Diaz et al v. CT Corporation et al

Filing 14

ORDER granting Defendant's 8 Motion for Summary Judgment with regard to all of Plaintiffs' claims and Defendant's counterclaim. The Clerk shall enter judgment in favor of Defendant and against Plaintiffs in the sum of $131,891.88, plus costs of this action. Signed by Judge Richard W. Story on 2/27/13. (cem)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
ARMANDO DIAZ and
GERARDO MIRELES,
Plaintiffs,
v.
JPMORGAN CHASE BANK,
Defendant.

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CIVIL ACTION NO.
1:12-CV-1556-RWS

ORDER
This case comes before the Court on Defendant’s Motion for Summary
Judgment [8]. After reviewing the record, the Court enters the following Order.
Background
On or about November 12, 2002, Plaintiff Armando Diaz (“Diaz”)
executed a promissory note payable to Northpoint Capital, Inc. in the principal
amount of $133,750.00 (“Note”). ([9] at 4-7.) Diaz also executed a Security
Deed on property located at 4559 Iroquois Trail, Duluth, Georgia 30096
(“Property”) in favor of Northpoint Capital to secure the Note (“Security
Deed”) [8-2].

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The Note states that the Lender may transfer the Note, and anyone who
takes the Note by transfer is entitled to receive payments under the Note as the
“Note Holder.” (Note, Dkt. [9] at 4, ¶ 1.) Further, the Security Deed grants
Northpoint Capital the right to sell the Note one or more times without prior
notice to Diaz. (Security Deed, Dkt. [8-2] ¶ 20.) The Allonge to Mortgage
Note ([9] at 7) shows that the Note was transferred to Chase Manhattan
Mortgage Corporation (“Chase Manhattan”). On November 12, 2002, Diaz
executed a document acknowledging that the Note had been transferred to
Chase Manhattan (“Acknowledgment”). ([8-5] at 4-5.) On the same date,
Northpoint Capital transferred, conveyed and assigned to Chase Manhattan all
of its rights, title and interest in and to the Security Deed. (Assignment, Dkt.
[8-3].) In the Security Deed, Diaz “grant[ed] and convey[ed] to Lender and
Lender’s successors and assigns, with power of sale.” (Security Deed, Dkt. [82] at 3.)
Chase Manhattan merged with Chase Home Finance, LLC (“CHF”) on
January 1, 2005. CHF then merged with JPMorgan on May 1, 2011. (Affidavit
of Dawn McDuffie, Dkt. [8-6] ¶ 5.) As a result of the mergers, JPMorgan
became the servicer of the loan and holder of the original Note. (Id. ¶ 6.)
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JPMorgan was in continuous possession of the original Note until it forwarded
the Note to its counsel of record in this action, Stephen V. Kern at the law firm
of Kitchens Kelley Gaynes, P.C., for use in this litigation. (Id. ¶ 7.) Mr. Kern
has been in continuous possession of the Note since that time. (Affidavit of
Stephen V. Kern, Dkt. [9] ¶¶ 2-3.)
Diaz’s loan is more than nine months in arrears. (Affidavit of Ashley L.
Nauman, Dkt. [8-5] ¶ 6.) All principal, interest and other charges due and
payable under the Note have been accelerated and are now due. (Affidavit of
Dawn McDuffie, Dkt. [8-6] ¶ 9.)
By quitclaim deed dated September 29, 2008 [8-4], Diaz transferred the
Property to Plaintiff Gerardo Mireles (“Mireles”). JPMorgan did not give Diaz
written consent to transfer the Property. (Affidavit of Dawn McDuffie, Dkt. [86] ¶ 11.) Paragraph 18 of the Security Deed provides: “If all or any part of the
Property or any Interest in the Property is sold or transferred...without Lender’s
prior written consent, Lender may require immediate payment in full of all
sums secured by this Security Instrument.” ([8-2] at 11.)
A foreclosure sale of the Property was scheduled for April 3, 2012. But
the sale has not yet occurred due to the filing of this litigation. (Affidavit of
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Dawn McDuffie, Dkt. [8-6] ¶ 12.)
In their Complaint, Plaintiffs seek a temporary restraining order enjoining
Defendant from “either delivering the Deed Under Power of Sale relating to the
Future Foreclosure Sale and/or from conveying, transferring, selling, disposing
or other executing or delivering to any third party any document concerning the
Plaintiff’s Residence” or “the Plaintiff Business pending the final outcome of
issues raised in Plaintiff Complaint.” (Complaint, Dkt. [1-1], Count I and
Count II, ¶¶ 8-11.) Plaintiff also asks the Court to set aside or annul the
foreclosure sale, or cancel any rescheduling of the sale (Id., Count III, ¶¶ 1213.) Count Four asserts a claim for wrongful foreclosure and Count Five
includes a claim for breach of contract. (Id. ¶¶ 14-23.) Finally, Count VI seeks
attorney’s fees. (Id. ¶¶ 24-26.)
Defendant asserts a counterclaim against Plaintiff Diaz for the full
amount due under the Note as of the date of the judgment, including principal in
the amount of $117,259.41, plus interest calculated through June 1, 2012 in the
amount of $5,957.91, plus additional interest at a per diem rate of $21.89 from
June 2, 2012 through the date of entry of judgment, plus corporate advances,
escrow advances, insurance and fees in the amount of $2,581.68, plus late
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charges in the amount of $138.80, and any further relief deemed just and proper
by the Court. (Answer and Counterclaim, Dkt. [4] at 9-12.)
Defendant now moves the Court to dismiss all of Plaintiffs’ claims and
grant summary judgment on Defendant’s counterclaim. Plaintiffs have not filed
a response to Defendant’s motion.1 Therefore, the motion is deemed unopposed
under LR 7.1B.
Discussion
I.

