Date: 10-13-2009
Case Style: Bank of Oklahoma, N.A. v. Red Arrow Marina Sales & Service, Inc.
Case Number: 2009 OK 77
Judge: Opala
Court: Supreme Court of Oklahoma on appeal from the District Court for Tulsa County
Plaintiff's Attorney: Paul DeMuro, Mike Medina, Frederic Dorwart Lawyers, Tulsa, Oklahoma, for Plaintiff/Appellant.
Defendant's Attorney: Lewis Carter, Doerner, Saunders, Daniel & Anderson, L.L.P., Tulsa, Oklahoma, for Defendants/Appellees Red Arrow Marina Sales & Service, Inc. and Sullivan E. Johnson.
Jack Herrold, David H. Herrold, Emily M. Jones, Herrold, Herrold & Co., P.C., Tulsa, Oklahoma, for Defendants/Appellees Brad Carson and Red Arrow, Inc.
Description: ¶1 Certiorari was granted to settle the first-impression question whether a creditor who does not impose liability on a mortgage debtor for the deficiency that remains after a foreclosure sale may maintain a suit against the debtor and other parties for fraud in the inducement of the loan that is secured by mortgage. In short, we are asked to decide whether the mortgage debt's satisfaction under Oklahoma's anti-deficiency statute2 closes for a defrauded lender all other legal avenues of recovery. We hold that it does not.
¶2 The statute's protection extends only to mortgage debtors. But even for debtors this protection is not absolute. A lender's failure timely to seek imposition of deficiency liability will absolve borrowers of liability on the underlying debt, but will not free them from answering in damages for their fraudulent acts in the mortgage transaction. Though the debt's guarantor may in some instances derive some incidental benefit from the satisfaction of the underlying obligation, the anti-deficiency statute will not provide a shield against liability for anyone's fraudulent misrepresentations to a mortgage lender.
¶3 The trial court, though correct in finding that the mortgagor's liability on the mortgage debt stood extinguished by plaintiff's failure to seek deficiency recovery, erred in giving summary judgment to the other defendants on the bank's remaining claims. The statutory satisfaction of the mortgage debt, standing alone, is ineffective to defeat defendants' guaranty and fraud liability. The trial court also erred in denying plaintiff's quest for postjudgment relief by reconsideration of its earlier summary judgment.
¶4 The Court of Civil Appeals affirmed in part and reversed in part the trial court's decision. Although we reach here the same result as that of the Court of Civil Appeals, we vacate that court's opinion to provide precedential guidance on a question of substantive law not previously determined by this court. We also re-emphasize this court's established jurisprudence holding that the outer reach of a guarantor's obligation must be determined by the precise terms of the guaranty agreement and of the law that governs that obligation, not by resort to the separate, distinct, and totally inapplicable protections of the mortgage debtor by the shield of the anti-deficiency statute.
I. ANATOMY OF THE LITIGATION
¶5 Bank of Oklahoma (Bank) provided financing in 2000 for a $1,400,000 U.S. Small Business Administration loan to Red Arrow Marina Sales & Service, Inc. (Red Arrow Marina) for the purchase of a lakefront marina near Afton, Oklahoma then owned by Brad Carson (Carson) and Red Arrow, Inc. (collectively the Carson defendants). Evidenced by a promissory note, the obligation to the bank was secured by a mortgage on real property; a security agreement covering the marina's fixtures, inventory and equipment; and a guaranty for the full amount of the debt3 given by Sullivan E. Johnson (Johnson), Red Arrow Marina's president. Neither Red Arrow Marina nor Johnson ever made a payment on the loan obligation in suit.
¶6 Upon default Bank brought suit against: (1) Red Arrow Marina on the promissory note and to foreclose both the mortgage and security interest, (2) Johnson on the guaranty agreement and (3) both Red Arrow Marina and Johnson for fraud in inducing Bank to make a loan it claims it would not have made had it not been for defendants' alleged misrepresentations. Bank later amended its petition to allege fraud against the Carson defendants as well, claiming they too had conspired to mislead Bank into extending the loan.4 The thrust of Bank's fraud claim is that the marina's sellers, Carson and Red Arrow, Inc., and the marina's buyers, Johnson and Red Arrow Marina, jointly undertook fraudulently to misrepresent the marina property's value and Johnson's ability to repay the loan. Bank claims it was thereby misled into financing what amounted to an utterly sham transaction between Carson and Johnson.
