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Oconee Federal Savings and Loan Association v. Brown

Court of Appeals of Georgia, First Division

June 26, 2019

OCONEE FEDERAL SAVINGS AND LOAN ASSOCIATION
v.
BROWN et al.

          BARNES, P. J., MERCIER and BROWN, JJ.

          BARNES, PRESIDING JUDGE.

         In this case, Kenneth A. Brown and April M. Brown sued Oconee Federal Financial Corporation and Oconee Federal Savings and Loan Association (collectively, "Oconee Federal"), Brian C. Ranck, and Sanders, Ranck & Skilling P. C. (collectively "the Ranck defendants") alleging numerous causes of actions arising from the couple's failed attempt to modify certain loans and Oconee Federal's attempted foreclosure sale.[1] In a related appeal, Oconee Federal Savings and Loan Assn. v. Brown, 349 Ga.App. 54 (825 S.E.2d 456) (2019) ("Oconee I"), this Court reversed the grant of an interlocutory injunction enjoining the foreclosure sale of the subject property owned by the Browns, upon finding that the Browns had not tendered to Oconee Federal the amount due under a home equity line of credit ("HELOC") agreement. Id. at 65.

         Oconee Federal also filed a motion for summary judgment on its counterclaim for payment of the monies due under the loans and on the Browns' substantive claims, the trial court's denial of which provides the basis for the present appeal. The trial court issued a certificate for immediate review, and Oconee Federal filed an application for an interlocutory appeal, which this Court granted. On appeal, Oconee Federal contends that the trial court's order erred in denying its motion for summary judgment on its counterclaim for payment of the balances on the underlying loans and in denying its motion for summary judgment as to the Browns' claims.

         Summary judgment is proper 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 a judgment as a matter of law[.]" OCGA § 9-11-56 (c). Following a trial court's grant or denial of summary judgment, we conduct a de novo review, construing all reasonable inferences in the light most favorable to the nonmoving party. Cochran v. Kendrick, 297 Ga. 655, 658 (2) (778 S.E.2d 1) (2015). "We do not resolve disputed facts, reconcile the issues, weigh the evidence, or determine its credibility, as those matters must be submitted to a jury for resolution." Tookes v. Murray, 297 Ga.App. 765, 766 (678 S.E.2d 209) (2009). Following our review and for the reasons that below, we affirm the trial court's denial of summary judgment on the Browns' good faith and fair dealing, punitive damages, and attorney fees claims, and reverse the trial court's denial of summary judgment as to the remaining claims.[2]

         The Browns obtained a home loan for $136, 000 from Oconee Federal in 2003 (the "2003 Loan") and a $40, 000 HELOC from Oconee Federal in 2007.[3] Both loans were secured by their residential property. In 2015, the Browns submitted loan modification applications for the 2003 Loan and the HELOC.[4] The Browns alleged that during this period, Oconee Federal promised them that their loans would be modified and that they were instructed not to make loan payments while their loans were being considered for the modifications. The Browns made their last loan payments on the mortgage loan and HELOC in April 2015. Oconee Federal subsequently denied the loan modification applications in September 2015.

         On December 17, 2015, the Browns sent a qualified written request ("QWR") letter to Oconee Federal's counsel, the Ranck firm, under the federal Real Estate Settlement Procedures Act, 12 USC § 2601 et seq. ("RESPA"), seeking certain information and documents related to the HELOC. On January 15, 2016, Oconee Federal, through counsel, responded to the request and advised the Browns that its internal investigation had not identified any inaccuracies in the credits and debits attributed to the Browns' loans. The letter noted a "possible discrepancy" in how two payments were applied in October 2011 but explained that Oconee Federal would seek clarification from the Browns about how they intended the payment to be applied.

         On January 29, 2016, after Oconee Federal initiated foreclosure proceedings under the HELOC and security deed, the Browns filed the first of three amended complaints, "seeking injunctive relief to enjoin the foreclosure and raising multiple claims of wrongful foreclosure, breach of contract, and fraud." Oconee I, 349 Ga.App. at 57-58. Oconee Federal then cancelled the scheduled foreclosure, but resumed the foreclosure proceedings on March 2, 2018 because the Browns had failed to "repay their debt under the HELOC agreement in full by the maturity date of May 15, 2017." Id. at 58-59. The trial court, however, granted the Browns injunctive relief to stop the foreclosure sale upon the Browns' tender of $2, 700 into the trial court's registry.[5]

         In their subsequent third amended complaint, the Browns alleged causes of action for: (1) breach of contract; (2) anticipatory repudiation; (3) breach of the duty of good faith and fair dealing; (4) violations of the Georgia Fair Lending Act ("GFLA"), OCGA § 7-6A-1 et seq.; (5) fraud; (6) negligence; (7) violations of RESPA; (8) injunctive and declaratory relief; (9) punitive damages and attorney fees. Oconee Federal filed a motion for summary judgment, which the trial court denied, stating only that "[t]his Defendant having filed a [m]otion for [s]ummary [j]udgment and after having considered all matters of record and oral argument by counsel, the Court hereby determines that there are genuine issues of material facts, and that the [m]otion should be DENIED." It is from that order that Oconee Federal appeals.

