United States District Court, D. South Carolina, Charleston Division
Frank Scott Dabney and Kathryn Harrelle Dabney, Plaintiffs-Appellants,
Bank of America, N.A., Defendant-Appellee.
ORDER AND OPINION
Richard Mark United States District Court Judge
matter is before the Court on Appellants' appeal from the
order of the United States Bankruptcy Court for the District
of South Carolina granting Appellee's motion for judgment
on the pleadings. For the reasons set forth below, the Court
vacates the order of the bankruptcy court and remands this
matter for further proceedings.
11, 2006, Plaintiffs executed delivered to Lendmark Financial
Services, Inc. ("Lendmark"), an adjustable rate
note in the original principal amount of $304, 000 (the
"Note"). The Note provides the following interest
2. INTEREST. Interest will be charged on
unpaid principal until the full amount of Principal has been
paid. I will pay interest at a yearly rate of 8.000%. The
interest rate I will pay may change in accordance with
Section 4 of this Note.
4. INTEREST RATE AND MONTHLY PAYMENT
(A) Change Rates. The interest rate I will
pay may change on the first day of June, 2009 and on that day
every 6 months thereafter. Each date on which my interest
rate could change is called a "Change Date."
(B) The Index. Beginning with the first
Change Date, my adjustable interest rate will be based on an
Index. The "Index" is the average of interbank
offered rates for SIX-MONTH U.S. dollar denominated deposits
in the London market (LIBOR) as published in The Wall Street
Journal. The most recent Index figure available as of the
first business day of the month immediately preceding the
month in which the Change Date occurs is called the
If the Index is no longer available, the Note Holder will
choose a new index that is based upon comparable information.
The Note Holder will give me notice of this choice.
(C) Calculation of Changes. Before each
Change Date, the Note Holder will calculate my new interest
rate by adding 5.125 percentage point(s) (5.125%) to the
Current Index. The Note Holder will then round the result of
this addition to the nearest one-eighth of one-percentage
point (0.125%). Subject to the limits stated in Section 4(D)
below, this rounded amount will be my new interest rate until
the next Change Date. The Note Holder will then determine the
amount of the monthly payment that would be sufficient to
repay the unpaid principal that I am expected to owe at the
Change Date in full on the Maturity Date at my new interest
rate in substantially equal payments. The result of this
calculation will be the new amount of my monthly payment.
(D) Limits on Interest Rate Changes. The
interest rate I am required to pay at the first Change Date
will not be greater than 11.000% or less than 8.000%.
Thereafter, my interest rate will never be increased or
decreased on any single Change Date by more than 1.000
percentage point(s) (1.000%) from the rate of interest I have
been paying for the preceding 6 months. My interest rate will
never be greater than 14.000%.
simultaneously with the Note was a mortgage of property
located at 1844 Chelwood Circle, Charleston, South Carolina
("Mortgage") and an adjustable rate rider
("Rider"). The Rider expressly amends the Mortgage.
(Dkt. No. 2-1 at 40.) It has the following interest rate
A. INTEREST RATE AND MONTHLY PAYMENT
The Note provides for an initial interest rate of 8.00%. The
Note provides for changes in the adjustable interest rate and