                   IN THE COURT OF APPEALS OF TENNESSEE
                              AT KNOXVILLE
                           Assigned on Briefs September 29, 2010

            NEW SOUTH FEDERAL SAVINGS BANK v. BRENDA PUGH

                      Appeal from the Circuit Court for Blount County
                     Nos. L-16579, L-16580     David R. Duggan, Judge




               No. E2009-02150-COA-R3-CV - FILED NOVEMBER 29, 2010


This is an appeal of two unlawful detainer actions consolidated below. New South Federal
Savings Bank (“New South”) filed separate detainer warrants against Brenda Pugh seeking
possession of two non-adjacent properties conveyed to New South at a foreclosure sale
instituted after Pugh1 defaulted on a loan secured by a deed of trust on the properties. The
general sessions court dismissed the actions. On appeal, the trial court rejected Pugh’s
challenge to the foreclosure. The court held in favor of New South and ordered that it be
restored to possession of the properties. Pugh appeals. We affirm.

            Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court
                                Affirmed; Case Remanded

C HARLES D. S USANO, J R., J., delivered the opinion of the Court, in which D. M ICHAEL
S WINEY and J OHN W. M CC LARTY, JJ., joined.

William L. Gribble, Maryville, Tennessee, for the appellant, Brenda Pugh.

Ronald G. Steen, Jr. and Corinne E. Martin, Nashville, Tennessee, for the appellee, New
South Federal Savings Bank.

                                               OPINION




        1
          The record reflects that the loan was taken out by Brenda Pugh and her husband, Carlton Pugh. Mr.
Pugh died in October 2008 shortly after New South began foreclosure. Under the circumstances, we will
refer to “Pugh” in the singular because New South does not seek any relief against Mr. Pugh’s estate.
                                               I.

       Pugh owned two tracts of land in Alcoa – one at 239 West Watt Street and another at
129 West Howe Street. The first was acquired in 1970 and included Pugh’s personal
residence and the second was a piece of property acquired in 1994. In November 1995, Pugh
refinanced her mortgage with Liberty Trust Properties for $72,200. The deed of trust
securing the note described both of Pugh’s properties. Under the terms of the loan, Pugh
agreed to make payments of principal and interest of $641.63 a month, beginning on
December 6, 1995. The ten-year note included a balloon payment of $66,449.30 due on
November 6, 2005. The loan was subsequently assigned to New South.

        Pugh admittedly struggled to make the required payments. Beginning as early as
December 1996, New South began to notify Pugh that she was in default. At least seven
additional times between October 1997 and July 2007, New South sent notices of default and
intent to accelerate to Pugh. Throughout the course of her dealings with New South, Pugh
filed several Chapter 13 bankruptcy petitions, all of which were eventually dismissed.

        In September 2008, counsel for New South wrote Pugh advising her that it had been
retained to foreclose on her properties. On November 3, 2008, New South notified Pugh by
regular and certified mail that the foreclosure sale for both properties was scheduled for
December 8, 2008. The notice included a copy of the publication notice. Notice of the
foreclosure sale was published in the Knoxville Journal on November 6, 2008, November
13, 2008, and November 20, 2008. Pugh was not present at the scheduled sale of December
8, and, in fact, the sale did not take place that date – counsel for New South announced at the
scheduled time and place that the sale was postponed until January 6, 2009. New South by
letter informed Pugh on December 23, 2008, of the rescheduled sale. On January 14, 2009,
Pugh was notified that the sale was held as scheduled on January 6. The property was
purchased by New South based upon its bid of $42,274.91. No other bidders were present.

        New South filed its detainer warrants on January 22, 2009. The general sessions court
entered judgments of dismissal on March 4, 2009. On New South’s appeal, a bench trial was
held in the trial court on June 30, 2009, at which hearing both parties appeared and presented
evidence.

        At trial, representatives of New South testified regarding Pugh’s default. The last
notices of default sent to Pugh in June and July 2007 advised her that if she failed to reinstate
the loan by curing the default within 30 days of the notices, the remaining balance of the loan
would be accelerated and the matter referred to the bank’s foreclosure division for possible
sale of the properties. The June notice stated that the loan balance was $65,448 while the
July notice put the figure at $65,359.95. Each notice specified the sum required to cure the

                                               -2-
default. Jim Mize, custodian of records for New South, surmised that the lower balance
shown on the July default letter was the result of Pugh, either directly or through the
bankruptcy court, making a payment on the loan after the June letter was sent. Mize testified
that it did not “normally” take a year for New South to move to foreclose after it had sent a
debtor notice of default that went uncured; he attributed the delay in Pugh’s case to her
multiple bankruptcy filings.

