author: WILKINS, Circuit Judge:

text:
    UNITED STATES of America, Appellee v. LaFrances Dudley O’NEAL, Appellant
    No. 13-3085
    United States Court of Appeals, District of Columbia Circuit.
    Argued October 17, 2016
    Decided December 27, 2016

      Benjamin Beaton, Washington, DC, appointed by the court, argued the cause as amicus curiae in support of appellant. With him on the briefs was Paul J. Zidlicky, Washington, DC.
    LaFrances Dudley O’Neal, pro se, filed the briefs for appellant.
    Katherine M. Kelly, Assistant U.S. Attorney, argued the cause for appellee. With her on the brief were Elizabeth Tros-man, John P. Mannarino, and Virginia Cheatham, Assistant U.S. Attorneys. Elizabeth H. Danello, Assistant U.S. Attorney, entered an appearance.
    Before: BROWN, MILLETT and WILKINS, Circuit Judges.
   WILKINS, Circuit Judge:

Appellant LaFrances Dudley O’Neal challenges her conviction for conspiracy and bank fraud stemming from a scheme to obtain mortgage loans using straw purchasers, false loan applications, and forged appraisals. Following O’Neal’s conviction, the District Court imposed a sentence of forty-eight months’ imprisonment plus supervised release and restitution. The challenge to O’Neal’s conviction turns on two evidentiary decisions made by the District Court. O’Neal represented herself at sentencing, and we must further determine whether her waiver of the right to counsel at the sentencing stage was knowing and intelligent.

After consideration of these questions, we affirm both O’Neal’s conviction and sentence.

I.

A.

O’Neal is a former paramedic trainer for the D.C. Fire Department, who ran her own business providing medical training. She also started another company, GL Real Estate Development, to develop group homes and community-assisted living for the elderly.

In 2006 and 2007, O’Neal was involved in the purchase of seven properties, financed by mortgage loans that totaled over $2.6 million. O’Neal originally planned to convert all seven properties into group homes, but—after purchasing them—learned of regulatory requirements that made it infeasible to turn the smaller properties into group homes. Ultimately, O’Neal converted three properties into group homes and the other four properties into Section- 8 housing. Although O’Neal obtained the required regulatory approvals, no- one ever moved into the group homes.

Each property was purchased in the name of a straw buyer. Each straw buyer received approximately $5,000 from O’Neal for each property purchased in his or her name. As the straw buyers would not have had sufficient income to qualify for the loans, their income and employment information was falsified on the loan applications. In addition, forged appraisals of the properties were used to support higher loan amounts, bank funds received by the title company in advance of closing were illicitly used as the borrower’s dbwn payment, and invoices were provided to lenders suggesting that renovations not yet undertaken had in fact already been performed.

Eventually, all seven properties fell into default and the lenders that held the mortgages sustained an aggregate loss of $964,503.

B.

On December 7, 2011, the grand jury returned a seven-count indictment against O’Neal and Donald Ramsey, a .mortgage broker who prepared some of the loan documents.

Before trial—and after O’Neal had made several bizarre statements at the initial status . conference—-the District Court ordered O’Neal to undergo a forensic screening to evaluate her mental capacity. This initial screening determined that O’Neal was competent to stand trial. However, .O’Neal later- expressed a desire to represent herself and the District Court engaged in a lengthy colloquy about the dangers of self-representation, given the complexities of the rules of evidence, cross-examination, opening statements, jury selection, investigation, and other aspects of .trial .practice. The District Court then ordered an in-patient competency examination. See generally Indiana v. Edwards, 554 U.S. 164, 128 S.Ct. 2379, 171 L.Ed.2d 345 (2008). At a subsequent status hearing—when O’Neal continued to state she wished to represent herself—the District Court inquired further about whether O’Neal understood the charges against her, informed her of the maximum prison sentence, fíne, and other consequences for each charge, and questioned O’Neal regarding her.educational background, legal experience, and knowledge of trial procedure and the Federal Rules of Evidence. The District Court found she was competent to represent herself at trial and made a knowing and intelligent waiver of her right to counsel. Shortly before trial, however, O’Neal changed her mind and elected to be represented by retained counsel.

Meanwhile, O’Neal’s co-defendant, Donald Ramsey, entered into a plea agreement in which he agreed to cooperate with the Government in O’Neal’s prosecution. Ramsey was a key witness for the prosecution, linking' O’Neal' to the fraudulent documents and false statements that were submitted to the lenders.

At trial, the District Court prevented defense counsel from questioning Ramsey during recross-examination about two pri- or incidents that potentially reflected on Ramsey’s character for truthfulness. The District Court also barred testimony by another witness about an alleged invitation from Ramsey to participate in “shady” mortgages.

On March 27, 2013, the jury returned a verdict finding O’Neal guilty of conspiracy and three counts of bank fraud, but not guilty of mail fraud and first-degree fraud.

At the sentencing hearing on September 4, 2013, trial counsel announced that O’Neal would represent herself at sentencing. Trial counsel had prepared and filed a sentencing memorandum with the District Court, but did not participate in the hearing other than to give a statement as a “friend witness.”

■ The District Court imposed a prison sentence of 48 months—which constituted a downward variance from the Sentencing Guidelines range—and a total of 60 months of supervised release thereafter, with restitution but no fine.

• On September 11, 2013, O’Neal filed a notice of appeal.

II.

Here, we must determine whether the District Court abused its discretion in preventing questioning about two prior acts by Ramsey that could reflect on his character for truthfulness and excluding testimony about an alleged invitation by Ramsey to participate in “shady” mortgages. See United States v. Whitmore, 359 F.3d 609, 616 (D.C. Cir. 2004) (“We review the district court’s evidentiary rulings for abuse of discretion.”).

A.

After Ramsey had testified on direct examination, cross-examination, and redirect, the District Court solicited questions from the jury. The Court vetted the proffered juror questions with counsel, and then asked Ramsey, “what did you receive in return for testifying against the defendant?” J.A. 459. In response, Ramsey testi-fled that his cooperation agreement required him to “just ... tell the truth,” that he had not “been promised any outcome or result,” but that he “hope[d] for the best outcome possible.” J.A. 459. In response to a follow-up question about what he meant by the “best outcome,” Ramsey testified, “Well, for me, I think being able to continue to live a better and upright life and live my life. I don’t have—everybody’s desire is to stay free, but no one, including the judge, would make any commitment of anything to me because I made an error. So I would pray that leniency.” J.A. 459-60. On recross-examination, Ramsey was asked by defense counsel, “When you say that you want to return to live in this upright life, are you suggesting that you never did anything .improper in the mortgage business until you met Ms. O’Neal?” J.A. 460.

At that point, the Government objected and counsel approached the bench. At the bench conference, the Court asked defense counsel whether he had “a good faith basis for believing that [Ramsey had] ever done anything illegal in the real estate industry.” J.A. 460-61. Counsél responded that Ramsey had once opened a bank'account with a fake document. In his explanation, defense counsel began referring variously to a “drug thing” and the “bank fraud thing.” J.A 461. At this point the prosecution interrupted, clarifying that the only criminal charge against Ramsey was a 2003 misdemeanor charge for uttering a bad check in Maryland. Defense counsel later admitted that the “drug thing” pertained to a different witness, not to Ramsey. The prosecution also protested that there was no conviction on the bad. check charge, so questioning on that charge was inappropriate. In response, the Court asked, “[D]oes it have to be a conviction if it’s a bad act and it goes to his credibility?” J.A. 462.

The.Court opted to question the witness, outside the.presence of the jury, about the allegations. After dismissing the jury, the Court asked Ramsey whether he had been criminally charged in Maryland and if there were “ever any allegations made against you regarding a bad check or opening a bank account with a bad check?” J.A. 464, Ramsey denied that he had ever been “in front of a judge or received any citation.” J.A. 464. After hearing this, the Court concluded, “[U]nless counsel has some other information about these allegations in Maryland having been a criminal case, and that there was some . culpability found, or he admitted culpability based upon what he said, I would have to conclude that this is not an appropriate area to go into.” J.A. 467. Defense counsel made no further proffer and no further argument in favor of pursuing this line of recross-examination.

Recross-examination is an area where trial courts have long exercised “wide discretion in controlling the scope and the form of questions employed.” United States v. Landers, 484 F.2d 93, 95 (5th Cir. 1973); accord Kitchen v. United States, 221 F.2d 832, 835 (D.C. Cir. 1955). “A party has a right to re-cross examination only where new matter is brought out on re-direct examination.” Hale v. United States, 435 F.2d 737, 749-50 (5th Cir. 1970); see also United States v. Stoehr, 196 F.2d 276, 280 (3d Cir. 1952) (“Where new evidence is opened up on redirect examination, the opposing party must be given the right of cross-examination on the new matter, but the privilege of recross-examination lies within the trial court’s discretion.”).

The alleged incidents at issue here were not brought up on redirect or during jury questioning. Defense counsel could have attempted to question Ramsey about these matters' during cross-examination, but did not. In circumstances such as these—-where counsel seeks to pursue a new line of attack that is not directly responsive to intervening testimony by the witness—recross-examination is a privilege, not a right, and the District Court’s discretion is at its apex. We discern no abuse of discretion here..

Amicus submits that the District Court erroneously applied Federal Rule of Evidence 608(b). Rule 608(b) provides:

Except for á criminal conviction under Rule 609, extrinsic evidence is not admissible to prove specific instances of a witness’s conduct in order to attack 'or support the witness’s character for truthfulness. But the court may, on cross-examination, allow them to be inquired into if they are probative of the bharacter for truthfulness or untruthfulness of ... the witness.

