McDaniel v. Suntrust Bank (In re McDaniel)
523 B.R. 895
Bankr. M.D. Ga.2014Background
- Foreclosure and related litigation involve McCalla, SunTrust Bank, and SunTrust Mortgage over a Georgia property at 2627 Meadowview Drive.
- Plaintiff Leslie McDaniel defaulted on a 1992 note, with subsequent 1997 modification; she was to assume payments during a 2005 divorce.
- Foreclosure on November 2, 2010 was conducted by SunTrust Mortgage, but SunTrust Bank retained the Security Deed due to merger, not assigned to SunTrust Mortgage.
- Foxfire Acres, Inc. bought at the foreclosure, discovering later that SunTrust Bank, not SunTrust Mortgage, held the Security Deed; Foxfire sued McCalla and SunTrust Mortgage.
- Foxfire litigation remained pending; Foxfire and McCalla later tendered funds to resolve issues; McDaniel later filed bankruptcy in December 2012.
- May 2014 sale of the property yielded higher gross but lower net proceeds, leading to consideration of excess proceeds and related funds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Judicial estoppel applicability | SunTrust inconsistently denied foreclosure validity in Foxfire and bankruptcy; estoppel should bar denial here | SunTrust’s positions varied; no court adopted the inconsistent position; not estopped | SunTrust not judicially estopped; no clear prior court adoption of the inconsistent position |
| Equitable subordination of SunTrust | SunTrust engaged in egregious conduct warranting subordination | No insider/fiduciary relationship; no spoliation or egregious conduct proven | SunTrust entitled to summary judgment on equitable subordination |
| Automatic stay violation | If judicial estoppel applied, SunTrust shown stay violation by returning excess bid | Judicial estoppel not applicable, no stay violation | No stay violation found; argument rejected |
| Wrongful foreclosure under O.C.G.A. § 23-2-114 | Foreclosure proceeded by a non-holder; caused damages to reputation and property | Limitations and damages issues bar claims; potential for damages exist | Partial: reputation damages barred; genuine issue as to property damages; wrongful foreclosure not fully resolved |
| Fraud claim (Count 7A(3)) | McCalla's failure to disclose foreclosure failure constitutes fraud | Future-looking statement not actionable; no fiduciary duty; no justifiable reliance | Fraud claim fails as a matter of law |
| FDCPA claim (Count 7B) | McCalla violated FDCPA by pursuing foreclosure as debt collector without present right | FDCPA claim time-barred; limitations lack tolling grounds | FDCPA claim barred by statute of limitations |
Key Cases Cited
- New Hampshire v. Maine, 532 U.S. 742 (2001) (three Robinson factors for judicial estoppel; equity discretion)
- Robinson v. Tyson Foods, Inc., 595 F.3d 1269 (11th Cir.2010) (three-factor test for judicial estoppel with fairness concerns)
- Tampa Bay Water v. HDR Engineering, Inc., 731 F.3d 1171 (11th Cir.2013) (additional factors in judicial estoppel analysis)
- Mirando v. U.S. Dept. of Treasury, 766 F.3d 540 (6th Cir.2014) (discusses 'success' and dilution of estoppel in related context)
- In re N & D Properties, Inc., 799 F.2d 726 (11th Cir.1986) (tests for equitable subordination require showing of inequitable conduct with proof depending on status of claimant)