Smith-Tyler v. Bank of America, N.A. et al
Filing
77
OPINION and ORDER denying Plaintiff's 64 Motion for Summary Judgment; granting Defendant Bank of America, N.A.'s 65 Motion for Summary Judgment. Signed by Judge Thomas W. Thrash, Jr. on 1/16/2014. (dfb)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
HELEN SMITH-TYLER,
Plaintiff,
v.
CIVIL ACTION FILE
NO. 1:12-CV-1347-TWT
BANK OF AMERICA, N.A., et al.,
Defendants.
OPINION AND ORDER
This is an action for fraud and wrongful foreclosure. It is before the Court on
the Plaintiff’s Motion for Summary Judgment [Doc. 64] and the Defendant’s Motion
for Summary Judgment [Doc. 65]. For the reasons set forth below, the Plaintiff’s
Motion for Summary Judgment [Doc. 64] is DENIED and the Defendant’s Motion for
Summary Judgment [Doc. 65] is GRANTED.
I. Background
In June of 1997, the Plaintiff bought a home in Lithonia, Georgia (the
“Property”). (Def.’s Statement of Facts ¶ 1.) On July 23, 2004, she obtained a loan
from the Taylor, Bean & Whitaker Mortgage Corporation (“TBW”). (Pl.’s Statement
of Facts ¶ 1.) The Plaintiff pledged the Property as collateral by executing a security
deed (“2004 deed”) to Mortgage Electronic Registration Systems, Inc. (MERS),
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TBW’s nominee. (Def.’s Statement of Facts ¶ 3.) The 2004 deed was recorded in the
DeKalb County property records. (Def.’s Statement of Facts ¶ 4.) On July 27, 2009,
the Plaintiff refinanced the TBW loan with Platinum Community Bank. (Pl.’s
Statement of Facts ¶ 3.) As part of the transaction, the Plaintiff executed a security
deed (“2009 deed”) to MERS, the nominee of Platinum. (Pl.’s Statement of Facts ¶
8.) The 2009 deed was also recorded in the DeKalb County property records. (Def.’s
Statement of Facts ¶ 9.)
On August 4, 2009, the U.S. Department of Housing and Urban Development
(HUD), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the
Government National Mortgage Association (Ginnie Mae) shut down TBW. (Def.’s
Statement of Facts ¶ 11.) TBW’s loans were transferred to other entities. (Def.’s
Statement of Facts ¶ 12.) Ginnie Mae requested that the Defendant assume servicing
of roughly 180,000 of these loans, which included the Plaintiff’s 2004 loan from
TBW. (Def.’s Statement of Facts ¶¶ 13-14.) At the time, TBW’s records listed the
Plaintiff’s 2004 loan as active. (Def.’s Statement of Facts ¶ 15.)
The Defendant notified the Plaintiff that it was the new servicer of her loan.
(Pl.’s Statement of Facts ¶ 5.) However, the Plaintiff was then contacted by another
entity, RoundPoint Mortgage, LLC, which was also claiming to be the servicer of her
loan. (Pl.’s Statement of Facts ¶ 6.) The Plaintiff then had a conference call with
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representatives of both the Defendant and RoundPoint, and she was told to make
payments to the Defendant. (Pl.’s Statement of Facts ¶ 8.)
Operating under the belief that it was servicing an active loan, the Defendant
began foreclosure proceedings once the Plaintiff fell behind on her payments. (Def.’s
Statement of Facts ¶ 22.) The Defendant hired McCalla Raymer to handle the
foreclosure. (Def.’s Statement of Facts ¶ 22.) McCalla Raymer sent the Plaintiff a
notice of foreclosure sale dated March 2, 2010. (Pl.’s Statement of Facts ¶ 13.) On
April 5, 2010, the Plaintiff filed for bankruptcy. (Pl.’s Statement of Facts ¶ 14.) At the
time, the Plaintiff had around $182,141.00 of unsecured debt in addition to any
secured debt. (Def.’s Statement of Facts ¶ 27.)
