Santander Bank, N.A. v. Jerome J. Day, Jr., Trustee of the Jerome J. Day, Jr. Revocable Inter Vivos Trust u/t/d November 10, 2000 & a.

THE STATE OF NEW HAMPSHIRE

SUPREME COURT

In Case No. 2018-0677, Santander Bank, N.A. v. Jerome J.
Day, Jr., Trustee of the Jerome J. Day, Jr. Revocable Inter Vivos
Trust u/t/d November 10, 2000 & a., the court on September 27,
2019, issued the following order:

Having considered the brief filed by the defendants, Jerome J. Day, Jr.,
trustee of the Jerome J. Day, Jr., Revocable Inter Vivos Trust, and Jane F. de
C. Currivan, trustee of the Jane F. de C. Currivan Revocable Inter Vivos Trust,
the brief filed by the plaintiff, Santander Bank, N.A. (Santander), the
memorandum of law filed by NE Moves Mortgage, LLC (NE Moves), and the
record submitted on appeal, we conclude that oral argument is unnecessary in
this case. See Sup. Ct. R. 18(1). The defendants appeal orders by the Superior
Court (Delker, J.) in the action Santander brought to reform a mortgage
originally granted to NE Moves and later assigned to Santander. We affirm.

The following facts either were recited by the trial court or drawn from
documents introduced at trial and made part of the record on appeal. The
defendants, a married couple, are the respective trustees of eponymous
revocable inter vivos trusts. Through their trusts, they own property in North
Hampton. In 2004, they obtained a $430,000 first mortgage on the property
from Piscataqua Savings Bank (Piscataqua). In 2007, they obtained a
$640,000 loan from NE Moves, which they secured with a mortgage on the
property. In their mortgage application, the defendants indicated that they
held the property jointly as individuals. The defendants did not disclose that
title to the property was actually held by their respective trusts. When NE
Moves discovered that the property was held by the trusts, it requested copies
of the trust documents, which the defendants provided.

The closing occurred on December 7, 2007. Although the defendants
were listed only in their individual capacities on the first page of the new
mortgage, they initialed and signed the mortgage both individually and as
trustees.

Under the promissory note accompanying the loan, the defendants
agreed to pay $640,000 plus interest at 8.75% for 30 years. The note provided
that, in January 2013, the initial fixed interest rate would change to an
adjustable rate calculated by adding 2.250% to an index tied to the average
yield on United States Treasury securities adjusted to a constant maturity of
one year (the One-Year Constant Maturing Treasury Rate). According to the
defendants, for the first five years, the promissory note “was interest only,” and
“it would begin to amortize after that.”

The loan proceeds were used to pay off the first mortgage and for home
improvement projects. The new mortgage was recorded on December 11, 2007,
and, a discharge of the first mortgage was recorded on December 14. NE
Moves completed an assignment of the mortgage to Santander on December
21.

In 2008, the defendants received a letter from Santander, stating that the
promissory note erroneously tied the eventual adjustable rate to the wrong
interest rate index and that, in January 2013, the rate would “become
adjustable based on the LIBOR index.” The “LIBOR index” refers to the
“average of interbank offered rates for one-year U.S. dollar-denominated
deposits in the London market.” Santander requested that the defendants sign
a mortgage modification agreement, but they did not.

The defendants defaulted on their mortgage in 2010. To facilitate a
foreclosure, Santander requested that the defendants sign a corrective
mortgage, but they refused. Thus, Santander filed the instant action to reform
the mortgage to indicate that the defendants were granted a mortgage both in
their individual capacities and as trustees of their respective trusts.
Alternatively, Santander asked the court to “order that Santander has priority
over the interests of [the defendants], to the extent of $409,153.48[,] under the
theory of equitable subrogation.” In response, the defendants asserted a
counterclaim for breach of contract, among other claims. The defendants
asserted that Santander breached the parties’ contract by charging a higher-
than-agreed-to interest rate.

Thereafter, Santander moved for summary judgment on its reformation
and equitable subrogation claims. The trial court denied the motion as to the
reformation claim because it found “a genuine dispute of material facts as to
the defendants’ subjective intentions at the time of closing.” The trial court
granted the motion as to the equitable subrogation claim. Santander also
moved to dismiss the defendants’ counterclaims, and the trial court granted
the motion.

The trial court subsequently held a two-day bench trial on Santander’s
reformation claim. At the close of Santander’s case, the defendants moved for
a directed verdict on the ground that Santander had failed to demonstrate that
it properly held the mortgage at issue. The trial court denied that motion,
explaining that “[t]here has never been a dispute in this litigation, that
Santander . . . is the proper successor to the loan and mortgage issued to NE
Moves . . . on December 7, 2007,” and observing that the court had granted
summary judgment to Santander on its equitable subrogation claim “as
successor-in-interest to the mortgage at issue.”

