Tait et al v. Nationstar Mortgage LLC et al

Filing 20

OPINION AND ORDER: This Court OVERRULES Plaintiffs' objections to the Report and Recommendation, ADOPTS the 15 Report and Recommendation as the opinion of this Court, and GRANTS Nationstar Mortgage LLC and BNY Mellon, National Association' ;s 3 Partial Motion to Dismiss. Accordingly, Plaintiffs' claims of wrongful foreclosure, breach of contract, breach of the duties of good faith and fair dealing, fraud, fraudulent misrepresentations, negligent misrepresentation, declaratory judgment, and promissory estoppel are DISMISSED with prejudice for failure to state a claim upon which relief can be granted.. Signed by Judge Clarence Cooper on 9/30/2015. (tcc)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
PHYLLIS TAIT and TIFFANY
MINOTT,
Plaintiffs,
vs.
NATIONSTAR MORTGAGE LLC,
BNY MELLON, NATIONAL
ASSOCIATION, and DEFENDANT
DOE,
Defendants.

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CIVIL ACTION NO.
1:14-CV-2885-CC

OPINION AND ORDER
This lawsuit, which arises from an alleged foreclosure sale of real property
that is the second home of Plaintiffs Phyllis Tait and Tiffany Minott (“Plaintiffs”), is
before the Court on the Report and Recommendation [Doc. No. 15] issued by Chief
Magistrate Judge Linda T. Walker on August 19, 2015.

In the Report and

Recommendation, Chief Magistrate Judge Walker recommends that the Court grant
Defendants Nationstar Mortgage LLC and BNY Mellon, National Association’s
Partial Motion to Dismiss [Doc. No. 3]. Specifically, Chief Magistrate Judge Walker
recommends that the Court dismiss Plaintiffs’ claims of wrongful foreclosure, breach
of contract, breach of the duties of good faith and fair dealing, promissory estoppel,
fraud, fraudulent misrepresentation, negligent misrepresentation, and declaratory
judgment.
On September 2, 2015, Plaintiffs filed Objections to the United States
Magistrate Judge’s Final Report and Recommendation [Doc. No. 17].1 Plaintiffs
assert in the objections that Chief Magistrate Judge Walker failed to accept the facts

