Harris v. CitiMortgage, Inc. et al

Filing 14

OPINION AND ORDER granting 5 Motion to Dismiss for Failure to State a Claim, granting 6 Motion to Dismiss for Failure to State a Claim, granting 8 Motion to Dismiss for Failure to State a Claim, denying 12 Motion to Amend. Signed by Judge Thomas W. Thrash, Jr on 5/2/14. (dr)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
DEBORAH A. HARRIS,
Plaintiff,
v.

CIVIL ACTION FILE
NO. 1:14-CV-271-TWT

CITIMORTGAGE, INC., et al.,
Defendants.

OPINION AND ORDER
This is an action seeking to enjoin a foreclosure. It is before the Court on the
Defendant CitiMortgage, Inc.’s Motion to Dismiss [Doc. 6], the Defendant
MERSCORP’s Motion to Dismiss [Doc. 5], the Defendant Mortgage Electronic
Registration System’s Motion to Dismiss [Doc. 8], and the Plaintiff Deborah Harris’
Motion to Amend Complaint [Doc. 12]. For the reasons set forth below, the Defendant
CitiMortgage, Inc.’s Motion to Dismiss [Doc. 6] is GRANTED, the Defendant
MERSCORP’s Motion to Dismiss [Doc. 5] is GRANTED, the Defendant Mortgage
Electronic Registration System’s Motion to Dismiss [Doc. 8] is GRANTED, and the
Plaintiff Deborah Harris’ Motion to Amend Complaint [Doc. 12] is DENIED.
I. Background

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On April 10, 2003, the Plaintiff Deborah Harris obtained a residential loan from
First Horizon Loan Corporation. (Compl. ¶ 16.) In connection therewith, the Plaintiff
signed a security deed in favor of the Defendant Mortgage Electronic Registration
System (“MERS”) as nominee for First Horizon. (Compl. ¶ 19.) The security deed
was later assigned to the Defendant CitiMortgage, Inc. (Compl. ¶ 16.) The Plaintiff
defaulted on the loan and was given notice of foreclosure. (Compl. ¶ 31.) The notice
included the contact information for CitiMortgage, the servicer of her loan. There is
no allegation that a foreclosure sale has taken place thus far. The Plaintiff brought suit,
asserting a claim for wrongful foreclosure and seeking both damages and equitable
relief. The Defendants move to dismiss. In lieu of filing a Response, the Plaintiff
moves to amend her Complaint to add new claims.
II. Legal Standard
A complaint should be dismissed under Rule 12(b)(6) only where it appears that
the facts alleged fail to state a “plausible” claim for relief. Ashcroft v. Iqbal, 129 S.Ct.
1937, 1949 (2009); FED. R. CIV. P. 12(b)(6). A complaint may survive a motion to
dismiss for failure to state a claim, however, even if it is “improbable” that a plaintiff
would be able to prove those facts; even if the possibility of recovery is extremely
“remote and unlikely.” Bell Atlantic v. Twombly, 550 U.S. 544, 556 (2007). In ruling
on a motion to dismiss, the court must accept the facts pleaded in the complaint as true

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and construe them in the light most favorable to the plaintiff. See Quality Foods de
Centro America, S.A. v. Latin American Agribusiness Dev. Corp., S.A., 711 F.2d 989,
994-95 (11th Cir. 1983); see also Sanjuan v. American Bd. of Psychiatry and
Neurology, Inc., 40 F.3d 247, 251 (7th Cir. 1994) (noting that at the pleading stage,
the plaintiff “receives the benefit of imagination”). Generally, notice pleading is all
that is required for a valid complaint. See Lombard’s, Inc. v. Prince Mfg., Inc., 753
F.2d 974, 975 (11th Cir. 1985), cert. denied, 474 U.S. 1082 (1986). Under notice
pleading, the plaintiff need only give the defendant fair notice of the plaintiff’s claim
and the grounds upon which it rests. See Erickson v. Pardus, 551 U.S. 89, 93 (2007)
(citing Twombly, 127 S.Ct. at 1964).
“[T]he analysis of a 12(b)(6) motion is limited primarily to the face of the
complaint and attachments thereto.” Brooks v. Blue Cross & Blue Shield, 116 F.3d
1364, 1368 (11th Cir. 1997). However, “where the plaintiff refers to certain
documents in the complaint and those documents are central to the plaintiff's claim,
then the Court may consider the documents part of the pleadings for purposes of Rule
12(b)(6) dismissal, and the defendant's attaching such documents to the motion to
dismiss will not require conversion of the motion into a motion for summary
judgment.” Id. at 1369.
III. Discussion

