Gailliard v. Fleet Mortg. Corp.

• Citation: 880 F. Supp. 1085
• Decision Date: 11 January 1995
• Docket Number: No. 2:94-1040-18.,2:94-1040-18.
• Parties: Robert GAILLIARD, Plaintiff, v. FLEET MORTGAGE CORPORATION, Defendant.
• Court: U.S. District Court — District of South Carolina

880 F. Supp. 1085

Robert GAILLIARD, Plaintiff, v. FLEET MORTGAGE CORPORATION, Defendant.

No. 2:94-1040-18.

United States District Court, D. South Carolina, Charleston Division.

January 11, 1995.

Lawrence Keitt, Orangeburg, SC, for plaintiff.

Robert Stepp, Elizabeth Van Doren Gray, Elizabeth Gelene Howard, Columbia, SC, for defendant.

ORDER

NORTON, District Judge.

This matter is before the court on the motion of Defendant Fleet Mortgage Corp. ("Fleet") for summary judgment pursuant to Fed.R.Civ.P. 56(c). Because Fleet is entitled to judgment as a matter of law and fact, summary judgment is granted in favor of Fleet. Gailliard's cause of action for intentional interference with a contract between a borrower and himself as closing attorney is legally and factually insufficient.

Gailliard alleges that Fleet intentionally interfered with a contract for services that existed between himself and a Fleet borrower, Yolanda Moultrie ("Moultrie"). Gailliard also makes a general claim that Fleet engaged in a pattern of discouraging borrowers from using Gailliard to perform closings.

Fleet denies that it intentionally interfered with Gailliard's contract and that it discouraged borrowers from using Gailliard's services. Gailliard's cause of action fails because as a matter of law and fact Fleet's conduct did not rise to a termination of the contract and Fleet was justified in informing Moultrie that Fleet did not have a closing letter from Gailliard. The claim also fails because as a matter of undisputed fact Moultrie, not Fleet, terminated her relationship with Gailliard.

Fleet filed its Motion for Summary Judgment and supporting memorandum on October 21, 1994, in accordance with the court's scheduling order. The court scheduled a hearing for November 22, 1994. Plaintiff filed his Memorandum in Opposition on November 21 and filed Affidavits in Opposition to the Motion just before the hearing on November 22. Despite the fact that Plaintiff's Memorandum was 13 days past the due date under the local rules of this court, Local Rule 12.06, D.S.C. (allowing 15 days for a responsive memorandum), the court has considered the Memorandum and Affidavits. The court has afforded Fleet the opportunity to supply counter Affidavits as needed.

I. FACTS

Moultrie applied for a Fleet mortgage loan on August 19, 1992. At the time of the application, Moultrie selected Gailliard as her closing attorney on a form provided by Fleet. Kathryn Morgan, loan officer at Fleet's Charleston office, took Moultrie's loan application. Affidavit of Kathryn Morgan at ¶¶ 1 and 2. Morgan instructed Moultrie to inform Gailliard that Gailliard needed to provide Fleet with an Approved Closing Agent Protection Letter ("Closing Letter"). Morgan Affidavit at ¶ 2. Morgan told Moultrie that Gailliard could not close the loan unless Gailliard provided Fleet with a Closing Letter. Fleet's policy is that an attorney cannot conduct a closing unless the Closing Letter is provided. Morgan Affidavit at ¶ 4.

Moultrie's loan was thereafter approved. Before the loan closed, Kit Hutson, a loan processor at Fleet, informed Moultrie that Fleet did not have a Closing Letter from any title insurance company on behalf of Gailliard. Affidavit of Kit Hutson at ¶¶ 3; 4. Fleet told Moultrie to either procure a Closing Letter from Gailliard or to select another attorney. Id. at ¶ 4. Moultrie selected another attorney to perform the closing. Id.

Gailliard does not challenge the content of the conversation between Moultrie and Fleet. In fact, Gailliard did not provide a Closing Letter to Fleet until August 31, 1993. Gailliard stated in his Affidavit that he was informed by Moultrie's realtor, not by Moultrie, that he could not close the loan. The realtor allegedly related to Gailliard that Fleet contended Gailliard had "messed up" loans for Fleet and that therefore Gailliard could not close loans for Fleet borrowers. Affidavit of Terry Seabrook at ¶ 6. Gailliard willingly turned over the file to the realtor so that another attorney could conduct the closing. Gailliard did not talk directly to Fleet, nor did Gailliard provide a closing letter to Fleet. Gailliard Deposition at 14.

As Fleet points out, a Closing Letter insures a lender against risks with regard to the conduct of an attorney in a closing by specifying the terms and conditions in the event the closing attorney commits an error. If an approved attorney conducts a closing, the title insurance company agrees to reimburse the lender for any loss incurred by the lender in connection with the closing. The Closing Letter guarantees the attorney's work and provides an indemnification to the lender that suffers a loss.

