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Fifth Third Bank v. Canfield

United States District Court, Sixth Circuit

November 8, 2013

FIFTH THIRD BANK, Plaintiffs,
v.
R. STEPHEN CANFIELD and PENNY LOVE, Defendants.

MEMORANDUM OPINION

CHARLES R. SIMPSON, III, Senior District Judge.

This case involves various claims made by Plaintiff and Counter Defendant Fifth Third Bank ("Fifth Third") against Defendant and Counter Plaintiffs R. Stephen Canfield ("Canfield") and Penny Love ("Love") (collectively, "Defendants") in connection with a promissory note and mortgage. Defendants have filed ten counterclaims against Fifth Third. (DN 20). Fifth Third has moved for partial summary judgment on Canfield's liability on the note and mortgage and also seeks dismissal of Defendants' counterclaims. (DN 24). Defendants have moved for leave to file an amended answer and counterclaims. (DN 29). Having been fully briefed, these matters are now ripe for adjudication.

For the reasons set forth below, the court will grant Fifth Third's motion for partial summary judgment (DN 24) and deny Defendants' motion for leave to file an amended answer and counterclaims (DN 29).

BACKGROUND

The following facts are undisputed. Fifth Third, an Ohio banking corporation, is the holder and owner of several notes and loans made to Canfield. Defendants are spouses who reside in Kentucky. On April 19, 2006, Canfield executed a revolving promissory note[1] with Fifth Third in the maximum principal amount of $1 million. (DN 1-1). This line of credit was unsecured, but Canfield retained an option to renew it annually. Canfield exercised this renewal option in 2007 and 2008. (DNs 1-2, 1-3). In 2009, Canfield granted Fifth Third a mortgage on his personal residence to securitize the note.[2] Canfield, along with Love, executed an Open-End Mortgage and Security Agreement ("Mortgage"), which Fifth Third recorded on February 18, 2009. (DN 1-4). Canfield also executed a renewed note in the maximum principal amount of $916, 224.37, which was secured by the Mortgage. (DN 1-5). Canfield renewed the note in 2010. (DN 1-6).

Canfield and Fifth Third entered into an Extension Agreement on December 22, 2011, pursuant to which Canfield agreed to execute a renewal promissory note[3] in the principal amount of $862, 215.89 with a maturity date of April 5, 2012 ("2011 Note"). (DNs 1-7, 1-8). Canfield also agreed to list the mortgaged real property for sale with a real estate broker. (DN 1-7, at ¶ 4). When the 2011 Note matured on April 5, 2012, Canfield did not pay any of the sums due, nor did he seek to extend or renew the note. In a letter sent on September 13, 2012, Fifth Third advised Canfield that he was in default on the 2011 Note and demanded payment in full by September 23, 2012.

Canfield admits that he executed the notes, the Extension Agreement, and the Mortgage (collectively, "Loan Documents"), but he contends that Fifth Third made fraudulent statements that induced him to enter into these agreements.[4] In his counterclaim, Canfield alleges that the following exchanges occurred:

1. In 2006, Fifth Third offered Canfield an unsecured $1 million line of credit. (DN 20, at ¶ 3-4).
2. In 2008, Canfield agreed to give Fifth Third a mortgage on his personal residence in exchange for Fifth Third's oral promise that the note would remain interest-only until Canfield could sell the property to pay off the principal. (DN 20, at ¶ 7-14).
3. Fifth Third agreed that there would be no established time by which Canfield had to pay down the principal balance of the note. (DN 20, at ¶ 11).
4. In 2012, Fifth Third refused to renew the note unless Canfield paid $100, 000 toward the principal. (DN 20, at ¶ 19-21). Fifth Third then claimed that the line of credit had "matured" and demanded all outstanding principal due under the note. (DN 20, at ¶ 20-23).

Canfield also alleges that Fifth Third fraudulently induced him to execute the Extension Agreement by promising that it would not foreclose on his home and would let him renew the interest-only loan until he sold his home. (DN 30, at p. 3). Fifth Third denies that any such exchanges or oral promises were made. (DN 24, at p. 1-2).

Fifth Third filed this action in this court on September 25, 2012 against Defendants[5] seeking the following relief: (1) a judgment against Canfield for all amounts owed pursuant to the 2011 Note and the Mortgage; (2) a judgment that Fifth Third has a valid and enforceable mortgage lien on the real property; and (3) enforcement of Fifth Third's mortgage lien. Defendants filed an Answer and Counterclaim in which they raised several affirmative defenses and the following counterclaims: (1) breach of contract; (2) breach of good faith and fair dealing; (3) negligence; (4) fraudulent inducement; (5) tortious interference with prospective business advantage; (6) promissory/equitable estoppel; (7) declaratory judgment; (8) abuse of process; (9) punitive damages; and (10) injunctive relief. (DN 20). Fifth Third then filed a motion for partial summary judgment seeking (1) a judgment against Canfield for his liability to Fifth Third on the 2011 Note and the Mortgage, and (2) dismissal of Defendants' counterclaims. (DN 24). Defendants responded to Fifth Third's motion (DN 30) and filed a motion for leave to file an amended answer and counterclaims (DN 29).

DISCUSSION

I. Fifth Third's Motion for Partial Summary Judgment

Fifth Third contends that it is entitled to partial summary judgment as to Canfield's liability on the 2011 Note and the Mortgage and as to Defendants' counterclaims because there is no genuine factual dispute that Canfield breached his contractual obligations. (DN 24, at p. 1-2). Canfield acknowledges that he entered into the Loan Documents, but he disputes any allegations of ...


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