Cottingham v. Citizens Bank

• Decision Date: 17 January 2003
• Citation: 859 So.2d 414
• Parties: Carolyn COTTINGHAM v. The CITIZENS BANK and Wayne Gentry.
• Court: Alabama Supreme Court

859 So.2d 414

Carolyn COTTINGHAM v. The CITIZENS BANK and Wayne Gentry.

1011286.

Supreme Court of Alabama.

January 17, 2003.

Rehearing Denied March 28, 2003.

Charlie Andrew Bottoms, Jr., Florence, for appellant.

Robert V. Wood, Jr., and Ruth O. Priest of Spurrier, Rice, Wood & Hall, Huntsville, for appellees.

HARWOOD, Justice.

Carolyn Cottingham ("Carolyn"¹) appeals from the February 28, 2002, summary judgment of the trial court in favor of The Citizens Bank ("the Bank") and Wayne Gentry.

On January 30, 2001, Carolyn sued the Bank and Gentry in the Circuit Court of Lawrence County, alleging that the defendants, fraudulently and in bad faith, had foreclosed on a mortgage given by her and her husband to the Bank, had defamed her character, had harassed her, and had damaged her expectation of good credit. On March 8, 2001, the Bank and Gentry filed a motion to dismiss, which was denied on May 24, 2001. The Bank and Gentry filed a joint motion for a summary judgment on December 21, 2001. On January 10, 2002, Carolyn filed a "Statement in Opposition" to the motion for a summary judgment and attached evidentiary support, including the affidavit of her ex-husband, Donnie Cottingham ("Donnie"). That same day, the Bank and Gentry filed a "Narrative Summary of Undisputed Facts" with the trial court. On January 28, 2002, they filed a supplement to their motion for a summary judgment.

On February 4, 2002, the Bank and Gentry filed a brief in support of the motion for a summary judgment and also a supplemental exhibit to their brief in support of their motion for a summary judgment. On February 13, 2002, the Bank and Gentry filed an objection and a motion to strike Carolyn's statement in opposition and also to strike Donnie's affidavit. Without ruling on the objection and the motion to strike, the trial court granted the Bank and Gentry's motion for a summary judgment on February 28, 2002. The trial court's order states, in pertinent part:

"On February 13, 2002, the Court met with the attorneys for the parties with regard to the pending motion for summary judgment. The Court finds that there are no disputed issues of material facts and that the defendants are entitled to a judgment as a matter of law. Accordingly, judgment is hereby entered on behalf of The Citizens Bank and Wayne Gentry."

On March 26, 2002, Carolyn filed a notice of appeal.

On appeal, Carolyn argues that the Bank and Gentry's motion for a summary judgment should have been denied because, she says, she presented substantial evidence indicating: 1) that the debt, represented by two 1988 notes to the Bank, was extinguished either in 1992 or some time subsequent; and 2) that "the foreclosure was fraudulent because her mortgage was fraudulently and wrongfully used to secure future advancements of indebtedness leading to the foreclosure of her interest in her home." Because of our disposition of Carolyn's first argument, we need not address her second argument.

Our review of a summary judgment is de novo.

"In reviewing the disposition of a motion for summary judgment, `we utilize the same standard as the trial court in determining whether the evidence before [it] made out a genuine issue of material fact,' Bussey v. John Deere Co., 531 So.2d 860, 862 (Ala.1988), and whether the movant was `entitled to a judgment as a matter of law.' Wright v. Wright, 654 So.2d 542 (Ala.1995); Rule 56(c), Ala.R.Civ.P. When the movant makes a prima facie showing that there is no genuine issue of material fact, the burden shifts to the nonmovant to present substantial evidence creating such an issue. Bass v. SouthTrust Bank of Baldwin County, 538 So.2d 794, 797-98 (Ala.1989). Evidence is `substantial' if it is of `such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved.' Wright, 654 So.2d at 543 (quoting West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala. 1989)). Our review is further subject to the caveat that this Court must review the record in a light most favorable to the nonmovant and must resolve all reasonable doubts against the movant. Wilma Corp. v. Fleming Foods of Alabama, Inc., 613 So.2d 359 (Ala.1993); Hanners v. Balfour Guthrie, Inc., 564 So.2d 412, 413 (Ala.1990)."

Hobson v. American Cast Iron Pipe Co., 690 So.2d 341, 344 (Ala.1997).

The record reveals the following facts. On March 15, 1988, Carolyn; her then husband, Donnie; Donnie's brother, Jimmy Cottingham ("Jimmy"); and Jimmy's wife, Joyce Cottingham ("Joyce"), signed two promissory notes with the Bank. The first note, numbered 3037876, evidenced a debt of $129,000, and the second note, numbered 3037843, evidenced a line of credit for $100,172. Both notes evidenced an annual interest charge of 11% and listed the borrower as "D and J Mechanical," the business owned and operated by Donnie and Jimmy.

