UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION. v. 1:12-CV-1241-CAP ORDER

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1 Case 1:12-cv CAP Document 73 Filed 01/08/14 Page 1 of 14 MICHAEL HOOD, UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION Plaintiff, CIVIL ACTION NO. v. 1:12-CV-1241-CAP EVERBANK; EVERHOME MORTGAGE COMPANY; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; and FEDERAL NATIONAL MORTGAGE ASSOCIATION, Defendants. ORDER This matter is before the court on the defendants motion for summary judgment [Doc. No. 66], motion for leave to file excess pages [Doc. No. 68], and motion to strike [Doc. No. 70]. As an initial matter, the defendants motion for leave to file excess pages [Doc. No. 68] is GRANTED; the reply brief [Doc. No. 69] is accepted as filed. I. The Defendants Motion for Summary Judgment A. Factual and Procedural Background In May 2003, the plaintiff and his then-wife purchased property at 250 Grandiflora Drive, Stockbridge, Georgia. He obtained a mortgage loan from RBMG, Inc. and signed a note in favor of the lender. Additionally, the

2 Case 1:12-cv CAP Document 73 Filed 01/08/14 Page 2 of 14 plaintiff executed a security deed in favor of Mortgage Electronic Registration systems, Inc. ( MERS ) as nominee for RBMG, Inc., its successors and assigns, and to the successors and assigns of MERS. While neither party explains how Defendant EverBank 1 became involved with the property, they seem to agree that the plaintiff was making his payments to EverBank. In June 2009, the plaintiff began having difficulty making his mortgage payments. At some point between June 2009 and June 2011, the plaintiff sought modification of his loan payments. 2 On April 20, 2010, the plaintiff filed a Voluntary Petition in the United States Bankruptcy Court for this district. On July 6, 2010, EverHome filed a motion for relief from stay in the bankruptcy case. At some point, the plaintiff and EverBank entered into a Home Affordable Modification Agreement, and the plaintiff sought approval of this agreement in the bankruptcy court. The bankruptcy court approved the 1 On July 1, 2011, EverHome Mortgage Company, LLC and EverBank merged, leaving EverBank as the surviving entity. Therefore, the court will refer to the bank entity as EverBank throughout this order even though some events took place prior to the merger. 2 The defendants statement of material facts is chronologically confusing. For example, the defendants contend that the plaintiff and his then-wife sought a loan modification in June 2011 [Doc. No at 9] and that the modification package called for three trial period payments in 2009 [Doc. No at 11]. The plaintiff admitted these facts in response to the statement of material facts. 2

3 Case 1:12-cv CAP Document 73 Filed 01/08/14 Page 3 of 14 modification agreement. After the plaintiff failed to make the mortgage loan payments in accordance with the agreement, Everbank pursued the motion for relief from the bankruptcy stay. On the day the bankruptcy court scheduled a hearing of the motion for relief from stay, February 9, 2011, the plaintiff filed an amended Chapter 13 Plan in which he identified EverBank as a creditor and stated that his residence was to be surrendered. On March 31, 2011, the bankruptcy court terminated the automatic stay and authorized EverBank to exercise its rights under the power of sale provisions in the security deed. In April 2011, the plaintiff attempted to make a payment to EverBank and was advised that the payment would be returned because the lender was going to foreclose. On January 31, 2012, the plaintiff was sent a foreclosure sale notice via certified mail through the United States Postal Service. The plaintiff did not retrieve or sign for the certified letter. The property was foreclosed on March 6, After the foreclosure sale, EverBank conveyed the property to Fannie Mae. Fannie Mae filed a dispossessory proceeding and was granted a writ of possession. At some point thereafter, the plaintiff was evicted from the property. The plaintiff filed this suit in Henry County Superior Court against EverBank and MERS, and it was removed to this court by the defendants. 3

