Estate of Dr. John Ellis, Jr. v. American Advisors Group Inc.
2:18-cv-00070
S.D. Ga.Aug 26, 2019Background
- Dr. John Ellis obtained a reverse mortgage from AAG on October 1, 2014; loan proceeds ≈ $259,305 and home FMV ≈ $1,499,000. He died June 26, 2015; his estate (represented by Mark Podlin) managed the property.
- Plaintiffs allege AAG representatives (and a HUD counselor) promised the estate one year after Ellis's death to sell the home (with possible 90‑day extensions) if the estate timely notified AAG and actively marketed the house.
- Plaintiffs allege they notified AAG in December 2015, repaired and listed the home, and were told they would have until at least June 26, 2016 to sell.
- On March 1, 2016, defendants published a foreclosure advertisement stating the deed was in default; plaintiffs claim the ad chilled the market and the home later sold for $1,145,000 (below prior offers).
- AAG later halted foreclosure and an AAG employee allegedly admitted the foreclosure notice was a mistake. Plaintiffs filed an amended complaint asserting multiple state‑law claims against AAG and MERS; defendants moved to dismiss.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract / promissory estoppel (Count I) | AAG promised estate a year to sell after death; estate relied and suffered damages | No enforceable promise; MERS not party to contract | Survives against AAG; dismissed as to MERS |
| Wrongful attempted foreclosure (Count II) | Publication of foreclosure notice was false and caused harm to estate | Notice was proper or not actionable; MERS not liable | Survives against AAG; dismissed as to MERS |
| Negligence (Counts III & IV) | Failure to notify foreclosure dept and publishing untrue ad were tortious | Duties alleged arise from the contract, not independent tort duties | Dismissed — negligence claims arise from contract and lack independent duty |
| Breach of private duty / O.C.G.A. § 51‑1‑8 (Count V) | Statute plus representations created a private duty breached by defendants | § 51‑1‑8 does not create independent causes of action; duties arise from contract | Dismissed — § 51‑1‑8 only states general tort principles, not independent claims |
| Breach of fiduciary duty (Count VI) | AAG acted as trusted advisor, creating fiduciary duties to Ellis/estate | Arm’s‑length lender‑borrower relationship precludes fiduciary duty | Dismissed — no confidential/fiduciary relationship plausibly alleged |
| Elder abuse under Disabled Adults and Elder Persons Protection Act (Count VII) | Wrongful attempted foreclosure constituted elder abuse and private duty | Statute criminalizes failure to report by certain classes; does not create civil duty here | Dismissed — statutory scheme does not create pleaded private civil duty; conduct after death not abuse under Act |
| Confession of liability / negligence admission (Count VIII) | Defendants’ admission constitutes conclusive proof of negligence and entitles plaintiffs to summary judgment | Admission insufficient to state a separate cause of action in complaint | Dismissed — pleading is argument, not a viable cause of action |
| Fraud / misrepresentation (Count IX) | Security deed falsely stated indebtedness amount ($938,250) | Deed language caps maximum possible principal; plaintiffs misread instrument and cannot reasonably rely | Dismissed — misreading of deed and failure to plead justifiable reliance; fraud not pled with required particularity |
Key Cases Cited
- Strategic Income Fund, L.L.C. v. Spear, Leeds & Kellogg Corp., 305 F.3d 1293 (11th Cir. 2002) (court is not required to sift facts to decide which are material to each claim)
- Carvel v. Godley, [citation="404 F. App'x 359"] (11th Cir. 2010) (district court not required to rummage through pages of facts to fit allegations to claims)
- Weiland v. Palm Beach Cty. Sheriff's Office, 792 F.3d 1313 (11th Cir. 2015) (complaints may be deficient where they contain conclusory, vague, immaterial facts not tied to a claim)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for Rule 12(b)(6))
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (courts disregard legal conclusions and conclusory pleading)
- Reilly v. Alcan Aluminum Corp., 528 S.E.2d 238 (Ga. 2000) (O.C.G.A. §§ 51‑1‑6 and 51‑1‑8 set forth general tort principles and do not create independent causes of action)
- Life Ins. Co. of Virginia v. Conley, 351 S.E.2d 498 (Ga. Ct. App. 1986) (party who can read must read; fraud claims require pleading special circumstances preventing reading)
- Dyer v. Honea, 557 S.E.2d 20 (Ga. Ct. App. 2001) (elements required for fraud and misrepresentation under Georgia law)