Moore v. McCalla Raymer, LLCMoore v. McCalla Raymer, LLC
ORDER
This is an action for wrongful foreclosure. It is before the Court on the Report and Recommendation [Doc. 29] of the Magistrate Judge that the Defendants’ Motions to Dismiss Amended Complaint
FINAL REPORT AND RECOMMENDATION
Pending before the court are Defendants’ motions [Docs. 6, 10] to dismiss the original complaint in this action [Doc. 1-1] and Defendants’ motions [Docs. 16, 20] to dismiss Plaintiff Marcia Moore’s complaint as amended [Doc. 14]. Defendants argue that the complaint(s) should be dismissed for failure to state a claim for which relief can be granted, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. And Defendant Mortgage Electronic Registration Systems (“MERS”) argues that Defendant should be dismissed from this action pursuant to Fed.R.Civ.P. 12(b)(5) because MERS has not been properly served. Defendants’ motions [Docs. 6, 10] to dismiss the original complaint are unopposed. Plaintiff has responded [Docs. 21, 22] to Defendants’ motions [Docs. 16, 20] to dismiss the complaint as amended, and Defendants have filed replies [Docs. 23, 24]. The court RECOMMENDS that the motions to dismiss [Docs. 6, 10] the original complaint be DENIED AS MOOT; that MERS’ Rule 12(b)(5) motion [Doc. 16] to dismiss the amended complaint against Defendant be GRANTED; that MERS’ Rule 12(b)(6) motion [Doc. 16] accordingly be DENIED because the court lacks personal jurisdiction over Defendant; and that the remaining Defendants’ Rule 12(b)(6) motions [Docs. 16, 20] to dismiss the amended complaint be GRANTED.
1. Facts
Plaintiff Moore entered into a loan agreement with Countrywide Home Loans, Inc. (“Countrywide”) in October 2005 and executed a Security Deed granting MERS (solely as nominee for Lender and Lender’s successors and assigns) and the successors and assigns of MERS the property at 1408 Colony East Circle, Stone Mountain, Georgia 30083. [Complaint, ¶ 11; Doc. 20, Exhibit (“Ex.”) A, Security Deed].
Plaintiff made the monthly mortgage payments on the loan - for five years, until 2010 when she lost her second job. ■ [Complaint, ¶ 13].
The Notice identifies the loan by inter alia a. “Servicing Lender’s # .” [Notice, Doc. 20, Ex. C]. A copy of the Notice of Sale submitted for publication in the legal newspaper showing foreclosure sale scheduled for the first Tuesday in July 2010 is referenced as enclosed. [Id. at 2]. “Bank of America” is identified as the entity with the full authority to negotiate, amend, and modify the terms of the mortgage, and Plaintiff is given information on who to contact to find out more about the foreclosure or if reinstatement of her loan might be allowed. [M]
“ .On April 12, 2010, one month before the Notice of Foreclosure to Plaintiff, MERS, acting as Countrywide’s nominee, assigned to BACHLS the “Security Deed, the property described therein, and the indebtedness secured thereby” and stated therein that it had also sold and assigned to BACHLS “the note secured by the aforesaid Security Deed ... to secure the Assignee, its successors, representatives and assigns, in the payment of said note.” [Complaint, Ex. B, Assignment, recorded on June 21, 2010, at Deed Book 22013, Page 340, Clerk of Superior Court, DeKalb County]. “C. Troy Crouse” and “Thomas Sears,” attorneys with McCalla, signed the Assignment as a “Vice President” and “Assistant Secretary” of MERS; their signatures are witnessed; and the Assignment is notarized. [Id.].
The property was sold at foreclosure on July 6, 2010, to BACHLS, as evidenced by a Deed Under Power which states “in witness whereof, Lender as Agent and Attorney in Fact for Borrower has hereunto affixed Lender’s hand and seal.” [Complaint, Exs. E & El, Deed Under Power, recorded August 2, 2010, at Book 22068, Page 421].
