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Khan v. Regions Bank

Court of Appeals of Tennessee, Knoxville

November 12, 2014

RAFIA N. KHAN, INDIVIDUALLY, AND IN HER CAPACITY AS TRUSTEE OF THE RAFIA N. KHAN IRREVOCABLE TRUST
v.
REGIONS BANK

Session October 2, 2014

Petition for certiorari filed at, 06/15/2015

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Reversed; Case Remanded. Appeal from the Chancery Court for Knox County. No. 173193-2. Daryl R. Fansler, Chancellor.

Michael S. Kelley, Knoxville, Tennessee, for the appellant, Regions Bank.

Dan D. Rhea, Knoxville, Tennessee, for the appellees, Rafia N. Khan, individually, and in her capacity as Trustee of the Rafia N. Khan Irrevocable Trust.

D. MICHAEL SWINEY, J., delivered the opinion of the Court, in which CHARLES D. SUSANO, JR., C.J., and THOMAS R. FRIERSON, II, J., joined.

OPINION

Page 506

D. MICHAEL SWINEY, J.

This appeal arises from a disputed arbitration award. Rafia N. Khan (" Mrs. Khan" ), individually, and as Trustee of the Rafia N. Khan Irrevocable Trust (" the Trust" ) sued Regions Bank (" the Bank" ) in the Chancery Court for Knox County (" the Trial Court" ) alleging that the Bank had committed unfair acts under the Tennessee Consumer Protection Act (" the TCPA" ) by refusing to release a lien on property owned by the Trust and pledged to secure the Khans' line of credit with the Bank. Mrs. Khan's husband previously had withdrawn $40,000 on the joint line of credit, a move Mrs. Khan opposed. Per the loan documents, the parties by an agreed order entered into arbitration. The arbitrator Robert P. Murrian (" the Arbitrator" ), in a lengthy and detailed final award, found that the Bank was not liable for any unfair acts under the TCPA, that Mrs. Khan was not personally liable for the $40,000 loan made by the Bank to Mr. Khan, and that Mrs. Khan was not entitled to an order in the arbitration requiring the Bank to release the lien on the property. The Trial Court vacated the arbitration award. The Bank appeals. We hold, inter alia, that the Arbitrator rendered a sound, well-reasoned decision and award, and the Trial Court erred in vacating the award. We reverse the Trial Court.

OPINION

Background

The background facts of this long-running controversy are fairly straightforward. Mr. and Mrs. Khan obtained a joint line of credit from the Bank's predecessor secured by a deed of trust on residential property. Mrs. Khan had bought the property in 2004, and, later in 2004, she quitclaimed it to the Rafia N. Khan Irrevocable Trust. This property is where Mrs. Khan and her two children live. The joint line of credit dates from 2006, and it provided for credit up to $80,000. Mrs. Khan signed the credit agreement and disclosure in her individual capacity and signed the deed of trust both in her individual capacity and on behalf of the Trust.

In 2008, Mrs. Khan wanted to close the line of credit. There was some issue about whether or when the paperwork necessary to close the line of credit was processed finally. Before the final processing, Mr. Khan transferred $40,000 from the joint line of credit to his checking account. Mrs. Khan apparently was not consulted

Page 507

and did not approve of this move. The Khans have since divorced.

Mrs. Khan brought this lawsuit in both her individual capacity and as Trustee of the Rafia N. Khan Irrevocable Trust.[1] Mrs. Khan sought to have the Bank's refusal to release the lien on the residential property declared as an " unfair act" under the Tennessee Consumer Protection Act. Per the loan documents, the parties by an agreed order entered into arbitration. The Bank attempted to add Mr. Khan as a party to the arbitration, a move Mrs. Khan successfully opposed.

In November 2009, arbitration took place before the Arbitrator. The Arbitrator's findings as contained in the " Summary" section of the Interim Award and adopted in the Final Award, consisted of the following:

1. Ms. Khan has not proved that Regions Bank has breached the joint line of credit with respect to her;
2. Ms. Khan cancelled her obligations under the joint line of credit by providing Regions Bank with a written ...

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