The Defendant filed two proof of claims in the Plaintiff’s bankruptcy
proceeding. (Pl.’s Statement of Facts ¶ 18.) Because the Defendant maintained that
it was servicing an active loan, the Plaintiff continued to make post-petition payments
to the Defendant. (Pl.’s Statement of Facts ¶¶ 20-21.) During the bankruptcy
proceeding, however, it was discovered that the 2004 loan had been paid off through
the 2009 refinancing with Platinum. (Def.’s Statement of Facts ¶ 36.) The Defendant
then entered into a consent agreement where it returned the money it received from
the Plaintiff, with interest. (Pl.’s Statement of Facts ¶ 26; Def.’s Statement of Facts ¶
38.) In this action, the Plaintiff asserts claims for wrongful foreclosure, intentional
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infliction of emotional distress, fraud, and negligence. Both the Plaintiff and the
Defendant have moved for summary judgment on all claims.
II. Legal Standard
Summary judgment is appropriate only when the pleadings, depositions, and
affidavits submitted by the parties show that no genuine issue of material fact exists
and that the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c).
The court should view the evidence and any inferences that may be drawn in the light
most favorable to the nonmovant. Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59
(1970). The party seeking summary judgment must first identify grounds that show
the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317,
323-24 (1986). The burden then shifts to the nonmovant, who must go beyond the
pleadings and present affirmative evidence to show that a genuine issue of material
fact does exist. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257 (1986). “A mere
‘scintilla’ of evidence supporting the opposing party's position will not suffice; there
must be enough of a showing that the jury could reasonably find for that party.”
Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir.1990).
III. Discussion
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A. Wrongful Foreclosure
The Plaintiff’s claim for wrongful foreclosure must fail because there was no
actual foreclosure. See Roper v. Parcel of Land, 1:09-CV-0312-RWS, 2010 WL
1691836, at *2 (N.D. Ga. Apr. 23, 2010) (“Because Defendants did not proceed with
the foreclosure after Plaintiff filed the present action, Plaintiff cannot prove a claim
for wrongful foreclosure.”); Aetna Fin. Co. v. Culpepper, 171 Ga. App. 315, 319
(1984) (“[S]ince Mrs. Culpepper filed bankruptcy proceedings, thereby preventing
any sale of the property, she suffered no legal injury and proved no actual damages.”).
The Plaintiff then attempts to convert her claim into one of wrongful attempted
foreclosure. In Georgia, “courts have recognized a cause of action for wrongful
attempted foreclosure when a foreclosure action was commenced, but not completed,
where plaintiffs have shown that a defendant ‘knowingly published an untrue and
derogatory statement concerning the plaintiffs’ financial conditions and that damages
were sustained as a direct result.’” Morgan v. Ocwen Loan Servicing, LLC, 795 F.
Supp. 2d 1370, 1377 (N.D. Ga. 2011) (citing Sale City Peanut & Milling Co. v.
Planters & Citizens Bank, 107 Ga.App. 463, 465 (1963)).
Here, the Plaintiff provides no evidence that the Defendant knew that the loan
had been satisfied when it initiated foreclosure proceedings. Consequently, there is no
evidence that the Defendant knew that any published foreclosure notice contained
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incorrect statements. The Plaintiff does not refute the Defendant’s evidence that
TBW’s records marked the Plaintiff’s 2004 loan as active. (Def.’s Mot. to Dismiss,
Ex. J.) In response, the Plaintiff first argues that she put the Defendant on notice that
there was another entity claiming to be the rightful servicer. (Pl.’s Resp. to Def.’s Mot.
for Summ. J., at 8.) But this does not mean the Defendant knew that the 2004 loan had
been satisfied. In fact, the Plaintiff and the Defendant had a conference call with
RoundPoint where the parties appeared to believe that the Defendant was the servicer
of an active loan. The Plaintiff then argues that the Defendant “knew or should have
known that it was highly plausible that they were not the rightful servicer.” (Pl.’s
Resp. to Def.’s Mot. for Summ. J., at 8-9.) The Plaintiff, however, has to show actual
knowledge. See Aetna Fin. Co., 171 Ga. App. at 319 (“Those decisions upon which
Mrs. Culpepper relies to support her contention that she could recover damages for a
wrongful attempted foreclosure require a knowing and intentional publication of
untrue and derogatory information concerning the debtor's financial condition.”). The
Defendant’s summary judgment motion should be granted as to the Plaintiff’s
wrongful foreclosure and wrongful attempted foreclosure claims.
