Solley v. Navy Fed. Credit Union, Inc.

Citation723 S.E.2d 597,397 S.C. 192
Decision Date01 February 2012
Docket NumberNo. 4937.,4937.
CourtCourt of Appeals of South Carolina
PartiesBarbara SOLLEY, Respondent/Appellant, v. NAVY FEDERAL CREDIT UNION, INC., Appellant/Respondent.


George P. Sibley, III, of Richmond, VA; Mark B. Bierbower, of Washington, D.C.; R. Thayer Rivers, Jr., of Ridgeland; and Stephen A. Spitz, of Charleston, for Appellant/Respondent.

Jared Sullivan Newman, of Port Royal, for Respondent/Appellant.


Barbara Solley filed suit for conversion, slander of title, and negligence against Navy Federal Credit Union (the Bank) after Jimmy L. Mullins, Sr., with whom she owned a house, obtained a mortgage on the house from the Bank without her knowledge. The Bank was held in default after it failed to answer Solley's complaint. After the special referee required Solley to elect the theory of damages, she proceeded with slander of title and was awarded damages, including punitive damages. Solley appeals the special referee's requiring her to elect her remedy prior to the damages hearing, failing to find she was a consumer under federal regulations, and not allowing her to reform her complaint to conform to the evidence and issues actually tried. The Bank appeals arguing the default judgment should be vacated because Solley failed to plead the elements for slander of title. The Bank also argues the special referee committed several errors in awarding damages because Solley did not establish she suffered any damages; she did not establish its conduct was willful, wanton, or reckless; and the punitive damages are excessive compared to the actual damages. We affirm in part, reverse in part, and remand.


In 2000, Solley and Mullins 1 purchased a house in Jasper County from Solley's sister.2 Solley's sister gifted Solley the equity in the home, which Solley believed to be approximately $100,000 at the time. Solley and Mullins obtained financing of $100,000 from the Bank to satisfy her sister's outstanding mortgage. Mullins and Solley satisfied that mortgage in 2005 or 2006.

In April of 2006, without Solley's knowledge, Mullins obtained another loan from the Bank on the home amounting to $233,000.3 The Bank recorded the mortgage with the Register of Deeds in Jasper County. Solley learned of the mortgage in December 2007 and hired an attorney, who contacted the Bank. On January 14, 2008, Mullins filed an action against Solley for partition. Mullins was incarcerated at the time, and his sister filed the action via his power of attorney. On February 13, 2008, Solley filed an answer and counterclaim. She also filed a third-party complaint against the Bank, alleging conversion, slander of title, and negligence.

After being properly served, the Bank failed to timely respond and Solley moved for a judgment by default. On July 21, 2008, the court entered an order and entry of judgment against the Bank. The Bank did not pursue having the default set aside. The court severed the third-party action from the original action. The court referred the matter to a special referee to conduct the damages hearing. The Bank appeared at the hearing.

At the hearing, Solley testified that the mortgage had “destroyed [her] life.” She stated that she did not know “how to resolve the issue.” She could not have visitors because she did not know when she might be forced to leave and where she would go. She further testified that her son and grandchildren grew up in the home. Solley provided that she had not slept a night since this incident had begun and she lost her job, her family, and her grandchildren all because of the mortgage. She indicated she and Mullins had separated when he went to prison in January of 2008 and were no longer together. She testified she has no control over what Mullins will do with the mortgage, and this causes her to suffer from anxiety. She also stated she had to hire an attorney to resolve this matter and has had to expend costs in filing the lawsuit.

Solley offered Raymond Molony, a senior vice president at a different bank, to testify. Molony stated he had worked in the banking business since 1978 and had worked for a number of different banks. The special referee qualified him as an expert witness in banking and mortgages. Molony testified that if the Bank commenced a foreclosure action, it could foreclose on the entire piece of property. He further testified that if the Bank foreclosed and recovered enough funds to satisfy Mullins's mortgage and pay Solley for her interest in the property, she would still be evicted from the property.

A manager at the Bank, Laura Suzanne Hall, was also present at the damages hearing. Solley did not call Hall as a witness, but in response to questioning by the special referee, Hall indicated the mortgage was not in foreclosure. She also testified she did not know who closed the mortgage. She provided that normally “an attorney would go over the [d]eed.” She testified that the loan should have been closed by an attorney in South Carolina. The Bank conceded that no attorney's name was listed on the signature page of the loan.

