Dorman v. Trustmark Nat'l Bank, 2017-CA-01584-COA

Citation281 So.3d 1016
Decision Date07 May 2019
Docket NumberNO. 2017-CA-01584-COA,2017-CA-01584-COA
Parties Odell DORMAN, Jr. and Renodda A. Dorman a/k/a Renodda Dorman, Appellants v. TRUSTMARK NATIONAL BANK, Successor to Heritage Banking Group, Appellee
CourtCourt of Appeals of Mississippi

ATTORNEYS FOR APPELLANTS: MARK K. TULLOS, RALEIGH, CRAIG N. ORR

ATTORNEYS FOR APPELLEE: STEPHANIE M. RIPPEE, WILLIAM F. RAY, JACKSON

BEFORE BARNES, C.J., WESTBROOKS AND LAWRENCE, JJ.

BARNES, C.J., FOR THE COURT:

¶1. After Trustmark National Bank (Trustmark) foreclosed on Odell and Renodda Dorman's property and evicted them from their residence, the parties discovered that the deed of trust (DOT) securing their consumer loan agreement did not contain a legal description for the six acres on which the residence was located. The Dormans moved back into the home, and Trustmark filed suit in the Leake County Circuit Court for the remaining loan deficiency. The Dormans counterclaimed that Trustmark had wrongfully foreclosed on their home, and Trustmark moved to amend its complaint to assert an affirmative defense of mutual mistake, which the court granted. Trustmark subsequently filed a motion for summary judgment, alleging that the parties had intended for the Dormans' residence to be included in the DOT, and the bank requested a reformation of the deed for mutual mistake. Granting summary judgment, the circuit court ordered that the DOT be reformed to reflect the legal description for the residential property and awarded Trustmark a deficiency judgment.

¶2. The Dormans argue on appeal that the court did not have subject-matter jurisdiction to reform the DOT and erred in granting the motion for summary judgment, reforming the DOT, and awarding a judgment for the loan deficiency. Although we find the court had jurisdiction to consider the bank's claims, we conclude that there is a genuine issue of material fact as to whether the Dormans intended to pledge the residential property as security for the loan, and we reverse the court's judgment and remand for further proceedings. Accordingly, we find the court erred in reforming the DOT and in awarding a deficiency judgment against the Dormans.

FACTS AND PROCEDURAL HISTORY

¶3. The Dormans owned several parcels of land in Leake County, Mississippi. In April 1999, they obtained a loan for $ 80,462 from Carthage Bank.1 The loan was secured by a DOT for certain parcels of land, which included the Dormans' residence located on approximately six acres at 723 Highway 487, Carthage, Mississippi. In March 2004, the Dormans consolidated the 1999 loan with other loans to lower their monthly payments. Although the bank's loan application listed the "residence" under "Collateral Offered or Purchased," the DOT securing the loan did not contain a legal description of the six acres on which the home was located.2

¶4. On April 14, 2005, the Dormans executed another consolidated loan agreement for $ 164,720.66 with Heritage Banking Group, Trustmark's predecessor in interest. The agreement stated that the loan was:

Secured by Deed of Trust of even date herewith on real estate located in Section 31 Township 10 North Range 9 Leake County Mississippi being more particularly described in said Deed of Trust ; One (1) 1997 Toyota 4 Runner[,] Serial No. JT3GM84R8V001619J; 11 Shares Bank of Walnut Grove Stock evidenced by Certificate No. 472 in the name of Renodda Dorman or Odell Dorman.

(Emphasis added). The DOT for the 2005 loan did not contain a legal description of the six acres on which the Dormans' house was located.

¶5. When the Dormans became delinquent on their loan payments, Trustmark's attorney, Mark Mayfield, sent a foreclosure letter on October 25, 2013, stating in part:

If you are the former owner, child, or spouse of former owner: Your home sold at foreclosure and you no longer own the property. The premises must be vacated no later [than ] Thursday, October 31, 2013.
Please immediately move out and remove the house of all contents. Lock doors and windows. Send this office the keys and garage door openers. Let us know the date that you'll be out, and we will change the locks.
If you fail to comply, the new owner has asked us to file an eviction lawsuit directing the Sheriff to forcibly remove you and your belongings. Expect a Deputy Sheriff to serve you with a summons to appear in court.

The Dormans vacated the property and moved to a rental home. After a nonjudicial foreclosure sale, Renodda's brother-in-law contacted Trustmark in February 2014 to inquire about buying the property. Bank personnel informed him at that time that the DOT's legal description did not include the dwelling and the six acres upon which it was located; so the Dormans moved back into the house.