Summary Judgment - Legal Standard
Federal Rule of Civil Procedure 56 requires that summary judgment be

granted “if the movant shows that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.” “The moving
party bears ‘the initial responsibility of informing the . . . court of the basis for
its motion, and identifying those portions of the pleadings, depositions, answers
to interrogatories, and admissions on file, together with the affidavits, if any,
which it believes demonstrate the absence of a genuine issue of material fact.’”
Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256, 1259 (11th Cir. 2004)

1

The Court notes that Plaintiffs attached two sworn affidavits to their
Complaint. (See Dkt. [1-1] at 9-14.) The Court has reviewed those documents, but
they do not impact the Court’s analysis or decision on summary judgment.
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(quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). Where the
moving party makes such a showing, the burden shifts to the non-movant, 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).
The applicable substantive law identifies which facts are material. Id. at
248. A fact is not material if a dispute over that fact will not affect the outcome
of the suit under the governing law. Id. An issue is genuine when the evidence
is such that a reasonable jury could return a verdict for the non-moving party.
Id. at 249-50.
Finally, in resolving a motion for summary judgment, the court must
view all evidence and draw all reasonable inferences in the light most favorable
to the non-moving party. Patton v. Triad Guar. Ins. Corp., 277 F.3d 1294, 1296
(11th Cir. 2002). But, the court is bound only to draw those inferences which
are reasonable. “Where the record taken as a whole could not lead a rational
trier of fact to find for the non-moving party, there is no genuine issue for trial.”
Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir. 1997) (quoting
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)).
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“If the evidence is merely colorable, or is not significantly probative, summary
judgment may be granted.” Anderson, 477 U.S. at 249-50 (internal citations
omitted); see also Matsushita, 475 U.S. at 586 (once the moving party has met
its burden under Rule 56(a), the nonmoving party “must do more than simply
show there is some metaphysical doubt as to the material facts”).
II.

Analysis
A.

