Soffra v. Shieldsboro Dev., Inc.

• Decision Date: 01 December 2020
• Docket Number: NO. 2019-CA-01335-COA,2019-CA-01335-COA
• Parties: Edward A. SOFFRA, Appellant v. SHIELDSBORO DEVELOPMENT, INC. and Nikki S. Tingstrom, Individually, Appellees
• Court: Mississippi Court of Appeals

314 So.3d 129

Edward A. SOFFRA, Appellant

v.SHIELDSBORO DEVELOPMENT, INC. and Nikki S. Tingstrom, Individually, Appellees

NO. 2019-CA-01335-COA

Court of Appeals of Mississippi.

December 1, 2020

Rehearing Denied March 30, 2021

ATTORNEY FOR APPELLANT: MICHAEL D. HAAS JR., Bay St. Louis

ATTORNEY FOR APPELLEES: NIKKI S. TINGSTROM (PRO SE)

BEFORE WILSON, P.J., LAWRENCE AND McCARTY, JJ.

WILSON, P.J., FOR THE COURT:

¶1. Nikki Tingstrom bought a home on Genin Street in Bay St. Louis from Edward Soffra. The sale was owner-financed. Tingstrom gave Soffra a down payment and a promissory note secured by a deed of trust. Less than six months later, Soffra sent Tingstrom a notice of default, which alleged that she had missed payments and threatened foreclosure. Tingstrom denied that she was in default, but Soffra eventually foreclosed on the property. Tingstrom then sued Soffra in chancery court, alleging wrongful foreclosure, breach of contract, and conversion. After trial, the chancellor found that Soffra had wrongfully foreclosed on the property, breached the duty of good faith and fair dealing, and committed the tort of conversion. The chancellor set aside the foreclosure, awarded compensatory and punitive damages, and cancelled the deed of trust.

¶2. On appeal, Soffra argues that the chancellor erred (1) by finding that he wrongfully foreclosed on the property; (2) by awarding excessive damages; (3) by both awarding damages and setting aside the foreclosure, "resulting in a dual recovery"; (4) by establishing a new payment plan for Tingstrom's remaining debt to Soffra; (5) by finding that he committed the tort of conversion; and (6) by awarding punitive damages without first making findings regarding his net worth. We affirm the chancellor's findings that Soffra wrongfully foreclosed on the property and converted Tingstrom's personal property. We also affirm the award of punitive damages. However, we reverse and remand the award of compensatory damages, as the amount awarded is not supported by evidence presented at trial. We also agree with Soffra that the chancellor erred by cancelling the parties’ deed of trust and establishing a new payment plan and new legal relationship between the parties. We reverse and remand for further proceedings on that issue as well.

FACTS AND PROCEDURAL HISTORY

¶3. On September 23, 2015, Tingstrom purchased a home on Genin Street in Bay St. Louis from Soffra. Tingstrom received a warranty deed in exchange for a $10,000 down payment and a promissory note for $75,000 secured by a deed of trust.¹ There was no interest on the promissory note. The note required Tingstrom to pay $600 on the 23rd of each month, beginning on October 23, 2015, with a balloon payment for the balance of the note due on September 23, 2020, or, at Tingstrom's option, September 23, 2022. Tingstrom testified that Soffra owner-financed the sale because the property was in such poor condition that no bank would finance it. She testified that she had spent more than $50,000 making improvements to the home, including more than $40,000 that she received under a disability insurance policy to make accommodations for her disability.

¶4. Tingstrom made the $10,000 down payment at the closing. Tingstrom testified that she next paid Soffra $600 in cash for her October 2015 mortgage payment. According to Tingstrom, they met in the parking lot of a bank, and Soffra signed a handwritten receipt for the cash.² At trial, Soffra claimed that the receipt was forged, and he denied that Tingstrom ever made her October 2015 payment. There is now no dispute that Tingstrom made all payments from November 2015 through January 2016.

¶5. Tingstrom testified that she mistakenly wrote a check on the wrong bank account for her February 2016 payment. She testified that she contacted Soffra when she realized her mistake but that he tried to cash the check anyway. The check bounced. On March 3, Tingstrom received a letter from Soffra's attorney notifying her that she was in default. The letter asserted that she had missed her January 2016 and February 2016 payments and owed a late fee for the January payment and attorney's fees. The letter demanded a total payment of $1,849.46 to bring the note current. The letter stated that Soffra would initiate foreclosure proceedings if payment was not made within thirty days.

