COURT FROM WHICH APPEALED: LAFAYETTE COUNTY CHANCERY COURT. DATE OF JUDGMENT: 02/28/2011. TRIAL JUDGE: HON. GLENN ALDERSON.
THE JUDGMENT OF THE COURT OF APPEALS IS AFFIRMED IN PART AND REVERSED IN PART. THE JUDGMENT OF THE CHANCERY COURT OF LAFAYETTE COUNTY IS REVERSED AND THE CASE IS REMANDED.
FOR APPELLANT: DANIEL MYLES MARTIN, JOHN J. CROW, JR., AUSTIN GARRETT GRAY.
FOR APPELLEES: SHANE F. LANGSTON, REBECCA M. LANGSTON, G. TODD BURWELL, DANA E. KELLY, JACQUELINE H. RAY.
COLEMAN, JUSTICE. WALLER, C.J., DICKINSON, P.J., KITCHENS, CHANDLER, PIERCE AND KING, JJ., CONCUR. RANDOLPH, P.J., AND LAMAR, J., NOT PARTICIPATING.
¶1. BancorpSouth Bank filed a complaint for declaratory judgment, judicial foreclosure, and other relief against Van Buren Group, LLC, a corporation that organized the construction of thirty condominiums in Oxford. BancorpSouth also named several members of Van Buren Group and several condominium purchasers. Four purchasers and two members moved for summary judgment, which the chancellor granted. The Court of Appeals affirmed the grant of summary judgment as to the four purchasers; however, it reversed and remanded as to the two members. We granted BancorpSouth's subsequent petition for writ of certiorari. We hold that an issue of material fact exists, reverse the chancery court's grant of summary judgment as to the four purchasers, and remand the case.
FACTS AND PROCEDURAL HISTORY
¶2. In March 2001, H. Claiborne Frazier formed Van Buren Group, LLC (" Van Buren" ) with plans to purchase a piece of real estate in Oxford, Mississippi, and build and sell thirty condominiums. Frazier applied for financing with BancorpSouth, and, on August 20, 2001, through loan officer Bobby Little, BancorpSouth issued a commitment letter to Van Buren for a $5,400,000 loan. The loan commitment required Van Buren to " present evidence on the sale of 18 units through sales contracts and the collection of earnest money equal to 10% of the sales price." Should eighteen units not be presold, the loan commitment provided that letters of credit on the difference between eighteen and the number of units actually presold would be accepted, subject to BancorpSouth's approval.
¶3. On August 22, 2001, James Irby of Irby & Associates, Inc., who had been retained to appraise the condominiums, sent a letter to Little at BancorpSouth. The appraisal letter listed all the units, the appraised value, the listed sales price, and the sales status of each unit. The appraisal letter listed units 102, 210, and 303 as " Sold" and unit 306 as " Pending," however, it did not provide the names of the purchasers. A day later, on August 23, 2001, Bobby Covington of Taylor Covington & Smith, P.A. (" TCS" ) and attorney for Van Buren, wrote a letter to Little and BancorpSouth, certifying that nineteen units had been presold and that he was holding deposits for the units in his escrow account. The certification letter identified future purchasers as: John and Lynn Albriton, Shane Langston, James B. Grenfell, and Tim Ford. The Albritons, Langston, and Grenfell together with Larry and Susan Bryan and Norma Bourdeaux are referred to hereinafter as " the purchasers."
¶4. On September 5, 2001, Van Buren executed a promissory note in the amount of $5,400,000 in favor of BancorpSouth along with a deed of trust conveying a secured interest on the property to BancorpSouth. As to the promissory note, Frazier signed a personal guaranty. Two Van Buren members, hereinafter the " guarantors," also signed the guaranty - Robert Crumpton and Shelby K. Brantley,
Jr. The deed of trust was recorded in the Office of the Chancery Clerk of Lafayette County on September 12, 2001.
¶5. As reflected in the August 23, 2001, letter, Van Buren had presold several units - including those of the Albritons, Langston, and Grenfell - before entering the loan agreement. The Albritons executed a contract to purchase unit 303 on May 30, 2001, for $241,980. The agreement provided, in paragraph thirteen, that it was " subject and subordinate to the lien of any construction mortgage now or hereafter placed on the Unit, but the Seller shall cause such mortgage to be discharged or the above-described unit released of record prior to or simultaneously with the date of delivery of the Warranty Deed." Further actions concerning the Albritons' sale did not take place until 2003.
¶6. On June 21, 2001, Shane Langston executed a Reservation Agreement with Van Buren to reserve his right to purchase unit 102. Ten days earlier, Langston issued a check payable to TCS, representing the reservation fee. Soon after, on June 25, 2001, Langston entered a Purchase Agreement, which was substantially similar to that entered into by the Albritons, including paragraph thirteen. Per the Agreement, Langston would pay a total of $241,980 to TCS, as the escrow agent, with an earnest money deposit of $24,198, also paid to TCS. Further actions concerning Langston's sale did not take place until 2003.
