Freeman v. Wells Fargo Bank, N.A.

Filing 15

ORDER granting Defendant's 3 Motion to Dismiss. Signed by Judge Richard W. Story on 6/11/2013. (cem)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
RODDY FREEMAN,

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Plaintiff,
v.
WELLS FARGO BANK, N.A.,
Defendant.

CIVIL ACTION NO.
1:12-CV-2854-RWS

ORDER
This case is before the Court on Defendant’s1 Motion to Dismiss, or, in
the Alternative, Motion to Stay Proceedings [3].2 After reviewing the record,
the Court enters the following Order.

1

The Complaint names Wells Fargo Bank, N.A. as Defendant. Wells Fargo
files this motion not in its individual capacity, but solely as Trustee for RMAC
REMIC Trust, Series 2010-3.
2

On March 22, 2013, the Court stayed this action pending resolution by the
Georgia Supreme Court of issues relevant to the case. Those issues have now been
resolved and Defendant’s Motion to Dismiss is ripe for consideration.

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Background
The subject of this action is real property located at 6883 Glen Cove
Lane, Stone Mountain, Georgia 30087 (“Property”).3 Purchase of the Property
was financed by a Promissory Note (“Note”) with J.P. Morgan Chase Bank,
N.A. (“JP Morgan”) in the amount of $153,000. The loan was secured by a
Security Deed executed on October 17, 2007, in favor of JP Morgan. (Security
Deed, Dkt. [1-1] at 13 of 52.) JP Morgan subsequently transferred its interest in
the Security Deed to Chase Home Financing, LLC (“Chase”). (First
Assignment, Dkt. [1-1] at 40 of 52.) Chase, in turn, assigned the Security Deed
to Wells Fargo Bank, N.A., not in its individual capacity, but solely as trustee
for RMAC REMIC Trust, Series 2010-3. (Second Assignment, Dkt. [1-1] at 43
of 52.) No other assignment of the Security Deed has been recorded.
In 2011, Plaintiff fell behind on his mortgage payments. On July 27,
2011, he received a foreclosure notice from McCalla Raymer, LLC indicating
that a foreclosure sale was scheduled for the first Tuesday of September 2011.
(Notice of Foreclosure, Dkt. [1-1] at 46 of 52.) The foreclosure notice listed

3

Unless otherwise noted, the factual background is taken from Plaintiff’s
Complaint. As the Court must at the motion to dismiss phase, it accepts as true all
well-pleaded facts in the Complaint.
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Rushmore Loan Management Services, LLC (“Rushmore”) as the entity with
“full authority to negotiate, amend, and modify all terms of the mortgage with
the debtor.” (Id. at 47 of 52.) The notice provides the contact information for
Rushmore. (Id.) Wells Fargo conducted a foreclosure sale on September 6,
2011.
Plaintiff filed this action on July 5, 2012, in the Superior Court of Dekalb
County, Georgia. On August 17, 2012, Defendant removed the suit to this
Court pursuant to 28 U.S.C. §§ 1332, 1441(a), and 1446(b). (Notice of
Removal, Dkt. [1].) Plaintiff alleges that Defendant violated Georgia’s
foreclosure notice law, O.C.G.A. § 44-14-162.2, and seeks compensatory and
punitive damages, and attorney’s fees and costs. Defendant moves to dismiss
the Complaint under Federal Rule of Civil Procedure (“Rule”) 12(b)(6).
Discussion
I.

Legal Standard - Motion to Dismiss
Rule 8(a)(2) requires that a pleading contain a “short and plain statement

of the claim showing that the pleader is entitled to relief.” While this pleading
standard does not require “detailed factual allegations,” mere labels and
conclusions or “a formulaic recitation of the elements of a cause of action will
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not do.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007)). In order to withstand 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.’” Id. (quoting Twombly, 550
U.S. at 570). A complaint is plausible on its face when the plaintiff pleads
factual content necessary for the court to draw the reasonable inference that the
defendant is liable for the conduct alleged. Id.
“At the motion to dismiss stage, all well-pleaded facts are accepted as
true, and the reasonable inferences therefrom are construed in the light most
favorable to the plaintiff.” Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1273
n.1 (11th Cir. 1999). However, the same does not apply to legal conclusions set
forth in the complaint. Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252, 1260
(11th Cir. 2009) (citing Iqbal, 129 S. Ct. at 1949). “Threadbare recitals of the
elements of a cause of action, supported by mere conclusory statements, do not
suffice.” Iqbal, 556 U.S. at 678. Furthermore, the court does not “accept as
true a legal conclusion couched as a factual allegation.” Twombly, 550 U.S. at
555.

