FEDERAL NATIONAL MORTGAGE ASSOCIATION v. EDDINGS et al

Filing 37

ORDER granting 23 Motion to Dismiss Defendants Blankenship and Blalock for Failure to State a Claim. Ordered by Judge Clay D. Land on 03/13/2013.(aaf)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
COLUMBUS DIVISION
FEDERAL
NATIONAL
ASSOCIATION,

MORTGAGE *
*

Plaintiff,
*
vs.

CASE NO. 4:12-cv-72 (CDL)
*

MICHAEL A. EDDINGS, LAW OFFICE
OF MICHAEL A. EDDINGS, P.C., *
APEX
TITLE,
INC.,
TRIPP
BLANKENSHIP,
JIM
BLALOCK, *
VICKIE
HUBBARD
TURNER,
and
CRESCENT MORTGAGE COMPANY,
Defendants.
O R D E R
This action arises from two real estate closings performed
by attorney Michael A. Eddings, who was employed by Michael A.
Eddings

P.C.,

(collectively

“Eddings”).

Plaintiff,

Federal

National Mortgage Association (“Fannie Mae”), was the seller of
the properties, and Defendants Joseph Tripp Blankenship and Jim
Blalock were the purchasers of one of the properties.

As part

of the closing, Blankenship and Blalock made payment of the
purchase

price

to

Eddings

as

the

closing

agent

with

the

understanding that Eddings would disburse the net sales proceeds
to Fannie Mae.

Fannie Mae alleges that Eddings never disbursed

any of the net sales proceeds to it, although it executed a
warranty deed conveying the property to Blankenship and Blalock.
In addition to its claims against Eddings, Fannie Mae asserts

claims against Blankenship and Blalock for quia timet, O.C.G.A.
§ 23-3-40 et seq., breach of contract, conversion, civil RICO,
O.C.G.A.

§

16-14-1

et

seq.,

and

damages and declaratory judgment.

fraud.

It

seeks

monetary

Blankenship and Blalock have

filed a motion to dismiss all claims against them for failure to
state a claim (ECF No. 23).

For the following reasons, the

Court grants their motion.
MOTION TO DISMISS STANDARD
When considering a 12(b)(6) motion to dismiss, the Court
must

accept

complaint

as

and

true

all

facts

limit

its

consideration

exhibits attached thereto.

set

forth
to

in

the

the

plaintiff’s

pleadings

and

Bell Atl. Corp. v. Twombly, 550 U.S.

544, 556 (2007); Wilchombe v. TeeVee Toons, Inc., 555 F.3d 949,
959

(11th

Cir.

2009).

“To

survive

a

motion

to

dismiss,

a

complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on its
face.’”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting

Twombly,

550

U.S.

at

570).

The

complaint

must

include

sufficient factual allegations “to raise a right to relief above
the

speculative

level.”

Twombly,

550

U.S.

at

555.

“[A]

formulaic recitation of the elements of a cause of action will
not do[.]”

Id.

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,

2

“Rule

12(b)(6)

does

not

permit

dismissal

of

a

well-pleaded

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.
at 556).
FACTUAL ALLEGATIONS
The following facts are taken from Fannie Mae’s Amended
Complaint, including the attached exhibits.

In August 2011,

Fannie Mae, as the seller, entered into a Purchase and Sale
Agreement for real property with Blankenship and Blalock as the
purchasers.

See generally Am. Compl. Ex. A, Purchase & Sale

Agreement, ECF No. 15 at 1.

Pursuant to the Purchase and Sale

Agreement, Eddings served as the closing attorney.

Id. ¶ 7.

Fannie Mae alleges that Blankenship and Blalock “independently
selected” Eddings to be the closing attorney “with no input,
guidance,

assistance,

control,

or

approval

from

Fannie

Mae.”

Am. Compl. ¶ 13, ECF No. 13.
On October 21, 2011, Eddings conducted a cash-sale real
estate closing for the property in question.

Prior to or at the

closing, Blankenship and Blalock tendered the purchase price of
$40,000.00 plus fees and costs to Eddings, which Eddings then
deposited,
account.

less

the

brokers’

commissions,

into

his

escrow

See Am. Compl. Ex. B, BB&T Outgoing Wire Transfer

Request Agreement (Oct. 20, 2011), ECF No. 15 at 11 (listing

3

originator name as J. T. Blankenship and beneficiary name as Law
Office

of

Michael

A.

Eddings,

P.C.);

Am.

Compl.

Ex.

C,

Beneficiary Transfer (Oct. 20, 2011), ECF No. 15 at 12 (listing
debit party as Realty Management Services, Inc. and beneficiary
as The Law Office of Michael Eddings, Escrow Account).
Fannie Mae executed a Warranty Deed to convey the property
to Blankenship and Blalock.

Am. Compl. Ex. E, Special Warranty

Deed (Oct. 20, 2011), ECF No. 15 at 18.