         1. Oconee Federal first contends that the trial court erred in denying summary judgment as to its counterclaims for payment of the 2003 Loan and 2007 HELOC.[6]It contends that prima facie cases were proven as to both loans in that Oconee Federal produced the notes, established that the Browns executed the notes, and that the couple subsequently defaulted on the notes. Thus, Oconee Federal argues, as thereafter the Browns did not meet their burden of establishing a defense in response, summary judgment should have been granted to Oconee Federal. The Browns maintain that Oconee Federal is estopped from collecting on the notes because the bank made it impossible to pay though its unequitable acts, including blocking online payments, refusing payments, and prematurely reporting the couple as in default. The Browns characterize Oconee Federal's alleged actions and inactions as creating an equitable extension of the time required for payment of the loans. The Browns further assert that the subject loans are neither due nor enforceable and that questions remain regarding the amounts due.

         It is undisputed that the Browns obtained a home loan from Oconee Federal in 2003 and a HELOC from Oconee Federal in 2007, and that both loans were secured by their residential property.[7] The 2003 Loan provided that failure to make monthly payments would constitute a default and, that upon written notice and failure to cure within 30 days, Oconee Federal had the right to accelerate the loan. The HELOC also provided that failure to pay would constitute default and that the balance of the loan was due at the expiration of the 120 month draw period on May 10, 2017. It is further undisputed that the Browns had not made payments on either loan since May 2015.

         "In a suit on a note, when signatures are admitted or established, production of the instrument entitles a holder to recover on it unless the defendant establishes a defense." (Citation omitted.) Heath v. Boston Capital Corp. Tax Credit Fund VIII, 253 Ga.App. 537, 538 (1) (559 S.E.2d 743) (2002). See also Nash v. Township Investments, LLC, 320 Ga.App. 494, 495 (740 S.E.2d 236) (2013); Braswell v. Bank of Early, 229 Ga.App. 445, 447 (494 S.E.2d 277) (1997). Upon review of the record, and construing the evidence in favor of the Browns, we find that Oconee Federal made the required prima facie showing to recover under the notes.

         The Browns raise various defenses, including that Oconee Federal rejected tender, that the amount owed under the loans is disputed, and equitable estoppel, in that they had relied on Oconee Federal's promise to modify their HELOC loan. However, as to the HELOC, in Oconee I we found that "none of the Browns' claims excuse them from the requirement that they tender payment to Oconee Federal." Oconee I, 349 Ga.App. at 65. Specifically we found that "the Browns' claim that the amount owed is in dispute does not excuse them from the requirement that they tender payment to Oconee Federal," that the "tender must be continuous, and the Browns have not shown that they have tendered any payment to Oconee Federal after the HELOC debt matured or that Oconee Federal would have refused any such tender," that "the Browns [are not] excused from the tender requirement based on their claims that Oconee Federal prevented them from paying their debt by denying their application to modify the HELOC and in reporting them as delinquent to credit agencies," and that "[s]imilarly unavailing is the Browns' related claim that Oconee Federal is estopped from collecting on the HELOC debt due to its purported promises regarding the application to modify the debt." Id. at 63-64.

         Pursuant to OCGA § 9-11-60 (h), "[a]ny ruling by the Supreme Court or the Court of Appeals in a case shall be binding in all subsequent proceedings in that case in the lower court and in the Supreme Court or the Court of Appeals as the case may be." See Fulton-DeKalb Hosp. Auth. v. Walker, 216 Ga.App. 786, 788 (1) (456 S.E.2d 97) (1995); Hicks v. McGee, 289 Ga. 573, 577-578 (2) (713 S.E.2d 841) (2011) ("[A] ruling by the Supreme Court or the Court of Appeals in a case shall be binding in all subsequent proceedings in that case in the lower court and in the Supreme Court or the Court of Appeals, as the case may be. Georgia's appellate courts are required to adhere to the law of the case rule in all matters which they consider. . . . [A]ppellate rulings remain binding as between parties to a case, so long as the evidentiary posture of the case remains unchanged[.]") (punctuation omitted; emphasis in original).

         In light of this Court's ruling in Oconee I as to the Browns' defenses, and given that Oconee Federal established a prima facie case as to the outstanding debt under the HELOC and that the Browns failed to establish a defense, the trial court erred in denying Oconee Federal's motion for summary judgment on its counterclaim for payment of the HELOC debt. The Browns put forth identical defenses regarding payment of the 2003 Loan, and thus as Oconee Federal also established a prima facie case as to that debt, we find this Court's ruling in Oconee I controlling as to payment of the 2003 Loan as well. Accordingly, the trial court also erred in denying summary judgment to Oconee Federal on its counterclaim for payment of the 2003 Loan.

