Boyce v. LPP Mortg. Ltd., W2012-02725-COA-R3-CV

• Decision Date: 20 November 2013
• Docket Number: No. W2012-02725-COA-R3-CV,W2012-02725-COA-R3-CV
• Parties: FREDA BOYCE and MARVELL BOYCE v. LPP MORTGAGE LTD.
• Court: Tennessee Court of Appeals

FREDA BOYCE and MARVELL BOYCE v. LPP MORTGAGE LTD.

No. W2012-02725-COA-R3-CV

COURT OF APPEALS OF TENNESSEE AT JACKSON

October 17, 2013 Session

Filed November 20, 2013

Direct Appeal from the Chancery Court for Shelby County

No. CH-11-0985-3

Kenny W. Armstrong, Chancellor

This case involves the application of the doctrine of res judicata. The parties previously engaged in litigation in the General Sessions Court regarding possession of a foreclosed property. The homeowners attempted to assert that the mortgage company did not have proper title to the property prior to initiating foreclosure proceedings. The parties and the trial court all apparently concluded that the General Sessions Court lacked jurisdiction to inquire into the merits of the title based on Tennessee Code Annotated Section 29-18-119. Accordingly, the General Sessions Court entered judgment in favor of the mortgage company. The homeowners subsequently filed an action in the Chancery Court, alleging that the mortgage company committed fraud in foreclosing the property because it had not acquired proper title to the property. The Appellee, having hired a new attorney, asserted that the issue should have been alleged as a defense to the General Sessions Court action, and was, therefore, barred by the doctrine of res judicata. The Chancery Court agreed and dismissed the homeowners' action on the basis of res judicata. We affirm and remand.

Tenn. R. App. P. 3. Appeal as of Right; Judgment of the Chancery Court Affirmed

and Remanded

J. STEVEN STAFFORD, J., delivered the opinion of the Court, in which DAVID R. FARMER, J., and HOLLY M. KIRBY, J., joined.

Archie Sanders, III, Memphis, Tennessee, for the appellants, Freda Boyce and Marvell Boyce.

Cannon F. Allen and J. Bennett Fox, Jr., Memphis, Tennessee, for the appellee, LPP Mortgage LTD.

OPINION

I. Background

Because this case was decided on summary judgment, the facts are taken from the parties' statements of undisputed fact filed in the trial court. On December 6, 2006, the Plaintiffs/Appellants Freda Boyce and Marvell Boyce (together, "Appellants") signed a note for $200,000.00 to purchase real property at 1715 Belledeer Drive. Appellants obtained the loan to finance the purchase from New Century Mortgage. On December 5, 2008, Defendant/Appellee LPP Mortgage LTD ("Appellee") allegedly acquired the $200,000.00 note and the deed of trust on the property. According to its brief, Appellee also received an assignment of the note pursuant to a Master Mortgage Sale Agreement on March 31, 2008.

The Appellants paid their monthly mortgage payment for several years, but fell behind on their payments around April of 2010. The Appellants defaulted on the note in May of 2010. Consequently, the Appellee initiated foreclosure proceedings in November 2010. A foreclosure sale occurred on February 14, 2011. However, the Appellants refused to vacate the property.

On March 21, 2011, the Appellee initiated a Forcible Entry and Detainer ("FED") action in the Shelby County General Sessions Court against the Appellants for possession of the property. The Appellants appeared and argued that the foreclosure was void because the Appellee did not have good title to the property. Specifically, the Appellants asserted a claim of fraud and that "the property had not been properly transferred" to the Appellee. However, the Appellee took the position that Tennessee law did not allow the General Sessions Court to inquire into the merits of the Appellee's interest in the title based on Tennessee Code Annotated Section 29-18-119(c), discussed in detail infra. The trial court apparently agreed with the Appellee's interpretation of the statute and, thus, considered only whether the proper foreclosure procedures were followed. No facts supporting the fraud claims were adduced in the General Sessions Court and the General Sessions Court judge made no findings as to these allegations. Appellee was ultimately awarded possession of the property. The date for execution of the judgment was extended beyond the statutory ten-day period by agreement of the parties to allow an action in Chancery Court to be filed. The Chancery Court action was apparently meant to adjudicate the issue regarding the merits of Appellee's title. Thus, no appeal was taken from the General Sessions Court order awarding possession of the property to the Appellee and it became final.

Thereafter, on June 9, 2011, Appellants filed a complaint for Declaratory Judgment and to Set Aside Foreclosure, for Ex Parte Temporary Restraining Order and Injunctive Relief and for Damages and Other Legal and Equitable Relief in the Shelby County Chancery Court. The complaint alleged that Appellee did not legally acquire the deed of trust and indebtedness with regard to the Appellants' property. On September 1, 2011, Appellee fileda Motion to Dismiss the complaint, which was denied by order of October 27, 2011.

