Deutsche Bank Nat'l Trust Co. v. Pyle

• Decision Date: 28 March 2017
• Docket Number: No. SD34133,SD34133
• Citation: 518 S.W.3d 805
• Parties: DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee FOR MORGAN STANLEY HOME EQUITY LOAN TRUST 2005–3 (MSHEL 2005–3), Plaintiff–Respondent, v. Enoch and Karen PYLE, Defendants–Appellants, and Homeland Capital Group, LLC, Defendant.
• Court: Missouri Court of Appeals

518 S.W.3d 805

DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee FOR MORGAN STANLEY HOME EQUITY LOAN TRUST 2005–3 (MSHEL 2005–3), Plaintiff–Respondent,

v. Enoch and Karen PYLE, Defendants–Appellants,andHomeland Capital Group, LLC, Defendant.

No. SD34133

Missouri Court of Appeals, Southern District, Division One .

Filed: March 28, 2017

Motion for Rehearing and/or Transfer to Supreme Court Denied April 18, 2017

Application for Transfer Denied June 28, 2017

ROBERT M. SWEERE, Springfield, MO, for Appellants.

TRENTON K. BOND, Clayton, MO, for Respondent.

DON E. BURRELL, J.

Enoch and Karen Pyle ("Homeowners"), husband-and-wife defendants in the underlying case, appeal the September 2015 declaratory judgment that quieted title in Homeowners to certain property in Steeplechase Estates, an Ozark subdivision ("the Property"), but also declared the Property subject to a first-priority encumbrance for the deed of trust ("Deed of Trust") assigned to Deutsche Bank National Trust Company, as Trustee for Morgan Stanley Home Equity Loan Trust 2005–3 ("Bank"). The judgment also declared a recorded copy of the Deed of Trust to be "a true, accurate, and authentic copy of the original," and it taxed the costs of the action against Homeowners.¹

Well after the litigation commenced, Homeowners were granted leave to file counterclaims against Bank. One of these "counterclaims" ("HCC 1") relied on section 514.205² in claiming that Bank had pursued its action frivolously and in bad faith. On the morning of trial, after the jury had been selected but before the presentation of evidence had commenced, the trial court dismissed HCC 1 and determined that the selected jury would stay on as "an advisory jury pursuant to Rule 73.01."³

Homeowners present nine points on appeal. Point 1 contends the trial court erred in dismissing HCC 1 because Homeowners had a cause of action under section 514.205 for money damages resulting from their opposition to Bank's "frivolous" litigation. Point 2 contends that Homeowners "have a constitutional right to a trial by jury on all statutory actions for damages." Point 3 contends the trial court erred in denying Homeowners a jury trial on Bank's claim. Point 4 challenges the denial without a hearing of Homeowners' after-trial motion that also asserted claims under section 514.205 ("the frivolous-suit motion"). Points 5, 6, and 7 challenge the admission of certain photocopies of documents as Bank's exhibits 1, 3, and 5, and each alleges that "legally false impression[s]" resulted from their admission.⁴ Point 8 claims the trial court erred in permitting Bank "to challenge a juror after [Homeowners] had announced their challenges" in violation of section 494.480, which directs that a plaintiff's challenges be made first. Point 9 claims the judgment was not supported by substantial evidence and was against the weight of the evidence because "there was no competent evidence in the record that the alleged photocopy of [the Deed of Trust] ... was a true, accurate, and authentic copy of the original[.]" (Quotation omitted.) Finding no merit in any of Homeowners' points, we affirm.

Applicable Principles of Review

We "will affirm a trial court's judgment in a court-tried case unless there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or applies the law." Hunter v. Moore , 486 S.W.3d 919, 925 (Mo. banc 2016). The same standard applies when a case is tried to an advisory jury. Rhodes v. Hunt , 913 S.W.2d 894, 898 (Mo. App. S.D. 1995). In cases tried with an advisory jury, "the trial court is the ultimate trier of fact and [it] may adopt or reject the verdict or findings of the advisory jury according to the court's view of the facts." Mason v. Wal–Mart Stores, Inc. , 91 S.W.3d 738, 741 n.1 (Mo. App. W.D. 2002). Thus, an appellate court still defers "to the trial court's determinations of credibility, and views all evidence in the light most favorable to the trial court's judgment and disregards all contrary evidence." Pitman Place Dev., LLC v. Howard Inv., LLC , 330 S.W.3d 519, 526 (Mo. App. E.D. 2010) ; see also Rhodes , 913 S.W.2d at 902.

"The determination of whether a sufficient foundation was laid for admission of the evidence is within the sound discretion of the trial court." Healthcare Serv. of the Ozarks, Inc. v. Copeland , 198 S.W.3d 604, 616 (Mo. banc 2006) (quotation omitted). The admission of evidence is reviewed for prejudice, not mere error. Teasdale & Assoc. v. Richmond Heights Church of God in Christ , 373 S.W.3d 17, 24 (Mo. App. E.D. 2012). "A trial court has broad discretion when ruling upon a complaint that proffered documentary evidence violates the best evidence rule, and the court's decision is subject to reversal only in cases of clear abuse." Christian Health Care of Springfield W. Park, Inc. v. Little , 145 S.W.3d 44, 53 (Mo. App. S.D. 2004). "We will not reverse unless the erroneous admission of evidence was so prejudicial that it deprived the defendant of a fair trial, and we find a reasonable probability that the evidence affected the outcome of the trial." Teasdale , 373 S.W.3d at 24.

