In this dispute between creditors over the proceeds of a short sale of a home, the Norfolk Circuit Court says the former homeowner may intervene in the interpleader action as a defendant, in order to determine his exposure for the deficiency.
The interpleaded funds represent the proceeds from a short sale on property owned by intervener James Dickinson. The property was encumbered by deeds of trust to secure separate loans made by Bank of the Commonwealth and a lender identified as “American Home” in the pleadings. Defendant Southern Bank is the successor to Bank of the Commonwealth. Deutsche Bank Trust is identified as the “Trustee for American Home Mortgage Assets Trust 2006-6, Mortgage Backed Pass Through Certificates Series 2006-6,” with an address in Los Angeles, Calif. The pleading recites that Deutsche Bank Trust is the holder of the American Home note secured by the deed of trust against the Dickinson property.
Southern Bank and Deutsche Bank Trust dispute the priority of the deeds of trust, which were released in order to effect a short sale of the property. The proceeds of the sale have been held in escrow by plaintiff, which filed the complaint for interpleader following the failure of the creditors to reach any agreement as to distribution of the funds.
Dickinson himself claims no interest in the funds. He alleges Southern Bank agreed to cap at $15,000 his personal liability for any deficiency owed on its note. He alleges he has tried without success to reach any agreement or even gain any understanding of Deutsche Bank’s position respecting his obligation.
In early 2013, apparently at the direction of the Trustee for the American Home Mortgage Assets Trust, Ocwen Loan Servicing began collection efforts on Dickinson’s entire outstanding loan balance, including the amount in controversy paid into this court. Dickinson alleges despite repeated efforts, his counsel has been unable to reach anyone at Ocwen or Deutsche Bank Trust with authority to discuss the final settlement of his debt. Counsel indicated the only contact information they had for any representative of the lender was a telephone number that is answered in India.
The court is persuaded that the cap on liability from one creditor, but not the other, gives Dickinson a sufficient interest in the subject matter of this suit. He claims no interest in the funds themselves, but he does have an interest in the position that Deutsche Bank Trust will take regarding amounts they claim to be owned, as well as an interest in how the funds are applied and what his exposure to Deutsche Bank Trust may ultimately be.
The court grants Dickinson leave to intervene as party defendant, not party plaintiff, which he may do by filing an appropriate Answer with whatever other affirmative pleading articulates any claim that he has germane to this subject matter.
If Deutsche Bank Trust can confirm with counsel for Dickinson its intentions with respect to Dickinson’s exposure for the deficiency to the satisfaction of counsel, Dickinson may withdraw his motion to intervene.
Tavss Fletcher Maiden & Reed PC v. Southern Bank and Trust Co. (Hall) No. CL 13-4306, Oct. 31, 2013; Norfolk Cir.Ct.; Hunter D. Hanger, Richard H. Matthews, Peter I. Grasis for the parties. VLW 013-8-124, 3 pp.