Thereafter, on August 23, 2012, the Appellee, having retained different counsel, filed a motion for summary judgment and statement of undisputed facts, arguing that the claim was barred by res judicata, based on the case of Davis v. Williams, No. E2010-01139-COA-R3-CV, 2011 WL 335069, (Tenn. Ct. App. Jan. 31, 2011), discussed in detail infra. The Appellants filed a response to the Appellee's motion, as well as their own statement of undisputed facts, which the Appellee did not contest.¹ In their response to the motion, the Appellants disputed that the allegations of fraud and improper transfer currently before the trial court had been decided on the merits in the original FED action in General Sessions Court, and asserted that disputes of fact precluded summary judgment. The trial court entered an order granting summary judgment in favor of the Appellee on October 22, 2012. Specifically, the trial court found that:

4. Under Tennessee law, the [Appellants] had the right to raise the defense of wrongful foreclosure in the previously decided General Sessions action on May 11, 2011. [Appellants] contend that 1) they raised the issue of "good title" in the General Sessions action, and 2) the Court determined that it could not legally consider those arguments and did not make a ruling concerning those issues. No transcript of the proceedings in General Sessions exists.

5. The basis of the [Appellants'] claim in this Chancery Court action is that [Appellee] did not have good title to foreclose on the subject property. The [Appellants] admitted that they were in default on the note and the mortgage held by [Appellee]. The [Appellants] did not request additional time to pursue discovery prior to this Court's ruling on the summary judgment motion.

6. Having tried the General Sessions action and lost and failing to pursue on an appeal of the General Sessions ruling, [Appellants] have forfeited their opportunity to assert this claim in this Court since the General Sessions decision is final and the detainer action and the present action arose out of the same transaction.

7. The doctrine of res judicata applies and precludes a second suit between these same parties . . . with respect to all issues that were or could have been litigated in the earlier action in General Sessions Court.

* * *

11. Because there is no genuine issue as to any material fact relating to the finality of the General Sessions judgment and the fact that the claims pressed in this Court [] arise from and are related to the claims in the General Sessions proceeding, all [Appellants'] claims against [the Appellee] should be dismissed with prejudice.

The Appellants filed a timely notice of appeal.

II. Issues Presented

The Appellants raise one issue, which is taken from their brief:

1. Whether the trial court erred in granting the Appellee's Motion for Summary Judgment on the ground that the Appellants' claim was barred by the doctrine of res judicata?

III. Standard of Review

A trial court's decision to grant a motion for summary judgment presents a question of law. Our review is therefore de novo with no presumption of correctness afforded to the trial court's determination. Bain v. Wells, 936 S.W.2d 618, 622 (Tenn. 1997). This Court must make a fresh determination that the requirements of Tenn. R. Civ. P. 56 have been satisfied. Abshure v. Methodist Healthcare-Memphis Hosps., 325 S.W.3d 98, 103 (Tenn. 2010).

When a motion for summary judgment is made, the moving party has the burden of showing that "there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Tenn. R. Civ. P. 56.04. The moving party may accomplish this by either: (1) affirmatively negating an essential element of the non-moving party's claim; or (2) showing that the non-moving party will not be able to prove an essential element at trial. Hannan v. Alltel Publ'g Co., 270 S.W.3d 1, 8-9 (Tenn. 2008). However,"[i]t is not enough for the moving party to challenge the nonmoving party to 'put up or shutup' or even to cast doubt on a party's ability to prove an element at trial." Id. at 8. If the moving party's motion is properly supported, "The burden of production then shifts to the nonmoving party to show that a genuine issue of material fact exists." Id. at 5(citing Byrd v. Hall, 847 S.W.2d 208, 215 (Tenn. 1993)). The non-moving party may accomplish this by: "(1) pointing to evidence establishing material factual disputes that were overlooked or ignored by the moving party; (2) rehabilitating the evidence attacked by the moving party; (3) producing additional evidence establishing the existence of a genuine issue for the trial; or (4) submitting an affidavit explaining the necessity for further discovery pursuant to Tenn. R. Civ. P., Rule 56.06." Martin v. Norfolk Southern Railway. Co., 271 S.W.3d 76, 84 (Tenn. 2008) (citations omitted).

When reviewing the evidence, we must determine whether factual disputes exist. In evaluating the trial court's decision, we review the evidence in the light most favorable to the nonmoving pa...