Fed. R. Evid. 608(b).

To be sure, Federal Rule of Evidence 608(b) allows questioning' on specific incidents that did not result in a criminal conviction. Nor is an admission of wrongdoing a necessary precondition. Nevertheless, questioning about such incidents must be “probative.” Id. As with all evidentiary determinations, even if the district court finds that the questioning would be probative, it must then apply the “overriding” balancing test of Rule 403 to ensure that the “probative value not be outweighed by danger of- unfair prejudice, confusion of issues, or misleading the jury.” Fed. R. Evid. 608(b) advisory committee’s note to 1972 proposed rule.

To this end, the confusing proffer by defense counsel provided scant support for the .probative value of the questioning.-The District Court-was left to evaluate a slew of allegations, almost all of which Ramsey had denied, and one of which defense counsel admitted was- mistaken. While a discovery letter regarding these matters was mentioned, neither it nor any other documentation was presented to the Court. Moreover, there was no indication that cross-examination on these matters would be fruitful, as defense counsel provided no details about the alleged incidents. When given the opportunity to question Ramsey during voir dire, defense counsel asked the witness only whether he “had a case in District Court in Maryland” or a “drug case in Maryland,” and Ramsey answered both questions in the negative. Indeed, defense counsel gave the District Court no reason to believe that the answer to either question should have been “yes.” No conviction was noted for the bad check case, and it was possible that Ramsey was never even informed of the charge. As to the second question, defense counsel later admitted that he was mistaken and the drug case pertained to a different witness. Given the requirement to weigh the demonstrated probative value of such questioning against- the dangers of confusion of issues and misleading the jury, and, the fact that direct and cross-examination had been completed, the District Court did not abuse its discretion in declining to allow questioning on these vague allegations during recross-examination.

This background also sheds light on the District Court’s comment, after voir dire, that questioning about the prior incidents would not be allowed “unless ... there was some culpability found or [Ramsey] admitted culpability.” J.A. 467. This comment is best read as the Court’s reasonable conclusion that some boost to the probative value of the questioning—such as a conviction, corroborating details, or an admission—would be required to outweigh the other factors that weighed against its admission. The allegations have little probative value,-and Ramsey has limited ability to explain or counter, when the proffer contains no details about dates, name of the bank, name of the account holder, or other pertinent details. The Court’s comment need not be read, as amicus argues, as an erroneous conflation of Rule 608(b) and Rule 609. In fact, the Court’s earlier question—“[D]oes it have to be. a conviction if it’s a bad act and it goes to his credibility?”—and request for the “good faith basis” for the inquiry demonstrated the Court’s recognition and proper application of the Rule 608(b) test. J.A. 461-62.

Accordingly, the District Court did not misapply Rule 608(b), and its decision to disallow questioning about these incidents was within the ample bounds of the Court’s discretion in matters of recross-examination.

B.

After Ramsey’s testimony concluded, defense counsel sought to introduce testimony from another mortgage broker that Ramsey had “asked her to do some loans, some mortgages, and that they were shady.” J.A. 529. Defense counsel explained that his purpose in introducing Ramsey’s statement related to Ramsey’s “[credibility, and also to rebut some of the things that he said,' that he never, you know, did anything shady before this, transactions and that type of thing, or that he’s sorry that he allowed himself to be sucked into it, the whole speech that he gave, you know, when he was on the stand.” J.A. 529-30. The Government objected on hearsay grounds. After considering both whether the alleged statement was hearsay and whether it was relevant, the District Court ultimately excluded it on the grounds that the statement did not contradict anything Ramsey said during his testimony and was therefore “nothing other than a character assassination.” J.A. 533.

Amicus argues that the District Court abused its discretion in excluding this testimony as impeachment-by-contradiction evidence. Regardless of whether the statement was hearsay, the District Court did not abuse its discretion in declining to admit it. In general, “extrinsic evidence is not admissible to prove specific instances of a witness’s conduct in order to attack or support the witness’s character for truthfulness.” Fed. R. Evid. 608(b). However, “Rule 608(b)’s bar against extrinsic evidence -does not apply when the evidence is used to contradict a statement made by a witness during her testimony. Such ‘impeachment by contradiction’ is subject only to the constraints of Federal Rules of Evidence 401, 402, and 403.” United States v. McGill, 815 F.3d 846, 907 (D.C. Cir. 2016) (per curiam) (citations omitted); see Fed. R. Evid. 608(b) advisory committee’s note to 2003 amendments.

Here, however, defense counsel never asked Ramsey whether he had asked the witness to participate in some “shady” mortgages. Instead, he attempted to introduce the statement 'through another witness after Ramsey had left the stand. Ramsey did not assert that he had not previously committed mortgage fraud or that all his past mortgage transactions had been aboveboard. Nevertheless, defense counsel proffered the “shady” mortgages testimony to “rebut” Ramsey’s testimony that “kind of implied ... this was out of character for him.” J.A. 531. This Court has previously taken a dim view of evidence offered to impeach by contradiction where the evidence did not contradict a “specific statement” made by the witness. McGill, 815 F.3d at 908; see also United States v. Miller, 738 F.3d 361, 376-77 (D.C. Cir. 2013) (finding no abuse of discretion in prohibiting questioning on cross-examination where “any contrar diction would have been ambiguous because [the witness] had not testified on direct examination that he had never engaged in” the behavior about which he would have been questioned),

However, we need not decide here the precise level of tailoring required between testimony and contradictory evidence, because the District Court was within its discretion to exclude the- testimony under Rules 401, 402, and 403 in any event. See McGill, 815 F.3d at 907 (“[I]mpeaehment by contradiction is subject . . to the con-' straints of Federal Rules of Evidence 401, 402, and 403.” (internal quotation marks omitted)). Of course, the general rule in. our trial courts is that relevant evidence is admissible and irrelevant evidence is inadmissible. Fed. R. Evid. 402. Under Rule 401, evidence is relevant if “it has any tendency to make a fact more or less probable than it would be without the evidence” and “the fact is of consequence in determining the action,” Fed. R. Evid. 401.

The problem here is that O’Neal’s trial counsel failed to show what fact from Ramsey’s testimony would have . been made “more or- less probable” by the proffered testimony. Ramsey never said that the fraud with O’Neal was his only “shady” mortgage scheme. Nor did Ramsey claim a one-off motive for participating in this fraud that would have been undermined'by his participation in other unsavoiy deals. Although Ramsey said he saw O’Neal’s scheme as a “win-win” in which he could help straw purchasers earn money and aid O’Neal who “had a great dream,” he did not deny a pecuniary motive on his part. J.A. 455. He noted that he would get a “referral bonus” and a “good commission” and acknowledged, “of course you’re sitting there as a single dad and you’re going okay, it’s money.” J.A. 455, 318. He even admitted that he was “greedy and selfish.” J.A. 318. As the District Court put it: “He said he was greedy, and his greed caused him to do this, but I didn’t see him as saying that his greed only encompassed the events that are charged in this case.” J.A. 531.

To the extent the proffered testimony was relevant át all, it was not an abuse of discretion to conclude that any probative value was substantially outweighed by the other considerations identified in Rule 403, such as undue delay and wasting time. See Fed. R. Evid. 403 (“The court may exclude relevant evidence if its probative value is substantially- outweighed by a danger of one or more of the following: unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence.”).

In sum, even assuming the proffered testimony could have overcome the hearsay objection, the District Court did not abuse its discretion in excluding this statement.

ill.

We turn next to the question of whether O’Neal’s right to counsel was violated when the District Court allowed her to represent herself at the sentencing stage. “A criminal defendant has a constitutional right to represent himself at trial if he knowingly, intelligently, and voluntarily waives his Sixth Amendment right to counsel.” United States v. Gewin, 471 F.3d 197, 198-99 (D.C. Cir. 2006) (citing Faretta v. California, 422 U.S. 806, 836, 95 S.Ct. 2525, 45 L.Ed.2d 562 (1975)). “That a waiver must be ‘intelligent’ doesn’t mean it must be wise or even reasonable; it is ‘undeniable that in most criminal prosecutions defendants could better defend with counsel’s guidance than by their own unskilled efforts.’ A defendant’s technical legal knowledge is, therefore, ‘not relevant to an assessment of his knowing exercise of the right to defend himself.’ ” Id. at 199 (citation omitted) (quoting Faretta, 422 U.S. at 834, 836, 95 S.Ct. 2525).

However, the trial court does have a responsibility to make the defendant “aware of the dangers and disadvantages of self-representation,” United States v. Brown, 823 F.2d 591, 599 (D.C. Cir. 1987) (quoting Faretta, 422 U.S. at 835, 95 S.Ct. 2525), and to engage the defendant in a “‘short discussion on the record’ regarding these dangers and disadvantages,” id. (quoting United States v. Bailey, 675 F.2d 1292, 1300 (D.C. Cir 1982)). The purpose of this colloquy is “so that the record will establish that ‘he knows what he is doing and his choice is made with eyes open.’ ” Faretta, 422 U.S. at 835, 95 S.Ct. 2525 (quoting Adams v. United States ex rel. McCann, 317 U.S. 269, 279, 63 S.Ct. 236, 87 L.Ed. 268 (1942)).

