Cadence Bank, N.A. v. Robertson

• Decision Date: 02 April 2021
• Docket Number: 1190997
• Citation: 335 So.3d 1142
• Parties: CADENCE BANK, N.A. v. Steven Dodd ROBERTSON and Mary Garling-Robertson
• Court: Alabama Supreme Court

335 So.3d 1142

CADENCE BANK, N.A.

v.Steven Dodd ROBERTSON and Mary Garling-Robertson

1190997

Supreme Court of Alabama.

April 2, 2021

S. Dagnal Rowe, Jr., of Wilmer & Lee, P.A., Huntsville, for appellant.

Stuart M. Maples and Mary Ena J. Heath of Maples Law Firm, PC, Huntsville, for appellees.

SELLERS, Justice.

Cadence Bank, N.A. ("Cadence"), sued Steven Dodd Robertson and Mary Garling-Robertson, seeking to recover a debt the Robertsons allegedly owe Cadence. The Madison Circuit Court ruled that Cadence's claim is barred by the statute of limitations and, thus, granted the Robertsons’ motion for a summary judgment. We reverse the trial court's judgment and remand the cause for further proceedings.

In November 2003, the Robertsons executed a loan agreement with a lender called "The Bank" to acquire a home-equity line of credit. To secure repayment, the Robertsons granted The Bank a mortgage on their house. In February 2005, the Robertsons sent The Bank a check in the approximate amount of $61,000, which was accompanied by a notice of "satisfaction of loan/estoppel/cancellation of credit line." The parties refer to the notice as a "kill letter."

The kill letter provided that the Robertsons’ payment was in full satisfaction of their debt incurred under the home-equity line of credit and was being paid under the condition that The Bank release the mortgage and "cancel the note or loan agreement as well as any right to obtain future advances under the note or loan agreement." The kill letter also provided that The Bank's endorsement of the check constituted assent to the terms provided in the letter. Cadence does not dispute that The Bank endorsed and deposited the check. There is no signature line on the kill letter for a representative of The Bank.

Notwithstanding the language in the kill letter indicating that the home-equity line of credit should be canceled, bank records produced by Cadence suggest that, beginning in June 2005, four months after sending the kill letter, the Robertsons began borrowing additional funds against the home-equity line of credit. The parties do not point to any new written loan agreement or other document indicating that, when the Robertsons allegedly began drawing additional advances, a new account or line of credit was opened on their behalf or a new loan number was assigned to them.

An affidavit submitted by an officer of Cadence indicates that, in January 2006, The Bank changed its name to Superior Bank; that, in April 2011, Superior Bank was placed into receivership by the Federal Deposit Insurance Corporation; that, shortly thereafter, Superior Bank, N.A., obtained Superior Bank's assets and liabilities; and that, in November 2011, Superior Bank, N.A., was merged into Cadence. Thus, Cadence asserts, it became the owner of the assets and liabilities formerly held by The Bank and its successors.

Records produced by Cadence suggest that, for approximately eight years after submitting the kill letter, the Robertsons took additional advances from, and made partial payments to, The Bank and its successors, as if the initial home-equity line of credit was still active after submission of the kill letter. The records indicate that the Robertsons’ final draw on the home-equity line of credit was made in August 2012 and that their last payment was made in September 2013. Cadence suggests that the Robertsons’ alleged actions are inconsistent with one or more of the terms of the kill letter and could be construed as a waiver thereof.

In December 2018, Cadence sued the Robertsons, seeking a judicial foreclosure pursuant to the terms of the mortgage the Robertsons had granted The Bank. Cadence also sought a money judgment for funds the Robertsons allegedly owed pursuant to the above-referenced transactions. After the lawsuit was initiated, Cadence learned of the kill letter, which, as noted, contained language indicating that the Robertsons’ mortgage should have been released, their home-equity line of credit closed, and further advances stopped. Thereafter, at Cadence's request, the trial court dismissed the judicial-foreclosure count, leaving only Cadence's count seeking a money judgment.

The Robertsons failed to respond to discovery requests propounded by Cadence and, instead, filed a motion for a summary judgment. In support, the Robertsons argued that Cadence's count seeking a money judgment was based on a theory of "open account," which, as the Robertsons asserted, is governed by a three-year statute of limitations. See § 6-2-37, Ala. Code 1975 ("The following must be commenced within three years: ... Actions to recover money due by open or unliquidated account, the time to be computed from the date of the last item of the account or from the time when, by contract or usage, the account is due ...."). The Robertsons argued that, because Cadence's records indicate that advances to, and payments by, the Robertsons ended no later than September 2013, the statute-of-limitations period on Cadence's count seeking a money judgment expired in September 2016, more than two years before Cadence commenced this action.

