Brenda Savory v. First Union National Bank of Delaware ( 2002 )

IN THE SUPREME COURT OF MISSISSIPPI
NO. 2003-CA-02773-SCT
BRENDA SAVORY
v.
FIRST UNION NATIONAL BANK OF DELAWARE
DATE OF JUDGMENT: 10/15/2002
TRIAL JUDGE: HON. MARGARET CAREY-MCCRAY
COURT FROM WHICH APPEALED: LEFLORE COUNTY CIRCUIT COURT
ATTORNEYS FOR APPELLANT: FRANK THACKSTON, JR.
C. W. WALKER, III.
ATTORNEYS FOR APPELLEE: H. MITCHELL COWAN
VIKKI J. TAYLOR
NATURE OF THE CASE: CIVIL - OTHER
DISPOSITION: REVERSED AND REMANDED - 03/01/2007
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
BEFORE SMITH, C.J., EASLEY AND GRAVES, JJ.
SMITH, CHIEF JUSTICE, FOR THE COURT:
¶1. This case comes to this Court on appeal from the Circuit Court of Leflore County by
the plaintiff, Brenda Savory. Savory claims that she was defrauded by First Union National
Bank of Delaware (hereinafter “First Union”) and mortgage brokers John Emory and Joni
Goss, doing business as Mississippi Mortgage Corporation (“Mississippi Mortgage”),while
she was obtaining a loan with First Union. Specifically, the alleged fraud involves the
falsification of documents, which Savory argues exaggerated her net worth and bolstered her
credit worthiness. On appeal, Savory asserts that First Union was either actively involved
in this fraudulent scheme, should have detected the fraud, or that the actions of Emory and
Mississippi Mortgage should have been imputed to First Union because they were agents of
First Union.
¶2. We hold that the trial court erred in giving Jury Instructions 26 and 30, as they likely
confused and misled the jury as to the correct principle of law. Accordingly, we reverse and
remand.
FACTS
¶3. In 2000, Savory contacted Orin Parrish, to inquire about a house that was listed for
sale. Parrish told Savory that the selling price of the house would not be less than $40,000.
Savory subsequently contacted Emory, a loan officer with Wholesale Mortgage, about
financing options for the house. Emory took Savory’s loan application over the phone and
entered information that she provided on a standard Housing and Urban Development (HUD)
Form 1003. He also obtained employment and rent verifications, verification of Savory’s
deposit account and assets, a borrower’s authorization and an appraisal of the property to be
financed. These documents were submitted to Equicredit, one of Wholesale Mortgage’s
lending sources. After Equicredit notified Emory that Savory’s application had been denied,
he transferred her loan application packet to Joni Goss with Mississippi Mortgage.
¶4. At all times relevant to Savory’s Complaint, Mississippi Mortgage had applied to be
but had not yet been placed on First Union’s list of approved brokers. Darrell Carroll, who
was the Underwriting Manager for First Union’s Broker Division at the time of the events
in question, testified that Mississippi Mortgage was allowed to submit Savory’s loan
application packet on a trial basis while approval of the Broker Agreement between First
Union and Mississippi Mortgage was being considered. Carroll testified that, based on
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representations that the selling price of the house was $53,000 and that Savory would be
paying a required ten percent down payment of $9,658, First Union approved Savory’s
application. First Union loaned $47,7000 on property that actually cost $40,000. On
October 6, 2000, the closing on the loan was held at Bobby Fisher, Jr.’s law office. Savory
received a cash payment of $1,350 at the loan closing, which is not reflected on the
Settlement Statement or other signed loan documents provided to First Union. Savory moved
in to the house in November of 2000 but never made any of the scheduled $470.55 monthly
mortgage payments to First Union.
¶5. On March 2, 2001, Savory filed a complaint against First Union, Emory; Mississippi
Mortgage; Bobby Fisher, Jr.; Fisher Law Offices and other defendants, charging them with
negligence, misrepresentation, fraud, breach of contract and various other claims. On
October 3, 2002, a Leflore County jury found that First Union was not liable to Savory.
However, the jury awarded Savory $30,000 in actual damages and $20,000 in punitive
damages as a result of the fraud by Emory and Mississippi Mortgage. On November 1, 2002,
the Circuit Court entered final judgment on the jury’s verdict. Savory’s motion for a directed
verdict against First Union on the issue of liability was denied. Aggrieved by this decision,
Savory asserts seven issues on appeal.
I. Whether the Lower Court Erred in Refusing to Rule First Union
Was Liable to Brenda Savory as a Matter of Law for its Admitted
Preparation of an Admitted Fraudulent Loan Document
Applicable to Brenda Savory’s Loan from First Union.
II. Whether the Lower Court Erred in Refusing to Rule That
Mississippi Mortgage Was First Union’s Agent as a Matter of
Undisputed Fact and Law.
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III. Whether the Lower Court Erred in Refusing to Rule That
Mississippi Mortgage Acted Within the Scope of its Employment
as Agent for First Union as a Matter of Undisputed Fact and Law.