On or about March 21, 2012, six-hundred-and-twenty-four days after foreclosure, Plaintiff received a letter from McCalla stating that the property had been foreclosed upon on July 6, 2010, and that she needed to vacate the property. [Id., ¶ 23]. Plaintiff filed this action on April 10, 2012, in the Superior Court of DeKalb County, Georgia, alleging inter alia that she “had never received any communication concerning the confirmation of the foreclosure sale[.]” [Doc. 1-1].
After Defendants filed motions [Docs. 6, 10] to dismiss the complaint, Plaintiff filed an amended complaint [Doc. 14].
Additional facts will be taken into consideration as needed to address the merits of the motions pending before the court. The court must first address MERS’ Rule 12(b)(5) motion to be dismissed from this action. “ ‘Service of process is a jurisdictional requirement: a court lacks jurisdiction over the person of a defendant when the defendant has not been served.’ ... Therefore, where a court finds insufficient service, it is ‘improper for the district court to ... reach[ ] the merits in th[e] case and to ... issue[ ] a dismissal with prejudice[ ]’ ” as to that defendant. Pelmore v. Pinestate Mortg. Corp.,
II. Rule 12(b)(5)
Plaintiff attempted to serve MERS before removal by hand delivering a copy of the complaint and summons to a “William K. Davidson.” [Doc. 1-1 at 27-28, Certificate of Service], A Rule 12(b)(5) motion challenging sufficiency of service “ ‘must be specific and must point out in what manner the plaintiff has failed to satisfy the requirements of the service provision utilized.’ ” Binns v. City of Marietta Housing Authority,
• [5]- “In actions removed from state court, the sufficiency of service of process prior to removal is determined by the law of the state from which the action was removed.” Rentz v. Swift Transportation Co., Inc.,
Unless federal law provides otherwise ..., a domestic or foreign corporation ... must be served: (1) in a judicial district of the United States: (A) in the manner prescribed by Rule 4(e)(1) for serving an individual; or (B) by delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process....
Fed.R.Civ.P. 4(h)(1) (as amended 2007). Therefore, service of process can be effected upon MERS in one of two ways. “First, it can be effected by ‘[personally] delivering a copy of.the summons and of the complaint to an officer, a managing or general agent, or to any other agent au
MERS’ first motion to dismiss put Plaintiff on notice, on May 23, 2012, one week after removal, that Defendant had not been properly served prior to removal because “Mr. Davidson is an unauthorized infringer on MERS’ name.... He is not and has never been affiliated with MERS, and he is not authorized to accept service on its behalf.” [Doc. 10 at 10 (citation omitted) ]. Plaintiff amended the complaint to allege: “[W]e have documentation acknowledging the mistaken identity of a MERS representative that even MERS is investigating [sic] therefore Plaintiff cannot be held liable[, and] MERS has now been properly served in conjunction.” [Complaint, ¶ 6].
Defendant argues that it has not been properly served after removal because Plaintiff has “merely served all counsel with the [amended complaint] via ECF [and that electronic service is insufficient to serve MERS in this matter, as MERS has not previously been served with a complaint or summons. Moreover, MERS has not waived service, nor did the undersigned [counsel] agree to accept service on behalf of MERS. [And s]ervice on counsel, before proper service has been effectuated [on Defendant], is insufficient service.” [Doc. 16 at 11, citing Ga. Process and Service § 8.4].