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“The district court generally must convert a motion to dismiss into a
motion for summary judgment if it considers materials outside the complaint.”
D.L. Day v. Taylor, 400 F.3d 1272, 1275-76 (11th Cir. 2005); see also Fed. R.
Civ. P. 12(d). However, documents attached to a complaint are considered part
of the complaint. Fed. R. Civ. P. 10(c). Documents “need not be physically
attached to a pleading to be incorporated by reference into it; if the document’s
contents are alleged in a complaint and no party questions those contents, [the
court] may consider such a document,” provided it is central to the plaintiff’s
claim. D.L. Day, 400 F.3d at 1276. At the motion to dismiss phase, the Court
may also consider “a document attached to a motion to dismiss . . . if the
attached document is (1) central to the plaintiff’s claim and (2) undisputed.” Id.
(citing Horsley v. Feldt, 304 F.3d 1125, 1134 (11th Cir. 2002)). “‘Undisputed’
means that the authenticity of the document is not challenged.” Id.
II.

Analysis
“Georgia law requires a plaintiff asserting a claim of wrongful

foreclosure to 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.” Heritage Creek Dev. Corp. v. Colonial Bank, 601
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S.E.2d 842, 844 (Ga. Ct. App. 2004) (citing Calhoun v. First Nat’l Bank v.
Dickens, 443 S.E.2d 837 (Ga. 1994)). The two issues before the Court are (1)
whether notice of the foreclosure sale was proper and, (2) whether Plaintiff has
sufficiently pled causation.
A.

Notice

Foreclosure notice requirements are governed by O.C.G.A. § 44-14162.2. Section 44-14-162.2 reads:
Notice of the initiation of proceedings to exercise a
power of sale in a mortgage, security deed, or other
lien contract shall be given to the debtor by the
secured creditor no later than 30 days before the date
of the proposed foreclosure. Such notice shall be in
writing, shall include the name, address, and
telephone number of the individual or entity who shall
have full authority to negotiate, amend, and modify all
terms of the mortgage with the debtor . . . .
(emphasis added). Plaintiff alleges that Defendant, not Rushmore, was the
secured creditor with full authority to negotiate, amend, and modify the
mortgage, and “failure to include [Defendant] on the foreclosure notice is a
material deficiency that renders the notice invalid.” (Complaint, Dkt. [1-1] ¶¶
20-29.) Defendant maintains, however, that the notice complied (or

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substantially complied) with the requirements under § 44-14-162.2. (Def.’s
MTD Br., Dkt. [3-1] at 6-19.)
The Georgia Supreme Court recently addressed § 44-14-162.2's
requirements in You v. JP Morgan Chase Bank, N.A., ___ S.E.2d ___, 2013
WL 2152562, at *6 (Ga. May 20, 2013). According to the state court, the
statute requires only that the entity with full authority to negotiate, amend, and
modify the mortgage be identified. Id. It elaborated:
If that individual or entity is the holder of the security
deed, then the deed holder must be identified in the
notice; if that individual or entity is the note holder,
then the note holder must be identified. If that
individual or entity is someone other than the deed
holder or the note holder, such as an attorney or
servicing agent, then that person or entity must be
identified. The statute requires no more and no less.
Id. The court also held that “the required notice need not expressly identify the
foreclosing party as the ‘secured creditor.’” Id.
Here, the foreclosure notice identified Rushmore as the entity with “full
authority to negotiate, amend, and modify all terms of the mortgage with the
debtor,” and provided the requisite contact information for Rushmore. (Notice
of Foreclosure, Dkt. [1-1] at 47 of 52.) Under You, it does not matter whether

