A decade of litigation over a property tax bill that was almost paid in full
A borrower fell $98 short on his county property taxes. That was enough to lose a decade-long case against Fifth Third Bank.
The Tennessee Court of Appeals, in a decision filed October 12, 2026, affirmed a chancery court ruling dismissing both breach of contract claims brought by the borrower and his son. The pair sued in 2015 to block a foreclosure sale on a Memphis property encumbered by a deed of trust with Fifth Third.
The backstory: a prior dispute - stemming from the bank’s mistaken withdrawal of mortgage payments from the wrong account - had already produced litigation, a settlement agreement, and a loan modification executed by August 2013. Those agreements said the borrower would not need an escrow account unless he defaulted on property tax or insurance payments. The settlement also required the bank to notify credit reporting agencies of the modification.
The escrow trigger
The fight turned on roughly $6,700 in 2013 Shelby County property taxes. Under Tennessee law, unpaid property taxes become delinquent on March 1 following the October due date and start accruing 1.5% monthly interest. By that deadline, the borrower had paid nothing.
Partial payments trickled in: $1,300 in April 2014, $3,000 in May, and $1,770 in November. By his own testimony, those left him “$98 shy of the full amount.”
The bank moved in July 2014, sending notice it was imposing an escrow account due to “delinquent property taxes” and advancing $2,856.68 to cover the remaining balance. Only about two-thirds of the tax bill had been paid at that point.
The appellate court agreed - the borrower was in default. His argument that the bank should have waited until the property faced a tax sale got short shrift. “At that point, imposing an escrow account would serve little purpose,” the court wrote.
The credit reporting claim
The borrower also alleged the bank never properly notified credit bureaus of the modification. The evidence showed otherwise. The bank submitted a Uniform Data Form - the industry-standard method for reporting to credit agencies - on August 26, 2013, and sent confirmation to the borrower’s attorney that September. The borrower argued the form should have been in “plain English.” The court noted the settlement required notice to credit agencies, not to laypeople.
For servicers and lenders, the takeaway is practical: well-drafted escrow-trigger language tied to tax defaults holds up, and the Uniform Data Form remains the accepted standard for post-modification credit reporting.
