Vieira v. CitiGroup, Inc. et al

Filing 39

ORDER granting 24 Motion to Dismiss for Failure to State a Claim, granting 7 Motion to Dismiss for Failure to State a Claim; Pendergast & Associates, P.C. and Worthmoore Realty are DISMISSED. Signed by Judge Thomas W. Thrash, Jr on 12/11/12. (dr)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
J. KIRBY VIEIRA,
Plaintiff,
v.

CIVIL ACTION FILE
NO. 1:12-CV-1636-TWT

CITIGROUP, INC., et al.,
Defendants.

ORDER

This is an action for wrongful foreclosure.

It is before the Court for

jurisdictional review in light of the allegations of fraudulent joinder in the Notice of
Removal. The action is also before the Court on Defendant Pendergast’s Motion to
Dismiss [Doc. 7] and Defendant Pendergast’s Motion to Dismiss Plaintiff’s Amended
Complaint [Doc. 24]. For the reasons set forth below, Defendant Worthmoore Realty,
LLC is DISMISSED from the action, and Pendergast’s Motion to Dismiss [Doc. 7]
and Motion to Dismiss Plaintiff’s Amended Complaint [Doc. 24] are GRANTED.
I. Background
This dispute arises from property located at 3623 Cochise Dr., NW, Cobb
County, Atlanta, Georgia 30339 (the “Property”). The Plaintiff purchased the
Property on April 28, 2006, after obtaining a mortgage from Primary Capital
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Advisors, LC. (Compl. ¶¶ 24-31).1 At closing, the Plaintiff executed a promissory
note in the amount of $1,473,500. (Compl. ¶¶ 26, 28). At the same time, the Plaintiff
executed and delivered a security deed (the “Security Deed”) to Mortgage Electronic
Registration Systems, Inc. (“MERS”), as nominee for Primary Capital. (Compl. ¶¶
29-31; Ex. C). The Security Deed was duly recorded. (Compl. Ex. C). On July 21,
2011, MERS assigned its interest in the Property to Defendant CitiMortgage, Inc.
(Compl. ¶ 50). In February 2012, CitiMortgage instituted a non-judicial foreclosure
of the Property. (Compl. ¶ 52). Defendant Pendergast & Associates, P.C., a law firm,
represented CitiMortgage in connection with the foreclosure. (Compl. ¶ 20).
The Plaintiff filed a complaint on April 9, 2012, in Cobb County Superior Court
against CitiGroup, Inc., CitiMortgage, MERS, Pendergast, and Worthmoore Realty,
LLC. The complaint was removed to this Court on May 9, 2012. [Doc. 1]. The
Plaintiff filed an emergency motion for a temporary restraining order on May 9 and
then withdrew the motion on May 16. [Docs. 3, 6]. Pendergast filed a motion to

1

The Plaintiff’s initial complaint was amended with supplements to 28
paragraphs in the initial complaint. [Doc. 14]. In this Order, citations to the complaint
refer to the complaint as amended.
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dismiss on May 16, 2012, the Plaintiff amended his complaint on October 5, 2012,
and Pendergast filed a renewed motion to dismiss on October 17, 2012.2
The complaint sets forth seven causes of action. The first cause of action
requests a declaratory judgment that the foreclosure initiated by Defendant
CitiMortgage was unlawful. (Compl. ¶¶ 81-85). The second seeks injunctive relief
preventing the Defendants from continuing foreclosure activities. (Id. ¶¶ 86-90). The
third cause of action seeks cancellation of the allegedly fraudulent assignment from
MERS to CitiMortgage. (Id. ¶¶ 91-99). The fourth cause of action is for slander of
title following the allegedly unlawful foreclosure listings. (Id. ¶¶ 100-106). The fifth
cause of action seeks to quiet title, and the sixth alleges wrongful attempted
foreclosure. (Id. ¶¶ 107-121). The seventh cause of action alleges negligence “with
respect to all issues related to the Note and the Security Deed.” (Id. ¶¶ 122-129).
Defendant Pendergast has filed a motion to dismiss under Rule 12(b)(6). (See
Def. Pendergast’s Br. in Supp. of Def. Pendergast’s Mot. to Dismiss, at 1). However,
before the Court can address the motion to dismiss, it is obligated to inquire into its
own jurisdiction. Defendants CitiMortgage, Inc., CitiGroup, Inc., and MERS removed

