Abdullahi v. Bank of America, NA et al
Filing
27
ORDER denying as moot 6 Bank of America and Freddie Mac's Motion to Dismiss Complaint and Pendergasts 7 Motion to Dismiss Complaint is DENIED as moot. Pendergasts 15 Motion to Strike or Dismiss Amended Complaint is GRANTED and Bank of America and Freddie Macs 16 Motion to Strike or Dismiss Amended Complaint is GRANTED. Finally, Plaintiffs 21 Motion for Leave to Amend First Amended Complaint is DENIED. Signed by Judge Richard W. Story on 3/15/2013. (vld)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
GAINESVILLE DIVISION
ZIAD ABDULLAHI,
Plaintiff,
v.
BANK OF AMERICA, N.A.;
FEDERAL HOME LOAN
MORTGAGE CORPORATION;
and PENDERGAST &
ASSOCIATES, P.C.,
Defendants.
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CIVIL ACTION NO.
2:12-CV-0162-RWS
ORDER
This case if before the Court on Defendants Bank of America (“BOA”)1
and Federal Home Loan Mortgage Corporation’s (“Freddie Mac”) Motion to
Dismiss the Complaint [6]; Defendant Pendergast & Associates’ (“Pendergast”)
Motion to Dismiss the Complaint [7]; Pendergast’s Motion to Strike and/or
Dismiss Plaintiff’s Amended Complaint [15]; BOA and Freddie Mac’s Motion
to Strike Amended Complaint, or, in the alternative, Motion to Dismiss
1
Plaintiff initially named “BAC Home Loans” as a Defendant in this action.
BAC Home Loans is not a legal entity. BAC Home Loans Servicing, LP merged with
BOA on July 1, 2011. Therefore, BOA responds in its own original capacity and as
successor to BAC Home Loans Servicing, LP.
AO 72A
(Rev.8/82)
Plaintiff’s First Amended Complaint [16]; and Plaintiff’s Motion to Amend
First Amended Complaint [21].
As a preliminary matter, the Court must decide whether to rely on the
original Complaint or Plaintiff’s Amended Complaint for purposes of the
motions to dismiss. Defendants move to strike the Amended Complaint as
untimely or, in the alternative, to dismiss the Amended Complaint. Under
Federal Rule of Civil Procedure (“Rule”) 15(a)(1), a party may amend its
pleading as a matter of course within a certain time period. “In all other cases, 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).
Although Plaintiff did not expressly request leave to amend his
Complaint, under Rule 15, “the court should freely give leave when justice so
requires.” Id. The parties have submitted motions based on the Amended
Complaint, which have been fully briefed. At this point, Defendants will not be
prejudiced and no delay will result from allowing the Amended Complaint to
remain.
Therefore, the Court will allow Defendant to amend his Complaint, and
Defendants’ Motions to Dismiss the Complaint ([6] and [7]), which were
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directed to the original Complaint are DENIED as moot. The Court now
considers the remaining motions before it.
Background
This dispute arises out of the non-judicial foreclosure sale of Plaintiff’s
property located at 5820 Catalpa Court, Cumming, Georgia 30040 (the
“Property”).2 On June 6, 2012, Plaintiff filed suit in Superior Court of Forsyth
County. (Complaint, Dkt. [1-1] at 5.) Defendants BOA and Freddie Mac
removed the action to this Court pursuant to 28 U.S.C. §§ 1331, 1332, 1367,
1441, and 1446. (Notice of Removal, Dkt. [1].) Defendant Pendergast then
filed a Stipulation Consenting to Removal [1-2].
On or about December 30, 2005, Plaintiff entered into a loan agreement
with Peachtree Residential Mortgage, L.P. (“PRM”) in the amount of
$316,250.00. At the same time, Plaintiff executed a Security Deed to secure the
loan, which named PRM as the Lender and Mortgage Electronic Registration
Systems, Inc. (“MERS’), acting solely as nominee for Lender and Lender’s
successors and assigns, as the Grantee under the security instrument. (Security
Deed, Dkt. [21-2] at 1.) Plaintiff alleges that on January 27, 2006, Freddie Mac
2
Unless otherwise noted, all background facts are accepted as true and are
taken from Plaintiff’s Amended Complaint [14].
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became the holder of the loan agreement. (See Dkt. [14-1] at 1 (“Yes. Our
records show that Freddie Mac is the owner of your mortgage and it was
acquired on January 27, 2006. This date is also referred to as the Freddie Mac
settlement date.”).)
