Opinion ID: 901011
Heading Depth: 1
Heading Rank: 1

Heading: Material Issues of Disputed Fact

Text: [¶ 54.] One need not read more than the opening passage of the Bank's own brief to resolve this appeal. In that passage, the Bank unequivocally demonstrates the existence of material issues of disputed fact on Scotts' affirmative defense of payment. The Bank's Statement of the Facts expressly concedes the point stating that: This case involves a dispute over the amount of principal due on a promissory note delivered to the Bank by the Scotts in August of 1985. The Bank contended that at maturity the Scotts owed $109,948.79 plus interest on the note, while the Scotts asserted that the note was paid in full. This seemingly straightforward matter is complicated because neither the Scotts nor the Bank have complete records of payments made on the note. Considering this statement alone, we should reverse the summary judgment. Never before has this Court permitted summary judgment in such circumstances: especially not when the trial court had to make credibility determinations about disputed factual assumptions underlying each side's payment records (described by both parties as amortization schedules). [¶ 55.] The trial court concluded that Bank was entitled to summary judgment because it found that the Scotts' amortization contained obvious glaring errors. On the other hand, the trial court apparently found the Bank's amortization credible despite missing records and alleged errors. This Court compounds the problem by further finding that [i]t was reasonable for the trial court to rely on the Bank's balance .... See supra note 7 (emphasis added). In my view, this type of fact finding, expressly finding the reasonableness of disputed evidence, has no place in summary judgment proceedings. [¶ 56.] The Court, therefore, attempts to distinguish our precedent prohibiting fact finding in summary judgment proceedings by noting that this case involves payment, which is an affirmative defense. However, the Court's error is illustrated by Wright, Miller and Kane's discussion of summary judgment in cases involving defenses. That treatise recognizes that even though a motion for summary judgment may be used to test the sufficiency of a defendant's defense: A [plaintiff] is entitled to summary judgment only when no genuine issue of material fact exists, the papers on the motion demonstrate the right to relief, and every one of the defenses asserted legally are insufficient. Since a single valid defense may defeat recovery, however, [plaintiff's] motion for summary judgment should be denied when any defense presents significant fact issues that should be tried. 10B Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2734 (3d ed 1998) (emphasis added). Accordingly, if a fact issue existed on the payment defense, summary judgment should have been denied, and the trial court's resolution of the payment dispute should have been determined at a trial. Simply stated, the Scotts' ultimate trial burden of persuasion under SDCL 57A-3-308 is irrelevant. It is irrelevant because the only question on the motion for summary judgment is whether any material dispute of fact exists on the payment defense. [¶ 57.] Additionally, even if a fact resolution of the payment dispute were permitted in summary judgment proceedings, the Bank's own showing does not affirmatively demonstrate its entitlement to relief. It does not because the Bank's own amortization schedule is subject to the same infirmities the Court uses to invalidate the Scotts' amortization schedule. Specifically, this Court disallows consideration of Scotts' amortization because of their inability to produce the records [15] used to construct their schedule. However, Bank concedes that it also lost underlying documentation supporting the outstanding principal claimed on its schedule. Indeed, in its Statement of Material Facts filed in support of its motion, the Bank expressly concedes that [a]pparently, the records of any payments that had been made prior to the execution of the Third Allonge in October of 1988 had been destroyed when Western Bank merged into First Bank in the late 1980s. [¶ 58.] Moreover, the Bank's other supporting submissions demonstrate that its claim to $109,948.79 in principal is inconsistent and uncertain. The Bank's claim is inconsistent because it is based upon two affidavits of Michael J. Porcello, a Bank Vice President. However, the claims made in those affidavits are inconsistent. In his first affidavit, Porcello claimed entitlement to $109,948.79. However, in his second affidavit, he attached a Bank amortization schedule, purportedly prepared from Bank records, claiming $111,258.61. Nevertheless, the trial court found for the Bank in the amount of $109,948.79. [¶ 59.] The Bank also concedes that there is record evidence that its claim is uncertain. The Bank admitted that [t]he SBA was reluctant to pay on its guaranty because the Bank was missing certain records relating to the Note. On July 17, 1996, the SBA notified the Bank that it planned to delay any purchase until an agreement is reached as to the amount owing on th[e] account that can be legally proved. However, [t]he SBA ultimately declined to honor its guaranty on the Note, in part because of the wide variance between the Bank's and the Scotts' amortization schedules. The SBA terminated its guaranty entirely in December, 1997, due to the Bank's and the Scotts' failure to come to an agreement regarding the Note's outstanding balance. [¶ 60.] These deficiencies in the Bank's own showing more than adequately demonstrate that the Bank failed to establish the absence of disputed issues of material fact and its right to $109,948.79 plus interest. The inconsistencies and uncertainties in the Bank's own records certainly refute this Court's appellate finding that [t]he note ultimately matured on August 21, 1995, with an unpaid balance of $109,948.79 according to Bank's records. See supra ¶ 8 (emphasis added). [¶ 61.] It must finally be noted that the deficiencies in the Bank's own showing are not the only evidence raising disputes of material fact. The Scotts raised other alleged errors in the Bank's amortization schedule, including: (1) an alleged failure to give proper credit for a $38,000 equipment sale; (2) an alleged failure to credit any portion of the 1989 payments to principal reduction; and, (3) a Bank letter indicating the loan was current. Although the Bank has submitted explanations for these points, the Bank's explanations and the Scotts' assertions should both be resolved by a fact finder rather than by concluding that they raise no dispute of fact.