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Forcht v. Forcht Bank, N.A.

Court of Appeals of Kentucky

June 23, 2017



          BRIEFS FOR APPELLANT/CROSSAPPELLEE: Richard M. Sullivan Edward F. Busch Bradley R. Palmer Louisville, Kentucky.

          BRIEFS FOR APPELLEE/CROSSAPPELLANT: Benjamin L. Riddle Cynthia L. Effinger Louisville, Kentucky.



          NICKELL, JUDGE.

         Nancy Brock Forcht appeals from the Jefferson Circuit Court's grant of summary judgment in favor of Forcht Bank, N.A., on her claims for violations of KRS[1] 382.365[2] and the tort of outrage. Nancy also challenges several of the trial court's evidentiary rulings. On cross-appeal, Forcht Bank challenges the trial court's denial of its first motion for summary judgment on Nancy's claim for outrage. Following a careful review of the briefs and the law, we affirm the trial court in toto.

         Nancy and her ex-husband, Theodore Bradley Forcht ("Ted"), owned a residence on Hartwick Village Drive in Louisville, Kentucky ("Hartwick property"), encumbered by a mortgage in favor of PRP National Bank[3] ("PRP Bank") executed in 2000. The mortgage secured a note bearing a maturity date of September 22, 2005. In May of 2002, the Board of Directors approved[4] a modification of the terms of the note.[5] PRP Bank released the mortgage on the Hartwick property on October 14, 2003. The record reveals the underlying indebtedness was not, in fact, paid off at the time the release was filed.

         Ted began divorce proceedings against Nancy in 2004. On September 21, 2005, the parties executed a Property Settlement Agreement ("PSA") in which Ted agreed to convey his interest in the Hartwick property to Nancy and assume all responsibility for payment of the outstanding indebtedness on the property. The following day, PRP Bank prepared a new note with a stated purpose of refinancing the debt on Ted and Nancy's personal residence. The new note called for a single advance to the Forchts; called for a balloon payment to mature on September 22, 2010; and contained signature lines for both Ted and Nancy. Although the note was processed and entered into PRP Bank's computer system, the entire loan file for the 2005 note is missing, and no executed copies of any documents can be located. Nancy denies executing the new note, insisting she was unaware of its existence.

         On October 4, 2005, PRP Bank filed an "Affidavit in Aid of Title" with the Jefferson County Court Clerk's Office, purporting to re-file Ted and Nancy's 2000 mortgage on the Hartwick property, and asserting the release dated October 14, 2003, had been erroneously filed. The terms of the original mortgage were not modified in any way. On August 1, 2006, PRP Bank recorded another mortgage release purporting to release the mortgage on the Hartwick property for a second time. Nancy was not given notice of the filing of any of these documents.

         On February 10, 2008, in conformity with the parties' 2005 PSA, Ted executed a Quitclaim Deed conveying his interest in the Hartwick property to Nancy. Nearly two years later, in January of 2010, Nancy contacted Forcht Bank seeking information on obtaining a loan to purchase a vehicle and about an outstanding personal loan unrelated to the Hartwick property. During that conversation, Nancy first learned of the 2005 note purporting to extend her obligation on the 2000 mortgage on her home. Over the next several months, Nancy attempted to determine her liability on the note she claimed she never signed. Shortly before the maturity date of the 2005 note, Forcht Bank prepared new loan papers and sought Nancy's voluntary execution of them; Nancy refused to sign. During this time, she was informed by her daughter, Kristen Urbahn, that Ted repeatedly stated Nancy's refusal to execute a new mortgage would result in the institution of foreclosure proceedings by Forcht Bank. Nancy believed Ted's role as a director of the bank gave him authority and ability to initiate such an action. She contended the stress of the threats caused her severe emotional distress. No foreclosure proceedings were ever instituted.

         On October 8, 2010, Ted-as the debtor-signed a "Change in Terms Agreement" purporting to extend the maturity date and modify the interest rate on the original 2000 loan as previously modified by the 2005 agreement. The agreement noted the loan was still to be secured by the Hartwick property. The modification was approved at a meeting of the Board of Directors of Forcht Bank. On November 3, 2010, Forcht Bank recorded an Affidavit in Aid of Title purporting to re-record-for a second time-the original 2000 mortgage, this time asserting the 2006 release had been inadvertently filed and the underlying indebtedness had not been satisfactorily extinguished.

