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United States v. Phillips

United States District Court, W.D. Kentucky, Louisville

January 14, 2019

UNITED STATES OF AMERICA
v.
Rosie PHILLIPS, et al. DEFENDANTS

          MEMORANDUM OPINION

          Charles R. Simpson III, Senior Judge United States District Court.

         I. Introduction

         This case is before the Court on Plaintiff United States of America's motion for default judgment, summary judgment, and an order of sale. DN 14. No. Defendant has responded. Therefore, this matter is ripe for review. Finding that Defendants Rosie Phillips and Portfolio Recovery Associates, LLC (“PRA”) have defaulted, the Court will grant default judgment to the United States. Further finding that Defendant Town & Country Bank and Trust Company's (“Town & Country”) judgment lien is inferior to the United States' prior purchase money mortgage, the Court will grant summary judgment to the United States. As a result, the Court will enter an order of sale foreclosing on the property at issue.

         II. Factual Background[1]

         A. Phillips's Mortgage

         On July 17, 2007, Phillips executed and delivered a promissory note to the United States Department of Agriculture's Rural Housing Service. DN 1-1 at 1. The note had a principal amount of $84, 800 and an interest rate of 5.75% per annum. Id. at 1. To secure the note, Phillips signed a mortgage that was recorded on the same day in Mortgage Book 793, Page 620 in the Office of the Clerk of Nelson County, Kentucky. DN 1 at 2; DN 1-2 at 1. Through the mortgage, Phillips granted the United States a mortgage lien on property located at 137 Scenic Drive, Bardstown, Kentucky 40004 and described as:

BEING Lot 62 in Springhill Subdivision, Section #3, filed in Plat Cabinet 1, Slot 92, in the Nelson County Court Clerk's Office, Nelson County, Kentucky.
Being the same property to which Rosie Phillips, unmarried acquired title by Deed from Kirk G. Hamilton and his wife Lisa A. Hamilton, dated July 17, 2007, of record in Deed Book 443, Page 347, in the Nelson County Court Clerk's Office.

         DN 14-1 at 1-2; DN 1-2 at 1, 7.

         That same day, Phillips signed a Subsidy Repayment Agreement authorizing the United States to recapture, upon transfer of title or non-occupancy of the property, any subsidies granted to her by the United States. DN 1-3. Later, on or about April 17, 2012, Phillips signed a Reamortization Agreement combining the unpaid principal and unpaid interest into a new principal. DN 1-4. Phillips then defaulted on the note by failing to make required payments. DN 1-2 at 2. The United States claims that, as of October 3, 2017, it is owed $96, 516.14 in principal balance, $5, 336.80 in interest, $19, 114.48 in subsidies, $174.86 in late charges, and $561.88 in fees, for a total of $121, 704.16. DN 14-2.

         B. Portfolio Recovery Associates's Lien

         PRA is the holder of a judgment lien recorded on June 2, 2009 in Encumbrance Book 44, Page 678 in the Office of the Clerk of Nelson County, Kentucky. DN 1 at 3; DN 1-5. The judgment, originating from a Nelson County District Court case with the docket number 09-CV-182, was originally for $6, 018.53 at an interest rate of 12% per annum. DN 1-5.

         C. Town & Country's Lien

          Town & Country is the holder of a judgment lien recorded on November 10, 2011 in Encumbrance Book 53, Page 410 in the Office of the Clerk of Nelson County, Kentucky. DN 1 at 3-4; DN 1-6. The judgment, originating from a Nelson County Circuit Court case with the docket number 11-CI-00315, was originally for $5, 871.32 plus costs at an interest rate of 10.517% per annum and attorney's fees in the amount of $711. DN 1-6. Town & Country asserts that, as of August ...


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