Opinion
No. ED 84118
September 13, 2005
Appeal from the Circuit Court of St. Louis County, Hon. Larry L. Kendrick.
Donald L. O'Keefe, St. Louis, MO, for Appellant.
John W. Rourke, St. Louis, MO, for Respondent.
First National Bank of St. Louis, N.A. (First National) appeals from the trial court's grant of summary judgment in favor of Rodney and Diane Glass (collectively "the Glasses"). The Glasses were awarded $52,500 on Count I of their First Amended Petition, the amount representing forfeiture of ten percent of the face amount of the deed of trust, $525,000, between First National and the Glasses. On appeal, First National argues the trial court erred in granting summary judgment in favor of the Glasses because (1) the Glasses' demand letter failed to follow the requirements of Section 443.130, RSMo. 2000; (2) First National fulfilled its obligations under Section 443.130, in that it executed the Glass deed of release and forwarded it to the St. Louis County Recorder of Deeds' office (Recorder of Deeds) prior to receiving the Glasses' demand letter; (3) the Glasses' predatory use of Section 443.130 for personal financial gain is not within the legislative intent of the statute to facilitate the clearing of title through the filing of deeds of release; (4) the Glasses do not have standing to challenge compliance with Section 443.130; and (5) Sections 443.060 and 443.130 are unconstitutional.
Unless otherwise indicated, all further statutory references are to RSMo 2000.
We reverse.
On December 21, 1999, the Glasses executed a deed of trust in favor of First National in the amount of $525,000 for the purchase of their home located at 12706 Wynfield Pines Court in Des Peres, Missouri. After the mortgage loan was originated by First National, servicing of the loan, including issuing bills and accepting payments, was subsequently handled by Jefferson Bank through its Loan Servicing Center ("Loan Servicing Center") in Jefferson City, Missouri. The Loan Servicing Center was responsible for servicing the Glasses' mortgage loan as well as preparing and recording an appropriate deed of release following satisfaction.
In 2001, the Glasses began refinancing their home to obtain a more favorable interest rate. The Glasses utilized Fidelity Mortgage, a mortgage broker, to procure a new mortgage loan. The Glasses successfully refinanced on three subsequent separate occasions with National City Mortgage (National City), ABN Amro, and Sun Trust, and received a better interest rate each time. Rodney Glass testified there were no problems associated with the refinancing with National City other than an unrelated issue involving an easement. National City and/or the title company involved in the transaction, Columbian Title Company, satisfied First National's loan on June 13, 2001.
After the mortgage loan was satisfied, the Loan Servicing Center generated a Report 20, also called a weekly pay-off report, which reflected the mortgage loans satisfied the previous week. The weekly pay-off report dated June 15, 2001, shows a listing for Rodney M. Glass. Before release processors for the Loan Servicing Center prepare a deed of release, they pull the loan files, ensure that the files contain a note and deed of trust, and then write on the weekly pay-off report the initials "FDN," representing file, deed, and note, and signifying that a deed of release should be prepared. "FDN" appeared next to Rodney M. Glass's name on the weekly pay-off report of June 15, 2001. The release processor for the Loan Servicing Center, Anna Holt, prepared and forwarded the Glass deed of release for recordation to the Recorder of Deeds' office in either June or July of 2001. Although Ms. Holt could not confirm the exact date that the Glass deed of release was forwarded for recordation, she testified in her deposition that it was probably sent the week of June 19, 2001. The Glass deed of release was executed by Ronald R. Klatt and Jennifer L. Poole, both of the Loan Servicing Center, with a notary date of June 19, 2001. The Glass deed of release was not recorded by the Recorder of Deeds' office until October 9, 2001.
The record reveals the Glass deed of release was sent no later than July 24, 2001, as it was noted in a facsimile letter sent by Ms. Holt to Rodney Glass on July 24 that the deed of release had been sent to St. Louis County for recordation.