The same constitutional right of the defendant to represent herself, and concomitant obligation of the court to inform her of the dangers and disadvantages attendant thereto, applies at sentencing. See United States v. Ellerbe, 372 F.3d 462, 466-68 (D.C. Cir. 2004).

When O’Neal decided to represent herself at her sentencing hearing, the Court explained to her that—as they had discussed before trial when she first raised the possibility of proceeding pro se—she had a right to represent herself, but that doing so meant she may be waiving an ineffective assistance of counsel claim. The Court further admonished O’Neal:

I always advise people not to represent themselves because lawyers go to school for a long time to learn the law and then practice law, and become more familiar with the law. And therefore, are generally in a better position to provide legal assistance to their clients as compared to their clients providing assistance to themselves especially if they don’t have any legal training themselves.

J.A. 720-21. The Court asked O’Neal if she understood, and she said she did. The Court also asked why she no longer wanted trial counsel to represent her. In response to that question, and repeated requests for clarification and greater specificity, O’Neal stated only that “he refused to raise law and legal evidence to protect my right to due process under the law.” J.A. 723; see also J.A. 721-24. Yielding to her reticence, the Court allowed O’Neal to represent herself, with trial counsel serving as standby counsel.

Amicus argues that O’Neal’s waiver of the right to counsel at sentencing was not knowing and intelligent, and therefore hep right to counsel was violated. Amicus asserts that the District Court’s colloquy was insufficient, in particular because it did not discuss the United States Sentencing Guidelines, a particularly complicated area of law that plays an important role in the sentencing process.

As a general rule, trial courts are likely best served by relying on a model colloquy—such as that in the Benchbook for U.S. District Court Judges—when confronted with a pro se defendant, whether at trial or at sentencing. See, e.g., Fed. Judicial Ctr., Benchbook for U.S. District Court Judges 6-7 (6th ed. 2013). “But the Benchbook is merely a training manual and compendium of advice, and it is neither binding nor itself a statement of judicial policy.” United States v. Pasha, 797 F.3d 1122, 1129 (D.C. Cir. 2016). To evaluate whether O’Neal’s right to counsel was violated, we do not compare the trial' transcript to the Benchbook’s model colloquy, but instead ask whether O’Neal’s waiver of that right was knowing and intelligent. This inquiry is primarily informed by the colloquy conducted on the record.

The District Court’s colloquy with O’Neal immediately before sentencing explained the ill-advisedness of representing one’s self without legal training, asked the defendant if she understood, and gave her the opportunity to ask questions. The Court also advised O’Neal of the possibility that she could be waiving her right to a claim of ineffective assistance of counsel at sentencing.

This pre-sentencing colloquy, already sufficient in its own right, is reinforced by the District Court’s lengthy discussions with O’Neal that preceded the trial and the District Court’s resulting conclusion that O’Neal knowingly and intelligently waived her right to counsel at trial (although O’Neal later changed her mind and was ultimately represented by counsel at trial). See J.A. 282; cf. United States v. Bisong, 645 F.3d 384, 395 (D.C, Cir. 2011) (holding that, despite several months having passed, “the Sixth Amendment does not require a new colloquy to inform the defendant of the risks and difficulties of pro se representation where it is discernible in the record that the defendant was made well aware of those risks and difficulties”); Gewin, 471 F.3d at 198-200, (determining, after examination of colloquy, that a waiver of the right to counsel encompassed both plea negotiations and trial); United States v. Weisz, 718 F.2d 413, 424-28 (D.C. Cir. 1983) (rejecting claim that right of self-representation was infringed at second trial in light of “the record of [the defendant’s exercise of the right of self-representation at his first trial”). Repeatedly, the District Court advised O’Neal that self-representation was “not a good idea” and questioned her about her understanding of criminal trial procedure. In response to detailed questioning about her familiarity with rules of procedure and evidence, O’Neal repeatedly objected by pointing opt that “under Faretta [v.] California, I do not have to know what hearsay is” and “under Faretta [v.] California, which [has] never been overturned, I have a right to represent myself.” J.A. 200.

In light of the District Court’s admonishments and questioning, and O’Neal’s responses, it is evident that O’Neal was ad.vised of the dangers and disadvantages of self-representation and chose to proceed pro se in spite of them. Although the Sentencing Guidelines were not discussed— and although they are central to the sentencing process and pro se defendants may be unfamiliar with them—“[n]either case law nor common sense supports the position that a trial court must advise a defendant of each and every difficulty he might encounter in a particular case.” Brown, 823 F.2d at 599. O’Neal had previously expressed to the District Court that she had a right to represent herself at trial even if she did not know legal rules such as hearsay, which is true. Given that, it would seem rather anomalous to hold that her waiver to represent herself at sentencing was not knowing and intelligent because she was not queried about her knowledge of the legal 'rules of the Sentencing Guidelines. O’Neal had made it clear that she would not allow ignorance of the law to deter or dissuade her from exercising her right to self-representation. We therefore reject the claim that O’Neal’s right to counsel was violated when she elected to proceed pro se at sentencing.

For the foregoing reasons, we affirm the District Court’s judgment with respect to O’Neal’s conviction and sentence.

So ordered.

      . In her pro se filings, O'Neal raises only frivolous arguments, which we summarily reject. Amicus for O’Neal identified the eviden-tiary and constitutional issues discussed herein.

      . Further, nothing in the record indicates that the District Court was asked to allow questioning about an allegation identified by ami-cus involving Ramsey's alleged use. of a bad check to open up a bank account in 2006. . Trial counsel briefly adverted to an incident concerning the opening of a bank account with a fraudulent document, but the Government interjected that the incident to which defense counsel referred was the 2003 charge of uttering a bad check. Defense counsel appeared to agree and never again mentioned Ramsey’s opening of a bank account. When the District Court asked Ramsey about open- • ing a.n account with a bad check, Ramsey denied any such allegation and defense counsel failed to do any further follow-up.

      . We do not address whether this testimony should have been admitted under Federal Rule of Evidence 613(b), which concerns impeachment by prior inconsistent statement, as neither amicus nor O’Neal raised Rule 613(b) on appeal. See Abdelfattah v. U.S. Dep't of Homeland Sec., 787 F.3d 524, 532 (D.C. Cir. 2015) ("[S]ince neither'Abdelfattah nor court-appointed Amicus pursue these claims on appeal, they are forfeited.”).


source: Caselaw Access Project

author: ROGERS, Circuit Judge:

license: Public Domain

text:
    ENRON NIGERIA POWER HOLDING, LTD., Appellee v. FEDERAL REPUBLIC OF NIGERIA, Appellant
    No. 15-7121
    United States Court of Appeals, District of Columbia Circuit.
    Argued October 7, 2016
    Decided December 27, 2016

      David Elesinmogun argued the cause and filed the briefs for appellant.
    Kenneth R. Barrett argued the cause and filed the briefs for appellee.
    Before: ROGERS, TATEL and GRIFFITH, Circuit Judges.
   ROGERS, Circuit Judge:

In 1999, the Republic of Nigeria entered into a power purchase agreement (“PPA”) with Enron Nigeria Power Holding, Ltd. (“ENPH”), for construction of electrical facilities. Days later, Nigeria suspended implementation of the PPA, and after years of attempted renegotiation over one phase of construction proved fruitless, ENPH filed under the PPA for arbitration by the International Chamber of Commerce’s International Court of Arbitration (“ICC”). The ICC issued an Award in ENPH’s favor. When collection efforts failed, ENPH filed a petition for confirmation and enforcement of the Award in the federal district court here. Nigeria now appeals from the order granting enforcement of the Award.

Invoking Article V(2)(b) of The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (known as the “New York Convention”), 21 U.S.T. 2517, Nigeria contends that enforcement of the Award violates the public policy of the United States not to reward a party for fraudulent and criminal conduct. It maintains that ENPH and Enron International Corporation (“Enron”) are alter egos, and, alternatively, that ENPH made false and fraudulent representations about Enron to induce Nigeria to enter the PPA. Although the question whether enforcement of the Award should be denied on public policy grounds is a question for the courts to answer, the interpretation of the PPA, by its terms, was for the ICC. The ICC’s findings, to which an enforcing court owes substantial deference, doom Nigeria’s public policy defense in the absence of evidence or equities warranting the piercing of Enron’s corporate veil. Accordingly, for the following reasons, we affirm the order enforcing the Award.

I.

The New York Convention is a multilateral treaty that, with exceptions, obligates participating countries to honor international commercial arbitration agreements and to recognize and enforce arbitral awards rendered pursuant to such agreements. Comm’ns Import Export S.A. v. Republic of the Congo, 757 F.3d 321, 324 (D.C. Cir. 2014). The United States and Nigeria are signatories to the Convention, 21 U.S.T. 2517, and Chapter 2 of the Federal Arbitration Act implements the Convention. 9 U.S.C. §§ 201-08. The FAA provides that the court “shall confirm the award unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the said Convention.” Id. § 207. Article V of the Convention sets forth the grounds for refusal or deferral of enforcement. As relevant, Article V(2)(b) of the New York Convention provides:

Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that .,. [t]he recognition or enforcement of the award would be contrary to the ’ public policy of that country.