On October 1, 2010, Pendergast, as attorney and representative of BAC
Home Loans Servicing, LP (“BAC”), sent a Notice of Foreclosure Sale to
Plaintiff. ([14-1] at 7.) The notice identified BAC as the Lender and “holder of
a Note secured by a Deed to Secure Debt,” and stated that a non-judicial
foreclosure sale would take place on the first Tuesday of November 2010. (Id.)
On November 5, 2010, Pendergast, again on behalf of BAC, sent an identical
Notice of Foreclosure Sale to Plaintiff, except it indicated that the sale would
take place on the first Tuesday of December 2010. ([14-1] at 7.)
The record shows that the Security Deed was transferred and assigned by
MERS to BAC on April 29, 2011. (Transfer and Assignment, Dkt. [14-1] at
11.) On May 4, 2011, Plaintiff received a third Notice of Foreclosure Sale from
Pendergast, as representative of BAC. ([14-1] at 12.) The third Notice stated
that a foreclosure sale would be held on the first Tuesday of June 2011. (Id.)
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The same day he received the third Notice of Foreclosure Sale from
Pendergast, Plaintiff received a letter from BOA requesting additional
documentation to complete an “eligibility review” for the federal government’s
Home Affordable Modification Program. ([14-1] at 14.) The letter states, “We
want you to know that if we do not receive the requested information by June 3,
2011, you will no longer be eligible for the Home Affordable Modification
Program and we will resume normal activities for collecting past due loan
payments.” (Id.) The BOA letter also says, “Do not ignore any foreclosure
notices. While you will not lose your home during the loan modification
evaluation, to protect your rights under applicable foreclosure law, you may
need to respond to foreclosure notices or take other actions.” (Id.)
On August 2, 2011 at 12:35 p.m., Stephanie Beal, a Home Servicing
Specialist with BOA’s Loan Modification Department, emailed Plaintiff’s
attorney. ([14-2] at 1.) The email states: “This loan is in the modification
process, and any information you received to the contrary is incorrect.” (Id.)
Ms. Beal informed Plaintiff’s attorney that the modification review was not
complete, and would not be complete until a final review was done by U.S.
Treasury, and that she, not other agents at BOA, was the point of contact for the
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loan. (Id.) At 2:52 p.m. that same day, Ms. Beal emailed Plaintiff’s attorney to
say that she had heard from the foreclosure department that the Property had
already been sold, “but it was possible to have it rescinded.” ([14-2] at 2.) She
also stated, “The underwriter has completed the review for MHA and has
determined that all of the documents are complete. They put in an escalated
request to have a foreclosure rescission, in addition to the one my supervisor
made yesterday.” (Id.)
The non-judicial sale of the Property occurred on August 2, 2011. The
following day, Ms. Beal again emailed Plaintiff’s attorney. ([14-2] at 4.) The
email says:
I contacted the foreclosure attorney for this file, and
was informed by the manager there that the
foreclosure has been rescinded. He also confirmed
that no new foreclosure date has been set at this time.
Our system at Bank of America still reflects a
foreclosure date of 08/02/11 and the loan is flagged as
“foreclosure sale has occurred, loan not conveyed.” It
may take some time, possibly around 48 hours, for
this to be updated.
(Id.) Plaintiff’s attorney forwarded Ms. Beal’s email to Plaintiff with a note
saying, “Congratulations your property was given back to you.” ([14-2] at 5.)
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On September 9, 2011, a Deed Under Power of Sale was filed with the
Clerk of Superior Court of Forsyth County, stating that BOA had purchased the
Property on August 2, 2011 for $327,578.69. ([14-2] at 7.) On the same day,
BOA filed a Special Warranty Deed with the Clerk transferring ownership of
the Property to Freddie Mac for consideration of $10.00. ([14-2] at 10.) On
March 16, 2012, Pendergast sent a letter to Plaintiff informing him that Freddie
Mac was the owner of the Property. ([14-3] at 1.) On March 28, 2012, a
Dispossessory Proceeding was filed by Freddie Mac against Plaintiff in the
Magistrate Court of Forsyth County. ([14-3] at 2.) The filing indicated that
Plaintiff was a tenant at sufferance, due to a foreclosure sale on August 2, 2011.
(Id.) On April 4, 2012, the Forsyth County Sheriff’s Department served
Plaintiff with notice of Dispossessory.
