McLean v. First Horizon Home Loan, Corp.

• Decision Date: 26 June 2012
• Docket Number: No. WD 74025.,WD 74025.
• Citation: 369 S.W.3d 794
• Parties: David C. McLEAN, et al., Respondents, v. FIRST HORIZON HOME LOAN, CORPORATION (f/k/a McGuire Mortgage Company), Appellant.
• Court: Missouri Court of Appeals

369 S.W.3d 794

David C. McLEAN, et al., Respondents,
v.
FIRST HORIZON HOME LOAN, CORPORATION (f/k/a McGuire Mortgage Company), Appellant.

No. WD 74025.

Missouri Court of Appeals,
Western District.

June 26, 2012.

[369 S.W.3d 797]

Thomas M. Hefferon, for Appellant.

R. Frederick Walters, for Respondents.

Before Division Two: GARY D. WITT, Presiding Judge, JOSEPH M. ELLIS, Judge and MARK D. PFEIFFER, Judge.

JOSEPH M. ELLIS, Judge.

First Horizon Loan Corporation ¹ appeals from the denial of its motion for entry of satisfaction of judgment and an award of attorney's fees entered in favor of counsel representing the plaintiff class in this matter. For the following reasons, the judgment is affirmed.

The underlying litigation was filed by David and Holly McLean in the Circuit Court of Jackson County in November 2000 against First Horizon alleging violations of the Missouri's Second Mortgage Loans Act, §§ 408.231 ² et seq. The circuit court subsequently certified the matter as a class action. Eventually, in February 2007, the parties agreed to a comprehensive class action settlement. On June 7, 2007, the court entered its Final Order and Judgment approving the settlement, incorporating by reference the terms of the 33–page Settlement Agreement executed by the parties.

Under the terms of the Settlement Agreement, claims were to be submitted by class members to a Settlement Administrator, who determined whether the claims were valid and notified counsel of her decisions. First Horizon was permitted to challenge submitted claims by notifying class counsel within 90 days of the court's final approval of the settlement, or September 5, 2007. The Settlement Agreement provided that First Horizon could challenge claims based upon the calculated benefit amount and/or the validity of the claim, including alleged deficiencies in the claim form and eligibility for benefits on a bankruptcy loan. The Settlement Agreement further provided that all challenges to claims were to be made “in good faith” and include a “reasoned explanation.” If the parties were unable to informally resolve the challenges, the challenges were to be submitted to a Special Master for resolution. The Settlement Agreement stated that “[o]nce a challenge is resolved, the validity and amount of the Claim shall be adjusted or approved accordingly, without right of further challenge or appeal.”

The Settlement Agreement also provided that “[a]lthough the Court shall enter a judgment, the Court shall retain jurisdiction over the interpretation, effectuation, enforcement, administration, and implementation of this Agreement.” The trial court's judgment similarly stated that the

[369 S.W.3d 798]

court “retains exclusive jurisdiction of all matters related to the interpretation, administration, implementation, effectuation and enforcement of the Settlement and of the Settlement Agreement.”

On September 5, 2007, First Horizon challenged 1,588 of the approximately 2,600 claims submitted by class members, asserting over 4,200 separate challenges to those claims. Those challenges were asserted on two general grounds: (1) the claim forms were incomplete for various reasons and, therefore, invalid, or (2) class members had bankruptcy loans and the bankruptcy trustee had not filed a separate claim form and, therefore, class members were not entitled to a full settlement benefit. After the parties were unable to informally resolve most of the challenges, the challenges were submitted to two different Special Masters. The Special Masters subsequently found in favor of First Horizon on 62 of its challenges but denied all of the rest.

On December 4, 2007, First Horizon filed a Motion for Court Interpretation of Settlement Agreement and Enforcement of Judgment in the circuit court challenging various determinations by the Special Masters. First Horizon argued that the Special Masters' resolution of the challenges “create [d] additional obligations under the Settlement Agreement and Judgment and [was] in complete contravention of what the Agreement and Judgment say.” The plaintiffs opposed that motion, asserting that the court lacked jurisdiction because the Special Masters' rulings were final and binding and not subject to further challenge or appeal under the terms of the Settlement Agreement. They further claimed that, pursuant to Rule 75.01, the court lost jurisdiction over the matter thirty days after the entry of its final judgment because no post-judgment motions had been filed. On June 30, 2008, the circuit court entered a “judgment” granting the motion to interpret and finding that the Special Masters' rulings were proper and consistent with the Settlement Agreement.

