Head v. Planet Home Lending

895 S.E.2d 512

HEAD et al.

v.PLANET HOME LENDING, LLC et al.

A23A1279

Court of Appeals of Georgia.

November 16, 2023

Paul C. Kunst, for Appellant.

Bret Jacob Chaness, Patricia Lynn White-head, Peachtree Corners, for Appellee.

Fuller, Senior Judge.

In this action to cancel a security deed and for declaratory and injunctive relief, plaintiffs Charles and Lisa Head appeal from the grant of summary judgment to defendants Planet Home Lending, LLC ("PHL") and BCMB1 Trust. The Heads contend that the defendants were not entitled to summary judgment because title under the security deed has reverted to the Heads and, alternatively, that any claims the defendants may have under the deed are barred by laches. For the reasons that follow, we disagree and affirm.

[1] "We review de novo a grant or denial of summary judgment, viewing the evidence and all reasonable conclusions and inferences drawn from it in the light most favorable to the nonmovant." Henry v. Griffin Chrysler Dodge Jeep Ram, 362 Ga. App. 459, 460, 868 S.E.2d 827 (2022). So viewed, the record shows that, in 2007, the Heads obtained a second mortgage and executed a related promissory note (the "Note") in the amount of $65,000 in favor of Countrywide Bank, N.A. At that time, Countrywide also held the primary mortgage on the Heads’ property. That same day, the Heads executed a security deed (the "Security Deed") conveying the real property securing the second mortgage loan to Mortgage Electronic Registration Systems, Inc. ("MERS"), as Countrywide’s nominee. The Security Deed identifies the maturity date for the underlying debt as March 1, 2022. In June 2019, MERS assigned the Security Deed to defendant BCMB1. PHL is BCMB1’s servicer for the debt.

The Heads fell behind on both mortgage payments in 2009 and received letters of acceleration as to both loans in 2011. As a result, they initiated bankruptcy proceedings in May 2011. The bankruptcy action was dismissed later that year after the lender refinanced the primary mortgage. At that time, the Heads were unaware that the second mortgage (which is at issue in this action) was not refinanced and that their indebtedness under the Note thus remained outstanding. It appears that neither party took any action with respect to the Note for several years thereafter.

In April 2020 (approximately ten months after BCMB1 obtained the Security deed), counsel for PHL mailed to the Heads notice that they had defaulted on the Note, under which they owed $114,499.92, and that a foreclosure sale would be held. Later that month, the Heads sued PHL and BCMB1, seeking: (i) a declaration that the expiration of the statute of limitation bars enforcement of the debt evidenced by the Note; (ii) a declaration that they are the true owners of the property, subject to satisfaction only of their primary mortgage; (iii) a temporary injunction barring the foreclosure and sale of the property; (iv) cancellation of the Security Deed; and, (v) a declaration that the defendants’ attempts to enforce the debt and foreclose are barred by laches. In May 2020, the trial court temporarily enjoined the foreclosure proceedings pending resolution of this action.

Following discovery, the defendants moved for summary judgment. The trial court granted the motion on grounds that: (i) statutes of limitation play no part in the enforceability of security deeds, which instead are governed by the reversionary periods in OCGA § 44-14-80; (ii) here, the Security Deed is valid and enforceable because, under that statute, title will not revert to the Heads until March 1, 2029, seven years after the maturity date shown in the deed; (iii) any potential acceleration of the underlying debt did not accelerate the running of the reversionary period for the Security Deed; and (iv) the doctrine of laches does not bar foreclosure in this case.¹ This appeal followed.

Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. The burden on the moving party may be discharged by pointing out by reference to the affidavits, depositions and other documents in the record that there is an absence of evidence to support the nonmoving party’s case. If the movant meets this burden, the nonmovant cannot rest on his pleadings, but rather must point to specific evidence giving rise to a triable issue.

Henry, 362 Ga. App. at 460-461, 868 S.E.2d 827 (citations and punctuation omitted); see OCGA § 9-11-56 (c), (e).

[2] 1. The Heads primarily contend that the trial court erred when it determined that the Security Deed is not subject to a statute of limitation and instead is subject only to the reversionary statute. We disagree.

The reversionary statute provides, in relevant part:

Title to real property conveyed to secure a debt or debts shall revert to the grantor or his or her heirs, personal representatives, successors, and assigns at the expiration of seven years from the maturity of the debt or debts or the maturity of the last installment thereof as stated or fixed in the record of the conveyance or, if not recorded, in the conveyance ….

