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Suntrust Bank v. Ritter

Court of Appeals of Tennessee, Knoxville

February 1, 2018

SUNTRUST BANK
v.
MATTHEW ROBERT RITTER

          Assigned on Briefs November 1, 2017

         Appeal from the Circuit Court for Rhea County No. 2016-CV-308 Thomas W. Graham, Judge

         A bank filed an action against a debtor to collect the outstanding balance on an installment loan approximately five and one-half years after the cause of action accrued. After finding that Florida's five-year statute of limitations for actions on contracts applied, the trial court denied the bank's motion for summary judgment and granted the debtor's motion to dismiss for failure to state a claim. The bank appeals, and we reverse the trial court's judgment.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Reversed

          Mary Barnard Cheadle and John R. Cheadle, Jr., Nashville, Tennessee, for the appellant, SunTrust Bank.

          Andy D. Bennett, J., delivered the opinion of the Court, in which Charles D. Susano, Jr., and Kenny W. Armstrong, JJ., joined.

          OPINION

          ANDY D. BENNETT, JUDGE

         Factual and Procedural Background

         This case involves a 2007 loan made by SunTrust Bank ("SunTrust") to Matthew Robert Ritter. SunTrust is a Georgia banking corporation that is qualified to operate in Tennessee. Mr. Ritter is a resident of Spring City, Tennessee.

         On February 16, 2007, Mr. Ritter executed an "access 3" equity line account agreement ("the Agreement") with SunTrust that granted him a line of credit in the amount of $110, 500.00. The loan was secured by a mortgage on real property that Mr. Ritter owned in Florida. Because SunTrust Mortgage, Inc.[1] held a mortgage on Mr. Ritter's Florida property at the time the Agreement was executed, SunTrust held a junior mortgage on the property.

         The Agreement provided that Mr. Ritter could request advances on the line of credit for a period of ten years and required the loan to be paid in full no later than twenty years from the date the Agreement was executed (February 16, 2027). The Agreement also included the following relevant provisions:

Late Charge. Your payment will be late if it is not received by us within 7 days after the "Payment Due Date" shown on your periodic statement. If your payment is late we may charge you 5.000% of the payment.
Collection Costs. We may hire or pay someone else to help collect this Agreement if you do not pay. You will pay us that amount. This includes, subject to any limits under applicable law, our costs of collection, including court costs and fifteen percent (15%) of the principal plus accrued interest as attorneys' fees or reasonable attorneys' fees as allowed by law . . . .
Governing Law. This Agreement will be governed by federal law applicable to us and, to the extent not preempted by federal law, the laws of the State of Florida without regard to its conflicts of law provisions. This Agreement has been accepted by us in the State of Florida.

         Between 2007 and 2011, Mr. Ritter received several advances on the line of credit. He made payments on the loan through February 15, 2011. SunTrust received no other payments from him after that date despite a remaining balance of $106, 442.43. On September 7, 2011, SunTrust formally charged-off the account.[2]

         SunTrust Mortgage, the senior mortgage holder, initiated foreclosure proceedings on Mr. Ritter's Florida property and named SunTrust as a junior interest holder. On July 15, 2013, the Circuit Court for Charlotte County, Florida granted SunTrust Mortgage a final summary judgment of mortgage foreclosure in the amount of $184, 980.25. The record does not indicate how much the Florida property sold for at the foreclosure sale. At the time of foreclosure, however, the Florida property was appraised at $98, 489.00- far less than the combined amount of $291, 422.68 owed to ...


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