Rivas et al v. Green Tree Servicing
Filing
16
ORDER granting in part and denying in part Plaintiffs' 2 Motion to Amend Notice of Removal. Granted in part regarding substance of Plaintiffs' claims and Denied in part regarding adding new defendant. Plaintiffs' 8 Motion to Remand to State Court is DENIED, Plaintiffs' 9 Motion to Appoint Counsel is DENIED, and Defendant's 3 Motion to Dismiss is GRANTED. Signed by Judge Richard W. Story on 3/25/13. (cem)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
ALTAIR RIVAS and ELISA
RIVAS,
Plaintiffs,
v.
GREEN TREE SERVICING, LLC,
Defendant.
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CIVIL ACTION NO.
1:12-CV-2866-RWS
ORDER
This case is before the Court on Plaintiffs’ Motion to Amend Notice of
Removal [2], Defendant’s Motion to Dismiss [3], Plaintiffs’ Motion to Remand
to State Court [8], and Plaintiffs’ Motion to Appoint Counsel [9].
First, Plaintiffs move to amend their Complaint (labeled “Motion to
Amend Notice of Removal” in their filing). Under Federal Rule of Civil
Procedure (“Rule”) 15(a)(1), Plaintiffs are allowed to amend their Complaint
once as a matter of course. Further, Defendant does not oppose Plaintiffs’
motion. Therefore, the Court will consider Plaintiffs’ claims against Defendant
based on the Amended Complaint submitted with Plaintiffs’ motion. However,
to the extent Plaintiffs seek to add Mortgage Electronic Registration Systems,
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Inc. (“MERS”) as a defendant through their motion to amend, the Court finds
that amendment would be futile and should be denied. For the same reasons
Plaintiffs’ claims fail against Defendant (see discussion Part II, infra), their
claims would fail against MERS. Therefore, Plaintiffs’ Motion to Amend
Notice of Removal [2] is GRANTED in part (regarding substance of
Plaintiffs’ claims) and DENIED in part (regarding adding new defendant).
Second, Plaintiffs move to remand this action to state court. Defendant
removed the case from the Superior Court of Gwinnett County, Georgia on
grounds of diversity jurisdiction under 28 U.S.C. §§ 1332 and 1441. (Notice of
Removal, Dkt. [1].) Defendant argues that there is complete diversity between
the parties and the amount in controversy exceeds $75,000. (Id. ¶¶ 4-14.)
Specifically, Defendant alleges that Plaintiffs are citizens of Georgia and
Defendant, a limited liability company, is a citizen of Delaware, Maryland,
Minnesota and Florida. Additionally, both the value of the property and the
amount owed on the loan at issue in this case exceed $75,000. Plaintiffs state in
their motion that “Defendant lacks full diversity jurisdiction citizenship,” but
provide no facts to support their allegation. (Pl.s’ MTR, Dkt. [8] at 3, ¶ 6.)
Plaintiffs also claim that the Complaint states no specific dollar amount for
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Plaintiffs’ damages and “[t]his court should not decided [sic] or specify a value
amount for Plaintiff’s [sic] apparent value.” (Id.)
The Court agrees with Defendant that the case is properly before it based
on diversity jurisdiction. In their Amended Complaint, Plaintiffs seek
injunctive relief to stop a pending foreclosure sale and punitive damages. (Am.
Compl., Dkt. [2] at 7 of 17.) Under Georgia law, where a party seeks to bar the
right to foreclose, the value of the property determines the amount in
controversy for purposes of diversity jurisdiction. See Roper v. Saxon Mort.
Servs., Inc., 1:09-CV-312-RWS, 2009 WL 1259193, at *6 (N.D. Ga. May 5,
2009) (“As Plaintiff seeks injunctive relief barring the foreclosure on the
property at issue, the value of the property determines the financial value at
stake.”). Moreover, courts often look to the value of the loan as evidenced by
the security deed to determine the amount in controversy in a foreclosure case.
See, e.g., Reynolds v. JPMorgan Chase Bank N.A., No. 5:11-CV-311 (MTT),
2011 WL 5835925, at *2 (M.D. Ga. Nov. 21, 2011) (“[T]he security deed meets
the amount-in-controversy requirement.”). Records from the Gwinnett County
Tax Assessor’s Office indicate that the property value is $117,200. (Dkt. [1-4]
at 2-3.) The amount of the loan was $191,850, and according to the notice of
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foreclosure, Plaintiffs owe an outstanding balance of over $250,000, inclusive
of interest and late charges.