¶7. On July 8, 2002, Susan Bryan executed a Purchase Agreement in which she agreed to purchase unit 207 for $259,000. The Agreement was substantially the same as that entered into by the Albritons, including the clause that Van Buren should discharge the mortgage on or before the date of delivery of the Warranty Deed and that time was of the essence. Two days later, on July 10, 2002, Larry Bryan subsequently issued a check to TCS in the amount of $24,900 as earnest money.
¶8. Also in July 2002, Frazier Construction and Development, Inc., sent a letter to BancorpSouth that appears to list the units sold to date, the respective buyers, and the contracted purchase prices. Of note, the letter lists " 102 Shane Langston - $241,980. . . 207 Bryan - $259,000 . . . 210 Tim Ford - $210,000. . . 303 John Albritton - $241,980. . . 305/306 Lee - $400,000." A handwritten note at the bottom of the letter totals the purchase prices to $5,306,900, which was approximately the amount of the BancorpSouth loan.
¶9. On November 20, 2002, Norma Bourdeaux issued a check for $1,000, payable to TCS, as a deposit for the purchase of unit 111. On January 22, 2003, Bourdeaux signed a Purchase Agreement for unit 111, agreeing to purchase it for $190,000. Several pages of the Agreement are absent from the record; however, it appears that it was substantially the same as that signed by the Albritons. The Agreement provided that the purchase money would be paid to TCS as the escrow agent. On the same day, Frazier offered Bourdeaux an $8,000 discount for early payment of the remaining purchase money, or $181,000 with the discount. Bourdeaux delivered a check to Van Buren for $181,000 on January 22, 2003. When asked why she made the check out to Van Buren and not TCS, as stipulated, Bourdeaux stated that it was probably because Frazier asked her to do so. Bourdeaux's unit was substantially complete by the summer of 2003. However, Van Buren did not execute and file the Warranty Deed until September 2005.
¶10. Sometime after entering their Purchase Agreement, the Albritons were approached by Frazier, offering a $5,000 discount in exchange for an early closing. On February 26, 2003, the Albritons entered
a settlement agreement reflecting the discount, and the sale was closed at the office of TCS. The settlement agreement shows that the Albritons paid $236,980 to Van Buren and gave Frazier $13,438.20 in store credit at the Albritons' jewelry store. A Warranty Deed was executed and delivered soon after closing in February 2003; however, the deed was not recorded until November 21, 2007.
¶11. On May 13, 2003, Van Buren and the Bryans amended their Purchase Agreement, providing the Bryans a $5,000 discount in exchange for their early payment to TCS as escrow agents of $228,100, increasing the total amount in escrow to $254,000. The discount was provided so that Van Buren would be able to pay down the loan sooner. Although the amended agreement provided that the funds would be paid into escrow, on May 13, 2003, Larry Bryan made a check directly to Van Buren in the amount of $228,100. On July 13, 2003, TCS sent Susan Bryan a Certificate of Title, which referenced the security interest held by BancorpSouth. Van Buren delivered a Warranty Deed to Susan Bryan on September 3, 2003, and the deed was recorded on October 13, 2003.
¶12. Langston closed on unit 102 on August 18, 2003, paying Van Buren $220,565. In return, Van Buren provided Langston with a Warranty Deed the same day, but it was not recorded until August 12, 2005. The deed was titled to " Langston Oxford Properties, LP," an entity Langston created to handle the closing. Prior to closing, on July 31, 2003, Langston entered a Settlement Agreement with Van Buren, which indicated that $255,621 of the purchase price was for " Payoff of first mortgage loan" with BancorpSouth. The Albritons, Bryans, Langston, and Bourdeaux all took possession of their respective units between June 2003 and November 2003.
¶13. An internal BancorpSouth memorandum was sent by Ronald Winford, who succeeded Bobby Little in overseeing the Van Buren loan, to James Stringer in the Credit Administration Department on June 2, 2003. The memo recapped a meeting between Winford and Stringer, accompanied by Ron Hendrix and the Fraziers on March 27, 2003. The memo lists the loan to Van Buren, stating that the $5.4 million loan had been advanced $5,311,885 to date and that the project was " 91% complete with 27 of 30 units sold." It also states that Covington " is preparing Deed of Trust release documents for us to review in anticipation of condo closing in mid-June," and that Winford anticipated " being paid out of this project by the end of August."
¶14. As previously mentioned, Tim Ford was listed in the August 23, 2001, letter from Covington to BancorpSouth as having contracted with Van Buren for the purchase of unit 210 and having deposited $21,000 in escrow with TCS. According to a BancorpSouth document, Van Buren executed a deed to Ford on September 26, 2003, and BancorpSouth executed a partial release of that unit on October 9, 2003. BancorpSouth had not been remitted the proceeds from the sale. Winford testified that the release of Ford's condo was a mistake because Ford's condo closed the " same day" as unit 202, the sales of which were remitted to BancorpSouth on September 19, 2003. However, Ford's condo actually closed nine days after unit 202. BancorpSouth's partial release list, date unknown, shows that unit 202 was not released from the deed of trust, although Ford's was released.
¶15. The August 22, 2001, appraisal letter listed unit 306, eventually purchased by Lee, as pending. Further, the July 2002 letter sent by Frazier Construction & ...