Zow et al v. Regions Financial Corporaiton et al

Filing 16

MEMORANDUM ORDER Denying 10 MOTION for Emergency Injunctive and Declaratory Relief and to Stay Forclosure Sale, or, in the Alternative, Grant Verified MOTION for Temporary Restraining Order filed by James Zow, Sr., Veronica Zow. Signed by Judge Leonard P. Stark on 9/28/12. (ntl)

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IN THE UNITED STATES

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FOR THE DISTRICT

ISTRICT COURT
F DELAWARE

JAMES ZOW, SR. and VERONICA ZOW,
Plaintiffs,

v.

Civ. No. 12-571-LPS

REGIONS FINANCIAL CORPORATION, et al.,
Defendants.

Pending before the Court is Plaintiffs' Verifi d Motion for Emergency Injunctive and
Declaratory Relief and to Stay Foreclosure Sale or, i the Alternative, Grant Verified Motion for
Temporary Restraining Order (D.I. 10) ("Motion"), swell as Defendants' opposition thereto
(D.I. 15). For the reasons given below, the Court wi 1 deny the motion.

I.

BACKGROUND
The Complaint (D.I. 3), filed on May 4, 2012 alleges wrongful foreclosure via the use of

a purported negotiable instrument, and jurisdiction b reason of diversity of the parties pursuant
to 28 U.S.C. § 1332. It also alleges violations of the air Debt Collection Practices Act, 15
U.S.C. § 1692. Plaintiffs proceed prose and have b en granted leave to proceed in forma

pauperis. (D.I. 5) A service order was entered on S ptember 21, 2012, and Defendants have not
yet been served. 1
On September 20, 2012, Plaintiffs filed the i stant motion seeking to enjoin Defendants
from conducting a non-judicial foreclosure sale of th ir residential property scheduled to take

'The order requires the parties to address the ssue of venue.
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place on October 2, 2012. The next day, the Court orered Defendants to respond to the motion.
(See D.I. 11) As ordered by the Court, Defendants fi ed their opposition (D.I. 15) on September
26,2012.

II.

LEGALSTANDARDS
"A preliminary injunction is an extraordinary remedy that should be granted only if:

(1) the plaintiff is likely to succeed on the merits; (2) denial will result in irreparable harm to the
plaintiff; (3) granting the injunction will not result in irreparable harm to the defendant; and

utraSweet Co. v. Vit-Mar Enters., Inc., 176

(4) granting the injunction is in the public interest."

F.3d 151, 153 (3d Cir. 1999). IfPlaintiffs demonstr te the two threshold showings that they are
reasonably likely to prevail eventually in the litigatio , and they are likely to suffer irreparable
injury without relief, the Court then considers the ot er factors. See Tenafly Eruv Ass 'n, Inc. v.

Borough oJTenajly, 309 F.3d 144, 157 (3d Cir. 200 ).

III.

DISCUSSION
Plaintiffs question the authority ofDefendan Regions Bank d/b/a Regions Mortgage

("Regions") to non-judicially foreclosure on their re idential property. They seek to enjoin the
non-judicial foreclosure sale pursuant to Georgia la

and contend that they meet the

requirements for issuance of an injunction. Defend ts oppose the motion on grounds including
that Plaintiffs cannot show the likelihood of success n the merits.
Plaintiffs purchased their home in 1994. On

ovember 20, 2008, Plaintiff James Zow,

Sr. ("J. Zow") executed an original promissory note ecured by a security deed executed by both
Plaintiffs to Defendant Mortgage Electronic Registr tions, Inc. ("MERS"), as nominee for
Regions. (See D.I.3

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29; D.I. 15 Exs. A, B, and

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14) Plaintiffs filed a verified

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complaint in the Superior Court of Chatham County, State of Georgia stating that they both
signed the security deed. (See D.l. 15 Ex.

Cat~

14) That complaint states that Veronica D. Zow

("V. Zow") signed the security deed as a co-owner, ot as a co-borrower. (See id.) Defendants
indicate that the proceeds of the loan were used to p

off and satisfy a first mortgage on the real

property and most of a second mortgage, which was ubordinated of record upon the execution of
a modification and deed of subordination. (Id. at Ex D) At closing, Plaintiffs executed a waiver
ofborrower's rights, wherein they consented to a no -judicial foreclosure upon J. Zow's default.
(Id. at Ex. F)

On January 13, 2009, the loan was purchased by Fannie Mae as part of a pool ofloans
serviced by Regions as a mortgage-backed securitize loan. (D.I. 3 Ex. 20) In the instant
motion, J. Zow "denies the alleged default" and state that he "does not owe Regions Bank any
money or debt whatsoever." (D.I. 10 at~ 13) Howe er, on June 10,2009, J. Zow sought special
forbearance, indicating a delinquency in mortgage p yments that began in March 2009. (ld. at
Ex. E) As of September 1, 201 0, MERS assigned al of its interest in the security deed to
Regions. (D.I. 3 Ex. 5) Defendants notified Plaintif son November 5, 2010 ofthe intent to
proceed with a non-judicial foreclosure sale to take lace on December 7, 2010. (Id. at Ex. 6)
The sale did not take place.
Subsequent to Plaintiffs' default, litigation
Court of Chatham County, State of Georgia, Zow v.