Plaintiffs’ Claims

Defendant moves for summary judgment on all of Plaintiffs’ claims. The
Court first addresses the motion with regard to Plaintiffs’ substantive claims
(Count IV for wrongful foreclosure and Count V for breach of contract related
to wrongful foreclosure), and then addresses Plaintiffs’ prayers for relief
(Counts I, II, III, and VI).
1.

Wrongful Foreclosure and Breach of Contract

Defendant argues that Plaintiffs’ wrongful foreclosure and breach of
contract claims fail as a matter of law because no foreclosure sale has occurred
and Defendant has the right to initiate foreclosure proceedings against the
Property. (Brief in Support of JPMorgan Chase Bank, N.A.’s Motion for

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Summary Judgment (“Def.’s MSJ Br.”), Dkt. [8-1] at 8.) The Court agrees with
Defendant.
In support of these claims, Plaintiffs appear to allege that the Security
Deed was improperly assigned to Defendant. (Id. ¶¶ 15, 22.) However, under
O.C.G.A. § 14-2-1106(a)(2), “[t]he title to all real estate and other property
owned by, and every contract right possessed by, each corporation or entity
party to the merger is vested in the surviving corporation or entity without
reversion or impairment, without further act or deed, and without any
conveyance, transfer, or assignment having occurred.” Here, by their explicit
terms, the Note and the Security Deed were transferable. Northpoint Capital
transferred the Note ([1-2] at 4) and assigned the Security Deed ([8-3]) to Chase
Manhattan. JPMorgan became successor-by-merger to Chase Manhattan and is
now the proper holder of the Note and the Security Deed. (See Def.’s MSJ Br.,
Dkt. [8-1] at 8-9.) Therefore, Defendant has the right to foreclose on the
Property under those contracts. (See Security Deed, Dkt. [8-2] at 3 (granting
Lender and its successors and assigns the power of sale).)
Moreover, Defendant argues, Plaintiff Diaz breached his obligations
under the Note and Security Deed by failing to make payments on the mortgage
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loan and by conveying the Property to Plaintiff Mireles in violation of
Paragraph 18 of the Security Deed (“due-on-sale clause”). Plaintiffs do not
dispute any of these allegations. Therefore, the Court agrees that Defendant is
entitled to foreclose on the Property. (See id. at 3-4, ¶ 1, and 11, ¶ 18).
Accordingly, Counts IV and V are DISMISSED.
3.

Injunctive Relief and Attorney’s Fees

To receive injunctive relief (Counts I, II, and III), Plaintiffs must show,
among other things, a likelihood of success on the merits of the underlying case.
Johnson & Johnson Vision Care, Inc. v. 1-800 Contacts, Inc., 299 F.3d 1242,
1246 (11th Cir. 2002). Because the Court has dismissed Plaintiffs’ substantive
claims, Plaintiffs cannot satisfy this requirement for injunctive relief. Therefore,
Plaintiffs’ requests in Counts I, II, and III2 are DENIED.
In Georgia, the general rule is that attorney’s fees are not available unless
authorized by statute or contract. Vie v. Wachovia Bank, N.A., 2012 WL
1156387, at *5 (N.D. Ga. Apr. 6, 2012) (citing O’Conner v. Bielski, 701 S.E.2d

