Atkins v. Ge Capital Mortg. Services, Inc.
| Decision Date | 23 January 1998 |
| Docket Number | Civil Action No. 96-D-1550-E. |
| Citation | 993 F.Supp. 1406 |
| Parties | Thomas Scotty ATKINS and Mary Virginia Atkins, Plaintiffs, v. GE CAPITAL MORTGAGE SERVICES, INC., Defendant. |
| Court | U.S. District Court — Middle District of Alabama |
Michael S. Harper, Steven F. Schmitt, Tallassee, AL, Carl M. Benson, Auburn, AL, for Plaintiffs.
Robert K. Spotswood, Richard H. Monk, III, Birmingham, AL, for Defendant.
DE MENT, District Judge.
Before the court are the following motions, memoranda, and other pleadings regarding Defendant's pending Motion for Summary Judgment in the above styled case:
(1) Defendant's Motion for Summary Judgment ("Def.'s Mot. Summ. J."), Memorandum in Support ("Def.'s Mem. Supp."), and accompanying submission of evidence, filed May 7, 1997.
(2) Defendant's Amendment to Motion for Summary Judgment ("Def.'s Am. Mot. Summ. J."), filed June 6, 1997.
(3) Plaintiffs' Response to Statement of Facts and Brief in Response to Defendant's Motion for Summary Judgment ( ), and accompanying designations of evidence, filed June 10, 1997.
(4) Defendant's Reply Brief in Support of Motion for Summary Judgment ("Def.'s Reply"), filed June 26, 1997.
(5) Defendant's Supplemental Statement of Facts and Memorandum in Support of Motion for Summary Judgment ( ), and accompanying supplemental submission of evidence, filed July 2, 1997.
(6) Plaintiffs' Response to Defendant's Reply Brief in Support of Motion for Summary Judgment ( ), filed July 3, 1997.
(7) Plaintiffs' Brief in Opposition to Defendant's Supplemental Statement of Facts and Memorandum in Support of Motion for Summary Judgment ( ), Supplemental Designation of Evidence in Opposition, and Response to Supplemental Statement of Facts, filed July 15, 1997.
(8) Plaintiffs' Motion to Supplement Submission in Opposition to Defendant's Motion for Summary Judgment ( ), with attached supplemental submission, filed July 30, 1997.1
(9) Plaintiffs' Supplement in Opposition to Defendant's Motion for Summary Judgment ( ), filed January 16, 1998.
The court properly exercises subject matter jurisdiction pursuant to 28 U.S.C. § 1332(a). The parties do not contest venue or personal jurisdiction.
On a motion for summary judgment, the court is to construe the evidence and factual inferences arising therefrom in the light most favorable to the nonmoving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). Summary judgment can be entered on a claim only if it is shown "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." Fed.R.Civ.P. 56(c). As the Supreme Court has explained the summary judgment standard:
[T]he plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. In such a situation, there can be no genuine issue as to any material fact, since a complete failure of proof concerning an essential element of the non-moving party's case necessarily renders all other facts immaterial.
Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The trial court's function at this juncture is not "to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (citations omitted). A dispute about a material fact is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson, 477 U.S. at 248; see also Barfield v. Brierton, 883 F.2d 923, 933 (11th Cir.1989).
The party seeking summary judgment has the initial burden of informing the court of the basis for the motion and of establishing, based on relevant "portions of `the pleadings, depositions, answers to interrogatories, and admissions in the file, together with affidavits, if any,'" that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Celotex, 477 U.S. at 323. Once this initial demonstration under Rule 56(c) is made, the burden of production, not persuasion, shifts to the nonmoving party. The nonmoving party must "go beyond the pleadings and by [his] own affidavits, or by the `depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Celotex, 477 U.S. at 324; see also Fed.R.Civ.P. 56(e).
In meeting this burden the nonmoving party "must do more than simply show that there is a metaphysical doubt as to the material facts." Matsushita Elec. Indus. Corp. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). That party must demonstrate that there is a "genuine issue for trial." Fed.R.Civ.P. 56(c); Matsushita, 475 U.S. at 587. An action is void of a material issue for trial "[w]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party." Matsushita, 475 U.S. at 587; see also Anderson, 477 U.S. at 249.
