Garr v. Countrywide Home Loans, Inc.

• Decision Date: 01 July 2004
• Docket Number: No. SC 85578.,SC 85578.
• Citation: 137 S.W.3d 457
• Parties: L. Joseph GARR, III, et al., Respondents/Cross-Appellants, v. COUNTRYWIDE HOME LOANS, INC., Appellant/Cross-Respondent.
• Court: Missouri Supreme Court

137 S.W.3d 457

L. Joseph GARR, III, et al., Respondents/Cross-Appellants, v. COUNTRYWIDE HOME LOANS, INC., Appellant/Cross-Respondent.

No. SC 85578.

Supreme Court of Missouri, En Banc.

July 1, 2004.

Duane L. Coleman, St. Louis, MO, Richard L. Martin, Kansas City, MO, for Appellant/Cross-Respondent.

Kevin L. Fritz, St. Louis, MO, for Respondents/Cross-Appellants.

STEPHEN N. LIMBAUGH, JR., Judge.

Defendant Countrywide Home Loans, Inc. ["Countrywide"] appeals summary judgment entered in favor of plaintiffs L. Joseph Garr, III and Marianne C. Garr for violation of section 443.130, RSMo 2000. Countrywide appeals in part based on the alleged unconstitutionality of section 443.130; thus, this Court has exclusive appellate jurisdiction. MO. CONST. art. V, sec. 3. The judgment is reversed.

On March 18, 2002, the Garrs, husband and wife, who resided at 1417 Marlann Drive in Des Peres, Missouri, signed a promissory note in favor of Mortgage Resources, a mortgage lender, in the principal amount of $165,000.00. A deed of trust secured the note on the Garrs' residence. At some point before August 2002, Mortgage Resources assigned its interest in the promissory note and deed of trust to Countrywide, another mortgage lender that transacts business in Missouri but has its principal office in Calabasas, California. On August 2, 2002, the Garrs refinanced their home with another mortgage lender, Matrix Financial. Mr. Garr mailed the full payoff amount for the Garrs' promissory note, and Countrywide received the payment on August 8, 2002. Also on that date, Mr. Garr sent a letter via certified mail, return receipt requested to the attention of Countrywide's Payoff Processing Department in Plano, Texas. The letter stated:

On August 2, 2002, we closed on our Marlann Drive home. On August 8, 2002, I confirmed via the Countrywide Automated Customer Service Line that our loan with Countrywide Home Loans was paid in full on August 8, 2002 and that an escrow balance of $60.84 would be refunded to me. We still have not received a Deed of Release to release the lien against our personal residence at 1417 Marlann Drive, Des Peres, Missouri 63131.

We are demanding immediate release of the Deed of Trust against our Marlann Drive property. Enclosed is a check payable to your institution in the sum of $30.00 to cover the costs of filing and recording the Deed of Release regarding the transaction. Please deliver in hand to me evidence of the release of the Deed of Trust. In the event the Deed of Release has already been sent, please return my check to above listed address.

Countrywide's Payoff Processing department received Mr. Garr's letter and personal check for $30.00 on August 12, 2002. That same day, a California affiliate of Countrywide prepared the deed of release and an officer of Countrywide executed it. As Mr. Garr requested, the deed of release included a directive to the recorder of deeds to mail the recorded deed to the Garrs at their home address. Countrywide then mailed the letter and deed of release to the St. Louis County Recorder of Deeds for recording in the public real estate records, and it was recorded on August 26, 2002, which was the tenth business day following receipt of Mr. Garr's letter of August 8. On August 14, 2002, Countrywide returned Mr. Garr's $30.00 check to him explaining that his loan was paid in full and additional funds were unnecessary.

