ABN AMRO Mortgage Group, Inc. v. Southern Security Federal Credit Union
372 S.W.3d 121
Tenn. Ct. App.2011Background
- ABN AMRO Mortgage held the first deed of trust on 8320 Bon Lin Drive; the First Deed described Lot 16 due to scrivener’s error, though other references identified Lot 10 and the parcel correctly.
- Southern Security obtained a HELOC deed of trust on the same property, recorded May 22, 2002, correctly describing Lot 10 as the property secured.
- ABN foreclosed on its First Deed of Trust; Southern Security appeared at the sale and bid $197,165.
- Southern Security later stopped payment on its cashier’s check after ABN’s bid was accepted, prompting ABN to file suit seeking reformation and to confirm ABN as the first mortgage holder.
- The trial court found the First Deed sufficiently identified the property, held ABN had priority, and ordered a substitute deed of trust in ABN’s favor and payment of $197,165 to ABN; Southern Security appealed.
- The appellate court conducted de novo review, held the scrivener’s error did not defeat ABN’s priority, and affirmed the trial court’s judgment in ABN’s favor.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the scrivener’s error in the First Deed of Trust negates ABN’s first-lien status | ABN argues the description, though flawed on Lot, identifies the property via address/parcel and extrinsic evidence. | Southern Security argues the error undermines ABN’s priority as first lienholder. | scrivener’s error does not defeat priority; extrinsic evidence confirms the intended property and ABN remains first lienholder. |
| Whether ABN had standing to foreclose and sue on the First Deed of Trust | ABN is the rightful assignee/transferee of the First Deed of Trust and had standing to foreclose and sue. | Southern Security asserts ABN’s standing was not proven in trial court. | ABN demonstrated standing; standing issue waived on appeal but record supports ABN’s standing. |
| Whether Southern Security is bound to honor its bid at ABN’s foreclosure sale | A bid at a properly conducted foreclosure sale creates an executory contract to pay the bid amount. | Southern Security contends it may not be bound given the contested title and priority. | Southern Security is contractually bound to pay $197,165 to ABN. |
| Whether ABN has damages and is entitled to relief (specific performance) despite the bid market | Stopping payment on the cashier’s check caused damages equal to the bid amount; specific performance appropriate. | No damages or improper relief argued by Southern Security. | ABN suffered $197,165 in damages; court affirmed specific performance remedy.” |
Key Cases Cited
- Wilson v. Calhoun, 11 S.W.2d 906 (Tenn. 1928) (description must fit land with extrinsic aid when necessary to identify property and boundaries)
- Dobson v. Litton, 45 Tenn. 616 (Tenn. 1868) (parol evidence admissible only if deed refers to a particular tract; otherwise not)
- Phoenix Mut. Life Ins. Co. v. Kingston Bank & Trust Co., 112 S.W.2d 381 (Tenn. 1938) (sufficiency of description to identify land with reasonable certainty)
- Freeman v. Martin Robowash, Inc., 457 S.W.2d 606 (Tenn. Ct. App. 1970) (description sufficiency identified by location/identity of land)
- Wallace v. McPherson, 214 S.W.2d 50 (Tenn. 1947) (sufficient description may permit extrinsic evidence to locate land)
- Holiday Hospitality Franchising v. State Res., 232 S.W.3d 41 (Tenn. Ct. App. 2006) (equitable lien restoration when a deed of trust is released by mistake; not applicable to mere scrivener’s error but analogous)