RENDERED: DECEMBER 6, 2024; 10:00 A.M. NOT TO BE PUBLISHED
Commonwealth of Kentucky Court of Appeals NO. 2023-CA-1489-MR
SCOT EVANSON AND LORI EVANSON APPELLANTS
APPEAL FROM JEFFERSON CIRCUIT COURT v. HONORABLE JENNIFER WILCOX, JUDGE ACTION NO. 15-CI-400371
NATIONSTAR MORTGAGE LLC APPELLEE
OPINION AFFIRMING
** ** ** ** **
BEFORE: CETRULO, COMBS, AND EASTON, JUDGES.
COMBS, JUDGE: Scot Evanson and his former spouse, Lori Evanson, challenge
the summary judgment of the Jefferson Circuit Court entered October 2, 2023, in
favor of Nationstar Mortgage LLC (Nationstar) in a foreclosure action. After our
review, we affirm. In 1993, the Evansons obtained a loan and executed a note and
mortgage to purchase a house on Rock Falls Trace in Louisville. They divorced in
2011. Scot moved to his second house in Tennessee. Lori continued to reside at
the residence at Rock Falls Trace, and Scot agreed to make monthly payments
toward the home loan. However, Scot did not provide the mortgage holder with
notice of his change of address, and Lori chose not to open mail concerning the
mortgage. Instead, she bagged up the mail periodically and gave it to her son to
deliver to Scot in Tennessee.
The Evansons failed to make their July and August 2013 mortgage
payments. While they caught up and became current on those payments by
October 2013, they again encountered problems by failing to review notices sent to
the property regarding the terms of the mortgage. For instance, the Evansons
failed to respond to Nationstar’s repeated requests for proof that the home was
properly insured. As a result, Nationstar procured the necessary insurance. It then
increased the Evansons’ monthly payment to compensate for the cost of the
insurance and notified the Evansons of the change. Unaware of the contents of
notices mailed to them at the property, the Evansons failed to pay the increase in
the mortgage payment. While they caught up on overdue payments a few times,
by July 2014, they were again in default. Nationstar sent written notice to the
property advising of the default and of how the default could be cured. The notice
-2- warned that the terms of the loan would be accelerated if the Evansons failed to
cure the default, potentially resulting in the foreclosure and sale of the property.
When once again the Evansons failed to provide proof that they had insured the
property, Nationstar renewed its insurance coverage in August 2014.
In February 2015, Nationstar filed a complaint for foreclosure.
Nationstar alleged that it was in possession of the original note indorsed in blank
and attached to the complaint copies of the note, mortgage, and an assignment of
the mortgage. The Evansons failed to defend against the action, and Nationstar
obtained a default judgment and order of sale in August. Scot eventually filed a
motion to vacate the judgment and order of sale, and the motion was granted.
The litigation continued, and in May 2016, the Evansons filed a
motion asking the court to order Nationstar to accept their offer to pay the
outstanding principal and interest and to release the mortgage. Following a
hearing, the trial court denied the motion. In July 2016, the Evansons filed a
counterclaim asserting that their alleged default was occasioned by Nationstar’s
refusal to accept their payments or its misapplication of their monthly payments.
They alleged that they were entitled to recover money damages for injury to their
reputations and credit scores. Nationstar answered and denied the allegations.
In January 2022, Nationstar filed a motion for summary judgment. In
responding to the motion, the Evansons argued that summary judgment was
-3- premature; that Nationstar failed to act in good faith during its telephone
conversations with Scot; that Nationstar failed to provide sufficient evidence of the
amounts due; and that Nationstar failed to mitigate its losses when it rejected their
offer of payment made after the foreclosure proceedings were initiated.
The court’s master commissioner recommended that the court grant
Nationstar’s motion. She determined that the Evansons’ default was “primarily the
result of problematic record keeping” on their part. She observed that there had
been no allegation that the content of the notices provided to the Evansons was
inadequate or that the mail had not been delivered to the property’s address. She
concluded that “[i]t is entirely reasonable to expect a homeowner to check their
mail, and if necessary, read the contents of correspondence from the servicer of
their home loan.” The master commissioner concluded that Nationstar had
supported its claim with substantial evidence and that it had no legal obligation to
accept the Evansons’ tender of less than full payment of the outstanding balance.
In March 2023, Nationstar renewed its motion for summary judgment.
Attached to the summary judgment motion was the affidavit of an assistant vice
president of Nationstar and the regularly maintained business records relating to
the Evansons’ home mortgage loan. The Evansons again opposed the motion. By
its order of October 2, 2023, the trial court granted Nationstar’s motion. Its order
of sale was duly entered. This appeal followed.
-4- The Evansons contend that the trial court erred in two ways. First,
they argue that disputed issues of material facts concerning their counterclaim
precluded entry of summary judgment. Next, they contend that Nationstar failed to
mitigate its damages when it refused to accept their offer of partial payment. We
disagree with both arguments.