At the time the Glass deed of release was filed, it was well-known by employees of the Loan Servicing Center that the Recorder of Deeds' office was continually "backlogged" with filings, and it typically took several months to have a document recorded and returned.
Rodney Glass sent an undated, certified letter to First National in July or August of 2001. This letter requested a deed of release, included evidence that the deed of trust had been satisfied, and enclosed a check for recording fees. This letter did not reference any statute, including Section 443.130; did not request the issuance of a deed of release within a certain period of time; did not specify to whom the deed of release should be sent; and did not reference any penalties for failure to provide the deed of release within a certain period of time.
Not having received back the recorded deed of release from the Recorder of Deeds, First National provided the Glasses with their original note marked "paid" on August 22, 2001.
The Glasses filed suit against First National alleging causes of action for penalties for failure to provide a deed of release and attorney's fees under Section 443.130, for invasion of privacy/unreasonable publicity of another's private life, for interference with prospective advantage, and for punitive damages. The Glasses and First National submitted motions for summary judgment. The trial court granted summary judgment in favor the Glasses on a portion of Count I of their petition. The Glasses were awarded $52,500, representing forfeiture of ten percent of the amount of the deed of trust. On the remaining portion of Count I seeking attorney's fees, as well as on the counts for invasion of privacy/unreasonable publicity of another's private life, interference with prospective advantage, and punitive damages, summary judgment was entered in favor of First National. This appeal follows.
The Glasses have not appealed the grant of summary judgment in favor of First National on these counts.
The Glasses' motion to strike Missouri Bankers Association's Amicus Curiae brief taken with the case is denied.
In reviewing whether a grant of summary judgment was proper, we must view the record in the light most favorable to the party against whom the summary judgment was entered. ITT Commerical Finance Corp. v. Mid-America Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). That party is accorded the benefit of all reasonable inferences that may be drawn from the record. Id. Conversely, the moving party has the burden of establishing a right to judgment as a matter of law and that no genuine issue of material fact exists. Id. at 378. Because the granting or denial of a motion for summary judgment is purely an issue of law, and because the trial court's decision is founded on the same record we are to consider, we need not defer to the trial court's judgment. Id. As such, our review of the trial court's judgment is de novo. Id.
We only address First National's first point because it is dispositive of this appeal. In its first point, First National argues the trial court erred in granting summary judgment in favor of the Glasses because the Glasses' demand letter failed to follow the requirements of Section 443.130. We agree.
Missouri courts have recognized the highly penal nature of Section 443.130 and have ruled the statute must be strictly construed; therefore, the burden is on a mortgagor to show compliance with the statute. Murray v. Fleet Mortgage Corp., 936 S.W.2d 212, 215 (Mo.App. E.D 1996); Roberts v. Rider, 924 S.W.2d 555, 558 (Mo.App.S.D. 1996); Trovillion v. Chem. Bank, 916 S.W.2d 863, 865 (Mo.App.E.D. 1996); Masterson v. Roosevelt Bank, 919 S.W.2d 9, 10 (Mo.App.E.D. 1996); Trovillion v. Countrywide Funding Corp., 910 S.W.2d 822, 823 (Mo.App. E.D. 1995); Martin v. STM Mortgage Co., 903 S.W.2d 548, 550 (Mo.App. W.D. 1995).
Section 443.130 is the mechanism to enforce the obligation set out in Section 443.060.1, which requires a mortgagee, after receiving full satisfaction of any security instrument, and at the request and cost of the person making satisfaction, to deliver to such person a sufficient deed of release of the security instrument. Section 443.130.1 provides:
Section 443.060.1 provides in pertinent part:
If any mortgagee, cestui que trust or assignee, or personal representative of the mortgagee, cestui que trust or assignee, receive full satisfaction of any security instrument, he shall, at the request and cost of the person making the same, deliver to such person a sufficient deed of release of the security instrument; . . .
