Graham-Rogers v. Wells Fargo Bank, N.A.

397 Mont. 262

449 P.3d 798

2019 MT 226

Chelcee GRAHAM-ROGERS, Plaintiff and Appellant,

v.WELLS FARGO BANK, N.A., Defendant and Appellee.

DA 18-0630

Supreme Court of Montana.

Submitted on Briefs: September 18, 2019

Decided: September 24, 2019

For Appellant: Brian J. Miller, Robert Farris-Olsen, Morrison Sherwood Wilson & Deola, PLLP, Helena, Montana

For Appellee: Kenneth K. Lay, Brett Clark, Crowley Fleck PLLP, Helena, Montana

Justice Jim Rice delivered the Opinion of the Court.

¶1 Chelcee Graham-Rogers (Graham-Rogers), appeals from the entry of summary judgment on her claims in favor of Wells Fargo Bank, N.A. (Wells Fargo), by the Eighteenth Judicial District Court, Gallatin County. We affirm, and restate the issues as follows:

1. Did the District Court err by dismissing Graham-Rogers' breach of contract claim?

2. Did the District Court err by dismissing Graham-Rogers' tort claims?

FACTUAL AND PROCEDURAL BACKGROUND

¶2 In 2005, Graham-Rogers jointly owned an 11.331-acre tract (Lot 3) in Gallatin County, along with her mother, grandmother, and two siblings. Graham-Rogers and the other owners designated a 1-acre portion of Lot 3 as collateral for mortgage purposes (Tract M) and had a mortgage tract survey recorded to reflect this designation. On February 14, 2006, Graham-Rogers obtained a loan from Valley Bank of Belgrade for $125,042. Graham-Rogers and her family members who jointly owned Lot 3 executed a deed of trust with Valley Bank of Belgrade as beneficiary, with Tract M serving as collateral for the loan. After the loan's origination, Wells Fargo assumed service of the loan.

¶3 On November 19, 2008, Graham-Rogers and her then-husband refinanced the February 14, 2006 loan with Wells Fargo, borrowing $182,849 dollars (the Loan). Graham-Rogers executed a Deed of Trust to secure the Loan, which named Wells Fargo as beneficiary. Tract M served as the collateral for the Loan and is referred to as the "Property" in the Deed of Trust.

¶4 For reasons that are not evident from the record, when Tract M was created for mortgage purposes, the Department of Revenue assigned the tract its own tax identification number, REF 54165, separate from the tax identification number for Lot 3, REF 32145. Between 2006 and 2008, property taxes were separately assessed for Tract M. Sometime in 2009, the Department of Revenue deactivated the tax identification number for Tract M. The District Court found, upon the uncontested affidavit submitted by an employee of the Department of Revenue, that the Department does not ordinarily assign new tax identification numbers for mortgage survey parcels. Since 2008, the Department has assessed real property taxes on Lot 3 and Tract M together, as an individual tax parcel, referred to as tax identification number REF 32145.¹

¶5 Under the Deed of Trust, Graham-Rogers was responsible for paying, "in each monthly payment, together with principal and interest as set forth in the Note and any late charges, a sum for (a) taxes and special assessments levied or to be levied against the Property ...." In the event Graham-Rogers failed to make required payments, Wells Fargo was authorized to do "whatever is necessary to protect the value of the Property and Lender's rights in the Property, including payment of taxes ...." The Deed of Trust further specified that any amount paid by Wells Fargo to protect the value of the Property "shall become an additional debt of the Borrower and be secured by this Security Instrument."

¶6 Graham-Rogers and her family members who jointly owned Lot 3 failed to pay the 2009 and 2010 property taxes assessed to Lot 3, which included Tract M. In October 2010, Graham-Rogers received a real estate tax bill from Gallatin County which stated, "WARNING! This property is the subject of a TAX LIEN SALE per MCA 15-17-212. Please pay TOTAL DELINQUENT TAXES DUE immediately." Graham-Rogers sought to refinance the Loan with Wells Fargo in late 2010 and early 2011. In February 2011, upon learning of the tax delinquency and pending tax lien sale of the property, Wells Fargo advanced $3,387.76 to pay the delinquent taxes because there were insufficient funds in Graham-Rogers' escrow account to pay the full amount of taxes due. The advance created a negative balance in Graham-Rogers' escrow account. Wells Fargo notified Graham-Rogers of its full tax payment, the resulting escrow shortage, and a change in her monthly mortgage payment to make up the shortage in her escrow account.