Also, on March 15, 1988, two mortgages were executed as security for the notes. One was executed by Jimmy and Joyce, and the other by Donnie and Carolyn. The mortgage executed by Donnie and Carolyn (hereinafter referred to as "the mortgage") was to secure the amount of $60,000, and it did not contain a future-advance clause.² The mortgage was handled by Wayne Gentry, a representative of the Bank. Additional security was provided by two financing statements, each listing inventory, equipment, and accounts receivable, that we infer from the record were owned by "D and J Mechanical."

On March 29, 1989, Donnie, Joyce, and Carolyn signed a note for $100,000,³ listing as security the 1988 mortgages and the "inventory and equip[ment] and accounts rec[eivable] as listed on" the Uniform Commercial Code statement sheet. The note lists the borrower as, "D & J Mechanical" and then "Donnie and Jimmy Cottingham." The note indicates that it is a renewal⁴ of the 1988 note for the line of credit, but charges an annual interest rate of 14%. The "Schedule of Notes Secured by Mortgage Dated March 15, 1988," prepared by counsel for the Bank and Gentry and provided by them to the trial court, purports to show that a note executed in 1990, numbered 3047099, was a renewal of 3037843, the 1988 note for the line of credit. However, the copy contained in the record of note 3047099 is largely unreadable and reveals nothing of significance. On December 21, 1992, Alafabco, Inc.;⁵ Donnie, acting as president of Alafabco, Inc.; and Jimmy, acting as vice president of Alafabco, Inc., executed a note for $157,614.08 to the Bank. The note indicates that it is a renewal of 3037876 and 3047099, along with other notes. The note charges an annual interest rate of 8%, and lists as security the 1988 mortgages and the "inventory, equipment, accounts receivable filed on" the Uniform Commercial Code statement sheet. The "borrower's name and address" section of this note bears only the entry, "Alafabco, Inc.," and an address. None of the notes contained in the record and asserted by the Bank to be renewals of the 1988 notes bear Carolyn's signature.

The affidavit of Doug Alexander, a vice president of the Bank, states, in relevant part:

"My name is Doug Alexander. I am over the age of 19 years and have personal knowledge of the matters and things set forth herein. I am the Vice-President of The Citizens Bank, Defendant in the above-referenced action. I have reviewed the complaint in the above-styled cause and am familiar with the allegations made by the plaintiff therein. I have also reviewed the records of The Citizens Bank pertaining to transactions between the Plaintiff and the Bank. I am the custodian of the records attached hereto as Exhibits B through O, and these are true and correct copies of the original documents. The documents contained in Exhibits B through O are business records of the bank, kept in the usual and ordinary course of business, and it is the practice of the bank to keep such business records. I am familiar with the method used by the bank for making records of the kind exhibited, and the records contained in Exhibits B through O were made in the regular course of business either at the time of the event recorded or within a reasonable time thereafter. The `Schedule of Notes Secured by Mortgage Dated March 15, 1988,' attached hereto as Exhibit A, has been prepared by counsel for The Citizens Bank for ease in following the history of the original note between The Citizens Bank and the Plaintiff, and is a true and accurate compilation.

"The records attached hereto relate to transactions between the Plaintiff and The Citizens Bank. These records clearly demonstrate that sometime on or about March 15, 1988, Donnie Cottingham and Carolyn Cottingham executed a mortgage to secure a note from The Citizens Bank. On or about December 21, 1992, the remaining balance on the note secured by the Cottingham's mortgage was renewed into a new note. From December 21, 1992 to December 10, 1999, the funds borrowed under the original note were renewed numerous times. On May 1, 1998, Carolyn Cottingham executed a guaranty on a loan which was secured by the mortgage entered into on March 19, 1988.

"Upon non-payment of the note dated May 1, 1998, a default occurred. Upon default, [the Bank] instituted foreclosure proceedings on the residence of Donnie and Carolyn Cottingham. The foreclosure notices were duly published and the foreclosure sale was held on February 1, 2001. At the foreclosure sale, the Bank was the purchaser of the property. On February 5, 2001, counsel for the Bank forwarded to Carolyn Cottingham statutory notice, pursuant to Alabama Code Section 6-5-215, that the Bank had purchased the property and that if she did not vacate the premises within ten days, she forfeited her statutory right of redemption.

"At no time from origination of the first note for which the March 15, 1988 mortgage secured was the indebtedness ever paid in full or satisfied."

In 1999, Carolyn and Donnie were divorced. The divorce...