McKinley v. Lamar Bank, No. 2002-CT-0270-SCT.

• Decision Date: 01 December 2005
• Docket Number: No. 2002-CT-0270-SCT.
• Citation: 919 So.2d 918
• Parties: Jerald D. McKINLEY v. The LAMAR BANK, James S. Welch, Jr., and George Gunter.
• Court: Mississippi Supreme Court

Page 918

919 So.2d 918

Jerald D. McKINLEY v. The LAMAR BANK, James S. Welch, Jr., and George Gunter.

No. 2002-CT-0270-SCT.

Supreme Court of Mississippi.

December 1, 2005.

Lawrence E. Abernathy, III, John T. Kersh, Laurel, attorneys for appellant.

C. Stephen Seale, Amanda Clearman Waddell and S. Robert Hammond, Jr., Gulfport, Monica R. Morrison, Richard F. Yarborough, Jr., Jackson, attorneys for appellees.

EN BANC.

ON MOTION FOR REHEARING

CARLSON, Justice, for the Court.

¶ 1. The motion for rehearing is granted. The original opinion is withdrawn, and this opinion is substituted therefor.

¶ 2. Claiming, inter alia, that a bank had wrongfully commenced foreclosure proceedings on his property pursuant to a deed of trust which allegedly had previously been satisfied and canceled of record, Jerald D. McKinley commenced a suit for damages against the bank, the original holder of the deed of trust, and the bank's substituted trustee. The trial court granted summary judgment in favor of the defendants and entered a final judgment dismissing McKinley's case with prejudice. Aggrieved by the trial court's dismissal of his case, McKinley appealed, and his case was assigned to the Court of Appeals, which reversed the trial court's judgment and remanded this case for a jury trial. McKinley v. Lamar Bank, 918 So.2d 689 (Miss.Ct.App.2004). Upon a grant of George Gunter's petition for writ of certiorari, we find that the Court of Appeals erred; therefore, as to Gunter, we reverse the judgment of the Court of Appeals and reinstate and affirm the judgment of dismissal entered by the Circuit Court of Lamar County. However, since the Lamar Bank did not file a petition for writ of certiorari, nor join Gunter's cert petition, the Lamar Bank is not properly before us in today's case, and thus the judgment of the Court of Appeals as to the Lamar Bank is final.

FACTS AND PROCEEDINGS IN THE TRIAL COURT

¶ 3. The following facts are gleaned from the opinion of the Court of Appeals:

Jerald and Minnie McKinley purchased a home from James S. Welch, Jr. on May 25, 1990. The McKinleys executed a deed of trust and promissory note to Welch to secure financing of the home. The deed of trust secured a $50,000 indebtedness and provided for monthly payments in the amount of $482.40. It was recorded in the Forrest County Chancery Clerk's office on May 29, 1990.

On March 17, 1995, Welch recorded a photocopy of the original recorded deed of trust. The photocopy was denoted as a "Corrected Deed of Trust," in which a Bobbie B. Hudson replaced Welch as the beneficiary. On May 23, 1995, Hudson reassigned all of her interest in the deed of trust back to Welch. Additionally, on that same day, Welch assigned all of his interest in the deed of trust to Lamar Bank as collateral for a loan financed by the bank. Both of these assignments were filed in the clerk's office on June 6, 1995. It is noteworthy that the note from the McKinleys to Welch was assigned to Lamar Bank, but the bank never notified the McKinleys of the assignment. Apparently, the McKinleys continued making payments to Welch, with no payments ever being made to Lamar Bank. Further, the bank did not send the notice of foreclosure to the McKinleys.

Gunter testified by deposition that he never talked with Welch prior to initiating foreclosure proceedings. He took Lamar Bank's word that the McKinleys were in default on their promissory note to Welch. Lamar Bank said that Welch told it that the McKinleys were in default.

On July 5, 1996, Welch canceled the recorded deed of trust in which he was listed as the beneficiary. On May 19, 1997, he paid off the loan financed by Lamar Bank and, on the same day, assigned to the bank for a second time all of his interest in the McKinley deed of trust. This second assignment was security for a new loan. This assignment was filed on June 23, 1997.

In March 2001, McKinley defaulted on his promissory note to Welch. As a result, Lamar Bank appointed George Gunter as substitute trustee of the deed of trust and authorized Gunter to initiate foreclosure proceedings on McKinley's property. Apparently, McKinley was not notified of the impending foreclosure proceedings, for according to McKinley, he learned of the foreclosure proceedings from his son who had seen the published notice in the local newspaper. McKinley filed a Chapter 13 bankruptcy to interrupt the foreclosure proceedings. In response to the bankruptcy filing, Gunter terminated the foreclosure proceedings and took no further action in this regard. McKinley continued to live in the house without making any further payments until the house was destroyed by a fire in November 2001.