¶7 The trial court gave in 2001 judgment to Bank against Red Arrow Marina and Johnson on the note and guaranty and decreed foreclosure of the mortgage and security interest to satisfy the loan obligation.5 The court held Bank's fraud claim in abeyance pending the outcome of the foreclosure sale. The sale's occurrence was long delayed: the foreclosed marina property failed to receive any bids at seven separate sheriff's sales conducted between 2002 and 2005 until finally selling for $280,000 at a public auction in November 2005.6 The district court confirmed the sale the following month. Although the amount realized from the sale fell far short of satisfying the full amount of the mortgaged debt, Bank did not seek judicial determination of the deficiency's7 amount due the creditor as authorized by the terms of 12 O.S. 2001 § 686.8
¶8 In 2006 - nearly one year after the sale - Bank filed a notice of renewal of the judgment obtained against Red Arrow Marina and Johnson five years earlier that decreed foreclosure of the mortgaged property.9 All defendants moved for summary judgment, arguing that the statutory satisfaction of the mortgage debt in toto that followed, as a matter of law, Bank's failure to obtain a deficiency determination10 absolved them of any further liability on the guaranty and fraud claims. The trial court gave summary judgment to all defendants. Plaintiff then unsuccessfully pressed the trial court for reconsideration of its summary disposition.11 The Court of Civil Appeals, Division I, affirmed the trial court's judgment in favor of the defendant mortgagor Red Arrow Marina12 but reversed that given for the other defendants on the remaining guaranty and fraud claims. We granted certiorari to determine and define by a precedential pronouncement the breadth of the protection afforded by Oklahoma's anti-deficiency statute.
II. STANDARD OF REVIEW
¶9 Summary process - a special pretrial procedural track pursued with the aid of acceptable probative substitutes13 - is a search for undisputed material facts which, without resort to forensic combat, may be utilized in the judicial decision-making process.14 A court may grant summary judgment only when neither genuine issues of material fact nor any conflicting inferences that may be drawn from uncontested facts are in dispute and the law favors the moving party's claim or liability-defeating defense as a result of which the moving party becomes entitled to judgment as a matter of law.15 Only those evidentiary materials which eliminate from trial some or all fact issues on the merits of the claim (or of the defense) afford legitimate support for a trial court's use of summary process for a claim's adjudication, partial or total.16
¶10 Issues in summary process stand before us for de novo review.17 All facts and inferences tendered in a summary proceeding must be viewed in the light most favorable to the non-moving party.18 Just as trial courts must decide whether summary judgment is proper in the first instance, so too must appellate courts undertake an independent and non-deferential de novo review when testing the legal sufficiency of all evidentiary materials proffered by the parties in their quest for or in the defense against summary relief.19 If no material fact or inference derived from the materials stands in dispute, the movant is entitled to summary judgment if the law favors the moving party's claim or liability-defeating defense.20
¶11 A trial court's denial of a motion for new trial - here denominated erroneously as a motion for reconsideration of the judgment - is reviewed for abuse of discretion.21 Where, as here, our assessment of the trial court's exercise of discretion in denying plaintiff a new trial rests on the propriety of the earlier summary judgment, we settle the abuse-of-discretion question by a de novo review of the summary adjudication's correctness.22 A trial court abuses its discretion when it errs with respect to a pure, unmixed question of law.23
III. THE COURT OF CIVIL APPEALS' OPINION AND THE PARTIES' ARGUMENTS ON CERTIORARI
¶12 The Court of Civil Appeals (COCA) affirmed in part and reversed in part the judgment of the trial court. COCA held that the absence from the record of an adjudicated deficiency extinguished Red Arrow Marina's debt but that the anti-deficiency statute's provisions did not also bar Bank's claims against the remaining defendants for guaranty and fraud liability. In affirming in part the trial court's judgment COCA relied on this court's well-settled jurisprudence holding that the failure timely to obtain a deficiency amount's determination releases the mortgagor from further liability on the mortgage debt.24 COCA next correctly evaluated the issue of Johnson's guaranty liability by looking strictly to the terms of the guaranty agreement. COCA determined that Bank's decision to forgo imposing deficiency liability on Red Arrow Marina did not eo ipso25 discharge Johnson's separate guaranty obligation.
