Osbourne v. Capital City Mortg. Corp.

• Decision Date: 13 November 1995
• Docket Number: No. 93-CV-1653.,93-CV-1653.
• Citation: 667 A.2d 1321
• Parties: Larry J. OSBOURNE, et al., Appellants, v. CAPITAL CITY MORTGAGE CORPORATION, Appellee.
• Court: D.C. Court of Appeals

667 A.2d 1321

Larry J. OSBOURNE, et al., Appellants, v. CAPITAL CITY MORTGAGE CORPORATION, Appellee.

No. 93-CV-1653.

District of Columbia Court of Appeals.

Argued September 15, 1995.

Decided November 13, 1995.

Paris A. Artis, Washington, DC, for appellants.

Eric J. Sanne, Chevy Chase, MD, for appellee.

Before TERRY, FARRELL and RUIZ, Associate Judges.

FARRELL, Associate Judge:

This appeal is from an order granting summary judgment to appellee Capital City Mortgage Corporation in a suit by appellants Larry and Sandra Osbourne for breach of contract and other claims relating to a loan transaction between the parties. The Osbournes contend that, contrary to the conclusions of the trial judge: (1) the record presents triable issues of fact on their claims of breach of contract and unfair and deceptive trade practices; (2) the deed of trust did not permit Capital City to advance superior trust payments to a previous note holder and charge interest on them; and (3) the Osbournes had standing to maintain an action for breach of the obligation to release the deed of trust and for misrepresentation of the payoff amount. We reverse and remand the order granting summary judgment on the breach of contract claim to the extent that it alleges accounting errors and overcharging by Capital City, as well as on the claims for breach of the obligation to release trust, misrepresentation, and unfair and deceptive trade practices under D.C.Code §§ 28-3312 & -3904 (1991). We affirm the trial court's legal ruling that the contract permitted Capital City to forward payments to the first note holder, to add those amounts to the debt and to charge interest at the contract rate on the additional principal.

I.

On November 6, 1986, the Osbournes executed a note in favor of Capital City for the principal loan amount of $10,000, with interest accruing at 24% per annum and monthly payments of $220.48. The note was secured by a deed of trust which conveyed the Osbournes' property at 2618 10th Street, N.W., to trustees for the benefit of Capital City and its successors. The same property was security for a prior loan on which the Osbournes owed $506 per month (the record does not reveal the principal amount). In order to safeguard Capital City's rights in the property, the Osbournes agreed in the note to make monthly payments on the superior loan directly to Capital City, which in turn would forward the payments to the superior note holder. Capital City interpreted the note and deed of trust as permitting it to advance payments to the superior trust in the event the Osbournes missed a payment, and to add any such payments to the principal balance and charge interest thereon.

On March 27, 1989, Capital City issued a Notice of Foreclosure Sale based on the Osbournes' failure to make $13,014.55 in payments, including interest and accrued charges. The Osbournes negotiated with First Government Mortgage & Investors Corporation to refinance the Capital City loan as well as some additional debt. First Government was to succeed to Capital City's second trust position. First Government hired Mid-Atlantic Title, Inc., to conduct the title search and loan settlement. Michael Perry, president of Mid-Atlantic, was in charge of the settlement scheduled for May 23, 1989.

Prior to settlement, First Government requested a statement from Capital City as to the total amount required to pay off the Osbourne note. In a letter dated May 10, 1989, Capital City stated that the "approximate" payoff amount through June 1, 1989, was $24,346.51. The letter disclaimed the accuracy of the amount, which was "subject to final audit," and advised First Government to contact the auctioneer, Goldsten Realty, "for the amount of auctioneer's fees and attorney's fees that must be paid in addition to the payoff amount." First Government forwarded the payoff letter to Perry, who (in deposition) could not say whether anyone in his office called Goldsten to determine the amount of auctioneer's fees.

On May 31, 1989, Mid-Atlantic hand-delivered to Capital City a check for $24,346.51, which did not include auctioneer's fees, and a Certificate of Satisfaction/Deed of Release. On that same day, Goldsten Realty issued an invoice to Capital City for auctioneer's fees of $2285.60 from the foreclosure sale that had been cancelled. Capital City paid Goldsten Realty on June 2, 1989, and posted the amount on the Osbournes' account, precluding release of the deed of trust. The Osbournes made no further payments to Capital City after May 1989.