         Nancy subsequently requested Forcht Bank release the mortgage encumbering her property. Upon receiving no response to her written request, a second request was sent by her counsel demanding release of the allegedly invalid, and twice-released mortgage. Forcht Bank refused to honor the demand, asserting the prior releases had been inadvertently filed, the mortgage had been reinstated to secure the loan, and the underlying debt still existed. By counsel, on January 11, 2011, Nancy sent a third request for release of the mortgage, this time citing KRS 382.365(4). Receiving no relief, Nancy filed the instant suit on February 18, 2011, seeking civil penalties and damages from Forcht Bank for violations of KRS 382.365 ("statutory claim"), slander of title, breach of the duty of good faith and fair dealing, violations of KRS 434.155, and breach of contract. The complaint was later amended to add a claim for damages on the tort of outrage.[6] On April 6, 2011, Forcht Bank filed-for the third time-a release of the mortgage encumbering the Hartwick property.

         Following a period of discovery, on October 31, 2012, the trial court entered an order denying Nancy's motion for partial summary judgment on the statutory claim and dismissing that portion of the complaint upon concluding the underlying debt had not been satisfied and thus, the statutory release requirements had not been triggered. The order also found sufficient factual questions existed surrounding the outrage claim and therefore denied Forcht Bank's motion for partial summary judgment. Nancy's subsequent motion to reconsider dismissal of the statutory claim was denied.

         On January 11, 2013, the trial court granted Forcht Bank's motion in limine to exclude any references to allegations of filing a false lien in violation of KRS 434.155(1) and that any such violation would be punishable as a felony offense. Shortly thereafter, the trial court granted Forcht Bank's motion to strike Nancy's proffered errata sheet which purported to make approximately fifty changes to her earlier deposition testimony, some of which changed entire answers or significantly altered the spirit and tone of the previously given answer, and which failed to offer reasons for the proposed changes as required by CR[7] 30.05.

         On January 30, 2013, the trial court granted another motion in limine filed by Forcht Bank to exclude any statements purportedly made by Ted threatening foreclosure on the Hartwick property. Based on this ruling, Forcht Bank renewed its motion for summary judgment on the outrage claim. In denying the motion, the trial court explained Ted's statements constituted inadmissible hearsay and were not, in any case, attributable to Forcht Bank. Further, noting Nancy's outrage claim alleged the actions taken by Forcht Bank caused such stress as to exacerbate her pre-existing medical conditions, the trial court concluded the guidance set forth in Osborne v. Keeney, 399 S.W.3d 1, 14-18 (Ky. 2012), while not final at the time of its decision, was persuasive and required medical or expert testimony to sustain an action based on emotional distress. Thus, Nancy was ordered to acquire and disclose an expert witness within forty-five days.

         After Forcht Bank renewed its motion for summary judgment on the outrage claim, Nancy stipulated her emotional distress claims primarily arose from Ted's purported threatening statements. Nancy offered no medical or expert testimony to bolster her claims. Finding she could not produce admissible evidence of Forcht Bank's willful and outrageous conduct resulting in severe emotional distress sufficient to sustain a claim for outrage, on July 19, 2013, the trial court dismissed Nancy's claim. On July 25, 2013, an agreed order was entered voluntary dismissing all remaining counts in Nancy's complaint not previously dismissed by order of the court and further designating all prior orders as final and appealable. This appeal and cross-appeal followed.

         Nancy presents five allegations of error in seeking reversal. She contends the trial court erred in: 1) granting summary judgment on her statutory claim; 2) excluding Ted's statements containing threats of foreclosure; 3) applying Osborne to the outrage claim; 4) excluding reference to potential criminal violations of KRS 434.155; and 5) striking her proposed changes to her deposition testimony. In a protective cross-appeal, Forcht Bank contends even if the trial court's evidentiary rulings were incorrect, it was still entitled to summary judgment on Nancy's outrage claim as she was unable to sufficiently establish the factual and legal bases necessary to sustain such a cause of action. We shall address each assertion in turn.


         Summary judgment serves to terminate litigation where "the pleadings, depositions, answers to interrogatories, stipulations, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." CR 56.03. Summary judgment should be granted only if it appears impossible the nonmoving party will be able to produce evidence at trial warranting a judgment in her favor. Steelvest, Inc. v. Scansteel Serv. Ctr., Inc., 807 S.W.2d 476 (Ky. 1991). Summary judgment "is only proper where the movant shows ...

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