Reliant Bank v. Kelly D. Bush

12/28/2018
IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
December 4, 2018 Session
RELIANT BANK v. KELLY D. BUSH ET AL.
Appeal from the Chancery Court for Williamson County
No. 41461 Deanna B. Johnson, Chancellor
___________________________________
No. M2018-00510-COA-R3-CV
___________________________________
Following an appeal in which this Court affirmed the judgment of the chancery court, the
unsuccessful appellants moved the chancery court for relief from the judgment under
Rule 60.02 of the Tennessee Rules of Civil Procedure. The chancery court granted the
motion by reducing the amount of the original judgment. The matter is now before us
again on the grant of Rule 60 relief. Because the Rule 60 motion was untimely, we
reverse the grant of relief.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Reversed
and Case Remanded
W. NEAL MCBRAYER, J., delivered the opinion of the court, in which FRANK G.
CLEMENT, JR., P.J., M.S., and ANDY D. BENNETT, J., joined.
Marc T. McNamee and Stephen M. Montgomery, Nashville, Tennessee, for the appellant,
Reliant Bank.
Byron V. Bush and Kelly D. Bush, Brentwood, Tennessee, pro se appellees.
OPINION
I.
A.
In the first appeal, we recounted the facts underlying this case and some of the
procedural history. See Commerce Union Bank v. Bush, 512 S.W.3d 217 (Tenn. Ct.
App.), perm. app. denied, (Tenn. Nov. 16, 2016). In 2007, Byron V. Bush, D.D.S., and
his wife, Kelly D. Bush, executed a “Multipurpose Note and Security Agreement . . . with
Commerce Union Bank . . . d/b/a Reliant Bank (“Reliant”), for the original principal
amount of $1,500,000.” Id. at 222. As additional security, the Bushes also executed a
deed of trust for unimproved, commercial real property owned by Dr. Bush. Id.After the Bushes defaulted under the promissory note, Reliant initiated foreclosure
proceedings on the commercial property. Id. At the foreclose sale, Reliant was the only
bidder. Id. Reliant credit bid $1,050,000 based on an appraisal of the property. Id. The
credit bid left the Bushes owing $569,706.65 plus interest and costs of collection. Id.In the Chancery Court of Williamson County, Tennessee, Reliant sued the Bushes
for a deficiency judgment. Id. In response, the Bushes claimed, among other things, that
the property was sold at foreclosure for “an amount materially less” than its fair market
value. Id.; see Tenn. Code Ann. § 35-5-118(c) (2015).
At trial, the parties offered conflicting evidence of the commercial property’s
value at the time of the foreclosure. Reliant’s expert testified that the fair market value of
the property was $1,050,000, while the Bushes’ expert testified that the fair market value
was $1,885,000. Commerce Union Bank, 512 S.W.3d at 236. Another witness called by
the Bushes testified that both valuations were “credible” but that he favored the appraisal
of the Bushes’ expert. Id.
In its October 2014 order, the chancery court granted Reliant a deficiency
judgment in the full amount requested. Id. at 223. The court found credible the
$1,050,000 valuation given by Reliant’s expert. Id. at 235-36. The court also concluded
that the Bushes had not overcome the statutory presumption that the foreclosure sale
price of $1,050,000 was equal to the property’s fair market value. Id. at 223; see Tenn.
Code Ann. § 35-5-118(b) (“The creditor shall be entitled to a rebuttable prima facie
presumption that the sale price of the property is equal to the fair market value of the
property at the time of the sale.”).
The Bushes filed separate Rule 59.02 motions to alter or amend, which the court
denied. Commerce Union Bank, 512 S.W.3d at 223. On January 30, 2015, the court’s
judgment against the Bushes in the amount of $751,334.32 became final for the purposes
of appeal.
In the first appeal, this Court affirmed the chancery court’s judgment. Among
other things, we determined that “the evidence [did] not preponderate against the trial
court’s finding that [the] $1,050,000 valuation of the property was credible” or the
finding that the Bushes failed to present evidence sufficient to overcome the presumption
that the foreclosure sale price equaled the fair market value of the property at the time of
the sale. Id. at 237, 239. Thus, we held “the foreclosure sale price of $1,050,000 was not
‘materially less’ than the fair market value.” Id. at 239.
2
B.
On May 25, 2017, following the remand from this Court, the Bushes filed a
motion under Rule 60.02 of the Tennessee Rules of Civil Procedure for relief from the
final judgment.1 The Bushes asked that the chancery court relieve them of the final
judgment and reverse “based on RULE 60.02(1)(2) MISTAKE AND FRAUD.”
The chancery court2 granted relief in part. Despite concluding that the motion was
prohibited under Rule 59.01 because it was based on “identical grounds” as the prior
motion to alter or amend and that the motion was untimely under Rule 60.02, the court
found “mistakes of law and fact were made relating to the determination of the Property’s
fair market value.” The court reviewed the evidence of the 2014 trial and found “several
significant facts were erroneously omitted from its prior findings.” The court determined
that the appraisal of Reliant’s expert was “not merely inferior to [the Bushes’ expert’s]
appraisal” but also was “based on questionable data that he fail[ed] to justify and
reache[d] a value conclusion without reasoned analysis.” Relying in part on the valuation
of the Bushes’ expert, the court found the fair market value of the property to be
$1,520,000 at the time of the foreclosure sale and that the sale price of $1,050,000 was
“materially less” than the fair market value. So the court reduced the deficiency
component of its judgment, the amount of the judgment exclusive of attorney’s fee and
discretionary costs, from $640,783.41 to $99,736.40.
