RCB Bank v. Stitt

• Court: United States State Court of Appeals of Oklahoma. Court of Civil Appeals of Oklahoma
• Writing for the Court: JOHN F. FISCHER, JUDGE
• Citation: RCB Bank v. Stitt, 2022 OK CIV APP 3, 116548, 116551, 117835 (Okla. Civ. App. Jan 05, 2021)
• Decision Date: 05 January 2021
• Docket Number: 116548,117835,116551
• Parties: RCB BANK, an Oklahoma Banking Association, Plaintiff/Appellee, v. KENT STITT, an individual; KENT D. STITT, Trustee of the 186th St. Land Trust #3240 under the provisions of a Trust Agreement dated June 29, 2007, Defendant/Appellant, and M. KEITH STITT & ASSOCIATES; OKLAHOMA TAX COMMISSION; BOARD OF COUNTY COMMISSIONERS, WASHINGTON COUNTY; and OCCUPANTS, if any, Defendants, M. KEITH STITT & ASSOCIATES, Plaintiff, v. KENT STITT, as Trustee of the 186th St. Land Trust; RCB BANK, and OKLAHOMA TAX COMMISSION, Defendants.

2022 OK CIV APP 3

RCB BANK, an Oklahoma Banking Association, Plaintiff/Appellee, v. KENT STITT, an individual; KENT D. STITT, Trustee of the 186th St. Land Trust #3240 under the provisions of a Trust Agreement dated June 29, 2007, Defendant/Appellant, and M. KEITH STITT & ASSOCIATES; OKLAHOMA TAX COMMISSION; BOARD OF COUNTY COMMISSIONERS, WASHINGTON COUNTY; and OCCUPANTS, if any, Defendants, M. KEITH STITT & ASSOCIATES, Plaintiff, v. KENT STITT, as Trustee of the 186th St. Land Trust; RCB BANK, and OKLAHOMA TAX COMMISSION, Defendants.

Nos. 117835, 116548, 116551

Court of Appeals of Oklahoma, Division II

January 5, 2021

Mandate Issued: 03/03/2022

APPEAL FROM THE DISTRICT COURT OF WASHINGTON COUNTY, OKLAHOMA HONORABLE RUSSELL C. VACLAW, TRIAL JUDGE

Scott P. Kirtley, Robert P. Skeith, RIGGS, ABNEY, NEAL, TURPEN ORBISON & LEWIS, Tulsa, Oklahoma, for Plaintiff/Appellee

John J. Carwile, MCDONALD, MCCANN, METCALF & CARWILE, LLP Tulsa, Oklahoma, for Defendants/Appellants

JOHN F. FISCHER, JUDGE

¶1 Kent Stitt (Kent) and Kent D. Stitt as Trustee of the 186th St. Land Trust #3240 (Trust) along with M. Keith Stitt &amp Associates (Keith), appeal the judgment entered in favor of RCB Bank in this mortgage foreclosure action. In the district court, both the Bank and Keith sued Kent and his Trust to collect unpaid promissory notes and to foreclose mortgages on property located in Washington County, Oklahoma, securing the payment of those notes. The district court granted the Bank's motion for summary judgment and also granted Keith's motion for summary judgment, in part. The parties' appeals have been assigned to the accelerated docket pursuant to Oklahoma Supreme Court Rule 1.36(b), 12 O.S.Supp. 2013, ch. 15, app. 1, and stand submitted without appellate briefing. The appeals have been consolidated. The district court's judgment provides that Kent's notes to both plaintiffs were in default and that both plaintiffs were entitled to foreclose their respective mortgages. However, the judgment also provides that the Bank's mortgage lien was superior to Keith's mortgage lien and entitled to be satisfied first from the sale of the mortgaged property. Oklahoma law resolves the priority issue in favor of the Bank because its mortgage lien was recorded before Keith recorded its mortgage lien. Because the Trust agreed that its Washington County property would secure all of Kent's debts when it signed the Bank's mortgage, the Bank is entitled to satisfy its entire judgment from that property. Finally, the Bank is not required to marshal Kent's assets and resort to other property on which it holds a mortgage before resorting to the Washington County property because, as between the Bank and Keith, there is no common debtor sufficient to invoke this equitable doctrine. The district court's judgment is affirmed.

BACKGROUND

¶2 This case involves competing mortgage foreclosure actions involving the same property located in Washington County Oklahoma, described as the southeast quarter of the southeast quarter of section 32, Township 23 North, Range 13 East, Washington County and "commonly known as 3240 E. 186th St. N., Skiatook, OK 74070." The Trust owned the property and granted both of the competing mortgages.

¶3 The Bank's lending relationship with Kent began on December 1, 2004, when Kent executed Note 8610 in the amount of $70, 850. The original of Note 8610 is not in the record. However, Kent admits that he executed Note 8610. Documents in the record show that Note 8610 was renewed on several occasions, the last renewal occurring on November 26, 2013, in the amount of $70, 850. A copy of the November 26 renewal of Note 8610 is in the record.

¶4 Also on December 1, 2004, Kent executed a mortgage securing the payment of Note 8610 and providing as collateral Government Lot 1, Section 5, Township 22 North, Range 13 East in Tulsa County, Oklahoma. On January 20, 2010, the parties executed a modification of that mortgage extending the due date to January 20, 2011.