        Phillip Jones, counsel for New South, testified that Pugh’s properties were originally
set for sale at foreclosure in September 2008, but that the sale was cancelled due to a pending
bankruptcy filing. After the bankruptcy petition was dismissed, the sale was scheduled for
December 8. Since Jones was confident that a subsequent bankruptcy petition filed by Pugh
would also be dismissed, “instead of cancelling that sale, all of the ads were running and
everything, so we felt that we were just preserving the status quo by just postponing the sale.”
As a result, the sale was postponed until January 6, 2009.

       In her defense, Pugh testified regarding the loan and her financial struggles. She
believed the loan was secured not by her personal residence, but only by the rental property
on Howe Street; that it was a 15-year, not a 10-year note; and that these and other provisions
of her loan contract had been changed after the documents were executed, but offered no
proof in this regard. Pugh and her husband filed bankruptcy petitions in 1998, 2000 and
2002. After her husband’s death, she again sought protection from the bankruptcy court in
an effort to stop the planned foreclosure sale of her properties in September, November and
December of 2008. Pugh explained that she had people who were willing to lend her some
money to save her home, but she was never able to get an exact payoff amount from New
South or its attorneys. According to Pugh, she constantly made efforts to work with New
South to modify or reinstate her loan, but they refused. Asked whether she had ever actually
tendered a lump sum payment in any amount to New South in an attempt to pay off the note,
Pugh testified,

              I have tried, and I could not get them to give me a thing of how
              much I actually owed. They’re saying . . .bankruptcy didn’t pay
              them, they give me this figure and that figure and won’t talk to
              me, being hateful and smart. They’d still write me letters telling
              me they can help me to reinstate it. They would not cooperate
              with me. They just stuck to me [sic] the deeds of trust . . . .

She acknowledged receipt of the 2007 notices reflecting a specific payoff amount, but stated
that she did not tender payment then because she was “trying to get it all straightened out to
really see what [she] did owe New South.”



                                              -3-
       Pugh stated that she offered New South $42,000 in cash to pay off the note but did not
indicate that she received any response. After the properties were sold at foreclosure, she
received a letter from New South offering to sell them back to her for $92,300. She repeated
that she had “tried” to tender payment to New South but never wrote them a check because
“[t]hey’ve got to give me a figure to tender with.”

       At the conclusion of the hearing, the trial court rejected Pugh’s various challenges to
the notice provisions in the foreclosure process and sustained issuance of the detainer
warrants in favor of New South. In its final order, the court set forth its findings:

              1. The Knoxville Journal, wherein [New South] published its
              notice of foreclosure on the Properties . . . is a newspaper of
              general circulation in Blount County, Tennessee, and an
              appropriate newspaper for the publication of such notices.

              2. New South gave [Pugh] proper notice, under the Tennessee
              statutes and its Deed of Trust, of the foreclosure sale originally
              scheduled on December 8, 2008, reserving the right in its
              published notice of said sale to postpone the sale without further
              publication upon announcement at the time and place given in
              the published notice.

              3. Due to [Pugh] having filed bankruptcy after New South
              began its foreclosure proceeding, New South gave proper notice
              of postponement of its foreclosure sale until January 6, 2009, by
              announcing said postponement at the time and place of the
              originally scheduled sale.

              4. The Court is not aware of any statutory law or case law that
              says that a foreclosure sale cannot be postponed upon the trustee
              being there at the date and time and announcing a postponement
              or adjournment. The Court finds that the Tennessee Court of
              Appeals decision [in] Conway v. Eastern Savings Bank . . .
              stands for the proposition that a foreclosure sale properly
              advertised according to the terms of the foreclosure statutes may
              be postponed without readvertisement in accordance with the
              precise terms of the statute.

              5. [Pugh] did not, at any point after notice of default on the
              subject loan, tender or try to tender to New South the amount

                                             -4-
              necessary to pay off the debt, catch it up, bring it current, avoid
              foreclosure, and/or redeem the subject property.