If any such person, thus receiving satisfaction, does not, within fifteen business days after request and tender of costs, deliver to the person making satisfaction a sufficient deed of release, such person shall forfeit to the party aggrieved ten percent upon the amount of the security instrument, absolutely, and any other damages such person may be able to prove such person has sustained, to be recovered in any court of competent jurisdiction. A business day is any day except Saturday, Sunday and legal holidays.
Here, the trial court erred in granting summary judgment in favor of the Glasses because their demand letter failed to follow the requirements of Section 443.130. Section 443.130 triggers an obligation to pay the ten percent penalty only if a demand is made and all other elements of the statute are met. We further note that Section 443.130 does not contain a requirement that mortgagor prove prejudice or damages to recover the penalty under the statute. Sections 443.130.2 provides:
At the time the Glasses' cause of action arose, the 2004 amendment to Section 443.130 was not in effect. The current versions of Sections 443.130.1 and .2 read as follows:
1. If the secured party, receiving satisfaction for the debt secured pursuant to this chapter, does not, within forty-five days after request and tender of costs, submit for recording a sufficient deed of release, such secured party shall be liable to the mortgagor for the lesser of an amount of three hundred dollars a day for each day, after the forty-fifth day, that the secured party fails to submit for recording a sufficient deed of release or ten percent of the amount of the security instrument, plus court costs and attorney fees to be recovered in any court of competent jurisdiction. In the event a document submitted for recording by a secured party is rejected for recording for any reason, such secured party shall have sixty days following receipt of notice that the document has been rejected in which to submit a recordable and sufficient deed of release.
2. To qualify under this section, the mortgagor or his or her agent shall provide the request in the form of a demand letter to the secured party by certified mail, return receipt requested or in another form that provides evidence of the date of receipt to the mortgagor. The letter shall include good and sufficient evidence that the debt secured by the deed of trust was satisfied with good funds, and the expense of filing and recording the release was advanced.
To qualify under this section, the mortgagor shall provide the request in the form of a demand letter to the mortgagee, cestui qui trust, or assignee by certified mail, return receipt requested. The letter shall include good and sufficient evidence that the debt secured by the deed of trust was satisfied with good funds, and the expense of filing and recording the release was advanced.
As mentioned above, Section 443.130 is highly penal and must be strictly construed. Roberts, 924 S.W.2d at 558; Masterson, 919 S.W.2d at 10; Trovillion, 910 S.W.2d at 823; Martin, 903 S.W.2d at 550. The purpose of Section 443.130 is to enforce the duty of the mortgagee to clear the mortgagor's title, so that the record is no longer encumbered. Ong Building Corp. v. GMAC Mortgage Corp. of Pennsylvania, 851 S.W.2d 54, 55 (Mo.App.W.D. 1993). "Any demand letter purporting to invoke section 443.130 should closely track the language of the statute to place the mortgagee on notice that the statutory demand is being made." Brown v. First Horizon Home Loan Corp., 150 S.W.3d 287, 288 (Mo. banc 2004); Garr v. Countywide Home Loans, Inc., 137 S.W.3d 457, 460 (Mo. banc 2004).
We find the case of Lines v. Mercantile Bank, N.A., 70 S.W.3d 676 (Mo.App.S.D. 2002) is instructive and directly on point. In Lines, the plaintiffs were parties to an earlier declaratory judgment action against Mercantile regarding various notes and security interests. Id. at 677. This suit was resolved by a written Settlement and Mutual Release Agreement, which was the means by which the security interests were satisfied. Id. at 677-78. The plaintiffs sent Mercantile a certified letter demanding release of a deed of trust and enclosed a check for costs to record the appropriate deed of release. Id. at 678. The letter further requested that Mercantile "proceed appropriately to effect release of the aforementioned deed of trust." Id. When the deed of release was not forthcoming, the plaintiffs filed suit claiming Mercantile refused to deliver a sufficient deed of release within 15 business days of their request. Id. at 679. Because the deed of trust secured an indebtedness of $327,181, the plaintiffs sought damages of $32,718.10 plus interest and attorneys fees. Id. The trial court granted summary judgment in favor of Mercantile. Id.