2

The Court notes that Plaintiffs’ request in Count III to set aside or annul the
foreclosure sale is moot because no sale has occurred. Further, because the Court
concluded in Part II.A.1, supra, that Defendant is entitled to foreclose on the Property,
the Court will not enjoin Defendant from rescheduling the sale.
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856, 858 (Ga. 2010)). Plaintiffs do not allege that any contract authorized
attorney’s fees. The statutes identified by Plaintiffs, O.C.G.A. § 13-6-11 and §
9-15-14, also do not authorize attorney’s fees in this case.
Under O.C.G.A. § 13-6-11, expenses of litigation are generally not
allowed as part of the damage, “but where the plaintiff has specially pleaded
and has made prayer therefor and where defendant has acted in bad faith, has
been stubbornly litigious, or has caused the plaintiff unnecessary trouble and
expense, the jury may allow them.” Plaintiffs have not alleged any facts or
presented any evidence to satisfy the statute’s standard for recovering attorney’s
fees. Plaintiffs’ conclusory assertions that Defendant acted in bad faith and has
been stubbornly litigious are insufficient. See Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 257 (1986) (Plaintiffs must go beyond the pleadings and present
affirmative evidence to show that a genuine issue of material fact does exist).
O.C.G.A. § 9-15-14(a) allows recovery of attorney’s fees when a party
“has asserted a claim, defense, or other position with respect to which there
existed such a complete absence of any justiciable issue of law or fact that it
could not be reasonably believed that a court would accept the asserted claim,
defense, or other position.” Given the Court’s finding that Defendant is entitled
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to foreclose on the Property, Plaintiffs cannot recover attorney’s fees on the
basis that Defendant raised a defense or position lacking substantial
justification. Therefore, Plaintiffs’ request for attorney’s fees is DENIED.
B.

Defendant’s Counterclaim

Defendant also moves for summary judgment on its counterclaim against
Plaintiff Diaz. Defendant alleges that Diaz defaulted on his monetary
obligations under the Note and when he conveyed his interest in the Property to
Plaintiff Mireles, he violated the due-on-sale clause of the Security Deed.
(Def.’s MSJ Br., Dkt. [8-1] at 13-14; see also Answer and Counterclaim, Dkt.
[4] at 8-12.) Consequently, Defendant asserts, all principal, interest and other
charges due and payable under the Note have been accelerated and are now due.
(Id. at 14.) Plaintiffs have not filed an answer to Defendant’s counterclaim.
The Security Deed gives the Lender the authority to “require immediate
payment in full of all sums secured by [the] Security Instrument” in the event
the Borrower sells or transfers the Property or any interest therein without the
Lender’s prior written consent. (Security Deed, Dkt. [8-2] at 11, ¶ 18.) The
Security Deed also allows the Lender to accelerate all amounts due under the
Note following the Borrower’s breach of any covenant or agreement under the
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Deed (e.g., failure to make payments), if proper notice is provided to the
Borrower. (Id. at 13, ¶ 22.) It is undisputed that Diaz conveyed the Property to
Mireles without written consent from Defendant. It is also undisputed that
Plaintiff Diaz is in default on the loan payments.
The record shows that Chase Manhattan, Defendant’s predecessor in
interest, complied with the notice requirements for acceleration under Paragraph
22 of the Security Deed. (See Acceleration Warning (Notice of Intent to
Foreclose), Dkt. [8-5] at 34-37.) On November 28, 2011, Chase Manhattan sent
a letter to Diaz informing him that he was in default under the loan, specifying
the action required to cure the default, providing the date by which the default
needed to be cured, and warning that if Diaz failed to cure by the specified date,
Chase Manhattan would accelerate the maturity of the loan, declare all sums
due, and commence foreclosure proceedings. (Id. at 34-35.) Under Paragraph
22 of the Security Deed, when Diaz failed to cure his default by the date
specified, the Lender was entitled to “require immediate payment in
full...without further demand” and “invoke the power of sale granted by
Borrower.” (Security Deed, Dkt. [8-2] at 13, ¶ 22.) Plaintiffs have not
challenged the sufficiency of this notice regarding acceleration.
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Therefore, Defendant has demonstrated its right to receive payment in
full. Plaintiffs have failed to show any material factual dispute as to this issue.
Consequently, Defendant’s motion for summary judgment on its counterclaim
is GRANTED.
Conclusion
Based on the foregoing, Defendant’s Motion for Summary Judgment [8]
is GRANTED with regard to all of Plaintiffs’ claims and Defendant’s
counterclaim. The Clerk shall enter judgment in favor of Defendant and against
Plaintiffs in the sum of $131,891.88, plus costs of this action.
SO ORDERED, this 27th day of February, 2013.

________________________________
RICHARD W. STORY
United States District Judge

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