UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF KENTUCKY

COVINGTON DIVISION

IN RE:

SANDRA LOU HELVEY

DEBTOR                                                                                          CASE NO. 05-24181

LORI A. SCHLARMAN, TRUSTEE                                                             PLAINTIFF

VS.                                                                                                    ADV. NO. 06-2061

SUNTRUST MORTGAGE, INC.;

SANDRA LOU HELVEY                                                                              DEFENDANTS

           This matter is before the court on the Trustee’s Motion for Summary Judgment against Defendant SunTrust Mortgage, Inc. (“SunTrust”). The Trustee seeks to avoid SunTrust’s mortgage pursuant to Bankruptcy Code section 544(a)(3). SunTrust did not file a responsive pleading to the Trustee’s motion, and the parties agreed that a hearing on the motion was not necessary. An Order Granting Motion to Waive Hearing . . . and to Submit on the Pleadings was entered on July 17, 2006, and this matter is now ripe for decision. This court has jurisdiction of this matter pursuant to Judicial Code section 1334(b); it is a core proceeding pursuant to Judicial Code section 157(b)(2)(K).

           1.        Factual and procedural background

           As set out by the Trustee, the Debtor purchased property in Independence, Kentucky on April 25, 2003. At the closing on this property, the Debtor executed and delivered to SunTrust a Promissory Note in the principal amount of $58,400.00. To secure the payment of the this debt, the Debtor further executed and delivered a Mortgage granting SunTrust a security interest in the subject property. The Debtor filed her Chapter 7 case in this court on October 13, 2005.

           On March 21, 2006, the Trustee filed her Complaint for Lien Avoidance, Sale of Real Estate, and Declaratory Judgment. The Trustee’s Complaint alleges that the certificate of acknowledgment following the signature of the Debtor is defective in that the name of the mortgagor, the name of the county, and the date of acknowledgment are left blank. SunTrust has admitted these allegations in its Answer filed herein on April 24, 2006. The Trustee therefore contends that SunTrust’s mortgage is not properly acknowledged pursuant to KRS 423.130, and is avoidable pursuant to Code section 544.

           The Debtor filed a Counterclaim against the Trustee, a Cross-claim against SunTrust, and a Third Party Complaint against Nielson & Sherry, P.S.C., and Lawyers Title Insurance Corporation. The court sustained motions to dismiss all these actions on June 13, 2006, and an Order dismissing the Third Party Complaint was entered on June 30, 2006.

           2. The summary judgment standard