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Saddler v. PNC Bank N.A.

United States District Court, E.D. Missouri, Eastern Division

June 11, 2019

LATERRYL SADDLER and SADDLER RESIDENTIAL CARE FACILITY, INC., Plaintiffs,
v.
PNC BANK, N.A., Defendant,

          MEMORANDUM AND ORDER

          RODNEY W. SIPPEL UNITED STATES DISTRICT JUDGE

         Plaintiffs Saddler Residential Care Facility, Inc. (SRCF) and Laterryl Saddler have a loan with Defendant PNC Bank (PNC). The loan is secured by the building in which SRCF is located. The loan is in default. Plaintiffs filed an amended complaint for a declaratory judgment seeking to construe the provisions of the deed of trust and the note associated with the loan. Plaintiffs also allege that PNC has failed to properly credit all of Plaintiffs' payments on the loan. PNC filed counterclaims including breach of note and breach of guaranty. PNC filed a motion for summary judgment on its counterclaims and on Plaintiff's complaint for a declaratory judgment. Because it is undisputed that the loan is in default and that the damages have been correctly calculated, I will grant the motion for summary judgment.

         Background

         Plaintiff SRCF and Plaintiff Laterryl Saddler operate a residential care facility for the aged and infirm located at 730 Hodiamont Avenue, St. Louis, Missouri 63122. That property is the subject of this litigation. On July 1, 2003, SRCF executed a promissory note in favor of Allegiant Bank in the original principal amount of $178, 006.62. Saddler signed the note on behalf of SRCF as SRCF's president. The note paid off three earlier promissory notes including refinancing the first and second mortgage on the Hodiamont property. Saddler and her husband (deceased) were guarantors of the note. A deed of trust encumbering the Hodiamont property secured the note.

         On July 30, 2004, Allegiant Bank merged with National City Bank. [Doc. # 78, Ex. 6] On July 1, 2006, SRCF executed a promissory note in favor of National City Bank in the amount of $157, 255.78. The note amended and restated the 2003 note. Saddler signed the note on behalf of SRCF as SRCF's president. Saddler also executed a guaranty of the 2006 note.

         On November 6, 2009, Defendant PNC Bank acquired National City Bank. [Id.] On February 2, 2010, SRCF executed a modification agreement with PNC in which the 2006 note was modified to extend the maturity date, adjust the interest rate, and modify the monthly payments, among other changes. Pursuant to the 2010 modification of the note all unpaid principal, unpaid accrued interest, and other amounts due were payable on March 1, 2012. The note provided that the failure to make a payment or comply with or perform any other term, obligation, covenant or condition contained in the note or any related document shall constitute default. In addition, an event of default increased the interest rate to thirteen percent, imposed a late charge of five percent, and required that SRCF pay all costs of collection in the event of default, including attorneys' fees, legal expenses, and court costs.

         On December 31, 2012, SRCF and Saddler executed a forbearance agreement in response to their default on the note and on the guaranty. Under the agreement PNC agreed to forebear its right to immediately enforce its rights under the loan documents until January 1, 2018 subject to certain conditions. Under the agreement SRCF and Saddler confirmed that they were in default of the loan. They also confirmed the amounts due under the loan and that the note, guaranty, and deed of trust were all valid, binding and enforceable. They also agreed that their obligations under the loan documents were not subject to any set-offs, defenses, or counterclaims. SRCF and Saddler acknowledged and agreed to pay in full all sums due under the note by January 1, 2018. SRCF has failed and refused to pay the sums due under the note by January 1, 2018, including, without limitations, all principal, interest, late charges, and real estate taxes for the property. On January 5, 2018, PNC sent SRCF a letter informing SRCF and Saddler of SRCF's default under the note and made demand upon SRCF and Saddler for immediate payment of all amounts due under the note. PNC calculates that the balance due and owing, as of February 15, 2019, is $180, 567.96[1] which includes the principal sum of $104, 271.83, plus accrued and unpaid interest in the amount of $16, 266.59, plus accrued and unpaid late charges in the amount of $7, 312.37, plus 2015 real estate taxes in the amount of $4, 623.43, plus appraisal and title fees in the amount of $17, 441.00, plus PNC's attorneys' fees and costs in the amount of $40, 400.90, less a waiver of late fees and interest thereon in the amount of $9, 748.16 relating to the forbearance agreement, plus accrued interest from February 16, 2019 until paid.

         On December 26, 2017, Saddler filed a petition for a declaratory judgment in state court challenging PNC's title to the note and seeking to clarify payments under the note. On February 2, 2018, PNC removed the case to this Court based on diversity jurisdiction. On March 22, 2018, Sadler filed an amended complaint for a declaratory judgment. In that document Saddler added SRCF as a plaintiff. The amended complaint seeks a to construe the provisions of the deed of trust and the note associated with the loan and seeks to clarify the chain of title of the note. Plaintiffs also allege that PNC has failed to properly credit all of Plaintiffs' payments on the loan. PNC filed counterclaims including breach of note and breach of guaranty. PNC filed a motion for summary judgment on its counterclaims and on Plaintiff's complaint for a declaratory judgment.

         Legal Standard

         Summary judgment is appropriate if the evidence, viewed in the light most favorable to the nonmoving party, demonstrates that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Lynn v. Deaconess Medical Center, 160 F.3d 484, 486 (8th Cir. 1998)(citing Fed.R.Civ.P. 56(c)). The party seeking summary judgment bears the initial responsibility of informing the court of the basis of its motion and identifying those portions of the affidavits, pleadings, depositions, answers to interrogatories, and admissions on file which it believes demonstrates the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). When such a motion is made and supported by the movant, the nonmoving party may not rest on his pleadings but must produce sufficient evidence to support the existence of the essential elements of his case on which he bears the burden of proof. Id. at 324. In resisting a properly supported motion for summary judgment, the plaintiff has an affirmative burden to designate specific facts creating a triable controversy. Crossley v. Georgia Pacific Corp., 355 F.3d 1112, 1113 (8th Cir. 2004).

         Discussion

         The 2006 note with its 2010 modification and 2012 forbearance agreement clearly bind SRCF and Saddler to the terms of those agreements. The validity of the note, deed of trust, and guaranty that SRCF and Saddler executed are not at issue.[2] However, SRFC and Saddler challenge the chain of title of the loan documents from Allegiant Bank to National City Bank to PNC Bank.

         Chain of Title of the Note

         In support of its motion for summary judgment PNC has submitted the affidavit of Casey Young, an employee of PNC in the capacity of Asset Resolution Consultant, Commercial Banking - Asset Resolution. The affidavit is based on Young's personal knowledge and review of PNC's records regarding and relating to the 2006 note and guaranty at issue in this case. One of Young's job duties at PNC is to manage the collection of various accounts including the note and guaranty in this matter. The exhibits included with Young's affidavit are business records of PNC produced in the regular course of business. Young is familiar with the method that these business records were produced. These records were maintained by PNC in the regular course of business and were made at or near the time of the act, condition, or event they describe. The records were ...


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