Luken v. BancBoston Mortg. Corp.
| Decision Date | 19 April 1991 |
| Citation | 580 So.2d 578 |
| Parties | James B. LUKEN and Gertrude Luken v. BANCBOSTON MORTGAGE CORPORATION. 89-1001. |
| Court | Alabama Supreme Court |
Myron K. Allenstein and Charles C. Hart, Gadsden, for appellants.
T. Thomas Cottingham III and Paul P. Bolus of Burr & Forman, Birmingham, for appellee.
The plaintiffs, James B. and Gertrude Luken, appeal from a summary judgment entered in favor of the defendant, BancBoston Mortgage Corporation. 1
In 1979, the Lukens purchased a house in Boaz, Alabama, for $26,800. In order to finance the purchase of the house, the Lukens borrowed the amount of the purchase price from BancBoston; the loan was secured by a mortgage on the house and land. The Veterans Administration guaranteed payment to BancBoston of up to 60% of the amount of the loan.
The Lukens paid on the loan for six years. In August 1985, the Lukens sold the house to Alexander Leps. At the time of the sale, the remaining balance on the note secured by the mortgage was $23,375.57. Leps assumed the mortgage and payment of the note, and the Lukens remained personally liable for payment on the note in the event Leps did not meet his obligation.
In October 1985, the house, which was insured by Allstate Insurance Company, was partially destroyed by fire. As compensation for the loss, Allstate issued a check jointly to Leps (the mortgagor) and BancBoston (the mortgagee), in the amount of $21,547.56. The remaining balance on the note to BancBoston at that time was $23,311.48. According to the terms of the mortgage, BancBoston could apply the insurance proceeds to the reduction of the indebtedness or to the restoration or repair of the damaged property. Of the insurance proceeds, BancBoston applied $14,047.56 to the reduction of the indebtedness and released $7,500 to Leps so that he could restore the house to its original condition.
In February 1986, Leps requested additional funds from BancBoston to complete the restoration of the house. After independent inspection of the restoration progress, BancBoston refused to disburse additional funds to Leps until it was satisfied with the rate of progress of the restoration. Subsequently, Leps abandoned the property and made no more payments on the note. A foreclosure sale resulted in a deficiency of $8,360.91 for BancBoston. BancBoston sought and received a deficiency payment in that amount from the Veterans Administration. The Veterans Administration notified the Lukens of their obligation to pay the deficiency in the event Leps did not do so. The Lukens applied to the Veterans Administration for a waiver of payment. In August 1988, the Veterans Administration denied the request. The Lukens appealed from that decision by filing a "Notice of Disagreement." In April 1989, the Lukens received a document from the Board of Veterans Appeals in Washington, D.C., styled "In the Appeal of James B. Luken," in which their request for a waiver was seemingly denied. However, in May 1989, the Lukens received a letter from the Veterans Administration Regional Office and Insurance Center in St. Paul, Minnesota, stating that their appeal had been certified to the Board of Veterans Appeals in Washington, D.C., for a final decision. Since then, the Lukens have received no final decision from the Veterans Administration in this matter, nor have they made any deficiency payments to the Veterans Administration.
The Lukens filed an action in Etowah Circuit Court against BancBoston, alleging in three counts that, in paying $7,500 to Leps for restoration costs, BancBoston (1) breached a fiduciary duty to the Lukens, (2) breached a duty to conduct business in a reasonable manner, and (3) breached the mortgage contract. Bancboston filed a motion for summary judgment. In their response to that motion, the Lukens conceded that the first count was without merit, but they argued that counts two and three should be submitted to a jury. The trial court entered a summary judgment as to all counts, and, thereafter, denied the Lukens' motion for a new trial and their motion to alter, amend or vacate that judgment. The Lukens appeal from the summary judgment as to counts two and three.
In its motion for summary judgment and in its brief on appeal, BancBoston argues that the summary judgment was proper for several reasons. BancBoston first argues that because the Veterans Administration has not yet notified the Lukens of its final decision and because the Lukens have not paid the amount of the deficiency to the Veterans Administration, the Lukens have suffered no damages. Unless and until the Board of Veterans Appeals renders a final decision ordering the Lukens to pay the amount of the deficiency, BancBoston...
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