Opinion ID: 2804699
Heading Depth: 4
Heading Rank: 1

Heading: First Lienholder Argument

Text: First, Arvest argues it was the first lienholder on the effective date of the taking—in March 2010—when ODOT paid into the court the amount of just compensation set by the first commissioners’ report. It contends the later repayment of the disbursement monies cannot operate to change its priority rights as of the date of the taking. Arvest further asserts it was statutorily obligated to release the lien after the March 2010 disbursement under Okla. Stat. tit. 46, § 15(A), which states: “[a]ny mortgage on real estate shall be released by the holder of any such mortgage within fifty (50) days of the payment of the debt secured by the mortgage,” subject to a penalty of up to $100 per day for failure to release the mortgage. Id. It argues the SBA should not be allowed to take priority over Arvest’s lien by virtue of ignoring its own obligation under § 15(A) to release its lien. Arvest’s argument ignores relevant Oklahoma law. The commissioners’ assessment of just compensation is just that – an assessment; it is superseded by any subsequent jury verdict, which sets the final damage award. Garnett, 296 P.2d at 767; Indep. Sch. Dist. No. 5, 324 P.3d at 422; Okla. Stat. tit. 69, § 1203(e)(1) (“[E]ither party may within sixty (60) days after the filing of [the commissioners’] report file with the clerk a written demand for a trial by jury, in which case the amount of damages shall be assessed by a jury.”). Indeed, “where a demand is made for a jury trial in a condemnation proceeding, the award made by the commissioners is not competent evidence to go before the jury,” Taylor, 324 P.3d at 422, and “[t]he Commissioners’ award will no longer be relevant when superseded by the - 10 - jury’s verdict,” Okla. ex rel. Dep’t of Transp. v. Mehta, 180 P.3d 1214, 1220 (Okla. Civ. App. 2008). A party having an interest in the condemned property can immediately receive the preliminary award based on the commissioners’ assessment, but it does so “subject to the right of either party to prosecute further proceedings concerning the sufficiency or insufficiency of the award.” Okla. ex rel. Dep’t of Transp. v. Pendergraft, 919 P.2d 451, 453 (Okla. 1996) (internal quotation marks omitted). The March 2010 order disbursing the funds stated the disbursement was not the final determination of just compensation and did not act as waiver of the parties’ right to contest the amount of just compensation or to request a jury trial. Aplt. App. at 102. Arvest cites no Oklahoma law stating it cannot lose its lien position even if it releases its lien before the final damage award. Oklahoma law suggests otherwise. The Oklahoma Supreme Court has ruled that “if a mortgagee opts to have the commissioners’ preliminary award paid directly to him – rather than simply having his mortgage declared a lien on an award – then the mortgagee remains subject to . . . the right of the condemning authority to seek a judicial determination of the sufficiency or insufficiency of the award.” Pendergraft, 919 P.2d at 453. Further, as the district court ruled, a mortgagee can refuse to release a lien without penalty under § 15(A) when it has a good-faith belief there are substantial grounds for contesting that repayment has been made. See Grissom v. Dye, 269 P.2d 367, 370-71 (Okla. 1953) (holding there must be a clear showing of bad faith to seek a penalty under § 15(A)). Based on Oklahoma’s statutory condemnation statutes and - 11 - case law holding that distribution of a preliminary award is not the final damage award and that a mortgage holder might be required to return any excess funds, Arvest had a good faith legal justification to assert it had no assurance it had received payment in full from Crow when it received the March 2010 distribution.