Real Property: UNION PLANTERS BANK, N.A. V. HUTSON (COA; 6/9/2006)

UNION PLANTERS BANK, N.A.  V. HUTSON
REAL ESTATE:  Statutory penalties for failure to timely release mortgage
2004-CA-002160
PUBLISHED 
AFFIRMING IN PART, REVERSING IN PART (POTTER)
DATE:  6/9/2006

Appealing from a $98,000 judgment against it by the Whitley Circuit Court for violating KRS 382.365 in not releasing its lien after notice, the bank argued that (a) it did not actually receive notice (as is required under the statute), (b) that the statute is unconstitutional, and (3) that the appellees had a duty to mitigate their damages.

 

COA upholds trial courts decision with respect to the receipt issue.  In addition, it outlines the possibility in its dicta that statute may be unconstitutional.  However, it hangs its had on the bank’s mitigation argument.  Court finds that appellees had a contractual duty to act reasonably and in good faith.  It cites as an example that if the appellees were really being damaged by the bank’s failure to release its lien, they would have been more proactive.  Remanded as to a new trial on damages, with appellees receiving such amounts as accrued under the statute while they were acting in a reasonable manner and in good faith.

Digested by Bryan Pierce

 

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