The following facts found by the ICC bear on Nigeria’s appeal. In 1999, Lagos State, a regional government in Nigeria, was “in, desperate need of energy.” ICC Partial Award (“ICC”) ¶ 45 (incorporated by reference in the Final Award). By letter of June 19, 1999, Enron International expressed interest in working with Lagos State, stating that “Enron is the highest ranking power and gas company and is the leading company worldwide in such industry.” ICG ¶ 246. A month later, Enron formed ENPH as a special-purpose vehicle to construct and operate power plants in Lagos State. .ICC ¶ 2. ...The following month, Lagos State entered into a Memorandum of Understanding (“MOU”) on the first and second phases of the construction project with ENPH and YFP (a Nigerian power company) in which it was agreed that the companies and their affiliates (including Enron) had the technical and financial capacity to perform the project, having developed gas pipelines in the United States, Colombia, Bolivia, and Brazil, and electric power plants worldwide. ICC ¶ 247. On November 17, 1999, ENPH representatives and an employee of Enron International met with representatives of Nigeria, including President Obasanjo of Nigeria and the Governor of Lagos State. At the meeting, ENPH gave a PowerPoint presentation touting Enron’s vast financial and technical capabilities and describing Enron as the company with which ENPH was “affiliated.” ICC ¶¶ 239-40.

On December 6, 1999, Nigeria, Lagos State, the National Electric Power Authority of Nigeria (“NEPAN”), and ENPH executed the PPA, with ENPH as “Owner” of the energy facilities, Lagos State as “Purchaser” of the energy, NEPAN as regulator of the facilities it would connect to Nigeria’s power grid, and Nigeria as “Guarantor.” PPA Recitals (Dec. 6, 1999); ICC ¶¶ 25, 28. Enron was not a party to the PPA, nor was its participation in the construction project mentioned in the PPA. ICC ¶ 243. The PPA provided for three phases of construction: Phase I, three offshore, barge-mounted electricity generating units; Phase II, an on-shore power plant in Lagos; and Phase III, an additional set of barge-mounted units. PPA Clause 1; ICC ¶ 27. As regards Phase II, ENPH’s obligations were contingent upon satisfaction of certain conditions by December 31, 2000, including possession of a plant site, all necessary easements from Lagos State and Nigeria, and a security letter of credit. PPA Clause 3.1. ENPH was authorized to seek independent “financing for at least 70 percent of the full capital costs” of the onshore power plant, pipeline, and other Phase II facilities. PPA Clause 3.1(iii). The parties were bound to use all reasonable efforts to ensure that the conditions were timely satisfied. PPA Clause 3.2. Additionally, the PPA provided that all disputes not informally resolved between the parties would be settled by binding arbitration under the Rules of Arbitration of the ICC. PPA Clause 23.3.

Nine days after the PPA was executed, NEPAN wrote to ENPH that implementation of the PPA was “stayed until further notice.” ICC ¶ 50 (quoting NEPAN Ltr. Dec. 15, 1999). Five days earlier, the World Bank had written to Nigeria, Lagos State, and NEPAN to express economic criticisms of a draft of the PPA. ICC ¶ 49. Nigeria’s President informed Lagos State in January 2000 that the Attorney General of Nigeria had concluded the PPA was invalid under Nigerian law and suggested that the PPA be renegotiated. ICC ¶ 52. In June 2000, the parties agreed to an amended PPA regarding Phases I and III—along with Enron Nigeria Barge Ltd., to which ENPH had transferred its rights and obligations with respect to those phases. ICC ¶¶ 51, 60. Thereafter, AES Nigeria Holdings Ltd. (“AES”) acquired the rights to Phases I and III, along with an option to purchase Phase II, provided agreement was reached with Nigeria on amending the PPA. ICC ¶ 61.

In November 2001, Enron’s collapse became public knowledge, and it filed for Chapter 11 bankruptcy protection on December 2, 2001. ICC Final Award (“ICC Award”) ¶ 40. The same day, ENPH wrote to the Nigerian parties that ENPH would be unaffected by the bankruptcy and remained free to perform its obligations under Phase II. ICC Award ¶ 41. Nigeria apparently did not respond. AES contacted ENPH to express interest in extending its Phase II option; ENPH did not respond and the option expired. ICC Award ¶ 42; ICC ¶ 66. Three years later, ENPH wrote' to Nigeria seeking to implement Phase II. ICC Award ¶ 43. In November 2005, after various communications, Nigeria confirmed that Phase II “was suspended and remains so.” ICC Award ¶ 43 (quoting NEPAN Ltr. Nov. 22, 2005).

On June 12, 2006, ENPH filed a Request for Arbitration with the ICC regarding Phase II. The ICC found that Nigeria’s December 1999 suspension of the PPA was an anticipatory breach, but of no legal effect. ICC ¶¶ 395, 398. Nigeria had argued that because ENPH did not accept the anticipatory breach, the other parties were entitled to void Phase II of the PPA as a result of Enron’s 2001 collapse. The ICC disagreed, finding that Nigeria and NEPAN had breached the PPA almost a year prior to Enron’s collapse, when the December 31, 2000 deadline for satisfying Phase II conditions passed without any effort to meet those conditions. ICC ¶ 404. The ICC also found that the breach was “mainly for commercial reasons,” ICC ¶ 416, and that but for concerns over price, “it would appear that the Nigerian Government would have been happy to proceed with the Original PPA,” ICC Award ¶ 122. Nigeria’s earlier view that the PPA was void because it violated Nigerian law was not advanced in arbitration, leading the ICC to conclude that the legal objection was not well-founded. ICC ¶ 411. Due to the breach by Nigeria and NEPAN, the ICC found, ENPH and Lagos State could not be held responsible for failing to use all reasonable efforts to perform their obligations given the deadlock caused by Nigeria and NEPAN. ICC ¶¶ 421, 454.

The ICC rejected several affirmative defenses that bear on Nigeria’s current public-policy defense to enforcement of the Award. The ICC found that Enron was not a' party to the PPA, nor was its participation in the project an express or implied contract term. ICC ¶¶ 203, 206. The PPA included an integration clause whereby the PPA constituted the entire agreement between the parties, which, the ICC reasoned, was a term Nigeria would never have agreed to if there had been a separate understanding that Enron would participate in Phase II. ICC ¶ 202. The ICC also found that there was no reason to infer that Enron’s participation was necessary to ENPH’s performance of Phase II because the PPA contemplated that ENPH would “cause” the design and construction of the facility and “cause” the financing of the project by subcontracting with third parties (not necessarily Enron). ICC ¶¶ 188-194. For the same reasons, the ICC declined to find a collateral contract between - Enron and Nigeria. ICC ¶ 210.

The ICC further rejected Nigeria’s arguments that it had been induced to enter into the PPA because of fraud or misrepresentation. Allegedly false statements regarding the financial attributes of Enron made at the November 1999 PowerPoint presentation to President Obasanjo were not relevant, the ICC found, because of the legal framework of the PPA. ICC ¶-242. Enron was not a party to the PPA and there was “no clear evidence” that these statements induced Nigeria to enter the PPA. ICC ¶ 242. Not only was there was no reason to think the parties confused Enron with ENPH, ICC ¶ 240, the-PPA contained no express or implied guarantee from Enron as the parent company, ICC ¶ 242, and there was no evidence that the statements regarding Enron’s technical capabilities were false. ICC ¶¶ 239-241. Further, the ICC noted, as to financial capability, the PPA provided ENPH had “recourse to independent financing of at least 70% of the full capital costs in the absence of any pre-identification of the entity or entities which might have financed the project.” ICC ¶ 242 (quoting PPA Clause 3.1(iii) (emphasis added)). No misrepresentations were shown to be contained in Enron International’s June 1999 letter to Lagos State and, in any event, the letter related to Enron and not ENPH. ICC ¶ 246. Similarly, the prior MOU regarding the financial and technical capabilities of ENPH, YFP, and their affiliates referred to Enron, not the recently incorporated ENPH. ICC ¶ 247. If the financial and technical capabilities of Enron and its affiliates were so important as to induce Nigeria to enter the agreement, the ICC reasoned, then Nigeria could have sought inclusion of a. statement to that effect in the PPA. ICC ¶ 248. The ICC also rejected arguments that ENPH implicitly misrepresented its own capabilities by enter-? ing into a contract that it was incapable of performing inasmuch as the PPA contemplated ENPH obtaining assistance from third parties. ICC ¶ 249-51, So- too, the ICC found that Enron’s accounting fraud had no connection to ENPH or to Phase II of the PPA. ICC ¶ 256-57. Evidence showed only that Enron and Merrill Lynch, -Pierce, Fenner & Smith engaged in a sham transaction, allowing Enron to “book” an imaginary $12 million profit, relating to Enron’s Nigerian barges constructed under Phases I and III of the PPA. Id.; see also United States v. Brown, 459 F.3d 509, 514-16 (5th Cir. 2006).

Finally, regarding the amount of damages to be awarded to ENPH, the ICC acknowledged that Phase II had attractive prospects on paper but found that it never got off the ground and that if it had, the collapse of Enron “would almost certainly have stopped [it] in its tracks.” ICC Award ¶¶ 97-98, 105. That is, because the project was conceived under the assumption that Enron and its subsidiaries would construct and finance the Phase II facilities, Enron’s collapse would have forced ENPH to find new contracting partners and financing. ICC Award ¶¶ 101-103, 105-06. The ICC accordingly found that ENPH’s claim of $494 million in expected profits was too speculative and that instead “loss of chance” damages were appropriate. ICC Award ¶¶ 109-111. AES’s unexercised option to purchase Phase II could have earned ENPH as much as $34 million, depending on the terms of an amended PPA. ICC Award ¶ 120. Finding a one-third chance the contingencies would have been met to allow AES to exercise the option, the ICC awarded ENPH $11.22 million in damages, plus 2% interest, legal costs and expenses. ICC Award ¶¶ 127, 175 (Nov. 19, 2012).