In its response to the Robertsons’ summary-judgment motion, Cadence asserted that, in its count seeking a money judgment against the Robertsons, Cadence had not limited itself to an open-account theory of liability. Specifically, Cadence asserted that it would pursue recovery of the alleged debt pursuant to a theory alleging "account stated," which, generally speaking, relies on the existence of a post-transaction agreement whereby the parties to an original account agree that a particular amount is owed. Stacey v. Peed, 142 So. 3d 529, 532 (Ala. 2013). Cadence pointed out that account-stated claims are subject to a six-year statute of limitations under § 6-2-24(5), Ala. Code 1975, and asserted that the Robertsons cannot "recast" Cadence's cause of action in order to take advantage of a shorter limitations period. The trial court, however, concluded that Cadence had asserted an open-account claim and granted the Robertsons’ summary-judgment motion based on the expiration of the three-year limitations period applicable to such a claim. Cadence filed a postjudgment motion to alter, amend, or vacate the summary judgment, which was denied by operation of law pursuant to Rule 59.1, Ala. R. Civ. P. Cadence timely appealed. This Court applies a de novo standard when reviewing a summary judgment. Nettles v. Pettway, 306 So. 3d 873, 875 (Ala. 2020).

Cadence, as the plaintiff, is the master of its complaint and is entitled to choose the theory of liability on which it will rely in pursuit of the Robertsons’ alleged debt. See Ex parte J.E. Estes Wood Co., 42 So. 3d 104, 111 (Ala. 2010) (acknowledging that a plaintiff is the "master" of his or her complaint); Cook v. Midland Funding, LLC, 208 So. 3d 1153, 1158 (Ala. Civ. App. 2016) ("[The defendant] does not have the ability to recast [the plaintiff's] account-stated claim as an open-account claim so as to benefit from the shorter statute-of-limitations period applicable to such a claim ...."). Thus, Cadence asserts that it may seek to recover pursuant to a theory other than open account.¹

Count two of Cadence's complaint alleges that the Robertsons "presently owe [Cadence] the sum of $60,166.25, along with interest in the sum of $19,596.06 as of December 5, 2018, and late fees in the sum of $14.69, ... along with reasonable attorney fees for the cost of collection." Count two requests that the trial court enter a judgment finding that the Robertsons "owe" Cadence the referenced amounts and attorney fees, but it does not specify a particular theory of recovery, such as open account, account stated, breach of contract, or any other theory.

In support of their argument that Cadence seeks to recover pursuant to an open-account theory, the Robertsons relied on a statement made in Cadence's motion to dismiss its judicial-foreclosure count. Specifically, Cadence stated in that motion that, after dismissal of the judicial-foreclosure count, its remaining claim would be "for a money judgment against [the Robertsons] for default upon repayment of money lent to them." (Emphasis added.) The Robertsons then pointed to a single sentence from Stacey v. Peed, supra, in which this Court said: "[W]hat could be stated as a money-lent claim is perhaps more accurately stated as a claim of ‘money due on an open account.’ " 142 So. 3d at 533. According to the Robertsons, because Cadence represented in its motion to dismiss that it sought to recover money that was "lent" to the Robertsons, Cadence's claim is necessarily based on an open-account theory and is subject to a three-year limitations period.

In Stacey, the plaintiffs claimed that they had loaned the defendant money that he failed to repay. They "alleged that [the defendant] owed them $161,365.78 plus interest based upon three claims asserted in the complaint -- breach of contract, account stated, and money lent." 142 So. 3d at 530. The trial court in Stacey entered a summary judgment in favor of the defendant based on an apparent conclusion that the plaintiffs had not presented substantial evidence establishing each element of their causes of action.

On appeal, this Court held that the plaintiffs had indeed presented substantial evidence establishing the elements of their breach-of-contract claim, namely, offer and acceptance, consideration, and mutual assent to the essential terms of the agreement. 142 So. 3d at 531-32. Accordingly, the Court reversed the summary judgment on the plaintiffs’ breach-of-contract claim. As for the "money-lent" claim, the Court stated as follows:

" ‘An action for money lent is an action at law which lies whenever there has been a payment of money from the plaintiff to the defendant as a loan.

" ‘An action for money lent is an action at law for the recovery of money, based on an allegation that there was money lent to the defendant. The three elements of a claim on money lent are that the

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