JEFFERSON CITY, Mo. — A Clinton County couple has prevailed
at the Missouri Supreme Court in a mortgage foreclosure, but their
case will return to a jury at the trial court level on the question
In an opinion issued Feb. 28, the high court found that a Clinton
County judge was correct in sanctioning Wells Fargo and Freddie Mac
for discovery violations and that they wrongfully foreclosed on the
home belonging to David and Crystal Holm.
But, because Wells Fargo had a constitutional right to jury which
had been denied at the Clinton County court, the Supreme Court
reversed awards of $2,959,123 in punitive damages, $200,000 for
emotional distress, and $95,912.30 in compensatory damages and
remanded the case for a new trial on the Holms' damages for wrongful
According to court
documents, the case arises out of a 2008 wrongful-foreclosure
case against Wells Fargo and a quiet title action against Federal
Home Loan Mortgage Corp. — Freddie Mac — which had taken title to
the Holms' house following a foreclosure sale.
According to information in the opinion, discovery disputes
between the parties arose during pretrial proceedings that required
the trial court to compel the mortgage companies to produce documents
and witnesses for deposition.
Because of their "obstructive discovery tactics," the
mortgage companies had their pleadings struck by the trial-court
judge and and were prevented from the following: giving evidence at
trial, objecting to the Holms' evidence and cross-examining any of
the Holms' witnesses, the order stated.
After the sanctions order was entered, the plaintiffs waived their
right to a jury trial. The mortgage companies on the day of the trial
wanted the case be tried by a jury, but that request was denied by
Circuit Judge R. Brent Elliott, who then held a bench trial.
Elliott had concluded that the mortgage companies had waived their
right to a jury trial by failing to request a jury prior to the date
of trial and by failing to submit jury instructions.
Following the bench trial, Elliott entered judgment in favor of
the Holms on wrongful foreclosure, and he awarded damages and quieted
title to the house in the Holms.
The order stated that the Holms had bought their home in 2001, and
in 2008 it sustained storm damage. They were issued an insurance
check for $4,467.74 made payable to them and Wells Fargo.
Wells Fargo, which would have had to co-sign the check, did not
return it to the Holms. Instead, the company notified the Holms that
it had accelerated their note and they would need to pay $6,608.93 to
reinstate the note.
In a letter to Wells Fargo attorneys, the Holms acknowledged they
had been behind on payments but stated they had a payment plan in
place. They also contended that their loan was erroneously
accelerated because a Wells Fargo agent saw them removing items from
a storm-damaged barn and "mistakenly believed they were
abandoning their home."
The order states that the Holms believed the insurance check was
retained by Wells Fargo and their note would be brought current.
Wells Fargo did not release the insurance check to the plaintiffs
or apply it toward their debt.
Leading up to a foreclosure sale, the Holms believed that if they
paid a reinstatement amount of $10,306.94, the sale would not take
place, according to the order.
However, it took place as scheduled with Freddie Mac purchasing
the house at the foreclosure sale, which ultimately lead the Holms to