¶7 Graham-Rogers objected to Wells Fargo's full tax payment for Lot 3 and the increase of her mortgage payment to cover the tax payment. Graham-Rogers continued to pay the original loan payment amount, which reflected the taxes and costs associated only with Tract M. Graham-Rogers and Wells Fargo attempted to resolve this payment issue in 2011, with Wells Fargo offering repayment options, but an agreement was not reached. Wells Fargo maintained the Deed of Trust permitted it to pay the taxes in full and increase Graham-Rogers' monthly mortgage payment accordingly, and that Graham-Rogers' partial payments did not satisfy the terms of the note and Deed of Trust. Payments have not been made on the loan as due since July 2013.

¶8 On August 7, 2011, Wells Fargo sent Graham-Rogers a letter stating the Loan was in default and that Wells Fargo would pursue foreclosure if the Loan was not made current. In October 2013, Graham-Rogers quitclaimed her interest in Lot 3 to her family, and Wells Fargo initiated foreclosure proceedings in December 2013. Graham-Rogers pursued several other avenues in search of relief, including filing a complaint against Wells Fargo with the Office of Comptroller of Currency, and initiating a bankruptcy proceeding in 2014.

¶9 Internal Wells Fargo emails indicated that some employees believed Wells Fargo had paid the property taxes on the wrong parcel and should only have paid the taxes on Tract M. In March 2016, Wells Fargo sent Graham-Rogers a letter stating it had made an error by paying taxes on the entirety of Lot 3 because Lot 3 was not encumbered by Graham-Rogers' mortgage. Accordingly, Wells Fargo discontinued paying taxes on Lot 3 and refunded the $3,387.76 that had been added to Graham-Rogers loan as a result of paying the taxes. Wells Fargo also gave Graham-Rogers an additional $500 as a good will gesture.

¶10 Graham-Rogers filed this action in July 2016, alleging claims for breach of contract, negligence, negligent misrepresentation, violations of the Montana Consumer Protection Act, and punitive damages. Wells Fargo moved for summary judgment and, in separate orders, the District Court granted summary judgment in favor of Wells Fargo on all of Graham-Rogers' contract and tort claims, reasoning that the Deed of Trust's unambiguous language permitted Wells Fargo to pay Lot 3's taxes in full, that this action was necessary to protect their interest in Graham-Rogers' property, and thus, no breach of contract occurred. The District Court concluded that the March 2016 letter to Graham-Rogers stating Wells Fargo had erred in paying the taxes on Lot 3 was incorrect as a matter of law, as Wells Fargo was authorized to do so under the unambiguous terms of the Deed of Trust. Further, because Graham-Rogers' tort claims were based on the breach of contract claim, and no breach of the Deed of Trust had occurred, the tort claims had no basis in law. The District Court held that the tort claims were additionally subject to dismissal on other grounds.

¶11 Graham-Rogers appeals.

STANDARD OF REVIEW

¶12 "We review de novo a district court's grant or denial of summary judgment, applying the same criteria as the district courts." Modroo v. Nationwide Mut. Fire Ins. Co ., 2008 MT 275, ¶ 19, 345 Mont. 262, 191 P.3d 389 (citation omitted). "Summary judgment is appropriate ‘if the pleadings, depositions, answers to interrogatories, and admissions on file,’ together with any affidavits demonstrate that no genuine issue exists as to any material fact and that the party moving for summary judgment is entitled to judgment as a matter of law." Modroo , ¶ 19 (citing M. R. Civ. P. 56(c) ). "We view the evidence in the light most favorable to the party opposing summary judgment, and we draw all reasonable inferences in favor of the party opposing summary judgment." Modroo , ¶ 19.

DISCUSSION

¶13 1. Did the District Court err by dismissing Graham-Rogers' breach of contract claim?

¶14 Graham-Rogers argues summary judgment was improperly entered because there were issues of material fact in dispute, specifically, whether Wells Fargo breached the Deed of Trust by paying Graham-Rogers' delinquent taxes and increasing the escrow portion of her mortgage payment to cover the amounts Wells Fargo had advanced; whether Wells Fargo's actions were necessary to protect its interest in Graham-Rogers' property; and whether Wells Fargo negligently serviced Graham-Rogers' Loan. Wells Fargo answers that the District Court correctly granted summary judgment because, as a matter of law, paying Graham-Rogers delinquent taxes was the only way to protect its interest in the property, the payment was authorized under the unambiguous terms of the Deed of Trust, and Wells Fargo owed no special duty to Graham-Rogers that would have prevented it from taking this action.

¶15 A party moving for summary judgment "has the burden of establishing a complete absence of any genuine factual issues. In light of the pleadings and the evidence before the court, there must be no material issue of fact remaining which would entitle a nonmoving party to recover. Once the moving party has met its burden, the opposing party must present material and substantial evidence, rather than mere conclusory or speculative statements, to raise a genuine issue of material fact. Disputed facts are material if they involve the elements of the cause of action or defense at issue to an extent that necessitates resolution of the issue by a trier of fact."

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