.
Did a court order that prohibited a lender from foreclosing on property owned solely by a wife toll the running of the statute of limitation on the lender’s separate claim against the husband on his promissory note.
In early 2012, Citibank informed Mrs. Avakian that it intended to foreclose on the house. Mrs. Avakian filed suit in Chancery Court seeking to enjoin the foreclosure by contending that the two deeds of trust on the home were both void pursuant to Miss. Code Ann. § 89-1-29 because neither contained the signatures of both Mrs. Avakian and Mr. Avakian. The lawsuit was removed to the United States District Court for the Northern District of Mississippi. Following a trial in February 2014, the United Stated District Court entered a Final Judgment in favor of Mrs. Avakian and held that the deeds of trust on the house were unenforceable. On appeal, the Fifth Circuit reversed the United Stated District Court, making an Erie-guess holding that the Mississippi Supreme Court would likely construe the two deeds of trust as together creating a valid deed of trust and remanded. Meanwhile, J. P. Morgan filed a Statement of Claim based upon Mr. Avakian’s debt arising from the promissory note of $815,905.06. After the Fifth Circuit ruled, the chancellor held that the running of the statute of limitation had been tolled.
In February 23, 2015, Wilmington Trust filed suit in the Lowndes County Chancery Court against Mrs. Avakian and the Estate of Norair Avakian seeking to foreclose on the home and to recover against the Estate on the promissory note. On August 4, 2015, the United States District Court entered a Final Judgment in favor of Wilmington Trust (which was substituted for Citibank).
On September 8, 2015, the chancery court issued its Opinion and Judgment. The chancery court concluded that the four-year statute-of-limitations period expired on October 26, 2014. It concluded, however, that the Fifth Circuit’s order prohibiting the Trustee from foreclosing had tolled the running of the limitations period for at least the period between May 12, 2014 and August 4, 2015. As a result, the Trustee’s filing of the State Proceeding against the Estate on February 23, 2015 was timely. Moreover, Ms. Avakian had failed to mail the statutorily required notice to the Trustee, who was unquestionably a reasonably ascertainable creditor. Therefore, the statement of claim was timely.
Watch the argument here