Stewart v. Suntrust Mortgage, Inc.
331 Ga. App. 635
| Ga. Ct. App. | 2015Background
- Adrian Stewart obtained a residential mortgage from SunTrust in 2008 and executed a security deed naming MERS as nominee.
- Stewart defaulted; in Aug–Sep 2012 SunTrust solicited a "home preservation assistance" application and told Stewart foreclosure would be postponed while the application was pending.
- Stewart submitted a borrower response package; SunTrust repeatedly requested documents as incomplete; meanwhile a foreclosure notice was published for Nov. 6 and the sale proceeded on that date.
- Stewart lost the property to foreclosure and SunTrust obtained a dispossessory judgment; Stewart’s appeal of the dispossessory was denied.
- Stewart sued alleging fraud, intentional wrongful foreclosure, breach of contract, breach of duty of good faith and fair dealing, FBPA violation, and sought damages (including punitive), attorneys’ fees and injunctive relief.
- The trial court dismissed Stewart’s amended complaint for failure to state a claim; the Court of Appeals reviewed de novo and partially reversed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Fraud | SunTrust knowingly misrepresented that foreclosure would be postponed and that Stewart’s application was pending, inducing him to refrain from other remedies and causing loss of the home. | SunTrust argued Stewart failed to plead knowledge/scienter and that fraud was not pleaded with particularity. | Reversed dismissal: complaint alleges each fraud element sufficiently to survive a motion to dismiss; deficiencies in particularity could be addressed by a more definite statement. |
| Wrongful foreclosure | SunTrust breached duties under the security deed (esp. ¶18 agent/attorney-in-fact obligations) by not conducting the sale fairly and by misrepresenting postponement. | SunTrust contended any modification or promise was barred by the Statute of Frauds and that Stewart had no standing because he had not paid. | Reversed dismissal: allegations of a legal duty and breach under ¶18, causal injury and damages state a wrongful foreclosure claim. |
| Breach of contract & breach of duty of good faith and fair dealing | The security deed’s foreclosure/reinstatement provisions (¶18) were breached; implied duty of good faith was violated by arbitrary/capricious conduct during loss mitigation. | SunTrust argued Stewart’s default precluded contract claims or that obligations were not triggered. | Reversed dismissal: pleadings plus attached security deed put SunTrust on notice; Stewart need not have paid to allege lender breaches triggered by default. |
| FBPA claim; Injunctive relief | Stewart alleged deceptive practices in consumer mortgage transaction under the FBPA and sought injunctive relief to set aside foreclosure. | SunTrust argued mortgage conduct is regulated and thus exempt from the FBPA; Stewart had not tendered arrearages so equitable relief was barred. | FBPA claim dismissal affirmed: mortgage industry and the specific conduct are regulated (GRMA), so the FBPA does not apply. Injunctive relief dismissal affirmed: equitable relief requires tender of indebtedness. |
Key Cases Cited
- Center for a Sustainable Coast v. Ga. Dept. of Natural Resources, 319 Ga. App. 205 (court reviews dismissal de novo; pleadings construed for plaintiff)
- Gold Creek SL v. City of Dawsonville, 290 Ga. App. 807 (pleadings and exhibits to be construed together)
- Stendahl v. Cobb County, 284 Ga. 525 (motion to dismiss for failure to state claim standard)
- Crawford v. Williams, 258 Ga. 806 (elements of fraud)
- Racette v. Bank of America, N.A., 318 Ga. App. 171 (security deed attached to complaint suffices to plead breach-of-contract claims)
- Berry v. Govt. Natl. Mtg. Assoc., 231 Ga. 503 (equitable relief to set aside foreclosure requires tender)