Chase Bank USA, N.A. v. Regions Bank (Majority, with Concurring)
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Wanda Stephens purchased property in Little Rock consisting of Tract A and Tract B. In 2001, Wanda executed a quitclaim deed to the Stephens Family Limited Partnership (SFLP) and mortgaged the property to Regions Mortgage. In 2002, Wanda executed a warranty deed conveying Tract A to herself for life with a remainder to Greg Stephens and his heirs. In 2005, Wanda mortgaged Tract B of the land to Chase Bank. Regions Bank (Region) subsequently made a loan to Wanda, taking as collateral a mortgage on Tract A and Tract B. Wanda defaulted on the first mortgage, and Regions Mortgage foreclosed on both tracts. $308,828 remained from the sale. Chase and Regions asserted claims to the monies, and SFLP and the Stephens heirs intervened. All parties claimed to be first in priority. The circuit court granted partial summary judgment against Chase, finding that the interests of Regions, SFLP, and the Stephens heirs were superior to Chase's. The Supreme Court reversed and remanded, holding that because the question of whether Chase had actual notice of the Stephens heirs' claim on the property was a question of fact, summary judgment was inappropriate.
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Cite as 2013 Ark. 129
SUPREME COURT OF ARKANSAS
No.
11-900
Opinion Delivered March 28, 2013
CHASE BANK USA, N.A.
APPELLANT
V.
REGIONS BANK; THE STEPHENS
FAMILY LIMITED PARTNERSHIP;
KATHRYN STEPHENS; RACHEL
S T EPHENS; ALEX S T EP H EN S ;
JENNIFER STEPHENS; JOSHUA
STEPHENS, MINOR; AND GREG
STEPHENS, INDIVIDUALLY, AND AS A
PARENT AND NEXT FRIEND OF THE
ABOVE MINOR
APPELLEES
APPEAL FROM THE PULASKI
COUNTY CIRCUIT COURT
[NO. CV-2008-7020]
HON. COLLINS KILGORE, JUDGE
REVERSED AND REMANDED;
MOTION TO STRIKE APPELLEES’
STATEMENT OF THE CASE AND
SUPPLEMENTAL ABSTRACT MOOT.
KAREN R. BAKER, Associate Justice
Chase Bank USA, N.A. (Chase) appeals from the circuit court’s order granting partial
summary judgment in favor of Regions Bank (Regions), the Stephens Family Limited
Partnership (SFLP), and Kathryn, Rachel, Alex, Jennifer, Joshua, and Greg Stephens (the
Stephens heirs). We reverse and remand.
Wanda Stephens purchased the property at 6 River Ridge Court in Little Rock,
Arkansas from her brother, Charles Ward. The property consisted of Tract A, purchased in
1978, and Tract B purchased in 1982. Tract A is a zoned residential tract upon which Wanda
Stephens built a house. Tract B is contiguous to Tract A and is unzoned and undeveloped.
Cite as 2013 Ark. 129
On June 21, 2001, Wanda Stephens executed a quitclaim deed to SFLP, in which
Wanda Stephens was the general partner. The deed did not include a legal description. On
July 25, 2001, Wanda Stephens mortgaged Tract A and Tract B to Regions Mortgage for
$680,000 (the first mortgage).
On October 7, 2002, Wanda Stephens executed a warranty deed conveying Tract A
to herself for life with a remainder to Greg Stephens and the heirs of his body, in fee tail. In
2004, Greg Stephens filed a complaint against his uncle, Steve Ward, for breach of contract
in the Pulaski County Circuit Court, Sixth Division. Wanda Stephens had previously granted
Ward her power of attorney, including her general partnership in SFLP. Greg Stephens
alleged that Ward had used this power of attorney to commit actions against Wanda
Stephens’s interests, and that these actions had injured his and his minor children’s rights in
Wanda Stephens’s property. Ward counterclaimed, asserting that the 2002 deed was void
because the land had already been conveyed by the 2001 quitclaim deed to SFLP. A thirdparty complaint in intervention was filed by SFLP to include Kathryn Stephens, Rachel
Stephens, Alex Stephens, Jennifer Stephens, and Joshua Stephens (Greg Stephens’s minor
children) as necessary parties to the case. Greg Stephens did not file an answer to the thirdparty complaint within twenty days, and the circuit court entered default judgment against
him and his children on December 29, 2004, nullifying the 2002 deed.
On January 21, 2005, Wanda Stephens mortgaged property to Chase for $222,000.
The legal description of the property contained in the mortgage described only Tract B.
However, Wanda Stephens admitted in her response to requests for admission filed September
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Cite as 2013 Ark. 129
7, 2009, that she intended to grant a mortgage to Chase on Tract A and Tract B.
On February 16, 2005, SFLP filed a corrected quitclaim deed to correct the omission
of a legal description in the 2001 quitclaim deed to SFLP. This deed included the legal
description for Tract A. On May 31, 2005, Regions made a business loan to Wanda
Stephens, taking as collateral (among other properties) a mortgage on Tract A and Tract B.
Wanda Stephens defaulted on the 2001 mortgage (the first mortgage) to Regions
Mortgage. Regions Mortgage foreclosed on both Tract A and Tract B in a nonjudicial
foreclosure proceeding. The two tracts were sold together as one parcel at auction on June
12, 2008, for $808,100. After the first mortgage to Regions Mortgage was satisfied,
$308,828.02 remained from the sale. Regions filed an interpleader and placed the remaining
proceeds in the registry of the court. Both Chase and Regions asserted claims to the monies.
