U.S. Bank Trust Nat. Ass'n v. Bell

Decision Date31 August 2009
Docket NumberNo. 4614.,4614.
Citation684 S.E.2d 199,385 S.C. 364
CourtSouth Carolina Court of Appeals
PartiesU.S. BANK TRUST NATIONAL ASSOCIATION, f/k/a First Trust National Association, First Bank, National Association, as trustee under the Pooling Servicing Forbearance Agreement dated as of May 1, 1997, Morgan Stanley Capital, Inc. Mortgage Pass Certificates, Weighted Average Coupon Pass-Through Series 1997-pl, 180 East Fifth Street, St. Paul, MN 55101, Appellant, v. Clifford E. BELL, Jr., Delores Jane Bell a/k/a Delores J. Bell a/k/a Delores Jane R. Bell, Ford Consumer Financing Co., Inc., Henry I. Ziesel & Ziesel Accura Machinery Corporation, NationsBank, N.A. successor to Boatmens Bank of South Central Illinois, Pressmation, Inc., Daryl Palbiak, Phillip Dyches, South Carolina Department of Revenue, and The Department of Treasury — Internal Revenue Service, Respondents.

Hamilton Osborne, Jr., James Y. Becker, and Emily H. Farr, all of Columbia, for Appellant.

Herbert W. Hamilton and Tracy T. Vann, both of Rock Hill, for Respondents.

PIEPER, J.

U.S. Bank Trust National Association (Bank) appeals the decision of the master-in-equity denying Bank's request for foreclosure. Bank further appeals the order restructuring the loan given to Delores and Clifford E. Bell (the Bells). We reverse and remand.

FACTS

In 2001, Bank commenced a foreclosure action against the Bells' property, resulting in a judgment of foreclosure dated July 17, 2002. On August 2, 2002, the day before the scheduled foreclosure sale, the Bells called Chase Home Finance, LLC (Chase), the servicing agent for Bank, and spoke with Anita Gaines (now known as Anita Stokes). Stokes was a foreclosure analyst for Chase. During the telephone conversation, the Bells negotiated with Stokes to stop the foreclosure sale and to reinstate the loan by entering into a payment agreement. The parties do not dispute the existence of the reinstatement agreement; they dispute the due date of the second lump sum payment under that agreement.

Under the reinstatement agreement, the Bells agreed to pay two lump sum payments totaling $67,570.85, and also agreed to begin monthly payments. Stokes testified the first payment of $30,000 was to be paid immediately upon execution of the reinstatement agreement and the remaining balance was to be paid ninety days from the entry of the reinstatement agreement, which was November 2, 2002. Stokes further testified she did not have the authority to extend the time for payment beyond ninety days. On the other hand, the Bells testified the agreement required the initial payment indicated and also required a second payment of $37,570.85 to be paid within twelve months from the entry of the reinstatement agreement.

Stokes stated she did not presently know the whereabouts of the document containing the reinstatement agreement; Bank did not produce the document at trial. Stokes claimed she placed the document containing the agreement in the Bells' file and at some point transferred the file to Joseph Bryan. According to Stokes, Bryan gave the file to his manager, who unexpectedly died, resulting in the document's misplacement.

Around the time the reinstatement agreement was reached, Stokes made a record referencing the agreement in a computerized recordkeeping database known as FORTRACS History Notes.1 The FORTRACS notes were introduced into the record as evidence without objection. Stokes' note provided, in pertinent part:

I spoke to [Mr. Bell] and he stated that there was an error in the e-mail that I had received. He is asking to pay thirty thousand dollars now and have the remainder of the money in ninety days. He'll be paying his regular payment of $2,134.52 for the months of September and October. November 2, 2002[,] he will have the remainder of the reinstatement funds, attorney fees[,] and cost.

Stokes testified she reduced the agreement to writing and sent it to the Bells via e-mail. Stokes asserted she later called the Bells, whereby they allegedly agreed to the terms, signed the document, and returned it to Stokes by facsimile. The Bells testified they had no notes or other documents to support their assertion that the second lump sum payment was due in August 2003.

On August 12, 2002, the Bells made the first payment of $30,000, which Bank accepted and eventually applied to the loan. Additionally, the regular monthly payments the Bells agreed to continue making were received in September, October, and November.