Plaintiff, who is represented by counsel and ultimately “bears the burden of establishing proof of service of process[,]” Adventure Outdoors, Inc. v. Bloomberg,
Plaintiff was given notice twice that Defendant had not been properly served: on May 23, 2012, [Doc. 10] and again on June 25, 2012, in Defendant’s motion [Doc. 16] to dismiss the complaint as amended after removal, and she has not attempted to reserve Defendant as required under federal law. Plaintiff has not alleged any facts demonstrating good cause for not reserving MERS, nor has she requested an extension of time to re-serve Defendant. And, as argued by Defendant, the fact that MERS was aware of the complaint or communicated with Plaintiffs counsel about “William Patterson” does not nullify the requirement that Plaintiff actually serve MERS. [Doc. 23 at 4]. See Albra v. Advan, Inc.,
Plaintiff having not demonstrated good cause for failing to re-serve Defendant, “the court may in its discretion decide whether to dismiss the case [against MERS] without prejudice or extend time for service.” Petrucelli v. Bohringer & Ratzinger,
III. Rule 12(b)(6)
A. Standard of Law
On a motion to dismiss under Rule 12(b)(6) for failure to state a claim for which relief can be granted, the complaint’s factual allegations are assumed true and construed in the light most favorable to the plaintiff. Hardy v. Regions Mortg., Inc.,
“While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, ... a plaintiffs obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief requires more than' labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do[.]” Bell Atlantic Corp. v. Twombly,
“Factual allegations [in the complaint] must be enough to raise a right to relief above the speculative level,” i.e., they must do more than merely create a “ ‘suspicion [of] a legally cognizable right of action,’ on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Twombly,
The court’s inquiry at this stage of the proceedings focuses on whether the challenged pleadings “give the defendant fair notice of what the ... claim is and the grounds upon which it rests.” Erickson v. Pardus,
“Regardless of the alleged facts, however, a court may dismiss a complaint on a dispositive issue of law.” Bernard v. Calejo,
The court will apply these standards in ruling on the McCalla Defendants’ and BANA’s motions [Docs. 16, 20] to dismiss the complaint.
B. Discussion
As argued by Defendants, the complaint fails to meet the pleading requirements under Fed.R.Civ.P. 12(b)(6) and 8(a). “Plaintiff merely recites the pleading standard [for her claims] and then concludes that she met this standard because she sustained damages and was harmed” without also making supporting factual allegations. [Doc. 23 at 5]. The complaint contains whole paragraphs of legal argument, quotations, and citations which have no place in a complaint. See Chevy Chase Bank, F.S.B. v. Carrington,
Wrongful Foreclosure
In Count I, Plaintiff contends that Defendants wrongfully foreclosed on her property. BANA argues that Count I should be dismissed because to “seek any relief regarding a pending or past foreclosure sale, plaintiff must tender the amount owed under the loan[,]” Watkins v. Beneficial, HSBC Mortg.,
Plaintiff argues that she “attempted to resolve this issue with previous parties.” [Doc. 21 at 5]. However, seeking a loan modification does not give Plaintiff a cause of action for wrongful foreclosure. See, e.g., Miller v. Chase Home Fin., LLC,
Defendants further argue that Plaintiff does not have standing to challenge the foreclosure by challenging the validity of MERS’ Assignment of the security deed to BACHLS. [Doc. 16 at 16; Doc. 20-1 at 10]. “In order for a third party to have standing to enforce a contract ..., it must clearly appear from the contract that it was intended for his benefit. The mere fact that he would benefit from performance of the agreement is not alone sufficient. It must appear that both parties to the contract intended that the third person should be the beneficiary.” Haldi v. Piedmont Nephrology Assoc., P.C.,
Even if arguendo Plaintiff has standing to challenge the Assignment, the complaint fails to state a claim for wrongful foreclosure. Courts have repeatedly held that MERS has the right to foreclose, see, e.g., Shockley v. EMC Mortg. Corp.,
Borrower understands and agrees that ... MERS ... (as nominee for Lender and Lender’s successors and assigns) [ ] has the right: to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property, and to take any action required of Lender ....
[Security Deed at 2]. “Having expressly authorized MERS’s involvement in the transaction and its right to assign the Deed, Plaintiff cannot challenge [BACHLS’] authority to foreclose .... ” Alexis v. Mortg. Elec. Registration Systems, Inc.,
The court accordingly RECOMMENDS that Defendants’ motions to dismiss the wrongful foreclosure claim in the corn-plaint be GRANTED and that Count I be DISMISSED WITH PREJUDICE.