On appeal, the plaintiffs argued that Mercantile failed to perform its obligation to release the deed of trust after receiving a demand letter that satisfied all elements of a claim for statutory damages as provided in Section 443.130. Id. Mercantile responded that the demand letter sent by the plaintiffs was not sufficient to invoke the statutory forfeiture in Section 443.130. Id. Specifically, Mercantile pointed out that the letter did not reference Section 443.130, thereby putting Mercantile on proper notice that a statutory demand for a deed of release was being made, and the letter did not request a deed of release within 15 business days. Id. Rather, the letter only asked for Mercantile to proceed appropriately to effect release of the deed of trust. Id. The court agreed that the letter sent by the plaintiffs did not invoke the penalty provided by Section 443.130.1. Id. at 680.
In following the holding of Lines, our Supreme Court has recently held that a demand letter under Section 443.130 must be properly written in order to place the bank on notice that a statutory demand is being made. Brown, 150 S.W.3d at 288; Garr, 137 S.W.3d at 460. In Brown, the court noted that the deficiencies in the demand letter included the failure to reference Section 443.130 and the 15 day compliance period, as well as the failure to identify the person making satisfaction. Brown, 150 S.W.3d at 288. In addition, the court in Brown stressed the fact that the demand letter failed to indicate "that the release be given to the person making satisfaction rather than filing the release with the recorder of deeds." Id. Similarly, in Garr, the demand letter provided as follows:
On August 2, 2002, we closed on our Marlann Drive home. On August 8, 2002, I confirmed via the Countrywide Automated Customer Service Line that our loan with Countrywide Home Loans was paid in full on August 8, 2002 and that an escrow balance of $60.84 would be refunded to me. We still have not received a Deed of Release to release the lien against our personal residence at 1417 Marlann Drive, Des Peres, Missouri 63131.
We are demanding immediate release of the Deed of Trust against our Marlann Drive property. Enclosed is a check payable to your institution in the sum of $30.00 to cover the costs of filing and recording the Deed of Release regarding the transaction. Please deliver in hand to me evidence of the release of the Deed of Trust. In the event the Deed of Release has already been sent, please return my check to above listed address.
Garr, 137 S.W.3d at 458. Here, the same deficiencies exist in the Glasses' demand letter as in Brown and Garr. The Glass demand letter states as follows:
Please consider this our demand letter and written request for a deed of release of the mortgage/deed of trust on our home at 12706 Wynfield Pines Court, Des Peres, Missouri 63131.
Our home was recently refinanced and your loan, which was secured by a mortgage/deed of trust on the above property, has been paid off and satisfied with good funds. Recognizing this, you acknowledged receipt of payment in full of your loan on June 13, 2001 in a letter dated July 24, 2001. A copy of such letter is enclosed. For your convenience, this loan was referenced as loan number 2010185700.
Enclosed please find a check in the amount of $24.00 as and for costs, including recording fees, for the filing and recordation of the deed of release. I have also enclosed evidence that the aforesaid mortgage/deed of trust has been paid off and the expense of filing and recording the release has been advanced.
I trust that this letter and the accompanying check will enable you to deliver the requested deed of release promptly. Thank you in advance for your cooperation.
The Glass letter does not reference Section 443.130 and does not request a deed of release within 15 business days. In addition, the letter only requests that First National deliver the requested deed of release promptly, but does not specify to whom the release should be sent. Nothing in the text of the Glass letter was sufficient to place First National on proper notice that a statutory demand for the deed of release was being made. The Glasses, therefore, are precluded from collecting the penalties provided under Section 443.130.
We reverse the grant of summary judgment in favor of the Glasses.
Nannette A. Baker, P.J. and Sherri B. Sullivan, J., concur.