Plaintiffs do not allege any specific facts or put forward any evidence to
show that the amount-in-controversy requirement is not satisfied. Furthermore,
other than one conclusory statement to the contrary, Plaintiffs have not alleged
any facts to show lack of diversity among the parties. Therefore, Plaintiffs’
Motion to Remand is DENIED.
Third, Plaintiffs request that the Court appoint counsel for them in this
suit. They allege that the complaint “involves equity interest concerning an
unlawful foreclosure” and counsel is necessary “to preserve the U.S.
Constitutional rights for Plaintiffs to gain access to this court through fair Due
Process.” (Pl.s’ Mot. for Counsel, Dkt. [9] at 3.) The Court finds, however,
that this civil matter lacks exceptional circumstances to warrant the appointment
of counsel.
A court has discretionary authority to appoint counsel for indigent
litigants in civil cases. 28 U.S.C. § 1915(e)(1); Bass v. Perrin, 170 F.3d 1312,
1320 (11th Cir. 1999); Holt v. Ford, 862 F.2d 850, 853 (11th Cir. 1989). The
appointment of counsel in such cases is a privilege “justified only by
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exceptional circumstances.” Fowler v. Jones, 899 F.2d 1088, 1096 (11th Cir.
1990); Poole v. Lambert. 819 F.2d 1025, 1028 (11th Cir. 1987); Wahl v.
McIver, 773 F.2d 1169, 1174 (11th Cir. 1985). Determining whether
exceptional circumstances exist is committed to the discretion of the district
court. Steele v. Shah, 87 F.3d 1266, 1270 (11th Cir. 1996). Exceptional
circumstances may exist where the facts and legal issues are so complex that the
assistance of a trained practitioner is required. Poole, 819 F.2d at 1028. The
district court usually considers the merits of Plaintiff’s claim and whether the
claim is factually or legally so complex as to warrant the assistance of counsel.
Holt, 862 F.2d at 853.
Here, Plaintiffs’ Amended Complaint does not present complex legal
issues. Plaintiffs’ statement that the case involves an equity interest is
insufficient to establish exceptional circumstances warranting appointment of
counsel. Therefore, Plaintiffs’ Motion to Appoint Counsel is DENIED.
Having dispensed with these preliminary matters, the Court now
addresses Defendant’s Motion to Dismiss.
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Background1
On November 30, 2007, Plaintiffs executed a promissory note (“Note”)
in favor of SunTrust Mortgage, Inc. (“SunTrust”) in exchange for a loan of
$191,850 to be secured by real property located at 5641 Apple Grove Road,
Buford, Georgia 30519 (“Property”). (Note, Dkt. [1-1] at 37 of 38.) On the
same date, Plaintiffs executed a Security Deed on the Property, which listed
SunTrust as the Lender and MERS, acting solely as nominee for SunTrust and
SunTrust’s successors and assigns, as Grantee. (Security Deed, Dkt. [1-1] at 10
of 29.) On January 7, 2009, MERS assigned all of its interests in the Security
Deed to Litton Loan Servicing, L.P. (“Litton”). (First Assignment, Dkt. [1-1] at
35 of 38.) Litton then assigned the Security Deed to Defendant on January 26,
2011. (Second Assignment, Dkt. [1-1] at 32 of 38.)
In early 2011, Plaintiffs defaulted on their loan and Defendant initiated
foreclosure proceedings. (See Notice of Foreclosure, Dkt. [1-3] at 2.) Plaintiffs
filed suit in Superior Court of Gwinnett County, Georgia on March 26, 2012.
1
Plaintiff provides no factual background in her Amended Complaint. Where
necessary for a more complete statement of the events giving rise to Plaintiff’s claims,
the Court includes facts from Defendant’s briefs and from Exhibits attached to the
Amended Complaint. Plaintiffs do not appear to dispute these facts.
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The action was removed to this Court by Defendant on August 20, 2012. It
does not appear from the record that a foreclosure sale of the Property has
occurred. Defendant moves to dismiss Plaintiffs’ Amended Complaint under
Rule 12(b)(6).2
Discussion
I.
Legal Standard - Motion to Dismiss
Federal Rule of Civil Procedure 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 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
2
It appears that in an abundance of caution, Defendant’s Motion to Dismiss
addressed the claims in both the Complaint and the Amended Complaint. Because the
Court granted Plaintiffs’ motion to amend, the Court limits its consideration to the
issues and claims presented in the Amended Complaint.
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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.
“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
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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.
Additionally, because Plaintiffs are acting pro se, their “pleadings are
held to a less stringent standard than pleadings drafted by attorneys and will,
therefore, be liberally construed.” Tannenbaum v. United States, 148 F.3d
1262, 1263 (11th Cir. 1998). “This leniency, however, does not require or
allow courts to rewrite an otherwise deficient pleading in order to sustain an
action.” Thomas v. Pentagon Fed. Credit Union, 393 F. App’x 635, 637 (11th
Cir. 2010).