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A. Motions to Dismiss
As an initial matter, the Plaintiff’s wrongful foreclosure claim fails because
there has been no 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 the present action, Plaintiff cannot
prove a claim for wrongful foreclosure.”). To the extent that the Plaintiff is pursuing
her wrongful foreclosure claim as a basis for obtaining prospective equitable relief,
her claim still fails. “A borrower who has executed a deed to secure debt is not entitled
to an injunction against a sale of the property under a power in a deed unless he first
pays or tenders to the creditor the amount admittedly due.” R.R.R. Ltd. P’ship v.
Recreational Servs., Inc., 264 Ga. 494 (1994); see also Wright v. Intercounty
Properties, Ltd., 238 Ga. 492, 493 (1977). Here, there is no allegation that the Plaintiff
has offered to tender the amount admittedly due.
Regardless, the Plaintiff has failed to state a claim for wrongful foreclosure. “In
Georgia, 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.” Racette v.
Bank of Am., N.A., 318 Ga. App. 171, 174 (2012) (internal quotation marks omitted).
The Plaintiff first argues that CitiMortgage has no right to foreclose because the

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security deed assignment from First Horizon to CitiMortgage is invalid. “A claim for
wrongful exercise of a power of sale under OCGA § 23-2-114 can arise when the
creditor has no legal right to foreclose.” DeGolyer v. Green Tree Servicing, LLC, 291
Ga. App. 444, 449 (2008). Here, the Plaintiff does not have standing to challenge the
assignment. See, e.g., Montgomery v. Bank of Am., 321 Ga. App. 343, 346 (2013)
(“[T]he assignment was contractual, and because Montgomery was not a party to the
assignment . . . he lacked the standing to contest its validity.”); Moore v. McCalla
Raymer, LLC, 916 F. Supp. 2d 1332, 1343-44 (N.D. Ga. 2013) (“[C]ourts have
repeatedly rejected the argument that a homeowner has standing to challenge the
assignment of a security deed which grants the assignor a power of sale.”). Thus, the
Plaintiff has failed to state a plausible wrongful foreclosure claim based on the lack
of a legal right to foreclose. See You v. JP Morgan Chase Bank, 293 Ga. 67, 74 (2013)
(“Under current Georgia law, the holder of a deed to secure debt is authorized to
exercise the power of sale in accordance with the terms of the deed.”).
Second, the Plaintiff argues that the notice of foreclosure failed to satisfy
Georgia statutory requirements because it did not include contact information for the
secured creditor. Under Georgia law, a notice of foreclosure “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.” O.C.G.A.

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§ 44-14-162.2(a). “[T]he statute does not require that notice letters must identify the
security creditor.” Carr v. U.S. Bank, NA, 534 Fed. Appx. 878, 881 (11th Cir. 2013).
“The only entity that [has] to be identified in the Notice [is] the one with the full
authority to negotiate, amend, or modify the terms of the loan, and that could be the
deed holder, note holder, attorney, or servicing agent.” Harris v. Chase Home Fin.,
LLC, 524 Fed. Appx. 590, 593 (11th Cir. 2013). Here, the Plaintiff admits that
CitiMortgage is the servicer of her loan, (Compl. ¶ 12), and she never alleges that
CitiMortgage lacks the authority to “negotiate, amend, and modify all terms” of her
loan. Accordingly, the Plaintiff’s wrongful foreclosure claim against the Defendants
CitiMortgage, Mortgage Electronic Registration System, and MERSCORP should be
dismissed.1