¶6. Tingstrom responded to the letter and enclosed a cashier's check for $1,543.46. Her response detailed some of the problems she had experienced with Soffra. She stated that Soffra had changed the agreed upon method of payment, harassed her, trespassed on the property, and tampered with her mailbox. Tingstrom stated that the cashier's check was for the February 2016 payment plus fees for the returned check, the March 2016 payment, and 2015 property taxes. She denied that she had missed the January payment. Tingstrom stated that she would not pay attorney's fees because she was not in default. Tingstrom also enclosed cancelled checks showing her payments for November through January.

¶7. Soffra's attorney sent Tingstrom another letter on April 13, 2016, stating that Soffra had rejected Tingstrom's $1,543.46 cashier's check because it was insufficient. In this letter, Soffra claimed—for the first time—that Tingstrom had also failed to make her October 2015 payment. Soffra now claimed that Tingstrom owed $2,906.01—$600 payments for October 2015, February 2016, and March 2016; $319.46 in prorated property taxes; $7 in fees for the returned check; $24 for late fees on the October and February payments; $6.74 for certified mail; and $724.81 in attorney's fees. Enclosed with the letter was a notice for a foreclosure sale scheduled on May 12, 2016.

¶8. Although Soffra's April 13 letter did not mention it, Soffra apparently had realized by this point that Tingstrom had, in fact, made her January 2016 payment. Soffra admitted at trial that Tingstrom made her January 2016 payment. In addition, although Soffra's letter claimed that Tingstrom owed him for property taxes, Soffra had already received a letter from the closing attorney notifying him that he owed Tingstrom $847.18 for property taxes because he had underpaid his prorated property taxes at closing.

¶9. At trial, Tingstrom testified that she refused to pay attorney's fees because she had never been in default. Tingstrom asked an attorney she knew, Donald Rafferty, to help her make payments to Soffra. After the April letter and notice of foreclosure, Rafferty suggested that Tingstrom pay an amount to try to end the dispute. On May 12, 2016, Rafferty issued a check for $2,250 on behalf of Tingstrom to cover the February, March, and April 2016 payments, plus taxes and certain fees that Soffra claimed. Tingstrom testified that she just wanted to live in peace and denied that the payment was an admission that she was in default. The payment did not cover the disputed October 2015 payment or attorney's fees. Although the payment was not enough to cover the amount that Soffra alleged was due, Soffra cancelled the foreclosure sale.

¶10. On May 31, Soffra's attorney sent Rafferty a letter stating that there were only two unresolved issues between the parties: Soffra still maintained (1) that he had not received a payment in October 2015 (and that Tingstrom's receipt was a forgery) and (2) that Tingstrom owed him attorney's fees. The letter proposed a settlement of all issues that involved the hiring of a handwriting expert to examine the October 2015 receipt. The letter also advised Tingstrom that the May 2016 payment was due as of May 23. On June 17, 2016, Soffra accepted a check for $600, presumably for the May 2016 payment.

¶11. On August 12, 2016, Soffra's attorney sent Rafferty a letter notifying him that Tingstrom was in default by three payments: the still-disputed October 2015 payment plus the June and July 2016 payments. The letter rescinded any previous offer to settle and demanded full payment of all disputed payments and fees. The letter enclosed a notice of trustee's sale scheduled for September 9, 2016. On August 24, Rafferty sent a $600 check to Soffra's attorney, but Soffra rejected it as insufficient. On September 9, 2016, Soffra repurchased the property at the foreclosure sale for $70,000³ and received a substitute trustee's deed.

¶12. Tingstrom testified at trial that she never received notice of the trustee's sale. She testified that in October 2016, she received a complaint for eviction that Soffra had filed in justice court.⁴ Soffra acknowledged that the notice of default and notice of the trustee's sale were not mailed or delivered to Tingstrom. Soffra argued that his letter to Rafferty was sufficient because he believed that Rafferty represented Tingstrom. However, Tingstrom maintained that Rafferty was not her attorney and only acted as a "payment agent" because Soffra would not accept payments directly from her. Rafferty did not represent Tingstrom in chancery court, nor was he called as a witness.

¶13. Tingstrom continued occupying the property following the foreclosure. On December 6, 2016, she filed a complaint in chancery court for wrongful foreclosure. Her complaint alleged that Soffra had breached their contract by conducting a wrongful foreclosure, had breached the duty of good faith and fair dealing, and had committed the tort of conversion by charging her attorney's fees and other penalties. She sought to set aside the foreclosure and damages. Soffra answered and filed a counterclaim. There was no further action in the case until January 2018.

¶14. In April 2018, the chancellor entered an agreed order setting the case for trial in August and requiring Tingstrom to deposit $12,000 into the court registry. This amount represented the money Tingstrom owed to that date for monthly payments under the promissory note. The chancellor also ordered Tingstrom to begin making her $600 monthly payment, plus property taxes for the month, into Soffra's attorney's trust account. Tingstrom paid...