Grant v. Nationstar Mortg.

• Docket Number: 2023-UP-264,Appellate Case 2019-001732
• Decision Date: 12 July 2023
• Parties: Kathleen A. Grant, Dylan T. Grant, Devin D. Grant, and Andrea J. Grant, Appellants, v. Nationstar Mortgage, LLC, Respondent.
• Court: South Carolina Court of Appeals

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Kathleen A. Grant, Dylan T. Grant, Devin D. Grant, and Andrea J. Grant, Appellants, v. Nationstar Mortgage, LLC, Respondent.

No. 2023-UP-264

Appellate Case No. 2019-001732

Court of Appeals of South Carolina

July 12, 2023

THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.

Heard December 5, 2022

Appeal From Charleston County Bentley Price, Circuit Court Judge.

Daniel Scott Slotchiver and Stephen Michael Slotchiver, both of Slotchiver &Slotchiver, LLP, of Mount Pleasant; Jesse Sanchez, of The Law Office of Jesse Sanchez, of Charleston and Stephen A. Spitz, of A Business Law Firm, of Charleston all for Appellants.

Lawrence Michael Hershon, of The Hershon Law Firm, P.A., of Charleston, for Respondent.

PER CURIAM

In this declaratory judgment action, Appellants Kathleen A. Grant Dylan T. Grant, Devin D. Grant, and Andrea J. Grant (collectively, Appellants) seek review of an order of the circuit court finding that Respondent, Nationstar Mortgage LLC's (Nationstar) mortgage is a valid encumbrance on property owned by Appellants. Appellants argue the court erred in finding that: (1) the current action is an action at law; (2) Nationstar had no duty to benefit the remaindermen; and (3) the life tenant had the authority to mortgage the property. We affirm as modified.

FACTS

On June 25, 1987, Roberta R. Grant (Roberta) purchased a property at 1 Wall Street, Charleston, South Carolina (the Property). On December 28, 1988, Roberta passed away and left her Last Will and Testament (the Will) granting her husband, David E. Grant (David), a life estate interest in the property. Under the terms of the Will, David was named as the executor of the estate and the trustee of the Will's testamentary trust, and Appellants were named as remaindermen.

At the time of Roberta's death, there were two mortgages-in the amounts of $50,000 and $110,000-on the Property. From May 2, 1990, to March 14, 2007, David refinanced and consolidated the existing mortgages on the property and executed new mortgages. The subject of this appeal is the March 14, 2007 mortgage executed and delivered to Countrywide Home Loans (Countrywide) in the amount of $625,000. On September 3, 2013, the mortgage was assigned to Nationstar. On July 3, 2016, David passed away and Appellant Kathleen Grant was appointed as the personal representative of his estate. As of July 16, 2019, the most recent appraisal valued the property at $1,100,000, and the remaining balance of the mortgage was $669,984.89.

On August 26, 2017, Appellants filed a declaratory judgment action asking the circuit court to declare whether the mortgage on the property was proper noting their position "that it was not proper or lawful to put permanent mortgages on the property". On August 14, 2019, the circuit court denied the requested relief, finding that "Nationstar's mortgage was a valid encumbrance on the Property both under the express terms of the Will and the testamentary trust created under the Will." This appeal followed.

STANDARD OF REVIEW

The parties disagree as to the proper standard of review in the present case. Appellants contend that the trial court erred in characterizing this action as an action at law. We agree.

The "[c]haracterization of an 'action as equitable or legal depends on the appellant's "main purpose" in bringing the action.'" Verenes v. Alvanos, 387 S.C. 11, 16, 690 S.E.2d 771, 773 (2010) (quoting Ins. Fin. Servs., Inc. v. S.C. Ins. Co., 271 S.C. 289, 293, 247 S.E.2d 315, 318 (1978)). "The main purpose of the action should generally be ascertained from the body of the complaint." Id. The "main purpose [is] reflected by the nature of the pleadings, evidence, and character of the relief sought." Lollis v. Dutton, 421 S.C. 467, 478, 807 S.E.2d 723, 728 (Ct. App. 2017) (quoting Fesmire v. Digh, 385 S.C. 296, 303, 683 S.E.2d 803, 807 (Ct. App. 2009)). "[W]hen necessary, resort may also be had to the prayer for relief and any other facts and circumstances which throw light upon the main purpose of the action." Sloan v. Greenville Cnty., 380 S.C. 528, 534, 670 S.E.2d 663, 667 (Ct. App. 2009). "[W]here the complaint states facts which would support either a legal or an equitable action, the relief demanded will ordinarily determine its character." Bramlett v. Young, 229 S.C. 519, 531, 93 S.E.2d 873, 879 (1956) (quoting 1 C.J.S. Actions, § 54).

