Crowe v. Scissom
| Citation | 365 Ga.App. 124,877 S.E.2d 659 |
| Decision Date | 22 August 2022 |
| Docket Number | A22A1130 |
| Parties | CROWE v. SCISSOM et al. |
| Court | United States Court of Appeals (Georgia) |
Joseph Luna Law, Joseph R. Luna, for Appellant.
Beloin & Brown, Frederic S. Beloin, Atlanta; Chadwick S. Knott, for Appellee.
In this case involving a dispute over an owner-financed real estate transaction, the plaintiff, Michael L. Crowe, appeals from the trial court's order granting summary judgment in favor of the defendants, Claude T. Scissom and Martha Scissom. On appeal, Crowe contends that the trial court erred in granting summary judgment on his claims under the Georgia Fair Lending Act, OCGA § 7-6A-1 et seq. ("GAFLA") because the court misconstrued the statutory definitions of "creditor" and "home loan" and there were genuine issues of material fact as to whether those definitions were met in this case. Crowe also contends that the trial court erred in granting summary judgment on his claims for breach of warranty in light of the evidence he presented about certain easements he discovered on his property. For the reasons discussed more fully below, we affirm in part, reverse in part, vacate in part, and remand the case to the trial court with direction.
Summary judgment is appropriate when there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law. In evaluating whether summary judgment is proper, the evidence and all reasonable inferences drawn therefrom must be construed in the light most favorable to the nonmovant. We conduct a de novo review of a grant of summary judgment.
(Citation and punctuation omitted.) Moran v. Team Elite Realty , 361 Ga. App. 329, 329, 864 S.E.2d 165 (2021).
So viewed, the record shows that the Scissoms owned certain lakefront property in Union County, Georgia (the "Property"). The Property consisted of 1.41 acres and included a single-family house. In February 2014, Crowe entered into an agreement to purchase the Property from the Scissoms for $375,000, and the closing on the sale occurred in March 2014. Crowe made a $10,000 down payment, and the Scissoms owner-financed the remainder of the purchase price over 12 years.
Pursuant to the owner-financed loan transaction, Crowe executed a promissory note in the principal amount of $365,000 ("Note") and a deed to secure debt in favor of the Scissoms. The Note required Crowe to make monthly interest payments, with interest accruing at a six percent annual rate for the first five years and an adjustable annual rate between six and eight percent for the next seven years. The Note also required Crowe to make ten payments of principal on certain dates, followed by a final balloon payment in April 2026. The Note included a three percent prepayment penalty on the unpaid principal balance if the debt was paid in full before five years had elapsed, a five percent penalty on payments received ten days after the due date, and attorney fees in the amount of fifteen percent of the principal and interest if the Note was collected by law. Additionally, if Crowe defaulted on any payment, the Note authorized the Scissoms to increase the interest rate on the unpaid principal balance to 12 percent per year and to declare the entire unpaid principal balance due and payable.
When Crowe purchased the Property, he was married and lived with his family in Paulding County. But in March 2014, upon the closing on the sale of the Property, Crowe began living at the house on the Property four days a week. Crowe's long-term plan was to retire there. In October 2015, Crowe and his wife separated, and Crowe began living at the Property full time. However, in 2018, Crowe's wife stayed at the Property for several months while Crowe stayed in a houseboat on a different lake. Ultimately, Crowe moved into the houseboat permanently.
When Crowe initially purchased the Property, he planned to subdivide the acreage so that he could use a portion of it to build another house where his parents could live or that he could rent for additional income. However, after the closing, Crowe discovered a sewer line and other easements on the Property that were not referenced in the general warranty deed or disclosed by the Scissoms and that made it difficult to subdivide the Property. Following that discovery, Crowe decided not to pursue his plan to subdivide the acreage and build a house there, and he never obtained any rental or other income from the Property.
Between 2014 and 2017, Crowe's payments on the Note totaled $80,500, but he missed over 20 payments. In November 2017, Crowe's wife filed for divorce, and Crowe subsequently informed the Scissoms about the pending divorce and requested the payoff amount for the Note. A dispute arose over the payoff amount, and Crowe stopped making any payments on the Note. The Scissoms accelerated the maturity of the Note, declared the entire outstanding balance due and payable, charged Crowe 12 percent interest on the outstanding balance, and initiated foreclosure proceedings on the Property. In July 2019, the Scissoms conducted a nonjudicial foreclosure sale during which they repurchased the Property, and they thereafter sought and obtained a superior court order confirming and approving the foreclosure sale. In April 2021, the Scissoms sold the Property to other buyers.
In January 2020, Crowe filed the instant action against the Scissoms seeking actual and special damages, punitive damages, and attorney fees.1 Crowe alleged in his complaint that the terms of the Note constituted a "high-cost home loan" under GAFLA, that the Scissoms were "creditors" under the statute, and that the Scissoms were liable for ten statutory violations. Crowe also asserted claims for breach of warranty and fraud based on the easements he discovered on the Property. The Scissoms answered, denying liability, and asserted counterclaims for entry of a deficiency judgment, late payment fees, interest, recovery of costs incurred in obtaining insurance and paying pre-sale taxes, and attorney fees.
Following discovery, the Scissoms moved for summary judgment on Crowe's claims,2 and after conducting a hearing, the trial court granted the motion. Crowe now appeals from the trial court's summary judgment order, challenging the dismissal of his GAFLA and breach-of-warranty claims.3
1. The GAFLA Claims. We first address Crowe's contention that the trial court erred in granting summary judgment in favor of the Scissoms on his GAFLA claims.
GAFLA protects consumers from certain abusive lending practices associated with home loans. See OCGA §§ 7-6A-3, 7-6A-4, 7-6A-5.4 Under GAFLA, "high-cost home loans" are subject to particular limitations and prohibitions. See OCGA § 7-6A-5. And any "creditor" who is "found by a preponderance of the evidence to have violated [GAFLA] shall be liable to the borrower" for actual, statutory, and punitive damages and for reasonable attorney fees and costs. OCGA § 7-6A-7 (a).
In their motion for summary judgment, the Scissoms argued that Crowe could not succeed on his GAFLA claims because the uncontroverted evidence showed that neither of them met the statutory definition of a "creditor" and that the loan they extended to Crowe did not meet the statutory definition of a "home loan."
(Emphasis supplied.) OCGA § 7-6A-2 (8) (F).
In granting summary judgment to the Scissoms on Crowe's GAFLA claims, the trial court determined that neither of the Scissoms met the statutory definition of a "creditor" because neither "regularly extends consumer credit." The trial court reasoned that while GAFLA does not define the phrase "regularly extends consumer credit," GAFLA "is aimed squarely at home lenders and loan brokers," and there was no evidence that the Scissoms "regularly or frequently engaged in making home loans." The trial court further noted that the phrase "regularly extends consumer credit" is defined in 12 CFR § 1026.2 (a) (17) (v) of Regulation Z, which was promulgated under the federal Truth in Lending Act, 15 USC § 1601 et seq. ("TILA"), as follows:
A person regularly extends consumer credit only if it extended credit (other than credit subject to the...
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...the grant of summary judgment, and we may properly affirm the judgment of the trial court on this basis. See, e.g., Crowe v. Scissom, 365 Ga.App. 124, 141 (2) (877 S.E.2d 659) (2022) ("Grounds that are not attacked as erroneous will not be considered on appeal and are presumed to be binding......