¶13 COCA's interpretation of the anti-deficiency statute also demanded reversal of the summary judgment given by the trial court to defendants on Bank's fraud claim. COCA held that the terms of the anti-deficiency statute provide only for the satisfaction of the amount of the mortgagor's debt left outstanding after a foreclosure sale. Because a suit for fraud - stemming from a separate harm with an entirely distinct measure of damages - presents a wholly different claim from a suit on the mortgage debt, COCA held that plaintiff's failure to seek deficiency recovery did not operate to defeat its fraud claim.
¶14 On certiorari defendants argue that COCA erred in its interpretation of both the guaranty agreement and the anti-deficiency statute.26 All defendants assert that COCA decided the case in a way likely not in accord with previous decisions by this court. First, Johnson claims that the terms of his guaranty contract allow him to avoid his obligation through Bank's omission to seek deficiency recovery. Johnson urges a reading of the guaranty that preserves his liability-defeating defenses against enforcement of the debt based on the absence of a deficiency adjudication.
¶15 Secondly, Carson and Red Arrow, Inc. assert that Bank's fraud claim is untenable sans an antecedent judicial determination of deficiency. The Carson defendants argue that the amount of deficiency provides the measure of damages for fraud. Consequently the failure to obtain a deficiency determination renders Bank's fraud damages unprovable and hence destroys its claim. The Carson defendants also urge that COCA's decision conflicts with the opinion of another division of the Court of Civil Appeals in First United Bank & Trust Co. v. Wiley.27 According to the Carson defendants, the Wiley decision correctly construes the anti-deficiency statute to eliminate a court's power to consider any claim based on a deficiency - including, as defendants argue here, a suit for fraud the damages of which are to a large extent measured by the amount of deficiency - whenever a lender fails timely to obtain a deficiency adjudication. The Carson defendants' reading of Wiley, if correct, is in obvious discord with COCA's holding in this case and would also prompt a reexamination of this court's jurisprudence concerning a guarantor's continuing liability for a debt after the release of the mortgage debtor from deficiency liability.
¶16 For its part, Bank argues that COCA correctly reversed the trial court's summary judgment for defendants on its guaranty and fraud claims. Bank counters Johnson's arguments by urging a broad construction of the guaranty agreement's waivers of liability-defeating defenses. Emphasizing the correctness of COCA's decision, Bank asserts that: (1) because the decision in Wiley did not involve a creditor's tort claims against a third party, no interdivisional conflict exists within the Court of Civil Appeals on the anti-deficiency statute's interpretation; (2) the anti-deficiency statute governs only the relationship between a mortgage debtor and creditor, not that between creditors, guarantors, and tortfeasors; and (3) the anti-deficiency statute does not absolve defendants of the consequences of their fraudulent acts when a mortgagee omits to impose deficiency liability on a mortgage debtor.
IV. THE ANTI-DEFICIENCY STATUTE MAY NOT BE INTERPOSED AS A DEFENSE AGAINST A FRAUD CLAIM
¶17 The question of first impression tendered on certiorari is whether a mortgagee's failure to seek a deficiency determination against a mortgagor ever can defeat the mortgagee's separate claim against the mortgage debtor, the guarantor or a third-party defendant for fraud in the inducement of the loan. We answer this question in the negative. No legal principle will allow the defeat of a fraud claim against any party by interposition of the mortgagee's failure timely to impose deficiency liability on the mortgagor.
¶18 The anti-deficiency statute28 addresses itself exclusively to the relationship between mortgage creditor and debtor,29 and its protection applies to the debtor alone.30 But the statute's protection of the mortgage debtor is not absolute. Its benefit avails to the debtor only insofar as a mortgagee may seek to recover a deficiency (rendered unreasonable as a matter of law) by the creditor's untimeliness. In such instances the provisions of § 686 will discharge a mortgagor from further liability on the mortgage debt - but not on a separate fraud claim. Having achieved its well-defined aim, the statute cannot then be pressed into service as a defense against a fraud claim that seeks a separate recovery for an entirely different legal harm. To read § 686 as absolving defendants of liability for their misrepresentations is to force upon the statute a construction wholly unrelated to its limited and specific purpose. Fraud claims exist nowhere within the statute's ambit.
