Kinard v. Nationstar Mortg. LLC

572 S.W.3d 197

Dawn W. KINARD et al.

v.NATIONSTAR MORTGAGE LLC et al.

No. W2017-01131-COA-R3-CV

Court of Appeals of Tennessee, AT JACKSON.

January 31, 2018 Session

FILED March 2, 2018

Webb A. Brewer, Memphis, Tennessee, for the appellants, Dawn W. Kinard, and William E. Kinard.

Lauren Paxton Roberts and J. Anne Tipps, Nashville, Tennessee, for the appellees, NationStar Mortgage, LLC, First Horizon National Corporation, and The Bank of New York Mellon fka Bank of New York.

Arnold B. Goldin, J., delivered the opinion of the court, in which J. Steven Stafford, P.J., W.S., and Brandon O. Gibson, J., joined.

Arnold B. Goldin, J.

This appeal involves various issues related to a mortgage loan transaction and loan modification efforts. The plaintiffs' complaint, which was filed just a few days before a scheduled foreclosure, asserted multiple claims for relief, including breach of contract, breach of the covenant of good faith and fair dealing, and violation of the Truth-in-Lending Act. The trial court ultimately dismissed all claims at summary judgment in the defendants' favor. For the reasons stated herein, we affirm in part, reverse in part, and remand for further proceedings consistent with this Opinion.

BACKGROUND AND PROCEDURAL HISTORY¹

The genesis of this case is traceable to January 24, 2006, when Dawn and William Kinard ("the Kinards") refinanced their home in Collierville, Tennessee. On that date, the Kinards executed a fifteen-year promissory note in the amount of $ 694,875.00, as well as a deed of trust that secured their debt obligation. The Kinards' loan, which was obtained through First Horizon Home Loan Corporation ("First Horizon"), carried a fixed interest rate of 6.0%.

Around 2009, the Kinards began to experience difficulty in making their scheduled note payments. The downturn in the national economy had presented a number of challenges to their family businesses, and the Kinards accordingly explored efforts to secure payment relief from First Horizon. Although they initially sought to convert their loan to a thirty-year mortgage, the Kinards were unable to get a concrete response to that request. However, when a First Horizon representative later suggested that the Kinards should apply for a loan modification, they did so.

The Kinards pursued a loan modification by taking several actions. In addition to submitting financial information to First Horizon that had allegedly been requested of them, the Kinards withheld certain loan payments. With respect to this latter action, the Kinards claim that a First Horizon representative informed them that a modification was not possible if their loan payments were current.

After initially withholding payments and with still no decision from First Horizon regarding their request for a loan modification, the Kinards began to worry that they were getting too far behind on their mortgage. They tendered a substantial payment to bring the loan current, but they were then allegedly instructed to make no more regular payments pending the decision on the loan modification application. Mrs. Kinard specifically claims that a First Horizon representative instructed her that she would be told when and how much she should resume paying. Following this alleged instruction, payments were once again withheld.

The Kinards subsequently sent several loan modification packets to First Horizon as instructed. According to Mrs. Kinard, new packets were sent when old packets were deemed outdated. However, when Mrs. Kinard made a number of calls to get apprised about the status of the modification application, she allegedly could get no information.

It should be noted that, notwithstanding the alleged oral instruction to withhold payments, subsequent written correspondence plainly indicated that the Kinards' duty to make loan payments was not altered. In a letter from First Horizon dated November 10, 2010, following the Kinards' request for a loan modification, the Kinards were informed in relevant part as follows:

We have received your workout package for review.... Please be advised that:

• Collection and/or foreclosure activity will continue on your account until such time that a workout has been completed.

• Late charge fees may also continue to be assessed.

• Your obligation to make payments is not suspended while we review the submission[.]

In the summer of 2011, the Kinards learned that their loan was being "sold" to Nationstar Mortgage LLC ("Nationstar") and that Nationstar would soon begin servicing the loan. Servicing of the loan was eventually transferred to Nationstar effective August 15, 2011. A "Notice of Assignment, Sale, or Transfer of Servicing Rights" was provided to the Kinards by letter dated August 25, 2011.