Id. at 690-91, ¶¶ 3-8 (footnotes omitted).

¶ 4. Asserting that the Lamar Bank, James S. Welch, Jr., and George Gunter initiated foreclosure proceedings against him on a deed of trust which Lamar Bank, Welch and Gunter knew had been satisfied and canceled of record, Jerald D. McKinley commenced this action against the Bank, Welch, and Gunter on May 18, 2001. In his six-count amended complaint filed on October 9, 2002, pursuant to an agreed court order allowing the amended complaint, McKinley charged the defendants with (1) extortion, (2) conversion, (3) slander and libel, (4) gross negligence or willful misconduct, (5) conspiracy, and (6) conduct justifying the award of punitive damages. After extensive discovery, McKinley filed a motion for partial summary judgment, and the Bank and Gunter filed separate motions for summary judgment. We note here that the record reveals that Welch failed to appear and defend this action, and Welch likewise never submitted any sworn testimony via deposition or otherwise.¹ In his motion for partial summary judgment, McKinley sought a judicial declaration that the "corrected deed of trust" recorded by Welch on March 17, 1995, and indicating Bobbie B. Hudson to be the beneficiary thereunder, was "void, and of no consequence or effect." On the other hand, in their respective motions for summary judgment, the Bank and Gunter sought a grant of summary judgment, in toto, thus dismissing this action against them.

¶ 5. In a thorough 15-page opinion and order Circuit Judge Michael R. Eubanks denied McKinley's motion for partial summary judgment and granted the motions for summary judgment filed by the Bank and Gunter. Likewise, on the same date, Judge Eubanks entered a final judgment consistent with the opinion and order, thus dismissing this action, with prejudice, pursuant to Miss. R. Civ. P. 54(b) and 58.

¶ 6. We find the trial court's detailed findings of fact to be critical to our disposition of this case; however, so as to not participate in an exercise of lengthy quotation of the trial court's findings of fact, we will summarize these findings which are not redundant to the findings of fact made by the Court of Appeals, as we have already noted through quotation. We begin by noting that while the Court of Appeals found that on July 5, 1996, Welch "canceled the recorded deed of trust in which he was listed as a beneficiary," the trial court found that Welch "attempted to cancel" the deed of trust. The trial court also found that (1) McKinley failed to make both the April, 2001 and May, 2001 payments to Welch; (2) on May 9, 2001, after learning of the foreclosure proceedings from his son, McKinley went to Gunter's office wanting to know the amount of money required to "get current on his house" and McKinley was informed by Gunter that the sum was $4,906.42, which included the arrearage, as well as publication costs and attorneys fees; (3) the foreclosure was scheduled to take place on May 18, 2001, but one day before the scheduled foreclosure, McKinley filed for Chapter 13 bankruptcy protection and Gunter, therefore, canceled the foreclosure proceedings so as to not violate the bankruptcy court's automatic stay; and, (4) on May 28, 2001, McKinley dismissed his bankruptcy proceedings, Gunter made no further attempts to foreclose on McKinley's property, and McKinley continued to live in his home while making no further payments pursuant to the promissory note and deed of trust.²

¶ 7. The trial court also detailed McKinley's version of certain facts. As the trial court stated, McKinley recalled (as noted by his deposition testimony) that his used car dealership had purchased a $4,300 cashier's check from the Lamar Bank, payable to Welch, on April 16, 1999, but that McKinley did not remember purchasing the cashier's check. Also, while McKinley stated the purpose for purchasing the cashier's check was to use as a "cushion" in the event that he missed a payment (evidently claiming that Welch could "draw down" on this cashier's check when McKinley missed a payment), McKinley never discussed this "arrangement" with Welch. Nor was there any discussion as to how Welch should apply the $4,300, including whether Welch could simply apply the entire amount to the current balance on the note. Notwithstanding all of this, McKinley claimed that he could not be in default since Welch supposedly had available the sum of $4,300 from which to "deduct" any missed monthly payment. McKinley also never revealed this "cushion" to Gunter. McKinley also claimed that he had no further liability under the note and deed of trust after Welch canceled the deed of trust of record on July 5, 1996. McKinley attempted to undergird this assertion by stating that before his wife, Minnie, passed away in 1997, Minnie told McKinley not to worry about the house note, which he interpreted to mean that she had paid off the note. However, McKinley admitted that he was not aware of how Minnie could have generated the money to pay off the promissory note unless it happened to have come from her friend in Memphis, Tennessee, or a brother in Texas. The trial court noted, however, that this purported conversation between Minnie and McKinley occurred in June, 1997, almost a year after Welch had marked the deed of trust as canceled,...