¶19 The Oklahoma Legislature amended § 686 in 1941 to add the statute's current anti-deficiency language. Adopted in the wake of the Great Depression, the anti-deficiency statute sought to protect mortgage debtors from personal liability after foreclosure sales conducted at a time of greatly deflated land values in a depressed economy.31 The anti-deficiency provision evolved as a direct legislative response to the plight of mortgage debtors rendered vulnerable to burdensome deficiency liability in harsh economic circumstances. A corrective measure derived from a depression-era desire to ease the burden of displaced mortgagors cannot be invoked today to absolve defendants of liability for fraud.
¶20 Defendants urge that the absence of a deficiency adjudication removes the basis for measuring damages for Bank's fraud claim. Damages suffered as a natural and probable consequence of a plaintiff's reliance on a defendant's misrepresentations are an indispensable element of proving a claim of fraud.32 In contending that Bank voluntarily surrendered its right to maintain a fraud claim by its failure to impose deficiency liability on the mortgagor, defendants mistakenly conflate the statutory satisfaction of a mortgage debt with recovery for damages in fraud. Deficiency liability and fraud damages are different remedies born of separate legal injuries, each with a distinct and independent measure of damages to satisfy the alleged harm.
¶21 The amount of the deficiency does not automatically establish the proper measure of damages for Bank's fraud claim. Bank's omission to impose deficiency liability on Red Arrow Marina resulted only in the extinguishment of the recovery claim it could have obtained against its debtor in the amount of an adjudicated deficiency. The omission did not simultaneously eliminate its potentially recoverable damages in a different fraud claim because § 686 contemplates no more than the full satisfaction of the mortgage debt.
¶22 Plaintiff in a fraud action does not seek satisfaction of the mortgage debt. Rather, it seeks compensation for a tortious wrong. The fraud claim stands completely apart from the mortgage debtor's now-satisfied obligation on the note. Bank's quest for fraud recovery may not now be frustrated by interposition of a statute wholly inapplicable to the satisfaction of the harm remediable only in tort.
¶23 The question of Bank's damages in fraud cannot be settled merely by looking to the amount Bank could have obtained from the debtor after a deficiency determination. The trial court must instead evaluate the extent to which Bank suffered injury, if any, by making a $1,400,000 loan in reliance upon defendants' alleged misrepresentations. Upon proving all the elements necessary to establish fraud a party may recover the difference between the actual value of the property encumbered by mortgage and the security value it would have received had that value been exactly as represented.33 On remand Bank might also press its damages in terms of the value it reasonably believed it would realize from the sale of mortgaged property had it not been for defendants' alleged misrepresentation of the mortgaged property's value.
¶24 We neither opine on the merits of plaintiff's fraud claim nor speculate on the ability of defendants to marshal on remand successful liability-defeating defenses against it. The precise computation of damages - and Bank's ultimate success or failure in proving them - stands beyond the reach of this court's present review. We simply hold that the anti-deficiency statute does not afford a defense against Bank's fraud claim.34
¶25 Lastly we dispense with defendants' contention that COCA's decision conflicts with that pronounced by another COCA division in First United Bank & Trust Co. v. Wiley.35 The Carson defendants mistakenly ascribe to Wiley a meaning that strays far beyond the court's actual holding in the case. To give full effect to defendants' interpretation would also impermissibly clash with this court's extant jurisprudence holding that the satisfaction of a mortgage debt under § 686 does not eo ipso defeat a mortgagee's claim against a guarantor to recover the amount of the obligation left outstanding.36
¶26 The plaintiff bank in Wiley, having failed timely to seek a deficiency determination, argued that the defendant mortgagor had waived his right to claim § 686's protection after he had initially neglected to raise the bank's delay as a defense against liability.37 In accord with earlier pronouncements by this court the COCA panel in Wiley correctly held that the anti-deficiency statute is not an ordinary statute of limitations, but rather a condition upon a mortgagee's exercise of the right to obtain a deficiency determination.38 A statute of limitations is a remedial time bar. The time bar on lodging motions for deficiency determination, which is a condition upon the exercise of a right, is a substantive-law deadline. It destroys the right rather than the remedy.
