Wachovia Bank, N.A. v. Coffey

Decision Date10 July 2013
Docket NumberNo. 27282.,27282.
CourtSouth Carolina Supreme Court
PartiesWACHOVIA BANK, N.A., Petitioner, v. Ann T. COFFEY and Bank of America, N.A., Respondents. Appellate Case No. 2010–174086.

404 S.C. 421
746 S.E.2d 35

WACHOVIA BANK, N.A., Petitioner,
Ann T. COFFEY and Bank of America, N.A., Respondents.

Appellate Case No. 2010–174086.

No. 27282.

Supreme Court of South Carolina.

Heard Oct. 31, 2012.
Decided July 10, 2013.

[746 S.E.2d 36]

Sarah Patrick Spruill, of Haynsworth Sinkler Boyd, PA of Greenville, Hamilton Osborne, Jr. and James Y. Becker of Haynsworth Sinkler Boyd, PA of Columbia, all for Petitioner.

Gregory Milam Alford and Curtis Lee Coltrane, both of Alford Wilkins and Coltrane, LLC of Hilton Head Island, for Respondents.

Chief Justice TOAL.

[404 S.C. 422]We granted certiorari in this case to review a court of appeals' decision finding that Wachovia Bank, N.A. (Petitioner) committed the unauthorized practice of law in closing a home equity loan in 2001, and that Petitioner's unclean hands barred it from any equitable relief. We affirm as modified.


In 2001, Michael Coffey (Husband) obtained a home-equity line of credit from Petitioner. Husband signed a mortgage prepared by Petitioner's employees that purported to encumber Husband's Hilton Head Island home (the property). The mortgage contained the express language that Husband lawfully owned the property, and held the right to mortgage the property. However, Husband did not possess any interest in the property. In fact, Ann Coffey (Wife) held sole title to the property. Wife did not participate in the loan transaction and had no knowledge of Husband's transaction with Petitioner. Petitioner did not perform a title search to determine ownership of the property at time of the transaction. Additionally, Petitioner prepared the loan documents and closed the loan transaction without the participation or supervision an attorney licensed to practice law in South Carolina.

[404 S.C. 423]Husband subsequently purchased a sailboat, and financed the purchase through a $125,000 draw on the line of credit. Husband placed title to the sailboat in the name of A & M Partners, a corporation Husband and Wife jointly owned, and of which they served as President and Vice–President, respectively. Husband made regular payments on the line of credit from July 2001 until his death on March 21, 2005. Husband made these payments using funds from a personal checking account he shared with Wife. Following Husband's death, Wife continued making monthly payments using the same checking account. In September 2005, Wife discovered documents showing a loan or mortgage on the sailboat. Wife wrote “boat loan,” or “boat” on the memo line of at least three checks she sent to Wachovia in September and November 2005.

That same year, Wife also began efforts to sell the boat with the assistance of her daughter, Maureen Coffey–Edri (Daughter). In December 2005, Daughter provided St. Barts Yachts (St. Barts), a yacht broker, with loan information for the sailboat showing a payoff amount due to Petitioner in the amount of $125,643.30. An employee of St. Barts prepared a draft “Seller's Disbursement

[746 S.E.2d 37]

Summary,” showing a sale price of $112,000, with a $125,600 “payoff” to Petitioner. This payoff amount required a balance due from Wife of $25,525. However, when Wife asked a St. Barts employee to check on the status of the loan, the employee informed her that there was no lien or mortgage on the sailboat. Wife believed the sailboat was “paid for,” and never inquired with Petitioner about the line of credit or any other possible encumbrances on the sailboat. Wife sold the sailboat in January 2006 for $112,000 and received $100,075 from the sale. Wife deposited the proceeds in her personal bank account and did not make any further payments to Petitioner.

In June 2006, Petitioner filed a foreclosure action in the circuit court against Husband's estate, Wife, both individually and as personal representative of Husband's estate, and three of the couple's five children. In September 2006, Wife filed an inventory and appraisal of Husband's estate with the Beaufort County Probate Court. This inventory and appraisal acknowledged Husband and Wife's joint ownership of the boat. Petitioner then filed an amended complaint in 2008 naming Wife and Bank of America, N.A. as the only defendants. Petitioner [404 S.C. 424]sought to foreclose on the mortgage signed by Husband and included causes of action for equitable lien, prejudgment interest, restitution, ratification, quantum meruit, and quasi-contract. Petitioner filed a motion for summary judgment, and Wife filed a cross-motion for summary judgment on all of Petitioner's claims.

The master-in-equity denied Petitioner's motion for summary judgment on its claims against Wife, and granted Wife summary judgment on all of the claims asserted by Petitioner. The master-in-equity held, inter alia:

I am troubled by the concept that [Wife] sold the sailboat and retained the proceeds and that there is some perception of unfairness to Petitioner. However, in this court's opinion, Petitioner is the architect of its own problem. Petitioner prepared the loan documents and closed the loan with Husband without an attorney. Had Petitioner retained an attorney to prepare the loan documents and performed a title search, which should have been done, it would have known Husband did not own the subject [p]roperty to be mortgaged. This case would not have been filed and Petitioner's mistake would have been caught. It now attempts to seek equitable relief for its own mistake. Its own mistake arose by its own acts.

(emphasis added).

Petitioner appealed, and the court of appeals affirmed. Wachovia Bank, N.A. v. Coffey, 389 S.C. 68, 698 S.E.2d 244 (Ct.App.2010). The court of appeals held that Petitioner's actions constituted the unauthorized practice of law, and therefore, barred its equitable and legal claims. Id. at 76–77, 698 S.E.2d at 248 (“We therefore reach the inescapable conclusion that [Petitioner] has come to court with unclean hands and is...

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