On April 9, 2012, new counsel for Plaintiff contacted H. Hall at
Pendergast to inform the firm of Ms. Beal’s communications with Plaintiff’s
former attorney and Ms. Beal’s representation that the foreclosure sale had been
rescinded. ([14-3] at 5.) Plaintiff’s counsel’s firm sent a similar letter to BOA
and Freddie Mac on April 11, 2012. ([14-3] at 6.) On April 24, 2012, the
Forsyth County Magistrate Court issued a judgment on behalf of Freddie Mac
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ordering a writ of possession against Plaintiff, not to be executed until June 10,
2012.
Plaintiff then filed this suit. Plaintiff brings claims for wrongful
foreclosure (Count I), quiet title relief under the Quiet Title Act of 1966 (II),
constructive fraud (Count III), promissory estoppel (Count IV), and violation of
the Fair Debt Collection Practices Act (Count V) against all Defendants.
Plaintiff seeks damages and injunctive relief to enjoin Freddie Mac from
dispossessing Plaintiff. Defendants move to dismiss all of the claims against
them.
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
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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.
“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
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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 - Motions to Dismiss
A.
Defendants BOA and Freddie Mac (“Bank Defendants”)
1.
Wrongful foreclosure (Count I)
To assert a wrongful foreclosure claim, Plaintiff must “establish a legal
duty owed to [him] by the foreclosing party, a breach of that duty, a causal
connection between the breach of that duty and the injury [he] sustained, and
damages.” Heritage Creek Dev. Corp. v. Colonial Bank, 601 S.E.2d 842, 844
(Ga. Ct. App., 2004). Plaintiff raises several theories to support his claim for
wrongful foreclosure. First, Plaintiff alleges that “BOA never received an
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assignment giving it the power of sale.” (Am. Compl., Dkt. [14] ¶ 31.) Second,
Plaintiff alleges that BOA breached its duty to exercise fairly and in good faith
the power of sale because the foreclosure was rescinded. (Id. ¶¶ 32-33.) Third,
Plaintiff claims that BOA was not entitled to foreclose because Freddie Mac
was the true owner of the loan. (Id. ¶ 34.) Finally, Plaintiff alleges that he
never received proper notice regarding the foreclosure because the Notices of
Sale did not correctly identify the owner of the loan as required by O.C.G.A. §
44-14-162.2. (Id. ¶ 35.)
At the outset, Bank Defendants argue that Plaintiff has not alleged any
facts to support a claim for wrongful foreclosure against Freddie Mac. (Bank
Def.s’ MTD Am. Compl., Dkt. [16-1] at 8.)3 Freddie Mac was not the
foreclosing party and Plaintiff has not alleged that Freddie Mac owed him any
legal duty. Plaintiff simply alleges that the Special Warranty Deed by which
Freddie Mac took ownership of the Property was invalid. (Am. Compl., Dkt.
[14] ¶ 37.) However, the validity of the post-sale transfer does not impact the
3
Bank Defendants incorporate by reference their motion to dismiss the original
Complaint [6-1] into their motion to strike and/or dismiss the Amended Complaint
[16-1].
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legality of the foreclosure sale itself. Therefore, the Court agrees that Plaintiff
has not stated a claim for wrongful foreclosure against Freddie Mac.
Next, as to BOA, Bank Defendants argue that Plaintiff does not have
standing to challenge any assignment of the Security Deed. (Bank Def.s’ MTD
Compl., Dkt. [6-1] at 11.) Plaintiff is not a party to the assignment and he is not
a third-party beneficiary under the contract. As a general rule, under Georgia
law, “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). Therefore, the Court
agrees that Plaintiff lacks standing to challenge or enforce assignment of the
contract. See Joseph v. Fed. Home Loan Mortg. Corp., No. 1:12-CV-1022RWS, 2012 WL 5429639, at *2 (N.D. Ga. Nov. 6, 2012) (finding plaintiff could
not support claim for wrongful foreclosure by challenging assignment of the
security deed because she was not a party to the contract and lacked standing to
challenge validity of the assignment).
Regarding Plaintiff’s allegation that BOA was not entitled to foreclose
because Freddie Mac was the “owner of the loan,” Bank Defendants argue that
at the time of foreclosure, BOA had full power of sale as successor to BAC.
