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100 Lakeside Trail Trust v. Bank of America, N.A.

Court of Appeals of Georgia, Third Division

September 8, 2017




         In 2013, Bank of America, N.A., filed this action in the Superior Court of Fayette County against 100 Lakeside Trail Trust and Jum U. Ra'Oof (collectively, "the appellants"), seeking, inter alia, equitable reformation of a 2007 security deed based on mutual mistake. The bank alleged that the security deed mistakenly identified Ra'Oof individually as the grantor, when the actual owner of the subject property and intended grantor was the trust, which Ra'Oof served as trustee. In addition, the bank sought a declaratory judgment that the security deed remains in full force and effect, and evidences a perfected, valid, enforceable, first-priority security interest in the property. The appellants asserted a counterclaim for wrongful attempted foreclosure. The parties filed cross motions for summary judgment. After a hearing, the trial court granted the bank's motion for summary judgment on affirmative defenses asserted by the appellants.[1] The trial court granted the bank's claim for equitable reformation of the security deed to identify the trust as the grantor, and to correctly reflect that Ra'Oof executed the security deed in his capacity as trustee of the trust, rather than in his individual capacity. The trial court also granted the bank's motion for summary judgment on its claim for declaratory judgment and declared that the security deed has not been extinguished, as the appellants alleged. Finally, the trial court denied the appellants' cross motion for summary judgment.

         On appeal, the appellants contend that the bank's action is barred by the doctrine of laches and the doctrine of unclean hands and, therefore, that the trial court erred in reforming the deed. In addition, the appellants contend that the trial court erred in declaring that the security deed has not been extinguished, arguing specifically that the 2007 security deed in favor of a different lender was not assigned to the bank in a manner that makes the interest enforceable against them under the Statute of Frauds, that the evidence establishes that the bank is not a holder in due course, and that the bank wrongfully refused to accept the appellants' tender of funds to pay off the debt secured by the subject property. The appellants also contend that the evidence shows that the bank sought foreclosure in bad faith and, therefore, that the trial court erred in granting summary judgment in favor of the bank on their counterclaim for wrongful attempted foreclosure. Finding no merit in any of the appellants' arguments on appeal, as explained below, we affirm.

         Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law[.]" OCGA § 9-11-56 (c). When a plaintiff moves for summary judgment, it "has the burden of establishing the absence or non-existence of any defense raised by the defendant." (Citation and punctuation omitted.) Vance v. FD 2011-C1 Grove Rd., 340 Ga.App. 36 (795 S.E.2d 747) (2016).

Summary judgments enjoy no presumption of correctness on appeal, and an appellate court must satisfy itself de novo that the requirements of OCGA § 9-11-56 (c) have been met. In our de novo review of the grant of a motion for summary judgment, we must view the evidence, and all reasonable inferences drawn therefrom, in the light most favorable to the nonmovant.

(Citations and punctuation omitted.) Cowart v. Widener, 287 Ga. 622, 624 (1) (a) (697 S.E.2d 779) (2010). The relevant facts that follow are undisputed unless otherwise noted.

         In March 2003, Ra'Oof purchased 100 Lakeside Trail, a residence in Fayette County. For estate planning purposes, Ra'Oof, as grantor, executed a quitclaim deed on April 19, 2005, conveying the property to "100 Lakeside Trail Trust, Jum U. Ra'Oof, as Trustee." In 2007, he refinanced the debt secured by the property. On November 16, 2007, he executed a promissory note to the new lender, Countrywide Bank, FSB, and also executed a security deed to secure the debt. His signature line on both documents identified him as "Jum U. Ra'Oof - Borrower" and made no reference to his capacity as trustee. Ra'Oof deposed, however, that he knew that the trust owned the property at that time and that his intention in executing the documents was to do so in his capacity as the trustee. After this transaction, the bank acquired Countrywide and its assets, including its interest in the 2007 security deed and promissory note at issue in this case.

         Ra'Oof deposed that he stopped making payments on the promissory note in 2010, based on employees of the bank telling him that, in order to get a loan modification as he desired, he had to be three months behind on his payments. The bank did not approve the loan modification and soon thereafter published a notice of foreclosure. The appellants resisted foreclosure by initiating litigation that unsuccessfully challenged the bank's standing. This action followed in 2013.

         On October 5, 2015, while this case was pending in the trial court, Ra'Oof requested a payoff letter from the bank's loan servicer, Seterus, Inc. The same day, Seterus faxed a payoff statement to Ra'Oof's attorney. The letter gave instructions for tendering the payoff amount due as of October 9, 2015, calculated as $607, 563.67, and stated that the payoff statement would expire on that date. The letter gave two options under the heading "Payment Instructions:" one labeled "Wiring Instructions, " and one labeled "Overnight Address." The letter stated, "If you do not pay prior to [October 9, 2015], please request an updated payoff prior to sending any funds." The letter also stated, "Funds received after October 09, 2015 will require an additional $66.89 interest per day." Ra'Oof did not tender payment before the payoff statement expired.

         On December 18, 2015, Ra'Oof's attorney sent a letter to Seterus, stating that Ra'Oof had authorized her to accept Seterus's payoff demand and tender full payment due in regard to the promissory note on his behalf. The attorney's letter stated:

Your correspondence indicates that the tender must be made at your location in Roswell. Please have a representative of your company available to make the exchange. We will be making full presentment of the certified funds in person at your offices located at 14523 S.W. Millikan Way, Suite 200 Beaverton, OR 97005 on or after December 18, 2015. Please understand that under the contractual agreement, and in accordance with Georgia law, you must obtain the funds by closing the account out and exchanging the original Note marked "Paid In Full" for the funds in person. Due to the above listed discrepancies, we will not accept a separate receipt as evidence of your right to the funds. Tendered funds will not be surrendered without immediate exchange for the original Note. You have until the date the funds are tendered in person to produce and surrender the original promissory Note in exchange for the tendered funds. Failure to surrender the original Note and accept the tendered funds will result in the discharge of the Security Deed instantly. At that point, all foreclosure action must cease immediately and forever. Any attempt to foreclose after the tender has been made will be deemed as an act of fraud and will be prosecuted to the fullest extent of the law.

         Later on December 18, Ra'Oof's representative called and spoke with a Seterus employee in the Beaverton, Oregon office about the intended personal delivery of a cashier's check in the amount of $630, 000. The Seterus employee told Ra'Oof's representative that the Beaverton office would not accept the funds in person. Ra'Oof's representative went to the Beaverton office with the check on December 18 and on December 19 but was not admitted to the office.

         1. The appellants contend that the bank's action is barred by the doctrine of laches and, therefore, that the trial court erred in reforming the deed. OCGA § 23-1-25 provides: "Equity gives no relief to one whose long delay renders the ascertainment of the truth difficult, even when no legal limitation bars the right." See also OCGA § 9-3-3 ("[C]ourts of equity may interpose an equitable bar whenever, from the lapse of time and laches of the complainant, it would be inequitable to allow a party to enforce his legal rights."). "Of course, laches does not arise from delay alone. To ...

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