B. Intentional Infliction of Emotional Distress
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Under Georgia law, a claim of intentional infliction of emotional distress
contains the following elements: “(1) The conduct must be intentional or reckless; (2)
The conduct must be extreme and outrageous; (3) There must be a causal connection
between the wrongful conduct and the emotional distress; and (4) The emotional
distress must be severe.” United Parcel Service v. Moore, 238 Ga. App. 376, 377
(1999). In order to be sufficiently extreme and outrageous, the conduct must “go
beyond all reasonable bounds of decency so as to be regarded as atrocious and utterly
intolerable in a civilized community.” Id. Actionable conduct generally does not
include “mere insults, indignities, threats, annoyances, petty oppressions, or other
vicissitudes of daily living.” Id. Whether reasonable persons could find that the
conduct reaches this level is a question of law for the court. See id.; Racette v. Bank
of America, N.A., 318 Ga. App. 171, 179 (2012) (“Whether a claim rises to the
requisite level of outrageousness and egregiousness to sustain a claim for intentional
infliction of emotional distress is a question of law.”).
First, the Plaintiff has no evidence that the Defendant intended to inflict
emotional distress, or that it was reckless as to the possibility. As explained earlier,
the Defendant had reason to believe it was collecting on an active loan. Consequently,
the Plaintiff’s claim fails as a matter of law. See Roddy v. Tanner Med. Ctr., Inc., 262
Ga. App. 202, 205 (2003) (“[T]he tort of ‘intentional infliction of emotional distress,’
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as its name implies, is reserved in Georgia for instances in which a defendant intended
to harm the plaintiff, or for those rare occasions in which the evidence shows such a
reckless disregard of the rights of others as to be equivalent to an intentional tort.”).
Second, the Defendant’s conduct was not extreme and outrageous. Although
it collected on a debt that had been satisfied, “[s]harp or sloppy business practices .
. . are not generally considered as going beyond all reasonable bounds of decency as
to be utterly intolerable in a civilized community.” United Parcel Service, 238 Ga.
App. at 377. In fact, far more egregious conduct has failed to satisfy the “extreme and
outrageous” requirement. See Cook v. Covington Credit of Georgia, Inc., 290 Ga.
App. 825, 828 (2008) (“[T]hreatening language in the context of collecting a debt does
not go beyond all bounds of decency and cannot be regarded as utterly intolerable in
a civilized community.”). The Defendant’s summary judgment request as to the
Plaintiff’s intentional infliction of emotional distress claim should be granted.
C. Fraudulent Misrepresentation
The Plaintiff claims that the Defendant fraudulently misrepresented to her that
it was the servicer of an unsatisfied loan for which she was obligated. “Under Georgia
law . . . the tort of fraud consists of five elements: (1) false representation by
defendant; (2) scienter; (3) intent to induce the plaintiff to act or refrain from acting;
(4) justifiable reliance by the plaintiff; and (5) damage to the plaintiff.” Next Century
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Commc'ns Corp. v. Ellis, 318 F.3d 1023, 1027 (11th Cir. 2003) (internal quotation
marks omitted).
Here, the Plaintiff’s claim fails. First, she cannot establish the scienter element.
