Glew v. Ohio Savings Bank
| Decision Date | 17 July 2007 |
| Docket Number | No. 20051092.,20051092. |
| Citation | 2007 UT 56,181 P.3d 791 |
| Parties | Jordan GLEW, Maureen Glew, James R. Nichol, and Joan P. Nichol, Plaintiffs, Counterclaim Defendants, and Appellees, Superior Title Company of Utah, Additional Counterclaim Defendant, v. OHIO SAVINGS BANK, Defendant, Counterclaimant, Third-Party Plaintiff, and Appellant, v. Metro National Title Company, Third-Party Defendant. |
| Court | Utah Supreme Court |
Richard A. Rappaport, Leslie Van Frank, Thomas J. Burns, Salt Lake City, for plaintiffs.
George A. Hunt, Salt Lake City, for defendant.
INTRODUCTION
¶ 1 In this appeal, Ohio Savings Bank challenges the outcome of a bench trial. Ohio Savings claims that it, as the holder of a $271,000 bridge loan note, was entitled to full payment of the note despite the fact that the makers of the note, James and Joan Nichol, had already directed the payoff proceeds to the soon-to-be-bankrupt FirstPlus Financial, Inc., which had transferred the note to Ohio Savings after originating it. The trial court, however, ruled that the doctrines of equitable estoppel and apparent authority provided legal justification for the Nichols' decision to pay FirstPlus. We affirm.
¶ 2 When the Nichols bought their Sandy, Utah home, they had not yet found a buyer for the home in which they then resided. Like many homebuyers, the Nichols anticipated financing much of the purchase price of their new home with the proceeds from the sale of their prior residence. Because the Nichols could not realize these proceeds until their home was sold, they acquired a bridge loan from FirstPlus for $271,000 (Bridge Loan Note). To secure the Bridge Loan Note, the Nichols granted, in favor of FirstPlus, a trust deed on the home from which they were moving. With the funds from the Bridge Loan Note, the Nichols completed the purchase of their new home. FirstPlus also provided the financing for a first mortgage on their new home in the form of a thirty-year note (Thirty-Year Note) secured by a trust deed on the new home. The Nichols executed the notes and trust deeds for the Thirty-Year Note and the Bridge Loan Note at the closing on their new home held on July 14, 1998. At the closing, FirstPlus also executed, in favor of Ohio Savings, assignments of the trust deeds that secured the Bridge Loan Note and the Thirty-Year Note. Ohio Savings is a secondary market lender, which routinely purchases loans from correspondent lenders, like FirstPlus, throughout the country. The assignments were recorded with the Salt Lake County Recorder's office on August 4, 1998.
¶ 3 FirstPlus gave the Nichols several notices that explained how the assignments to Ohio Savings affected the Nichols. First, FirstPlus provided the Nichols letters advising them that Ohio Savings would be servicing both of the loans. The letters mandated that all inquiries about the loans be made by reference to the loan number. Each letter contained a space designated for the appearance of the Ohio Savings loan number. The spaces were blank.
¶ 4 Second, the Nichols received a "Notice of Assignment, Sale or Transfer of Servicing Rights" for each loan. Both notices contained the representation that
[d]uring the 60-day period following the effective date of the transfer of loan servicing, a loan payment received by the original mortgage lender in a timely fashion may not be treated by the new loan servicer as late, and a late fee may not be imposed.
However, the notices for the two loans differed in one respect: the notice for the Bridge Loan Note stated that the transfer date to Ohio Savings was September 1, 1999, while the transfer date for the Thirty-Year Note was September 1, 1998.
¶ 5 In addition, the Nichols received disclosure documents for each loan, which similarly explained that a payment made to the original servicer within sixty days of the effective date of transfer of loan servicing would not be treated as late by the new servicer.
¶ 6 After the closing, Ohio Savings apparently discovered the date error in the Bridge Loan Note transfer date and requested that payment be directed to it under the assignment commencing September 1, 1998. It returned the Bridge Loan Note and the first of the three notifications—the one providing that Ohio Savings would be servicing the loan—to FirstPlus on August 21, 1998, so that FirstPlus could obtain the Nichols' signatures to amend the documents. The Nichols complied with the request to amend the transfer date, and Ohio Savings received the signed amended documents on September 15.