On July 19, 2013, after efforts to collect proved unsuccessful, ENPH filed a petition for confirmation of the Award in the United States District Court for the District of Columbia, pursuant to 9 U.S.C. § 207. Nigeria moved to quash service and dismiss the petition, arguing that ENPH failed to properly effect service, that the district court lacked jurisdiction due to Nigeria’s sovereign immunity, and that enforcement of the Award would violate United States public policy. Upon allowing ENPH to accomplish service through alternative means under the Foreign Sovereign Immunities Act, the district court granted ENPH’s motion to confirm the Award, having ruled that Nigeria had waived its sovereign immunity in the PPA and had failed to show why enforcement should be denied on public policy grounds simply because an Enron-related entity is involved.

II.

On appeal, Nigeria contends that, enforcement of the ICC’s Award to ENPH should have been denied pursuant to Article V(2)(b) of the. New York Convention because its enforcement would violate the longstanding public policy that “no one shall be permitted to profit by his own fraud, or to take of. his own wrong, or, to found any claim upon his own iniquity or to acquire property by his own crime.” Appellant’s Br. 17 (quoting Riggs v. Palmer, 115 N.Y. 506, 511, 22 N.E. 188 (1889), and citing Stone v. Freeman, 298 N.Y. 268, 271, 82 N.E.2d 571 (1948)). ENPH presents several threshold objections to Nigeria’s appeal.

A.

In ENPH’s view, Nigeria has failed' to identify a well-defined public policy. See, e.g., United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29, 48, 108 S.Ct. 364, 98 L.Ed.2d 286 (1987). Nigeria’s position is that the district court erred by enforcing an award based on a contract that was tainted by fraud. ENPH acknowledges that enforcing a contract with an illegal purpose would violate public policy. See Appellee’s Br. 31. Hence, it is difficult to understand how enforcing a contract induced by fraud would not.

In Simon & Schuster, Inc. v. Members of N.Y. State Crime Victims Board, 502 U.S. 105, 112 S.Ct. 501, 116 L.Ed.2d 476 (1991), the Supreme Court observed that “most if not all States ... hafye] long recognized the fundamental equitable'principle that ‘no one shall be permitted to profit by his own fraud,’” noting státe statutes to that effect. Id. at 119,112 S.Ct. 501 (quoting Riggs, 115 N.Y. at 511-12, 22 N.E. 188) (internal quotation marks and citation omitted). In Riggs, the New York Court of Appeals held that it would violate “universal” public policy to allow a grandson to inherit his grandfather’s estate after he murdered the grandfather to prevent his being cut out of the will. 115 N.Y. at 508-09, 511-12, 22 N.E. 188. Likewise, in Stone, 298 N.Y. 268, 82 N.E.2d 571, the New York Court of. Appeals recognized that “[i]t is the settled - law of this State (and probably of every other State) that a party to an illegal contract cannot ask a court of law to help him carry out his illegal object,” Id. at 271, 82 N.E.2d 571. It thus dismissed a suit by one conspirator seeking reimbursement for a bonus it paid illegally to a co-conspirator. Id. at 270, 82 N.E.2d 571.

ENPH attempts to limit Riggs and Stone to their facts, but the New York Court of Appeals recognized—and the Supreme Court affirmed in Simon and Schuster—that each of .those cases rests on the “fundamental equitable principle” preventing courts from being made parties to fraud or other criminal acts. Simon and Schuster, 502 U.S. at 119, 112 S.Ct. 501 (quoting Children of Bedford, Inc. v. Petromelis, 77 N.Y.2d 713, 727, 570 N.Y.S.2d 453, 573 N.E.2d 541 (1991)); Stone, 298 N.Y. at 271, 82 N.E.2d 571; Riggs, 115 N.Y. at 511-12, 22 N.E. 188. Indeed, this principle is so well-established that it underlies numerous federal statutes, such as a requirement that any person convicted of engaging in a continuing criminal enterprise “shall forfeit ... claims against, and property or contractual rights affording a source of .control over, the continuing criminal enterprise.” 21 U.S.C. § 853(a)(3),

Consequently, Nigeria has adequately identified a well-defined public policy for purposes of determining whether enforcing the Award would be repugnant to that policy.

B.

ENPH also maintains Nigeria has contractually waived any right to challenge the Award. The PPA provides that “any determination or- award [by the ICC] shall be final and binding on all parties,” and that the parties “expressly waive, to the fullest extent permitted by applicable law, any right to challenge an award by the arbitrators anywhere outside the place of arbitration agreed herein.” PPA Clause 23.3.5. ENPH concludes that Nigeria’s failure to challenge the award in London, Great Britain, where the arbitration took place, means that U.S. courts were divested of jurisdiction to address Nigeria’s enforcement challenge.

ENPH has confused Article V(l) of the New York Convention, which addresses procedural grounds for refusing to enforce “at the request of the [liable] party,” -with Article V(2)(b) of the Convention, which addresses public-policy grounds on which a court may refuse to enforce “if the [court] finds” on its own initiative that such grounds exist. N.Y. Convention, art. V; Restatement (Third) of the U.S. Law of Int’l Commercial Arbitration § 2-16(a) (2015). As Nigeria responds, parties cannot waive their rights under Article V(2)(b) because public policy violations implicate the integrity of the enforcing court. See Hurd v. Hodge, 334 U.S. 24, 34-35, 68 S.Ct. 847, 92 L.Ed. 1187 (1948); Restatement (Third) of the U.S. Law of Int’l Commercial Arbitration § 2-16(b) (2015). Under the PPA, the parties only waived their rights “to the fullest extent permitted by applicable law.” PPA Clause 23.3.5.

The implementing statute authorizes federal courts to enforce arbitral awards under the New York Convention, 9 U.S.C. §§ 201, 207, which in turn, authorizes the enforcing court to deny enforcement where doing so would be contrary to the public policy of the jurisdiction in which enforcement is sought, N.Y. Convention, art. V(2)(b). This is distinct from Article V(l)’s procedural defenses, which the parties do not dispute can be waived. See Employers Ins. of Wausau v. Banco De Seguros Del Estado, 199 F.3d 937, 942 (7th Cir. 1999). Although the agreement by Nigeria and ENPH to arbitrate disputes arising under the PPA meant the interpretation of their agreement was delegated to the ICC, see Oxford Health Plans LLC v. Sutter, — U.S. —, 133 S.Ct. 2064, 2070-71, 186 L.Ed.2d 113 (2013), “as with any contract, however, a court may not enforce ... an agreement that is contrary to public policy.” W.R. Grace & Co. v. Local Union 759, Int’l Union of United Rubber Workers of Am., 461 U.S. 757, 766, 103 S.Ct. 2177, 76 L.Ed.2d 298 (1983). The Supreme Court reemphasized in W.R. Grace that “the question of public policy is ultimately one for resolution by the courts,” and thus, if enforcement of the Award based on the ICC’s interpretation of the PPA violates a public policy of the United States, as Nigeria contends, then the district court was “obligated to refrain from enforcing it.” Id.; see Hurd, 334 U.S. at 34-35, 68 S.Ct. 847; cf. Noonan v. Gilbert, 68 F.2d 775, 776 (D.C. Cir. 1934). The Court’s analysis of the public policy issue extended not only to the arbitral award but also to the underlying contract. W.R. Grace, 461 U.S. at 768-69 & n.13, 103 S.Ct. 2177.

Nigeria could not waive an Article V(2)(b) public-policy defense to enforcement of the Award simply as a result of agreeing to challenge the Award only in London, where the arbitration occurred. That would effectively negate the court’s authority to deny enforcement under both Article V(2)(b) of the Convention and Section 207 of the FAA, elevating the parties’ contractual choices above the fundamental need of the federal courts to protect their own integrity.

C.

ENPH also invokes the doctrine of forfeiture, maintaining that Nigeria failed to argue in the district court that ENPH itself had made false representations to induce Nigeria to enter the PPA, and that ENPH should be held responsible for Enron’s fraud as its alter ego. Even if Nigeria did not adequately raise these arguments in the district court, but see Defs Mot. to Dismiss Petition at 8-13, forfeiture cannot divest the court of its duty to resolve the public policy question any more than waiver can. As this court held in Noonan, 68 F.2d 775, where a party had failed to make a public policy objection at trial, that objection “may not be waived by any system of pleading,” and “the court itself was bound to raise [it] in the interest of the due administration -of justice.” Id. at 776 (internal quotation marks omitted). Even were a party’s failure to recognize the public policy issue until appeal to imply that the alleged violation is hardly “repugnant to fundamental notions of what is decent and just,” Tahan v. Hodgson, 662 F.2d 862, 864 (D.C. Cir. 1981), the court must nevertheless decide the issue.

III.

The public policy defense under Article V(2)(b) of the New York Convention is to be construed narrowly and is available only where an arbitration award “tends clearly to undermine the public interest, the public confidence in the administration of the law, or security for individual rights of personal liberty or of private property.” TermoRio S.A. v. Electranta S.P., 487 F.3d 928, 938 (D.C. Cir. 2007) (quoting Ackermann v. Levine, 788 F.2d 830, 841 (2d Cir. 1986)) (internal quotation marks omitted). That heavy burden is due to the countervailing and “emphatic federal policy in favor of arbitral dispute resolution .... [which] applies with special force in the field of international commerce.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 631, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985); Termo-Rio, S.A., 487 F.3d at 933; see also Chevron Corp. v. Ecuador, 795 F.3d 200, 209 (D.C. Cir. 2015).