OCGA § 44-14-80 (a) (1). The statute of limitation on which the Heads seek to rely pertinently provides: "All actions upon simple contracts in writing shall be brought within six years after the same become due and payable." OCGA § 9-3-24.

[3, 4] Under these statutory provisions, the enforceability of a security deed operates independently of the enforceability of its underlying promissory note, and a security deed thus may be enforced even though the lender cannot collect on the underlying debt because the statute of limitation on the note has expired. See Minton v. Raytheon Co., 222 Ga. App. 85, 86-87, 473 S.E.2d 177 (1996); accord Brinson v. McMillan, 263 Ga. 802, 803 (2), 440 S.E.2d 22 (1994). That is because "the reversionary statute has a different function than, and is unaffected by, statutes of limitation." White Properties Investments v. DIP Lending I, 366 Ga. App. 242, 244 (1), 881 S.E.2d 706 (2022).

A statute of limitation … is a rule limiting the time in which a party may bring an action for a right which has already accrued. OCGA § 44-14-80 (a) is not a statute of limitation. Rather, it establishes a time period after which title to real property conveyed by a security deed that has not been cancelled or foreclosed upon reverts to the grantor as a matter of law.

Id. at 246 (1), 881 S.E.2d 706 (citations and punctuation omitted); accord Griggs v. Miller, 363 Ga. App. 82, 88 (3), 870 S.E.2d 578 (2022). That distinction follows naturally from the General Assembly’s decision to establish "a non-judicial foreclosure process" and thereby "allow secured creditors to foreclose without ever going to court." Ames v. JP Morgan Chase Bank, 298 Ga. 732, 740 (3) (d), n. 6, 783 S.E.2d 614 (2016); see Patel v. J. P. Morgan Chase Bank, 327 Ga. App. 321, 324 (1), 757 S.E.2d 460 (2014) ("a power of sale in a mortgage or security deed" is "a remedy by contract intended to substitute the remedy by law") (citation and punctuation omitted).

[5] Thus, "a security deed stands alone so long as the underlying debt remains, and [the deed holder] is not obligated to satisfy it until the debt is paid regardless of the note’s enforceability." Decatur Fed. S. & L. Assn. v. Gibson, 268 Ga. 362, 364 (2), 489 S.E.2d 820 (1997). So even if "an action to collect the debt is barred by the statute of limitation, such would not prevent [the holder of a security deed] from exercising [its] rights under the security deed." Brinson, 263 Ga. at 803 (2), 440 S.E.2d 22.

Here, the defendants’ ability to foreclose depends only on the enforceability of the Security Deed, not their ability to collect on the underlying debt (which undisputedly remains unsatisfied). And regardless of whether the statute of limitation bars enforcement of the Note, the enforceability of the Security Deed is unaffected by the statute of limitation for the underlying debt. See Decatur Fed. S. & L. Assn., 268 Ga. at 364 (2), 489 S.E.2d 820; Brinson, 263 Ga. at 803 (2), 440 S.E.2d 22; White Properties Investments, 366 Ga. App. at 244 (1), 881 S.E.2d 706; Minton, 222 Ga. App. at 86-87, 473 S.E.2d 177.

[6] The Heads’ claim that acceleration of the underlying debt also accelerates the expiration of the reversionary period contravenes the plain language of the reversionary statute. Under the statute, title reverts "seven years from the maturity of the debt or debts or the maturity of the last installment there of as stated or fixed in the record of the conveyance"² OCGA § 44-14-80 (a) (1) (emphasis supplied). If the General Assembly had intended for the expiration of the statutory reversionary period to be accelerated by the acceleration of the underlying debt or otherwise altered by events outside of the "record of conveyance" — it could have said so. See Deal v. Coleman, 294 Ga. 170, 172 (1) (a), 751 S.E.2d 337 (2013) (when considering the meaning of a statute, a court must "presume that the General Assembly meant what it said and said what it meant" and afford the statutory text its "plain and ordinary meaning") (citations and punctuation omitted).

Nevertheless, the Heads contend that "[i]t is well-settled law that acceleration applies to [the] underlying debt as a whole, and thus applies to the security deed[ and] underlying note[] and initiates the running of the statute of limitations and the reversionary statute," But the authority they cite in support of that claim does not reach so far. In King v. Edel, 69 Ga. App. 607, 26 S.E.2d 365 (1943), on which the Heads rely, this Court observed that a promissory note and deed executed to secure payment of the note "together constituted one contract." Id. at 613, 26 S.E.2d 365 (citation and punctuation omitted). King, however, involved an action on a promissory note, in which the question presented was whether the claim was barred by the statute of limitation applicable to simple contracts. Id. at...