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J. Michael Vince, LLC v. Suntrust Bank

Court of Appeals of Georgia, Fifth Division

October 30, 2019

J. MICHAEL VINCE, LLC
v.
SUNTRUST BANK.

          MCFADDEN, C. J., MCMILLIAN, P. J., and SENIOR APPELLATE JUDGE PHIPPS

          Phipps, Senior Appellate Judge.

         This is the second appearance of this case before this Court. In SunTrust Bank v. Cowan, 344 Ga.App. 604 (812 S.E.2d 13) (2018), we reversed the trial court's award of excess funds from a tax sale to J. Michael Vince, LLC ("JMV") because of the Supreme Court of Georgia's holding in DLT List, LLC v. M7VEN Supportive Housing & Dev. Group, 301 Ga. 131 (800 S.E.2d 362) (2017) ("DLT List II")[1] that a redeeming creditor at a tax sale (such as JMV) does not have a first priority lien interest in the excess funds. After remand, the trial court found JMV in contempt of an order entered prior to the order we reversed. For the reasons that follow, we affirm in part, reverse in part, vacate in part, and remand with direction.

         The relevant procedural history and facts of this case are as follows. On October 12, 2011, Regina Jordan ("Jordan") executed a security deed in favor of SunTrust Bank ("SunTrust") in the amount of $246, 535.26 on the real property located at 1000 Landon Drive, Villa Rica, Georgia (the "Property"). In March 2015, Douglas County conducted a tax sale of the Property. After the tax sale, a homeowners' association lien on the Property was assigned to JMV in April 2015, and JMV redeemed the Property by paying the tax sale purchaser $198, 000.00. The Douglas County Tax Commissioner filed an interpleader action in the Superior Court of Douglas County stating that the Property sold for "$165, 000.00, leaving excess funds in the amount of $152, 232.58" and deposited the excess funds into the trial court's registry. SunTrust and JMV filed answers to the interpleader seeking the excess funds and claiming first priority lienholder status.

         In October 2015, the trial court entered an order awarding the Douglas County Tax Commissioner $1, 240.00 in attorney fees and the remaining excess funds totaling $150, 992.58 to JMV (the "October 2015 Order"), but it later vacated the award because neither JMV nor the trial court provided notice of the order to SunTrust. Thereafter, SunTrust moved to compel JMV to return the excess funds to the trial court's registry, and on September 26, 2016, the trial court entered an omnibus order on several pending motions (the "September 2016 Order"). In pertinent part, the trial court ordered JMV to pay the excess funds into the trial court's registry or post a bond within 30 days. JMV did not deposit the funds or post a bond. Instead, JMV moved for the dismissal, or alternatively, the reinstatement of the October 2015 Order, and on March 20, 2017, the trial court reinstated the October 2015 Order, awarding the excess funds to JMV (the "March 2017 Order"). SunTrust appealed, and we reversed the trial court's order, remanding the case for further consideration in light of the holdings in DLT List I and DLT List II. See SunTrust Bank, 344 Ga.App. at 607.

         After remand, in May 2018, SunTrust filed a motion for contempt, arguing that JMV "ignored [the trial court's September 2016 Order] compelling payment of the [e]xcess [f]unds into [c]ourt or post a bond." JMV responded that the September 2016 Order was a nullity and that SunTrust lacked standing as a party to the interpleader action because the security deed executed by Jordan was improperly attested, leaving SunTrust without a record interest in the Property, [2] and the trial court held a hearing where JMV made the additional argument that JMV could not comply with the order because it had already spent the money. The trial court found JMV in wilful contempt of the September 2016 Order. It ordered JMV to pay $150, 992.58 into the court's registry within 30 days and found that "JMV should be sanctioned or punished for its past acts," and as "a means to coerce compliance with a prior court order, pursuant to this Court's contempt authority," it ordered JMV to "pay to SunTrust through its undersigned counsel a fine and/or reasonable attorneys' fees and expenses in the amount of $5, 000.00 for the costs to SunTrust of preparing and prosecuting the [m]otion for [c]ontempt[.]" This appeal followed.[3]

         1. JMV argues that SunTrust lacked standing to participate in the interpleader action and to move for contempt against JMV because SunTrust's security deed "was not a valid (or even facially valid) instrument of record at the time of the Tax Sale[.]" We disagree.

         OCGA § 48-4-5 (a) states:

If there are any excess funds after paying taxes, costs, and all expenses of a sale made by the tax commissioner, tax collector, or sheriff, or other officer holding excess funds, the officer selling the property shall give written notice of such excess funds to the record owner of the property at the time of the tax sale and to the record owner of each security deed affecting the property and to all other parties having any recorded equity interest or claim in such property at the time of the tax sale. Such notice shall be sent by first-class mail within 30 days after the tax sale. The notice shall contain a description of the land sold, the date sold, the name and address of the tax sale purchaser, the total sale price, and the amount of excess funds collected and held by the tax commissioner, tax collector, sheriff, or other officer. The notice shall state that the excess funds are available for distribution to the owner or owners as their interests appear in the order of priority in which their interests exist.

OCGA § 48-4-5 (a).

         This statute provides that the officer selling a property at a tax sale must provide written notice of any excess funds after the sale to parties holding record interests in the property. It also provides that the notice shall state that "the excess funds are available for distribution to the owner or owners as their interests appear in the order of priority in which their interests exist." Id. It does not, as JMV argues, prohibit parties with unrecorded security interests from seeking excess funds through an interpleader action. SunTrust, as the grantee of the security deed through Jordan, has an ownership interest in the Property. See Wallin v. Wallin, 341 Ga.App. 440, 444 (1) (800 S.E.2d 617) (2017) (an unrecorded security deed "is nevertheless a valid lien on the property"); Jackson v. Bank One, 287 Ga.App. 791, 793 (2) (652 S.E.2d 849) (2007) (the "grantee of a security deed is under no duty to the grantor to have the deed recorded; as between the original parties, the deed is valid irrespective of whether it is recorded or not") (punctuation omitted.). See generally Baxter v. Bayview Loan Servicing, LLC, 301 Ga.App. 577, 578 (1) (a) (688 S.E.2d 363) (2009) ("Whether a mortgage is in recordable form . . . is different from the question of whether a mortgage exists-i.e., whether a mortgage was created by a particular writing . . . a mortgage is good as between the parties without any attesting witness and a mortgage is perfectly valid as between the parties thereto, though never recorded") (emphasis supplied) (citation, punctuation, and footnote omitted), citing Jackson, 287 Ga.App. at 793 (2). Thus, SunTrust has an interest in the Property sufficient to seek the excess funds.

         2. In several enumerations of error, JMV argues that the trial court erred by finding it in wilful contempt and by sanctioning it in the amount of $5, 000. We agree in part.

         In reviewing contempt cases, we bear in mind that "[t]he question of whether a contempt has occurred is for the trial court, and its determination will be overturned only if there has been a gross abuse of discretion." (citation and punctuation omitted.) Affatato v. Considine, 305 Ga.App. 755, 760 (2) (a) (700 S.E.2d 717) (2010).

         (a) JMV asserts that the trial court erred by holding it in contempt of the September 2016 Order because that order was no longer in force because it was "superseded by the [March 2017 Order] before ...


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