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 Thereafter, in a narrative order, the trial court ruled in Santander’s favor
on the reformation claim. In so ruling, the court observed that Santander had
“meticulously submitted documentation that overwhelmingly contradicts [the
defendants’] story that they believed that they were only signing the paperwork
in their individual capacit[ies].” The court termed the defendants’ testimony on
this subject “nonsensical” and described the defendants as “simply not
credible.” The court observed that neither defendant “fell off the proverbial
turnip truck.” The court found that both defendants are “well-educated and
familiar with the world of finance” in that Currivan “has a master’s degree in
international studies, was a real estate agent, and was involved in international
banking for 10 years,” and Day has a master’s in business administration, has
completed the course work for a doctorate degree, describes himself as an
economist, and has taught master’s-level courses in economics and statistics.

The court found “clear and convincing—indeed overwhelming—evidence”
that the defendants “have taken advantage of a scrivener’s error to prolong the
loss of their home by concocting this distinction between granting a mortgage
in their individual capacity, as opposed to on behalf of their trusts.” The court
explained:

[The defendants] both wanted this loan from the bank for
home improvement projects. They both knew that they could not
get the loan without granting the lender a security interest in the
Property. They both admitted that they were aware that if they did
not repay the loan, the bank could foreclose on the Property. They
have not made a single payment toward the loan since 2010. . . .
At the time of the closing on December 7, 2007, all parties to this
mortgage transaction intended for NE Moves to have an
enforceable security interest in the Property. In fact, even after the
closing[,] when [the defendants] applied for a loan modification in
2011, they acknowledged that [the] loan [was] secured [by their]
only residence . . . . In light of these admissions, their effort now
to disavow the security interest in the Property is disingenuous.

(Quotation and citations omitted.) This appeal followed.

On appeal, the defendants first challenge the trial court’s determination
that Santander was entitled to reformation. We will uphold the trial court’s
findings and rulings unless they are not supported by the evidence or are
legally erroneous. Cook v. Sullivan, 149 N.H. 749, 780 (2003). Our standard
of review is not whether we would rule differently than the trial court, but
whether a reasonable person could have reached the same decision as the trial
court based upon the same evidence. Id.

“The law is well settled in this jurisdiction that reformation may be
granted . . . where the instrument fails to express the intention which the

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parties had in making the contract which it purports to contain” and that
“parol evidence of mistake in reduction of the agreement of the parties to
writing may be received, not for the purpose of varying the written instrument,
but for the purpose of establishing the mistake and correcting the instrument.”
Gagnon v. Pronovost, 97 N.H. 58, 60 (1951) (quotation and citation omitted).
Reformation of an instrument for mutual mistake requires that the party
seeking reformation demonstrate by clear and convincing evidence that: (1)
there was an actual agreement between the parties; (2) there was an agreement
to put the agreement in writing; and (3) there is a variance between the prior
agreement and the writing. A.J. Cameron Sod Farms v. Continental Ins. Co., 142 N.H. 275, 283 (1997). “The credibility of witnesses and the weight to be
given evidence are questions to be determined by the trial court.” McCabe v.
Arcidy, 138 N.H. 20, 28 (1993) (quotation and brackets omitted). “The effect of
the trial court’s finding as to the parties’ agreement is not defeated or lessened
because it was reached after a consideration of conflicting testimony.” Id.
(quotation, ellipsis, and brackets omitted).

The defendants argue that Santander is not entitled to reformation
because it was not originally a party to the mortgage. However, as they later
correctly acknowledge, as the assignee to the mortgage originally granted to NE
Moves, “Santander stands in the shoes of NE Moves” and obtained the rights of
NE Moves at the time of the assignment. See YYY Corp. v. Gazda, 145 N.H. 53,
61 (2000). Accordingly, this argument is unavailing.

The defendants next assert that the evidence before the trial court
demonstrates that “both sides intended to have [the defendants] execute the
mortgage only as individuals . . . .” To the contrary, there is evidence in the
record to support the trial court’s finding that the parties intended that the
defendants would be parties to the mortgage both in their individual capacities
and as trustees of their respective trusts. Thus, we uphold the trial court’s
finding.

The defendants next contend that the trial court applied the wrong legal
standard when it ruled in their favor on Santander’s summary judgment
motion, finding that genuine issues of material fact existed as to their
subjective intentions. This argument lacks merit and warrants no further
discussion. See Vogel v. Vogel, 137 N.H. 321, 322 (1993).

