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Parker v. Parker

Court of Appeals of Arkansas, Division II

April 19, 2017

JEFFERY PARKER AND SHEILA PARKER APPELLANTS
v.
JERRY D. PARKER AND SARAH JO PARKER, IN THEIR CAPACITIES AS CO-TRUSTEES OF THE PARKER FAMILY TRUST APPELLEES

          APPEAL FROM THE SEBASTIAN COUNTY CIRCUIT COURT, FORT SMITH DISTRICT [NO. 66FCV-14-0849] HONORABLE J. MICHAEL FITZHUGH, JUDGE

          Jimmie Carl Bush, for appellants.

          Walters, Gaston, Allison & Parker, by: Veronica L. Bryant, for appellees.

          MIKE MURPHY, Judge

         This appeal is from the decree in a foreclosure action entered in favor of appellees Jerry D. Parker and Sarah Jo Parker as cotrustees of the Parker Family Trust against appellants Jeffery Parker and Sheila Parker.[1] Although appellants argue four points for reversal, the arguments lack merit. Accordingly, we affirm.

         On February 3, 2006, appellants executed a note and mortgage in the face amount of $165, 000. The note provided for interest-only payments of $859 per month until February 1, 2036, and provided for foreclosure upon default of a regular payment. The note did not specify an interest rate. Payments were due on the third day of each month, without specification of when they were to begin. The note and mortgage were assigned to the appellees' family trust in August 2014.

         On October 8, 2014, appellees filed their foreclosure complaint alleging that appellants were in default under the terms of the note and mortgage on multiple grounds, including being delinquent on the monthly payments, failing to maintain homeowners' insurance coverage listing appellees as loss payees for the property, and allowing state and federal tax liens to be filed against the property. They further alleged that a true and correct copy of the note was attached as an exhibit. However, a blank, undated, and unsigned copy of the note was attached. The copy of the mortgage had been executed and was file stamped as recorded. Appellees sought judgment, both in personam and in rem, in the amount of $165, 000 plus $2, 578 accrued interest, continuing interest, costs, reasonable attorney's fees, and postjudgment interest.

         Appellants responded to the complaint with a motion to dismiss and compulsory counterclaims. They argued that appellees' complaint failed to state sufficient facts upon which relief could be granted. This assertion was based on their claim that the note was usurious because the note failed to specify a rate of interest and the Arkansas Constitution provides that the rate of interest for contracts with no rate specified shall be 6 percent. When the calculations were made of the payments required under the note ($859), the interest rate was 6.25 percent and was, according to appellants, void.

         Appellants' counterclaim asserted claims for the torts of conversion and outrage, violation of the Arkansas Deceptive Trade Practices Act (ADTPA), and for damages for violations of Arkansas's usury laws, and unjust enrichment. The ADTPA claim was based on the allegations that appellant Sheila Parker is a disabled person within the meaning of the ADTPA. Appellees answered the counterclaim.

         Following entry of an order denying appellants' motion to dismiss, appellants answered the foreclosure complaint, denying the existence of a legally enforceable note or mortgage. They incorporated their earlier counterclaims by reference. They later amended their counterclaims to specifically include usury.

         Appellees filed a motion for summary judgment, attaching the note, mortgage, assignment to their trust, proof regarding insurance coverage, default letter, and tax liens. As mentioned earlier, the copy of the note attached to the motion was unsigned. Appellants responded that appellees failed to produce the original promissory note, and they filed a cross-motion for summary judgment seeking dismissal of the complaint for that failure. Appellees replied that they were unable to locate the original promissory note but then attached a copy of the original signed and notarized note they had obtained from appellants. Appellees also submitted affidavits in support of their motion for summary judgment. In those affidavits, appellees stated, among other things, that they had been able to locate the original note. Appellants responded to this change of whether appellees were able to locate the promissory note.

         The court entered an order finding the word able in appellees' affidavits was a scrivener's error and denying both sides' motions for summary judgment. The court also ruled that, although appellees failed to produce the original note, the note could still be enforced pursuant to Arkansas Code Annotated section 4-3-309 (Supp. 2015).

          The case proceeded to a two-day bench trial in October 2015. At the conclusion of the trial, the court ruled from the bench. The court repeated its pretrial finding that the rate of interest was not usurious. On appellants' conversion claim, the court found that there was no evidence that appellees exercised dominion or control in violation of appellants' rights because the money they paid appellees was to benefit themselves. On appellants' ADTPA claims, the court found the appellants had not been damaged. The court also found that there was no evidence that appellees used deception, fraud, or false pretenses to persuade appellants to execute the note and mortgage. The court then dismissed appellants' claims with prejudice.

         The court then turned to appellees' complaint for foreclosure. The court found that appellants were in default under the terms of the note and mortgage and that the entire principal on the note plus accrued interest was due and owing; it granted appellees a judgment for $165, 000 and ordered that the property sold if the judgment was not discharged within ten days. Specifically, the court found that appellants had allowed insurance coverage to lapse for nonpayment of premiums in 2009 and 2011. The court also found that the most recent policy had failed to list appellees as loss payees but that this was cured shortly before trial. The court noted that appellees were charging a lower interest rate than they were receiving on their money at the time of this transaction and that this was ...


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