Thaxton v. Beneficial Mortg. Co.

• Decision Date: 01 August 2006
• Docket Number: No. 103,080. Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 4.,103,080. Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 4.
• Citation: 145 P.3d 124,2006 OK CIV APP 101
• Parties: John F. THAXTON, II and Annette Thaxton, Plaintiffs/Appellants, v. BENEFICIAL MORTGAGE CO. OF OKLAHOMA and Beneficial Oklahoma, Inc., Defendants/Appellees.
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

Page 124

145 P.3d 124

2006 OK CIV APP 101

John F. THAXTON, II and Annette Thaxton, Plaintiffs/Appellants, v. BENEFICIAL MORTGAGE CO. OF OKLAHOMA and Beneficial Oklahoma, Inc., Defendants/Appellees.

No. 103,080. Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 4.

Court of Civil Appeals of Oklahoma, Division No. 4.

August 1, 2006.

Appeal from the District Court of Tulsa County, Oklahoma; Honorable J. Michael Gassett, Trial Judge.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED FOR FURTHER PROCEEDINGS.

Timothy C. Janak, Tulsa, OK, for Plaintiffs/Appellants.

Dan M. Peters, Fuller, Tubb, Pomeroy & Stokes, P.C., Oklahoma City, OK, for Defendants/Appellees.

Opinion by DOUG GABBARD II, Presiding Judge.

¶ 1 Plaintiffs, John F. Thaxton II and Annette Thaxton, appeal an order of summary judgment granted in favor of Defendants, Beneficial Mortgage Co. (BMC) and Beneficial Oklahoma, Inc. (BOI). For the following reasons, we affirm in part, reverse in part, and remand for further proceedings.

FACTS

¶ 2 In July 1994, Dennis and Janet Bullock granted BMC a first mortgage on their real property to secure the payment of their loan with BOI. In May 1998, they granted BMC a second mortgage on their real property to secure the payment of another loan with BOI. In May 1999, they sold the real property to Plaintiffs. As part of this sales transaction Guaranty Abstract Co. obtained loan payoff information from BOI, paid off the balance of the mortgages, and requested releases, notifying BOI that, under Oklahoma law, it was required to release the mortgages within 50 days or suffer substantial penalties. BOI replied by letter, stating that it would release the mortgages.

¶ 3 In September 2000, Plaintiffs refinanced and discovered that the Bullock mortgages had not been released. Buffalo Abstract Co., on behalf of Plaintiffs, sent a fax to BOI, again requesting the release of mortgages and noting that it had "been well over 90 days" since payment. BOI sent a written reply admitting that both mortgages had been paid in full and that they would be released.¹

¶ 4 In November 2003, Plaintiffs again attempted to refinance. On November 7, 2003, they received a title opinion indicating that Defendants had still not released the mortgages of record. As a result, Plaintiffs allege that they were unable to refinance, defaulted on their note, and had a foreclosure action filed against them on December 4, 2003, by their mortgage holder, Green Tree Servicing. Shortly thereafter, Plaintiffs filed bankruptcy, and, on March 10, 2004, mailed a deed in lieu of foreclosure to Green Tree Servicing in an effort to settle the foreclosure action. However, Green Tree refused to accept the deeds because the mortgages had not been released. BOI eventually filed releases of both mortgages in the Office of the County Clerk of Tulsa County, Oklahoma, on April 23, 2004.

¶ 5 On July 29, 2004, Plaintiffs filed the present action against Defendants, setting forth two causes of action: First, violation of 46 O.S.2001 § 15, which requires mortgage holders to release their mortgage within 50 days of full payment, and, if not, then 10 days after written notice by the mortgagee, the mortgagee may file a civil action for damages equaling one percent of the principal debt not to exceed $100 per day for each day the release is not recorded; Second, the tort of intentional infliction of emotional distress. Plaintiffs sought damages in excess of $10,000 for violation of the statute, loss of equity in the property, damage to their credit, and severe emotional distress.

¶ 6 On October 6, 2005, after generally denying liability, Defendants filed a motion for summary judgment arguing three propositions: First, that Plaintiffs' cause of action under § 15 accrued on October 6, 2000, and was barred by the one-year statute of limitations set forth in 12 O.S. Supp.2005 § 95(4); Second, that Plaintiffs' suit failed to state a cause of action under § 15 because the notice given to Defendants was from a third party, not Plaintiff, and the second mortgage was never paid in full; Third, § 15 sets forth an exclusive remedy and, therefore, Plaintiffs' second cause of action for intentional infliction of emotional distress was barred.

¶ 7 Plaintiffs responded that the commencement of the limitations period was estopped by Defendants' conduct; that the notice given to Defendants was by Plaintiffs' agents; that the second mortgage was paid in full; and that damages for emotional distress and punitive conduct could be awarded.

¶ 8 On December 21, 2005, after reviewing the pleadings and listening to the argument of counsel, the trial court, without explaining its decision, granted summary judgment in favor of Defendants. Plaintiffs appeal.

