from Cullman Circuit Court (CV-13-900480)
an Alabama banking corporation, appeals from a summary
judgment in favor of Traditions Bank, TBX Title, Inc., and
Terry Williams. We reverse the judgment and remand the case.
following facts are undisputed: On August 14, 2013, William
Michael Robertson and Connie Robertson, customers of EvaBank,
entered into a purchase agreement with Terry Williams,
pursuant to which Williams agreed to purchase the
Robertsons' property located on County Road 35 in
Hanceville ("the property"). The agreed-upon
purchase price for the property was $50, 000. EvaBank held
two mortgages on the property, securing a loan totaling
approximately $41, 000 (hereinafter referred to as "the
EvaBank mortgages"). Williams engaged Traditions Bank to
finance his purchase of the property. Traditions Bank agreed
to provide Williams with a loan secured by a first mortgage
on the property. TBX Title, a subsidiary of Traditions Bank,
acted as the closing agent for the real-estate transaction.
In preparation for the closing, Traditions Bank requested
that the Robertsons obtain a payoff statement for the EvaBank
mortgages. William Michael Robertson contacted EvaBank via
telephone and requested that EvaBank fax to Traditions Bank a
payoff statement for the mortgages. On September 10, 2013,
EvaBank faxed to Traditions Bank the payoff statement for
loan no. 80210981, indicating a balance due of $22, 111.30.
That payoff statement, however, was actually for anther
EvaBank customer, Michael S. Roberson, with an
address in Moulton, Alabama.
September 13, 2013, TBX Title closed the real-estate
transaction between the Robertsons and Williams. Traditions
Bank thereafter delivered a check to EvaBank for "Loan
Payoff #1--80210981, " in the amount of $22, 123.25.
EvaBank accepted and negotiated the check and applied the
proceeds to the loan of Michael S. Roberson. On September 16,
2013, TBX Title wired to the Robertsons, who were living in
Texas, the net sales proceeds from the closing--$24, 672.19.
September 17, 2013, TBX Title recorded the warranty deed and
mortgage and mailed the deed to Williams. On September 18,
2013, EvaBank contacted William Michael Robertson about his
loan being past due; Robertson responded that the loan should
have been paid off at the closing with the proceeds from the
sale. EvaBank learned at this point that there was a problem
with the payoff statement it had provided, i.e., the payoff
statement was for a loan in the name of Michael S. Roberson,
not William Michael Robertson. EvaBank thereafter
subtracted the payoff proceeds from the Michael S. Roberson
loan and applied them to the William Michael Robertson loan.
EvaBank ultimately sent Traditions Bank an e-mail, explaining
its mistake and noting that it had made a demand upon William
Michael Robertson to pay the remaining balance due on the
EvaBank mortgages but that Robertson had refused.
Accordingly, EvaBank informed Traditions Bank that it would
not release it mortgages encumbering the Robertsons'
property until the balance on the loan they were securing had
been fully satisfied.
December 12, 2013, Traditions Bank sued EvaBank, asserting a
claim of slander of title and seeking a judgment declaring
that it was the first lienholder on the property. EvaBank
counterclaimed, seeking a declaratory judgment concerning the
priority of the EvaBank mortgages and its right to full
payment for the loan secured by the mortgages. EvaBank added
Williams as a necessary party to its declaratory-judgment
action. EvaBank also added TBX Title as a defendant in its
counterclaim action, alleging third-party breach of contract,
negligence, wantonness, and slander of title. Williams filed
a counterclaim against EvaBank, joining Tradition Bank's
demand for a judgment declaring Traditions Bank the first
lienholder on the property; Williams demanded, in the
alternative, monetary damages against EvaBank for alleged
fraud, negligence, and wantonness. All parties moved for a
summary judgment or a partial summary judgment pursuant to
Rule 56(c), Ala. R. Civ. P.
February 7, 2017, after conducting a hearing, the trial court
entered a summary judgment in favor of Traditions Bank and
TBX Title, on the basis of equitable estoppel, on the claims
involving those parties and dismissed all other claims. The
trial court concluded that, as between the two banks, EvaBank
had the opportunity to prevent the injuries suffered.
Accordingly, the trial court ordered EvaBank to release its
mortgages on the property. EvaBank filed a postjudgment
motion, which the trial court denied. This appeal followed.
as here, the facts of a case are essentially undisputed, this
Court must determine whether the trial court misapplied the
law to the undisputed facts, applying a de novo standard of
review." Continental Nat'l Indem. Co. v.
Fields, 926 So.2d 1033, 1035 (Ala. 2005).
raises several issues on appeal, one of which is dispositive.
Specifically, EvaBank contends that the trial court erred in
entering a summary judgment in favor of Traditions Bank, TBX
Title, and Williams on the basis of equitable estoppel
because, it says, the elements of estoppel are not present in
this case. We agree.
begin our discussion by noting that Alabama classifies itself
as a "title" state with regard to mortgages.