II.
Analysis
Plaintiffs assert the following claims against Defendant: violations of the
Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692, et seq. (“FDCPA”)
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(Count I); wrongful foreclosure and/or attempted wrongful foreclosure (Count
II); and fraud (Count III). The Court addresses each claim in turn.
A.
FDCPA
To state a claim under the FDCPA, a plaintiff must show that “(1) he has
been the object of collection activity arising from consumer debt, (2) the
defendant is a debt collector as defined by the FDCPA, and (3) the defendant
has engaged in an act or omission prohibited by the FDCPA.” Gass v.
CitiMortgage, Inc., No. 1:11-CV-3713-RWS-JSA, 2012 WL 3201400, at *14
(N.D. Ga. June 25, 2012) (citing Kaplan v. Assetcare, Inc., 88 F. Supp. 2d 1355,
1362 (S.D. Fla. 2000)). Plaintiffs’ FDCPA claim appears to focus on the third
element and be based on a “splitting of the note and deed” theory. Plaintiffs
allege that the original Lender, SunTrust, did not grant MERS the authority to
assign the Note to Defendant, and therefore, Defendant is attempting to conduct
an illegal foreclosure. (Am. Compl., Dkt. [2] at 4-5.) Defendant responds that,
as holder of the Security Deed, it does have the power to foreclose, regardless
of whether it also holds the Note. (Def.’s MTD Br., Dkt. [3-5] at 9-10.)
Therefore, it has not engaged in any prohibited activity under the FDCPA or
any other law. The Court agrees with Defendant.
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This Court has previously found that Georgia law does not preclude the
holder of a security deed from initiating foreclosure if it does not also hold the
note. See LaCosta v. McCalla Raymer, LLC, No. 1:10-CV-1171-RWS, 2011
WL 166902, at *5-6 (N.D. Ga. Jan. 18, 2011) (rejecting debtor’s argument that
the foreclosing entity must possess both the promissory note and the security
deed); accord Alexis v. Mortg. Elec. Registration Sys., Inc., No. 1:11-CV-1967RWS, 2012 WL 716161, at *3 (N.D. Ga. Mar. 5, 2012). The Security Deed
explicitly grants the “successors and assigns of MERS” (e.g., Defendant) the
power of sale and “the right to foreclose and sell the Property” in the event of
Plaintiffs’ default. (Security Deed, Dkt. [1-2] at 12 of 29.) Plaintiffs do not
contest that they were behind on their mortgage payments. (See generally, Am.
Compl., Dkt. [2].) Therefore, the Court agrees that Defendant has the authority
to foreclose on the Property, and has not engaged in any unlawful activity under
the FDCPA.
B.
Wrongful Foreclosure and/or Attempted Wrongful Foreclosure
Plaintiffs appear to assert three theories of wrongful foreclosure in their
Amended Complaint. First, Plaintiffs claim that Defendant does not have
authority to foreclose because the Assignments of the Security Deed were
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invalid. Second, Plaintiffs assert that Defendant does not have the power to
foreclose because Defendant is not the holder of the Note. Finally, they claim
that notice of the foreclosure sale did not comply with O.C.G.A. § 44-14-162.2.
However, Plaintiffs also request injunctive relief to “stay any pending
foreclosure sale,” which suggests a claim for attempted wrongful foreclosure.
(Am. Compl., Dkt. [2] at 7 of 17.) Defendant argues that either claim –
wrongful foreclosure or attempted wrongful foreclosure – fails here. (Def.’s
MTD Br., Dkt. [3-5] at 12-14.) The Court agrees with Defendant.
In Georgia, to state a claim for wrongful foreclosure, Plaintiff must show
a legal duty owed to her by the foreclosing party, a breach of that duty, a causal
connection between the breach and the injury sustained, and damages. Heritage
Creek Dev. Corp. v. Colonial Bank, 601 S.E.2d 842, 844 (Ga. Ct. App. 2004).
Defendant argues that Plaintiffs cannot show damages because they have not
alleged that any foreclosure sale has occurred. (Def.’s MTD Br., Dkt. [3-5] at
12-13.) The Court agrees that in the absence of a sale, Plaintiffs cannot
maintain a claim for wrongful foreclosure. See Roper v. Parcel of Land, No.