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(Bank Def.s’ MTD Compl., Dkt. [6-1] at 9.) On April 29, 2011, MERS
transferred the Security Deed to BAC [14-1]. On July 1, 2011, BOA merged
with BAC. Under O.C.G.A. § 14-2-1106(a)(2), “every contract right possessed
by each corporation or entity party to the merger is vested in the surviving
corporation or entity without reversion or impairment, without further act or
deed, and without any conveyance, transfer, or assignment having occurred.”
Therefore, without taking any further action, BOA became the rightful holder of
the Security Deed on the date of its merger with BAC.
The Security Deed explicitly grants the “successors and assigns of
MERS” the power of sale and “the right to foreclose and sell the Property” in
the event of Plaintiff’s default ([21-2] at 3.) Plaintiff does not contest that he
was behind on his mortgage payments. (See generally, Am. Compl., Dkt. [14].)
Therefore, the Court agrees that on August 2, 2011, BOA had the authority to
foreclose on the Property and initiate sale proceedings.4
4
To the extent Plaintiff is asserting a “splitting of the Note and Deed” theory of
wrongful foreclosure, the claim fails. 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-CV1171-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-CV1967-RWS, 2012 WL 716161, at *3 (N.D. Ga. Mar. 5, 2012).
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Next, Plaintiff alleges that BOA breached its duty to exercise fairly and
in good faith the power of sale because BOA later rescinded the foreclosure.
(Am. Compl., Dkt. [14] ¶¶ 32-33.) Bank Defendants argue that this theory of
wrongful foreclosure is deficient for multiple reasons. First, Defendants
maintain that no rescission occurred and Plaintiff cannot point to any duty or
obligation to rescind owed to him by the Bank Defendants. (Bank Def.s’ MTD
Am. Compl., Dkt. [16-1] at 9.) Furthermore, any rescission would have
occurred after the sale was complete, and therefore has no bearing on a claim
for wrongful foreclosure. (Bank Def.s’ MTD Compl, Dkt. [6-1] at 8-9.)
Under Georgia law, “[p]owers of sale in deeds of trust, mortgages, and
other instruments ... shall be fairly exercised.” O.C.G.A. § 23-2-114. In
practice, this requires that when the power of sale is exercised, the foreclosing
party must advertise and sell the property according to the terms of the
instrument, and the sale must be conducted in good faith. Brown v. Freedman,
474 S.E.2d 73, 76 (Ga. Ct. App. 1996). Here, Plaintiff alleges that BOA did not
act in good faith because it represented to Plaintiff after the sale that the sale
had been rescinded. The Court agrees that BOA’s alleged actions after the sale
do not bear on a wrongful foreclosure claim.
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Finally, Plaintiff alleges that the Notices of Sale were defective because
the “owner of the loan” was never properly identified as required under
O.C.G.A. § 44-14-162.2. (Am. Compl., Dkt. [14] ¶ 35.) Bank Defendants note
that no foreclosure sale resulted from the October 2010 and November 2010
notices, and therefore these notices cannot serve as the basis for a wrongful
foreclosure claim. (Bank Def.s’ MTD Compl., Dkt. [6-1] at 13-14.) To the
extent Plaintiff is alleging that these earlier notices constituted attempted
wrongful foreclosures, Defendants argue that the August 2, 2011 sale
extinguished any claims for attempted wrongful foreclosure and that Plaintiff
has failed to allege the elements of a claim for attempted wrongful foreclosure.
The Court agrees with Defendants regarding the 2010 notices. “To state
a claim for attempted wrongful foreclosure under Georgia law, a plaintiff must
show that a creditor knowingly and intentionally published untrue and
derogatory information concerning the debtor’s financial condition, and that
damages were sustained as a direct result of this publication.” Sellers v. Bank
of Am., N.A., No. 1:11-CV-3955-RWS, 2012 WL 1853005, at *3 (N.D. Ga.
May 21, 2012). Plaintiff has not alleged that Bank Defendants published any
untrue or derogatory information concerning his financial condition. Plaintiff
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also has not alleged any damages sustained as a result of the 2010 notices. And
finally, because a foreclosure sale has been completed, any attempted wrongful
foreclosure claim brought by Plaintiff is improper. See Austin v. Bank of Am.,
N.A., No. 1:11-CV-3346-RWS, 2012 WL 928732, at *1 (N.D. Ga. Mar. 16,
2012) (“In Georgia, a claim for attempted wrongful foreclosure only exists
when a foreclosure action was commenced, but not completed....”).
With regard to the May 4, 2011 Notice of Foreclosure Sale ([14-1] at 12),
which did result in sale of the Property, Plaintiff alleges that the notice was
defective because the “owner of the loan” was never properly identified. (Am.