              6. There is no proof before the Court that payoff amounts
              provided to [Pugh] by New South were not accurate.

              7. Upon the proof, New South’s Foreclosure was proper and
              there is no basis on which to set it aside.

In summary, the trial court held in favor of New South and restored it to possession of both
properties. Pugh’s timely notice of appeal followed.

                                              II.

       Pugh presents a single issue for our review that we restate as follows:

              Whether the lower court erred in sustaining detainer warrants
              against Pugh after New South foreclosed on her properties
              without lawful notice of default.

                                             III.

        When an appeal is pursued from a bench trial, our review of the trial’s court findings
of fact is de novo upon the record. Tenn. R. App. P. 13(d). We accord these findings a
presumption of correction unless the evidence preponderates against them. See id; Rawlings
v. John Hancock Mut. Life Ins. Co., 78 S.W.3d 291, 296 (Tenn. Ct. App. 2001). As to the
trial court’s conclusions of law, however, there is no presumption of correctness. Ganzevoort
v. Russell, 949 S.W.2d 293, 296 (Tenn. 1997).

                                             IV.

       Pugh challenges New South’s authority to maintain the “unlawful” detainer actions
against her. She says that she was not given proper notice of default to trigger the
foreclosure process or of the foreclosure sale itself. As her argument goes, the sale at
foreclosure was thereby void, and New South never acquired the valid title necessary to
support the detainer actions.

       Unlawful detainer actions concern the right to possession of property. An unlawful
detainer occurs “where the defendant enters by contract, either as tenant or as assignee of a
tenant, . . . willfully and without force, holds over the possession from the landlord, or the

                                              -5-
assignee of the remainder or reversion.” Tenn. Code Ann. § 29-18-104 (2000). As this Court
has long observed, “[w]here the trust deed embodies the contract establishing the relation of
landlord and tenant between the mortgagor and the purchaser at the foreclosure sale, a
constructive entry by the purchaser, enabling him to maintain an unlawful detainer suit,
attaches as soon as he acquires title.” Christmas v. Moore, No. 03A01-9705-CV-00188,
1998 WL 372431 at *2 (Tenn. Ct. App. E.S., filed Jul. 6, 1998)(citing Metropolitan Life Ins.
Co. v. Moore, 167 Tenn. 620, 72 S.W.2d 1050, 1051 (1934); Griffith v. Brackman, 97 Tenn.
387, 37 S.W. 273, 274 (1896)). “[I]n the unique case of foreclosures conducted under a
power of sale, however, the landlord/tenant relationship may not arise when the trustee has
exercised the power of sale in violation of the deed of trust.” CitiFinancial Mortg. Co. v.
Beasley, No. W2006-00386-COA-R3-CV, 2007 WL 77289 at * 7 (Tenn. Ct. App. W.S., filed
Jan. 11, 2007). Applying these principles to the present case, the deed of trust expressly
establishes the requisite landlord/tenant relationship to support New South’s unlawful
detainer actions provided, of course, that the foreclosure sale by which it acquired its title to
the properties was conducted in strict compliance with the terms of the deed.

      We begin with the relevant notice and advertisement provisions in the deed.
Paragraph 21 provides, in bold letters, as follows:

              21. Acceleration; Remedies. Lender shall give notice to
              Borrower prior to acceleration following Borrower’s breach
              of any covenant or agreement in this Security Instrument .
              . . . The notice shall specify: (a) the default; (b) the action
              required to cure the default; (c) a date, not less than 30 days
              from the date notice is given to Borrower, by which the
              default must be cured; and (d) that failure to cure the
              default on or before the date specified in the notice may
              result in acceleration of the sums secured by this Security
              Instrument and sale of the Property. The notice shall
              further inform Borrower of the right to reinstate after
              acceleration and the right to bring a court action to assert
              the non-existence of a default or any other defense of
              Borrower to acceleration and sale. If the default is not cured
              on or before the date specified in the notice, Lender, at its
              option, may require immediate payment in full of all sums
              secured by this Security Instrument without further demand
              and may invoke the power of sale and any other remedies
              permitted by applicable law.