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
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the present action, Plaintiff cannot prove a claim for wrongful foreclosure.”).3
To state a claim for attempted wrongful foreclosure in Georgia, a 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 Fin. Co. V. Culpepper,
320 S.E.2d 228, 232 (Ga. Ct. App. 1984). The Amended Complaint alleges no
publication by Defendant of untrue or derogatory information. Therefore, the
3
The Court notes that even if a foreclosure sale has occurred and Plaintiffs are
seeking damages, all of Plaintiffs’ theories of wrongful foreclosure lack merit. First,
Defendant argues that Plaintiffs do not have standing to challenge the Assignments of
the Security Deed. (Def.’s MTD, Dkt. [3-5] at 11.) The Court agrees. In Georgia,
“[a]s a general rule, an action on a contract . . . shall be brought in the name of the
party in whom the legal interest in the contract is vested, and against the party who
made it in person or by agent.” O.C.G.A. § 9-2-20(a). Plaintiffs were not parties to
either Assignment of the Security Deed. Therefore, Plaintiffs may not challenge the
Assignments’ validity. See Breus v. McGriff, 413 S.E.2d 538, 539 (Ga. Ct. App.
1991) (“[S]trangers to the assignment contract . . . have no standing to challenge its
validity.”); Rosenhaft v. BAC Home Loans Servicing, LP, No. 1:11-CV-2519-TWT,
2012 WL 484842, at *2 (N.D. Ga. Feb. 14, 2012) (“Plaintiff does not have standing to
challenge the assignment . . . because she was not a party to the assignment.”).
Consequently, Plaintiffs have not stated a valid wrongful foreclosure claim on these
grounds.
Second, as discussed above (see Part II.A, supra), Plaintiffs’ “splitting of the
note and deed” theory fails as a matter of law. Finally, even if notice of the
foreclosure sale was defective under O.C.G.A. § 44-14-162.2, Plaintiffs still cannot
show causation (i.e., that defective notice caused their alleged damages) because they
do not dispute that they were in default under the loan.
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Court agrees that Plaintiffs have failed to state a claim for attempted wrongful
foreclosure.4
C.
Fraud
To state a claim for fraud in Georgia, a plaintiff must show: (1) a false
representation made by the defendant; (2) scienter; (3) an intention to induce
the plaintiff to act or refrain from acting in reliance on the misrepresentation;
(4) justifiable reliance by the plaintiff; and (5) damage to the plaintiff. City
Dodge, Inc. v. Gardner, 208 S.E.2d 794, 797 n.1 (Ga. 1974). “In alleging fraud
or mistake, a party must state with particularity the circumstances constituting
fraud or mistake.” Fed. R. Civ. P. 9. “Pursuant to Rule 9(b), a plaintiff must
allege: (1) the precise statements, documents, or misrepresentations made; (2)
the time, place, and person responsible for the statement(s); (3) the content and
manner in which these statements misled the plaintiff; and (4) what the
defendant gained by the alleged fraud. Am. Dental Ass’n v. Cigna Corp., 605
4
Additionally, to the extent Plaintiffs seek to enjoin the pending foreclosure
sale, they have not tendered or offered to tender the amount due on the loan. “A
borrower who has executed a deed to secure debt is not entitled to enjoin a foreclosure
sale unless he first pays or tenders to the lender the amount admittedly due.” Mickel
v. Pickett, 247 S.E.2d 82, 87 (Ga. 1978). Therefore, Plaintiffs lack standing to enjoin
the pending foreclosure.
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F.3d 1283, 1291 (11th Cir. 2010). Defendant argues that Plaintiffs have failed
to plead a claim for fraud with the requisite level of particularity. (Def.’s MTD
Br., Dkt. [3-5] at 15-17.) The Court agrees with Defendant.
Plaintiffs’ Amended Complaint contains a conclusory statement that the
assignment of the Security Deed to Defendant was “improper and fraudulent.”
(Am. Compl., Dkt. [2] at 5 of 17.) That is the only allegation in the Amended
Complaint regarding fraud. Clearly, Plaintiffs have not satisfied Rule 9
pleading standards to state a claim for fraud.
In sum, the Court finds that Plaintiffs have failed to state a claim upon
which relief may be granted. Therefore, Defendant’s Motion to Dismiss is
GRANTED.
Conclusion
Based on the foregoing, Plaintiffs’ Motion to Amend Notice of Removal
[2] is GRANTED in part and DENIED in part, Plaintiffs’ Motion to Remand
to State Court [8] is DENIED, Plaintiffs’ Motion to Appoint Counsel [9] is
DENIED, and Defendant’s Motion to Dismiss [3] is GRANTED.
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SO ORDERED, this 25th day of March, 2013.
_______________________________
RICHARD W. STORY
UNITED STATES DISTRICT JUDGE
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