At a time prior to July 7, 1989, Perry became aware that Capital City would not release the deed of trust because of an outstanding advertising fee. He wrote to Capital City requesting "an explanation for the $2500 advertising fee." The record does not disclose Capital City's response, or whether Perry took any additional steps to resolve the situation. Capital City meanwhile continued to charge interest on the unpaid balance (the record does not reveal what that balance was or how it squared with the $24,346.51 payment) and to send the Osbournes monthly statements reflecting overdue payments. Presumably Capital City also continued making payments to the first note holder, adding those additional amounts to the principal and charging interest at the contract rate. According to Mr. Osbourne, when he inquired about the overdue payment notices, Capital City told him the statements were mistakes and "to disregard them."

In or around August 1990, Capital City initiated a second foreclosure action against the Osbourne property. On September 11, 1990, prior to the commencement of a foreclosure sale, Perry communicated to Capital City Mid-Atlantic's desire to purchase the Osbourne note and requested a payoff statement. Mid-Atlantic subsequently purchased the note for $12,108.28. When the Osbournes failed to pay Mid-Atlantic on the note, they were notified by Mid-Atlantic that they were in default and that failure to cure the default would result in foreclosure. Rather than cure the default, the Osbournes countered with a four-count complaint against Capital City alleging breach of contract, breach of the obligation to release the trust, misrepresentation of the payoff amount, and unfair and deceptive trade practices. While Mid-Atlantic had threatened to foreclose, it subsequently agreed to postpone its foreclosure action until this suit revealed "who owed what." Capital City answered the Osbournes' complaint and moved to dismiss the complaint for failure to state a cause of action. The trial judge agreed to treat the motion as one for summary judgment and invited Capital City to supplement the motion. Eventually the judge granted summary judgment to Capital City on all counts. The Osbournes filed a motion for reconsideration, which was denied by the court on November 16, 1993. This appeal followed.¹

II.

In reviewing a grant of summary judgment, we apply the same standard as does the trial court in considering the motion. Byrd v. Allstate Ins. Co., 622 A.2d 691, 693 (D.C.1993). Summary judgment is appropriate where the facts submitted to the trial court "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Super.Ct.Civ.R. 56(c); Holland v. Hannan, 456 A.2d 807, 814 (D.C. 1983). In considering the motion as it related to the breach of contract claim, the trial judge viewed that count as setting forth two groups of claims, one containing factual issues and the other only a legal issue. First, the Osbournes alleged accounting errors and the imposition of excess charges on their account. Second, they challenged Capital City's authority under the deed of trust to advance superior trust payments and charge interest on the advanced sums as principal. Considering the first group of claims, the trial judge found no factual support for a triable issue on the allegations of accounting errors and excess charges. Concerning the second claim, the judge concluded, as a matter of law, that the deed of trust and promissory note gave Capital City authority to make advances and charge interest on them. We will address the judge's conclusions in turn.

A.

Capital City, as the moving party, has the burden of showing that no material fact is in dispute. Clay Properties, Inc. v. Washington Post Co., 604 A.2d 890, 893 (D.C. 1992) (en banc); Holland, 456 A.2d at 815. Only after the requisite showing has been made by Capital City does the burden shift to the Osbournes to show "`sufficient evidence supporting the claimed factual dispute... to require a jury or judge to resolve the parties' differing versions of the truth at trial.'" Clay Properties, 604 A.2d at 894 (quoting First Nat'l Bank of Arizona v. Cities Service Co., 391 U.S. 253, 288-89, 88 S.Ct. 1575, 1592-93, 20 L.Ed.2d 569 (1968)); Landow v. Georgetown-Inland W. Corp., 454 A.2d 310, 313 (D.C.1982). To the extent described below, Capital City failed to meet its initial burden.

In count one of the complaint, the Osbournes alleged, without specification, that Capital City had breached its contract with them and acted in bad faith by failing to account properly for various payments and charges and by overcharging them in general. Capital City responded by submitting, as part of its summary judgment motion, a reconstructed and admittedly unauthenticated accounting "which accurately reflects the entries made on defendants' Exhibit 3, an authenticated copy of plaintiffs' loan ledger with Capital City." The reconstruction was supported by an affidavit of David Richardson, Capital City's account administrator, in which he averred that the reconstruction "truly and accurately reflects all entries on Exhibit 3," excepting some erroneous entries that were immediately voided. The Osbournes were unable to present any documentation, aside from some overdue payment notices reflecting amounts owed on the note at various times, to support their...