¶5 On September 15, 2009, Kent executed Note 4997 in favor of the Bank in the amount of $117, 000. Kent acknowledged that Note 4997 was secured by three separate mortgages and assignments of rents dated September 15, 2009, on three separate properties located in Tulsa County. Those properties are generally described as the Gillette Avenue, Darlington Avenue and Admiral Court properties.

¶6 Regarding the Bank, the transaction involving the Washington County property appears to have begun on August 28, 2013, when Kent executed promissory Note 1374 in favor of the Bank in the amount of $85, 473.59. ^[1] On August 28, 2013, the Trust, as "Grantor," executed a mortgage in favor of the Bank. The mortgage was signed by Kent as trustee for the Trust and was recorded by the Bank on September 9, 2013. That mortgage expressly secured the payment of Note 1374 executed by Kent as "Borrower." In addition, a cross-collateralization provision in the mortgage also provided that the mortgage "secures all obligations, debts, and liabilities, plus interest thereon, of either Grantor [the Trust] or Borrower [Kent] to the Lender [Bank]."

¶7 Finally, Kent acting as trustee for the Trust executed a guaranty in favor of the Bank dated November 28, 2013. In that instrument, the Trust guaranteed repayment of Note 1374 and "any and all debts, liabilities and obligations" that Kent owed the Bank "under the Note [1374] and Related Documents."

¶8 Regarding Keith, the transaction involving the Washington County property appears to have begun on March 15, 2013. There is a mortgage dated that date signed by Kent as trustee for the Trust in favor of Keith that states it was acknowledged on March 25, 2013. The mortgage was granted by the Trust to secure a "Revolving line of credit" dated March 15, 2013, in the amount of $125, 000. The record also contains a promissory note from the Trust dated April 15, 2013, and payable to Keith. The note is signed by Kent as trustee for the Trust "on this 16th day of March 15, 2013" and was acknowledged on March 15, 2013. Keith recorded its mortgage on the Trust's Washington County property on October 23, 2013.

¶9 It is undisputed that all four of Kent's promissory notes involved in this case are in default. On June 10, 2015, the Bank sued to collect its three notes and to foreclose its mortgage on the Washington County property. On June 16, 2015, Keith filed a petition seeking to collect its note and foreclose its mortgage on the Washington County property. The cases were consolidated and both lenders filed motions for summary judgment. The district court granted the Bank's motion and Keith's motion and entered judgment in favor of each against Kent and the Trust. The judgment in favor of the Bank included all amounts due on Notes 1374, 8610 and 4997. In that judgment, the district court also determined that the Bank's Washington County mortgage had priority over Keith's mortgage and also found that the Bank's entire judgment could be satisfied from the proceeds of the sale of the Washington County property before any proceeds would be distributed to Keith.

¶10 Kent appeals the judgment in favor of the Bank but not the judgment in favor of Keith. ^[2] Keith appeals the judgment in favor of the Bank regarding the priority issue and the inclusion of the balance due on Notes 8610 and 4997 in the Bank's judgment. Keith also argues that the Bank was required to satisfy a portion of its judgment from its mortgage on Kent's Tulsa County properties before looking to the Washington County property. Finally, Keith appeals the denial of its motion to vacate the judgment in favor of the Bank.

STANDARD OF REVIEW

¶11 The procedure for summary judgment is set forth in 12 O.S.2011 § 2056. A motion for summary judgment "should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Id. The de novo standard controls an appellate court's review of the district court's order granting summary judgment. Carmichael v. Beller, 1996 OK 48, ¶ 2, 914 P.2d 1051. De novo review involves a plenary, independent, and non-deferential examination of the trial court's rulings of law. Neil Acquisition, L.L.C. v. Wingrod Inv. Corp., 1996 OK 125, n.1, 932 P.2d 1100.

¶12 The standard of review for a district court's ruling vacating or refusing to vacate a judgment is abuse of discretion. Wells Fargo Bank, N.A. v. Heath, 2012 OK 54, ¶ 7, 280 P.3d 328 (citing Ferguson Enters., Inc. v. H. Webb Enters., Inc., 2000 OK 78, ¶ 5, 13 P.3d 480). An abuse of discretion occurs "when discretion is exercised to an end or purpose not justified by, and clearly against, reason and evidence. It is discretion employed on untenable grounds or for untenable reasons, or a discretionary act which is manifestly unreasonable." Patel v. OMH Med. Ctr, Inc., 1999 OK 33, ¶ 20, 987 P.2d 1185.

ANALYSIS

¶13 The central issue in this appeal is whether the district court erred when it found that the Bank's Washington County mortgage was superior to Keith's Washington County mortgage and that the Bank was entitled to satisfy the entire amount of its judgment, including amounts due on Notes 8610 and 4997, before any proceeds from the sale of the Washington County property would be distributed to Keith. The determination of that issue requires construction of the Bank's mortgage and the cross-collateralization agreement contained in that mortgage.

I. Undisputed Facts

¶14 The necessary facts have been established in the summary judgment record and are not disputed.

1. On December 1, 2004, Kent executed promissory Note 8610 in favor of the Bank in the amount of $70, 850.

2. Also on

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