Patel v. J.P. Morgan Chase Bank, N.A.
327 Ga. App. 321
| Ga. Ct. App. | 2014Background
- In 2005 the Patels executed a security deed in favor of Chase Bank to secure a debt; the debt was not paid off.
- Three months later Chase mistakenly recorded a cancellation of the security deed (stating the debt was paid), though the Patels continued paying and later defaulted.
- In 2011 Chase initiated nonjudicial foreclosure proceedings; the Patels learned of the recorded cancellation and sued for wrongful foreclosure and unjust enrichment.
- Chase counterclaimed for a declaratory judgment reinstating the security deed and the power-of-sale, and moved for summary judgment on all claims.
- The trial court reinstated the security deed, granted summary judgment to Chase on unjust enrichment and, after a renewed motion, on wrongful foreclosure; the Patels appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether court erred by reinstating a security deed after bank mistakenly recorded a cancellation | Patels: Bank’s negligent unilateral cancellation forfeited its right to nonjudicial foreclosure and laches should bar reinstatement | Chase: Cancellation was recorded in error; by law title does not reconvey absent full payment, so bank retained security interest and may seek reinstatement | Reinstatement proper: erroneous cancellation did not reconvey title; no prejudice or third-party reliance shown, so deed was reinstated |
| Whether reinstatement unjustly enriches bank or bars foreclosure | Patels: Continued payments and attempted foreclosure after cancellation made foreclosure wrongful and unjustly enriched Chase | Chase: No enrichment — debt unpaid; power-of-sale remains part of security; foreclosure remedy preserved | No unjust enrichment; summary judgment for Chase on unjust enrichment and foreclosure claim appropriate after reinstatement |
| Whether judge’s comments at hearing violated OCGA § 9-10-7 (expressing opinion on evidence) | Patels: Court improperly commented on what was not proved, influencing jury | Chase: Remarks were made during motion hearing, not to a jury; statute prevents jury influence, not judicial remarks in hearings | No violation: comments during summary judgment hearing did not violate OCGA § 9-10-7 |
| Whether wrongful-foreclosure claim survived summary judgment because advertisements were published when deed appeared cancelled | Patels: Publication during period when record showed cancellation could chill bidding and injure sale | Chase: Once deed was reinstated, the concern was moot and no foreclosure sale occurred | Summary judgment proper: reinstatement rendered injunctive claim moot and no actual foreclosure sale had occurred |
Key Cases Cited
- Nw. Carpets, Inc. v. First Nat’l Bank of Chatsworth, 280 Ga. 535 ((erroneous cancellation does not reconvey title absent full payment))
- Taylor, Bean & Whitaker Mortg. Corp. v. Brown, 276 Ga. 848 (power that cancellation requires full payment to reconvey title)
- Davis v. Johnson, 241 Ga. 436 (trial court may reinstate bank’s security interest after cancellation)
- Gurr v. Gurr, 198 Ga. 493 (equity may grant relief despite complainant’s negligence when no prejudice shown)
- Reidling v. Holcomb, 225 Ga. App. 229 (recordation provides constructive notice)
- Gregorakos v. Wells Fargo Nat’l Assn., 285 Ga. App. 744 (elements required for wrongful-foreclosure claim)
- Scarbrough Group v. Worley, 290 Ga. 234 (injunctive claims can be mooted during litigation)
- Racette v. Bank of Am., N.A., 318 Ga. App. 171 (wrongful-foreclosure claim survives summary judgment where record shows possible defective sale or harm)