II.
A.
Reliant and the Bushes both raise issues on appeal related to the relief granted by
the chancery court. Basically, Reliant argues that the chancery court went too far, and the
Bushes argue that the chancery court did not go far enough. We review a trial court’s
ruling on a Tennessee Rule of Civil Procedure 60.02 motion to set aside a final judgment
under the abuse of discretion standard. Discover Bank v. Morgan, 363 S.W.3d 479, 487
(Tenn. 2012). In our review, we consider whether “the trial court applied incorrect legal
standards, reached an illogical conclusion, based its decision on a clearly erroneous
1
The Bushes also sought relief under Rule 9.02 of the Tennessee Rules of Civil Procedure and
Rule 36(a) of the Tennessee Rules of Appellate Procedure. The court concluded that neither of these
rules provided it with authority to grant relief from a judgment, and the Bushes do not challenge this
determination on appeal.
2
The case was tried before a different chancellor than the one who heard the Bushes’ post-appeal
motion for Rule 60.02 relief.
3
assessment of the evidence, or employed reasoning that cause[d] an injustice to the
complaining party.” Id. (quoting State v. Jordan, 325 S.W.3d 1, 39 (Tenn. 2010)).
Relief under Rule 60.02 is “an exceptional remedy.” Nails v. Aetna Ins. Co., 834
S.W.2d 289, 294 (Tenn. 1992). The rule is intended “to alleviate the effect of an
oppressive or onerous final judgment.” Spence v. Helton, No. M2005-02527-COA-R3-
CV, 2007 WL 1202407, at *3 (Tenn. Ct. App. Apr. 23, 2007). It “acts as an escape valve
from possible inequity that might otherwise arise from the unrelenting imposition of the
principal of finality embedded in our procedural rules.” Thompson v. Firemen’s Fund
Ins. Co., 798 S.W.2d 235, 238 (Tenn. 1990). The movant has the burden of proving the
grounds for relief. Spence, 2007 WL 1202407 at *3.
In their Rule 60.02 motion, the Bushes asked for relief based on claims of mistake
and fraud. Under Rule 60.02(1), the court may set aside a final judgment for reasons of
“mistake, inadvertence, surprise or excusable neglect.” Tenn. R. Civ. P. 60.02. Under
Rule 60.02(2), additional reasons for a court to set aside a final judgment are “fraud . . . ,
misrepresentation, or other misconduct of an adverse party.” Id. But motions based on
Rule 60.02(1) or (2) must be filed within a reasonable time, not more than one year after
the order was entered. Id.We conclude the chancery court erred in granting the Bushes’ motion. Here, the
court entered the final judgment from which the Bushes seek relief on January 30, 2015.
The Bushes filed their Rule 60.02 motion on May 25, 2017, over two years after entry of
that judgment. Because the motion was untimely, the chancery court should not have
entertained it. See Furlough v. Spherion Atl. Workforce, LLC, 397 S.W.3d 114, 131
(Tenn. 2013) (concluding that “relief [wa]s not available under Rule 60.02(1)” because
the petition seeking relief “was not timely filed”); cf. Rogers v. Estate of Russell, 50
S.W.3d 441, 445 (Tenn. Ct. App. 2001) (“[M]otions under Rule 60.02(1) and (2) must be
filed both within a reasonable time and within one year after the judgment or order was
entered.”).
Based on our conclusion that the Bushes’ motion was untimely, we need not
address the other grounds for reversal asserted by Reliant. We also do not reach the
issues raised on appeal by the Bushes, all of which relate to the propriety of the chancery
court’s judgment that we affirmed in the first appeal.
B.
Reliant requests an award of attorney’s fees and expenses incurred on appeal
under the terms of the loan documents, specifically Paragraph 20 of the Multipurpose
Note and Security Agreement executed by the Bushes. Paragraph 20 provides:
4
20. ATTORNEY’S FEES AND COLLECTION COSTS: In the event of
default, I [Dr. and Mrs. Bush] agree to pay all reasonable costs you
[Reliant] incur to collect on this Loan, including attorney’s fees, court costs
and other legal expenses.
“[A] contract that generally allowed for ‘attorney fees and costs of collection’ in the
event of default includes attorney’s fees on appeal.” Brunswick Acceptance Co., LLC v.
MEJ, LLC, 292 S.W.3d 638, 646 (Tenn. Ct. App. 2008).
We conclude an award of attorney’s fees and expenses incurred on appeal is
mandated under the parties’ agreement. Cf. Eberbach v. Eberbach, 535 S.W.3d 467,
478-79 (Tenn. 2017) (holding that appellate courts lack discretion to deny an award of
attorney’s fees mandated by a valid marital dissolution agreement). So we grant
Reliant’s request.
III.
For the foregoing reasons, we reverse the chancery court and reinstate the original
judgment against the Bushes. This case is remanded for a determination of Reliant’s
reasonable attorney’s fees and expenses incurred on appeal and for further proceedings as
may be necessary and are consistent with this opinion.
_________________________________
W. NEAL MCBRAYER, JUDGE
5