Compl., Dkt. [14] ¶ 35.) Bank Defendants respond that Plaintiff’s claim fails
for two reasons: (1) Plaintiff cannot show that his damages, if any, were caused
by the foreclosure and not his failure to make payments on the loan; and (2)
Plaintiff fails to recognize the distinction between the “owner of a loan,” the
holder of a promissory note, and the assignee of a security deed. (Bank Def.s’
MTD Am. Compl., Dkt. [16-1] at 9-10.)
Plaintiff alleges that he has “been damaged emotionally and financially
through the erroneous foreclosure of Property.” (Am. Compl., Dkt. [14] ¶ 37.)
However, as discussed above, BOA had the right to foreclose under the terms of
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the Security Deed. The Court agrees with Defendants that Plaintiff’s alleged
damages were caused by his undisputed failure to make payments on the loan,
not by Bank Defendants’ lawful actions. Therefore, because he cannot show
the requisite causation, Plaintiff has not stated a claim for wrongful foreclosure
against Defendants based on defective notice.
In sum, all of Plaintiff’s theories of wrongful foreclosure fail and the
claim is DISMISSED as to Bank Defendants.
2.
Quiet Title (Count II)
Plaintiff seeks to quiet title in his favor on grounds that he “is the owner
of Property; however, both BOA and [Freddie Mac] claim interest in the
Property. The fact that both claim to hold interest in the loan creates a cloud
over the title which must be removed.” (Am. Compl., Dkt. [14] ¶ 40.) Bank
Defendants contend that Plaintiff has not satisfied the strict requirements to
maintain an action under the Georgia Quiet Title Act, O.C.G.A. § 23-3-62, et
seq. (Bank Def.s’ MTD Am. Compl., Dkt. [16-1] at 18-19.) The statute
requires that the petition to quiet title be verified and contain particular details
regarding the petitioner’s interest in the land, as well as possible adverse
claimants’ interests. O.C.G.A. § 23-3-62(b). The statute also requires that a
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plat of survey of the land be filed with the petition. O.C.G.A. § 23-3-62(c).
Bank Defendants assert that Plaintiff has not satisfied these requirements
because, among other reasons, Plaintiff failed to file a survey plat with his
Complaint and Amended Complaint. (Bank Def.s’ MTD Am. Compl., Dkt.
[16-1] at 18.) The Court agrees that Plaintiff has not met the requirements to
bring an action under the Georgia Quiet Title Act. Therefore, this claim is
DISMISSED as to Bank Defendants.
3.
Constructive Fraud (Count III)
Plaintiff alleges that Bank Defendants committed constructive fraud
when they represented to Plaintiff that he would not lose his home during his
loan modification evaluation, but foreclosed anyway. (Am. Compl., Dkt. [14] ¶
43.) Further, he alleges, BOA “fed Plaintiff false information” when it
represented that the foreclosure sale had been rescinded. (Id. ¶ 44.) This
conduct, according to Plaintiff, constituted an intentional misrepresentation by
BOA “and concealed their actions that led Plaintiff to believe that they had the
authority and desire to modify his loan.” (Id. ¶ 45.)
In Georgia, “[c]onstructive fraud consists of any act of commission,
contrary to legal or equitable duty, trust, or confidence justly reposed, which is
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contrary to good conscience and operates to the injury of another.” O.C.G.A. §
23-2-51(b). To state a claim for constructive fraud, “the plaintiff must prove
the existence of a confidential relationship” between the plaintiff and defendant.
Rowland v. Rowland, No. 1:04-CV-2068-TWT, 2005 WL 3096169, at *6 (N.D.
Ga. Nov. 18, 2005). Bank Defendants argue that Plaintiff has failed to state a
claim for constructive fraud because Plaintiff has not alleged the existence of
any confidential relationship between Plaintiff and Bank Defendants. (Bank
Def.s’ MTD Compl., Dkt. [6-1] at 15-16.)
The Court agrees with Defendants. Georgia courts, including this Court,
have consistently held that there is no confidential relationship merely because
of parties’ relationship as lender and borrower or mortgagee and mortgagor.
See Brown v. Bank of Am., N.A., No. 2:12-CV-0132-RWS, 2013 WL 628599,
at *3 (N.D. Ga. Feb. 20, 2013). Plaintiff has not shown any reason why the
Court should depart from the general rule here. Therefore, Plaintiff’s
constructive fraud claim is DISMISSED as to Bank Defendants.