¶27 A mortgage debtor can interpose the protection of § 686 at any time because compliance with the statute's time limit is an absolute prerequisite for a mortgagee's ability subsequently to obtain a valid deficiency determination. But defendants appear to urge a reading of Wiley that would eliminate a court's power to adjudicate any claim - including claims against parties other than the mortgagor - based in some part on a creditor's failure in timely receiving satisfaction from the mortgage debtor. From the outset defendants' argument is unavailing. Bank's fraud claim does not depend for its viability upon the existence or nonexistence of a deficiency. It is not a disingenuous attempt to recover a statutorily extinguished deficiency cloaked in a suit for fraud. It is a completely independent claim the satisfaction of which is neither based on nor measured by the deficiency left unrecovered by operation of § 686. Damages from fraud do not and need not reflexively mirror the amount of deficiency. For this reason alone defendants' reliance on Wiley is misplaced.
¶28 But defendants also stretch the holding in Wiley beyond what this court's jurisprudence allows. The opinion in Wiley contains language to the effect that a mortgagee's failure to comply with § 686's requirements will eliminate a court's jurisdiction "to consider a deficiency."39 This statement is correct only insofar as it applies to extinguishing the mortgagor's debt and does not extend to the separate liability of guarantors and others whose obligation to the mortgagee stands independently of the underlying mortgage debt. Defendants may not reap the benefit of Wiley's imprecise language to suggest that claims tangentially related to the mortgage debt automatically dissolve in the absence of a timely deficiency adjudication. If the mortgagee does not timely seek deficiency adjudication against the mortgagor, the mortgagor is exonerated by the mortgagee's inaction from post-sale liability only on the mortgage debt. Between those parties, in contemplation of law, no deficiency liability may survive the sale.
¶29 Because the benefits of § 686 inure exclusively to the mortgage debtor, the same principle does not apply to a mortgagee's claims against a guarantor or against defendants in a suit for fraud. This court has previously held that the satisfaction of a mortgage debt under § 686 will not eo ipso discharge a mortgagee's claim to recover the debt assumed by the guarantor.40 The reading of Wiley pressed by defendants would permit the absence of a deficiency determination to absolve guarantors and others whose obligations to the lender exist independently of the self-contained creditor-debtor relationship and the statute that governs it, § 686.
¶30 This court's prior jurisprudence will not countenance such a result. We expressly reject any interpretation of Wiley's language suggesting otherwise. Although we today reaffirm our previous statements defining § 686 not as a statute of limitations but as a condition upon the exercise of a right,41 we limit the scope of that right to encompass only the purpose served and the party protected by the anti-deficiency statute. The proper purpose served by § 686 is to extinguish a mortgage debt in toto if its continued existence is claimed after a mortgagee fails timely to obtain a deficiency determination. The sole party protected by § 686 is the mortgage debtor insofar as the debtor stands in the capacity of a mortgagor, not as a fraud defendant.
¶31 By operation of the anti-deficiency statute Bank can no longer recover a deficiency from the mortgagor. With this the statute has achieved its single purpose: the protection of the mortgage debtor from the untimely imposition of deficiency liability. But the Bank also alleges it has been injured in a way distinct from that measured by the residue of a mortgage debt left unsatisfied after a foreclosure sale. It claims it has been harmed by its reliance upon defendants' fraud, a separate and independent harm the satisfaction of which falls outside the scope of the anti-deficiency statute. A plaintiff's recovery upon a valid claim may not be frustrated by a defendant who interjects as a liability-defeating defense an incongruous statute in no way applicable to determining the remedy plaintiff invokes. We hold that the anti-deficiency statute cannot be interposed as a defense to defeat Bank's fraud claim.