Constructive Fraud
In Count II, a claim for constructive fraud,
The McCalla Defendants argue that they cannot have committed constructive fraud because they do not owe Plaintiff a fiduciary duty. [Doc. 16 at 25], Constructive fraud may occur when a defendant “fails to disclose information he was under a legal or equitable duty to
Plaintiff argues in response that Defendants nonetheless breached the statutory duty under O.C.G.A. § 23-2-114 to exercise fairly the power of sale in the security deed. [Doc. 21 at 8, citing DeGolyer v. Green Tree Servicing, LLC,
Plaintiff also fails to allege how she was damaged as a result of her reliance on the signatures of Crouse and Sears. To state a claim for fraud, Plaintiff must allege specific facts indicating inter alia how she justifiably relied on a false representation by Defendants and how she suffered damage as a result of that reliance. APA Excelsior III, L.P.,
The court accordingly RECOMMENDS that Defendants’ motions to dismiss Count II for constructive fraud be GRANTED and that Count II be DISMISSED WITH PREJUDICE.
FDCPA Claim
In Count III, Plaintiff alleges that Defendants MeCalla and BACHLS violated the FDCPA when they attempted to collect a debt which they were not authorized to collect because “BAC” did not
Defendants argue that a person in the business of enforcing security interests, that is, pursuing a non-judicial foreclosure, is not considered a debt collector under the FDCPA except for purposes of 15 U.S.C. § 1692f(6). [Doc. 16 at 26-27; Doc. 23 at 13]. “Under § 1692f(6), a debt collector may not take or threaten to take a consumer’s property in a non-judicial action if (a) there is no present right to the property through an enforceable security interest ....” Warren v. Countrywide Home Loans, Inc.,
However, as Defendants argue, Plaintiff has not disputed that the Assignment of the security deed was a matter of public record prior to the foreclosure sale of the property. [Doc. 20 at 20-21]. The public property records demonstrate that the loan servicer [BACHLS] held both the security deed and the note and was thus in the position of the secured creditor with a present right to exercise the power of sale, as discussed supra. The complaint therefore fails to state a claim for relief based on a violation of § 1692f(6). Where there is an “enforceable security interest shown by public records,” dismissal of a § 1692f(6) claim is appropriate. Henderson v. BAG Home Loans Servicing, LP, Civil Action No. l:10-cv-03137, N.D.Ga., Doc. 16 at 13-25 (June 29, 2011), report and recommendation adopted by Doc. 17 (N.D.Ga., July 20, 2011). The court accordingly RECOMMENDS that Defendants’ motions to dismiss the FDCPA claim be GRANTED and that the FDCPA claim be DISMISSED WITH PREJUDICE.
The court, having recommended that Counts I through III be dismissed for failure to state a claim for which relief can be granted, further RECOMMENDS that Counts TV and V, for damages and injunctive relief based on Counts I through III, be DISMISSED.
IV. Conclusion
The court RECOMMENDS that the motions to dismiss [Docs. 6, 10] the origi
The court accordingly RECOMMENDS that MERS be DISMISSED from this action WITHOUT PREJUDICE and that the complaint against the remaining Defendants be DISMISSED WITH PREJUDICE.
All pretrial matters have been concluded with the issuance of this Report and Recommendation in accordance with 28 U.S.C. § 636(b)(1), this Court’s Local Rule 72.1, and Standing Order 08-01 (N.D. Ga. June 12, 2008). The Clerk, therefore, is DIRECTED to terminate the reference to the Magistrate Judge.
SO RECOMMENDED THIS 28th day of November, 2012.
Notes
. The facts have been drawn from Plaintiff's complaint and attachments thereto and from documents attached to Defendants' motions to dismiss. When reviewing a Rule 12(b)(6) motion, the court has discretion to determine whether to accept documents beyond the pleadings. See Adamson v. Poorter,
. The Security Deed was recorded on November 15, 2005, at Deed Book 18118, Page 106, with the Clerk of Superior Court, DeKalb County.