2

Defendants CitiGroup, Inc., CitiMortgage, Inc. and Mortgage Electronic
Registration Systems, Inc. filed a motion for summary judgment on September 26,
2012 [Doc. 22]. The Plaintiff filed a cross motion for summary judgment on October
17, 2012 [Doc. 26]. These motions are not the subject of this Order.
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this case from the Cobb County Superior Court on May 9, 2012 [Doc. 1]. The
Defendants alleged diversity jurisdiction because they contended the two resident
Defendants, Pendergast and Worthmoore Realty, were fraudulently joined by the
Plaintiff in order to prevent removal. (See Notice of Removal, at 6-15). The Plaintiff
did not file a motion to remand and has not otherwise responded to the allegations of
fraudulent joinder. The Court concludes that both Worthmoore and Pendergast were
fraudulently joined and should be dismissed from the action.
II. Applicable Legal Standard
In a removal case alleging fraudulent joinder, the removing party has the burden
of proving that either: (1) there is no possibility the plaintiff can establish a cause of
action against the resident defendant; or (2) the plaintiff has fraudulently pled
jurisdictional facts to bring the resident defendant into state court. Pacheco de Perez
v. AT&T Co., 139 F.3d 1368, 1380 (11th Cir. 1998); Crowe v. Coleman, 113 F.3d
1536, 1538 (11th Cir. 1997). The burden of establishing fraudulent joinder is a heavy
one.

Id. Where a plaintiff states even a colorable claim against the resident

defendant, joinder is proper, and the case should be remanded to state court. Id.
Indeed, if there is even a possibility that a state court would find that the complaint
states a cause of action against any one of the resident defendants, the federal court
must find that joinder was proper and remand the case to state court. Crowe, 113 F.3d

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at 1538. In making its determination, the district court must evaluate factual
allegations in the light most favorable to the plaintiff and resolve any uncertainties
about the applicable law in the plaintiff's favor. Pacheco de Perez, 139 F.3d at 1380.
III. Discussion
A. Defendant Worthmoore Realty, LLC
Here, despite the high standard, the Court concludes that Defendant
Worthmoore was fraudulently joined. First, it is not entirely clear that the Plaintiff is
actively pursuing a claim against Worthmoore. Worthmoore has not entered any
filings on the docket and does not have an attorney listed, yet the Plaintiff has not
moved for default. Pendergast argues in its motion to dismiss that it has never had any
professional relationship with Worthmoore, and the Plaintiff does not address this
argument in his responsive brief. (See Def. Pendergast’s Br. in Supp. of Mot. to
Dismiss, at 19; Pl’s. Resp. in Opp. to Def. Pendergast’s Mot. to Dismiss). Second, the
complaint is almost completely devoid of substantive allegations against Worthmoore.
The complaint includes Worthmoore in the caption and lists Worthmoore as a party.
(Compl. ¶ 6).

The only other mention of Worthmoore is an allegation that

“Pendergast employed Worthmoore Realty to place signage in furtherance of the ‘debt
collection’ process upon the subject property.” (Compl. ¶ 20). This single statement
is insufficient to establish a colorable claim against Worthmoore. Further, the

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Plaintiff’s conclusory allegations that the “Defendants” are liable or responsible do
not provide sufficient facts to state a claim against Worthmoore. (See, e.g., Compl.
¶ 124 (“Defendants committed tortious and unconscionable acts towards Plaintiff,
continuing up to the present time.”); RDT Living Trust v. CitiMortgage, Inc., No.
1:10-cv-3784-WSD, slip op. at 5 (N.D. Ga. Mar. 29, 2011) (concluding that defendant
was fraudulently joined when plaintiff’s allegations against the defendant were only
“vague, non-specific allegations” that all defendants were acting in concert). When
the Plaintiff has not provided enough facts to even dispute the Defendants’ claims of
fraudulent joinder, the Court cannot resolve uncertainties in the Plaintiff’s favor.
See Legg v. Wyeth, 428 F.3d 1317, 1323 (11th Cir. 2005) (“[T]here must be some
question of fact before the district court can resolve that fact in the plaintiff’s favor.”).
Based on the pleadings, there is no possibility that the Plaintiff could establish a cause
of action against Defendant Worthmoore. See Brown v. Allstate Ins. Co., 17 F. Supp.
2d 1134, 1137 (S.D. Cal. 1998) (concluding that defendants were fraudulently joined
when there were no material allegations made against them). Accordingly, the Court
concludes that Defendant Worthmoore was fraudulently joined and should be
dismissed from the action.