Insofar as Defendants seek and Chief Magistrate Judge Walker recommends
only partial dismissal of Plaintiffs’ claims, the Report and Recommendation is not a “final”
report and recommendation, notwithstanding Plaintiffs’ characterization of the Report and
Recommendation as such.
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alleged by Plaintiffs as true, failed to analyze the sufficiency of the pleading utilizing
the notice pleading standard set forth in Federal Rule of Civil Procedure 8(a)(2), and
erroneously accepted facts alleged by Defendants as true. In doing so, according to
Plaintiffs, Chief Magistrate Judge Walker erred in recommending dismissal of
Plaintiffs’ claims of wrongful foreclosure, promissory estoppel, fraud, fraudulent
misrepresentation, negligent misrepresentation, and declaratory judgment. While
Plaintiffs cursorily mention in their discussion of the promissory estoppel claim that
Defendant Nationstar allegedly breached a contract, Plaintiffs do not specifically
object to Chief Magistrate Judge Walker’s recommendation that the breach of
contract and breach of the duties of good faith and fair dealing claims be dismissed.
On September 21, 2015, the Court received Nationstar Mortgage LLC and
BNY Mellon, National Association’s Response to Plaintiffs’ Objection to the
Magistrate Court’s August 19, 2015 Report and Recommendation [Doc. No. 18].
Defendants maintain that Chief Magistrate Judge Walker resolved the Partial Motion
to Dismiss correctly based on her finding that Plaintiffs did not sufficiently allege
that a wrongful foreclosure sale occurred. Additionally, Defendants emphasize that
Chief Magistrate Walker repeatedly found that Plaintiffs did not plead any damages
they suffered as a result of the alleged foreclosure.
The Report and Recommendation, Plaintiffs’ objections thereto, and
Defendants’ response to Plaintiffs’ objections are ripe for the Court’s review. After
reviewing a magistrate judge’s findings and recommendations, a district judge may
accept, reject, or modify the findings or recommendations. 28 U.S.C. § 636(b)(1). A
party challenging a report and recommendation must “file . . . written objections
which shall specifically identify the portions of the proposed findings and
recommendation to which objection is made and the specific basis for objection.”
Macort v. Prem, Inc., 208 F. App’x 781, 783 (11th Cir. 2006) (citation and internal
quotation marks omitted); see also Fed. R. Civ. P. 72(b)(2). A district judge “shall
make a de novo determination of those portions of the report or specified proposed
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findings or recommendations to which objection is made.” Jeffrey S. v. State Bd. of
Educ. of Ga., 896 F.2d 507, 512 (11th Cir. 1990) (citation omitted). The district judge
must “give fresh consideration to those issues to which specific objection has been
made by a party.” Id. “Frivolous, conclusive, or general objections need not be
considered by the district court.” Marsden v. Moore, 847 F.2d 1536, 1548 (11th Cir.
1988) (citation omitted). Those portions of a report and recommendation to which
an objection has not been made are reviewed for plain error. United States v. Slay,
714 F.2d 1093, 1095 (11th Cir. 1983).
Plaintiffs’ main objection to the Report and Recommendation is that Chief
Magistrate Judge Walker, in recommending that the majority of Plaintiffs’ claims be
dismissed, purportedly relied on a representation by Defendant Nationstar that the
foreclosure sale at issue in this case was never consummated and concluded, as a
result, that there had been no change to Plaintiffs’ property interests and no
damages suffered by Plaintiffs in connection with the foreclosure sale. This Court
has conducted a thorough review of the entire record of this case and has carefully
examined the allegations in Plaintiffs’ Complaint and the attachments to the
Complaint. Having done so, the Court finds no plain error with respect to Chief
Magistrate Judge Walker’s recommended dismissal of the breach of contract and
breach of the duties of good faith and fair dealing claims and, upon de novo review,
concludes that Chief Magistrate Judge Walker correctly recommended dismissal of
Plaintiffs’ claims of wrongful foreclosure, promissory estoppel, fraud, fraudulent
misrepresentation, negligent misrepresentation, and declaratory judgment.
Plaintiffs’ claims of wrongful foreclosure, fraud, fraudulent misrepresentation,
and negligent misrepresentation are due to be dismissed not based on any
representation by Defendants that the foreclosure sale was not consummated but
based on Plaintiffs’ failure to allege facts indicating that the foreclosure sale was
consummated. As Chief Magistrate Judge Walker reasoned, to properly allege
claims for wrongful foreclosure, fraud, fraudulent misrepresentation, and negligent
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misrepresentation, a plaintiff must allege sufficient facts to indicate, among other
things, that an injury occurred and that plaintiff sustained damages. Brown v.
Federal Nat’l Mortg. Ass’n, No. 10-CV-03289, 2011 WL 1134716, at *6 (N.D. Ga. Feb.
28, 2011) (wrongful foreclosure); Uhlig v. Darby Bank & Trust Co., 556 F. App’x 883,
888-89 (11th Cir. 2014) (negligent misrepresentation and fraudulent representation);
Next Century Commc’ns. Corp. v. Ellis, 318 F.3d. 1023, 1027, 1030 (11th Cir. 2003)
(fraud and negligent misrepresentation). Under Georgia law, a foreclosure sale has
not occurred until the sale is consummated. Tampa Inv. Grp. v. Branch Banking &
Trust Co., 290 Ga. 724, 727, 723 S.E.2d 674 (2012) (holding that when a foreclosure
sale is not consummated, no foreclosure occurs). For a foreclosure sale to be
consummated, a deed must be transferred and the proceeds of the foreclosure sale
must be transferred from the bidder to the creditor and applied to reduce the
borrower’s debt. Bldg. Block Enters. v. State Bank and Trust Co., 314 Ga. App. 147,
150-51, 723 S.E.2d 467 (2012); Legacy Communities Grp. v. Branch Banking & Trust
Co., 310 Ga. App. 466, 470, 713 S.E.2d 670 (2011), rev’d in part on other grounds,
Tampa Inv. Grp. v. Branch Banking & Trust Co., 290 Ga. 724, 723 S.E.2d 674 (2012).
Here, Plaintiffs have not alleged either that the deed under power was transferred
or that the proceeds of the foreclosure sale were applied to reduce their debt. As