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Rushmore was holder of the Note, holder of the Security Deed, a “secured
creditor,” or none of the above. It does matter, however, whether Rushmore did
in fact have the authority to negotiate, amend and modify Plaintiff’s mortgage.
Plaintiff maintains that Defendant, not Rushmore, had that authority and
therefore, the proper entity was not identified. (Complaint, Dkt. [1-1] at ¶¶ 2029.) The Court finds that, at the motion to dismiss phase, Plaintiff’s allegations
are sufficient to show improper notice under O.C.G.A. § 44-14-162.2.
B.

Causation

Next, Defendant argues that even if the notice was deficient, Plaintiff
cannot show that improper notice caused his alleged damages. (Def.’s MTD
Br., Dkt. [3-1] at 6-19.) Plaintiff alleges that Defendant’s “failure to comply
with the statutory requirements . . . has caused actual damage to the Plaintiff in
an amount to be determined.” (Complaint, Dkt. [1-1] ¶ 30.) Further, he argues,
the improper notice “resulted in Plaintiff losing title and all equity in his home
as well as additional expenses including relocation costs, attorney fees, court
charges and credit damage.” (Id. ¶ 31.) Finally, Plaintiff claims: “Had
Defendant properly listed the proper secured creditor, and not just the servicer,
in the foreclosure notice, Plaintiff could have, and would have, been able to take
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affirmative steps to cancel or postpone the pending sale such as working
something out with the entity that actually owned and/or insured the mortgage.”
(Id. ¶ 34.) Defendant counters that Plaintiff’s failure to make his mortgage
payments, not any wrongdoing on Defendant’s part, caused Plaintiff’s injuries.
(Def.’s MTD Br., Dkt. [3-1] at 7-8.)
The Court agrees with Defendant. “To plead causation, Plaintiff must
allege that his injury was caused by the acts and omissions of Defendant [Wells
Fargo].” Warque v. Taylor, Bean, & Whitaker Mortg. Corp., No. 1:09-CV1906-ODE-CCH, 2010 WL 9474634, at *5 (N.D. Ga. July 30, 2010); see also
Heritage Creek, 601 S.E.2d at 844-45 (finding that the plaintiff’s own acts and
omissions caused the alleged injuries where the plaintiff: defaulted on the loan,
failed to cure the default, received a foreclosure notice, and did not bid on the
property at the foreclosure sale).4 Plaintiff admits that he was in default and

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Plaintiff argues that tender is not required in a wrongful foreclosure action
seeking damages (unlike actions seeking equitable relief). (Pl.’s Resp. Br., Dkt. [5] at
4-6.) The Court finds that Plaintiff’s argument and authority miss the mark. The
larger issue here is causation; namely, did Plaintiff’s alleged injuries – loss of title and
equity, relocation costs, legal fees and costs, etc. – result from his own failure to pay
his mortgage or from some act or omission by Defendant? Causation is an essential
element of any tort claim, including a claim for wrongful foreclosure, regardless of the
remedy sought.
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does not contest Wells Fargo’s authority to foreclose under the Security Deed.
Plaintiff’s alleged damages (relocation expenses, attorney’s fees, courts costs,
and loss of title and equity in the Property) flow from his own failure to make
payments, which resulted in foreclosure.
The Court is also not persuaded by Plaintiff’s argument that he could
have or would have sought a loan modification if the proper entity had been
identified on the foreclosure notice. Wells Fargo was under no obligation to
modify Plaintiff’s loan, and Plaintiff has given no indication that he had reason
to believe a modification would have been granted. Furthermore, entering into
modification negotiations would not have excused Plaintiff from making
payments under the terms of the Note and Security Deed. Consequently, the
Court agrees with Defendant that Plaintiff has not sufficiently pled causation.
Conclusion
Based on the foregoing, Defendant’s Motion to Dismiss [3] is
GRANTED.
SO ORDERED, this 11th day of June, 2013.

________________________________
RICHARD W. STORY
United States District Judge
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