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Bratton v. CitiFinancial, Inc.

Supreme Court of Kentucky

December 19, 2013

Edna BRATTON, Individually and as Executrix of the Estate of R.G. Bratton, Appellant
v.
CITIFINANCIAL, INC., Appellee.

Page 626

Errol L. Cooper, Jr., James L. Thomerson, Grasch Law, PSC, Counsel for Appellant.

Shea William Conley, Lauren Desiree Lunsford, Reminger Co., LPA, Counsel for Appellee.

OPINION

KELLER, Justice.

Edna Bratton and her late husband, R.G. Bratton (the Brattons), brought suit against CitiFinancial, Inc. (Citi) alleging that Citi erroneously placed a mortgage on their property and did not release that mortgage when notified of the error. The circuit court granted summary judgment and awarded damages based on Kentucky Revised Statute (KRS) 382.365. Citi appealed, and the Court of Appeals reversed, holding that the Brattons had not given notice to Citi by certified mail as required by KRS 382.365(4). The Brattons argue on appeal before this Court that Citi had actual notice of the error, thus notice by certified mail was not mandatory. Citi argues that the statute requires certified mail or personal delivery and actual notice cannot supplant that statutory mandate. Furthermore, Citi argues that KRS 382.365 only applies to mortgages that have been " satisfied," not to mortgages that were erroneously taken. We affirm the Court of Appeals's reversal of the trial court's summary judgment, although for different reasons.

I. FACTS

The underlying facts are not in dispute. The Brattons owned three parcels of real estate in Fayette County-2885 Liberty Road, 805 Tomahawk, and 815 Campbell Lane. On April 24, 2008, the Brattons intended to sell the Campbell Lane parcel to Boyd and Nannie Brooks (the Brookses). The Brookses financed the purchase through Citi and gave Citi a mortgage. Despite what the Brattons intended, the deed they executed conveyed not only the Campbell Lane parcel but also the Liberty

Page 627

Road and Tomahawk parcels to the Brookses. Furthermore, the mortgage executed by the Brookses, which stated on its face that it encompassed only the Campbell Lane parcel, contained a description encompassing all three parcels.[1]

In July 2008, counsel for the Brattons contacted Sherry Black (Black), the manager of a Fayette County Citi branch, and advised her that there was a problem with the deed and the mortgage. Black notified her supervisors and Citi's legal department of the problem and, in November 2008, Citi prepared and filed a " Deed of Correction." This deed apparently clarified that the Brattons only conveyed the Campbell Road parcel to the Brookses. However, it apparently did not re-convey the Liberty Road or the Tomahawk parcels to the Brattons, [2] and Citi did not release the mortgage on those two parcels.

Counsel for the Brattons concluded that the Deed of Correction did not rectify the matter, but made it more complicated. Therefore, he continued to contact Black seeking a release of the mortgage. In January 2009, counsel sent correspondence indicating that the Brattons would be filing suit and seeking damages under KRS 382.365. Black forwarded this information " up the chain of command" and Citi's response was that the Deed of Correction took care of the issues. The Brattons ultimately obtained a deed from the Brookses re-conveying the Liberty Road and Tomahawk parcels; however, Citi did not release the mortgage on those parcels until after the Brattons filed suit in July 2009.

In their complaint, the Brattons set forth the facts as outlined above and sought damages based on their allegation that Citi had violated KRS 382.365. Citi responded and, approximately one year later, filed a motion for summary judgment. It its motion, Citi argued that the provisions of KRS 382.365 only apply to mortgages that have been satisfied, not to mortgages that may have been erroneously filed. Furthermore, Citi argued that the Brattons could not rely on KRS 382.365 because they had not provided written notice by certified mail or personal delivery to Citi's principal address or to its agent for process.

The Brattons responded arguing that applying KRS 382.365 only to satisfied mortgages was nonsensical as that would leave them without a remedy. Furthermore, the Brattons argued that, because Citi had actual notice of the dispute, the Brattons were not required to comply with the notice provisions set forth in the statute.

The trial court subsequently entered an order granting summary judgment on liability in favor of the Brattons finding that actual notice was sufficient to meet the notice requirements of KRS 382.365. The court reserved on the issue of damages and did not address Citi's argument that KRS 382.365 only applies to satisfied mortgages. Citi moved the court to vacate its order arguing that the Brattons had not filed a motion for summary judgment. The court agreed, vacated the order granting summary judgment to the Brattons and entered an order denying Citi's motion for summary judgment. The Brattons then filed ...


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