992 F. Supp. 2d 1277
N.D. Ga.2014Background
- Plaintiff purchased property in 1997, took a TBW loan in 2004 secured by a recorded deed to MERS; refinanced in 2009 with Platinum, executing a second recorded deed to MERS.
- TBW collapsed in August 2009; Bank of America (Defendant) was asked to assume servicing of many TBW loans and notified Plaintiff it was the servicer; RoundPoint also claimed servicing rights, but after a conference call Plaintiff was told to pay Defendant.
- Defendant, believing the 2004 TBW loan remained active (per TBW records), initiated foreclosure proceedings after Plaintiff fell behind; a foreclosure notice was sent in March 2010.
- Plaintiff filed bankruptcy in April 2010; Defendant filed proofs of claim and Plaintiff continued post-petition payments to Defendant.
- During bankruptcy it was discovered the 2004 loan had been paid off by the 2009 refinance; Defendant later returned the post-petition payments with interest under a consent agreement.
- Plaintiff sued for wrongful foreclosure/attempted wrongful foreclosure, intentional infliction of emotional distress, fraud/negligent misrepresentation, and negligence. Court considered cross-motions for summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Wrongful foreclosure / attempted foreclosure | Defendant wrongfully initiated foreclosure/published false foreclosure notice despite loan being satisfied | Defendant reasonably relied on TBW records showing loan active and did not know loan paid off when it began foreclosure | Court granted summary judgment to Defendant — no actual foreclosure and no evidence Defendant knew loan was satisfied, so wrongful/attempted foreclosure fails |
| Intentional infliction of emotional distress | Collection on a satisfied debt caused severe distress and was intentional/reckless | Conduct was not intentional or extreme/outrageous; Defendant reasonably believed loan active | Court granted Defendant summary judgment — no intent/recklessness and conduct not extreme/outrageous |
| Fraud / negligent misrepresentation | Defendant falsely represented it was servicer of an outstanding loan, inducing payments | No scienter: Defendant did not know loan was satisfied and was not reckless; TBW records indicated loan active; payments were returned with interest | Court granted Defendant summary judgment — plaintiff cannot show scienter or justifiable reliance or damages |
| Negligence | Defendant breached duty by collecting on a satisfied debt causing harm (including bankruptcy) | No independent legal duty to service loan non-negligently; no proximate causation; payments returned with interest | Court granted Defendant summary judgment — no legally cognizable duty, insufficient causation/damages |
Key Cases Cited
- Adickes v. S.H. Kress & Co., 398 U.S. 144 (U.S. 1970) (summary judgment evidence viewed in light most favorable to nonmovant)
- Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (summary judgment burden-shifting framework)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (U.S. 1986) (necessity of sufficient evidence to create genuine issue for trial)
- Aetna Fin. Co. v. Culpepper, 171 Ga. App. 315 (Ga. Ct. App. 1984) (requiring knowing publication of untrue derogatory statements for wrongful attempted foreclosure)
- United Parcel Service v. Moore, 238 Ga. App. 376 (Ga. Ct. App. 1999) (elements and high threshold for intentional infliction of emotional distress)
- Next Century Commc’ns Corp. v. Ellis, 318 F.3d 1023 (11th Cir. 2003) (elements of fraud under Georgia law)
- Morgan v. Ocwen Loan Servicing, LLC, 795 F. Supp. 2d 1370 (N.D. Ga. 2011) (recognizing wrongful attempted foreclosure cause of action)
- Wender & Roberts, Inc. v. Wender, 238 Ga. App. 355 (Ga. Ct. App. 1999) (justifiable reliance and duty of due diligence in fraud claims)