Furthermore, “considerable deference” is to be afforded by the enforcing court to the arbitrator’s interpretation and application of the parties’ contract. B.G. Grp. PLC v. Republic of Argentina, — U.S. —, 134 S.Ct. 1198, 1210, 188 L.Ed.2d 220 (2014); see W.R. Grace, 461 U.S. at 768, 103 S.Ct. 2177. In addressing the public policy question at the enforcement stage, the Supreme Court has given significant weight to the arbitrator’s findings of fact. See United Paperworkers Int’l Union, 484 U.S. at 44-45, 108 S.Ct. 364. More generally in arbitration, because the parties bargained for the ICC’s construction of the PPA, the ICC’s “construction holds, however good, bad, or ugly.” Oxford Health Plans LLC, 133 S.Ct. at 2070-71. “It is not enough ... to show that the [arbitrator] committed an error—or even a serious error.” Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 671, 130 S.Ct. 1758, 176 L.Ed.2d 605 (2010). As long as the arbitrator was “even arguably construing or applying the contract and acting within the scope of his authority, that a court is convinced [the arbitrator] committed serious error does not suffice to overturn his decision.” United Paperworkers Int’l Union, 484 U.S. at 38, 108 S.Ct. 364.

The district court found that Nigeria “fail[ed] to establish why the [c]ourt should refrain from enforcing this international arbitral award simply because it involves an entity that was related to the Enron Corporation.” Mem. Op. at 4 (Aug. 6, 2015). Nigeria had identified. no basis to impute Enron’s accounting fraud to ENPH merely because it was an Enron special purpose vehicle. And the ICC had determined that Nigeria failed to provide “any evidence of [accounting] fraud in connection to Phase II of the Original PPA.” ICC ¶ 257.

On appeal, Nigeria’s contentions have a similar flavor, maintaining that ENPH is the “offshore shell affiliate” of a corporation that committed “one of the great financial frauds of recent years,” Appellant’s Br. 17, again without attempting to connect that fraud to Nigeria or Phase II of the PPA. To the extent Nigeria’s contentions amount to urging that the district court’s conclusion, as well as that of the ICC, about Enron’s non-relationship to the PPA misses the forest for the trees, because as a special purpose vehicle ENPH was necessarily a mechanism through which Enron carried out its fraud, it still shows no error by the district court. The ICG declined to pierce the corporate veil despite Nigeria’s argument that Enron and ENPH should be treated as a single enterprise under the PPA. ICC ¶ 163. Repeatedly emphasizing that Nigeria had contracted only with ENPH, see, e.g., ICC ¶¶ 191-92, 201-03, the ICC noted the absence of any mention of Enron in the PPA. It also interpreted PPA Clause 31—stating “this Agreement shall be binding upon ... the Parties and their successors and permitted assigns, and is not intended to and shall not confer any rights or benefits on any third party not a signatory thereto”— to preclude an implied, alter-ego relationship between ENPH and non-signatory Enron. ICC ¶¶ 212-14. Nigeria baldly asserts as an “undisputable fact” that ENPH lacked staff, an office, a bank account, assets, earnings, and sufficient capital. Appellant’s Br. 27. Even if true, Nigeria conveniently ignores its own concession that it had repudiated the PPA nearly two years before Enron’s collapse was publically known. ICC ¶¶ 400, 404(a). Moreover, Nigeria ignores the ICC’s determination that it was willing to cooperate in the completion of Phases I and III of the project. ICC ¶¶ 256-57.'

This does not mean that either the district court or the ICC viewed Enron’s collapse as irrelevant to Phase II of the PPA. The ICC credited the argument that ENPH was a “shell company that could not implement Phase- II by itself,” ICC ¶ 189, and considered Enron’s bankruptcy as a mitigating factor in calculating the amount of damages, when the renegotiation and completion of Phase II became too uncertain in Enron’s absence to allow ENPH to recover expectation damages. ICC Award ¶¶ 105-09. That, however, is a separate question from whether Nigeria was fraudulently induced to execute the PPA, which the ICC found it was not, and from whether Enron’s fraud and collapse had anything to do with Nigeria’s anticipatory repudiation and subsequent breach of the PPA, which- the ICC -found it did not.

No more persuasive-is Nigeria’s contention that ENPH itself made false representations regarding Enron’s financial strength that induced Nigeria to enter the PPA. Appellant’s Br. 32-34. For instance, misrepresentations were made during the November 1999 presentation to President Obasanjo, ICC ¶¶ 239, 242, but the ICC found that these statements were irrelevant. ICC ¶ 243. Even if knowledge of the statements’ falsity should be imputed to ENPH because its staff was employed by Enron, the ICC found the allegations failed for lack of materiality to Nigeria’s execution of the PPA, for such statements “could have only induced [Nigeria] to enter into an agreement with Enron,” not ENPH. ICC ¶ 243. As it does here, Nigeria asserted that absent these representations it never would ..have agreed to contract with ENPH. Appellant’s Br. 33; ICC ¶ 228. The ICC was unpersuaded, finding that nine days after executing-the PPA Nigeria simply had a “change of mind about the convenience of [its] bargain,!’ ICC ¶ 408, and noting that the PPA omitted a financial guarantee by Enron or any mention of Enron’s financial strength. ICC ¶ 242. Instead, the PPA provided that ENPH was free to subcontract with third-party companies to finance,’ design, and construct the power plant. PPA Clauses 3.1(iii), 4.2, 4.3; ICC ¶¶ 191-92.

Although the PPA was negotiated in Enron’s shadow, and Nigeria seems to have -believed Enron would lend its resources and backing to the electric facilities project, see Appellant’s Br. 38-34, the question before the enforcing court is limited. See Belize Soc. Dev. Ltd. v. Gov’t of Belize, 668 F.3d 724, 727 (D.C. Cir. 2012). Here, the district court had no choice other than to conclude that enforcement of the Award on Phase II is not so manifestly unjust that its confirmation would “undermine ... the public confidence in the administration of the law.” TermoRio S.A., 487 F.3d at 938 (quoting Ackermann, 788 F.2d at 841). Accordingly, we affirm the order confirming the Award.


author: BARRON, Circuit Judge.

text:
    IN RE Andrew A. DEMORE; Maureen A. DeMore, Debtors, HSBC Bank USA, N.A., Plaintiff, Appellee, v. Donald Lassman, Chapter 7 Trustee of the Bankruptcy Estates of Andrew A. DeMore and Maureen A. DeMore, Defendant, Appellant.
    No. 16-1150
    United States Court of Appeals, First Circuit.
    December 13, 2016

      Mark G. DeGiacomo, Boston, MA, with whom Taruna Garg, Stamford, CT, and Murtha Cullina LLP was on brief, for appellant.
    Jason A. Manekas, with whom Bernkopf Goodman LLP, Boston, MA, was on brief, for appellee.
    Before TORRUELLA, LIPEZ, and BARRON, Circuit Judges.

      . The underlined portions of the acknowledgment indicate handwritten insertions into an otherwise typed form.

   BARRON, Circuit Judge.

This case concerns an appeal from a consolidated adversary action in bankruptcy. The action was brought by Donald Lassman, the appellant, who is the trustee for the estates of two bankruptcy petitioners, Andrew and Maureen DeMore. In bringing the adversary action that this appeal concerns, Lassman sought, pursuant to, 11 U.S.C. § 544(a)(3), to “avoid” a mortgage on a parcel of land in Massachusetts that the DeMores had purportedly granted to the predecessor in interest to HSBC Bank, USA, N.A. (“HSBC”), which is the appellee.

Below, the Bankruptcy Court granted summary judgment to Lassman. The Bankruptcy Court did so on the ground that what is known under Massachusetts law as the certificate of acknowledgement for the mortgage at issue is “materially defective” because the certificate failed to make clear that the DeMores, as grantors of that mortgage, executed that mortgage as their free act and deed. But, when HSBC appealed that ruling to the District Court, the District Court reversed on the ground that the certificate of acknowledgement is not materially defective because it did make clear that the DeMores had executed the mortgage as their free act and deed. Because we agree with the District Court, we affirm its order reversing summary judgment for Lassman.

I.

The underlying dispute concerns a mortgage purportedly granted by the DeMores to HSBC Mortgage Corporation (“HSBC Mortgage”), the predecessor in interest to HSBC, on a parcel of property that is owned by the DeMores. We start by recounting the uncontested facts that are critical to the resolution of this dispute.

A.

In 1994, the DeMores acquired a parcel of land in North Attleboro, Massachusetts. This property is what is known in Massachusetts as “registered land,” which is a type of land for which the Massachusetts Land Court maintains a certificate of title, and to which chapter 186 of the'Massachusetts General Laws applies.

In April 2004, the DeMores each executed a power of attorney to John G. Molloy. Those powers of attorney authorized Mol-loy to grant a mortgage on the property to HSBC Mortgage.

Later that month, Molloy granted a promissory note and mortgage on that property to HSBC Mortgage on behalf of the DeMores. Several days later, the note and the mortgage were registered on the certificate of title for the property in the Northern Bristol County Registry of Deeds of the Massachusetts Land Court.