4.
Promissory Estoppel (Count IV)
Plaintiff asserts a promissory estoppel claim based on BOA’s alleged
promise that the foreclosure sale had been rescinded. (Am. Compl., Dkt. [14]
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¶¶ 47-48.) “To prevail on a promissory estoppel claim, plaintiffs must show
that (1) defendant made certain promises, (2) defendant should have expected
that plaintiff[] would rely on such promises, (3) that plaintiff[] did in fact rely
on such promises to [his] detriment, and (4) injustice can be avoided only by
enforcement of the promise.” Canterbury Forest Ass’n v. Collins, 532 S.E.2d
736, 739 (Ga. Ct. App. 2000). Bank Defendants argue that they did not make
any promises to Plaintiff and that Plaintiff’s reliance on BOA statements was
not reasonable under the circumstances. (Bank Def.s’ MTD Compl., Dkt. [6-1]
at 18-23.)
“Promissory estoppel requires reliance on a promise, rather than a
representation of fact.” Pinnacle Port Cmty. Ass’n v. Orenstein, 872 F.2d 1536,
1543 (11th Cir. 1989). Plaintiff’s promissory estoppel claim rests on multiple
statements by BOA’s employee, Stephanie Beal; namely:
I was able to reach the foreclosure attorney to confirm
if the sale had occurred or not. They told me that it
had been sold, but it was possible to have it rescinded.
I also spoke with the underwriter. . . . They put in an
escalated request to have a foreclosure rescission, in
addition to the one my supervisor made yesterday.
([14-2] at 2.)
I contacted the foreclosure attorney for this file, and
was informed by the manager there that the
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foreclosure has been rescinded. . . .Our system at
Bank of America still reflects a foreclosure date of
08/02/11 and the loan is flagged as “foreclosure sale
has occurred, loan not conveyed.” It may take some
time, possibly around 48 hours, for this to be updated.
([14-2] at 4.)
Bank Defendants argue that these statements do not constitute promises to
Plaintiff that the foreclosure would be rescinded. (Bank Def.s’ MTD Compl.,
Dkt. [6-1] at 20.) Rather, Ms. Beal was merely communicating her
understanding of the facts regarding rescission of the sale. (Id.)
Bank Defendants also assert that Plaintiff’s reliance on these statements,
even if they are construed as promises, was not reasonable. (Id. at 20-23.)
First, they argue, Plaintiff could not have reasonably relied on any statement
that rescission was “possible.” (Id. at 21.) Second, Defendants argue that
Plaintiff’s reliance was unreasonable in light of the written agreement between
the parties (i.e., the Security Deed). (Id.) The Eleventh Circuit has found that
“[r]eliance is not reasonable if the clear and unambiguous provisions of the
written contract between the promisor and promissee served to place the
promissee on due notice that he could not thereafter reasonably rely upon any
words or other course of dealing to his inducement, other than a modification of
the agreement actually reduced to writing.” Sampson v. Washington Mut.
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Bank, 453 Fed. App’x 863, 867 (11th Cir. 2011) (internal quotations omitted).
Here, the Security Deed states: “Extension of the time for payment or
modification of amortization of the sum secured by this Security Instrument
granted by Lender to Borrower . . . shall not operate to release the liability of
Borrower . . . .” (Security Deed, Dkt. [21-3] ¶ 12.) The Security Deed also says
that, after proper notice, if Plaintiff does not cure his default before the date
specified in the notice, the lender may require immediate payment in full and
invoke the power of sale. (Id. ¶ 22.)
The Court agrees that Plaintiff has failed to allege a promise by Bank
Defendants and even if Ms. Beal’s statements could be construed as promises,
Plaintiff has failed to show reasonable reliance on those statements, given the
clear terms of the Security Deed.5 Therefore, Plaintiff’s promissory estoppel
claim is DISMISSED as to Bank Defendants.
5
The Court also questions whether Plaintiff has shown detrimental reliance on
any promise or representation made by Bank Defendants. Plaintiff simply states that
he “lost money and time dealing with BOA’s officials that had not [sic] interest in
helping them to save their property.” (Am. Compl., Dkt. [14] ¶ 48.) Plaintiff does not
dispute that he was in default on his loan payments. Therefore, Plaintiff’s efforts to
secure a modification and negotiate with BOA were beneficial to him and began
before BOA represented that the foreclosure sale had been rescinded. Notably,
Plaintiff does not allege that he continued making payments under the loan or a
modified loan agreement after the foreclosure sale.
