Jefferson v. American Financial Group, Inc.
| Decision Date | 03 May 2005 |
| Docket Number | No. ED 84471.,ED 84471. |
| Citation | 163 S.W.3d 485 |
| Parties | LeeAnna JEFFERSON, Appellant, v. AMERICAN FINANCIAL GROUP, INC., d/b/a The Mortgage Source, et al., Respondent. |
| Court | Missouri Supreme Court |
Scott Donald Mosier, St. Louis, MO, for Appellant.
Robert Edward Metzler, St. Louis, MO, for Respondent.
LeeAnna Jefferson (Jefferson) appeals from the judgment on her claim for breach of fiduciary duty by American Financial Group, Inc, d/b/a the Mortgage Source (Mortgage Source). The trial court found in favor of Jefferson and awarded actual damages in the amount of $8,352.00. Jefferson contends the trial court erred in (1) failing to award punitive damages where there was sufficient evidence of legal malice on the part of Mortgage Source, and (2) awarding only broker's fees of $8,352.00 where there was evidence to support an award of loss of equity and the amount of increased payment. The judgment is affirmed in part and remanded in part.
In July of 1998, Jefferson purchased a home and financed the purchase through Old Kent Mortgage with a thirty-year fixed rate mortgage on the principal amount of $112,195.74 at an interest rate of 7.75 percent. Jefferson paid $883.24 per month on the mortgage, which included escrow for taxes and insurance. In 1999, Jefferson sought to refinance after falling behind on her mortgage payments. Jefferson ultimately contacted Mortgage Source to assist her in refinancing her home. Jefferson completed a loan application where all her financial information was disclosed, including the fact that Jefferson was delinquent on her mortgage payments to Old Kent Mortgage because she had given money to her children leaving her financially unable to make her payments. Mortgage Source then sought an appraisal of the property by William A. Thomas (Thomas). Mortgage Source requested an appraisal in the amount of $170,000.00. Jefferson had informed Mortgage Source that at the time she purchased the home, the home was appraised for $120,000.00. Thomas submitted an appraisal valuing the property at $174,000.00.
After the closing date had been delayed several times, a closing date was set for August 24, 1999. At the closing, Jefferson first learned the terms of the refinancing. Jefferson stated she was not informed of the precise terms of the refinancing prior to the closing. Jefferson's monthly mortgage payments increased from $883.24 to $1,304.65, an increase of $421.41 per month. The new monthly payment did not include escrow for taxes and insurance as requested by Jefferson. The loan procured by Mortgage Source was a variable rate loan with an initial interest rate of 10.8 percent on the principal amount of $139,200.00. Upon learning the terms of the new loan that were not previously disclosed to her, Jefferson testified she was "distraught" upon learning those terms at the closing. Jefferson was told that if she could make the first six months' payments, Mortgage Source would refinance, her home for a lower interest rate at that time. After six months of struggling to make her mortgage payments, Jefferson contacted Mortgage Source to refinance her home. Mortgage Source subsequently told Jefferson they would be unable to refinance her home as it had promised.
Jefferson brought suit against Mortgage Solutions for breach of fiduciary duty and negligence, and against Thomas for fraudulent appraisal and negligent appraisal.1 The trial court found Mortgage Solutions had breached its fiduciary duty to Jefferson.2 The trial court awarded Jefferson actual damages in the amount of $8,352.00, the amount of the broker's commission paid to Mortgage Source. The trial court further found that Mortgage Source's actions did not warrant an award of punitive damages. Jefferson now appeals.3
In her first point, Jefferson contends the trial court erred in failing to award her punitive damages. Jefferson maintains there was sufficient evidence to show legal malice on the part of Mortgage Source and thus, she was entitled to punitive damages. We disagree.
The trial court found Mortgage Source breached its fiduciary duty (1) by obtaining an appraisal that was unreasonably inflated, (2) by obtaining a loan in a principal amount, interest rate, and monthly payment that it knew Jefferson could not pay, and (3) by failing to keep Jefferson fully informed and by making representations regarding future refinancing that it knew or should have known would not occur.4 The trial court found that the representations made by Mortgage Source that it would get Jefferson a better interest rate after six months were false and that Mortgage Source failed to act in good faith and with reasonable skill, care, and diligence for the benefit of Jefferson. Relying on the trial court's finding, Jefferson contends that the trial court erred in failing to award punitive damages where there was evidence to support such an award as reflected in the trial court's findings.
Punitive damages are an extraordinary remedy and should be applied sparingly. Norber v. Marcotte, 134 S.W.3d 651, 662 (Mo.App. E.D.2004). Whether evidence is sufficient to warrant punitive damages is within the discretion of the trial court. Vermillion v. Pioneer Gun Club, 918 S.W.2d 827, 833 (Mo.App. W.D.1996). Punitive damages are recoverable for actual or legal malice. Id. Malice is "the doing of a wrongful act intentionally without just cause or excuse." Id. (citing Ruppel v. Ralston Purina Co., 423 S.W.2d 752, 757 (Mo.1968)). To justify punitive damages, there must be some element of wantonness or bad motive. Vermillion, 918 S.W.2d at 833.
After a review of the record, while we are disturbed by Mortgage Source's conduct, we cannot say there was sufficient evidence that Mortgage Source must have acted with malice. While Mortgage Source told Jefferson at the closing that it would refinance her loan in six months and did not do so when the time came, there was no evidence that at that time of the closing Mortgage Source did not intend to perform the future refinancing or that Mortgage Source had a bad motive. Thus, the trial court did not abuse its discretion in denying punitive damages. Point denied.
In her second point, Jefferson argues the trial court erred in failing to award damages for loss of equity and increased payments. Jefferson claims there was sufficient evidence to support an award of damages for loss of equity and increased payments based on the terms of Jefferson's new loan and those damages were not speculative. We agree.
In reviewing a court-tried case, we will affirm the judgment unless it is not supported by the evidence, it is against the weight of the evidence, or it erroneously declares or...
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