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B. Defendant Pendergast & Associates, P.C.
Pendergast has filed a motion to dismiss under 12(b)(6). Before the Court can
consider a motion to dismiss on the merits, it must inquire into its own jurisdiction.
For the reasons set forth below, the Court concludes that the Plaintiff cannot establish
a claim against Pendergast under any of the causes of action enumerated in the
complaint.
1. The Assignment From MERS to CitiMortgage
The Plaintiff’s factual allegations focus upon the assignment of the Security
Deed from MERS to CitiMortgage on July 21, 2011. The Plaintiff argues that the
assignment was fraudulent and that this rendered the Defendants’ subsequent conduct
unlawful. Unfortunately for the Plaintiff, the documents the Plaintiff executed as well
as the precedent in this district indicate that the assignment from MERS to
CitiMortgage was not fraudulent.3
The language in the Security Deed specifically authorized the assignment from
MERS to CitiMortgage. The deed states:

3

Several courts have held that plaintiffs in this situation do not have standing
to challenge the assignment because they were a third party to the assignment. See,
e.g., Woodberry v. Bank of America, N.A., No. 1:11-cv-3637-TWT, 2012 WL 113658
(N.D. Ga. Jan. 12, 2012). Because the Court concludes that the assignment at issue
was valid, it need not determine whether the Plaintiff here has standing to challenge
the assignment.
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Borrower does hereby grant and convey to MERS (solely as nominee for
Lender and Lender’s successors and assigns) and to the successors and
assigns of MERS, with power of sale, the [Property]. ... Borrower
understands and agrees that MERS holds only legal title to the interests
granted by Borrower in this Security Instrument, but, if necessary to
comply with law or custom, MERS (as nominee for Lender and Lender’s
successors and assigns) has the right: to exercise any or all of those
interests, including, but not limited to, the right to foreclose and sell the
Property.
(Compl. Ex. C, at 3). The Security Deed unequivocally permits MERS to assign its
interest in the Property. See id. (“to the successors and assigns of MERS”) (emphasis
supplied); Gordon v. South Cent. Farm Credit, ACA, 213 Ga. App. 816, 817 (1994)
(“[I]t is clear that a security deed which includes a power of sale is a contract and its
provisions are controlling as to the rights of the parties thereto and their privies.”)
(quoting Druid Assoc. v. Nat’l Income Realty Trust, 210 Ga. App. 684, 685 (1993)).
There is nothing in the Security Deed or the other transaction documents to suggest
that the assignment from MERS to CitiMortgage was invalid or even impermissible.
In Crutcher v. CitiMortgage, Inc., No. 1:12-cv-00455-JOF (N.D. Ga. Sep. 20,
2012), the court concluded that a similar assignment from MERS to CitiMortgage was
valid. The Court noted that the security deed at issue stated “that MERS is a ‘grantee’
and nominee for the ‘Lender and Lender’s successors and assigns.’” Id., slip op. at
13. Likewise, the deed stated that “MERS has the power of sale and the right to
exercise any or all of Lender’s and Lender’s successors and assigns’ interests,

