Jane McGinnis v. American Home Mortgage Servicing, Inc.
901 F.3d 1282
| 11th Cir. | 2018Background
- Plaintiff Jane McGinnis owned seven rental properties whose mortgages were serviced by American Home Mortgage Servicing (Homeward); a disputed escrow/ payment increase began after Homeward became servicer in Oct. 2009.
- McGinnis paid the pre-increase amount, disputed Homeward’s unexplained higher escrow charge, and repeatedly notified Homeward of the alleged error; Homeward treated payments as partial, placed funds in a suspense account, assessed fees, and eventually foreclosed on one property.
- McGinnis sued for wrongful foreclosure, conversion, interference with property, intentional infliction of emotional distress (IIED), and other claims; the jury found for McGinnis and awarded $6,000 economic, $500,000 emotional distress, and $3,000,000 punitive damages.
- District court reduced punitive damages to Georgia’s $250,000 statutory cap, citing insufficient evidence of specific intent; the Eleventh Circuit vacated that reduction on procedural grounds and remanded to consider Homeward’s Rule 59 motion for a new trial on punitive damages.
- On remand the district court denied a new trial, concluding punitive damages were not grossly excessive under the Due Process Clause and that the jury’s finding of specific intent (which removes Georgia’s statutory cap) was not against the weight of the evidence.
- Homeward appealed; the Eleventh Circuit affirmed, holding the punitive award constitutional and that the denial of a new trial on specific intent was not an abuse of discretion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether $3,000,000 punitive award is unconstitutionally excessive under Due Process | McGinnis: award proportionate given reprehensibility, repeated misconduct, physical/emotional harm, and deterrence needs | Homeward: award is grossly excessive relative to $506,000 compensatory and facts; emotional distress should be discounted; RESPA penalties much lower | Court: punitive award not grossly excessive; single-digit ratio (5.9:1) acceptable given high reprehensibility and deterrence interests |
| Whether Georgia’s $250,000 punitive cap applies (i.e., whether there was specific intent to harm) | McGinnis: evidence showed Homeward knew of error, used suspense account to collect fees, repeatedly threatened foreclosure, and knew of emotional harm — supports specific intent | Homeward: no evidence it specifically intended to cause harm; conduct was billing/error, not desire to harm; thus cap applies | Court: jury reasonably found specific intent (knowledge conduct was substantially certain to cause harm); denial of new trial not an abuse of discretion |
| Whether emotional distress damages should be treated differently in ratio analysis | McGinnis: emotional distress is compensatory and counts fully in ratio | Homeward: emotional distress awards carry punitive element and should be discounted for ratio analysis | Court: emotional distress included as compensatory; prior Eleventh Circuit precedent treats it as part of compensatory damages for ratio purposes |
| Whether comparable civil penalties (e.g., RESPA) constrain punitive award | McGinnis: Homeward’s conduct exceeded RESPA failures; civil penalties not analogous | Homeward: compare to RESPA penalties to show excessiveness | Court: RESPA penalties not a meaningful comparator because defendant’s conduct was far worse than mere escrow-statement violations |
Key Cases Cited
- Action Marine, Inc. v. Continental Carbon Inc., 481 F.3d 1302 (11th Cir. 2007) (de novo review of punitive-damages constitutional challenge; specific-intent definition guidance)
- Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424 (U.S. 2001) (courts review constitutional challenges to punitive damages de novo but defer to district court fact findings)
- BMW of North America, Inc. v. Gore, 517 U.S. 559 (U.S. 1996) (three Gore guideposts for due-process review of punitive damages)
- State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (U.S. 2003) (single-digit multipliers generally consistent with due process; reprehensibility is primary guidepost)
- Goldsmith v. Bagby Elevator Co., Inc., 513 F.3d 1261 (11th Cir. 2008) (reprehensibility as dominant consideration; upholding higher multipliers where conduct egregious)
- Bogle v. McClure, 332 F.3d 1347 (11th Cir. 2003) (emotional-distress compensatory damages may be counted in punitive/compensatory ratio analysis)
- DeGolyer v. Green Tree Servicing, LLC, 291 Ga. App. 444 (Ga. Ct. App. 2008) (foreclosure based on a known calculation error can support IIED/egregious conduct findings)
- Montgomery Ward & Co. v. Duncan, 311 U.S. 243 (U.S. 1940) (Rule 59 new-trial authority when verdict is against weight of evidence)