334 Ga. App. 653
Ga. Ct. App.2015Background
- Zhong purchased a house in 2004 and financed it; PNC purchased the loan in 2005 and later acted as servicer; Wells Fargo was identified as the creditor.
- From 2004–2010 Zhong generally paid mortgage payments; PNC paid delinquent 2009 property taxes and later asserted a large escrow shortage, increasing monthly payments substantially.
- Zhong disputed the escrow increase, attempted payment arrangements, and eventually agreed to higher payments; PNC returned some of her checks and continued to demand large sums and threatened acceleration.
- Zhong retained counsel, submitted hardship documents at PNC’s request, and instructed PNC to communicate with her attorney; notice of a 2012 foreclosure sale was sent to the vacant property address and neither Zhong nor counsel received notice.
- Wells Fargo foreclosed, Zhong lost the property and alleged damage to credit and emotional distress; she sued PNC and Wells Fargo for wrongful foreclosure, breach of contract, negligence, and sought punitive damages and fees.
- The trial court granted summary judgment to both defendants on the basis that Zhong had no equity in the property and thus no recoverable damages; Zhong appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether lack of equity bars recovery for wrongful foreclosure and related claims | Zhong: wrongful foreclosure damages may include non-property harms (credit damage, mental anguish), so lack of equity does not bar recovery | Defendants: Zhong had no equity, so she had no damages from the foreclosure | Court: Reversed — lack of equity does not preclude non-property damages; trial court erred in granting summary judgment on that ground |
| Whether trial court may rely on an argument not properly raised by movant | Zhong: trial court relied on a legal theory not adequately raised by PNC | Defendants: argued lack of equity supported summary judgment | Court: Did not decide this claim because it reversed on the merits of the equity issue; noted the court erred to adopt that theory |
| Whether plaintiff needed to present evidence of non-equity damages on summary judgment | Zhong: she was not required to present evidence on issues defendants did not pierce in their motions | Defendants: argued Zhong presented no evidence of other damages | Court: Agreed Zhong need not present evidence on issues not raised by defendants’ motions; defendants must pierce complaint on particular issues |
| Whether punitive damages/attorney fees were appropriate | Zhong sought punitive damages and fees for allegedly culpable conduct and wrongful foreclosure | Defendants argued punitive damages/fees not warranted | Court: Did not resolve these claims on appeal; remanded for further proceedings consistent with opinion |
Key Cases Cited
- Curl v. First Federal Savings & Loan Assn., 243 Ga. 842 (1979) (wrongful-foreclosure plaintiff may recover non-property damages such as mental anguish and credit injury)
- DeGolyer v. Green Tree Servicing, 291 Ga. App. 444 (2008) (recognizing non-property damages in wrongful foreclosure actions)
- First Union Natl. Bank v. Cook, 223 Ga. App. 374 (1996) (culpable servicer conduct can support punitive damages in foreclosure context)
- Calhoun First Natl. Bank v. Dickens, 264 Ga. 285 (1994) (plaintiff must elect remedy and may not both set aside foreclosure and recover value of property)
- Hodge v. Sada Enterprises, 217 Ga. App. 688 (1995) (on summary judgment, plaintiff need not respond to issues not raised by the movant)
- City of Gainesville v. Dodd, 275 Ga. 834 (2002) (reversal and remand appropriate where trial court relied on erroneous legal theory)