Lipp v. Lipp

Citations: 75 S.W.3d 736; 2002 Mo. App. LEXIS 172; 2002 WL 104875Docket: No. ED 79147

Court: Missouri Court of Appeals; January 28, 2002; Missouri; State Appellate Court

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Shirley and Dwayne Lipp, along with Melvin Lipp as conservator for the Estates of Brittney and Courtney Lipp, sued Suzanne Lipp and Trinity Universal Insurance Company to recover damages related to an injunction bond posted by Suzanne Lipp in a separate case. The trial court granted summary judgment in favor of the Respondents, awarding $91,071.30 from the injunction bond. Suzanne Lipp and Trinity Universal appealed, and the appellate court reversed and remanded the decision. 

In the context of the appeal, the court considered the record favorably towards the Appellants. The case involved a property transaction where Melvin and Shirley Lipp conveyed real estate to their son Dwayne and his wife Suzanne for “one dollar and other good and valuable considerations,” including a reverter clause that transferred property rights to their children upon Dwayne's death or divorce. Following a divorce on February 4, 1998, the court declared that neither party had marital interests in the property but allowed for equitable interests to be shared. Dwayne was ordered to absolve Suzanne from liability on a $70,000 promissory note secured by a deed of trust on the property. 

Dwayne defaulted on the note's payment due on March 21, 1998. Melvin Lipp was appointed conservator for the children’s estate on August 10, 1998. Dwayne attempted to negotiate a settlement with NationsBank, which held the note, but the bank moved to foreclose due to issues with the loan collateral. Dwayne's attorney asserted that the bank lacked valid collateral for foreclosure based on the deed's language and the divorce court's ruling, indicating confidence in protecting the children's interests in the property.

Notice was given for a Trustee's Sale of a property on June 25, 1999, with NationsBank prepared to bid $84,565.26, the outstanding note amount, despite the property's fair market value being significantly higher (estimated between $250,000 and $300,000). Suzanne obtained a temporary restraining order on June 24, 1999, halting the sale. The court mandated an injunction bond of $150,000, which Trinity Universal Insurance Company provided as surety. The restraining order prohibited defendants, including NationsBank and the Successor Trustee, from foreclosing or transferring the property until further court orders. A preliminary injunction was issued on July 8, 1999, sustaining these restrictions. 

On November 18, 1999, McKenzie Banking Company acquired the promissory note from Bank of America, which had taken over NationsBank. On March 9, 2000, the trial court dismissed Suzanne’s petition due to her lack of legal or equitable ownership interest in the property, confirming that Melvin Lipp and his attorney were safeguarding the children’s interests. Subsequently, on March 30, 2000, Melvin Lipp and others filed a petition for damages against the injunction bond, claiming that the temporary restraining order and preliminary injunction led NationsBank to refrain from bidding the full amount, thus leaving Dwayne liable for the property debt. 

On October 17, 2000, the court awarded Dwayne $89,195.06 plus $1,876.24 in attorney's fees through an amended partial summary judgment, noting it was not a final judgment for appeal. On January 5, 2001, the Lipp parties dismissed their claim against Suzanne with prejudice. Dwayne assigned most of the judgment to McKenzie Bank on March 2, 2001. Following this, the court permitted Suzanne and Trinity Universal Insurance to file a late appeal, which they did on March 23, 2001. Suzanne contended on appeal that the trial court erred in granting summary judgment to Dwayne, asserting that the plaintiffs had not sufficiently demonstrated that the restraining order and injunction were the proximate cause of Dwayne’s damages.

Summary judgment allows a court to enter judgment without delay if the moving party can show a legal right to judgment based on undisputed facts. Appellate review of summary judgment is de novo, evaluating the record in favor of the non-moving party. A court can only award damages for an improperly granted temporary restraining order (TRO) or preliminary injunction based on statutory provisions that limit recovery to actual, natural, and proximate damages resulting from the restraint, excluding speculative damages and those stemming from the underlying case or other factors.

In this case, Dwayne argues that Suzanne's TRO and injunction prevented a scheduled foreclosure sale, which would have discharged their debt. Instead, NationsBank reconsidered and sold the note to McKenzie Banking Company, which also chose not to foreclose. Suzanne claims that their divorce triggered a reverter clause, transferring property title to their children and eliminating the bank's collateral, thus rendering any foreclosure void. Dwayne acknowledges the bank lost its collateral but insists that foreclosure would have occurred but for the injunction, leading to a loss he attributes to the title company's underwriter.

However, Dwayne's evidence does not substantiate his claim that his debt would have been extinguished. The deed from a potential foreclosure sale would be voidable and could be contested by the children, allowing the note holder to pursue Dwayne and Suzanne for the debt.

Dwayne's reliance on a letter from the bank is deemed non-binding for both the title company and its underwriter. Even if the underwriter could cover losses related to the reversionary clause, this does not prevent the underwriter from pursuing actions against Dwayne and Suzanne regarding the promissory note. The injunction against the bank’s foreclosure may have influenced the bank's choice not to act, but there is no record evidence that Dwayne would be absolved from his obligation to repay the note. Dwayne's argument that his debt would have been entirely extinguished without the injunction lacks support, leading to an error by the trial court in granting his summary judgment and damages. The decision is reversed and remanded. Additionally, the text references Section 526.070 RSMo.1998, outlining the requirements for issuing an injunction, including the necessity of a bond or cash deposit to secure damages related to the injunction.