"The construction of a will is an action at law. . . [but a]n action to construe or interpret a testamentary trust is equitable in nature." Holcombe-Burdette v. Bank of Am., 371 S.C. 648, 654-55, 640 S.E.2d 480, 483 (Ct. App. 2006). Further, "[a]ctions to foreclose or cancel an instrument are [also] actions in equity." Cody Disc., Inc. v. Merritt, 368 S.C. 570, 574, 629 S.E.2d 697, 699 (Ct. App. 2006).

The body of the complaint in the current action states in pertinent part:

This is a Declaratory Judgment Action filed pursuant to S.C. Code [Ann. § 15-53-10 (2017)]. It asks the Court to declare whether or not certain mortgages are valid vis-avis four remaindermen / remainderwomen who only recently came into possession of certain property in Charleston, South Carolina and discovered that the property they inherited is deeply encumbered by mortgages that may well not be entirely proper.

This action is filed specifically under S.C. Code Sections 15-53-20 and 15-53-30 and asks the [c]ourt to interpret various wills and to declare the meaning of those documents in light of the law [in relation] to the mortgages now on their property but placed there without their knowledge or consent.

(emphasis added). The prayer for relief "request[s] that the [circuit c]ourt inquire into this matter and determine whether or not the mortgages^[1] are indeed valid and lawful with regard to the [Appellants] in this case."

In Holcombe-Burdette, this court recognized that the differing standards of review between the interpretation of wills and trusts presented an "obvious conundrum" but declined to resolve the dilemma because it would not affect the outcome of that case. Holcombe-Burdette 371 S.C. at 655, 640 S.E.2d at 483. In the present case, the will and embedded testamentary trust present a similar conundrum. However, unlike the situation in Holcombe-Burdette, the Appellants' prayer for relief provides another consideration that we believe controls the analysis. See Bramlett 229 S.C. at 531, 93 S.E.2d at 879 ("[W]here the complaint states facts which would support either a legal or an equitable action, the relief demanded will ordinarily determine its character.") (quoting 1 C.J.S., Actions § 54). Because the prayer for relief asks the court to determine the validity of the mortgage, we find the character of the action is one in equity. See Cody Disc., Inc., 368 S.C. at 574, 629 S.E.2d at 699 ("Actions to foreclose or cancel an instrument are actions in equity.").

"In an action in equity, while this [c]ourt is free to take its own view of the preponderance of the evidence, this does not require us to disregard the findings of the trial judge who saw and heard the witnesses and, accordingly, was in a better position to judge their credibility." Id. at 574-75, 629 S.E.2d at 699.

LAW/ANALYSIS

I. David's Authority to Mortgage the Property

Appellants argue that the circuit court erred in finding that David had the authority to mortgage the property "as he saw fit" because David was authorized to mortgage the Property only to protect the interests of the remaindermen. We disagree.

Long-established South Carolina precedent dictates that a life tenant may execute a mortgage to the fullest extent of their life estate interest. See First Nat. Bank v. Hutson, 142 S.C. 239, 244, 140 S.E. 596, 597 (1927) (finding that a life tenant could mortgage her interest in a life estate even when her children had a remainder interest); see also Bethea v. Bass, 240 S.C. 398, 412, 126 S.E.2d 354, 360 (1962) (clarifying that a mortgage executed by a life tenant covers only his life estate interest and not a fee interest). This is particularly true when a will explicitly carves out a life estate interest with the power of disposition. See Johnson v. Waldrop, 256 S.C. 372, 375, 182 S.E.2d 730, 731 (1971) (finding that "a life estate, with the complete power to dispose and consume[,]" was a valid devise).

Article V, Section 1(d) of the Will defines the executor's rights and obligations in pertinent part:

My husband, David E. Grant, shall be obligated to invest and reinvest the properties from time to time constituting the assets of such life estate, in order to protect the remaindermen taking after him[,] and in furtherance of said obligation he shall have and possess full power and authority to mortgage or pledge all or any portion of such property, either realty or personalty, or both[,] in fee simple, absolutely, by warranty deed or otherwise, and such conveyance may be public or by private sale, and at such prices and upon such terms and conditions as he in his absolute discretion may deem most advantageous, taking into account the protection of remaindermen taking after him. All resulting proceeds shall continue to be properties of such life estate.

(emphases added). In David's capacity as trustee of the testamentary trust, the Will reaffirms his authority "[t]o borrow money for any purpose, either from [himself] or from others, and to mortgage or pledge any trust property[.]"

The above provisions reflect Roberta's unambiguous intent to grant David absolute discretion to mortgage the Property. The circuit court, in stating that David had the authority to mortgage the Property "as he saw fit," echoed this express language in the Will.

Appellants argue...