IV. Whether the Lower Court Erred in Allowing the Jury to Decide
Whether Emory/Mississippi Mortgage Acted as an “Independent
Contractor” or “Agent.”
V. Whether the Lower Court Erred in Excluding from Evidence the
Broker’s Agreement, Which Both Parties Testified Was Applicable
to Savory’s Loan from First Union.
VI. Whether Jury Instructions 26 and 30 Were Accurate Statements of
Law.
VII. Whether the Lower Court Erred in Denying Savory’s Motion for
J.N.O.V.
As the determination of Issues IV and VI control the outcome of this appeal, we address only
those issues.
STANDARD OF REVIEW
¶6. This Court will not set aside a jury verdict unless it is against the overwhelming
weight of the evidence and credibility testimony. SW. Miss. Reg’l Med. Ctr. v. Lawrence,
et al., 684 So. 2d 1257, 1267 (Miss. 1996). This Court reviews jury instructions as a whole.
Splain v. Hines, 609 So. 2d 1234, 1239 (Miss. 1992). Defects in particular instructions do
not require reversal when the instructions, taken as a whole, fairly express the primary rules
of law. Id.DISCUSSION
I. Whether the Lower Court Erred in Allowing the Jury to Decide
Whether Emory/Mississippi Mortgage Acted as an “Independent
Contractor” or “Agent.”
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¶7. Savory asserts that the fraud committed by the mortgage brokers was at First Union’s
express direction because the brokers were controlled by First Union. Savory submits that
the trial court should have instructed the jury that First Union was vicariously liable for the
wrongful conduct of its agents; therefore the court erred in submitting to the jury the issue
of whether the mortgage brokers were agents or independent contractors. First Union
counters that the mortgage brokers were not agents of First Union. First Union argues that
the brokers were actually independent contractors or agents of Savory.
¶8. This Court has held that a question of whether an agency relationship exists, or
whether a party is an independent contractor, is a question of fact to be resolved by the jury.
Kight v. Sheppard Bldg. Supply, Inc., 537 So. 2d 1355, 1358 (Miss. 1989). One legal
authority states “when the facts pertaining to the existence or non-existence of an agency are
conflicting, or conflicting inferences may be drawn from the evidence, the question presented
is one of fact for the jury, . . . and even though the evidence is not full or satisfactory, it is the
better practice to submit the question to the trier of fact .” 3 Am. Jur. 2d Agency § 372
(1986).
¶9. In Elder v. Sears, Roebuck & Co., the Court held that, due to conflicting evidence
presented, the jury reasonably could have found that Sears exercised sufficient control over
its agent, that it should be vicariously liable for the negligence of its agent, and therefore, the
agency relationship was a question of fact for jury determination, and not one of law. Elder
v. Sears, Roebuck & Co., 516 So. 2d 231, 236 (Miss. 1987). At trial, First Union and Savory
presented conflicting evidence regarding whether Emory and Mississippi Mortgage were
agents or independent contractors. In support of its position that Emory and Mississippi
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Mortgage were independent contractors, First Union stated that Mississippi Mortgage
independently did the following: (1) selected their own business location; (2) hired and fired
their own employees and determined their salaries; (3) conducted their own advertising with
no reference to First Union; (4) solicited mortgage customers; (5) took loan applications in
their name; (6) managed the daily activities of their office; (7) purchased their own
equipment; (8) determined which lender to which the loan application would be submitted;
and (9) did not participate in the loan approval process. First Union also introduced
testimony showing that Emory followed this same practice. Conversely, Savory introduced
evidence that: (1) Mississippi Mortgage and First Union were parties to a contract when
Mississippi Mortgage arranged the loan with First Union; (2) First Union controlled the
procedures that Mississippi Mortgage was to follow in making Savory’s loan; (3) First Union
devised loan criteria that was binding on Mississippi Mortgage; (4) First Union required
Mississippi Mortgage to keep records relating to the borrowers’ loans that it submitted to
First Union.
¶10. Due to the conflicting evidence introduced at trial by Savory and First Union relating
to the question of an agency relationship between the mortgage brokers and First Union, we
find that the trial court did not err in submitting this issue to the jury. Furthermore, we
decline to address the sufficiency of the evidence supporting the jury’s finding of whether
Mississippi Mortgage and Emory were agents or independent contractors, as the resolution
of the next issue controls the outcome of this appeal.
II. Whether Jury Instructions 26 and 30 Were Accurate Statements of
Law.
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¶11. Savory argues that Jury Instructions No. 26 and 30 were incorrect statements of law.
However, First Union asserts that the jury was properly instructed as a whole. First Union
also argues that Savory has now waived her objections based on her failure to object to these
instructions at trial.
¶12. Rule 3.07 of the Mississippi Uniform Circuit and County Court Rules requires
attorneys to “dictate into the record their specific objections to the requested instructions
stating the grounds for each objection.” Miss. URCCC Rule 3.07. Rule 51(b)(3) of the
Mississippi Rules of Civil Procedure requires that objections to jury instructions be stated
distinctly into the record before the instructions are presented to the jury. Miss. R. Civ. P.
