MCINERNEY et al v. WELLS FARGO HOME MORTGAGE INC et al
ORDER granting 3 Motion to Dismiss for Failure to State a ClaimOrdered by U.S. District Judge Clay D. Land on 12/16/2013 (bsh)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
PETER MCINERNEY and KELLY
CASE NO. 3:13-CV-100 (CDL)
WELLS FARGO HOME MORTGAGE,
INC., WELLS FARGO BANK, N.A.,
and FEDERAL HOME LOAN MORTGAGE
O R D E R
borrower seeking to avoid the inevitable consequences associated
with failing to pay back a debt.
Plaintiffs lost their home
through foreclosure because they defaulted on their loan.
rather than accept responsibility for their default, they have
filed the present action asserting various claims for relief.
These claims are predicated on three erroneous legal theories:
(1) that the foreclosure was unauthorized because the party that
secured by the security deed on which the foreclosure was based;
(2) that Plaintiffs were intended beneficiaries of the federal
Home Affordable Modification Program (“HAMP”) and may assert a
claim based on violations of the conditions of that program; and
(3) that a loan may be contractually modified even though the
Unfortunately for Plaintiffs, Georgia law clearly permits the
foreclosing party does not also hold the promissory note that is
secured by the security deed.
Therefore, Plaintiffs’ claims for
wrongful foreclosure and fraud that rely on the theory that the
foreclosure here was not authorized must fail.
federal law is clear that the federal statute that created HAMP
does not provide a private cause of action and does not make
Plaintiffs intended beneficiaries of that program for purposes
fundamental principles of contract law and promissory estoppel
agreement must include the essential terms for the new modified
Since the alleged modification did not contain any
of the essential terms, no claim can be made for breach of
Dismiss (ECF No. 3) is granted.
MOTION TO DISMISS STANDARD
When considering a 12(b)(6) motion to dismiss, the Court
exhibits attached thereto.
Bell Atl. Corp. v. Twombly, 550 U.S.
544, 556 (2007); Wilchombe v. TeeVee Toons, Inc., 555 F.3d 949,
complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on its
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
sufficient factual allegations “to raise a right to relief above
formulaic recitation of the elements of a cause of action will
Although the complaint must contain factual
allegations that “raise a reasonable expectation that discovery
will reveal evidence of” the plaintiff’s claims, id. at 556,
complaint simply because ‘it strikes a savvy judge that actual
proof of those facts is improbable,’” Watts v. Fla. Int’l Univ.,
495 F.3d 1289, 1295 (11th Cir. 2007) (quoting Twombly, 550 U.S.
Peter McInerney and his wife Kelly initiated this action
against Wells Fargo Home Mortgage, Inc. (“WFHM”), Wells Fargo
Bank, N.A., and Federal Home Loan Mortgage Corporation (“Freddie
Mac”) in state court.
They sought injunctive relief and damages
covenant of good faith and fair dealing.
After removing the
action to this Court, Defendants filed the presently pending
motion to dismiss arguing that Plaintiffs’ Complaint fails to
state a claim upon which relief may be granted.1
As explained in
the remainder of this Order, Defendants’ Motion to Dismiss for
Failure to State a Claim (ECF No. 3) is granted.
Plaintiffs allege the following in their Complaint.
transaction, he executed a Promissory Note and Security Deed.
The Promissory Note showed WFHM as the lender, and the Security
Deed granted a power of sale to WFHM and WFHM’s “successors and
assigns” over property the Security Deed conveyed.
Deed also provides that “[t]he Note or a partial interest in the
Note (together with this Security Instrument) can be sold one or
more times without prior notice to Borrower.”
Security Deed, ECF No. 1-1 at 77.
the Note to Freddie Mac.
Compl. Ex. B,
On June 28, 2003, WFHM sold
Freddie Mac then securitized the Note
and placed it in a mortgage-backed security trust.
WFHM dissolved and its assets, including the McInerney Security
were assumed by Wells Fargo
as “successor by merger.”
Federal jurisdiction is based upon the joinder of Freddie Mac, a
United States Government Agency for purposes of 28 U.S.C. § 1442, as a
WFHM serviced the loan prior to its dissolution, and Wells Fargo
continued to service the loan after the merger.
Mr. McInerney began missing payments on the loan in late
discussed modifying his loan with representatives of WFHM and
In September 2009, Wells Fargo extended a three-
month Trial Modification to Mr. McInerney under the federal Home
Affordable Modification Program (“HAMP”).
He made three timely
payments under this agreement while waiting for a response to
his request for permanent modification.