First Horizon appealed, and the plaintiffs cross-appealed. On appeal, this Court determined that the circuit court had erred in entertaining First Horizon's motion to interpret the Settlement Agreement. We held that “the circuit court's attempt to retain jurisdiction after the judgment became final for purposes other than enforcement of the judgment, as well as [language to that effect] in the Settlement Agreement, is contrary to Rule 75.01 and has no effect.” McLean v. First Horizon Home Loan Corp., 277 S.W.3d 872, 879 (Mo.App. W.D.2009). We struck those provisions from the judgment and Settlement Agreement. We further noted that “[t]he provisions [were] not necessary to retain the court's inherent power to enforce its judgment, including the terms of the Settlement Agreement.” Id. The case was remanded to the circuit court with directions to dismiss First Horizon's motion. Id.

After this Court's opinion was handed down, First Horizon issued payment on the outstanding claims. On December 4, 2009, First Horizon filed a motion requesting an entry of satisfaction of judgment. The Plaintiffs opposed First Horizon's motion, and Plaintiffs' counsel filed Class Counsel's Motion for Fees and Expenses Caused by First Horizon's Bad Faith, asserting that 2,034 of First Horizon's challenges had been made in bad faith. Class Counsel asserted that the court could assess sanctions against First Horizon and award Class Counsel attorney's fees based upon the court's inherent authority. The circuit court denied First Horizon's motion for an entry of satisfaction of judgment and granted Class Counsel's motion, entering

[369 S.W.3d 799]

judgment against First Horizon and in favor of Class Counsel in the amount of $462,038.12.

In its first point, First Horizon contends that the circuit court had no legal authority to deny its Rule 74.11(c) motion for entry of satisfaction of judgment because all of the payments required under the judgment/settlement agreement had been paid. Rule 74.11(a) provides: “When any judgment or decree is satisfied otherwise than by execution, the judgment creditor shall immediately file an acknowledgement of satisfaction.” “If a judgment creditor who has received satisfaction of a judgment fails to acknowledge such satisfaction immediately, any interested person may apply to the court where the judgment was entered for an order showing satisfaction.” ³Rule 74.11(c).

A circuit court's ruling on a Rule 74.11(c) motion is “to be reviewed the same as any other judge-tried case, under the standard set forth in Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976).” Rhodus v. McKinley, 71 S.W.3d 191, 195 (Mo.App. W.D.2002). “As such, we will affirm the orders of the trial court unless there is no substantial evidence to support them, they are against the weight of the evidence, or they erroneously declare or apply the law.” Id. Furthermore, “[w]e will not reverse the trial court's judgment if there is no showing of prejudice as a result of that judgment.” McAllister v. McAllister, 101 S.W.3d 287, 291 (Mo.App. E.D.2003).

Class Counsel opposed First Horizon's Rule 74.11(c) motion, asserting that an order of satisfaction should not be entered because First Horizon had failed to satisfy the provision in the settlement agreement incorporated in the judgment that required parties to act in good faith in challenging class member claims and that the court should enter an award of attorney's fees as sanctions against First Horizon. Class counsel claimed that First Horizon had demonstrated bad faith by intentionally filing thousands of meritless objections to claims at the last minute, thereby leaving counsel with an extremely limited amount of time in which to respond to avoid waiving those claims and requiring counsel to perform an exceptional amount of additional legal work. The circuit court granted Class Counsel's motion and entered an award of $462,038.12 in fees and expenses. The circuit court denied First Horizon's Rule 74.11(c) motion but specifically stated that the motion could be re-filed and would be granted after the $462,038.12 attorney's fees award had been paid.

Even if an order of satisfaction was warranted...