II. SUMMARY JUDGMENT STANDARD

Summary judgment should be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issues as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The party seeking summary judgment bears the initial burden of demonstrating to the district court that there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). Once the movant has made this threshold demonstration, the non-moving party cannot survive the motion for summary judgment unless he demonstrates that specific, material facts exist which give rise to a genuine issue of fact. Id. at 324, 106 S.Ct. at 2553. The nonmoving party may not rest on the allegations averred in his pleadings. Id. Accordingly, when Rule 56(e) has shifted the burden of proof to the non-movant, he must produce existence of every element essential to his action which he bears the burden of adducing at a trial on the merits.

Summary judgment serves the useful purpose of disposing of meritless claims before the court and the parties become entrenched in frivolous litigation. Donahue v. Windsor Locks Bd. of Fire Comm'rs, 834 F.2d 54, 58 (2nd Cir.1987). Although summary judgment is an extreme remedy, the courts should not be reluctant to grant summary judgment in appropriate cases; indeed, summary judgment is mandated where appropriate. Herman v. City of Chicago, 870 F.2d 400, 404 (7th Cir.1989); Meiri v. Dacon, 759 F.2d 989, 998 (2nd Cir.1985), cert. denied, 474 U.S. 829, 106 S.Ct. 91, 88 L.Ed.2d 74 (1985); United States v. Porter, 581 F.2d 698, 703 (8th Cir.1978); Estate of Detwiler v. Offenbecher, 728 F.Supp. 103, 134 (S.D.N.Y. 1989); Burleson v. Illinois Farmers Ins., 725 F.Supp. 1489, 1490 (S.D.Ind.1989).

Summary judgment is appropriate in this case, because Gailliard's claim is barred as a matter of undisputed fact and law.

III. LEGAL DISCUSSION

A. FLEET ACTED WITHIN THE FRAMEWORK OF THE PREFERENCE STATUTE; THEREFORE NO CAUSE OF ACTION ARISES FOR INTENTIONAL INTERFERENCE.

Gailliard agrees he cannot rely on S.C.Code Ann. § 37-10-102(a) (Law.Coop.1989) for affirmative relief in this action. See Camp v. Springs Mortgage Corp., ___ S.C. ___, 426 S.E.2d 304, 305 (1992). The section is relevant, however, because Fleet's conduct comported with the statute. The Code provides that a creditor "must ascertain the preference of the borrower as to the legal counsel that is employed to represent the debtor in all matters of the transaction relating to the closing of the transaction...." S.C.Code Ann. § 37-10-102(a) (Law.Co-op.1989).

Fleet acted within the borrower preference statute when it asked Moultrie either to choose another attorney or to procure a Closing Letter from Mr. Gailliard. The borrower preference statute requires that an attorney chosen to conduct a closing provide reasonable security to a lender "by way of mortgage title insurance in a company acceptable" to the lender. S.C.Code Ann. § 37-10-102(a). This legislative requirement providing security to the lender conforms with industry custom. The quoted portion of the statute affords a lender the right to reject any lawyer selected by the borrower who is not approved as a closing attorney by a title insurance company.

Fleet had no Closing Letter from Gailliard as of the time Fleet contacted Moultrie. Morgan Affidavit at ¶ 3. Moultrie did not provide a Closing Letter nor did Gailliard offer a Closing Letter to Fleet when Gailliard was notified that he was not on the Fleet approved list. Gailliard Deposition at 14.

Fleet's conduct was within the parameters of the statute because at the time of the closing Fleet did not have reasonable security in the form of a Closing Letter. Fleet's conduct is therefore protected under the statute and the statute provides a defense in favor of Fleet. Because Fleet lacked adequate security, Fleet had the ability, if it so chose, to reject Moultrie's selection outright. Of course, Moultrie was actually afforded her choice of closing attorneys. Moultrie had no claim under the statute because no violation ever occurred. Likewise, Gailliard cannot sustain a claim that is even indirectly derived from the statute.

Gailliard's suit must necessarily derive from Moultrie's right to choose an attorney. Moultrie was simply not deprived of her choice of counsel, because she chose not to proceed with Gailliard. Fleet cannot be liable for Moultrie's choice.

Summary judgment is therefore granted in favor of Fleet on this ground.

B. FLEET DID NOT INTERFERE WITH GAILLIARD'S CONTRACT.

Fleet did not intentionally interfere with the contract between Moultrie and Gailliard for three reasons: 1) Moultrie, not Fleet, terminated the relationship with Gailliard; 2) Fleet's conduct did not amount to a discharge of Gailliard and therefore does not constitute interference; and 3) Fleet's conduct was justified because Fleet exercised its legal right and acted with a legitimate business purpose.

To prevail on a tortious interference claim, Gailliard must prove the following elements:

1. The existence of a valid contract;

2. Fleet's knowledge of the

...