After more back-and-
forth with WFHM and Wells Fargo, Mr. McInerney received a letter
on February 21, 2010 stating that his loan was in default and
that he must pay amounts owed by March 23 to avoid foreclosure.
On March 25, 2010, he received a letter stating that WFHM had
referred the loan to begin foreclosure proceedings.
On June 10,
2012, WFHM sent a letter to Mr. McInerney through the law firm
McCalla Raymer, LLC, attempting to collect the debt owed.
authorized to receive payment on your loan but which may not be
the recorded holder of the security deed.”
Compl. ¶ 60, ECF No.
disputing whether Wells Fargo had the right to foreclose on the
Wells Fargo sent a Notice of Foreclosure Sale to Mr.
McInerney via McCalla Raymer on September 19, 2012, stating that
it was the successor by merger to WFHM.
On November 6, 2012,
Wells Fargo, acting on behalf of Freddie Mac as the holder of
purchased the property for $177,705.21.
It then transferred the
property to Freddie Mac, which had the equitable interest in the
property because of the Note, for ten dollars.
filed a dispossessory action in Athens-Clarke County to evict
That action was dismissed because neither Wells
Fargo nor Freddie Mac had filed foreclosure documents or deeds
with the County proving that the property was foreclosed upon
Freddie Mac filed a second dispossessory action on
January 28, 2013.
That action was stayed.
Preliminarily, the Court finds that it is undisputed that
Kelly McInerney was not a party to the loan transaction giving
rise to Plaintiffs’ Complaint. She is not listed as an obligor
on the promissory note, nor is she listed as a grantor on the
Accordingly, she has no standing to pursue the
claims she asserts in this action.
See Henry v. Guaranteed
Rates, Inc., 415 F. App’x 985, 985 (11th Cir. 2011) (per curiam)
(explaining that a plaintiff does not have standing to bring
claims based on a loan to which she is not a party).
are therefore dismissed.2
Mr. McInerney, as the party to the
loan transaction, does have standing, but as explained below,
his allegations fail to state claims upon which relief may be
To establish a claim for wrongful foreclosure in Georgia, a
foreclosing party, a breach of that duty, a causal connection
between the breach of that duty and the injury it sustained, and
Racette v. Bank of America, N.A., 318 Ga. App. 171,
A violation of that statute is necessary
to establish a wrongful foreclosure.
Harris v. Chase Home Fin.,
LLC, 524 F. App’x 590, 592 (11th Cir. 2013) (per curiam).
Instead, he alleges that Wells Fargo did not have the right to
interest, WFHM, was listed in the security deed as the grantee.
There is also no dispute that when WFHM dissolved and merged
The Court notes that even if Kelly McInerney did have standing, her
claims would fail for the same reasons Mr. McInerney’s claims fail.
into Wells Fargo, Wells Fargo obtained all of the rights and
rights under Mr. McInerney’s security deed.
law is clear that the fact that neither Wells Fargo nor WFHM
held Mr. McInerney’s promissory note did not prevent Wells Fargo
from exercising its rights under the security deed.
See You v.
JP Morgan Chase Bank, N.A., 293 Ga. 67, 74, 743 S.E.2d 428, 433
(2013) (“[T]he holder of a deed to secure debt is authorized to
exercise the power of sale in accordance with the terms of the
deed even if it does not also hold the note or otherwise have
any beneficial interest in the debt obligation underlying the
prevented Wells Fargo from exercising its right to foreclose,
Wells Fargo was authorized to foreclose on Plaintiff’s property
pursuant to the security deed it held on the property.
Mr. McInerney points to nothing in the security deed that
directly prohibits the foreclosure by Wells Fargo in this case.
Instead, Mr. McInerney relies on language in the Security Deed
that authorizes the Promissory Note and Security Deed to be sold
to a third party.
See Security Deed, ECF No. 1-1 at 77 (“The
Security Instrument) can be sold . . .”).
Mr. McInerney claims
that this language prevented the Security Deed from being split
from the Promissory Note, and thus the Security Deed’s power of
sale was extinguished when Wells Fargo transferred the Note to
He argues that although Wells Fargo indisputably
secured creditor because it did not also hold the Note.
argues, therefore, that Wells Fargo violated O.C.G.A. § 44-14162.2(a)’s
proceedings to exercise a power of sale” in a security deed be
given by the secured creditor.
The Court is not persuaded by
provision in the Security Deed is strained.
That provision does
not prohibit the splitting of the Security Deed and Promissory
Georgia Supreme Court’s holding in You.
Accordingly, the Court
Plaintiff’s property, and Plaintiff’s wrongful foreclosure claim
fails as a matter of law.