4 Case 1:12-cv CAP Document 73 Filed 01/08/14 Page 4 of 14 The plaintiff then filed an amended complaint adding Fannie Mae as a named defendant. B. Summary Judgment Standard Rule 56(a) of the Federal Rules of Civil Procedure authorizes summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. The party seeking summary judgment bears the burden of demonstrating that no dispute as to any material fact exists. Adickes v. S.H. Kress & Co., 398 U.S. 144, 156 (1970); Johnson v. Clifton, 74 F.3d 1087, 1090 (11th Cir. 1996). The moving party s burden is discharged merely by showing that is, pointing out to the district court that there is an absence of evidence to support [an essential element of] the nonmoving party s case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). In determining whether the moving party has met this burden, the district court must view the evidence and all factual inferences in the light most favorable to the party opposing the motion. Johnson, 74 F.3d at Once the moving party has adequately supported its motion, the nonmovant then has the burden of showing that summary judgment is improper by coming forward with specific facts showing a genuine dispute. Matsushita Electrical Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). 4

5 Case 1:12-cv CAP Document 73 Filed 01/08/14 Page 5 of 14 In deciding a motion for summary judgment, it is not the court s function to decide issues of material fact but to decide only whether there is such an issue to be tried. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251 (1986). The applicable substantive law will identify those facts that are material. Id. at 247. Facts that in good faith are disputed, but which do not resolve or affect the outcome of the case, will not preclude the entry of summary judgment as those facts are not material. Id. Genuine disputes are those by which the evidence is such that a reasonable jury could return a verdict for the nonmovant. Id. Genuine factual issues must have a real basis in the record. See Matsushita, 475 U.S. at 586. Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial. Id. at 587 (citations omitted). C. Analysis The amended complaint [Doc. No. 5] contains five enumerated counts: wrongful foreclosure, breach of contract/promissory estoppel, bad faith, constructive fraud, and injunctive relief. Bad faith and injunctive relief are not substantive causes of action. A review of the paragraphs within these counts indicates that the plaintiff is seeking certain types of relief. For 5

6 Case 1:12-cv CAP Document 73 Filed 01/08/14 Page 6 of 14 purposes of resolving the pending motion for summary judgment, the court will consider the substantive counts first. 1. The Plaintiff s Wrongful Foreclosure Claim In Count I of the amended complaint, the plaintiff attacks the validity of the foreclosure sale using two legal theories. First, he alleges that EverBank violated the notice requirements of Georgia s non-judicial foreclosure statute. Second, he alleges that the assignment of the loan from MERS to EverBank was invalid. The plaintiff makes no allegations of wrongdoing by Fannie Mae within Count I. The plaintiff s attack on the assignment fails as a matter of law because the plaintiff lacks standing to challenge the assignment from MERS to Everbank. While this court has in the past rejected the lack of standing argument, the Georgia Court of Appeals has recently clarified Georgia law on this issue. The court held that the assignment of a security deed is a contract between assignor and assignee, and a borrower, who is not a party to that contract, lacks the standing to challenge it. Montgomery v. Bank of Am., 740 S.E.2d 434 (Ga. Ct. App. 2013). Pursuant to the holding of the Georgia Court of Appeals, the court concludes that the plaintiff lacks standing to challenge the assignment. 6

7 Case 1:12-cv CAP Document 73 Filed 01/08/14 Page 7 of 14 With regard to the plaintiff s allegation that EverBank failed to give him proper notice as required by O.C.G.A , the plaintiff contends that the letter he received did not provide any information concerning who may amend or modify the plaintiff s loan. While the defendants concede that the February 15, 2012 letter referred to by the plaintiff did not contain this information, the defendant has directed the court to a January 31, 2012 letter that does contain the required information. It is the January 31, 2012 letter that the plaintiff did not retrieve from the United States Postal Service. In response to the motion for summary judgment, the plaintiff points out that the letter referenced by the defendants was not sent to the property address. Instead, it was sent to 260 Grandiflora Drive, McDonough, GA , and the property address is 260 Grandiflora Drive, Stockbridge, GA The January 31, 2012 letter was sent via certified mail using the United State Postal Service. The defendants have provided evidence to establish that the official United States Postal Service mailing address for the property is 260 Grandiflora Drive, McDonough, GA [Doc. No and 63-3]. Moreover, the plaintiff has admitted that the mailing address for the property is 260 Grandiflora Drive, McDonough, GA [Doc. 7