ong the parties ensued in the: (1) Superior
egions Fin. Corp., Civ. No. 10-1883 FR

(voluntarily dismissed by Plaintiffs on May 3, 2012) (2) United States District Court for the
Southern District of Georgia, Zow v. Regions Fin. C rp, Civ. No. 10-306-BAE-GRS (remanded
to 10-1883 FR in State Court on February 16, 2011, fter Plaintiffs dismissed all federal claims);
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(3) United States District Court for the Southern Dis "ct of Georgia, Regions Bank v. Zow, Civ.
No. 11-104-WTM-GRS (voluntarily dismissed with ut prejudice by Defendants on July 10,
2012); and (4) United States Bankruptcy Court fort e Southern District of Georgia, In re Zow,
Bk. No. 10-42639 (dismissed with prejudice by Co

on December 27, 2010 due to debtor's

failure to file necessary papers). The instant case wa filed in this District on the day after
Plaintiffs voluntarily dismissed their State court case
Non-judicial foreclosures in Georgia are gov

ed by O.C.G.A §§ 44-14-162 through 44-

14-162.4. On August 29, 2012, Plaintiffs were noti ed by certified mail, pursuant to O.C.G.A.
§ 44-14-162.2, of Regions' intent to initiate proceedi gs to exercise a power of sale under the
terms of the security deed, said sale to take place on

ctober 2, 2012. (D.I. 10 Ex. 11) Plaintiffs

took steps in Georgia to stop the sale including: (1)

"ting letters to Regions disputing the

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validity of the debt and Regions' lack of authority to proceed with a non-judicial foreclosure;
(2) writing a letter to the Savannah Morning News t cease and retract a legal notice of sale
under power published on September 6, 2012 and sc eduled for additional publication on
September 13, 20, and 27, 2012; and (3) filing a noti e oflis pendens and notice of corrected lis
pendens of this lawsuit in the Superior Court of Cha am County, Georgia on September 4 and
11, 2012, respectively. (Id. at Exs. 3-7) It does not ppear that Plaintiffs sought relief in State
court to enjoin the non-judicial foreclosure. Instead, on September 20, 2012, they filed the
instant motion for injunctive relief.
Under Georgia law, it is well-settled that "[t] e holder of a note who is also the grantee in
a deed to secure the indebtedness of the note . . . rna sue on the note or exercise the power of
sale." REL Dev., Inc. v. Branch Banking & Trust C , 699 S.E.2d 779, 781 (Ga. Ct. App. 2010)

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(internal citation and punctuation omitted). As state by the Supreme Court of Georgia, "[t]he
only real defense to the action is to pay up the debt." River Farm, LLC v. SunTrust Bank, 699
S.E.2d 771, 772 (Ga. Ct. App. 2010) (internal quotat on marks omitted).
Given the exhibits submitted, the Court finds that Plaintiffs have not demonstrated the
likelihood of success on the merits. On the record n w before the Court, it appears that: Regions
is the holder of the note and the assignee of secured eed; J. Zow executed the note at issue on
November 20, 2008; Plaintiffs both signed the secu ·

deed; J. Zow is in default and has been

since 2009; and Plaintiffs executed a waiver of borro er' s rights wherein they consented to a
non-judicial foreclosure upon J. Zow's default. Hen e, pursuant to Georgia law, as holder of the

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note and assignee of the security deed, Regions bee

e entitled to proceed with a non-judicial

foreclosure sale once J. Zow defaulted as set forth in the waiver of borrower's rights.
Plaintiffs also assert that Defendants did not omply with Georgia's non-judicial
foreclosure statute, on the basis that verbiage in the 010 notice is slightly different from the
2012 notice. For example, instead of using the word "holder," the 2012 notice uses the term
"secured creditor." Plaintiffs argue the "contradictio s" are evidence of fraud and deceptive
business practices. At this juncture, however, based pon the record before the Court, it appears
that Defendants have complied with the requirement of Georgia's non-judicial foreclosure
statute. Should that turn out not to be the case, Plain iffs have a remedy available to them in the

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Georgia state courts by bringing an action to set asid the mortgage foreclosure sale. See e.g.,

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Arrington v. Reynolds, 565 S.E.2d 870 (Ga. Ct. App. 2002).
For the above reasons, the Court finds that in unctive relief is not appropriate. Therefore,

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the Court DENIES the motion. (D.I. 10)
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IV.

CONCLUSION

NOW, THEREFORE, IT IS HEREBY ORD RED THAT:
1.

Plaintiffs' Verified Motion for Emerg ncy Injunctive and Declaratory Relief and

to Stay Foreclosure Sale or, in the Alternative, Grant Verified Motion for Temporary Restraining
Order (D.I. 10) is DENIED.
2.

The Clerk of Court is directed to serv a copy of this Memorandum Order upon

Steven K. Kortanek, Esquire, Womble Carlyle Sand dge & Rice, 222 Delaware Avenue,
Wilmington, DE 19801, by electronic mail.

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Dated: September 28, 2012

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