              If Lender invokes the power of sale, Trustee shall give notice

                                               -6-
              of sale by public advertisement in the county in which the
              Property is located for the time and in the manner provided
              by applicable law, and Lender or Trustee shall mail a copy
              of notice of the sale to Borrower in the manner provided in
              paragraph 14. Trustee, without demand on Borrower, shall
              sell the property at auction to the highest bidder at the time
              and under the terms designated in the notice of sale. Lender
              or its designee may purchase the Property at any such sale.

                                          *   *     *

              If the Property is sold pursuant to this paragraph 21,
              Borrower, . . . shall immediately surrender possession of the
              Property to the Purchaser at the sale. If possession is not
              surrendered, Borrower . . . shall be a tenant at will of the
              Purchaser and hereby agrees to pay the purchaser the
              reasonable rental value of the Property after sale.

        Before this Court, Pugh makes no allegation that the letters she received in June and
July 2007 did not serve as proper notice of default and of New South’s intent to accelerate
the sum she then owed. Rather, as we understand her argument, she takes the position that
these otherwise proper default notices somehow became stale and ineffective because more
than a year went by before New South began the foreclosure process. She further suggests
that postponement of the sale left her with inadequate notice of the sale. In her brief, Pugh
states:

              [A] default letter was initially sent out by New South on June
              21, 2007; another default notice with a significantly different
              payoff amount was sent out by New South on July 17, 2007; the
              foreclosure file was received by New South’s attorneys on
              August 12, 2008, with the sale set for September 15, 2008,
              which was cancelled. A letter sent by New South’s attorneys to
              [Pugh] on October 31, 2008 showed the payoff was $92,483.28
              ([with] New South’s counsel acknowledging it was not sufficient
              to serve as a notice of default); another letter dated November
              3, 2008 (which did not show the payoff amount, thus not
              sufficient) setting another sale date for December 8, 2008,
              which was reset; and finally, correspondence dated December
              23, 2008 simply informing [Pugh] of the foreclosure sale [set]
              for January 6, 2009, giving [Pugh] only thirteen days notice of


                                              -7-
              the ultimate foreclosure sale. Thus, the sale was invalid and the
              lower court should be reversed.

(Emphasis and parenthetical information in original.)

        Pugh accurately summarizes the procedural history, including the dates of the relevant
notices and other correspondence, leading to the sale of her properties. We must take issue,
however, with Pugh’s conclusion that on these facts, an invalid foreclosure is shown. The
gist of Pugh’s argument that she was not provided with adequate notice of default depends
on her position that the delay between July 2007, the date of the most recent notice of default,
and the institution of the foreclosure process in September 2008, somehow rendered the
notice of no effect. Neither at trial nor on appeal has Pugh offered any support for this
position. At trial, Pugh moved to dismiss at the close of New South’s proof and the
following exchange took place:

              Counsel [for Pugh]: [T]he first acceleration letter [was] sent
              June 21, 2007, the second was sent July 10, 2007, and almost an
              entire year goes by, and one of the debtors, . . . her husband,
              passed away, and instead of working with [Pugh] and sending
              her what I believe to be – they should have sent another default
              letter, in my humble opinion.

                                            *   *     *

              And it’s my opinion and argument that you can’t just put a letter
              of acceleration out there and have it extend forever. You need
              to respect the rights of the borrower, send another notice of
              default before you accelerate, give the thirty days to cure before
              you accelerate and before you invoke the power of sale.

              THE COURT: Again, can you cite to any statute or any case law
              that says that if a foreclosure sale is not conducted within x
              number of days of whether it be the initial notice of default or
              the notice of the trustee’s sale, whatever it is, that, therefore, you
              cannot proceed with the sale in the absence of renoticing it?

              Counsel: I can’t other than maybe the equitable argument of
              latches. That’s all I have.

       The evidence shows that Pugh received multiple notices of default and intent to

                                                -8-
accelerate from New South that contained the specific information expressly required by the
deed. The July 10, 2007, default notice informed Pugh (1) of her default; (2) that payment
of $4,673.49 was required within 30 days, on or before August 9, 2007, to cure the default;
(3) and that failure to cure the default on or before the specified date would result in
acceleration of the unpaid balance of $65,359.95, and referral for foreclosure, “which may
lead to the sale of the property.”

