The Arkansas Court of Appeals reversed and remanded a foreclosure case Thursday saying a Washington County circuit judge should have considered a couple's claims they signed agreements under duress and a bank's actions prevented them from paying back loans.
The case involves numerous interrelated parties and entities and concerns multiple loans, but the principal players are Jacob and Paige Levitt, who filed the appeal, and Today's Bank, which foreclosed on their loans. The Levitts lost their business and home in the foreclosures and bankruptcy actions.
The appeals court said Judge John Threet erred when he granted summary judgement to the bank. The court said Threet should have considered evidence the couple entered into a loan modification under duress, which could make the contract void.
Jacob Levitt stated in his affidavit he had been threatened by bank officials with civil and criminal action if the Levitts did not immediately place their home up for collateral. The Levitts also alleged the bank threatened to file a foreclosure action if they refused to modify the terms of the loan.
"We hold that the circuit court erred in finding that the facts were not sufficient to constitute duress or at least in holding that there was no dispute of material fact," the appeals court opinion said. "Here, the evidence to support the Levitts' claim of duress was sufficient to raise material issues of fact to survive summary judgment."
The Levitts presented evidence they agreed to the loan modification only after the bank threatened to bring criminal charges against them for the false statements in a security agreement for a loan. They also said they feared the bank would call their note and foreclose on their home, according to the opinion.
The bank's claims the Levitts ratified the contract by remaining silent regarding the alleged duress until after the bank initiated foreclosure proceedings is an issue a jury should decide, according to the opinion.
Likewise, the bank's argument the Levitts weren't prejudiced by the loan modification but, in fact benefited from its conversion to a traditional loan is subject to interpretation and remains a question of fact for a jury to decide, according to the opinion.
Finally, the appeals court said the Levitts presented evidence the bank failed to effectuate the transfer of titles to trailers the Levitts used in their business, resulting in the trailers being repossessed. The loss of the trailers devastated their business, resulting in an inability to pay their loans, the couple claimed. The court concluded that genuine issues of material fact exist as to whether the actions of the bank prevented the Levitts from performing under the contracts.