THE BANK OF NEW YORK MELLON et al.
EDMONDSON et al.
MILLER, P. J., DOYLE, P. J., and REESE, J.
Edmondson refinanced property he owned with his wife, Alena.
The Bank of New York Mellon ("Mellon") filed this
action against the Edmondsons seeking to: replace an original
security deed that was allegedly executed at the closing and
lost prior to recordation and reformation of the county
records to reflect the replacement deed; a declaratory
judgment; or a first priority equitable lien against the
Edmondsons's interest in the property. Following a bench
trial, the trial court found that the Edmondsons's
signatures on the replacement deed filed by Mellon were
forged and that Mellon's claim for an equitable lien was
therefore barred by the doctrine of unclean hands, ruling in
favor of the Edmondsons and awarding them attorney fees in
the amount of $9, 000. Mellon appeals, arguing that the trial
court erred by denying its request for equitable relief and
by awarding attorney fees to the Edmondsons. For the reasons
that follow, we affirm in part and reverse in part.
On an appeal from an entry of judgment following a bench
trial, we apply a de novo standard of review to any questions
of law decided by the trial court, but will defer to any
factual findings made by that court if there is any evidence
to sustain them. Nevertheless, if the trial court makes a
finding of fact which is unsupported by the record, that
finding cannot be upheld and any judgment based upon such a
finding must be reversed.
viewed, the record shows that in 2003, the Edmondsons
purchased a home in DeKalb County ("the Property")
with a loan agreement with Homebanc Mortgage, which mortgage
was secured by a security deed against the Property. On May
24, 2007, Jerome refinanced the loan with Countrywide Home
Loans, Inc., to obtain a more favorable interest rate. At the
closing, Jerome executed a promissory note ("the
Note") in favor of Countrywide; Alena did not attend the
closing and was not listed as a borrower on the Note, nor did
she sign any documentation associated with the
refinance. The Note provided that it was secured by a
mortgage, deed of trust, or a security deed dated the same
day as the Note. Jerome conceded at the subsequent trial that
there should have been a security deed executed at the
closing and that he intended for the Property to be used as
collateral for the Note. Jerome, however, testified that he
did not sign a security deed at the closing.
or so after the closing, Jerome received a letter from the
closing attorney asking him "to come back" and sign
the security deed. Jerome went to the closing attorney's
office to do so, but the attorney told him he no longer
represented Countrywide. Jerome then contacted his mortgage
broker, who told him that if the bank failed to obtain a
security deed "that's on them." Jerome
testified that he never signed a security deed to secure the
Countrywide refinance. According to Jerome, he later
attempted to enter into a loan modification with Countrywide
and then Bank of America, which had purchased the loan, but
was unsuccessful because there was no security deed on the
Property. He also received a call from the DeKalb County
Clerk's office advising him that someone was requesting
to "force" a security deed into the records for the
3, 2007, Nations Title Agency of Georgia, Inc., recorded an
"Affidavit of Lost/Misplaced Deed for Recording."
Attached to the affidavit was a copy of a security deed for
the Property, which deed was dated May 24, 2007, and
contained the purported signatures of both Edmondsons. On
February 9, 2012, the security deed was transferred to Mellon
via a recorded assignment.
April 30, 2013, Mellon filed this action against the
Edmondsons, the Georgia Department of Labor ("the
DOL"), and American Express Bank, FSB, seeking to reform
the deed records and a declaratory judgment establishing a
security deed to the property in the first priority secured
position. Mellon indicated therein that the
Edmondsons had executed the security deed at closing, but
that the deed had been "lost prior to recording";
attached to the complaint was a copy of the security deed
purportedly signed by both Edmondsons.
February 14, 2014, the Edmondsons filed an answer, denying
that they signed the security deed attached to the complaint,
asserting a counterclaim alleging that Mellon conveyed
"a fraudulently forged" security deed, and seeking
attorney fees and expenses of litigation. On May 4, 2015,
Mellon amended its complaint to add a claim for a first
priority equitable lien against the Edmondsons' interest
in the Property, "coupled with a power of nonjudicial
sale and all other terms of the [s]ecurity [d]eed, effective
as of July 3, 2007." Thereafter, Mellon moved for
summary judgment, and the trial court denied the motion.
case proceeded to a bench trial, at which both Jerome and
Alena testified that only Jerome attended the refinance
closing and that neither of them signed the security deed
containing their purported signatures. At the conclusion of
the evidence, the trial court ruled in favor of the
Edmondsons, finding that the undisputed evidence showed that
the security deed attached to the affidavit of lost/misplaced
deed was not signed by the Edmondsons, and the deed was
"a forged document." The court then concluded that
because the security deed was forged, Mellon's claim for
an equitable lien or equitable subrogation was barred by the
doctrine of unclean hands, and Mellon "did not avail
itself of the proper legal remedies upon discovering the . .
. [s]ecurity [d]eed was not recorded, and therefore, is
chargeable with inexcusable and/or culpable neglect."
The court also awarded the Edmondsons $9, 000 "for their
reasonable attorney fees in defending this matter."
contends that the trial court erred by denying its claim for
a first priority equitable lien against the Edmondsons'
interest in the property or for equitable subrogation. We
does not challenge the trial court's failure to grant its
request for reformation of the security deed or for a
declaratory judgment related thereto. Thus, the only
remaining claims are Mellon's claims for equitable
relief, which the trial court found to be barred by the
doctrine of unclean hands.
"Unclean hands" is a shorthand reference to OCGA
§ 23-1-10, which states, "[h]e who would have
equity must do equity and must give effect to all equitable
rights of the other party respecting the subject matter of
the action." OCGA § 23-1-10 embodies both the
"unclean hands" doctrine and the concept that one
will not be permitted to take advantage of his own wrong.
However, relief is precluded only if the inequity so infects
the cause of action that to entertain it would be violative
of conscience. The inequity must relate directly to the
transaction concerning which complaint is made. The ...