First Union Mortg. Corp. v. Thomas, 2261
| Decision Date | 04 October 1994 |
| Docket Number | No. 2261,2261 |
| Citation | 451 S.E.2d 907,317 S.C. 63 |
| Court | South Carolina Court of Appeals |
| Parties | FIRST UNION MORTGAGE CORPORATION, Appellant-Respondent, v. Jacob E. THOMAS, Respondent-Appellant. . Heard |
Samuel H. Altman and Jonathon S. Altman, both of Altman & Sturgis, and Thomas E. Lydon, of Nelson, Mullins, Riley & Scarborough, Charleston, for appellant-respondent.
Thomas J. Wills, IV, of Barnwell, Whaley, Patterson & Helms, Charleston, for respondent-appellant.
First Union Mortgage Corporation (First Union) brought this action against Jacob E. Thomas seeking to recover $58,500 due as an origination fee for First Union's services in obtaining a loan commitment from a proposed lender. Thomas filed various counterclaims. The jury found in favor of Thomas on First Union's claim, and awarded almost $600,000 in actual and punitive damages against First Union on Thomas' counterclaims. First Union appeals the denial of its motions for JNOV, new trial and new trial nisi remittitur. Thomas appeals the trial court's dismissal of an additional counterclaim against First Union for unfair trade practices. We affirm in part, reverse in part, and remand.
Thomas is a commercial real estate developer engaged in the business of developing shopping centers. Thomas had obtained the majority of his financing through First Federal of Charleston, including the financing for the Galleria, a shopping center located in Summerville. After new federal regulations established certain lending caps, Thomas sought to reduce the amount of debt he owed to First Federal by refinancing the Galleria.
According to Thomas, John Darby of First Union approached him about refinancing the Galleria. First Union was to act as a mortgage broker to obtain a commitment from another lender for permanent financing of the Galleria. At Darby's request, Thomas provided First Union with financial information, rent rolls, and leases of the Galleria tenants so Darby could seek proposed lenders for a seven million dollar loan. On February 6, 1990, Thomas executed a Mortgage Loan Application and Exclusive Agreement (the Exclusive Agreement) whereby Thomas agreed to pay First Union an origination fee for services in arranging financing. The Exclusive Agreement provided that the fee was earned when Thomas accepted a commitment for financing. The Agreement was sent to Thomas under a cover letter from First Union, dated February 2, 1990 and signed by Darby, indicating Southern Farm Bureau (Southern Farm) was interested in financing the Galleria in the amount of $6,000,000. The letter also indicated "Southern Farm is a (sic) old correspondent of First Union and one of our top mortgage investors for loans ranging from $1,000,000 to $7,000,000." Darby later admitted, however, that the largest loan arranged through Southern Farm had been $4.5 million, and that their average loan was $2.5 million. Thomas testified he would not have entered into the agreement had he known this information.
On February 23, 1990, Thomas executed a Southern Farm Mortgage Loan Application, which was forwarded to Southern Farm along with financial statements, surveys, leases, and other required information. After reviewing the information submitted by Thomas, Southern Farm became concerned about certain provisions in the lease with Bi-Lo, Inc., the Galleria's anchor tenant. The Bi-Lo lease contained a restrictive covenant which prohibited within the Galleria the operation of a lounge, tavern, or health spa. 1 In spite of this provision, the Galleria's tenants included a sports bar and a fitness center. By letter dated March 14, 1990, Darby notified Thomas that Southern Farm would require, among other things, written approval from Bi-Lo allowing the sports bar and fitness center on the premises. After Thomas received the letter, Darby spoke to him by phone and told Thomas that the loan would not close if Bi-Lo did not consent to the sports bar and fitness center. Thomas assured Darby that he would correct the problem.
Thereafter, Southern Farm issued a loan commitment for $5.85 million, contingent upon compliance with certain terms and conditions, including review and approval of all loan documents and leases, and estoppel letters from all the tenants of the Galleria. Thomas accepted the commitment on April 13, 1990. The commitment provided it would expire, and Southern Farm's obligations to Thomas would terminate, unless the loan closed before August 3, 1990. The commitment further provided that all required documentation must be submitted to Southern Farm at least thirty days before the closing of the loan.