such, Plaintiffs have not adequately alleged that a foreclosure sale occurred or that
they suffered any damages or economic injury. These pleading deficiencies are fatal
to the wrongful foreclosure, fraud, fraudulent misrepresentation, and negligent
misrepresentation claims.
In addition to Plaintiffs’ failure to allege the consummation of the foreclosure
sale, one of Plaintiffs’ own attachments to the Complaint indicates that Defendant
Nationstar rescinded the foreclosure sale. In this regard, Exhibit R to Plaintiffs’
Complaint is a letter in which Defendant Nationstar states that a foreclosure sale
occurred but was rescinded. In bringing the claims in the instant lawsuit, Plaintiffs
rely heavily on Defendant Nationstar’s representation in the letter that a foreclosure
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sale did occur on May 1, 2012, but Plaintiffs unconvincingly urge the Court to
overlook Defendant Nationstar’s representation in that same letter that the
foreclosure sale was rescinded. Plaintiffs argue that Chief Magistrate Judge Walker
erred in relying on Defendants’ assertion that the foreclosure sale was rescinded.
However, when an exhibit to a complaint contradicts general and conclusory
allegations in a pleading, the exhibit governs. Griffin Indus., Inc. v. Irvin, 496 F.3d
1189, 1205-06 (11th Cir. 2007). Here, Plaintiffs’ own Exhibit R to the Complaint
contradicts what is, at best, an inference to be drawn from the allegations in the
Complaint that the foreclosure sale was consummated. Under these circumstances,
the exhibit to the Complaint governs.
Plaintiffs’ promissory estoppel claim is also subject to dismissal. To state a
claim for promissory estoppel, the plaintiff must allege facts demonstrating that:
(1) the defendant made a promise or promises; (2) the defendant should
have reasonably expected the [plaintiffs] to rely on such promise; (3)
the [plaintiffs] relied on such promise to [their] detriment; and (4) an
injustice can only be avoided by the enforcement of the promise,
because as a result of the reliance, [plaintiffs] changed [their] position
to [their] detriment by surrendering, forgoing, or rendering a valuable
right.
Hendon Props., LLC v. Cinema Dev., LLC, 275 Ga. App. 434, 438-39, 620 S.E.2d 644
(2005). The Court agrees with Chief Magistrate Judge Walker that Plaintiffs have not
alleged facts demonstrating that they relied on the promise made by Defendant
Nationstar not to foreclose to their detriment or that they surrendered a valuable
right as a result of their reliance. In the absence of alleged facts tending to show that
the foreclosure sale was consummated and in the presence of a document attached
to Plaintiffs’ Complaint indicating that the foreclosure sale was rescinded, Chief
Magistrate Judge Walker reasonably concluded that Plaintiffs’ interests in their
property remained unchanged.2 Even Plaintiffs’ alleged decision not to pursue a
Chief Magistrate Judge Walker also took judicial notice that the Fulton
County Board of Assessors Property Records still indicate that Plaintiffs own the residence.
(Report and Recommendation at 12.)
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bankruptcy filing immediately before the foreclosure sale was not detrimental
because there is no indication from the Complaint and the documents attached
thereto that Plaintiffs lost any property rights or experienced any change as it relates
to their ownership of the real property in dispute. Consequently, Plaintiffs have not
stated a plausible promissory estoppel claim.
The Court likewise concludes that Plaintiffs are not entitled to declaratory
relief. Under Georgia law, declaratory relief may by issued only in cases of actual
controversy. O.C.G.A. § 9-4-2. “To proceed under a declaratory judgment a party
must establish that it is necessary to relieve himself of the risk of taking some future
action that, without direction, would jeopardize his interests.” Plantation Pipe Line
Co. v. Milford, 257 Ga. App. 709, 712, 572 S.E.2d 67 (2002) (citation omitted). Federal
law similarly requires that there be an “actual controversy” for a declaratory
judgment to be issued. Emory v. Peeler, 756 F.2d 1547, 1552 (11th Cir. 1985).
“[U]nder the facts alleged, there must be a substantial continuing controversy
between parties having adverse legal interests.” Id. (citations omitted). The Court
agrees with Chief Magistrate Judge Walker’s well-reasoned analysis that no actual
controversy exists and that Plaintiffs therefore are not entitled to declaratory relief.
Plaintiffs assert that they should have an opportunity to conduct discovery to
determine whether the foreclosure sale was consummated, but Plaintiffs cite no legal
authority persuading the Court that they are entitled to such discovery. Here,
Plaintiffs have failed to state claims for wrongful foreclosure, promissory estoppel,
fraud, fraudulent misrepresentation, negligent misrepresentation, and declaratory
relief. Therefore, Plaintiffs are not entitled to discovery relating to these claims.
Cummings v. Mortg. Elec. Registration Sys., No. 1:13-CV-3302-TWT, 2014 WL
3767797, at *4 (N.D. Ga. July 30, 2014) (“[A] plaintiff is not entitled to discovery. A
plaintiff must first file a complaint which states a legal claim before the door to
discovery is opened.”); Tolbert v. Trammell, No. 2:13-CV-02108-WMA, 2014 WL
3892115, at *9 (N.D. Ala. Aug. 4, 2014) (“Pleadings that fail to state a claim are not
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entitled to discovery to improve their factual foundation.”).
Based on the foregoing, this Court OVERRULES Plaintiffs’ objections to the
Report and Recommendation, ADOPTS the Report and Recommendation as the
opinion of this Court, and GRANTS Nationstar Mortgage LLC and BNY Mellon,
National Association’s Partial Motion to Dismiss. Accordingly, Plaintiffs’ claims of
wrongful foreclosure, breach of contract, breach of the duties of good faith and fair
dealing, fraud, fraudulent misrepresentations, negligent misrepresentation,
declaratory judgment, and promissory estoppel are DISMISSED with prejudice for
failure to state a claim upon which relief can be granted.
SO ORDERED this 30th day of September, 2015.

s/ CLARENCE COOPER
CLARENCE COOPER
SENIOR UNITED STATES DISTRICT JUDGE

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