Fannie Mae was supposed

to receive $37,600.25 from Eddings’ escrow account as the net
cash sales proceeds.
ECF

No.

15

at

Am. Compl. Ex. D, Settlement Statement 1,

13.

As

part

of

the

closing,

Blankenship,

and

Blalock

signed

a

acknowledging

the

accuracy

of

settlement

the

“HUD-1

Fannie

Mae,

Certification,”
statement

that

showed all receipts and disbursements regarding the transaction.
Am. Compl. Ex. D, HUD-1 Certification, ECF No. 15 at 15.

The

HUD-1 Certification was prepared and signed by Eddings as the
settlement agent.

Id.

There is no allegation that Fannie Mae

ever objected to Eddings acting as the closing agent.
Fannie Mae alleges that Eddings never disbursed the net
sales proceeds to it from his escrow account.

Therefore, Fannie

Mae is in the unenviable position of having deeded the property
to

Blankenship

and

Blalock

without

being

paid

for

it.

In

addition to Eddings, Fannie Mae has sued Blankenship and Blalock

4

because they now have title to the property even though Fannie
Mae never received the purchase proceeds from Eddings.
DISCUSSION
The facts alleged by Fannie Mae are indistinguishable from
those described by the Georgia Supreme Court in Hayes v. Gordon,
240 Ga. 19, 239 S.E.2d 344 (1977).

In Hayes, a closing attorney

for the sale of real property delivered a check drawn on the
firm’s account to the seller of the property that was later
dishonored due to insufficient funds.
345.

Id. at 19, 239 S.E.2d at

After being unable to collect in a prior suit against the

closing attorney, the seller sued the purchaser to cancel the
warranty deed, cancel the deed to secure debt granted to the
purchaser,

and

collect

rent

from

the

purchaser.

Id.

The

purchaser and seller had entered into a closing statement, which
included the following:
[T]he names of the purchaser and seller, the location
of the real estate, the date, and the purchase amount.
It then set out the amounts to be disbursed for sales
commission, transfer tax, recording and cancellation
fees, discount, taxes, loan payments, closing costs
and processing fee. The net balance due to the seller
after these deductions was then set out.
The
agreement contained this statement: ‘I have read the
above and hereby authorize (the closing attorney) to
make proper disbursements in my behalf as outlined
above.’
It was signed by the seller and the
purchaser.
Id. at 20, 239 S.E.2d at 345.
found

that

the

agreement

The Supreme Court of Georgia

authorized

5

the

closing

attorney

to

receive funds into his escrow account from the purchaser for the
amount of the purchase price and to make disbursements from that
account

to

the

seller

for

the

net

sales

proceeds.

Id.

Concluding that “the seller impliedly, but clearly, authorized
the closing attorney to receive payment from the purchaser on
the

seller’s

behalf,”

the

court

held

that

“when

a

seller

authorizes a closing agent to receive payment of the sales price
and the buyer, aware of that authorization, makes such payment
to the closing agent, the seller must look to the closing agent
for satisfaction.”
trial

court’s

purchaser.
The

Id.

grant

of

Accordingly, the court affirmed the
summary

judgment

in

favor

of

the

Mae’s

Amended

Id., 239 S.E.2d at 345-46.

closing

documents

attached

to

Fannie

Complaint make it clear that Fannie Mae authorized Eddings to
receive the purchase proceeds from Blankenship and Blalock for
eventual disbursement of the net sales proceeds to Fannie Mae.
Fannie Mae does not allege that the settlement statement was
inaccurate or that Blankenship and Blalock had any reason to
believe that Eddings was not authorized to receive the payment
of the purchase price.

Fannie Mae’s claim is that the net sales

proceeds never made it from Eddings to Fannie Mae.

Under Hayes,

Fannie

Blalock

Mae’s

claim

is

against

Eddings,

Blankenship as the purchasers of the property.

6

not

and

To the extent that Fannie Mae suggests that Blankenship and
Blalock colluded in some way with Eddings to defraud Fannie Mae
or to unlawfully convert Fannie Mae’s property, the Court finds
that Fannie Mae has failed to allege sufficient facts to support
such claims.

In light of Hayes, Fannie Mae’s claims against

Blankenship and Blalock are not plausible on their face.

The

facts alleged by Fannie Mae do not come close to nudging its
claims

beyond

expectation

the

exists

speculative
that

support those claims.

level.

discovery

will

And

no

reveal

reasonable
evidence

to

Accordingly, Fannie Mae’s claims against

Blankenship and Blalock must be dismissed.
CONCLUSION
For the reasons explained in this Order, the Court grants
Defendants Blalock’s and Blankenship’s motion to dismiss (ECF
No. 23).
IT IS SO ORDERED, this 13th day of March, 2013.
S/Clay D. Land
CLAY D. LAND
UNITED STATES DISTRICT JUDGE

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