. Plaintiff entered into a second ($12,200) loan agreement with Countrywide on June 7, 2006. [Id., ¶ 12]. "[T]his loan was not the subject of the foreclosure and is not the subject of [Plaintiff's] allegations.'' [Doc. 16 at 1 n. 1].
. The second page of the Notice attached to Plaintiff’s complaint is a "service members' civil relief act notice” giving a toll free military assistance number. [Complaint, Ex. A]. The Notice attached to the "McCalla Defendants' ” (Defendants McCalla, Charles Troy Crouse, and Thomas Sears, collectively) motion to dismiss the complaint includes the second page discussed infra, followed by the "service members’ civil relief act notice.” [Doc. 20, Ex. C].
.Plaintiff alleges that the property "was never called out on the steps of the DeKalb County Courthouse.” [Id., ¶ 20]. However, • the complaint does not allege that this had a chilling effect on the foreclosure price; the original loan amount was $113,295.00, and the property was sold for $119,583.97. [Ex. F].
. Confirmation of foreclosure sales is governed by O.C.G.A. § 44-14-161 which provides in pertinent part:
When any real estate is sold on foreclosure, without legal process, and under powers contained in security deeds, ... and at the sale [did] not bring the amount of the debt secured by the deed, ... no action may be taken to obtain a deficiency judgment unless the person instituting the foreclosure proceedings shall, within 30 days after the sale, report the sale to the judge of the superior court ... that the property ... brought its true market value ....
O.C.G.A. § 44-14-161(a), (b).
. In a merger, "each party ... continued] in, and the parties to the plan shall be, a single corporation ... which shall have, without further act or deed, all the property, rights, powers, trusts, duties, and obligations of each party to the [merger] plan...." O.C.G.A. § 7-l-536(c). "[T]he necessity of a formal transfer or assignment of the property of the constituent bank to the consolidated bank” is eliminated by the statute. State Bank & Trust Co. v. Newby,
. After trial on April 30, 2012, DeKalb County Magistrate Court rendered a dispossessory judgment against Plaintiff and ordered that a writ of possession be issued. [Doc. 16 at 7; Ex. B (Order and Judgement of dispossession)]. Plaintiff either had not yet appealed the dispossessory judgment or had not filed a motion to transfer and consolidate such appeal with the Superior Court action at the time of Defendants’ notice of removal as filed. Three months later, on August 20, 2012, Plaintiff filed a motion to consolidate her appeal in DeKalb County Magistrate Court with this action. [Doc. 25]. The motion to consolidate was denied because no federal question appeared on the face of the dispossessory complaint. [Doc. 28].
.For ease of reference, the amended complaint [Doc. 14] will be referred to as the "complaint” in the court’s discussion. An amended complaint generally supersedes the original complaint. Malowney v. Federal Collection Deposit Group,
. See Miree v. United States,
. But see Wideman v. Bank of America, N.A.,
. But see Sutton v. Bank of America, N.A.,
. Plaintiff's reliance on Stubbs v. Bank of America,
. Plaintiff’s wrongful foreclosure claim includes an allegation of intentional infliction of emotional distress. [Complaint ¶ 37]. "DQntentional wrongful foreclosure can be the basis for an action for intentional infliction of emotional distress under certain circumstances.” Racette v. Bank of America, N.A.,
. "[C]onstructive fraud may be consistent with innocence[,]”; whereas “[ajctual fraud implies moral guilt[.]” O.C.G.A. § 23-2-51(c).
. BANA also maintains that it is not a debt collector under the FDCPA. [Doc. 23 at 13], "The legislative history of section 1692a(6) indicates conclusively that a debt collector does not include the consumer’s creditors, a mortgage servicing company, or an assignee of a debt, as long as the debt was not in default at the time it was assigned.” Perry v. Stewart Title Co.,