FROM THE CRITTENDEN COUNTY CIRCUIT COURT [NO. 18CV-08-10]
HONORABLE VICTOR L. HILL, JUDGE
AS MODIFIED IN PART, AFFIRMED IN PART, REVERSED IN PART, AND
REMANDED IN PART ON DIRECT APPEAL; AFFIRMED ON CROSS-APPEAL
& Associates, PLLC, by: H. Keith Morrison, for appellant.
F. Campbell, P.A., by: Sheila F. Campbell, for appellees.
M. GLOVER, Judge.
case involves separate appeals by
appellant MidFirst Bank (MidFirst) and appellants Carolyn
Bedford and her sister, Denise Bedford, from the order of the
Crittenden County Circuit Court unwinding the results of a
foreclosure decree that was set aside for improper service on
Carolyn Bedford, the property owner. MidFirst appeals that
part of the order awarding appellee Lori Sumpter a money
judgment against it and from the award of indemnification to
Carolyn Bedford on a separate claim. Carolyn and Denise
Bedford appeal from that part of the order directing that
they take nothing on their conversion claims against MidFirst
and Sumpter. Carolyn Bedford also argues that the circuit
court erred in failing to remove a cloud on her title.
Sumpter has filed a cross-appeal. We affirm as modified in
part, affirm in part, reverse in part, and remand in part on
the direct appeals. We affirm on Sumpter's cross-appeal.
and Procedural History
1986, Carolyn Bedford became the owner of property located in
West Memphis, Arkansas. Bedford assumed the indebtedness owed
under a deed of trust and note executed by Warren Taylor and
his wife, Lisa Taylor. This note and deed of trust were later
assigned to MidFirst. The note went into default when Carolyn
Bedford failed to make the March 2007 payment.
January 10, 2008, MidFirst filed a judicial-foreclosure
action against Carolyn Bedford and other defendants with
record title interests in the property. Service on Bedford
was had by certified mail, restricted delivery, return
receipt requested; but the green card was signed by
Bedford's sister, Denise Bedford, who was residing in the
Carolyn Bedford failed to respond to the complaint, the
circuit court entered a decree of foreclosure by default on
July 25, 2008. The property was offered for public sale on
September 15, 2008, and Sumpter purchased the property for
$35, 103.46. On October 6, 2008, the circuit court confirmed
the sale and approved the Commissioner's Deed. The
Commissioner's Deed to Sumpter was recorded the same day.
October 2, 2008, Sumpter borrowed $62, 250 from Fidelity
National Bank, secured by a mortgage on the property, to
finance the purchase and to make improvements to the property
($35, 103.46 was immediately drawn by Sumpter for payment of
the purchase price, and the remaining balance of the loan was
drawn by Sumpter for improvements and other expenses). The
mortgage was recorded shortly after the Commissioner's
Deed had been recorded. After evicting the Bedfords from the
property, Sumpter began making improvements. In November
2008, Sumpter leased the property.
October 15, 2008, Carolyn Bedford moved to set aside the
foreclosure decree for insufficient service of process. She
alleged the service of the summons and complaint by certified
mail was improper because it was signed for by Denise Bedford
instead of Carolyn Bedford. Sumpter was made a party.
August 2009, the circuit court found service of the
foreclosure complaint had been defective. The court set aside
the default judgment, vacated the foreclosure sale, voided
the Commissioner's Deed, and ordered possession be
returned to Bedford within sixty days. The court noted that
MidFirst had failed in its obligation to ensure Sumpter
received good title to the property. Sumpter sought to have
the order modified so Bedford would not regain possession
until she paid the value of the improvements made by Sumpter,
as provided by the Betterment Act.
sought to quiet title to the property in her name and
requested damages from Bedford and MidFirst alleging various
legal theories. Carolyn Bedford answered the petition and
denied the material allegations. MidFirst responded by
asserting that the doctrine of caveat emptor applied to bar
any relief to Sumpter. Sumpter later amended her petition to
seek damages under the Betterment Act in the approximate sum
of $60, 000, together with lost revenues in the amount of
Bedford filed a cross-claim for indemnification against
MidFirst for any damages Sumpter might recover against
her. As an alternative theory in an
amended cross-claim, Bedford asked for damages for wrongful
foreclosure. She also asked that Fidelity National's
mortgage lien on the property be canceled. Denise Bedford
filed her motion to intervene for the purpose of asserting a
conversion claim against MidFirst and Sumpter. After the
circuit court granted the motion to intervene, Denise Bedford
filed her third-party complaint seeking damages from MidFirst
and Sumpter for conversion of personal property lost or
damaged during the eviction.
agreed order entered on December 28, 2009, Sumpter's
purchase price of $35, 103.46 was refunded to her by
MidFirst. The order reserved the question of whether she
should be awarded interest on the sum.
Bedford filed for Chapter 13 bankruptcy protection on April
15, 2010. Fidelity National and Sumpter were granted relief
from the automatic stay in the summer of 2011. The bankruptcy
court confirmed Bedford's Chapter 13 plan to become
current on the mortgage in August 2011.
moved for partial summary judgment on the issue of
MidFirst's liability. MidFirst responded to the motion.
Following a hearing, by order entered on July 27, 2011, the
circuit court granted Sumpter's motion as to
MidFirst's liability only, reserving all other issues,
including damages and apportionment among the parties. The
court did not state the theory or the basis for its ruling
but noted both Bedford and MidFirst were inattentive to their
business, which led to the improper foreclosure action, and
Sumpter was not to blame.
case proceeded to a two-day bench trial. In its order entered
on November 2, 2012, the circuit court found Sumpter was
entitled to recover from MidFirst the total amount she had
borrowed from Fidelity Bank, plus all associated costs and
interest paid and accrued, which the court found to be $81,
516.15, less the refunded purchase price of $35, 103.46, for
a balance of $46, 412.69, plus interest at the maximum lawful
rate until paid. The court specifically declined to give an
offset for the $7, 000 in rent Sumpter had received on the
property. Fidelity National was granted a lien on the net
proceeds of the judgment, or such portion thereof as might be
necessary, to pay off the balance Sumpter had borrowed.
Finally, the circuit court found the Bedfords could not
recover on their conversion claims because their claims ...