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including, but not limited to, the right to foreclose and sell the Property.” Id. (internal
quotation marks omitted). This language is nearly identical to the language in the
Security Deed here. (See Compl. Ex. C, at 3). Accordingly, the weight of authority
in this district suggests that the assignment from MERS to CitiMortgage is valid.
This holding is in line with numerous other cases addressing the Plaintiff’s
arguments with respect to assignments from MERS. See, e.g., Woodberry v. Bank of
America, N.A., No. 1:11-cv-3637-TWT, 2012 WL 113658 (N.D. Ga. Jan. 12, 2012);
LaCosta v. McCalla Raymer, LLC, No. 1:10-cv-1171, 2011 WL 166902 (N.D. Ga.
Jan. 18, 2011); Nicholson v. OneWest Bank, No. 1:10-cv-0795, 2010 WL 2732325
(N.D. Ga. Apr. 20, 2010) (report and recommendation). Indeed, the Plaintiff has not
provided and the Court has not located any case holding that an assignment from
MERS based on what is apparently standard language in its security deeds was
fraudulent. The Court concludes the assignment was not fraudulent. Accordingly,
there is no possibility that the Plaintiff can establish a cause of action against
Pendergast seeking the cancellation of a fraudulent assignment.
2. Declaratory Judgment
The first cause of action for a declaratory judgment appears to have no
allegations associated with Defendant Pendergast.

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(See Compl. ¶¶ 81-85).

Accordingly, there is no possibility that the Plaintiff can establish a cause of action for
a declaratory judgment against Pendergast.
3. Injunctive Relief
The Plaintiff seeks injunctive relief in the form of temporary and permanent
injunctions to prevent the Defendants from continuing the foreclosure process. To
prevail on the motion for preliminary injunction, the Plaintiff must show: (1) a
substantial likelihood of success on the merits; (2) a substantial threat of irreparable
injury if the injunction is not issued; (3) that the injury to the movant outweighs the
injury to the nonmoving party; and (4) that the injunction is in the public interest.
Cuban American Bar Ass’n v. Christopher, 43 F.3d 1412, 1414 (11th Cir.), cert.
denied, 115 S. Ct. 2578 (1995). A preliminary injunction is an extraordinary and
drastic remedy not to be granted until the movant clearly carries the burden of
persuasion as to the four prerequisites.
Here, as noted above, the assignment from MERS to CitiMortgage was not
fraudulent. Many of the Plaintiff’s claims rely on the Plaintiff’s allegation that the
assignment was fraudulent. Therefore, the Plaintiff has not shown a substantial
likelihood of success on the merits because the Court has rejected his primary
contention – that the assignment was invalid. Accordingly, the Plaintiff cannot

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possibly establish a claim against Defendant Pendergast with respect to injunctive
relief.
4. The Plaintiff’s Claim for Slander of Title
The Plaintiff contends that the Defendants slandered the title to the Property by
publishing the notice of foreclosure sale despite the allegedly fraudulent assignment.
To state a claim for slander of title, a plaintiff must allege: (1) publishing of
slanderous words; (2) that such words were false; (3) that the plaintiff sustained
special damages; and (4) that the plaintiff possessed an estate in the property
slandered. Joseph v. Federal Home Loan Mortg. Corp., No. 1:12-CV-01022-RWS,
2012 U.S. Dist. LEXIS 159355, at *20 (N.D. Ga. Nov. 5, 2012) (citing Latson v.
Boaz, 278 Ga. 113 (2004)).
Here, the Plaintiff has not pled sufficient facts to state a colorable claim for
slander of title.

Although the complaint states that Pendergast published the

foreclosure notice letter, prepared a notice of default, notice of sale, and notice of
acceleration, and placed notices of sale of the Property in the Marietta Daily Journal,
(Compl. ¶¶ 68, 112, 114), these allegations do not indicate that the words published
were false, let alone that the Plaintiff sustained special damages. Because the Court
has concluded the assignment from MERS to CitiMortgage was valid, and because the
Plaintiff has failed to plead any facts suggesting that Pendergast’s publications