Appended to the mortgage document was a certificate of acknowledgment. A certificate of acknowledgment is a notarized document that is signed by an officer entitled to take acknowledgments (often a notary public) and that attests that “the grantor appeared before the officer making the certificate and made such acknowledgment.” Bank of Am., N.A. v. Casey, 474 Mass. 556, 52 N.E.3d 1030, 1035 (2016) (quoting McOuatt v. McOuatt, 69 N.E.2d 806, 809 (Mass. 1946)). The certificate of acknowledgment in this case reads as follows:

On this 27th day of April, 2004, before me, the undersigned notary public[,] personally appeared Andrew DeMore and Maureen DeMore by their attorney-in-fact, John G. Molloy[,] under Power of Attorney recorded herewith proved to me through satisfactory evidence of identification, which were drivers licenses to be the person whose name is signed on the proceeding attached document, and acknowledged to me that he/ she signed it voluntarily and for its stated purpose..

/s/ Melissa Ly Henderson

Melissa L.'Henderson, Notary Public

My Commission Expires 8/27/10

The requirement to record a mortgage with a certificate of acknowledgment comes from chapter 183, section 29 of the Massachusetts General Laws. That section states, in relevant part, that “[n]ó deed’ shall be recorded unless a certificate of its' acknowledgment ... is endorsed upon or annexed to it....” Mass. Gen. Laws ch. 183, § 29. It is clear that, for the purposes of section 29, a mortgage constitutes a deed. See Casey, 52 N.E.3d at 1035.

The Supreme Judicial Court of Massachusetts- (“SJC”) has stated that “[a]n acknowledgment is the formal statement of the grantor to the official authorized to take the acknowledgment that, the execution of the instrument was his free act and deed.” McOuatt, 69 N.E.2d at 810. The SJC has also stated that “[n]o particular words are necessary as long as they amount to an admission that [the grantor] has voluntarily and freely executed the instrument.” Id. (citations omitted). Massachusetts, however, permits a person acting under power of attorney to execute and acknowledge a mortgage for another. See Mass. Gen. Laws ch. 183, § 30 (“The acknowledgment of a deed or other written instrument required to be acknowledged shall be by one or more of the grantors or by the attorney executing it.”); Malaguti v. Rosen, 262 Mass. 555, 160 N.E. 532, 560-62 (1928) (finding that a specific power of attorney extended the authority to borrow money and execute notes to mortgage property); Davidson v. Reznikow, 2005 WL 774047, at *5 (Mass. Land Ct. April 6, 2005) (finding that a power of attorney “regularly” provides authority to convey registered land). And thus the question that gives rise to this appeal: what must a certificate of acknowledgement for a mortgage state when a person acting by power of attorney appears to acknowledge the mortgage?

B,

The appeal itself comes to us by way of bankruptcy court. In 2013, each of the DeMores filed separate voluntary petitions for bankruptcy under Chapter 7 of the Bankruptcy Code. The schedule for each of the petitions listed the property and the mortgage in question..A single bankruptcy trustee, Donald Lassman, was appointed for both of the DeMores’ bankruptcy cases.

Lassman, as trustee, then filed adversary actions against HSBC, which had received an -assignment of the mortgage from HSBC Mortgage, to avoid the mortgage, In avoiding a lien, such as a mortgage, a trustee “invalidate[s] unperfected security interests,” pursuant to 11 U.S.C. § 544(a)(3), and, “put[s] the estate in the shoes of the creditor whose lien is avoided,” pursuant to 11 U.S.C. § 551. In re Traverse, 753 F.3d 19, 26 (1st Cir. 2014) (internal quotation marks, brackets, and citation omitted). The adversary actions Lassman filed against HSBC on behalf of each of the DeMores’ bankruptcy estates were then consolidated.

In pressing the consolidated adversary action, Lassman explained that the Bankruptcy Code authorizes a bankruptcy trustee to avoid a transfer of property by the debtor, such as a mortgage, where such a transfer is voidable under state law by a bona fide purchaser. See 11 U.S.C. § 544(a)(3). Lassman then contended that, under section 29 of chapter 183 of the Massachusetts General Laws, the mortgage on the DeMores’ property is required to be recorded along with a valid certificate of acknowledgement. And,. finally, Lassman contended that the mortgage here is voidable under state law by a bona fide purchaser because the certificate of acknowledgement is “materially defective” under section 29.-

To support this last contention, Lassman argued that the certificate of acknowledgment does not clearly state that the execution of the mortgage was the free act and deed of the DeMores. Lassman argued that this ambiguity arises because it is unclear from the certificate of acknowl-edgement whether the DeMores, Molloy, or some combination thereof were present to acknowledge the mortgage. According to Lassman, if only Molloy appeared before the notary to acknowledge the' mortgaged then the certificate' of acknowledgement by its terms makes clear only that Molloy had signed—and thus executed— the mortgage to HSBC Mortgage as his free act and deed pursuant to the powers of attorney that the DeMores had granted to him. For that reason, Lassman argued, the certificate of acknowledgement is materially defective under section 29 because it fails to do what McOuatt requires an acknowledgement to do: make clear that the instrument being acknowledged (here, the mortgage from the DeMores to HSBC Mortgage) had been executed as the “free act and deed” of that instrument’s grantors (here, the DeMores). See 69 N.E.2d at 810.

HSBC filed a motion to dismiss the consolidated adversary action. The motion contended that, if section 29’s requirement applies to the mortgage at issue here, the certificate of acknowledgement complies with section 29 because the certificate does make clear that the execution of the mortgage was the free act and deed of the DeMores. In addition, HSBC contended that section 29’s requirement does not apply to the mortgage at issue here because section 29 appears in chapter 183, which governs recorded land, while the underlying parcel that is subject to the mortgage at issue is registered land, which is governed by chapter 185.

HSBC further contended that, even if the certificate of acknowledgment does not comply with section 29, the certificate and other documents still provide constructive notice of the mortgage to a bona fide purchaser, and that state law requires no more than constructive notice in order to preclude a bona fide purchaser from voiding the mortgage. In connection with this contention, HSBC also filed a motion for the Bankruptcy Court to certify to the SJC the question of whether a “mortgage encumbering registered land, whose certificate of acknowledgment is alleged to be potentially ambiguous regarding whether the execution of the mortgage was the voluntary act of the mortgagors, but which ... is noted on the certificate of title of such registered land, provides constructive notice.”

After HSBC converted its motion to dismiss into a motion for summary judgment, the Bankruptcy Court denied both HSBC’s motion to certify the question to the SJC and its motion for summary judgment. In doing so, the Bankruptcy Court ordered HSBC to show cause why the Bankruptcy Court should not grant summary judgment to Lassman, the trustee. After receiving briefing in response to that order, the Bankruptcy Court granted summary judgment to Lassman. The Bankruptcy Court did so because it found that a certificate of acknowledgment is required for this mortgage under section 29, notwithstanding the parcel’s status as registered land; that the certificate of acknowledgement at issue does not make clear who appeared before the notary; that this ambiguity renders the certificate of acknowledgement “materially defective” by making it unclear whether there was an acknowledgment that the execution of the mortgage was the free act and deed of the DeMores; and that, while constructive notice of the mortgage is all that is required under state law to prevent a bona fide purchaser from voiding a mortgage, the defective certificate of acknowledgement and other documents do not suffice to provide constructive notice of the mortgage to a bona fide purchaser. In re DeMore, 530 B.R. 519, 532-37 (Bankr. D. Mass. 2015).

HSBC appealed the Bankruptcy Court’s order to the District Court. The District Court reversed the Bankruptcy Court’s grant of summary judgment to Lassman on the ground that the certificate of acknowledgment is not materially defective. Lassman now appeals that order.

II.

In an appeal from a district court’s review of a decision by a bankruptcy court, our review “assesses] the bankruptcy court’s decision directly.” In re Sheedy, 801 F.3d 12, 18 (1st Cir. 2015) (internal quotation marks and citation omitted). We review a bankruptcy court’s findings of fact for clear error and its conclusions of law de novo. Id. Because we conclude that the certificate of acknowledgement in this case complies with section 29 of chapter 183, we need not address either the threshold question of whether section 29 applies to the parcel at issue, despite its being registered rather than recorded land, or the back-end questions of whether a bona fide purchaser would have had constructive notice of the mortgage and whether such notice would be sufficient to preclude a bona fide purchaser from voiding the mortgage.

In reaching this conclusion, we do not take issue with the finding below that the certificate of acknowledgement that is in dispute fails to show that the DeMores appeared before the notary to acknowledge the mortgage and thus may show no more than that Molloy alone appeared on their behalf. We simply conclude that, even assuming that the certificate of acknowledgment must be read to state that only Molloy appeared before the notary, the certificate of acknowledgement still does all that it needed to do.

If the certificate of acknowledgment is read to state that Molloy appeared without both DeMores, then it expressly states that Molloy appeared as the “attorney-in-fact” for the DeMores “under Power of Attorney recorded herewith.” And, in the referenced “Power of Attorney recorded herewith,” the DeMores specifically authorized Molloy to “do all things necessary to obtain a mortgage loan from ... HSBC ... including without limitation the right to execute, acknowledge and deliver any and all documents.” Further, the certificates of acknowledgment accompanying those power of attorney forms state that the DeMores each signed the power of attorney forms “voluntarily for [their] stated purpose.”