The defendants next challenge the trial court’s grant of summary
judgment to Santander on its equitable subrogation claim. Equitable
subrogation “is a broad doctrine, which is given liberal application.” Chase v.
Ameriquest Mortgage Co., 155 N.H. 19, 27 (2007). “It applies where one who
has discharged the debt of another may, under certain circumstances, succeed
to the rights and position of the satisfied creditor.” Id. (quotation omitted). In
order for equitable subrogation to apply, the following conditions must be met:
(1) the subrogee cannot have acted as a volunteer; (2) the subrogee must have

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paid a debt upon which it was not primarily liable; (3) the subrogee must have
paid the entire debt; and (4) subrogation may not work any injustice to the
rights of others. Id. The propriety of awarding equitable relief rests in the
sound discretion of the trial court to be exercised according to the
circumstances and exigencies of the case. Id. at 24. We will uphold a trial
court’s equitable order unless it constitutes an unsustainable exercise of
discretion. Id.

The defendants argue that equitable subrogation is not appropriate
because “Santander did not pay the entire debt to Piscataqua,” rather, they
assert, “NE Moves paid the debt.” This argument is unpersuasive given that as
the defendants later concede, as the assignee, “Santander stands in the shoes
of NE Moves.” See YYY Corp., 145 N.H. at 61.

Finally, the defendants contest the trial court’s dismissal of their
counterclaim for breach of contract. In reviewing the trial court’s grant of a
motion to dismiss a counterclaim, our standard of review is whether the
allegations in the counterclaimants’ pleadings are reasonably susceptible of a
construction that would permit recovery. Town of Londonderry v. Mesiti Dev., 168 N.H. 377, 379 (2015). Although we assume the truth of the facts alleged in
the counterclaimants’ pleadings and construe all reasonable inferences in the
light most favorable to them, we will uphold the granting of the motion to
dismiss if the facts pleaded do not constitute a basis for legal relief. Id.

The trial court dismissed the defendants’ breach of contract counterclaim
on ripeness grounds. “Ripeness relates to the degree to which the defined
issues in a case are based on actual facts and are capable of being adjudicated
on an adequately developed record.” Univ. Sys. of N.H. Bd. of Trs. v. Dorfsman, 168 N.H. 450, 455 (2015) (quotation and brackets omitted). Although we have
not adopted a formal test for ripeness, we have found “persuasive the two-
pronged analysis used by other jurisdictions that evaluates the fitness of the
issue for judicial determination and the hardship to the parties if the court
declines to consider the issue.” Id. (quotation omitted). With respect to the
first prong of the analysis, fitness for judicial review, a claim is fit for decision
when: (1) the issues raised are primarily legal; (2) they do not require further
factual development; and (3) the challenged action is final. Id. “The second
prong of the ripeness test requires that the contested action impose an impact
on the parties sufficiently direct and immediate as to render the issue
appropriate for judicial review at this stage.” Id. (quotation omitted).

Here, the trial court ruled that the defendants’ breach of contract claim
was not ripe because it centered upon the adjustable interest rate imposed in
January 2013, approximately three years after the defendants defaulted. The
court ruled that, given that the defendants had defaulted long before that
interest rate became effective and given that they did not allege that the
allegedly improper interest rate proximately caused their default, they had

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failed to demonstrate that imposing the rate caused them “sufficiently direct
and immediate” harm as to render the issue proper for judicial review. Id. The
court further stated that whether Santander should calculate the defendants’
current debt using the One-Year Constant Maturing Treasury Rate or the
LIBOR rate “will best be resolved during foreclosure.”

The defendants argue that their breach of contract claim is ripe because,
given the uncertainty as to whether the One-Year Constant Maturing Treasury
Rate or the LIBOR rate applies to their debt, their mortgage is voidable. As the
appealing party, the defendants have the burden of demonstrating reversible
error. Gallo v. Traina, 166 N.H. 737, 740 (2014). Based upon our review of the
trial court’s well-reasoned order dismissing the defendants’ breach of contract
counterclaim, the defendants’ challenges to it, the relevant law, and the record
submitted on appeal, we conclude that they have not demonstrated reversible
error. See id. We have reviewed the defendants’ remaining arguments and
conclude that they do not warrant any further discussion. See Vogel, 137 N.H.
at 322.

Affirmed.

Hicks, Bassett, Hantz Marconi, and Donovan, JJ., concurred.

Eileen Fox,
Clerk

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