1

The Plaintiff briefly asserts two other claims. First, she asserts a civil
conspiracy claim. However, Georgia law does not recognize an independent civil
conspiracy cause of action. See Savannah Coll. of Art & Design, Inc. v. School of
Visual Arts of Savannah, Inc., 219 Ga. App. 296, 297 (1995) (“Where it is sought to
impose civil liability for a conspiracy, the conspiracy of itself furnishes no cause of
action.”). Second, she asserts a promissory estoppel claim. Specifically, the Plaintiff
alleges that she “applied for a modification two times and was denied at the last
moment after making 9 payments into the modification plan.” (Compl. ¶ 79.) “To
establish a promissory estoppel claim, a party must show that (1) the promisor made
certain promises; (2) the promisor should have expected that the party would rely on
the promises; and (3) the party relied on those promises to its detriment.” F & W
Agriservices, Inc. v. UAP/Ga. Ag. Chem., Inc., 250 Ga. App. 238, 241 (2001). Here,
the Plaintiff does not allege that CitiMortgage made a certain promise that she would
be granted a permanent loan modification.
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B. Motion to Amend Complaint
The Plaintiff moves to amend her Complaint. The additional allegations concern
two loan modification agreements. First, the Plaintiff alleges that, in January of 2012,
CitiMortgage sent her a loan modification document that she signed and returned
(“First Modification”). (Mot. to Am. Compl., Ex. A.) The Plaintiff alleges that
CitiMortgage then refused to honor the agreement. (Id.) Second, the Plaintiff alleges
that CitiMortgage then offered her another loan modification agreement whereby she
would initially participate in a three-month trial program (“Second Modification”).
(Id.) The Plaintiff alleges that CitiMortgage again refused to honor the agreement and
initiated the foreclosure process. (Id.) The Plaintiff now seeks to assert claims for
breach of contract, breach of the implied covenant of good faith and fair dealing,
conversion, unjust enrichment, fraud, and wrongful attempted foreclosure.
“[A] party may amend its pleading only with the opposing party’s written
consent or the court’s leave.” FED. R. CIV. P.15(a)(2). “The court should freely give
leave when justice so requires.” Id. “A district court may deny such leave where there
is ‘substantial reason’ for doing so, such as where . . . amendment would be futile.”
Alhallaq v. Radha Soami Trading, LLC, 484 Fed. Appx. 293, 298 (11th Cir. 2012).
“[D]enial of leave to amend is justified by futility when the complaint as amended is
still subject to dismissal.” Burger King Corp. v. Weaver, 169 F.3d 1310, 1320 (11th

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Cir. 1999) (internal quotation marks omitted). Here, the additional claims in the
Plaintiff’s Amended Complaint would still be subject to dismissal.
First, the Plaintiff claims that she had two binding contracts with CitiMortgage
– the First Modification and the Second Modification – that CitiMortgage breached
when it initiated the foreclosure process. “To constitute a valid contract, there must
be parties able to contract, a consideration moving to the contract, the assent of the
parties to the terms of the contract, and a subject matter upon which the contract can
operate.” Campbell v. State, 286 Ga. App. 72, 73-74 (2007) (internal quotation marks
omitted). However, “[w]hen a contract is contingent on the meeting of some
condition, it is not enforceable by either party until the condition has been met.” Lee
v. Green Land Co., Inc., 245 Ga. App. 558, 560 (2000); see also Interfinancial
Properties, Inc. v. Mary T. Cristal Trust, 254 Ga. App. 406, 409 (2002) (“A condition
precedent must be performed before the contract becomes absolute and obligatory
upon the other party.”) (internal quotation marks omitted).
Here, the Plaintiff fails to sufficiently allege that either of the modification
agreements became enforceable contracts. The First Modification includes a condition
precedent: “This Agreement will not take effect unless the preconditions set forth in
Section 2 have been satisfied.” (Mot. to Am. Compl., Ex. 1.) Section 2 in turn states
that “the Loan Documents will not be modified unless and until . . . the Lender accepts

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this Agreement by signing and returning a copy of it to me.” (Mot. to Am. Compl.,
Ex. 1.) The Plaintiff never alleges that CitiMortgage signed and returned the First
Modification. Accordingly, there was never a binding contract.2 Additionally, the
Second Modification is unenforceable for a similar reason. The bottom of the Second
Modification contains the caption “ACCEPTED AND AGREED TO BY:
CitiMortgage, Inc.,” with two signature lines underneath. Again, the Plaintiff never
alleges that CitiMortgage signed this document. Thus, the Plaintiff has failed to
sufficiently allege the existence of an enforceable contract.3 This also defeats the
Plaintiff’s claim for breach of the implied covenant of good faith and fair dealing. See
Myung Sung Presbyterian Church, Inc. v. North Am. Ass’n of Slavic Churches &

2

The Plaintiff suggests that the only condition precedent to the First
Modification was the requirement that the Plaintiff sign and return it to CitiMortgage.
Because this assertion is contradicted by the attached exhibit, (Mot. to Am. Compl.,
Ex. 1), the Court need not accept it as true, see Griffin Indus., Inc. v. Irvin, 496 F.3d
1189, 1206 (11th Cir. 2007) (“[W]hen the exhibits contradict the general and
conclusory allegations of the pleading, the exhibits govern.”).
3