¶ 7 Around the first of September, Mrs. Nichol began efforts to make her first payment on the Thirty-Year Note. Under the terms of the notices the Nichols had received concerning the assignment of the loan to Ohio Savings, the Nichols were to begin sending payments to Ohio Savings in September. Mrs. Nichol began her inquiries into where to direct her payment because Ohio Savings had yet to provide the Nichols with a loan number. Mrs. Nichol called Ohio Savings' toll-free telephone number several times in an attempt to obtain a loan number, but she was unsuccessful. Ohio Savings representatives repeatedly told her not to send any money without a loan number. On September 16, 1998, an Ohio Savings representative told Mrs. Nichol not to send a payment without a loan number and that she should contact FirstPlus and make the payment to it. On that same day, Mrs. Nichol sent FirstPlus a payment on the Thirty-Year Note.
¶ 8 During the summer of 1998, the Nichols found a buyer for their prior home. A closing on the sale was scheduled for September 17, 1998, at Metro National Title Company. The Bridge Loan Note was to be paid off at the closing. On September 3, 1998, Metro National faxed a payoff request signed by Mrs. Nichol to Ohio Savings that made reference to the fast-approaching closing date. Following up on the payoff request, Metro National's representative, Aaron Turner, called Ohio Savings. He was told that the loan was not in Ohio Savings' computer system and that Ohio Savings could not help him. Mr. Turner pressed the issue, insisting that the loan was with Ohio Savings and asked to speak with a supervisor. A person then came to the phone, identified himself as a manager, and told Mr. Turner that Ohio Savings could not provide a payoff statement and that he should contact FirstPlus.1
¶ 9 As the closing date approached, Metro National asked Mrs. Nichol to renew her attempt to obtain the payoff information from Ohio Savings. Mrs. Nichol called Ohio Savings on September 14 and was again told that Ohio Savings did not have the loan, that she should not send any money to Ohio Savings without a loan number, and that she should deal with the original lender. Mrs. Nichol told Metro National's escrow officer about her conversation with Ohio Savings, saying that Ohio Savings had told her to make the payoff to FirstPlus.
¶ 10 On September 17, Metro National contacted FirstPlus and requested a payoff statement for the Bridge Loan Note. FirstPlus complied and faxed the statement to Metro National.
¶ 11 The trial court found that, taken together, these events warranted Metro National and the Nichols' reliance and justified them in directing the payoff for the Bridge Loan Note to FirstPlus.
¶ 12 The closing on the sale of the Nichols' previous home took place as scheduled on September 17, 1998. On September 18, 1998, Metro National sent the bridge loan payoff check to FirstPlus and requested release of the trust deed that secured the Bridge Loan Note.
¶ 13 On either September 17 or 18, 1998, Ohio Savings wired funds to FirstPlus to complete the purchase of the Thirty-Year Note and the Bridge Loan Note. The Thirty-Year Note and the Bridge Loan Note became active in Ohio Savings' servicing computer on September 21, 1998. Sometime after that date, Ohio Savings sent the Nichols a letter containing a loan number for the Thirty-Year Note and advising them that their first payment to Ohio Savings would come due on November 1, 1998. At the same time, the Nichols received a similar letter from Ohio Savings providing them with the loan number for the Bridge Loan Note.
¶ 14 Despite receiving payment from Ohio Savings for the Bridge Loan Note, FirstPlus did not forward Ohio Savings the final payment of the loan made by the Nichols. Instead, it kept the money and filed for bankruptcy.
¶ 15 Ohio Savings commenced a nonjudicial foreclosure of the trust deed on the Bridge Loan Note against the Nichols' former home, which had been bought by Jordan and Maureen Glew. The Glews demanded that Ohio Savings release the trust deed on the Glew home from the Bridge Loan Note. Ohio Savings refused, and the Glews and the Nichols sued.
¶ 16 After a bench trial, the trial court entered extensive findings of fact and conclusions of law. The court concluded that, under the doctrines of apparent authority and equitable estoppel, Ohio Savings was estopped from arguing that the check the Nichols sent to FirstPlus did not pay the Bridge Loan Note in full.
¶ 17 The trial court anchored its ruling that Ohio Savings was equitably estopped from asserting that the Nichols were obligated to pay it instead of FirstPlus in numerous factual findings. As noted above, the court found that when Metro Title and the Nichols contacted Ohio Savings to inquire about paying off the Bridge Loan Note, Ohio Savings directed the Nichols to FirstPlus. The trial court also found that it was reasonable for the Nichols to rely on these representations and on the written statements provided at the closing in making the payoff to FirstPlus. The trial court linked its determination that Ohio Savings ceded apparent authority to FirstPlus to receive the Nichols' payoff of the Bridge Loan Note to the communications among Metro Title, Mrs. Nichol, and Ohio Savings during which Ohio Savings directed Metro Title and Mrs....
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