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5.
Fair Debt Collection Practices Act (“FDCPA”) (Count V)
Plaintiff alleges that the Notices of Foreclosure sent by Defendant
Pendergast in October 2010 and November 2010 represented “a fraudulent
attempt to collect on debt” in violation of 15 U.S.C. § 1692e(10)6 and §
1692f(6)(A)7 because BAC did “not have standing to collect on a debt they
were not entitled to” and because the notices “wholly fail to mention any claim
of ownership on behalf of [Freddie Mac].” (Am. Compl., Dkt. [14] ¶¶ 51-54.)
Bank Defendants contend that Plaintiff’s FDCPA claim fails for three reasons:
(1) Plaintiff has not even alleged that Bank Defendants are “debt collectors”
under the FDCPA; (2) a foreclosure proceeding is not a “debt collection”
activity under the FDCPA; and (3) any claim based on the 2010 notices is timebarred by the FDCPA’s one-year statute of limitations. (Bank Def.s’ MTD Am.
Compl, Dkt. [16-1] at 18-19.) The Court agrees with Bank Defendants that
Plaintiff’s claim is time-barred.
6
This subsection of the FDCPA prohibits: “The use of any false representation
or deceptive means to collect or attempt to collect any debt or to obtain information
concerning a consumer.”
7
This subsection of the FDCPA prohibits: “Taking or threatening to take any
nonjudicial action to effect dispossession or disablement of property if there is no
present right to possession of the property claimed as collateral through an enforceable
security interest.”
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Section 1692k(d) states that an action to enforce liability under the
FDCPA may be brought “within one year from the date on which the violation
occurs.” The Eleventh Circuit has found that an FDCPA claim accrues on the
day after the alleged violation occurs. See Maloy v. Phillips, 64 F.3d 607, 608
(11th Cir. 1995) (applying calculation method under Fed. R. Civ. P. 6(a)).
Here, the notices were dated October 1, 2010 and November 5, 2010. ([14-1] at
6-7.) Plaintiff did not file his original Complaint alleging an FDCPA violation
until June 6, 2012. Therefore, this claim is clearly barred by the statute of
limitations and is DISMISSED as to Bank Defendants.8
6.
Emotional Distress Damages
Plaintiff requests damages for intentional infliction of emotional distress.
Plaintiff alleges that “Defendants’ actions were obviously intentional – they
sent out the wrongful notices not once but three times, and, each time, they did
not have the right to do so. Further, they made binding statements in which
they committed blatant sabotage to the detriment of Plaintiff.” (Am. Compl.,
Dkt. [14] ¶ 58.) To state a claim for emotional distress, Plaintiff must allege
8
Plaintiff raises in his Response Brief [18] the argument that he received
another notice in June 2011, which “starts a new clock on the statute of limitations.”
However, Plaintiff is precluded from raising new allegations and theories of relief in
his brief that do not appear in his Amended Complaint.
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that Defendants’ conduct was “(1) intentional or reckless; (2) extreme and
outrageous; and (3) the cause of severe emotional distress.” Wilcher v.
Confederate Packaging, Inc., 651 S.E.2d 790, 792 (Ga. Ct. App. 2007). “[O]nly
where the conduct has been so outrageous in character, and so extreme in
degree, as to go beyond all possible bounds of decency, and to be regarded as
atrocious, and utterly intolerable in a civilized community” will a plaintiff
prevail on a claim for intentional infliction of emotional distress. Garner v.
Acad. Collection Serv., Inc., No. 3:04-CV-93-JTC, 2005 WL 642680, at *5
(N.D. Ga. Mar. 11, 2005). Bank Defendants argue that Plaintiff has failed to
allege any of the elements for a claim of intentional infliction of emotional
distress, and instead has made only conclusory allegations and recited Georgia
case law on this cause of action. (Bank Def.s’ MTD Compl., Dkt. [6-1] at 25.)
The Court agrees with Defendants. Even if the notices were deficient in
some technical way, as Plaintiff alleges, there is no indication of extreme and
outrageous conduct by Defendants. Plaintiff does not dispute that he was in
default under his loan agreement. The Security Deed gave the lender and its
representatives (BAC and BOA) authority to accelerate the debt and foreclose
on the Property in the event of Plaintiff’s default. Consequently, Bank
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Defendants’ efforts to collect on the debt owed by Plaintiff were neither
extreme nor outrageous. Therefore, this claim is DISMISSED as to Bank
Defendants.