Relevant Evidence and Procedural Background⁵

Homeowners purchased the Property and borrowed money in 2004 to construct a house on it. In March 2005, Homeowners obtained "permanent financing" for the Property. In May 2005, Homeowners refinanced the second loan with a third ("the Loan").

Portions of the depositions of Homeowners were read into evidence. In those portions, Mr. Pyle recalled that he and Mrs. Pyle were present for the closing on the Loan, which was held at their house, but he could not recall the name of the man who handled the closing. Mr. Pyle thought he "had documentation" about the closing at the time it occurred, but he did not keep "a single copy[.]" Mr. Pyle did not recall looking at the documentation even though he knew that he should have, but he did not do so because he had borrowed money before. He commented, " ‘[It] seems like the more I do it, the faster it goes. Because I think, okay, I've done this before. Bang-bang and, you know, you're out of there.’ " Mr. Pyle acknowledged at trial that he "sign[ed] papers" at the closing, and he and his wife received about $34,000 in cash as a result of the Loan.

In her deposition, Mrs. Pyle recalled that she signed documents at the closing, but she did not "review them prior to the closing[.]" In her testimony at trial, Mrs. Pyle said that before she signed the documents, she "briefly [,]" but "not completely" reviewed them, and she acknowledged that she "could have reviewed them more thoroughly if [she had] wanted to[.]" Mrs. Pyle also testified that she and Mr. Pyle still "reside[d] together at the [P]roperty[.]"

A vice-president of Bank's corporate trust department, Ronaldo Reyes, testified that he had the original adjustable rate note for the Loan dated May 17, 2005 ("the Adjustable Rate Note") with him at trial in a binder. He also testified that he had a copy that was a true and accurate photocopy of the Adjustable Rate Note ("the Note Copy"). The Note Copy identified Mr. Pyle as the borrower and Wilmington Finance as the lender, and the Note Copy was admitted into evidence as Bank's Exhibit 3 as follows:

THE COURT: Any objection to Exhibit 3?

[HOMEOWNERS' COUNSEL]: Uh, no. I object to 3. It hasn't been identified. That's the note.

THE COURT: It was identified by this witness.

[HOMEOWNERS' COUNSEL]: No. He hadn't—he didn't—he said what it looks like. He read the top of it. In order for a note to be admissible, he has to say who signed it. He didn't ask him that. He just said it's—it's a note.

THE COURT: Well, I'm going to overrule the objection, and I'll admit Exhibit 3.

The Note Copy included the hand-written initials "E.P." at the bottom of the first three pages, a hand-written signature above the typed-name "ENOCH PYLE" on the fourth page, and another hand-written signature above the typed-name "ENOCH PYLE" on a final page entitled "PREPAYMENT RIDER TO NOTE[.]"

A photocopy of the U.S. Department of Housing and Urban Development settlement statement ("the HUD statement") dated May 17, 2005, which identified Homeowners as the borrowers, Wilmington Finance as the lender, and Advantage Equity Services ("Advantage") as the settlement agent, was admitted as Bank's Exhibit 17. The HUD statement included hand-written signatures above each of the typed-names "ENOCH PYLE" and "KAREN PYLE[.]"

Portions of a deposition of the former general counsel for Advantage, Sean Bello, were read into evidence. Mr. Bello worked for Advantage in Pennsylvania between 2002 and 2007, and he understood that the company was no longer in business. Mr. Bello recalled that, for areas outside of Pittsburgh, Advantage would use a closing service that had " ‘people go to the borrowers [sic] residence.’ "

Records from Advantage's internal note-keeping system were admitted into evidence,⁶ and the entries from May 19, 2005 stated that Advantage "did not get back the original mortgage or all our [sic] affidavits[,]" and "[w]e got all of the originals with the exception of the mortgage." Additional entries indicated plans to "DOUBLE/TRIPLE CHECK FOR" the "MISSING MORTGAGE" and, if it could not be located, "GET IT RESIGNED."

In June 2005, Bank became the custodian of the Loan as trustee "for the benefit of bond investors[.]" Bank was governed in the management of loans held for this purpose (a category that included the Adjustable Rate Note) by a pooling and servicing agreement. A copy of the pooling and servicing agreement ("Pooling Copy") was admitted as Exhibit 1 over Homeowners' objection that "[i]t's improper to admit a photocopy when the original is available."

Mr. Reyes testified that Bank's file for this type of loan would "typically include the ... deed of trust[,]" and, upon receipt, Bank employees would review the physical files for the mortgages. Bank retained these files in a secure room. Mr. Reyes had reviewed the file for...