Poppen v. Residential Mortg. Services, Inc.

• Decision Date: 12 November 1996
• Docket Number: No. A-95-625,A-95-625
• Citation: 5 Neb.App. 115,556 N.W.2d 49
• Parties: Bradley L. POPPEN and Laurie L. Poppen, Appellees, v. RESIDENTIAL MORTGAGE SERVICES, INC., a Nebraska Corporation, Appellant.
• Court: Nebraska Court of Appeals

Page 49

556 N.W.2d 49

5 Neb.App. 115

Bradley L. POPPEN and Laurie L. Poppen, Appellees, v. RESIDENTIAL MORTGAGE SERVICES, INC., a Nebraska Corporation, Appellant.

No. A-95-625.

Court of Appeals of Nebraska.

Nov. 12, 1996.

Syllabus by the Court

1. Judgments: Appeal and Error. In a bench trial of a law action, the trial court's factual findings have the effect of a jury verdict and will not be set aside on appeal unless they are clearly erroneous.

2. Judgments: Appeal and Error. When reviewing a question of law, an appellate court reaches a conclusion independent of the lower court's ruling.

3. Contracts: Parol Agreement: Consideration. A written executory contract may be modified by the parties thereto at any time after its execution and before a breach has occurred, without any new consideration, and the terms of a written executory contract may be changed by a subsequent parol agreement before a breach thereof.

4. Damages: Appeal and Error. A fact finder's determination of damages is given great deference on appeal.

5. Damages: Proof. The party seeking recovery has the burden of proving damages with as much certainty as the case permits.

6. Damages: Proof. Damages must be proven with a reasonable degree of certainty and exactness.

7. Breach of Contract: Damages. In a breach of contract action, the ultimate objective of a damages award is to put the injured party in the same position that the injured party would have occupied if the contract had been performed.

8. Breach of Contract: Loans: Damages: Interest. The measure of damages for a breach of contract to lend money is usually the difference between the contract interest rate and the increased interest rate the borrower is obliged to pay in procuring a new loan.

Donald L. Stern and Arnold J. Stern, of Stern & Stern, Omaha, for appellant.

Russell S. Daub, Omaha, for appellees.

Before MILLER-LERMAN, C.J, and HANNON and MUES, JJ.

MUES, Judge.

INTRODUCTION

Bradley L. Poppen and Laurie L. Poppen sued Residential Mortgage Services, Inc. (RMS), alleging that RMS breached its contract to provide a 7-percent interest rate on the Poppens' mortgage and, instead, provided said mortgage with an 8-percent interest rate. From a judgment against RMS for $18,966, RMS appeals.

FACTUAL BACKGROUND

RMS is a mortgage broker company. It enters into agreements to provide mortgages to prospective borrowers at a specified interest rate, provided a loan closes within a Bradley, an accountant and the chief financial officer for an Omaha company, met with Gary Nachman, president of RMS, in mid-August 1993 to discuss a 30-year fixed interest rate loan regarding a newly constructed home. On August 31, 1993, the Poppens and Nachman entered into a written agreement in which RMS agreed to provide a 30-year fixed interest loan at a rate of 7 percent. The agreement provided that "[t]he rate and discount points are both guaranteed for a period of 180 days expiring Mar[ch] 1, 1994." It further provided that after this date, the rate and discount points would "float" until 3 days prior to closing, at which time they would automatically be locked according to the current market rate or 7 percent, which-ever was higher. It also stated that "[i]n consideration of ... $1320.00, Residential Mortgage Services, Inc. shall grant the ability to re-lock your rate and or points one additional time within sixty (60) days of your anticipated closing date." Finally, the agreement provided that its provisions could not be modified or amended except in writing.

specified time period. It then sells the mortgages to lending institutions.

Despite this written agreement, Bradley contends that Nachman orally agreed, during August 1993, to provide this 7-percent interest rate for an additional 10 days, for a total of 190 days. Nachman denies any discussion regarding an additional 10 days occurred.

In November 1993, Bradley contacted RMS to discuss the 10-day extension and spoke with a loan processor, Donna Jorgensen. Bradley offered the following typed message, which is a transcribed message left by Jorgensen on Bradley's answering machine on November 24, 1993: "Hey, Brad, this is Donna from Residential. Gary called in this morning and I asked him about that 10 day leeway, and he said there shouldn't be a problem with that on your lock-in extension...."

Due to a builder's delay, Bradley contacted Nachman on January 10 or 11, 1994, requesting another extension. Nachman agreed to guarantee the 7-percent interest rate for an additional 30 days for $330. Laurie, also an accountant, delivered a check in that amount on January 11, 1994, and received a receipt which stated, "Extended lock." A memorandum written by Laurie on her check stated, "30 day rate lock ext. -till 4/10/94." Nachman did not become aware of this notation until he was sued in this matter. The Poppens increased their loan from $132,000 to $135,200 in approximately February 1994.