¶6. On May 22, 2014, Trustmark filed a complaint with the circuit court for the remaining loan deficiency of $ 70,791.99, plus interest. There was no mention of the issue with the DOT. The Dormans filed an answer and counterclaim, alleging wrongful foreclosure because Trustmark knew or should have known there was no lien on their residence. Trustmark subsequently filed a motion to amend its complaint on May 24, 2015, asserting a defense of mutual mistake because the loan documentation indicated that "Trustmark believed it was obtaining the Dormans' house as collateral for the subject loan, and the Dormans believed they were assigning their home as collateral for the subject loan." The circuit court granted the motion to amend. The Dormans were deposed in September 2016; both asserted that they did not intend to pledge their residence as security for the 2005 loan.

¶7. Trustmark filed a motion for summary judgment, requesting reformation of the DOT due to mutual mistake by the parties, which the circuit court granted. The circuit court determined that Trustmark was entitled to reformation of the DOT based on mutual mistake, finding: "Here, based on the documents signed and acknowledged by the Dormans and Trustmark's internal documentation[,] there can be no legitimate dispute that both the Dormans and Trustmark intended for the Dormans' residence property to be collateral for the consolidated loan." The court found that the Dormans' moving out of the house after foreclosure "demonstrated [their] belief that Trustmark had a valid security interest in their residence[.]" The court further held that Trustmark was "entitled to summary judgment on its affirmative claim for a deficiency judgment in the principal amount of $ 70,791.99 plus prejudgment interest from and after April 30, 2014, at the rate of 7.50% per annum, through August 24, 2017, in the amount of $ 19,987.93." The Dormans' counterclaims were dismissed with prejudice.

¶8. The Dormans assert on appeal that the circuit court erred in granting summary judgment, citing the following arguments: (1) there was a genuine issue of material fact whether the Dormans intended to pledge the house as security for the loan; (2) there was no mutual mistake to support the reformation of the deed; (3) the court did not have subject-matter jurisdiction to reform the DOT; and (4) the deficiency judgment was not ripe for adjudication.

DISCUSSION

I. Whether the circuit court had subject-matter jurisdiction to reform the DOT.

¶9. Before addressing the substantive issues raised on appeal, we first consider the Dormans' claim that the circuit court lacked subject-matter jurisdiction. Trustmark's complaint requested recovery of a deficiency judgment on a loan, which the Dormans acknowledge was properly before the circuit court as a matter of law. However, the circuit court allowed Trustmark to amend its answer to the Dormans' counterclaim to assert reformation and mutual mistake as a defense. At the motions hearing, the circuit judge questioned whether he had the power to reform the deed, noting: "It's just I think that the place for that correction is in front of a chancellor." After briefing by the parties on the issue, the court determined in its final judgment that it had subject-matter jurisdiction over the claims. The Dormans now argue that Trustmark tried to "back door" the issue of reformation by filing the complaint for the deficiency judgment and that the bank "should have sought reformation in chancery court."

¶10. "To determine whether a court has subject[-]matter jurisdiction, we look to the face of the complaint , examining the nature of the controversy and the relief sought." RAS Family Partners LP v. Onnam Biloxi LLC , 968 So.2d 926, 928 (¶ 11) (Miss. 2007) (emphasis added). "If the complaint seeks legal relief, even in combination with equitable relief, the circuit court can have proper subject[-]matter jurisdiction." Id. "[E]quitable claims are more appropriately brought before a circuit court when they are connected to a contractual relationship or other claims tied to questions of law." Era Franchise Sys. Inc. v. Mathis , 931 So.2d 1278, 1283 (¶ 14) (Miss. 2006).

¶11. As the court noted, Trustmark's complaint asserted a legal claim for a deficiency judgment; the issue of mutual mistake later arose as an affirmative defense to the counterclaim. The Mississippi Supreme Court has held that once a circuit court acquires subject-matter jurisdiction of an action at law, "it may hear and adjudicate in that action all claims, including those with an equitable smell, arising out of the same transaction and occurrence as the principal claim." Hall v. Corbin , 478 So.2d 253, 255 (Miss. 1985). This includes "other claims (whether asserted by the one or more of the original parties or by new or intervening parties), ancillary or pendent to the original claim," even if those claims "standing alone may have been beyond the court's jurisdiction." Id. Because Trustmark's equitable claim was raised as a defense to the Dormans' counterclaim, we find no error in the circuit court's determination that it had subject-matter jurisdiction of Trustmark's claim for reformation of the DOT.

II. Whether the circuit court erred in granting Trustmark's motion for summary judgment.

¶12. A...

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