Although “[p]arties may become bound by the terms of a contract, even
though they do not sign it, where their assent is otherwise indicated,” Comvest, L.L.C.
v. Corporate Sec. Grp., Inc., 234 Ga. App. 277, 280 (1998) (internal quotation marks
omitted), the existence of a signature line suggests that an agreement is not intended
to be binding until the required signatures are attained, see Legg v. Stovall Tire &
Marine, Inc., 245 Ga. App. 594, 596 (2000) (“The fact that there were signature
blocks in the agreement for the Stovall Marine listing agent and manager approval
also tends to show that the agreement was not intended to be binding until it was
signed by Stovall Marine.”).
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Ministries, Inc., 291 Ga. App. 808, 810 (2008) (“Every contract implies a covenant
of good faith and fair dealing in the contract’s performance and enforcement . . . but
the covenant cannot be breached apart from the contract provisions it modifies and
therefore cannot provide an independent basis for liability.”).
Second, the Plaintiff asserts a conversion claim. The Plaintiff alleges that she
made several payments as per the terms of the two loan modification documents. She
further alleges that CitiMortgage did not properly credit these payments to her
account. “In order to establish a claim for conversion, the complaining party must
show (1) title to the property or the right of possession, (2) actual possession in the
other party, (3) demand for return of the property, and (4) refusal by the other party
to return the property.” Capital Financial Services Group, Inc. v. Hummel, 313 Ga.
App. 278, 280-81 (2011). “Where a defendant originally obtained lawful possession
of property, the plaintiff must show actual conversion or demand for the property’s
return coupled with the defendant’s refusal to return the property.” Stroman v. Bank
of America Corp., 852 F. Supp. 2d 1366, 1379 (N.D. Ga. 2012). Here, the Plaintiff
never alleges that she demanded a return of her payments. Consequently, her
conversion claim fails.
Third, the Plaintiff asserts a claim for unjust enrichment. In support, the
Plaintiff alleges that CitiMortgage has incorrectly declared that it is owed an

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additional $60,000 in principal. “[U]njust enrichment applies when as a matter of fact
there is no legal contract . . . but where the party sought to be charged has been
conferred a benefit by the party contending an unjust enrichment which the benefited
party equitably ought to return or compensate for.” Engram v. Engram, 265 Ga. 804,
806 (1995) (internal quotation marks omitted). Here, there has been no benefit
conferred. The fact that CitiMortgage declares that it is owed an additional $60,000
does not mean that it has been paid this amount. Thus, the Plaintiff’s unjust
enrichment claim fails.
Fourth, the Plaintiff asserts a fraud claim. In support, the Plaintiff merely
alleges that she relied on certain representations made in the modification agreements.
“In order to establish a claim of fraud under Georgia law, a plaintiff must prove (1)
false representation by a defendant; (2) scienter; (3) intention to induce the plaintiff
to act or refrain from acting; (4) justifiable reliance by the plaintiff; and (5) damage
to the plaintiff.” Bithoney v. Fulton-DeKalb Hosp. Auth., 313 Ga. App. 335, 343
(2011) (internal quotation marks omitted). Here, the Plaintiff has alleged no false
representation. She does not allege that the CitiMortgage definitively represented to

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her that she would be granted a permanent loan modification. In addition, she alleges
no other specific false representation.4
Finally, the Plaintiff asserts a claim for wrongful attempted foreclosure. The
Plaintiff claims that CitiMortgage refused to acknowledge the validity of the
modification agreements, and thus improperly initiated the foreclosure process. 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 never alleges that any of the
Defendants knowingly published an untrue and derogatory statement about her
financial condition. Thus, her attempted wrongful foreclosure claim fails. Because the
Plaintiff’s Amended Complaint would still be subject to dismissal, the Court denies
the Plaintiff’s Motion to Amend her Complaint.

4

It is equally unclear what the detrimental reliance was. The Plaintiff merely
alleges that she made payments pursuant to the modification agreements. But she does
not deny that – absent the modification agreements – she would still have been
required to make payments pursuant to the original loan terms.
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IV. Conclusion
For these reasons, the Court GRANTS the Defendant CitiMortgage, Inc.’s
Motion to Dismiss [Doc. 6], GRANTS the Defendant MERSCORP’s Motion to
Dismiss [Doc. 5], GRANTS the Defendant Mortgage Electronic Registration System’s
Motion to Dismiss [Doc. 8], and DENIES the Plaintiff Deborah Harris’ Motion to
Amend Complaint [Doc. 12].
SO ORDERED, this 2 day of May, 2014.

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

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