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Roberts v. Smith

Court of Appeals of Georgia, First Division

June 20, 2017

ROBERTS et al.


          Barnes, Presiding Judge.

         Estelle Roberts and Charlie Smith appeal the trial court's rulings on cross-motions for summary judgment in this dispute over an arrangement among four siblings to purchase a home for the benefit of one of the siblings. The trial court ruled in favor of Mary Smith, the executor of the estate of Johnnie Smith, who was one of the siblings, on all claims. For reasons that follow, we reverse.

         Summary judgment is proper "only if the pleadings and evidence show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. OCGA § 9-11-56 (c)." (Citation and punctuation omitted.) Vernon v. Assurance Forensic Accounting, 333 Ga.App. 377, 378 (774 S.E.2d 197) (2015). On appeal from a grant or denial of summary judgment, we conduct a de novo review, "constru[ing] the evidence most favorably towards the nonmoving party, who is given the benefit of all reasonable doubts and possible inferences." (Citation and punctuation omitted.) Johnson v. Omondi, 294 Ga. 74, 75 (751 S.E.2d 288) (2013).

         The record shows the following undisputed facts. Estelle Roberts, Charlie Smith, Osie Outlaw, and Johnnie Smith, who is now deceased, are siblings.[1] In November 2011, Johnnie purchased a house in Cordele for $84, 000 for the use of Osie and her husband. The appellants and Osie verbally agreed to contribute money toward the purchase and maintenance of the house. During their depositions, Estelle testified that "[n]obody had a set amount to pay, " and Charlie explained that each sibling would do "[w]hatever was needed." When Charlie was asked, "Was there something more detailed about each of your responsibility?" he responded, "No, we are a family. So we don't sit down and say you put this amount, you put this amount. Whatever was needed we did." The appellants and Osie contributed toward the down payment, and Charlie later made one insurance and one tax payment and bought some doors for the house.

         Johnnie was the sole buyer listed on the purchase agreement. He made a cash down payment of $11, 136.49 and obtained mortgage financing from Atlanta Postal Credit Union ("APCU"), with which he already had a banking relationship, for the remainder. Johnnie was the only borrower listed on the promissory note and security deed. In January 2012, shortly after the closing, Johnnie executed a warranty deed transferring ownership of the Cordele property to the appellants and himself as joint tenants with rights of survivorship. He did not tell the appellants about this transfer until after the fact.

         Johnnie arranged for the monthly mortgage payments to be automatically deducted from an account at APCU that he owned jointly with his wife, Mary.[2]According to the appellants' affidavits, Johnnie told them that he had set aside enough money in this account to pay the remaining mortgage balance. Neither appellant contributed toward the mortgage payments while Johnnie was alive.[3]

         Johnnie died in December 2012, and Mary became the executor of his estate. According to Mary, and not refuted by the appellants, mortgage payments on the Cordele residence continued to be deducted automatically from Johnnie and Mary's joint APCU account for at least eight months after Johnnie's death.

         In August 2013, Mary asked APCU to close all of Johnnie's accounts, including the joint account and an individual account that Johnnie owned with a balance of approximately $52, 000. That same month, Mary told Estelle that Johnnie's accounts had been closed, and her lawyer sent the appellants a letter asking them to "take appropriate steps to refinance the mortgage indebtedness on the property and begin to pay the mortgage on the property." The appellants asked APCU for a pay-off amount and other details about the mortgage, but APCU refused to disclose any information to them. They also approached other banks in an effort to refinance the mortgage, but were rebuffed because their names did not appear on the loan documents. Finally, they tried to discuss the mortgage with Mary, but she would not tell them anything. Estelle made mortgage payments directly to APCU for the months of September 2013 through January 2014.

         In September 2013, APCU notified Mary by letter that it had closed Johnnie's joint account at her request and reversed the mortgage payment that had been automatically deducted for that month. APCU also claimed in the letter that the mortgage loan was in default due to the reversed payment and because Johnnie's January 2012 transfer of the property by warranty deed had violated a provision of the security deed requiring pre-approval from APCU for any transfers. Accordingly, APCU accelerated the loan and demanded full payment within 30 days. Soon thereafter, APCU seized the money in Johnnie's individual account and applied it toward the mortgage debt, claiming that it had a lien on the individual account under the terms of Johnnie's membership agreement with APCU. That left an outstanding mortgage balance of $14, 661.64. The appellants were unaware of APCU's actions or communications with Mary.

         In January 2014, APCU sent Mary notice that it was initiating foreclosure proceedings on the Cordele property because the mortgage loan remained in default due to lack of payment. After learning of this notice, [4] the appellants retained counsel to stop the foreclosure. The foreclosure did not occur, but the appellants were not told why. In fact, Mary averted the foreclosure by paying off the outstanding mortgage balance herself soon after receiving the foreclosure notice, and in return, APCU assigned the security deed and loan documents to Johnnie's estate. The appellants were not informed of this transaction.

         In February 2014, the appellants filed a petition against Mary, in her capacity as executor of Johnnie's estate, seeking a judgment declaring the appellants to be the owners of the Cordele property, an order directing Mary to provide documentation for a pay-off amount on the mortgage, an accounting, and damages for emotional distress.[5] Mary answered and asserted counterclaims for judicial foreclosure, implied trust, and liquidated damages based on the appellants' breach of their alleged agreement to pay off the mortgage. With the trial court's permission, Mary later added Osie as a third party defendant and asserted those same claims against her.[6]

         Mary and the appellants filed cross-motions for summary judgment. Following a hearing, the trial court entered an order granting Mary's motion and denying the appellants' motion. The court ruled that the appellants had no claim for failure to provide payoff information;[7] that they failed to establish a claim for emotional distress; that they breached an agreement to pay the mortgage on the Cordele property and that Mary was entitled to liquidated damages for that breach; that Mary also was entitled to judicial foreclosure and an implied trust on the property; and that the appellants were not entitled to cancellation or satisfaction of the loan documents. The appellants filed this appeal, challenging the trial court's rulings on the existence of an agreement to pay off the mortgage, implied trust, and satisfaction or cancellation of the loan documents.[8]

         1. The appellants contend that the trial court erred by finding that they entered into an enforceable agreement to pay off the ...

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