Brady Daniels v. Vince Trotter

07/01/2025 IN THE COURT OF APPEALS OF TENNESSEE AT KNOXVILLE Assigned on Briefs May 1, 2025 BRADY DANIELS ET AL. v. VINCE TROTTER Appeal from the Chancery Court for Hamilton County No. 19-0040 Jeffrey M. Atherton, Chancellor ___________________________________ No. E2024-00473-COA-R3-CV ___________________________________ In this constitutional challenge involving a non-judicial foreclosure, the trial court determined that Tennessee Code Annotated § 35-5-106 is not unconstitutional as applied because the City of Chattanooga acted in a proprietary capacity when it conducted a non-judicial foreclosure of a deed of trust. Thus, only private conduct is at issue and constitutional rights are not implicated. We affirm. Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed KRISTI M. DAVIS, J., delivered the opinion of the Court, in which ANDY D. BENNETT and CARMA DENNIS MCGEE, JJ., joined. Sharon McMullan Milling, Hixson, Tennessee, for the appellants, Brady L. Daniels and Sylvia L. Benford Daniels. Jonathan Skrmetti, Attorney General and Reporter; J. Matthew Rice, Solicitor General; and Jing Geng, Assistant Attorney General, for the intervenor-appellee, State of Tennessee. Barry L. Abbott, Chattanooga, Tennessee, for the appellee, Vince Trotter. Harry R. Cash, Chattanooga, Tennessee, for the appellees, City of Chattanooga and Chattanooga Neighborhood Enterprise, Inc.  OPINION BACKGROUND This is the parties’ second appeal of this matter. As background, we quote at length from our first opinion: Since 1971, Sylvia L. Benford Daniels and Marian L. Benford had been the joint owners of a piece of property located in Chattanooga, Tennessee (“the Property”). In 1996, Marian Benford, Sylvia L. Benford Daniels, and Brady Daniels executed a deed of trust, and Ms. Benford made all mortgage payments until her death in 2010. As part of the loan process, the loan application and the “Loan Master Information” listed the address of Sylvia L. Benford Daniels and Brady Daniels (collectively, “the Daniels”) as being in Columbia, Maryland. The record also includes a document entitled, “Chattanooga Home Improvement Program Deed of Trust and Security Agreement,” which states that the instrument is a “Construction Mortgage.” The lender and beneficiary of the deed of trust is listed as “the CITY OF CHATTANOOGA, organized and existing under the Laws of the State of Tennessee.” The deed of trust reflects that the document was prepared by and filed for the City of Chattanooga c/o Chattanooga Neighborhood Enterprise, Inc.[1] Following Ms. Benford’s death, Sylvia Benford Daniels became the sole owner of the property due to the right of survivorship clause in the original deed. The Daniels were both co-debtors to the mortgage on the Property. At all times relevant, the Daniels continued to reside at their address in Columbia, Maryland as listed in the loan application document. A relative of Ms. Daniels was residing at the Property and had agreed to pay the mortgage payments. At some point, the family member ceased making the mortgage payments, and the City of Chattanooga, as “beneficiary under the Deed of Trust and the true and lawful owner and holder of the [promissory note],” appointed a successor trustee to conduct the foreclosure process. The Daniels did not receive notice at their Maryland address of non-payment of the mortgage or of the upcoming foreclosure sale. Instead, the foreclosure notices addressed to the Daniels were sent to the Property address in Chattanooga, Tennessee. The record reflects that the family member residing at the Property at the time of the foreclosure was also copied on the notice of foreclosure. The public auction for the Property was advertised in the 1 CNE’s mission is “to drive homeownership, promote financial well-being, build community connections, restore and build stable housing and more.” CHATTANOOGA NEIGHBORHOOD ENTER., What We Do, https://www.cneinc.org/what-we-do (last visited June 16, 2025). -2- Chattanooga Times Free Press, and the Property was purchased at the foreclosure sale by the respondent, Vince Trotter. Title was transferred to Mr. Trotter by successor trustee’s deed in November 2018. The Daniels did not learn of the foreclosure until after title of the Property had been transferred to Mr. Trotter. In January 2019, the Daniels filed a petition to set aside the successor trustee’s deed and to declare Sylv