         2. Oconee Federal also contends that the trial court erred in denying its motion for summary judgment on the Browns' claims. The Browns' complaint, as thrice amended, alleged 13 counts including: injunctive relief, declaratory judgment, breach of contract, anticipatory repudiation, breach of good faith and fair dealing, violation of the GFLA, fraud, conspiracy, negligence, punitive damages, violation of RESPA, and attorneys fees.[8]

         a. Declaratory Judgment [9]

         The Browns sought a declaratory judgment pursuant to OCGA § 9-4-2, alleging a justiciable controversy between the parties as to the ownership of the two loans; the validity of the security deeds and promissory notes on which Oconee Federal seeks to foreclose; the balance due on the loans; and Oconee Federal's rights and duties in servicing the loans, foreclosing the loans and in attempting to collect the loans. On appeal, Oconee Federal asserts that summary judgment was proper as to this claim because there is no justiciable issue between the parties. According to Oconee Federal, the loans have matured, and the Browns do not allege any future act or conduct upon which they face uncertainity; thus, the couple in essence is seeking an advisory ruling as to their purported defense. In contrast, the Browns contend that there remains a controversy "regarding the status of their loans and security deeds."

         To obtain declaratory relief,

[t]he plaintiff must show facts or circumstances whereby it is in a position of uncertainty or insecurity because of a dispute and of having to take some future action which is properly incident to its alleged right, and which future action without direction from the court might reasonably jeopardize its interest. A declaratory judgment may not be granted in the absence of a justiciable controversy. The object of the declaratory judgment is to permit determination of a controversy before obligations are repudiated or rights are violated. As many times pointed out by this court, its purpose is to permit one who is walking in the dark to ascertain where he is and where he is going, to turn on the light before he steps rather than after he has stepped in a hole.

         (Citations and punctuation omitted; emphasis in original.) Farm & Home Life Ins. Co. v. Skelton, 235 Ga.App. 507, 508 (510 S.E.2d 76) (1998).

         An actual controversy ripe for adjudication does not necessarily reflect a justiciable controversy for purposes of a declaratory judgment. Id. The Browns' uncertainty regarding the status of their loans and security deeds may present issues ripe for adjudication, but the Browns do not show how they face any uncertainty about future rights or obligations such that a justiciable issue is presented. The obligations under the loans and security deeds are set forth on the face of each document, and for purposes of a declaratory judgment, the Browns have not demonstrated "the need of any direction from the trial court with respect to future conduct on [their] part which might increase [their] liability or otherwise affect [their] interests." Farm & Home Life Ins. Co., 235 Ga.App. at 508. See Richardson v. Phillips, 302 Ga.App. 305, 310 (1) (690 S.E.2d 918) (2010) (a declaratory judgment not permitted to "simply . . . have the trial court decide the propriety of past conduct committed by [the defendant]").

         Thus, the trial court erred in denying summary judgment to Oconee Federal on this claim.

         b. Breach of Contract

         The Browns alleged breach of contract for Oconee Federal's failure to "provide [them] with certain notices regarding the acceleration of the amounts due under the instruments," or notice prior to the acceleration of the loans and initiation of the foreclosure. They asserted that Oconee Federal was contractually obligated to provide timely written notice before it accelerated the amount due on the loans or initiated foreclosure; permit the Browns to reinstate the loans by paying the balance due; and allow the Browns to reinstate and accept the total balance owed on one or more of the loans.

         "The elements for a breach of contract claim in Georgia are the (1) breach and the (2) resultant damages (3) to the party who has the right to complain about the contract being broken." (Footnote omitted.) Duke Galish, LLC v. Manton, 308 Ga.App. 316, 320 (2) (707 S.E.2d 555) (2011). Oconee Federal contends that the trial court erred in denying its motion for summary judgment on the Browns' claim because the couple cannot show any material breach or any damages. According to Oconee Federal, this claim fails because it was based on Oconee Federal's alleged failure to provide certain notices about the acceleration of the debts and impending foreclosure, but there was no foreclosure and thus no damages. We agree.

         "Damages recoverable for a breach of contract are such as arise naturally and according to the usual course of things from such breach and such as the parties contemplated, when the contract was made, as the probable result of its breach." OCGA § 13-6-2. Even if we assume, without deciding, that the failure to give the Browns notice of the acceleration of the notes and impending foreclosure evinced a breach of certain contractual obligations, to prevail on their claim for breach of contract, the Browns still had to show damages resulting from Oconee Federal's failure to give notice.

         In their complaint, the Browns only alleged that they suffered "damages in an amount to be proven at trial," and in their appellate response, only assert that there was a breach of the contractual obligation to provide notice. They have come forward with no evidence showing how Oconee Federal's failure to provide notice of the acceleration and impending foreclose caused them harm. Instead, the evidence demonstrates that the foreclosure sale was cancelled, and Oconee Federal further stipulated that it had no immediate plans to reinitiate foreclosure of the property. Further, upon the Browns' motion to tender funds into the court registry, the trial court permitted the couple to ...


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