On December 16, 1993, Plaintiffs executed a promissory note ("Note") in favor of Ford Mortgage Services, Inc. ("Ford"), in the amount of $62,000.00. To secure the Note, Plaintiffs executed a mortgage ("Mortgage") on their home in favor of Ford on the same date. The Note and Mortgage were immediately assigned to Empire of America Realty Credit Corporation ("Empire"). At the loan closing, Plaintiffs also purchased a home-owners insurance policy ("Policy") from Farmers Insurance Group ("Farmers"), which provided for the replacement of the property, in the event of loss, up to a policy limit of $62,000.00. The policy further provided that funds, in the event of a loss, would be paid to the mortgagee (Plaintiffs) and the named insured (Defendant).
Plaintiffs began sending payments on the Mortgage to Defendant GE Capital Mortgage Services, Inc. ("GECMSI") sometime after May of 1994, when they were notified by Defendant that the servicing rights to the Mortgage had been purchased from Empire by GECMSI. On September 26, 1994, the property that was the subject of the Mortgage was burned in a fire. Plaintiffs reported the fire to Defendant on September 29, 1994. At the time of the fire, Plaintiffs were in default on their Mortgage, as they had not made their September 1, 1994 payment. Although Plaintiffs did eventually make the September payment on their Mortgage (the payment posted with GECMSI on October 17, 1994), they then ceased making payments on the Mortgage.
Defendant sent a general demand letter to Plaintiffs on December 14, 1994. This letter stated that Plaintiffs were in default on their Note and explained several options that GECMSI might pursue if the Note was not made current. Among other remedies, the Mortgage allowed the lender to accelerate payments in the case of default, while the Note allowed the holder to do the same. Both the Mortgage and the Note also allowed the appropriate party (lender or holder) to forbear their rights without waiving them.
Attorney Steven F. Schmitt first began his representation of Plaintiffs sometime late in 1994, after the Plaintiffs' house was damaged by fire. Plaintiffs first approached attorney Mike Benson after the fire, but were referred to Schmitt. While Schmitt became lead counsel in the lawsuit against Farmers that ensued, Benson remained associated with and involved as counsel for Plaintiffs. Attorney Michael Harper also became associated as counsel and assisted in Plaintiffs' representation.
Plaintiffs filed suit against Farmers on January 11, 1995 because of a dispute over the amount due under Plaintiffs' insurance policy with Farmers. Farmers contended that the fire caused only a partial loss, and that only $42,881.06 was due Plaintiffs under the policy, while Plaintiffs contended that the house was a total loss and therefore the policy limit of $62,000.00 was due.
On January 20, 1995, Schmitt sent GECMSI a check in the amount of $42,881.06 from Farmers. The check was made payable to "Thomas Scotty Atkins & Mary V. Atkins and GE Capital Mortgage and their attorney Steven Schmitt." The check was endorsed by the Atkins and Schmitt. On the back of the check, Schmitt wrote "For Deposit Only into GE Capital Mortgage Account for Benefit of Thomas Scotty Atkins & Mary V. Atkins." GECMSI deposited the $42,881.06 check into a hazard suspense account from which GECMSI received some benefit. Plaintiffs were aware that the insurance check had been deposited into the hazard suspense account. Plaintiffs' Mortgage provided as follows regarding the application of insurance proceeds:
Unless Lender and Borrower otherwise agree in writing, insurance proceeds shall be applied to restoration or repair of the Property damaged, if the restoration or repair is economically feasible and Lender's security is not lessened. If the restoration or repair is not economically feasible or Lender's security would be lessened, the insurance proceeds shall be applied to the sums secured by this Security Instrument, whether or not then due, with any excess paid to Borrower.
(Def.'s Mem. Supp., Ex. B ¶ 5.)
Plaintiffs were required to make payments to an escrow account for yearly property and hazard insurance premiums, which were then to be paid, on their behalf, to their insurer. On or about October 21, 1994, Farmers sent Plaintiffs notice that a renewal premium was due on their policy and Farmers billed GECMSI directly. GECMSI paid...
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