STANDARD OF REVIEW

¶ 9 Summary judgment is used to reach a final judgment where there is no dispute as to any material fact, Indiana Nat'l Bank v. Dep't of Human Servs., 1993 OK 101, ¶ 10, 857 P.2d 53, 59; and where one party is entitled to judgment as a matter of law. Sellers v. Okla. Pub. Co., 1984 OK 11, ¶ 23, 687 P.2d 116, 120. We review a grant of summary judgment de novo. Young v. Macy, 2001 OK 4, ¶ 9, 21 P.3d 44, 47. Summary judgment on a limitations defense is appropriate where the evidence is sufficient to support a finding of fact of the time-bar and where the evidence establishes there is no dispute as to when the limitation period began to run. MBA Commercial Const. v. Roy J. Hannaford Co., 1991 OK 87, ¶ 10, 818 P.2d 469, 472-73.

ANALYSIS

¶ 10 In their motion for summary judgment, Defendants first asserted that Plaintiffs' lawsuit was barred by the limitations period set forth in 12 O.S. Supp.2005 § 95(4), which provides for a one-year limitations period for a cause of action based upon "a statute for penalty or forfeiture."

¶ 11 Plaintiffs' first cause of action is based upon 46 O.S.2001 § 15, which provides:

A. Any mortgage on real estate shall be released by the holder of any such mortgage within fifty (50) days of the payment of the debt secured by the mortgage and the holder of the mortgage shall file the release of the mortgage with the county clerk where the mortgage is recorded. If, at the end of the fifty-day period, the holder has failed to release the mortgage, the mortgagor may at any time request in writing the holder of the mortgage to release the mortgage and the holder of the mortgage shall have ten (10) days from the date of the request to release such mortgage. If the holder of the mortgage fails to release the mortgage by the end of such ten-day period, he shall then forfeit and pay to the mortgagor a penalty of one percent (1%) of the principal debt not to exceed One Hundred Dollars ($100.00) per day each day the release is not recorded after the ten-day period has expired and the penalty shall be recovered in a civil action in any court having jurisdiction thereof, but the request for the release shall be in writing and describe the mortgage and premises with reasonable certainty. Provided that, the total penalty shall not exceed one hundred percent (100%) of the total principal debt.

B. For purposes of this section, "mortgagor" shall include any subsequent purchaser of the mortgaged real estate.

This statute has been held to be a penal statute that must be strictly construed. Walker v. Dugger, 1962 OK 88, ¶ 13, 371 P.2d 910, 913; Walker v. Duncan, 1970 OK 86, ¶ 24, 469 P.2d 647, 650. Accordingly, the one-year statute of limitations set forth in 12 O.S. Supp.2005 § 95(4) is applicable. Nay v. First Fin. Bank, 2003 OK CIV APP 91, ¶ 12, 79 P.3d 1124, 1128.

¶ 12 Statute of limitation periods begin to run when a cause of action accrues, that is, when a cause of action comes into existence. Sherwood Forest No. 2 Corp. v. City of Norman, 1980 OK 191, ¶ 10, 632 P.2d 368, 370; Stephens v. General Motors Corp., 1995 OK 114, ¶ 8, 905 P.2d 797, 799. The cause of action set forth in 46 O.S.2001 § 15 accrues 10 days after written demand upon the mortgage holder, which demand cannot be given until the passage of 50 days after full payment. In this case, the evidentiary material indicates that both mortgages were paid no later than May 21, 1999, and that the first written demand thereafter was made on September 25, 2000.² Therefore, we agree with Defendants that the limitations period expired on October 6, 2001.

¶ 13 Nevertheless, Plaintiffs assert that Defendants' conduct estops them from asserting limitations as a bar. In response, Defendants note that penal statutes, such as this one, are strictly construed, and applicable statutes of limitation are not usually tolled, citing Cummings v. Board Of Education of Oklahoma City, 1942 OK 154, 125 P.2d 989.

¶ 14 In Cummings, the Supreme Court addressed the question of whether the predecessor to § 95(4) could be tolled by the doctrine of concealment or discovery. The penal statutes involved, §§ 6830-6832, O.S.1931 (70 O.S.1931 §§ 131-33), provided for the collection of fines and compensatory damages from one who wrongfully expended school district funds. The Court noted that § 95(3) specifically provided that the referenced causes of action "shall not be deemed to have accrued until the discovery of the fraud," and that enumeration of this specific exception excluded its application to all other subsections, including § 95(4) by implication. Noting that it had not always followed this rule, the Court stated:

While the courts recognize penalties of a civil character and enforce them pursuant to legislative mandate, they do not regard them as rights which are favored by the law. Insofar as they confer benefits on an injured party, they are in the nature of a gratuity. When based solely upon statute, these are in a sense an act of legislative grace. Viewed from the wrongdoer's standpoint, they operate as punishment. Thus statutes creating penalties are subject to strict construction.

While the courts may and do "strain a point"...