“Scienter for fraud purposes may be shown by a . . . reckless representation.” Avery
v. Chrysler Motors Corp., 214 Ga. App. 602, 604 (1994). When attempting to satisfy
the scienter requirement through a showing of recklessness, however, the Plaintiff
must also show that the Defendant had an intent to deceive. See Smiley v. S & J
Investments, Inc., 260 Ga. App. 493, 501 (2003) (“Hall and S & J had to know that
the representations were false when made or that the representation was recklessly
made with the intent to deceive for liability in fraud to attach.”); O.C.G.A. § 51-6-2
(“A fraudulent or reckless representation of facts as true when they are not, if intended
to deceive, is equivalent to a knowledge of their falsehood even if the party making
the representation does not know that such facts are false.”). As noted in the wrongful
foreclosure discussion, the Plaintiff has no evidence that the Defendant knew that the
2004 loan had been satisfied. Additionally, the Defendant was not reckless in
representing that it was servicing an active loan. The TBW records showed that it was
active. (Def.’s Mot. to Dismiss, Ex. J.) In response, the Plaintiff first reiterates her
argument that she put the Defendant on notice that RoundPoint was claiming to be the
servicer of her loan. (Pl.’s Mot. for Summ. J., at 3.) But then they had a conference
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call and all parties concluded that the Defendant was the true servicer. If anything, this
shows that the Defendant was not reckless. The Plaintiff then argues that a Title
Search Report requested by the Defendant revealed the 2009 deed. (Pl.’s Mot. for
Summ. J., at 3.) The Defendant points out – correctly – that even if it was aware of the
2009 deed, that does not mean the Defendant knew that the 2004 loan had been
satisfied. (Def.’s Reply in Supp. of its Mot. for Summ. J., at 5.) Even more, the
Plaintiff herself states that the cancellation of the 2004 deed was recorded in the
Superior Court of DeKalb County on December 1, 2010, months after the foreclosure
commenced.1 (Pl.’s Statement of Facts ¶ 9.)
Second, there is no justifiable reliance. “In order for a genuine issue of material
fact to exist as to justifiable reliance, there must be some evidence that [the Plaintiff]
exercised [her] duty of due diligence to ascertain the truth of the matter and to avoid
damage.” Wender & Roberts, Inc. v. Wender, 238 Ga. App. 355, 360 (1999). “Fraud
cannot be the basis of an action if it appears that the party alleging the fraud had equal
and ample opportunity to prevent it.” Martin v. Centre Pointe Investments, Inc., 310
Ga. App. 253, 257 (2011) (internal quotation marks omitted). “A party may fail to
exercise due diligence as a matter of law.” Wender, 238 Ga. App. at 360. The Plaintiff
1
Additionally, the Plaintiff admits that the Defendant did not intend to deceive
her. (Smith-Tyler Dep., at 111-12.) (“Q: Do you believe that Bank of America
intended to deceive you? A: No.”)
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could have uncovered that the Defendant was collecting on a satisfied debt. Unlike the
Defendant, the Plaintiff knew that she had refinanced her 2004 loan. She does not
argue that there was an information asymmetry that prevented her from discovering
the truth. Third, there are no damages. All of the money paid to the Defendant as a
result of its representation was returned with interest. (Def.’s Statement of Facts ¶ 39.)
The Defendant’s summary judgment request as to the Plaintiff’s fraudulent
misrepresentation claim should be granted.2
D. Negligence
The Plaintiff argues that the Defendant was negligent in collecting on a satisfied
debt. In Georgia, “[a] cause of action for negligence requires (1) [a] legal duty to
conform to a standard of conduct raised by the law for the protection of others against
unreasonable risks of harm; (2) a breach of this standard; (3) a legally attributable
causal connection between the conduct and the resulting injury; and, (4) some loss or
damage flowing to the plaintiff's legally protected interest as a result of the alleged
breach of the legal duty.” Dupree v. Keller Indus., Inc., 199 Ga. App. 138, 141 (1991)
(internal quotation marks omitted).
2
The Plaintiff also alludes to a negligent misrepresentation claim. The
conclusion regarding justifiable reliance applies to that claim as well. See Real Estate
Int'l, Inc. v. Buggay, 220 Ga. App. 449, 451 (1996) (“As the same principles apply to
both fraud and negligent misrepresentation . . . justifiable reliance is also an essential
element of a claim asserting negligent misrepresentation.”).
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This claim fails. To begin, the Plaintiff has not established a legal duty that was
breached by the act of collecting on a satisfied debt. There is no confidential
relationship giving rise to a duty between a lender and a borrower. See Baker v.