Thus, the certificate of acknowledgement for the mortgage does just what it needs to do: state that Molloy is acknowledging to the notary that he executed the mortgage not only as his own free act and deed but as the “free act and deed” of the DeMores. McOuatt, 69 N.E.2d at 809. As the District Court stated, “[u]nder the terms of the power of attorney[,]:... Molloy’s ‘free act and deed,’ with respect to executing the mortgage, was the free .act and deed of the DeMores.” HSBC Bank USA, N.A. v. Lassman, 550 B.R. 157, 162 (D. Mass. 2016); cf. Sowden & Co. v. Craig, 26 Iowa 156, 163 (1868) (“It was the agent who executed the instrument, and, assuming his authority ... if it was his (the agent’s) voluntary act and deed, as he acknowledged it to be, then in law it was the voluntary act and deed- of his principal.”).

Lassman argues against this seemingly eommonsensical conclusion on the ground that the certificate of acknowledgment in this case does not, in a key respect, mirror a form certificate of acknowledgement that is set forth in an appendix to chapter 183, which, again, is the chapter in which section 29 appears. That appendix contains form certificates of acknowledgement for various situations, including the one that is relevant here. In particular, the form that appears in the appendix as “14,” has the italicized title, “Acknowledgement of Individual Acting by Attorney.” And the text that follows then states: “On this_ day of_19_, before me personally appeared A B, to me known to be the person who executed the foregoing instrument in behalf of C D, and acknowledged that he executed the same as the free act and deed of said C D.” Mass. Gen. Laws ch. 183 App., Form (14).

Lassman seizes on the fact that this form certificate of acknowledgment expressly states that “A B” in executing the instrument in behalf of “C D” was doing so “as the free act and deed of said C D.” He contends that, in this way, the form signals the intention of the legislature to ensure that a certificate of acknowledgment for an instrument, such as a mortgage, expressly states that an attorney in fact who acknowledges that instrument executed it as the free act and deed of the grantor of the instrument. And, Lassman contends, because the certificate of acknowledgement in this case expressly states only that the execution of the mortgage was the free act and deed of Molloy, and not of the De-Mores themselves, the certificate, of ac-knowledgement fails to make the. representation that, in light of what McOuatt requires of an acknowledgement, is the critical one.

But we do not agree. It is true that the certificate of acknowledgment in this case does not- use the very same words' as does the form that is set forth in the appendix to chapter 183. Nonetheless, the certifícate of acknowledgement in this cáse still does all that it must do. This certificate of ac-knowledgement expressly states that the one who appeared in order to acknowledge the mortgage, Molloy, did so as the De-Mores’ attorney and that he did so pursuant to power of attorney forms “recorded herewith.” Those recorded power of attorney forms in turn make perfectly clear that the DeMores voluntarily granted the power to execute the mortgage to Molloy. And, indeed, the DeMores acknowledged those power of attorney forms as their free act and deed.

Thus, when the certificate of acknowl-edgement of the mortgage states that Mol-loy voluntarily executed the mortgage as attorney in fact under the power of attorney forms “recorded herewith,” the certificate of acknowledgement leaves' no doubt that Molloy is acknowledging that he had executed the mortgage—to quote the form certificate of acknowledgment, in the appendix to chapter 183—“as the free act and deed” of the DeMores. And no more is required under section 29, given the standard for making an acknowledgement laid out in McOuatt. See id. at 810 (explaining that, to qualify as an acknowledgement, “[n]o particular words are necessary as long as they amount to an admission that [the grantor] has voluntarily and freely executed the instrument”).

Nor is there any reason to conclude that Molloy’s representation in the certificate of acknowledgment that is at issue here fails to comply with section 29 simply because that representation is formally distinct from the functionally equivalent representation set forth in the form certificate of acknowledgment in chapter 183’s appendix. Chapter 183, section 42 states .quite clearly that “[t]he forms set forth in the appendix to this chapter for taking acknowledgments ... may be used; but this shall not prevent the use of any other forms heretofore lawfully used.” And the SJC has also confirmed that “[t]he acknowledgment required for proper recording of a mortgage ,.. need not take any one specific form.” Casey, 52 N.E.3d at 1036.

Lassman also argues that the District Court’s ruling is in error on the basis of another model certificate of acknowledgment—this one published by the Land Court, which maintains the certificate of title for registered land like the parcel that is at issue here. The Land Court model form reads: “Then personally appeared the aforementioned John Doe and acknowledged the foregoing instrument to be the free act and deed of Mary Doe.” Commonwealth of Mass. Land Court Guidelines on Registered Land (“Land Court Guidelines”), Feb. 27, 2009, at 39, http://www. mass.gov/courts/docs/courts-and-judges/ courts/land-court/guidelines-registered-land.pdf.

But, like the form certificate of acknowl-edgement in the appendix to chapter ‘183, the Land Court’s form is also of no help to Lassman’s argument, even assuming that the requirement of section 29 applies to registered land, as we must for the Land Court form to be of any help to Lassman. For the reasons we have already given, the certificate of acknowledgment in this case—by expressly referencing the power of attorney forms “recorded herewith”— makes clear that Molloy, in signing the mortgage, was undertaking the free act and deed of the DeMores. Thus, the fact that the certifícate of acknowledgment in this case does not use the precise' words used in the Land Court form is not significant.

To the extent one might have any doubt on that score, moreover, the Land Court Guidelines containing the model' Land Court form expressly state that “[t]he forms of certificates of acknowledgment ... set forth in Executive Order Revised No. 455 ... are acceptable for registration by the court’s registration districts.” Land Court Guidelines at 2. And that executive form in turn reads:

On this_day of_, 20_, before me, the undersigned notary public, personally appeared _ (name of document signer), proved to me through satisfactory evidence of identification, which were_, to be the person whose name is signed on the preceding or attached document, and acknowledged to me that (he) (she) signed it voluntarily for its stated purpose. (as partner for ..., a partnership) (as_for_, a corporation) (as attorney in fact for_, the principal) (as_for_!_, (a) (the)-) _ (official signature and seal of notary)

Revised Executive Order No. 455 (04-04) (2004), at 6, http://www.mass.gov/courts/ docs/lawlib/eo400-499/eo455rev.pdf.

In other words, the Land Court Guidelines expressly bless a form certificate of acknowledgement that is .not unlike the one that' is at issue here. The executive form, like the one in this case, references the power of attorney relationship between the one who appears before the notary to acknowledge the instrument and the grantor of the instrument. And, the executive form, like the, one in this case, does not also expressly- state that the person who appeared as attorney in fact for the grantor in “voluntarily” signing the mortgage did so as the free act and deed of the grantor. We thus do not see how the Land Court form—given that the Land Court’s own guidelines expressly approve the executive form—calls into question the certificate of acknowledgement that is at issue in this case.

III.

The order of the District Court is affirmed.

      . The certificate of acknowledgment in this case states that the one who appeared to acknowledge the mortgage "signed it voluntarily and for its stated purpose.” Quite sensibly, Lassman does not argue that there is any material significance to the use of the word "voluntarily” rather than the use of the words "free act and deed,”

      . For a useful discussion of the land registration system, which governs registered land, and the land recording system, which governs recorded land, and the differences between the two systems, see In re Bailey, 468 B.R. 464, 477 n.19 (Bankr. D. Mass. 2012).

      . In response to HSBC’s argument that section 29 of chapter 183 does not apply to this mortgage because the mortgage concerns a parcel of registered land, which is governed by section 185, Lassman points to chapter 185, section 58. Lassman contends that this section of chapter 185 incoiporates the requirements of section 29 of chapter 183 for recording a mortgage on recorded land into the requirements for registering a mortgage on registered land. Section 58 of chapter 185 provides that “[e]very ... attachment ... affecting registered land, which would trader other provisions of law, if recorded ... affect the land to which it relates, shall, if registered ... be notice to all persons from time of such registering.” Mass Gen. Laws ch. 185, § 58.

      . The Land Court Guidelines appear to contemplate that the requirement of section 29 does apply to registered land, because they state that deeds, among other documents “must be acknowledged in order to be recorded.” Land Court Guidelines at 1 (citing Mass. Gen. Laws ch. 183, § 29).

      . We note that in In re Kelley, 498 B.R. 392 (B.A.P. 1st Cir. 2013), on which Lassman relies, the certificate of acknowledgment for the mortgage there at issue stated in relevant part that “before me ... personally appeared [Grantors] by Shannon Obringer as Attorney in Fact ... and acknowledged to me that he/she/they signed it voluntarily for its stated purpose.” Id. at 394. The Bankruptcy Appellate Panel concluded that, despite the language stating that the grantor of the mortgage appeared "by” Obringer, id Obringer ”[n]ever said anything to the one who made out the certificate of acknowledgment to indicate that the Mortgage was the voluntary act of the [grantors].” Id. at 401. In so holding, the Bankruptcy Appellate Panel in In re Kelley made no reference to the terms of the power of attorney that would have enabled Obringer to execute and acknowledge the mortgage on behalf of the grantors. Thus, even if we were to assume that In re Kelley is right on its particular facts, our case is distinguishable because the certificate of acknowledgment at issue here expressly specified that the one who appeared before the notary to acknowledge the mortgage was acting "under Power of Attorney recorded herewith,” and the recorded power of attorney forms that are referenced expressly and voluntarily authorize that attorney—Molloy—to execute and acknowledge the mortgage on behalf of the DeMores. Thus, we do not see how one could say that, on the basis of the certificate of acknowledgement here, the one who acknowledged the mortgage ”[n]ever said anything to the one who made out the certificate of acknowledgment to indicate that the Mortgage was the voluntary act of the [grantors].” Id.