On September 3, 2002, the fifteenth business day following Mr. Garr's August 8 letter, Mr. Garr sent a second letter by regular mail to Countrywide's Payment Processing department in Plano, Texas. In this letter, Mr. Garr stated that he and Mrs. Garr were "seeking damages against Countrywide Home Loans as a result of its flagrant violation of Mo.Rev.Stat. sec. 443.130," a statute that authorizes penalties for failing to execute a sufficient deed of release within 15 days of satisfaction of the debt. Mr. Garr demanded that Countrywide "immediately tender" a check for $16,500.00 (the statutory penalty of 10% of the promissory note) and deliver a "sufficient deed of release" within ten days of the date of his letter or he would file suit against Countrywide. Then, on September 12, 2002, Countrywide's California affiliate mailed the Garrs a copy of the deed of release.

On November 13, 2002, the Garrs filed suit against Countrywide in the Circuit Court of St. Louis County seeking to recover the statutory penalty under section 443.130. After a hearing on cross-motions for summary judgment, the parties agreed to waive trial and submit the case for disposition on the motions and briefs filed. The trial court rendered its judgment in favor of the Garrs, but denied the Garrs' request for prejudgment interest and attorney's fees. Countrywide appealed to this Court, and the Garrs cross-appealed the trial court's denial of prejudgment interest.

Appeals from summary judgment are essentially reviewed de novo. ITT Commercial Finance Corp. v. Mid-America Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). This Court must address the legal consequences of the facts contained in the record and if, under those facts, the Garrs are not entitled to recover the penalty under section 443.130, the final judgment of the trial court must be reversed. See Schroeder v. Horack, 592 S.W.2d 742, 744 (Mo. banc 1979).

Countrywide first asserts that the trial court erred in granting judgment in favor of the Garrs because the Garrs' letter of August 8, 2002 did not sufficiently invoke section 443.130. That section states in pertinent part:

1. If any such person, thus receiving satisfaction, does not, within fifteen business days after request and tender of costs, deliver to the person making satisfaction a sufficient deed of release, such person shall forfeit to the party aggrieved ten percent upon the amount of the security instrument, absolutely, and any other damages such person may be able to prove such person has sustained....

2. To qualify under this section, the mortgagor shall provide the request in the form of a demand letter to the mortgagee... by certified mail, return receipt requested. The letter shall include good and sufficient evidence that the debt secured by the deed of trust was satisfied with good funds, and the expense of filing and recording the release was advanced.

The purpose of section 443.130 is to enforce the duty of the mortgagee to clear the mortgagor's title, so that the record is no longer encumbered. Ong Building Corp. v. GMAC Mortgage Corp. of Pennsylvania, 851 S.W.2d 54, 55 (Mo. App.1993). This statute is an enforcement mechanism for section 443.060.01, RSMo 2000, which requires a mortgagee to deliver a "sufficient deed of release of the security instrument" upon satisfaction of the instrument. Id. Section 443.130 is penal in nature, so it must be strictly construed. See BCI Corp. v. Charlebois Constr. Co., 673 S.W.2d 774, 780 (Mo. banc 1984). Therefore, any demand letter purporting to invoke section 443.130 should closely track the language of the statute to place the mortgagee on notice that the statutory demand is being made. See Lines v. Mercantile Bank, N.A., 70 S.W.3d 676, 679 (Mo.App.2002).

In this case, Countrywide asserts that the Garrs' letter did not place it on notice that section 443.130 was being invoked. This Court agrees. First, the Garrs demanded an "immediate release" of the deed of trust, rather than allowing for fifteen business days in which Countrywide could respond as allowed under the statute. In addition, the Garrs demanded that Countrywide record the deed of release, which is another action not required by the statute. Finally, reading the Garrs' letter as a whole, nothing places Countrywide on notice that the Garrs are making a demand under section 443.130, whether directly, by reprinting, citing, or referencing, or otherwise.

The Garrs rely on Martin v. STM Mortgage Co., 903 S.W.2d 548, 550 (Mo.App. 1995) for the proposition that the statutory demand need not consist of any particular...