"Execution of a mortgage passes legal title to the
mortgagee." Trauner v. Lowrey, 369 So.2d 531,
534 (Ala. 1979). Section § 35-10-26, Ala. Code 1975,
states both that "[t]he payment or satisfaction of the
real property mortgage debt divests the title
passing by the mortgage" and that "'[p]ayment
or satisfaction of the real property mortgage debt' shall
not occur until there is no outstanding indebtedness
or other obligation secured by the mortgage." (Emphasis
added.) In this case, EvaBank held legal title to the
property by virtue of its mortgages on the property securing
the Robertsons' loan. Traditions Bank and TBX Title
sought to divest EvaBank of legal title to the property by
satisfying the EvaBank mortgages encumbering the property. In
preparation for the closing, Traditions Bank requested from
the Robertsons a payoff statement for the EvaBank mortgages.
William Michael Robertson contacted EvaBank via telephone and
requested that it fax a payoff statement to Traditions Bank.
Jane Smith, the EvaBank employee who received the telephone
call, confused Robertson with another EvaBank customer,
Michael Roberson. She testified in her deposition:
"I got a call from a Michael Roberson, Roberson, saying
I need you to fax a payoff to Traditions [Bank]. I recognized
the voice, I pulled up [the account of] Michael Roberson, and
I faxed the payoff to [Traditions Bank]."
asserts that, in undertaking to satisfy the EvaBank
mortgages, Traditions Bank and TBX Title had a duty to
inquire and to verify that the payoff statement was, in fact,
the correct mortgage-payoff statement for the EvaBank
mortgages encumbering the property. Traditions Bank and TBX
Title, on the other hand, assert that EvaBank is estopped
from claiming a priority interest in the property because,
they say, the payoff statement was a misleading communication
upon which they detrimentally relied.
establish the essential elements of estoppel, Traditions Bank
and TBX Title had the burden of demonstrating that
"(1) [t]he person against whom estoppel is asserted, who
usually must have knowledge of the facts, communicates
something in a misleading way, either by words, conduct, or
silence, with the intention that the communication will be
acted on; (2) the person seeking to assert estoppel, who
lacks knowledge of the facts, relies upon that communication;
and (3) the person relying would be harmed materially if the
actor is later permitted to assert a claim inconsistent with
his earlier conduct."
General Elec. Credit Corp. v. Strickland Div. of Rebel
Lumber Co., 437 So.2d 1240, 1243 (Ala. 1983).
It is undisputed that EvaBank mistakenly faxed to Traditions
Bank the payoff statement for Michael S. Roberson, and not
the payoff statement for William Michael Robertson. It is
further undisputed that EvaBank did not become aware of its
mistake until after the closing had occurred.
Therefore, given EvaBank's lack of knowledge as to its
mistake, it could not have intended to induce reliance. In
other words, there is no evidence indicating that EvaBank
intended to induce either Traditions Bank or TBX Title to
rely on the payoff statement for Michael S. Roberson to close
the real-estate transaction between the Robertsons and
Williams. Moreover, the testimony on behalf of Traditions
Bank and TBX Title, as described below, establishes that
neither was ignorant of the discrepancies in the payoff
statement. Thus, the only question left for our review is
whether it can be held, as a matter of law, that Traditions
Bank and TBX Title's reliance on the payoff statement
provided them by EvaBank was reasonable under the undisputed
facts of this case. It is well settled that the "party
invoking estoppel must have in good faith been ignorant of
the true facts at the time a representation is made to him,
and must have acted with diligence to learn the truth."
Ivey v. Dixon Inv. Co., 283 Ala. 590, 594, 219 So.2d
639, 643 (1969). See also Webb v. Pioneer Ins. Co.,
56 Ala.App. 484, 488, 323 So.2d 373, 376 (Ala. Civ. App.
1975) (noting that "[t]he party seeking to claim the
benefit of an estoppel must show detrimental reliance of a
substantial character on his part").
Bank and TBX Title had before them numerous documents that,
among other things, set forth each of the Robertsons'
full names, the address of the property, the dates of the two
EvaBank mortgages, and the amount of the loan secured by the
mortgages. For example, the purchase agreement contained the
signatures of William M. Robertson and Connie
Robertson. The payoff statement, on the other hand,
reflected the name of Michael S. Roberson. The
EvaBank mortgages contained the signatures of four
Robertsons, including the signature of William Michael
Robertson. The payoff statement, on the other hand,
contained only the single name of Michael S.
Roberson. The warranty deed recorded by TBX Title
contained the full names of each of the Robertsons, including
William Michael Robertson. Again, the payoff
statement reflected the name Michael S. Roberson.
White, a loan officer with Traditions Bank, stated in her
deposition that she had requested most of the documents
required for the closing and that she forwarded them to Debra
Butler, the sole employee of TBX Title. White stated that,
when she received the payoff statement, she noticed that the
name, Michael S. Roberson, was different from any of the
names on the closing documents. White stated, however, that
she did not check the name on the payoff statement against
the names of the sellers, i.e., the Robertsons, because,
according to her, EvaBank had provided the payoff statement
at the request of its customer. Butler also admitted in her