572 S.W.3d 197
Tenn. Ct. App.2018Background
- Dawn and William Kinard refinanced their Collierville home in 2006 via a 15‑year note and deed of trust through First Horizon; payments later became difficult.
- The Kinards applied for loan modifications, withheld some payments based on alleged oral instructions, and repeatedly submitted updated modification packets.
- First Horizon sent written notice stating payments were not suspended and foreclosure/collection could continue while modification requests were reviewed.
- Servicing transferred to Nationstar effective August 15, 2011; Nationstar allegedly failed to provide timely payoff figures while the Kinards sought refinance.
- Foreclosure was initiated; the Kinards sued (breach of contract, breach of implied covenant, misrepresentation, promissory estoppel, TILA violation), and the Chancery Court granted summary judgment to defendants; this appeal followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract / implied covenant vs. First Horizon | First Horizon breached loan servicing obligations and the implied covenant by mishandling the modification process and transfer of servicing. | No enforceable separate contract to modify; loan documents did not require offering modifications; any alleged oral agreement was too vague. | Affirmed: claims based on a separate oral modification agreement waived/insufficient; implied covenant claim fails because loan did not impose a duty to offer modifications and Kinards’ reliance was unreasonable in light of written notice. |
| Breach of implied covenant vs. Nationstar (failure to provide payoff figures) | Nationstar breached the implied covenant by failing to timely provide accurate payoff figures needed for refinance; prepayment right implies right to payoff info. | Chancery Court initially ruled no breach of contract was alleged against Nationstar. Nationstar did not show absence of factual dispute at summary judgment. | Reversed: dismissal vacated; claim survives because failure to provide payoff information can impair the borrower’s contractual prepayment right and Nationstar did not negate the factual claim. |
| Misrepresentation vs. First Horizon | First Horizon told Kinards to stop payments (or would instruct when to resume), inducing reliance. | Alleged statements were not representations of existing/past facts; written notice negated reasonable reliance. | Affirmed: no actionable misrepresentation (statements were not factual or reasonable reliance lacking given written notice that payments were not suspended). |
| Promissory estoppel vs. First Horizon | Kinards relied to their detriment on promise of fair consideration for permanent modification and withheld payments. | Reliance unreasonable and claim time‑barred; written notice told Kinards payments were not suspended. | Affirmed: reliance unreasonable in light of written notice; promissory estoppel fails. |
| TILA §1641(g) notice vs. Bank of New York Mellon | Bank failed to provide required notice of transfer within 30 days of March 21, 2013. | TILA claim is subject to one‑year limitations and was filed after the one‑year period. | Affirmed: claim time‑barred under TILA’s one‑year limitations; discovery rule does not extend the period. |
Key Cases Cited
- Maggart v. Almany Realtors, Inc., 259 S.W.3d 700 (Tenn. 2008) (standard of review for summary judgment).
- Rye v. Women’s Care Ctr. of Memphis, MPLLC, 477 S.W.3d 235 (Tenn. 2015) (summary judgment burden/allocation framework).
- Barnes & Robinson Co., Inc. v. OneSource Facility Servs., Inc., 195 S.W.3d 637 (Tenn. Ct. App. 2006) (limits on implied covenant—cannot create new contractual rights).
- Walker v. Sunrise Pontiac‑GMC Truck, Inc., 249 S.W.3d 301 (Tenn. 2008) (elements for intentional and negligent misrepresentation).
- Cadence Bank, N.A. v. The Alpha Trust, 473 S.W.3d 756 (Tenn. Ct. App. 2015) (scope of duty of good faith tied to contract terms).
- Long v. McAllister‑Long, 221 S.W.3d 1 (Tenn. Ct. App. 2006) (implied covenant protects reasonable expectations and parties’ rights under contract).