Stearns Bank, N.A. v. Dozetos

• Decision Date: 10 July 2014
• Docket Number: No. A14A0106.,A14A0106.
• Citation: 328 Ga.App. 106,761 S.E.2d 520
• Court: Georgia Court of Appeals
• Parties: STEARNS BANK, N.A. v. DOZETOS, et al.

328 Ga.App. 106

761 S.E.2d 520

STEARNS BANK, N.A.

v.DOZETOS, et al.

No. A14A0106.

Court of Appeals of Georgia.

July 10, 2014.

Avery Singleton Jackson, Carrollton, Robert B. Wooldridge, William Emery Underwood, for Appellant.

James Paul Blum Jr., Leonard L. Franco, Atlanta, for Appellee.

DOYLE, Presiding Judge.

This case arises from a 2008 action to quiet title as to approximately 14 acres of land known as 2441 Branch Road, Monroe County, Georgia, filed by Keith and Lori Dozetos. Specifically named in the action were, inter alia, Keith's mother, Bea Nickelson; Earl C. Mitchell, Jr., d/b/a BBS Construction Company; and E–Bank, the predecessor in interest to the current appellant, Stearns Bank, N.A. (“the Bank”). In addition to the petition to quiet title, the Dozetoses alleged fraud, breach of contract, and unjust enrichment against Nickelson.¹

In response to the Dozetoses' action, Nickelson filed an answer, cross-claims, and counter-claims against the Dozetoses and E–Bank, alleging that she held legal title to the property. E–Bank filed an answer, and after E–Bank was taken into receivership by the Federal Deposit Insurance Corporation and its assets assigned to the Bank, the Bank asserted various counter-claims and cross-claims against Nickelson and the Dozetoses based on its purported security interest in the property for the payment of construction funds totaling $144,000 provided by the Bank to Mitchell to build a home on the property for the Dozetoses. The Bank appeals the trial court's sua sponte grant of summary judgment in favor of Nickelson, which awarded her title to the property and cancelled all encumbrances on the property.² For the reasons that follow, we reverse and remand for further proceedings.

“On appeal from the denial or grant of summary judgment the appellate court is to conduct a de novo review of the evidence to determine whether there exists a genuine issue of material fact, and whether the undisputed facts, viewed in the light most favorable to the nonmoving party, warrant judgment as a matter of law.” ³

The record reveals that in 1998, Keith Dozetos bought the approximately 14–acre property, but in February 2002, he used the property as collateral to borrow at least $8,000 from his mother, Nickelson.⁴ Pursuant to their verbal agreement, Dozetos issued a quitclaim deed to Nickelson, but the deed did not memorialize the full agreement and appeared on its face to be a conveyance of absolute title. Nickelson admitted that the quitclaim deed issued to her on the property was meant to constitute a security interest for repayment of the loan. Keith contended that within one and a half years of the February 2002 conveyance he repaid the $8,000, which he maintained was the only loan secured by the deed, but Nickelson refused to deed the property back to him as she had agreed to do. Nickelson, on the other hand, contends that several other amounts totaling $38,000 were also included in the agreement, and the loan was never fully repaid. She also admitted that the Dozetoses maintained a trailer on the property from as early as 2002 and that many of the sums she advanced the Dozetoses were intended for them to develop the property for building their home.

Because Nickelson refused to re-deed the property to him, Keith forged a quitclaim deed purportedly from Nickelson to his wife, Lori, in 2006.⁵ In early February 2007, Lori contracted with Carter Mitchell for construction of a home on the property whereby Lori transferred the property to Mitchell via a quitclaim deed, which title Mitchell used to secure a construction loan to build the home. In early March 2007, Mitchell obtained a $100,000 construction loan from E-bank for which Mitchell executed a deed to secure debt against the property. Construction on the home began, and later that year, in June 2007, the loan was modified to $125,000; it was modified again in August 2007 to $140,000.