After servicing transferred to Nationstar, the Kinards found another source to refinance their loan. As a result, they made multiple requests for payoff figures and remained in frequent contact with Nationstar representatives about the status of their application for a loan modification and their requests for payoff information. According to the Kinards, however, Nationstar was unresponsive and consistently failed to provide the requested information.

Nationstar eventually initiated foreclosure proceedings, and a foreclosure sale was scheduled for August 26, 2014. The present litigation ensued in response to the threatened foreclosure. On August 21, 2014, the Kinards filed a "Petition to Enjoin Foreclosure Sale and Complaint for Damages" in the Shelby County Chancery Court. In addition to seeking injunctive relief with regard to the foreclosure, the complaint asserted the following claims against First Horizon and/or Nationstar: violation of the Fair Debt Collection Practices Act, breach of contract, breach of the covenant of good faith and fair dealing, promissory estoppel, intentional or negligent misrepresentation, and violation of the Tennessee Consumer Protection Act. The Kinards also sought to recover a judgment against the Bank of New York Mellon for an alleged violation of the Truth-in-Lending Act ("TILA"). In advancing their TILA claim, the Kinards asserted that they had learned of a change in ownership of their mortgage to Bank of New York Mellon but had not been given notice of the transfer as required by law. A temporary restraining order enjoining the foreclosure was entered in response to the filing of the complaint, and on September 4, 2014, the temporary restraining order was extended through entry of a consent order.

On July 8, 2016, Nationstar, First Horizon, and the Bank of New York Mellon filed a joint motion for summary judgment. The motion requested that the Kinards' complaint be dismissed in its entirety. A statement of undisputed material facts was submitted contemporaneously to the filing of the defendants' motion, and on July 11, 2016, the defendants jointly filed a supporting memorandum of facts and law. The Kinards filed a response to the defendants' summary judgment motion on October 24, 2016. On the same date, they filed a response to the defendants' statement of undisputed material facts, as well as a statement of additional undisputed material facts. The Kinards' filings were soon followed by additional fillings submitted on behalf of the defendants. On November 1, 2016, the defendants filed a reply in support of their summary judgment motion and also submitted a response to the Kinards' statement of additional undisputed material facts.

A hearing on the defendants' motion for summary judgment was held on November 4, 2016. The motion was taken under advisement following the hearing, and on April 10, 2017, the Chancery Court entered its "Findings of Fact and Conclusions of Law," wherein it concluded that the defendants' motion for summary judgment should be granted. A formal "Final Order and Judgment" was later entered on April 28, 2017. In its April 28 order, the Chancery Court dismissed the Kinards' claims against the defendants with prejudice. This appeal followed.

ISSUES PRESENTED

In their appellate brief, the Kinards raise the following issues for our review, which we rephrase and reorder, as follows:

1. Whether the Chancery Court erred in dismissing their claims for breach of contract and breach of the covenant of good faith and fair dealing.

2. Whether the Chancery Court erred in dismissing their misrepresentation claims.

3. Whether the Chancery Court erred in dismissing their claim for promissory estoppel.

4. Whether the Chancery Court erred in dismissing their TILA claim.

STANDARD OF REVIEW

At issue in this appeal is the propriety of the Chancery Court's grant of summary judgment in the defendants' favor. We review summary judgment decisions de novo and afford no presumption of correctness to the trial court's determination. Maggart v. Almany Realtors, Inc. , 259 S.W.3d 700, 703 (Tenn. 2008) (citations omitted). In determining whether a grant of summary judgment is proper, we are obligated to make a fresh determination that the requirements of Rule 56 of the Tennessee Rules of Civil Procedure have been satisfied. Hughes v. New Life Dev. Corp. , 387 S.W.3d 453, 471 (Tenn. 2012) (citations omitted). By rule, a motion for summary judgment should only be granted if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Tenn. R. Civ. P. 56.04.

"The moving party has the ultimate burden of persuading the court that ... there are no genuine issues of material fact and that it is entitled to judgment as a matter of law." Town of Crossville Hous. Auth. v. Murphy , 465 S.W.3d 574, 578 (Tenn. Ct. App. 2014) (citation omitted). If the moving party makes a properly supported motion for summary judgment, the burden of production shifts to the nonmoving party to demonstrate the existence of a genuine issue of material fact. Id. (citation omitted).

The Tennessee Supreme...