51(b)(3). Further, this Court will not consider an alleged erroneous instruction on appeal
unless a contemporaneous objection was made at trial. Ducker v. Moore, 680 So. 2d 808,
810 (Miss. 1996).
¶13. A thorough review of the trial record reveals that Savory objected to both instructions
in a jury instruction conference held out of the jury’s presence before the instructions were
given. Savory objected to Instruction No. 26 on grounds that the factors listed to determine
the independent contractor status were an abstract statement of law that was neither
applicable to the facts of the case nor clear to the jury. Additionally, Savory argued that the
jury could find that the defendants were not agents of First Union without finding that they
were independent contractors. Savory also objected to Instruction No. 30, arguing that
Emory and Mississippi Mortgage were agents as a matter of undisputed fact, and the
instruction was an inaccurate statement of law regarding agency.
A. Instruction No. 26
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¶14. Savory claims that Instruction No. 26 is confusing and misleading. Instruction No.
26 in pertinent part states that “the court instructs you that First Union is not responsible for
the actions or conduct of Bobby F. Fisher, Jr., Fisher Law Offices [], John Emory,
Mississippi Mortgage Corporation, Jason O’Bryant and/or Statewide Real Estate Valuation
and Title Corporation if you determine that any of those parties were independent
contractors.” (Emphasis added). Instead of correctly directing the jury to consider the status
of each of these parties, the instruction directed the jury to consider all of the parties as one
group. Under the instruction given, the jury could exonerate First Union from the fraudulent
conduct of Emory or Mississippi Mortgage, if the jury found that Fisher or O’Bryant were
independent contractors but Mississippi Mortgage and Emory were not. Under the correct
standard of law, the jury’s finding that any one of these parties was an independent
contractor would not exonerate First Union from the wrongful conduct of any of the other
parties whom the jury believed to be agents of First Union. Therefore, this instruction as
written is misleading and conflicts with the applicable rule of law.
¶15. The Court has held that “[i]t is the province of the court to instruct the jury on the law
applicable to the case, and it is the duty of the jury to act on the law as received by them from
the court.” Griffin v. Fletcher, 362 So. 2d 594, 595 (Miss.1978). Furthermore, “[i]t is error
for the court in any case to grant instructions which are likely to mislead or confuse the jury
as to the principles of law applicable to the facts in evidence." Id. at 596 (citing Moak v.
Black, 230 Miss. 337, 351, 92 So. 2d 845, 851 (1957)); Puckett Machinery Co. v. Edwards,
641 So. 2d 29, 34 (1994)(holding that it is reversible error to give instructions likely to
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mislead or confuse the jury as to the principles of law applicable to the facts in evidence).
B. Instruction No. 30
¶16. The first paragraph of Instruction No. 30 states:
If you find against Bobby F. Fisher, Fisher Law Offices [], John Emory,
Mississippi Mortgage Corporation, Jason O’Bryant and/or Statewide Real
Estate Valuation and Title Corporation on Brenda Savory’s claims and further
find that that party was acting as an agent of First Union, you shall not return
a verdict against First Union unless that party was acting within the scope and
course of his employment as an agent.
This portion properly allows a judgment against First Union if the jury found one or more
of the parties to be acting within the scope of that party’s employment as an agent of First
Union. However, in the paragraph immediately following this sentence, the instruction
directs the jury that “if you find that Bobby F. Fisher, Jr., Fisher Law Offices [], John Emory,
Mississippi Mortgage Corporation, Jason O’Bryant and/or Statewide Real Estate Valuation
and Title Corporation each acted as agents of First Union, you shall not return a verdict
against First Union if you find that their actions were outside the scope of their employment
as agents.” (Emphasis added). Under this instruction, for the jury to return a verdict against
First Union, they had to find that each party acted as an agent of First Union. We find that
the language in the first and second part of the instruction conflicts, creating probable
confusion. Under the correct statement of law, if the jury found that any one of these parties
were acting within their scope of employment as agents of First Union, the fraudulent actions
of that agent could bind First Union. Clearly, Instruction No. 30 failed to instruct the jury
as to the applicable rule of law and was likely to cause confusion due to the use of conflicting
language within the instruction.
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¶17. Because these two instructions were likely to mislead and confuse the jury as to the
correct principles of law applicable to the facts in evidence, we find that it was reversible
error to grant and give Instructions Nos. 26 and 30.
CONCLUSION
¶18. While we find no error by the trial court in submitting the question of agency to the
jury, we find that the trial court erred in giving Jury Instructions Nos. 26 and 30, as these
instructions were confusing and likely to mislead the jury as to the applicable statements of
law. Accordingly, the final judgment is reversed and remanded for a new trial.
¶19. REVERSED AND REMANDED.
WALLER, P.J., DIAZ, EASLEY, CARLSON, GRAVES, DICKINSON AND
RANDOLPH, JJ., CONCUR. COBB, P.J., CONCURS IN PART AND IN RESULT
WITHOUT SEPARATE WRITTEN OPINION.
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