Our rules of civil procedure (CR) provide that summary judgment
may be granted where pleadings, stipulations, discovery, and affidavits indicate
that there is no genuine issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law. CR 56. We review a trial court’s grant
of summary judgment de novo in order to consider whether the trial court correctly
determined that there were no genuine issues of material fact and that the moving
party was entitled to judgment as a matter of law. Gonzalez v. Johnson, 581
S.W.3d 529 (Ky. 2019).
While Nationstar strongly disagrees, the Evansons argue on appeal
that their counterclaim sufficiently alleged that Nationstar failed to interact with
Scot in good faith and that it breached its duty to engage in fair dealing. They
explain that Scot “made repeated attempts to reach Nationstar by phone for
information on his account leading up to the foreclosure and more often than not
got off the phone no more edified than before he called.” They argue that when
Scot “would receive a reasonable explanation from Nationstar[,] he would make
-5- his best efforts to correct the issue” -- but that Nationstar simply failed to act in
good faith.
However, there is no evidence in the record to indicate that Nationstar
acted in a manner inconsistent with the requirements of the mortgage agreement.
The agreement required that the property be insured. When the Evansons failed to
produce evidence proving that the property was properly insured, Nationstar was
entitled to insure the property and, in turn, to charge the Evansons for the cost.
Moreover, the mortgage agreement clearly provided the manner in which the
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RENDERED: DECEMBER 6, 2024; 10:00 A.M. NOT TO BE PUBLISHED
Commonwealth of Kentucky Court of Appeals NO. 2023-CA-1489-MR
SCOT EVANSON AND LORI EVANSON APPELLANTS
APPEAL FROM JEFFERSON CIRCUIT COURT v. HONORABLE JENNIFER WILCOX, JUDGE ACTION NO. 15-CI-400371
NATIONSTAR MORTGAGE LLC APPELLEE
OPINION AFFIRMING
** ** ** ** **
BEFORE: CETRULO, COMBS, AND EASTON, JUDGES.
COMBS, JUDGE: Scot Evanson and his former spouse, Lori Evanson, challenge
the summary judgment of the Jefferson Circuit Court entered October 2, 2023, in
favor of Nationstar Mortgage LLC (Nationstar) in a foreclosure action. After our
review, we affirm. In 1993, the Evansons obtained a loan and executed a note and
mortgage to purchase a house on Rock Falls Trace in Louisville. They divorced in
2011. Scot moved to his second house in Tennessee. Lori continued to reside at
the residence at Rock Falls Trace, and Scot agreed to make monthly payments
toward the home loan. However, Scot did not provide the mortgage holder with
notice of his change of address, and Lori chose not to open mail concerning the
mortgage. Instead, she bagged up the mail periodically and gave it to her son to
deliver to Scot in Tennessee.
The Evansons failed to make their July and August 2013 mortgage
payments. While they caught up and became current on those payments by
October 2013, they again encountered problems by failing to review notices sent to
the property regarding the terms of the mortgage. For instance, the Evansons
failed to respond to Nationstar’s repeated requests for proof that the home was
properly insured. As a result, Nationstar procured the necessary insurance. It then
increased the Evansons’ monthly payment to compensate for the cost of the
insurance and notified the Evansons of the change. Unaware of the contents of
notices mailed to them at the property, the Evansons failed to pay the increase in
the mortgage payment. While they caught up on overdue payments a few times,
by July 2014, they were again in default. Nationstar sent written notice to the
property advising of the default and of how the default could be cured. The notice
-2- warned that the terms of the loan would be accelerated if the Evansons failed to
cure the default, potentially resulting in the foreclosure and sale of the property.
When once again the Evansons failed to provide proof that they had insured the
property, Nationstar renewed its insurance coverage in August 2014.
In February 2015, Nationstar filed a complaint for foreclosure.
Nationstar alleged that it was in possession of the original note indorsed in blank
and attached to the complaint copies of the note, mortgage, and an assignment of
the mortgage. The Evansons failed to defend against the action, and Nationstar
obtained a default judgment and order of sale in August. Scot eventually filed a
motion to vacate the judgment and order of sale, and the motion was granted.
The litigation continued, and in May 2016, the Evansons filed a
motion asking the court to order Nationstar to accept their offer to pay the
outstanding principal and interest and to release the mortgage. Following a
hearing, the trial court denied the motion. In July 2016, the Evansons filed a
counterclaim asserting that their alleged default was occasioned by Nationstar’s
refusal to accept their payments or its misapplication of their monthly payments.
They alleged that they were entitled to recover money damages for injury to their
reputations and credit scores. Nationstar answered and denied the allegations.
In January 2022, Nationstar filed a motion for summary judgment. In
responding to the motion, the Evansons argued that summary judgment was
-3- premature; that Nationstar failed to act in good faith during its telephone
conversations with Scot; that Nationstar failed to provide sufficient evidence of the
amounts due; and that Nationstar failed to mitigate its losses when it rejected their
offer of payment made after the foreclosure proceedings were initiated.
