DAWN W. KINARD ET AL.
NATIONSTAR MORTGAGE LLC ET AL.
Session Date: January 31, 2018
from the Chancery Court for Shelby County No. CH-14-1266-1
Walter L. Evans, Chancellor
appeal involves various issues related to a mortgage loan
transaction and loan modification efforts. The
plaintiffs' complaint, which was filed just a few days
before a scheduled foreclosure, asserted multiple claims for
relief, including breach of contract, breach of the covenant
of good faith and fair dealing, and violation of the
Truth-in-Lending Act. The trial court ultimately dismissed
all claims at summary judgment in the defendants' favor.
For the reasons stated herein, we affirm in part, reverse in
part, and remand for further proceedings consistent with this
R. App. P. 3 Appeal as of Right; Judgment of the Chancery
Court Affirmed in Part, Reversed in Part, and Remanded
A. Brewer, Memphis, Tennessee, for the appellants, Dawn W.
Kinard, and William E. Kinard.
Paxton Roberts and J. Anne Tipps, Nashville, Tennessee, for
the appellees, NationStar Mortgage, LLC, First Horizon
National Corporation, and The Bank of New York Mellon fka
Bank of New York.
B. Goldin, J., delivered the opinion of the court, in which
J. Steven Stafford, P.J., W.S., and Brandon O. Gibson, J.,
B. GOLDIN, JUDGE
AND PROCEDURAL HISTORY
genesis of this case is traceable to January 24, 2006, when
Dawn and William Kinard ("the Kinards") refinanced
their home in Collierville, Tennessee. On that date, the
Kinards executed a fifteen-year promissory note in the amount
of $694, 875.00, as well as a deed of trust that secured
their debt obligation. The Kinards' loan, which was
obtained through First Horizon Home Loan Corporation
("First Horizon"), carried a fixed interest rate of
2009, the Kinards began to experience difficulty in making
their scheduled note payments. The downturn in the national
economy had presented a number of challenges to their family
businesses, and the Kinards accordingly explored efforts to
secure payment relief from First Horizon. Although they
initially sought to convert their loan to a thirty-year
mortgage, the Kinards were unable to get a concrete response
to that request. However, when a First Horizon representative
later suggested that the Kinards should apply for a loan
modification, they did so.
Kinards pursued a loan modification by taking several
actions. In addition to submitting financial information to
First Horizon that had allegedly been requested of them, the
Kinards withheld certain loan payments. With respect to this
latter action, the Kinards claim that a First Horizon
representative informed them that a modification was not
possible if their loan payments were current.
initially withholding payments and with still no decision
from First Horizon regarding their request for a loan
modification, the Kinards began to worry that they were
getting too far behind on their mortgage. They tendered a
substantial payment to bring the loan current, but they were
then allegedly instructed to make no more regular payments
pending the decision on the loan modification application.
Mrs. Kinard specifically claims that a First Horizon
representative instructed her that she would be told when and
how much she should resume paying. Following this alleged
instruction, payments were once again withheld.
Kinards subsequently sent several loan modification packets
to First Horizon as instructed. According to Mrs. Kinard, new
packets were sent when old packets were deemed outdated.
However, when Mrs. Kinard made a number of calls to get
apprised about the status of the modification application,
she allegedly could get no information.
should be noted that, notwithstanding the alleged oral
instruction to withhold payments, subsequent written
correspondence plainly indicated that the Kinards' duty
to make loan payments was not altered. In a letter from First
Horizon dated November 10, 2010, following the Kinards'
request for a loan modification, the Kinards were informed in
relevant part as follows:
received your workout package for review. . . . Please be
. Collection and/or foreclosure activity will continue on
your account until such time that a workout has been
. Late charge fees may also continue to be assessed.
. Your obligation to make payments is not suspended while we
review the submission[.]
summer of 2011, the Kinards learned that their loan was being
"sold" to Nationstar Mortgage LLC
("Nationstar") and that Nationstar would soon begin
servicing the loan. Servicing of the loan was eventually
transferred to Nationstar effective August 15, 2011. A
"Notice of Assignment, Sale, or Transfer of Servicing
Rights" was provided to the Kinards by letter dated
August 25, 2011.
servicing transferred to Nationstar, the Kinards found
another source to refinance their loan. As a result, they
made multiple requests for payoff figures and remained in
frequent contact with Nationstar representatives about the
status of their application for a loan modification and their
requests for payoff information. According to the Kinards,
however, Nationstar was unresponsive and consistently failed
to provide the requested information.
eventually initiated foreclosure proceedings, and a
foreclosure sale was scheduled for August 26, 2014. The
present litigation ensued in response to the threatened
foreclosure. On August 21, 2014, the Kinards filed a
"Petition to Enjoin Foreclosure Sale and Complaint for
Damages" in the Shelby County Chancery Court. In
addition to seeking injunctive relief with regard to the
foreclosure, the complaint asserted the following claims
against First Horizon and/or Nationstar: violation of the
Fair Debt Collection Practices Act, breach of contract,
breach of the covenant of good faith and fair dealing,
promissory estoppel, intentional or negligent
misrepresentation, and violation of the Tennessee Consumer
Protection Act. The Kinards also sought to recover a judgment
against the Bank of New York Mellon for an alleged violation
of the Truth-in-Lending Act ("TILA"). In advancing
their TILA claim, the Kinards asserted that they had learned
of a change in ownership of their mortgage to Bank of New
York Mellon but had not been given notice of the transfer as
required by law. A temporary restraining order enjoining the
foreclosure was entered in response to the filing of the
complaint, and on September 4, 2014, the temporary
restraining order was extended through entry of a consent
8, 2016, Nationstar, First Horizon, and the Bank of New York
Mellon filed a joint motion for summary judgment. The motion
requested that the Kinards' complaint be dismissed in its
entirety. A statement of undisputed material facts was
submitted contemporaneously to the filing of the
defendants' motion, and on July 11, 2016, the defendants
jointly filed a supporting memorandum of facts and law. The
Kinards filed a response to the defendants' summary
judgment motion on October 24, 2016. On the same date, they
filed a response to the defendants' statement of
undisputed material facts, as well as a statement of
additional undisputed material facts. The Kinards'
filings were soon followed by additional fillings submitted
on behalf of the defendants. On November 1, 2016, the
defendants filed a reply in support of their summary judgment
motion and also submitted a response to the Kinards'
statement of additional undisputed material facts.
hearing on the defendants' motion for summary judgment
was held on November 4, 2016. The motion was taken under
advisement following the hearing, and on April 10, 2017, the
Chancery Court entered its "Findings of Fact and
Conclusions of Law, " wherein it concluded that the
defendants' motion for summary judgment should be
granted. A formal "Final Order and Judgment" was
later entered on April 28, 2017. In its April 28 order, the
Chancery Court dismissed the Kinards' claims against the
defendants with prejudice. This appeal followed.
their appellate brief, the Kinards raise the following issues
for our review, which we rephrase and reorder, as follows:
1. Whether the Chancery Court erred in dismissing their
claims for breach of contract and breach of the covenant of
good faith and fair dealing.
2. Whether the Chancery Court erred in dismissing their
3. Whether the Chancery Court erred in dismissing their claim