Bradley testified that he had other conversations with Nachman on March 29 and 30, 1994, in which Nachman offered him $5,000 and a return of lock fees if Bradley would accept an 8-percent interest rate; however, Bradley never agreed to such terms. Nachman denies any such conversations took place.

At this time, the anticipated closing date for the Poppens' house was March 31, 1994. Bradley testified that on March 30, 1994, he learned from Jorgensen that the Poppens would not be able to close upon their house because permanent power had not been hooked up. According to Nachman, his attempts to get Commercial Federal Mortgage Corporation to waive this closing requirement were unsuccessful. Nachman testified that he spoke with Bradley on March 30 to tell him that his lock would expire and that while RMS could provide the Poppens a no-cost loan at 8 percent, a loan at 7 percent would cost between $5,000 and $6,000. Bradley denies any such conversation occurred.

The Poppens closed their loan on April 8, 1994. It was at this time, Bradley alleges, that he was first made aware that the loan was for 8 percent rather than 7 percent. Kathryn Tippery, escrow closer for Classic Title Company, testified that the Poppens were surprised and angry when learning of the 8-percent rate. Tippery then contacted RMS, and although she does not recall whom she spoke to, she thinks it was Jorgensen. Jorgensen, however, does not recall speaking to anyone from Classic Title on that day. According to Tippery, the RMS representative told her that the lock-in at 7 percent was good until April 10, 1994. Tippery noted this on a fax cover sheet, and this sheet was admitted into evidence. Tippery further attested that she was told by the RMS representative that the 8-percent rate was caused by the Poppens' failure to comply with a 48- The Poppens filed suit on May 10, 1994. A second amended petition was filed on September 2 in which the first cause of action asserted that RMS breached its contract to provide a loan at 7 percent until April 10. In their second cause of action, the Poppens alleged deceptive trade practices on the part of RMS. The Poppens requested damages in the amount of $18,966 and attorney fees.

hour notice provision required by Commercial Federal. In fact, upon Bradley's request, Nachman had spoken with Commercial Federal, and this notice requirement had been waived. Nevertheless, without proper authorization to adjust the interest rate, the Poppens closed their loan on April 8, 1994, under protest, at 8 percent.

Following a trial on April 25 and 26, 1995, the trial court found for the Poppens on their first cause of action and for RMS on the second cause of action. Specifically, the court found that the original lock-in period set to expire on March 1, 1994, had been extended an additional 10 days pursuant to the phone call from Jorgensen to Bradley on November 24, 1993. The court also found that on January 11, 1994, the parties extended the lock-in agreement for another 30 days, from March 10 until April 10.

ASSIGNMENTS OF ERROR

RMS asserts that the trial court erred in finding (1) that the alleged 10-day oral extension of the parties' written agreement was supported by consideration, (2) that the memorandum on the Poppens' check dated January 11, 1994, was binding upon RMS, and (3) that the Poppens sustained their burden of proof as to the extent of their damages and the correct method of calculation.

STANDARD OF REVIEW

In a bench trial of a law action, the trial court's factual findings have the effect of a jury verdict and will not be set aside on appeal unless they are clearly erroneous. Hill v. City of Lincoln, 249 Neb. 88, 541 N.W.2d 655 (1996); Lee Sapp Leasing v. Catholic Archbishop of Omaha, 248 Neb. 829, 540 N.W.2d 101 (1995). However, when reviewing a question of law, an appellate court reaches a conclusion independent of the lower court's ruling. Lee Sapp Leasing, supra; Dolan v. Svitak, 247 Neb. 410, 527 N.W.2d 621 (1995).

DISCUSSION

Consideration.

In its first assigned error, RMS asserts that the trial court erred in finding that the 10-day oral extension on November 24, 1993, of the parties' written agreement was supported by consideration. RMS contends that because this agreement was not supported by consideration, it is invalid and, therefore, that the Poppens' lock-in period ended prior to April 8, 1994.

In fact, it is not clear from the trial court's comments that it found consideration with regard to this 10-day extension. The Poppens argue that the $330 provided consideration to support both the 30-day extension and the earlier 10-day extension. Contrary to the Poppens' position, the trial court clearly viewed the $330 as payment for 30 days rather than 40. The Poppens make no other argument regarding this issue. Deferring to the trial court's factual findings that an oral agreement took place in which both parties mutually assented to extending the lock-in period 10 days, such an agreement was a modification to the parties'...