8 Case 1:12-cv CAP Document 73 Filed 01/08/14 Page 8 of 14 No at 6]. Therefore, the plaintiff s argument that the January 31, 2012 letter does not comply with Georgia s notice statute is completely disingenuous. The plaintiff raises other arguments in response to the motion for summary judgment by alleging additional deficiencies with the January 31, 2012 letter. However, the plaintiff may not amend his complaint by making new allegations in a brief in response to the motion for summary judgment. Gilmour v. Gates, McDonald & Co., 382 F.3d 1312, 1315 (11th Cir. 2004). Therefore, the court has disregarded the new allegations that were asserted in the response brief. Based on the undisputed evidence, the court concludes that EverBank complied with the requirements of Georgia s notice statute. Furthermore, the plaintiff does not have standing to challenge the assignment from MERS to EverBank. Therefore, the defendants motion for summary judgment is GRANTED as to Count I. 2. The Plaintiff s Breach of Contract Claim In Count II of the amended complaint, the plaintiff contends that EverBank breached the modification agreement by failing to accept his payments. The plaintiff makes no allegation of wrongdoing by MERS or Fannie Mae within Count II. 8

9 Case 1:12-cv CAP Document 73 Filed 01/08/14 Page 9 of 14 According to Paragraph 44 of the defendants Statement of Undisputed Facts, which the plaintiff admits, the first payment that was refused by EverBank was in April EverBank argues that the payment was rightfully refused because the plaintiff was in default as he had not timely made his payments. It is undisputed that the payment schedule set forth in the modification agreement was for sixty (60) payments of $1, to commence January 1, 2010, twelve (12) payments adjusting annually at a rate of 4.250% commencing January 1, 2015, and two hundred thirteen (213) payments adjusting annually at a rate of 5.250%. Defs. Statement of Material Facts at 26 [Doc. No. 66-9]; Pl. s Resp. to Defs. Statement of Material Facts at 26 [Doc. No. 67-1]. While the parties dispute the precise number and amounts of the payments made by the plaintiff, the plaintiff has directed the court to a payment history attached to the Affidavit of Lorri Beltz [Doc. No. 45 at pp. 5 9], which establishes that the plaintiff paid the following amounts: Dec. 14, 2010 $1,200.00, Jan. 19, 2011 $1,679.00, Jan $1,400.00, Mar. 17, 2011 $1,575.00, March 23, 2011 $1,

10 Case 1:12-cv CAP Document 73 Filed 01/08/14 Page 10 of 14 [Doc. No at 31]. In responding to the motion for summary judgment, the plaintiff does not address payments prior to December 14, 2010 and does not acknowledge the three insufficient funds checks he submitted to EverBank in Moreover, the precise document relied on by the plaintiff, the payment history [Doc. No. 45 at pp. 5 9], establishes that it was the plaintiff who failed to comply with the terms of the modification agreement through his failure to make timely payments. Therefore, EverBank s decision to refuse the April 2011 payment and begin foreclosure proceedings was not a breach of contract. In Count II of the amended complaint, the plaintiff alternatively argues that EverBank was not the correct party to enter into the modification agreement with the plaintiff. However, the plaintiff contends that Even if [EverBank] did not have the authority to make modification Plaintiff [sic] breach of contract claim should be upheld through the equitable action of promissory estopple [sic]. [Doc. No. 5 at 16]. The court is completely unable to understand basis of the plaintiff s promissory estoppel claim. Nevertheless, under Georgia law, the essential elements of promissory estoppel, are that: (1) the defendant made a certain promise or promises; (2) the defendant should have reasonably expected the plaintiff to rely on such promise or promises; (3) plaintiff did, in fact, rely on such promise or 10