V. THE TERMS OF THE GUARANTY AGREEMENT AT ISSUE DO NOT BY THEMSELVES ABSOLVE THE GUARANTOR OF LIABILITY
¶32 Johnson contends that the agreement's terms preclude Bank from seeking recovery on the guaranty when a deficiency is not timely sought. In effect Johnson argues that no part of the guaranty contract waives his right to raise Bank's omission as a defense against his continued liability on the debt. We disagree. The guaranty at issue contains wholesale waivers of defenses that militate strongly against ruling here that, as a matter of law, plaintiff's claim against the guarantor cannot go forward.
¶33 A guaranty42 arising from a contractual obligation distinct and separate from the principal debt is governed by statutory provisions unrelated to those of § 686.43 Because "the protection of § 686 applies only to [mortgage] debtors,"44 that statute's satisfaction of the mortgage debt cannot automatically discharge guarantors from further liability on their independent and separate guaranty obligations.45 The question whether a guarantor's liability survives in the absence of a deficiency determination will be decided by reference to the precise terms of the guaranty itself.46
¶34 The terms of the guaranty agreement define the specific nature of the promise exacted from the guarantor and thus determine both the scope of the guarantor's liability and the available defenses the guarantor may raise against that liability. As the specially protected beneficiaries of the anti-deficiency statute, mortgage debtors cannot contract away that statute's protection.47 The guarantor is not so constrained. A consenting guarantor may waive the protections provided by the separate statutory scheme regulating guaranty contracts. Such waivers as may exist will be ascertained from the express terms of the agreement.
¶35 The breadth of the guaranty agreement, purely contractual in nature, must be ascertained according to established principles of contract interpretation.48 The intent of the parties at the time of the contract's formation, as expressed within the four corners of the document, controls the meaning of the written contract.49 Intent must be discerned from the entire instrument taken as a whole.50 Where a contract is complete in itself and, as viewed in its entirety, contains clear and explicit language leaving it free of ambiguity, its language is the only legitimate evidence of what the parties intended.51
¶36 This court has long adhered to the principle that a guaranty agreement should be interpreted in favor of the creditor - the party who has parted with property in reliance on the promise contained in the guaranty. In other words the terms of the guaranty agreement should be most closely construed against the guarantor,52 whose collateral promise to answer for the debt of another in the event of default gives a lender the assurance needed to extend the loan. Guided by these established principles of guaranty interpretation, we determine that Johnson in fact gave a promise broad enough to waive the very defenses he now raises against liability.
¶37 Though a mortgagor's and guarantor's obligations are independent of each other, a creditor's failure to seek deficiency recovery may materially affect the guarantor's continued responsibility for the debt.53 In this case plaintiff's failure to obtain a deficiency adjudication led to the total exoneration of Red Arrow Marina from all further liability on the note, simultaneously eliminating Johnson's ability to recover from Red Arrow Marina any amount relating to the debt. But the question in this case is not whether Bank's omission impaired the guarantor's future right to recover from the debtor. There can be no dispute that it did. The pertinent question is whether by the terms of his contract Johnson relinquished his right to complain of that omission, leaving him alone responsible for the unpaid residue of the debt.54
¶38 The terms of 15 O.S. 2001 § 338 provide that a guarantor is exonerated from liability when any act of the creditor alters the debtor's obligation or impairs the creditor's rights against the debtor without the guarantor's consent.55 The terms of 15 O.S. 2001 § 344 state that a guarantor is not exonerated by the release of the debtor absent some intervention or omission of the creditor.56 Bank's omission altered Red Arrow Marina's obligation, impairing both Johnson's and its own right of recovery against that debtor. The question whether Johnson consented to such omission will be resolved by reference to the unambiguous language of the contract.
¶39 The guaranty contract states that Bank could "delay or forgo enforcing any of its rights without losing or impairing any of them." Though not the sole waiver embodied in the contract,57 this clause is itself sufficient to defeat defendant's proffered defense against liability. The imposition of deficiency liability on the mortgage debtor is a right inherent in the creditor's ability to recover the amount of a defaulted loan. The mortgagee's right to seek deficiency recovery is ingrained both in the foreclosure process and the statute that regulates it, § 686. By the guaranty's terms, Bank could choose to forgo that right without impairing its ability to recover from the guarantor.
