EvaBank v. Traditions Bank, et al., [Ms. 1160495, Feb. 9, 2018] __ So. 3d __ (Ala. 2018). This decision by Justice Sellers (Stuart, C.J., and Main, J., concur; Bolin and Shaw, JJ., concur in part and concur in the result; Parker, Wise, and Bryan, JJ., concur in the result) reverses the Cullman Circuit Court’s summary judgment in favor of Traditions Bank, TBX Title, Inc., and Terry Williams in a dispute involving the priority of a mortgage. Traditions Bank agreed to finance Terry Williams’s purchase of real property owned by the Robertsons located in Hanceville. Ms. *2. In connection with that sale and financing, TBX Title acted as the closing agent. Ibid.
At the request of its customer William Michael Robertson, EvaBank provided a loan payoff to TBX Title of $22,123.25 on a first mortgage that EvaBank held on the property being sold by Robertson to Williams. After closing, it was discovered that EvaBank had mistakenly provided an erroneous payoff for a customer by the name of Michael S. Roberson. After closing, EvaBank advised Traditions Bank that it would not release its mortgages until the correct balance on the loan secured by the mortgage was fully satisfied. Ms. *4.
Traditions Bank sued EvaBank asserting a claim for slander of title and for a declaratory judgment that it was the first lienholder on the subject property. EvaBank counterclaimed seeking a declaratory judgment that its mortgage had priority. Ms. *4. The circuit court granted summary judgment to Traditions Bank finding that EvaBank was equitably estopped to assert a priority interest in the property because the payoff statement provided by EvaBank was a misleading communication upon which Traditions Bank and TBX Title detrimentally relied. Ms. *8.
The Court noted that
To 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).
In reversing, the Court held that “given EvaBank’s lack of knowledge as to its mistake, it could not have intended to induce reliance.” Ms. *9. The Court further held that it could not hold as a matter of law that Traditions Bank and TBX Title’s reliance on the erroneous payoff statement was reasonable under the undisputed facts. Ms. *10. The Court noted that Traditions Bank and TBX Title had numerous documents before them which set out the correct names of the Robertsons, the correct address of the property, and the dates of the two EvaBank mortgages on the Robertson property. Ms. *10-11. The Court also noted that the payoff statement upon which Traditions Bank and TBX claimed to have relied contained an address for property located in Moulton, a city in a totally different county from the Robertson property. Ms. *15.
From those facts, the Court concluded that
based on the foregoing, it is clear that both Traditions Bank and TBX Title were on notice of one or more discrepancies between the payoff statement and the closing documents, which, through the exercise of due diligence, would have revealed the fact that the payoff statement was not for the loan secured by the EvaBank mortgages encumbering the property being sold by the Robertsons. We therefore conclude, as a matter of law, that Traditions Bank and TBX Title’s reliance on the payoff statement, without further inquiry, was not reasonable. Accordingly, they may not rely on estoppel as a basis on which to claim a priority interest in the property.