The special referee found the Bank published a false statement by filing a mortgage Solley was not privy to upon property in which she was an undivided co-owner. The referee found the mortgage was a false statement because it is invalid as Solley does not owe the Bank a debt. The special referee further found malice by the Bank because it had previously accepted a joint mortgage on the property from Solley and Mullins and then recklessly accepted this singular mortgage.

The special referee noted that based on Solley's testimony, the home was worth around $200,000 at the time of the hearing. The referee found that had she wished to borrow against her interest in the home, the “mortgage would have either severely restricted her borrowing power or not enabled her to borrow at all.” Solley's expert testified Solley would likely not have been able to obtain a loan on the home due to Mullins's loan. Further, the referee determined the Bank was “entirely culpable for its conduct,” which lasted over three years and was still continuing. The referee noted the Bank was in the sole position to mitigate Solley's damages and made no attempt to do so. The referee found Solley presented ample evidence of the Bank's net worth, which allowed it to afford an award of punitive damages. The referee posited the award should punish the Bank and deter subsequent similar conduct by it and other lenders.

The special referee found Solley was entitled to special damages, including actual damages sufficient to satisfy the mortgage on the property and remove the impediment to her title. The referee also found she was entitled to punitive damages, “due to the egregious conduct” of the Bank. Accordingly, the referee awarded Solley $233,000 in actual damages and $400,000 in punitive damages.4 The Bank filed a motion for reconsideration and to set aside judgment pursuant to Rules 59(a),(e) and 60(b), SCRCP. Solley filed a motion for reconsideration of the election of remedies. The referee denied all motions. Both parties appealed.


“An action in tort for damages is an action at law.” Longshore v. Saber Sec. Servs., Inc., 365 S.C. 554, 560, 619 S.E.2d 5, 9 (Ct.App.2005). In an action at law, the appellate court corrects errors of law, but affirms the special referee's factual findings unless no evidence reasonably supports those findings. Roberts v. Gaskins, 327 S.C. 478, 483, 486 S.E.2d 771, 773 (Ct.App.1997). The trial court's findings are equivalent to a jury's findings in a law action. King v. PYA/Monarch, Inc., 317 S.C. 385, 389, 453 S.E.2d 885, 888 (1995). We must look at the evidence in the light most favorable to the respondents and eliminate from consideration all evidence to the contrary.” Sheek v. Crimestoppers Alarm Sys., 297 S.C. 375, 377, 377 S.E.2d 132, 133 (Ct.App.1989). Questions regarding credibility and weight of evidence are exclusively for the trial court. Id.


I. THE BANK'S APPEALA. Sufficiency of Solley's Complaint

The Bank argues Solley failed to plead several of the elements of slander and thus the judgment is void. Specifically, it contends the mortgage is not false and Solley did not plead malice, plead special damages, or allege the value of the property was diminished in the eyes of a third party. We find this issue unpreserved.

In Bardoon Properties, NV v. Eidolon Corp., 326 S.C. 166, 168, 485 S.E.2d 371, 372 (1997), the defendant's motion to set aside the default judgment was denied. After a damages hearing, the plaintiff was awarded damages. Id. Subsequently, the defendant filed a motion to reconsider in which it raised, for the first time, the plaintiff was not the real party in interest. Id. That motion was denied. Id. On appeal, this court held the defendant had waived any challenge to the plaintiff's status as the real party in interest by failing to object prior to the entry of default. Id. The supreme court found this court correctly held the issues raised by the defendant, not having been timely raised prior to the entry of default, were waived. Id. at 171, 485 S.E.2d at 374.

The Bank first raised this issue in its Rule 59(e), SCRCP, or in the alternative Rule 60(b), SCRCP, motion to reconsider and to set aside judgment, after damages were awarded and the default judgment had been entered, much like Bardoon. Accordingly, this issue is not preserved for our review.

B. Special Damages

The Bank argues Solley is not entitled to special damages because she did not plead them. It further contends she did not prove the damages and they are excessive. We agree in part.

The trial judge has considerable discretion regarding the amount of damages, both actual or punitive. Because of this discretion, our review on appeal is limited to the correction of errors of law. Our task in reviewing a damages award is not to weigh the evidence,...

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