11 Case 1:12-cv CAP Document 73 Filed 01/08/14 Page 11 of 14 promises to his detriment; and (4) an injustice can be avoided only by the enforcement of the promise, because the plaintiff surrendered, forgoes, or rendered a valuable right. Reindel v. Mobile Content Network Co., LLC, 652 F. Supp. 2d 1278, 1290 (N.D. Ga. 2009) (citing Simpson Consulting, Inc. v. Barclays Bank PLC, 490 S.E.2d 184, 192 (Ga. Ct. App. 1997), overruled on other grounds, Williams General Corp. v. Stone, 614 S.E.2d 758 (Ga. 2005); O.C.G.A (a). The undisputed evidence in this case establishes that it was the plaintiff who failed to uphold his promise to pay. Based on the foregoing, the court concludes that EverBank has not breached the modification agreement or any promise made to the plaintiff. Therefore, the defendants are entitled to summary judgment as to Count II of the amended complaint.. 3. The Plaintiff s Constructive Fraud Claim In Count IV of the amended complaint, the plaintiff contends that EverBank committed constructive fraud by falsely representing to the plaintiff that it was his lender/creditor. Also, the plaintiff contends that EverBank represented that MERS had the authority to sign the modification agreement on behalf of EverBank when it did not. The plaintiff makes no allegation of wrongdoing by MERS or Fannie Mae within Count IV. 11

12 Case 1:12-cv CAP Document 73 Filed 01/08/14 Page 12 of 14 In Georgia there are five elements of the tort of fraud. These are a false representation by a defendant, scienter, intention to induce the plaintiff to act or refrain from acting, justifiable reliance by the plaintiff, and damage to the plaintiff. Grizzle v. Guarantee Ins. Co., 602 F. Supp. 465, 467 (N.D. Ga. 1984). Georgia also recognizes constructive fraud, whereby the defendant may be held liable if he fails to disclose information he was under a legal or equitable duty to disclose. Eason Pubs., Inc. v. NationsBank of Ga., 458 S.E.2d 899, 903 (Ga. Ct. App. 1995); O.C.G.A (b) ( Constructive fraud consists of any act of omission or commission, contrary to legal or equitable duty, trust, or confidence justly reposed, which is contrary to good conscience and operates to the injury of another. ). In moving for summary judgment, the defendants contend there is no evidence of a false representation or detrimental reliance. In response, the plaintiff contends that he has evidence of constructive fraud by Fannie Mae because he received a notice stating the Fannie Mae was the owner of the plaintiff s property, which was false. However, this allegation was not made in the complaint. In fact, the only allegation of constructive fraud in the amended complaint was against EverBank. In the response brief to the motion for summary judgment, the plaintiff makes no mention of a constructive fraud claim against EverBank. 12

13 Case 1:12-cv CAP Document 73 Filed 01/08/14 Page 13 of 14 Because the defendants pointed out an absence of evidence as to two essential elements of the plaintiff s constructive fraud claim and because the plaintiff failed to direct the court to any evidence to establish those elements, the defendants are entitled to summary judgment on Count IV of the complaint. 4. Counts III and V As set forth above, Counts III (bad faith) and IV (injunctive relief) are for specific remedies rather than substantive causes of action. Because the court has determined that the defendants are entitled to summary judgment on all the substantive causes of action, the plaintiff is due no remedy. Therefore, the defendants are entitled to summary judgment as to Counts III and V as well. II. The Defendants Motion to Strike The defendants contend that the plaintiff s response to their Statement of Material Facts fails to comply with Local Rule 56.1B.(1). While there is merit to the defendants argument, the court considered the plaintiff s inadequate filing and construed it in favor of the plaintiff. Despite this, the plaintiff still could not avoid summary judgment in favor of the defendants. Therefore, the motion to strike [Doc. No. 70] is DISMISSED as moot. 13

14 Case 1:12-cv CAP Document 73 Filed 01/08/14 Page 14 of 14 III. Conclusion Based on the foregoing, the defendants motion for summary judgment [Doc. No. 66] is GRANTED. In addition, the defendants motion for leave to file excess pages [Doc. No. 68] is GRANTED, and the defendants motion to strike [Doc. No. 70] is DISMISSED as moot. The clerk of court is DIRECTED to enter judgment in favor of the defendants with all costs being awarded against the plaintiff. SO ORDERED this 8th day of January, /s/ Charles A. Pannell, Jr. CHARLES A. PANNELL JR. United States District Judge 14