SFLP moved to intervene due to its interest in the property under the 2001 quitclaim deed
and the 2005 correction deed. SFLP’s motion for intervention was granted on July 7, 2009.
The Stephens heirs also moved to intervene based on their interest in the property under the
2002 warranty deed. The Stephens heirs’ motion to intervene was granted on February 14,
2011. Chase, Regions, SFLP, and the Stephens heirs all claimed to be first in priority.
During the course of the litigation, Greg Stephens filed a motion to vacate the 2004
default judgment in the Pulaski County Circuit Court, Sixth Division. The court denied his
motion as well as his motion for reconsideration. He appealed in the court of appeals. At the
same time, he filed a collateral attack claiming that the 2004 default judgment was void. On
January 15, 2010, the Pulaski County Circuit Court, Second Division, found that the 2004
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Cite as 2013 Ark. 129
default judgment against Greg Stephens and his minor children was void. The circuit court’s
order voiding the default judgment also declared Greg Stephens and the heirs of his body to
be “the true and lawful owners” of the property upon the expiration of Wanda Stephens’s life
estate. The court of appeals then dismissed his pending appeal as the relief requested had
already been received.
Regions, SFLP, and the Stephens heirs moved for partial summary judgment arguing
that their interests were superior to Chase’s. The circuit court granted partial summary
judgment against Chase. The remaining parties settled. This appeal followed.
On appeal, Chase asserts that the circuit court erred in granting the motion for partial
summary judgment because the relief granted was not in accord with Arkansas Code
Annotated section 18-50-109 (Repl. 2003) and because genuine issues of material fact
remained to be decided. Chase further asserts that the circuit court erred in denying several
of its motions: a motion to deem interrogatories to Wanda Stephens admitted, a motion to
disqualify Wanda Stephens’s lawyers, a motion to strike Wanda Stephens’s deposition answers,
and a motion for sanctions against Wanda Stephens. Finally, Chase asserts that the circuit
court erred in the distribution of proceeds from the sale.
Although it is Chase’s second point on appeal, we first review Chase’s argument that
the circuit court erred in granting summary judgment because genuine issues of material fact
remain unresolved as we find that it is dispositive of the issues. Summary judgment is to be
granted only when it is clear that there are no genuine issues of material fact to be litigated,
and the party is entitled to judgment as a matter of law. Gallas v. Alexander, 371 Ark. 106,
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263 S.W.3d 494 (2007). On appellate review, we determine if summary judgment was
appropriate based on whether the evidentiary items presented, viewed in the light most
favorable to the party resisting the motion, leave a material question unanswered. Id.
Chase asserted several equitable claims, including reformation. Chase’s arguments in
equity rest on whether it was a bona fide purchaser as to the other parties and whether the
other parties were bona fide purchasers as to Chase. In order to be a bona fide purchaser of
land in Arkansas, one must take property in good faith, for valuable consideration, and
without notice of a prior interest. Bill’s Printing, Inc. v. Carder, 357 Ark. 242, 161 S.W.3d 803
(2004). A subsequent purchaser will be deemed to have actual notice of a prior interest in
property if he is aware of such facts and circumstances as would put a person of ordinary
intelligence and prudence on inquiry that, if diligently pursued, would lead to knowledge of
the prior interest. Killam v. Texas Oil & Gas Corp., 303 Ark. 547, 798 S.W.2d 419 (1990).
Whether one buying land has actual notice of another’s interest in the land is a question of
fact. McGill v. Grigsby, 205 Ark. 349, 168 S.W.2d 809 (1943).
Chase presented evidence that the 2001 quitclaim deed to SFLP did not contain a
sufficient legal description, that the 2004 default judgment set aside the 2002 warranty deed
to the Stephens heirs, and that Regions’s 2005 mortgage, SFLP’s correction deed, and the
order vacating the 2004 default judgment were all filed subsequent to Chase’s mortgage.
Chase asserted that it had no notice of the Stephens heirs’ claim on the property because it
relied on the 2004 order vacating the Stephens heirs’ 2002 warranty deed. Because the
question of whether a party had actual notice of another party’s interest is a question of fact,
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summary judgment was inappropriate.
Thus, we reverse and remand on this point.
Having held that the circuit court erred in granting partial summary judgment against
Chase, we must reverse the distribution order as well and need not consider whether the relief
granted was in accord with Arkansas Code Annotated section 18-50-109. In Chase’s
remaining points on appeal, Chase asserts that the circuit court erred in denying its motions.
However, the circuit court did not deny the motions, but instead deemed them moot upon
his grant of partial summary judgment and dismissed them. Because we reverse the order
granting partial summary judgment against Chase, the circuit court’s order finding that the
motions are moot is also reversed.1
Reversed and remanded.
CORBIN, DANIELSON, and GOODSON, JJ., concur.
The McMullan Law Firm, by: Amy Clemmons Brown, for appellant.
Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., by: Donald Henry and Anton L.
Janik, Jr., for appellant Regions Bank.
Greg Stephens, for appellants Stephens Heirs, Kathryn Stephens, et al.
with co-counsel Janis Chalmers.
Southern & Allen, by: Byron Southern and Kate Bridges, for appellant The Stephens
Family Limited Partnership.
1
Because we reverse and remand, Chase’s motion to strike appellee’s statement of the
case and supplemental abstract is moot and dismissed.
6
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