On November 1, 2002, after the initial monthly payments had been made, Stokes indicated she spoke with Mr. Bell. The note of her conversation provides, "[s]poke to Mr. Bell ... he would be sending the rest of the reinstatement funds by 11/15/2002 [totaling $39,196.31]." On November 26, 2002, Stokes noted she again spoke with Mr. Bell and he stated his check was being held up, but promised it would arrive on December 5, 2002. The note continues, "[h]e will [overnight] a check to us on 12/7/2002." Stokes testified the delay was allegedly due to the fact Mr. Bell was expecting some of his merchandise to be sold.

Stokes testified the Bells did not make the payment allegedly due by December 7, 2002. Stokes claimed she proceeded to call the Bells on two separate occasions (December 18, 2002, and January 16, 2003), leaving voice messages each time. Stokes also testified the Bells failed to make the monthly payments for December 2002 and January 2003. Stokes stated that on January 18, 2003, Mr. Bell claimed he sent in the December and January monthly payments; however, there were no records the payments were received. Moreover, the Bells never presented any documents or other evidence as to these missed monthly payments. During the same telephone conversation on January 18, 2003, Stokes also mentioned to Mr. Bell that she "would be getting all the funds posted to his account and sent out a new referral to start a new foreclosure action unless he can reinstate his account." Notwithstanding, Stokes entered a note in FORTRACS indicating the Bells' loan was fully reinstated as of February 7, 2003; Stokes subsequently testified as to the reason for the notation.

Bank renewed its foreclosure action in May 2003. On June 30, 2003, Bank filed an amended complaint. In the amended complaint, Bank alleged the amount due and owing on the promissory note (the Note) and mortgage was $233,386.37 plus interest at a rate of nine percent per annum from July 1, 2001, plus attorney's fees and costs. The Bells denied this allegation. Additionally, the Bells testified they did not tender the second lump sum payment by August 2003 because Bank had already renewed its foreclosure action and because Bank was returning the Bells' monthly mortgage checks.

The Bells' answer to the foreclosure action asserted several defenses and two counterclaims one for breach of contract and the other for promissory estoppel.2 The Bells admitted they executed the Note in the original principal amount of $243,200.00 and a mortgage securing the Note, constituting a lien on the property.

Mr. Bell testified Bank started returning the monthly payments in February 2003, citing insufficient funds to cure default. Mr. Bell further testified the Bells continued to make payments every month thereafter until filing for bankruptcy protection in October 2005, despite Bank's rejection of the monthly payments.3 While asserting he continued to make monthly payments until October 2005, Bell never tendered the second lump sum payment even by the date he contends it was due.

On October 15, 2005, Mr. Bell declared Chapter 7 bankruptcy, and notice of the bankruptcy was filed in Bank's foreclosure action against Mr. Bell on December 19, 2005. On October 19, 2006, Bank and the bankruptcy trustee settled Mr. Bell's interest in the counterclaims asserted against the Bank in the state court foreclosure action.4 After Mr. Bell's bankruptcy case was closed, the foreclosure action was restored to the active docket on March 28, 2007, pursuant to Bank's motion under Rule 40(j), SCRCP.

The master-in-equity for York County presided over the nonjury trial in the foreclosure action. In his final order, the master-in-equity refused to allow the foreclosure to proceed because Bank had failed to carry its burden of proving that the terms of the reinstatement agreement required the second lump sum payment to be made in November 2002. In support of the decision, the master-in-equity cited Bank's own annotation that the loan was fully reinstated as of February 2003. Additionally, due to Bank's alleged repudiation of the agreement and subsequent rejection of Mr. Bell's monthly payment checks, the master-in-equity determined the Bells were not required to continue making payments to Bank because they were not required to perform useless acts. Finally, the master-in-equity modified the Note by adding the accrued, but unpaid interest, and the escrow funds to the principal balance, resulting in a new balance of $394,550.99. The net effect of this remedy was to increase the outstanding principal balance. The master-in-equity allowed the Bells to repay the new principal balance with interest at the rate set forth in the Note5 in monthly installments over the remaining term of the loan.6

The Bells filed a motion pursuant to Rule 59(e), SCRCP, wherein they asserted the following: (1) the award of accrued interest on payments which were made by the Bells and rejected by Bank was not supported by the evidence or applicable authority; (2) because Bank's rejection of the Bells' payments was wrongful, increasing the Bells' payments by $2,000 per month over the payment required by the original Note was not supported by the record; (3) the finding that Mr. Bell admitted to missing the December 2002 and the January 2003 payments was not supported by the record; and (4) the amount of the escrow balance was not supported by the record. In response, the...

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