First Bancorp Mortgage Corp. v. Giddens

After a jury entered a defense verdict for a real estate attorney and his law firm in a legal malpractice suit, First Bancorp Mortgage Corporation “Bancorp” filed an unsuccessful motion for new trial. In this appeal, Bancorp contends that the trial court erred by excluding three exhibits, excusing a juror for cause, permitting certain testimony over objection, and directing a verdict on punitive damages. Bancorp also asserts that the trial court erred by instructing the jury on contributory and comparative negligence and by incorrectly responding to a question posed by the jury. We find no error and affirm.

Bancorp is a Virginia corporation that underwrites mortgages, funds them, then sells them in the secondary market. In October 1996 and November 1996, Bancorp entered into two residential real estate transactions in Atlanta with Louie B. and Doreen Golden and Timothy Aiken, respectively. Shortly thereafter, both the Goldens and Aiken defaulted on their loans. Despite selling both mortgages to another company, Bancorp retained an obligation to pay foreclosure losses occurring in the first 12 months. Richard Arms, the president of Bancorp, described both transactions as being what he termed “flip sales.” In such transactions, the same property is sold twice on the same day or within a very short period with the price in the second sale substantially higher than the first. Arms testified that Bancorp would not have made either loan if he had known they were “flips” and said Bancorp’s combined losses were in excess of $78,000. Arms testified that he absolutely would have expected to be notified of the “flip sales” if his own lawyer had closed both loans.