        As can be readily seen, the July 10 notice contained all of the information required by
the deed of trust. We thus reject Pugh’s argument, unsupported by any authority, that
because the foreclosure process was not initiated until over a year later, “this notice either
expired, or New South was required by law to send out a new notice of default, . . . . with
foreclosure to follow.” We are unpersuaded by Pugh’s contention that the delay between the
giving of the default notice and the foreclosure proceedings left her “trying to determine the
amount of her payoff, calling both [New South] and their attorneys . . . to get an accurate and
correct payoff figure, something she was never able to accomplish because of their lack of
cooperation.” As the trial court recognized, New South provided the required notice of
default, and Pugh therefore had the necessary information by which she could have cured the
default by tendering the specified payment within 30 days. In our view, the difficulties Pugh
encountered in her dealings with New South and/or its counsel in attempting to avoid
foreclosure cannot be attributed to any deficiencies in the default notices provided, but rather
to her refusal or inability to tender the required payment to cure the default.

        Lastly, at trial, Pugh strenuously urged that the foreclosure sale was voided by the
Trustee’s decision to postpone the sale, initially scheduled for December 8, to January 8,
2009, with an announcement to that effect at the time and place of the sale. On this appeal,
Pugh simply reiterates that “New South’s attorney stated after the December 8, 2008 sale was
postponed, he made a conscious decision to simply announce at that sale date that it would
be continued until January 6, 2009.” The deed of trust required New South to “give notice
of sale by public advertisement in the county in which the Property is located for the time and
in the manner provided by applicable law,” and to mail a copy of the sale notice to Pugh. In
turn, Tenn. Code Ann. § 35-5-101(a) & (b) provide that the trustee shall give notice of a
foreclosure sale by public advertisement of the sale “made at least three (3) different times
in some newspaper published in the county where the sale is to be made,” and that the “first
publication shall be at least twenty (20) days previous to the sale.” In addition, the trustee or
lender shall send notice to the borrower on or before the first date the sale is advertised. See
Id. § 35-5-101(e).

        The record reflects that the foreclosure sale initially set for December 8 was properly
noticed and advertised and a copy of the published advertisement was sent to Pugh via
certified letter on November 3, 2008, all in accordance with the provisions of Section 35-5-

                                               -9-
101. Pugh fails to support her conclusory allegation that “the properties were ultimately
foreclosed . . . with inadequate notice.” More specifically, we conclude that Pugh has failed
to demonstrate any irregularity or impropriety regarding the manner in which the foreclosure
sale was noticed or advertised. To the extent she contends that the sale should have been
renoticed and readvertised when it was postponed from December to January, her argument
is to no avail. The statute itself provides that “[t]he failure to comply with the advertisement
provisions in the statutes regarding trust deed sales, in and of itself, does not render a sale
void or voidable.” Conway v. E. Sav. Bank, FSB, No. W2005-02919-COA-R3-CV, 2006
WL 3613605 at * 6 (Tenn. Ct. App. W.S., filed Dec. 11, 2006); Tenn. Code Ann. §
35-5-106. Thus, in Conway, this Court affirmed the chancery court’s decision upholding a
foreclosure sale under nearly identical circumstances2 to those presented herein; the chancery
court held that “the Bank's failure to re-advertise three times, twenty days prior to the
rescheduled foreclosure date does not render the sale irregular or unfair, and it does not
warrant setting aside the foreclosure sale.” Id. (Emphasis added).

        On our review, we conclude that the evidence preponderates overwhelmingly in
support of the trial court’s findings that “New South gave [Pugh] proper notice, under the
Tennessee statutes and its Deed of Trust, of the foreclosure sale originally scheduled on
December 8, 2008,” and that “a foreclosure sale properly advertised according to the terms
of the foreclosure statutes may be postponed without readvertisement in accordance with the
precise terms of the statute. . . .” The court did not err in its conclusion that there was a valid
foreclosure to support issuance of the detainer warrants sought by New South.

                                                   V.

       The judgment of the trial court is affirmed. This case is remanded to the trial court,
pursuant to applicable law, for enforcement of the trial court’s judgment and for the
collection of costs assessed below. Costs on appeal are taxed to the appellant, Brenda Pugh.




                                                  _______________________________
                                                  CHARLES D. SUSANO, JR., JUDGE




        2
         In Conway, the foreclosure sale was twice postponed and ultimately held more than a year after the
originally scheduled sale date without readvertisement or giving further notice.

                                                   -10-