Southern Farm's Mortgage Loan Application form required Thomas to submit a two percent deposit as consideration for the issuance of the loan commitment. According to Thomas, when he told Darby he could not afford to pay First Union's origination fee and deposit up front, Darby told him to send First Union the $60,000 origination fee 2 which First Union would send to Southern Farm to cover part of the deposit, and Thomas would then pay the balance of the deposit directly to Southern Farm. Thomas also testified Darby agreed First Union would receive its origination fee at closing. Darby testified that, as a courtesy to Thomas, First Union agreed to forward to Southern Farm its origination fee (which Thomas paid when he signed the Exclusive Agreement with First Union), so that Thomas would only be required to send Southern Farm the remaining one percent. First Union agreed to wait until closing for Thomas to repay the origination fee.
Although Southern Farm's commitment was to expire on August 3, 1990, and required submission of all documents thirty days in advance, Thomas had not satisfied all the conditions of the commitment by the middle of July. Importantly, Thomas had not yet obtained Bi-Lo's consent to the violations of the restrictive covenant in its lease. At Thomas' request, Southern Farm extended the expiration of its commitment until August 24, 1990. In addition to the problem with the Bi-Lo lease, Southern Farm in mid-August discovered a problem regarding the use of the Galleria's parking facilities by an out-parcel tenant. By August 24, 1990, Thomas still had not satisfied all Southern Farms requirements, and had not obtained Bi-Lo's consent to the violations of its lease. On August 23, 1990, Bi-Lo sent Thomas' attorney a letter in which Bi-Lo refused to waive the restrictive covenant in its lease. Although Bi-Lo consented to the specific tenants under the current leases, Bi-Lo refused to extend its consent to future tenants or to sublessees or assignees of the current tenants. This consent was received by Thomas after the expiration of the commitment, and because of its limited scope, Bi-Lo's consent was not satisfactory to Southern Farm. The parking problem likewise was not resolved.
Southern Farm's loan commitment expired August 24, 1990, and by letter to Thomas dated August 28, 1990, Southern Farm refused to extend it further. Thomas and Southern Farm then entered into a release and indemnity agreement (the Release Agreement) in which Southern Farm agreed to return to Thomas $107,868.80, representing the deposit, less fees and costs, and Thomas agreed to waive any claims he might have against Southern Farm. Thereafter, First Union requested Thomas pay its origination fee, and Thomas refused. In January 1991, First Union caused to be issued a warrant of attachment on the $107,868.80 check being forwarded from Southern Farm, to secure Thomas' obligation for the origination fee. For two days, a uniformed sheriff's deputy awaited the check in Thomas' place of business, and attached the check upon its arrival.
First Union then brought this action alleging breach of contract and seeking recovery of the $58,500 fee, plus interest and attorney's fees. Thomas counterclaimed against First Union for breach of contract, tortious interference with contractual relations, abuse of process and unfair trade practices. The trial court directed a verdict against Thomas' unfair trade practices claim.
The jury returned a verdict in favor of Thomas on First Union's action, and returned a verdict against First Union for $380,000 actual damages for breach of contract, $25,000 actual and $60,000 punitive damages for abuse of process, and $132,730 actual damages for tortious interference with contractual relations. The trial court denied First Union's motions for judgment notwithstanding the verdict, new trial, and new trial nisi remittitur.
On appeal, First Union argues the trial court erred in denying its directed verdict motion on its breach of contract action, because First Union was entitled to its origination fee once Thomas accepted the commitment offered by Southern Farm. We agree.
The Exclusive Agreement provided the origination fee "shall be earned where a commitment is issued substantially under the terms shown in this application, i.e., amount, rate, term, amortization, prepayment, and guarantee; or when a commitment issued on other terms is accepted by applicant." On April 13, 1990, Thomas accepted the Southern Farm commitment to provide financing for the Galleria. Thus, by the clear language of the Exclusive Agreement, First Union earned its fee on April 13, 1990. Thomas breached the Agreement by refusing to pay the fee earned by First Union.
Thomas contends the parties agreed the fee was to be earned at closing. We disagree. The Exclusive Agreement clearly and unambiguously provided that First Union's fee was earned when Thomas accepted a commitment for financing. There is no evidence in the record which shows this portion of the agreement was ever modified by the parties. While First Union did agree to wait until closing to collect its fee, there was no evidence the contract was modified so that the fee would be contingent on the loan actually...
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