The court’s master commissioner recommended that the court grant
Nationstar’s motion. She determined that the Evansons’ default was “primarily the
result of problematic record keeping” on their part. She observed that there had
been no allegation that the content of the notices provided to the Evansons was
inadequate or that the mail had not been delivered to the property’s address. She
concluded that “[i]t is entirely reasonable to expect a homeowner to check their
mail, and if necessary, read the contents of correspondence from the servicer of
their home loan.” The master commissioner concluded that Nationstar had
supported its claim with substantial evidence and that it had no legal obligation to
accept the Evansons’ tender of less than full payment of the outstanding balance.
In March 2023, Nationstar renewed its motion for summary judgment.
Attached to the summary judgment motion was the affidavit of an assistant vice
president of Nationstar and the regularly maintained business records relating to
the Evansons’ home mortgage loan. The Evansons again opposed the motion. By
its order of October 2, 2023, the trial court granted Nationstar’s motion. Its order
of sale was duly entered. This appeal followed.
-4- The Evansons contend that the trial court erred in two ways. First,
they argue that disputed issues of material facts concerning their counterclaim
precluded entry of summary judgment. Next, they contend that Nationstar failed to
mitigate its damages when it refused to accept their offer of partial payment. We
disagree with both arguments.
Our rules of civil procedure (CR) provide that summary judgment
may be granted where pleadings, stipulations, discovery, and affidavits indicate
that there is no genuine issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law. CR 56. We review a trial court’s grant
of summary judgment de novo in order to consider whether the trial court correctly
determined that there were no genuine issues of material fact and that the moving
party was entitled to judgment as a matter of law. Gonzalez v. Johnson, 581
S.W.3d 529 (Ky. 2019).
While Nationstar strongly disagrees, the Evansons argue on appeal
that their counterclaim sufficiently alleged that Nationstar failed to interact with
Scot in good faith and that it breached its duty to engage in fair dealing. They
explain that Scot “made repeated attempts to reach Nationstar by phone for
information on his account leading up to the foreclosure and more often than not
got off the phone no more edified than before he called.” They argue that when
Scot “would receive a reasonable explanation from Nationstar[,] he would make
-5- his best efforts to correct the issue” -- but that Nationstar simply failed to act in
good faith.
However, there is no evidence in the record to indicate that Nationstar
acted in a manner inconsistent with the requirements of the mortgage agreement.
The agreement required that the property be insured. When the Evansons failed to
produce evidence proving that the property was properly insured, Nationstar was
entitled to insure the property and, in turn, to charge the Evansons for the cost.
Moreover, the mortgage agreement clearly provided the manner in which the
parties would communicate and the consequences of default. The Evansons
offered no proof of a breach of the terms of the mortgage agreement on the part of
Nationstar. And, while Kentucky recognizes the obligation of good faith
performance of contracts, violation of the covenant of good faith alone does not
give rise to an independent cause of action (with the exception of insurance
contracts). J.S. v. Berla, 456 S.W.3d 19 (Ky. App. 2015). We are persuaded that
the trial court did not err by granting summary judgment to Nationstar with respect
to this claim.
Next, the Evansons argue that Nationstar had a duty to mitigate its
damages by accepting their offer to pay a portion of the sum that Nationstar sought
to recover through the foreclosure action. They contend that their offer was made
“without conditions,” but “[r]ather than accept the payment and crediting the
-6- Evansons’ account, Nationstar wrongfully refused to accept anything less than the
full amount it claimed was due.” The Evansons argue that the trial court erred by
failing to conclude that Nationstar waived its right to charge interest and late fees
after they offered to make a partial payment toward their outstanding loan balance.
Again, we disagree.
The parties’ agreement memorialized the Evansons’ obligation to pay
a sum certain. The account had a known outstanding balance at each stage of the
parties’ relationship. While Kentucky generally imposes upon a nonbreaching
party the duty to mitigate damages, the Supreme Court of Kentucky has clearly
stated that the mitigation requirement “has no application to a contract to pay
absolutely a certain sum of money.” Superior Woolen Co. Tailors, Inc. v. M.
Samuels & Co., Inc., 219 Ky. 539, 293 S.W. 1078, 1079 (1927). This principle,
“the Woolen rule,” conforms to the fundamentals of mitigation. See Branch
Banking & Trust Co. v. Pacific Life Ins. Co., 985 F. Supp. 2d 844, 848-49 (W.D.
Ky. 2013), aff’d, 645 F. App’x 387 (6th Cir. 2016) (citing Williston on Contracts §
66:96 (4th ed. 2013)). Pursuant to the mortgage agreement, Nationstar was entitled
to receipt of a sum certain. It was under no obligation to accept a smaller sum in
an effort to preserve its rights.
Accordingly, we affirm the judgment of the Jefferson Circuit Court.
-7- ALL CONCUR.
BRIEF FOR APPELLANTS: BRIEF FOR APPELLEE:
Andrew S. Zeh Bethany A. Breetz Louisville, Kentucky Louisville, Kentucky
Neal F. Bailen Louisville, Kentucky
-8-