DEUTSCHE BANK NATIONAL TRUST CO. v. RICE
493 P.3d 1043
| Okla. Civ. App. | 2020Background
- Richard Rice executed a 2004 note and mortgage (modified in 2012); Deutsche Bank, as trustee, sued to foreclose alleging default as of November 1, 2015.
- The Bank appended an endorsed-in-blank note, mortgage, loan modification, payment history, and servicer affidavits to its foreclosure petition and summary judgment motion.
- Rice counterclaimed for breach of the mortgage, alleging the Bank (via servicer Nationstar) failed to timely pay the 2015 homeowners insurance premium, causing cancellation and preventing him from obtaining adequate insurance; he sought escrow funds and damages.
- The record shows servicer attempted payments in 2015 (a $16,069 check was returned), the Travelers policy was cancelled for nonpayment, a new policy was later procured (effective for 2015) and the premium paid in early 2016.
- The trial court granted summary judgment for the Bank; Rice appealed arguing the Bank breached before his default and equity should bar acceleration/foreclosure.
- The Court of Civil Appeals affirmed: it found (1) Rice produced no admissible evidence of damages from the delayed premium payment and (2) although a technical breach occurred, equity did not preclude acceleration and foreclosure.
Issues
| Issue | Plaintiff's Argument (Deutsche Bank) | Defendant's Argument (Rice) | Held |
|---|---|---|---|
| Did the Bank breach the mortgage by failing to timely pay the 2015 insurance premium? | Bank acknowledges payment issues but shows attempts and that insurance was later secured; any lapse was remedied. | Bank failed to pay timely, causing policy cancellation and loss of coverage. | Court: A technical breach occurred (payment delay/cancellation) but it was remedied and not shown to cause damages. |
| Whether Rice proved damages from the alleged breach. | Bank: No evidence of damages; escrow used to secure replacement insurance; premium ultimately paid. | Rice: Asserts loss of insurability and entitlement to escrowed funds and future damages; provides correspondence and servicer notes. | Court: Rice produced no admissible evidence of actual damages; summary judgment proper on breach claim. |
| Whether the Bank’s pre-default breach bars its ability to accelerate and foreclose on equitable grounds. | Bank: Equity does not bar acceleration; its conduct was not oppressive or unconscionable. | Rice: Bank’s breach occurred before his default, so equity should prevent acceleration/foreclosure. | Court: Equity does not bar foreclosure here; the Bank’s error was not sufficiently oppressive or causal to Rice’s default. |
| Whether summary judgment was proper given the record (standing, default, amounts). | Bank: Record (endorsed note, affidavits, payment history) establishes holder status, default, and amounts. | Rice: Challenges affidavits as self-serving; disputes holder status and amounts but produced no contradictory evidentiary material. | Court: Uncontroverted record supports Bank’s status, default, and amounts; summary judgment affirmed. |
Key Cases Cited
- Murphy v. Fox, 278 P.2d 820 (Okla. 1955) (trial court may refuse foreclosure for technical default caused by mistake or inadvertence where security not impaired)
- Igleheart v. Warrington, 891 P.2d 619 (Okla. Civ. App. 1995) (foreclosure is equitable; refusal to accelerate should be exercised sparingly)
- Davis v. Leitner, 782 P.2d 924 (Okla. 1989) (materials opposing summary judgment need not be admissible evidence but must show reasonable probability of admissible evidence at trial)
- Poafpybitty v. Skelly Oil Co., 517 P.2d 432 (Okla. 1973) (affidavit of interested witness may be considered on summary judgment when uncontroverted and supported elsewhere in record)
- Greenberg v. Serv. Bus. Forms Indus., Inc., 882 F.2d 1538 (10th Cir. 1989) (whether acceleration is permitted depends on mortgagee’s conduct; courts consider bad faith, fraud, or unconscionability)
- CPT Asset Backed Certificates, Series 2004-EC1 v. Kham, 278 P.3d 586 (Okla. 2012) (mortgage follows negotiable note; endorsement and delivery of the note carries the mortgage)
- Deutsche Bank Nat'l Trust Co. v. Brumbaugh, 270 P.3d 151 (Okla. 2012) (endorsed-in-blank note supports holder’s right to enforce)