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associated with its representation of CitiMortgage were otherwise false, the Plaintiff
cannot establish a cause of action against Pendergast for slander of title.
5. The Plaintiff’s Claim for Wrongful Attempted Foreclosure
To show wrongful attempted foreclosure, the Plaintiff must establish “a
knowing and intentional publication of untrue and derogatory information concerning
the debtor's financial condition, and that damages were sustained as a direct result of
this publication.” Aetna Finance Co. v. Culpepper, 171 Ga. App. 315, 319 (1984). As
discussed above, because the assignment from MERS to CitiMortgage was valid, there
is no indication that Pendergast published false information, let alone that it published
false information knowingly and intentionally. The Plaintiff’s allegations against
Pendergast only state that Pendergast prepared foreclosure documents and published
a notice of foreclosure. (See Compl. ¶¶ 68, 112-115). Indeed, the Plaintiff has not
pled any facts suggesting that Pendergast – in representing its client, CitiMortgage –
knowingly or intentionally published any untrue information. Accordingly, there is
no possibility that the Plaintiff can establish a claim against Pendergast for wrongful
attempted foreclosure.
6. The Plaintiff’s Claim to Quiet Title
There is no indication from the Plaintiff’s complaint, the amendments to the
Plaintiff’s complaint, or from the Plaintiff’s responsive briefs that Pendergast is

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implicated in any way in the Plaintiff’s claim to quiet title. Accordingly, the Court
concludes that the Plaintiff has not stated a colorable claim against Pendergast to quiet
title.
7.

The Plaintiff’s Claims of Wrongful Foreclosure and Negligence,
and for Expenses of Litigation

The Plaintiff’s claims against Pendergast for wrongful foreclosure and
negligence are not colorable claims that a state court would even consider because the
Plaintiff has not shown that Pendergast owed him a duty. “[A] plaintiff asserting a
claim of wrongful foreclosure [must] establish a legal duty owed to it by the
foreclosing party, a breach of that duty, a causal connection between the breach of that
duty and the injury it sustained, and damages.” Brown v. Federal Nat’l Mort. Ass’n,
No. 10-CV-03289, 2011 U.S. Dist. LEXIS 31478, at *16 (N.D. Ga. Feb. 28, 2011)
(quoting Gregorakos v. Wells Fargo Nat'l Ass'n, 285 Ga. App. 744, 747-48 (2007)).
Here, Pendergast is not the foreclosing party, CitiMortgage is. The Plaintiff’s
complaint even recognizes this by alleging that Pendergast “prepared a foreclosure
notice letter, on behalf of CitiMortgage.” (Compl. ¶ 113). The Plaintiff has not
alleged any duty owed to him by Pendergast, and typically a law firm owes no duty
to its clients’ adversary. See McKenna Long & Aldridge, LLP v. Keller, 267 Ga.
App. 171 (2004). Accordingly, there is no possibility that the Plaintiff can establish
a claim against Pendergast for wrongful foreclosure.
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Likewise, the claims against Pendergast for negligence are not colorable
because the Plaintiff has not shown that Pendergast owed him a duty. To state a cause
of action for negligence under Georgia law, the plaintiff must prove the following: (1)
a legal duty to conform to a standard of conduct; (2) a breach of that duty; (3) a legally
attributable causal connection between the conduct and the resulting injury; and (4)
some loss or damage resulting from the alleged breach of duty. Dawkins v. Doe, 263
Ga. App. 737, 738 (2003). Here, as discussed, the Plaintiff has not shown that
Pendergast owed him any duty. In the absence of such a showing, the Court
concludes Pendergast owed no duty to the Plaintiff. See McCarter v. Bankers Trust
Co., 247 Ga. App. 129, 132 (2000) (concluding that law firm for lender had no duty
to mortgagor when lender had right to foreclose). Accordingly, the Court concludes
the Plaintiff cannot establish a claim against Defendant Pendergast for negligence.
“Reviewing the lawsuit as a whole, it is clear that the Plaintiff[’s] dispute is
with CitiMortgage and MERS, not Pendergast.” RDT Living Trust, No.1:10-cv-3784WSD, slip op. at 5. The Court concludes that the Plaintiff cannot sustain any
colorable claims against Defendant Pendergast. Accordingly, the Court concludes that
Pendergast was fraudulently joined in order to defeat diversity jurisdiction and should
be dismissed.

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IV. Conclusion
For the reasons set forth above, Pendergast’s Motion to Dismiss [Doc. 7] and
Motion to Dismiss Plaintiff’s Amended Complaint [Doc. 24] are GRANTED.
Additionally, Defendant Worthmoore Realty, LLC is DISMISSED.
SO ORDERED, this 11 day of December, 2012.

/s/Thomas W. Thrash
THOMAS W. THRASH, JR.
United States District Judge

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