Campbell, 255 Ga. App. 523, 528 (2002) (“The Bank as lender and the Bakers as
borrowers had no fiduciary relationship and dealt at arm’s length.”); Pardue v.
Bankers First Fed. Sav. & Loan Ass’n, 175 Ga. App. 814 (1985) (“There is . . . no
confidential relationship between lender and borrower or mortgagee and mortgagor
for they are creditor and debtor with clearly opposite interests.”); Moore v. Bank of
Fitzgerald, 225 Ga. App. 122, 126 (1997) (“[T]he mere fact that one reposes trust and
confidence in another does not create a confidential relationship. In the majority of
business dealings, opposite parties have trust and confidence in each other’s integrity,
but there is no confidential relationship by this alone.”).
The Plaintiff argues, citing S & A Indus., Inc. v. Bank Atlanta, 247 Ga. App.
377, 382 (2000), that “[w]here one undertakes an act which he has no duty to perform
and another reasonably relies upon that undertaking, the act must generally be
performed with ordinary and reasonable care.” (Pl.’s Reply in Supp. of Mot. for
Summ. J., at 9) (emphasis added). As noted in the fraudulent misrepresentation
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discussion, the Plaintiff’s reliance on the Defendant’s statements was not reasonable.3
Cf. Pardue, 175 Ga. App. at 814 (“[E]ven if the bank had undertaken to advise
appellants on their taxability and had mislead appellants, they would not be entitled
to rely on any such representations but would be ‘under a duty to prosecute their own
inquiries’ concerning their tax liability.”). To be sure, this Court has previously found
that there is no duty to non-negligently service a loan. See Kynes v. PNC Mortg., No.
1:12-CV-4477-TWT, 2013 WL 4718294, at *11-12 (N.D. Ga. Aug. 30, 2013)
(negligence claim was dismissed because the plaintiff did not establish an independent
duty to not negligently service a loan.); Kin Chun Chung v. JPMorgan Chase Bank,
N.A., 1:11-CV-2131-TWT, 2013 WL 5354211, at *7 (N.D. Ga. Sept. 24, 2013) (no
independent duty to non-negligently service a loan). Even Georgia courts suggest that
such a duty does not exist. See Fielbon Dev. Co., LLC v. Colony Bank of Houston
Cnty., 290 Ga. App. 847, 856 (2008) (“While evidence existed that the bank may have
been negligent in managing and monitoring the loan . . . Fielbon failed to establish
that the bank owed the company any duty independent of [the] contract in connection
with the loan.”).
3
In addition, the Plaintiff’s claim is not that the Defendant undertook an act and
then negligently performed it. The Plaintiff’s claim is that the Defendant was
negligent because it undertook the act in the first place. Once more, the Plaintiff has
not established a predicate duty that the Defendant breached by servicing a satisfied
loan.
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Finally, the Plaintiff has not produced sufficient evidence to show damages. As
noted, the Defendant returned the money it was paid along with interest. (Def.’s
Statement of Facts ¶ 39.) The Plaintiff argues that the alleged negligence also forced
her to file for bankruptcy, thus causing economic harm. There is no evidence to show
proximate causation. She admits that she was having financial issues independent of
any mortgage obligations. (Pl.’s Resp. to Def.’s Statement of Facts ¶ 30.) The mere
possibility of causation is insufficient to create a genuine issue of fact. See Barrett
Properties, LLC v. Roberts Capitol, Inc., 316 Ga. App. 507, 509 (2012) (“A mere
possibility of such causation is not enough; and when the matter remains one of pure
speculation or conjecture, or the probabilities are at best evenly balanced, it becomes
the duty of the court to grant summary judgment for the defendant.”). The Defendant’s
summary judgment motion should be granted as to the Plaintiff’s negligence claim.
IV. Conclusion
For these reasons, the Court DENIES the Plaintiff’s Motion for Summary
Judgment [Doc. 64] and GRANTS the Defendant’s Motion for Summary Judgment
[Doc. 65].
SO ORDERED, this 16 day of January, 2014.
/s/Thomas W. Thrash
THOMAS W. THRASH, JR.
United States District Judge
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