Nickelson learned of the forged quitclaim deed in June 2007—approximately two months after the document was recorded and two months before completion of the house.⁶ In February 2008, the Dozetoses filed the instant quia timet action. The trial court determined that because Keith had forged the quitclaim deed, Nickelson was the title holder of the property and Stearns' lien could not be asserted against the property because Lori, and thus Mitchell, had no interest in the property to encumber the property as security for the loan.

Stearns contends that the trial court erred by granting summary judgment to Nickelson based on its finding that the quitclaim deed from Nickelson to Lori was a forgery.

As an initial matter, it is undisputed that the quitclaim deed purporting to transfer title of the property from Nickelson to Lori is a forgery. And “a forged deed [will] not operate to convey a good title to the grantee therein or persons holding under him; nor would the good faith of a subsequent holder suffice to make such conveyance a good transfer of title.” ⁷ Nevertheless, Stearns argues that questions of material fact remain as to whether, prior to the forgery, Nickelson had an interest in the property because it is undisputed that Keith provided the deed to her in security of a loan. Stearns supports its argument with this proposition of law:

A deed or bill of sale, absolute on its face and accompanied with possession of the property, shall not be proved, at the instance of the parties, by parol evidence to be a mortgage only, unless fraud in its procurement shall be the issue to be tried. The converse is equally true, that a deed absolute on its face not accompanied with possession of the property may be proved by parol evidence to be a mortgage only.⁸

Generally speaking, the intent of the parties must be determined from the deed's text alone, and extrinsic evidence will be admitted to interpret the deed only where the deed's text is so ambiguous that its meaning cannot be determined through application of the ordinary rules of textual construction. Absent such ambiguity, there is no question of fact to be resolved by the factfinder.... [If] the language of a written instrument is clear and unambiguous, the courts must enforce it as written rather than giving effect to the subjective and unexpressed intentions and understandings of one party.” ⁹

That said, in this case, we have a grantor of a facially absolute quitclaim deed who remained in possession of the property. Nickelson did not dispute that this quitclaim deed was given to secure a debt on the property. ¹⁰ Nor did she dispute the contention that the Dozetoses were in physical possession of the property after Keith conveyed the property to her.

Here, the record establishes that both Nickelson and Keith understood the quitclaim deed he issued to her to be given in security for a debt and that upon repayment of the debt, title would be returned to Keith.¹¹ Therefore, the trial court erred by failing to find that Nickelson had only a security interest in the property.¹² The only remaining question with regard to Nickelson's interest is what the full amount of the debt was (between $8,000 and $38,000) and whether Keith satisfied his obligation to Nickelson.¹³ It remains for the trial court to make this finding. ¹⁴

The trial court also determined that the nature of the quitclaim deed between Keith and Nickelson was not an issue because even if Nickelson's interest had merely been a security interest, Stearns' claims for an equitable lien, unjust enrichment, or quantum meruit would fail because it emanated from the forged deed giving title to Lori. But this conclusion is also erroneous. There is evidence that would support a finding that Keith knew of the loan and construction, and therefore, even if the loan was made to Mitchell and even if the construction contract was between Lori and Mitchell, those facts would not preclude Stearns' claims against Keith, who orchestrated the entire transaction.¹⁵ Thus, the trial court erred by finding that Stearns' claims were precluded on that basis and by failing to make a determination of Nickelson's remaining security interest, if any, in the property.

Judgment reversed and case remanded for further proceedings consistent with this opinion.

MILLER and DILLARD, JJ., concur.

1. The Dozetoses' claims against Mitchell and various other parties are not pursued in this appeal.

2. The Bank initially appealed this case to the Georgia Supreme Court, which transferred the case in an order entered August 12, 2013, to this Court pursuant to the doctrine set forth in Graham v. Tallent, 235 Ga. 47, 49, 218 S.E.2d 799 (1975), holding that “[c]ases respecting title to land” constitute “actions at law ... in which the plaintiff asserts a presently enforceable legal title...