7.
Injunctive Relief
Plaintiff seeks to enjoin Freddie Mac from moving forward with any
dispossessory actions. (Am. Compl., Dkt. [14] ¶ 65.) To obtain temporary
injunctive relief, Plaintiff must demonstrate: (1) a substantial likelihood of
success on the merits of the underlying case, (2) that he will suffer irreparable
harm in the absence of an injunction, (3) that the harm suffered by him in the
absence of an injunction would exceed the harm to the opposing party if an
injunction were issued, and (4) that an injunction would not disserve the public
interest. Johnson & Johnson Vision Care, Inc. V. 1-800 Contacts, Inc., 299
F.3d 1242, 1246-47 (11th Cir. 2002). Defendants argue that Plaintiff has not
shown a substantial likelihood of success on the merits of his underlying claims
and he has not tendered any security as required by Rule 65(c).
Because the Court has dismissed all of Plaintiff’s underlying claims as to
Freddie Mac, Plaintiff cannot demonstrate a substantial likelihood of success on
the merits. Therefore, Plaintiff’s request for injunctive relief is DENIED.
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B.
Defendant Pendergast
Pendergast notes that it merely represented BOA as legal counsel in
connection with the non-judicial foreclosure sale and argues that all of
Plaintiff’s claims against it should be dismissed pursuant to Rule 12(b)(6).
(Pendergast MTD Am. Compl, Dkt. [15-1] at 7.) Since Pendergast was not the
foreclosing party and at no time held or asserted any interest in the Property,
Plaintiff appears to assert most of his claims against Pendergast under an
agency theory. Notably, Plaintiff’s theory of Pendergast’s liability is not clear
from the Amended Complaint. In fact, the Amended Complaint contains only
one specific allegation against Pendergast – that Pendergast sent fraudulent
notices of foreclosure in October and November 2010 in violation of the
FDCPA. (Am. Compl., Dkt. [14] ¶¶ 51-52.)
Assuming, arguendo, that Plaintiff has sufficiently stated a claim for
violation of the FDCPA against Pendergast, the claim is time-barred (see
discussion in Part II.A.5, supra) and DISMISSED. The Court finds that
Plaintiff has failed to satisfy the basic requirements of notice pleading under
Rule 8 with regard to all other claims against Pendergast. Therefore, all claims
against Pendergast are DISMISSED.
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III.
Plaintiff’s Motion for Leave to Amend First Amended Complaint
Plaintiff moves for leave to amend his Amended Complaint under Rule
15(a)(2). Defendants argue that the motion should be dismissed because
amendment would be futile and because Plaintiff has failed to allege any newly
discovered information to warrant amendment. (See Generally Def.s’ Resp.s
Opposing Pl.’s Mot. to Amend, Dkt. [23] and [24].) The Court agrees with
Defendants.
Although Rule 15(a)(2) says that leave to amend should be freely given,
futility of amendment is justification for dismissal with prejudice. Foman v.
Davis, 371 U.S. 178, 182 (1962). Plaintiff’s proposed Second Amended
Complaint [21-1] does not contain any new factual allegations against
Defendants. The amendments simply elaborate on Plaintiff’s prior legal
arguments, cite additional law, and provide a more detailed discussion of
damages suffered by Plaintiff. The additional law cited by Plaintiff in his
proposed Second Amended Complaint existed when Plaintiff filed his
Complaint and Amended Complaint, and does not alter the Court’s analysis of
Plaintiff’s claims.
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The Court finds that Plaintiff has not presented any new facts or authority
in his proposed amendments and based on the Court’s analysis in Part II, supra,
amendment would be futile. Therefore, Plaintiff’s motion for leave to amend is
DENIED.
Conclusion
Based on the foregoing, Bank of America and Freddie Mac’s Motion to
Dismiss Complaint [6] is DENIED as moot and Pendergast’s Motion to
Dismiss Complaint [7] is DENIED as moot. Pendergast’s Motion to Strike or
Dismiss Amended Complaint [15] is GRANTED and Bank of America and
Freddie Mac’s Motion to Strike or Dismiss Amended Complaint [16] is
GRANTED. Finally, Plaintiff’s Motion for Leave to Amend First Amended
Complaint [21] is DENIED.
SO ORDERED, this 15th day of March, 2013.
_______________________________
RICHARD W. STORY
UNITED STATES DISTRICT JUDGE
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