743 S.E.2d 850
S.C. Ct. App.2013Background
- Pendleton Station planned three tracts (Tracts A, B, and 2-Acre Tract) and executed a mortgage to Penza dated Aug 4, 2004, which referenced Tract B in the body and Schedule A describing Tract A.
- The mortgage was recorded Oct 24, 2004 and secured the note; Schedule A described Tract A and referenced the same tax map numbers as Tract B.
- Zeller owned Tract B; Coastal Plains Development owned Tract A and Pendleton Station acquired A shortly before/after execution; Penza made additional $500,000 in loans after the mortgage.
- On Oct 25, 2005, the mortgage was re-recorded without Penza’s notice, omitting Schedule A and adding a separate mortgage for Tract A to the Bank; Penza had no notice of the re-recording.
- Pendleton repaid $200,000 in Feb 2006; in Mar 2007, Pendleton executed a deed in lieu including Tract A and Zeller deeded Tract B to the Bank; Penza filed foreclosure May 15, 2007; the master granted partial summary judgment, but the issue of whether the mortgage encumbered Tract A created a genuine issue of material fact; the appellate court reversed and remanded on that ground.
- The court did not address reform implications or additional sustaining grounds because the unresolved factual issue required reversal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the original mortgage encumber Tract A as well as Tract B? | Penza contends the mortgage included Tract A. | Bank contends the mortgage covered only Tract B. | Genuine issue of material fact; partial grant reversed and remanded. |
| Did the re-recording and Schedule A omission effectively reform the mortgage without Penza’s consent? | Penza argues such reform was improper. | Bank argues reform may be permissible to reflect the true encumbrance. | Not addressed; dispositive issue was whether Tract A was encumbered. |
| May the Bank rely on the re-recorded mortgage as a separate basis to sustain its position? | Penza challenges reliance on the re-recorded instrument. | Bank argues it should be sustaining ground. | Court declined to affirm on this basis due to lack of development at summary judgment. |
Key Cases Cited
- I'On, L.L.C. v. Town of Mt. Pleasant, 338 S.C. 406 (S.C. Ct. App. 2000) (appellate review of arguments may preserve grounds for appeal without second hearing in trial court)
- First Palmetto Sav. Bank, F.S.B. v. Patel, 344 S.C. 179 (Ct. App. 2001) (reinstatement of mistakenly satisfied mortgage when no third-party interest)