Mr. McInerney’s fraud claim is based on his allegation that
solely for the purposes of creating Mortgage Backed Security
products and not home loans.”
Compl. ¶ 105.
This claim rests
on the argument that Georgia law does not permit the splitting
of a promissory note from a security deed as was done with the
But as the Court has previously explained, the
determined that transactions such as the one here are authorized
under Georgia law.
You, 293 Ga. at 74, 743 S.E.2d at 433.
Therefore, Plaintiff’s fraud claim must be dismissed.
III. Breach of Contract, Breach of the Covenant of Good Faith
and Fair Dealing, and Promissory Estoppel
Mr. McInerney claims that he was an intended beneficiary of
Wells Fargo’s contract with the Treasury Department under HAMP
and suffered damages from Wells Fargo’s alleged breach of that
A third party has standing to enforce a contract “if
it clearly appears from the contract that it was intended for
Eurocar Classics, 310 Ga. App. 825, 828, 714 S.E.2d 388, 391
There is no private right of action under HAMP.
v. Chase Home Fin., LLC, 677 F.3d 1113, 1116 (11th Cir. 2012)
And “[t]he majority of courts have determined
beneficiaries, of the contract between a participating servicer
and the federal government to participate in the HAMP program.”
Stroman v. Bank of Am. Corp., 852 F. Supp. 2d 1366, 1374 (N.D.
Mr. McInerney’s allegations in his Complaint do not
show that he was an intended beneficiary of the contract under
HAMP, and therefore, this claim fails.
Mr. McInerney also claims Wells Fargo agreed to modify his
loan and breached that contract when it failed to do so.
Mr. McInerney fails to allege the essential terms of the alleged
loan modification contract.
One of the fundamental principles
of the law of contracts is that there must be mutual assent by
the parties to all of the terms.
O.C.G.A. § 13-3-1; accord
Broughton v. Johnson, 247 Ga. App. 819, 819, 545 S.E.2d 370, 371
In the context of a loan modification, those terms
would include the interest rate, new monthly payment amount, and
Action No. 1:11-CV-3713-RWS-JSA, 2012 WL 3201400, at *8 (N.D.
Ga. June 25, 2012).
Mr. McInerney does not allege that any
agreed to by the parties.
Consequently, he has failed to allege
sufficient facts to support a breach of contract claim based
upon an alleged modification agreement.
Because Mr. McInerney’s claim for breach of contract fails,
his claim for breach of the implied covenant of good faith and
fair dealing also fails.
“[T]hat duty cannot be breached apart
from the contract provisions it modifies and therefore cannot
provide an independent basis for liability” under Georgia law.
Miller, 677 F.3d at 1117 (“internal quotation marks omitted).
contract claim, [he] cannot prevail on a cause of action based
on the failure to act in good faith in performing the contract.”
Heritage Creek Dev. Corp. v. Colonial Bank, 268 Ga. App. 369,
374, 601 S.E.2d 842, 847.
Finally, Mr. McInerney alleges a promissory estoppel claim.
dismissal of his breach of contract claim.
He simply does not
allege a sufficiently definite promise upon which he reasonably
estoppel must show that a “(1) defendant made certain promises,
(2) defendant should have expected that plaintiff would rely
on such promises, (3) the plaintiff did rely on such promises
to [his] detriment, and (4) injustice can be avoided only by
enforcement of the promise.”
Houston v. Houston, 267 Ga. App.
450, 451, 600 S.E.2d 395, 396 (2004) (first two alterations in
estoppel does not apply to vague or indefinite promises, or
promises of uncertain duration.”
Secured Realty Inv. v. Bank of
N. Ga., 314 Ga. App. 628, 630, 725 S.E.2d 336, 339 (2012).
previously explained, Mr. McInerney did not allege the specific
terms and conditions of any promises regarding a modification of
See Ga. Invs. Int’l, Inc. v. Branch Banking & Trust
Co., 305 Ga. App. 673, 675-76, 700 S.E.2d 662, 664-65 (2010)
(finding a promise to renew a loan too indefinite to support a
terms such as an interest rate).
He also fails to allege how he
relied on Defendants’ alleged promises to his detriment.
vague and conclusory allegations do not state a plausible claim
for relief under a promissory estoppel theory.
fail as a matter of law.
And he is not entitled to the relief
Defendants’ Motion to Dismiss (ECF No. 3) is granted.
IT IS SO ORDERED, this 16th day of December, 2013.
S/Clay D. Land
CLAY D. LAND
UNITED STATES DISTRICT JUDGE
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