¶40 Because in the absence of illegality a party may freely set the outer limit of the bargain, that party will be bound by the unambiguous terms of the contract even though the result may be harsh.58 Faced with the clear terms of the guaranty at issue, we cannot give a defendant the benefit of some other contract he in hindsight might wish he had made. We can only interpret the plain language of the contract now before us.59 Through the express terms of the agreement Bank exacted from defendant a promise broad enough to ensure repayment even when, as here, Bank took or failed to take actions that ultimately impaired the guarantor's right of recourse against the mortgage debtor.
¶41 The effect of the contract's extensive waivers precludes defendant from interposing that impairment by Bank as a defense against his present liability on the debt. Because defendant's right to this defense stands expressly waived by the unambiguously worded provisions of the contract, we need not say more about the contentions by which defendant seeks to avoid liability from the consequences of the loss of his waived rights. Accordingly we remand this cause to the trial court for determination of all issues in post-remand proceedings in a manner consistent with today's opinion.
VI. ISSUES NOT URGED AS ERROR ON BANK'S APPEAL OR BY PETITION FOR CERTIORARI ARE BEYOND THIS COURT'S POWER TO REVIEW AND HENCE STAND RESOLVED AS THE SETTLED LAW OF THE CASE
¶42 Plaintiff did not argue on appeal that the trial court erred in giving summary judgment to the mortgage debtor, Red Arrow Marina. As the sole recipient of the anti-deficiency statute's protection, Red Arrow Marina was exonerated from further liability on the debt when Bank declined to impose on it deficiency liability within the statutorily prescribed time period. Asserting that Red Arrow Marina had been insolvent since the time of its default in 2000, Bank likewise did not appeal from the dismissal of its fraud claim against Red Arrow Marina. An issue settled by the trial court and not urged as error on appeal becomes the settled law of the case and cannot be re-pressed on remand.60
¶43 Because Bank did not include in its appeal the trial court's dismissal of Red Arrow Marina on any ground or claim, we do not disturb that portion of the COCA opinion dealing with the correctness of the trial court's summary judgment in favor of Red Arrow Marina. We do not comment on the legal correctness of the trial court's ruling because the issue was not pressed by appeal. We note only that plaintiff's decision not to contest the dismissal of Red Arrow Marina has achieved what the anti-deficiency statute will not: the release of the mortgage debtor from potential liability on a fraud claim.
¶44 In his petition for certiorari Johnson presses for review only the portion of COCA's decision dealing with his guaranty liability. It is beyond this court's power to grant corrective relief from issues resolved by COCA but not explicitly pressed for certiorari review.61 COCA's determination that Bank's fraud claim may proceed against Johnson is now the settled law of the case.62 It is left undisturbed by this opinion.
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See: http://www.oscn.net/applications/oscn/deliverdocument.asp?cite=2009+OK+77
Outcome: ¶45 Plaintiff, alleging fraud in the inducement of its loan, seeks a remedy that cannot be withheld by invocation of a statute wholly irrelevant to the satisfaction of the harm alleged. The anti-deficiency statute cannot be interposed as a defense against a claim of fraud because the statute properly serves but a single purpose: the protection of mortgage debtors from the untimely imposition of deficiency liability. The resolution of a fraud claim lies beyond its reach.
¶46 The distinct obligation of a guaranty also falls outside the anti-deficiency statute's purview. The precise terms of the guaranty contract and the law governing that obligation - not the anti-deficiency statute - will determine the breadth of the guarantor's promise. The anti-deficiency statute's extinguishment of the mortgage debt (by lapse of time) does not confer on the guarantor any defenses beyond those the guaranty's unambiguous terms will allow.
¶47 Because the anti-deficiency statute completely extinguishes one type of obligation - the mortgage debt - defendants in a suit brought by a lender may be tempted to claim that the statute's operation erases other liabilities as well. But the statute cannot be stretched to accommodate claims or defenses it in no way addresses. In short, defendants cannot escape liability by invoking a defense to whose benefit they are not entitled. Upon satisfaction of the mortgage debt the anti-deficiency statute had fully achieved its purpose. We now hold that it may serve no other.
¶48 On certiorari granted upon defendants' petitions, the Court of Civil Appeals' opinion is vacated; the trial court's summary judgment is affirmed in part and reversed in part; and the cause is remanded for further proceedings to be consistent with today's pronouncement.
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