Schorr et al v. Countrywide Home Loans, Inc., No. 4:2007cv00019 - Document 84 (M.D. Ga. 2013)
Court Description: ORDER denying 64 Motion to Dismiss. Ordered by Judge W. Louis Sands on 7/18/2013 (tlf).
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Schorr et al v. Countrywide Home Loans, Inc. Doc. 84 IN TH E U N ITED STATES D ISTRICT COU RT FOR TH E MID D LE D ISTRICT OF GEORGIA COLU MBU S D IVISION BRADLEY Y. SCHORR; LORI A. : SCHORR, In dividually an d on Behalf of : a Class of Sim ilarly Situated Person s, : : Plain tiffs, : : v. : : COUNTRYWIDE HOME LOANS, INC., : : Defen dan t. : : CASE NO.: 4:0 7-CV-0 19 (WLS) ORD ER Before th e Court is Defen dan t Coun trywide Home Loan s, In c.’s Motion to Dism iss Plain tiffs’ First Am en ded Complain t. (Doc. 64.) For th e followin g reason s, Defen dan t Coun trywide Home Loan s, In c.’s Motion to Dism iss Plain tiffs’ First Am en ded Com plaint (Doc. 64) is D EN IED . I. RELEVAN T PROCED U RAL AND FACTU AL BACKGROU ND Plain tiffs h ave brought the above-captioned action , seekin g to represen t th em selves “individually an d on behalf of a class of all person s wh o gran ted on e or m ore security deeds which was secured by property in Georgia for whom [Countrywide H om e Loan s, In c. (“CHL”)] or a subsidiary of [CHL] was the gran tee or h older of th e security deed or servicin g agen t of th e underlyin g loan , which security deeds were n ot can celled with in sixty (60 ) days of the underlying loan being paid in full in accordan ce with O.C.G.A. § 44-14-3.” (Doc. 61, First Am en ded Com plain t, herein after referred to as “FAC,” ¶ 2.) Th ough th is case was filed in 20 0 7 an d Plain tiffs have been lon g iden tified as th e “origin al” gran tors of the security deed in question , Defen dan t moved to dism iss the 1 Dockets.Justia.com FAC on February 19, 20 13, allegin g for the first time th at the term “gran tors” as set forth in O.C.G.A. § 44-14-3 does n ot cover origin al gran tors of the security deed alleged n ot to h ave been can celled. (Doc. 64.) Rath er, Defen dan t con ten ds that a strict readin g of the statutory defin ition of gran tor reflects th at th e liquidated damages provision is on ly in ten ded to provide a rem edy to “h eirs, devisees, executors, adm in istrators, successors, tran sferees, or assign s.” O.C.G.A. § 44-14-3 (“‘Grantor’ m ean s heirs, devisees, executors, adm inistrators, successors, tran sferees, or assign s.”) Accordingly, Defendan t contends that Plain tiffs, as the origin al gran tors of the security in terest, do n ot have stan din g un der the statute’s enum eration of covered parties. On March 24, 20 13, Plain tiffs filed a respon se in opposition to Defen dan t’s Motion to Dism iss. (Doc. 70 .) Therein , Plain tiffs con ten d that the Court sh ould con strue the term “gran tors” as used in the statute to con fer stan din g on Plain tiffs. Per Plain tiffs, th e statute’s definition of “gran tor” expressly in cludes tran sferees, assign ees, an d oth er successors of the origin al gran tor of the security deed but n ot to th e exclusion of th e origin al gran tor. (Id. at 1-2.) In support of such a con struction , Plain tiffs poin t to the legislative in ten t of th e Georgia legislature in en actin g § 44-14-3—to provide broad redress to gran tors again st “gran tees who un reason ably withhold satisfaction or can cellation .” (Id. at 2) (quotin g Mitchell v. Oliver, 254 Ga. 112, 115-16 (198 5)). Accordin g to Plain tiffs, to read the statute to exclude the origin al gran tor would lead to an absurd result con trary to th is in ten t. (Id.) Plain tiffs also n ote that Georgia courts have, in th e past, construed § 44-14-3 in a way that m akes it clear th at original gran tors of th e security instrumen t have stan din g un der th e statute, despite th e enum eration of covered parties that, on its face, appears to leave out origin al gran tors. However, altern atively, Plain tiffs request th at if “the Court h as an y doubt as to th e proper in terpretation of this state statute, the Court should certify the question to the Supreme 2 Court of Georgia before adoptin g a readin g that would largely gut the effectiven ess of the remedy created by th e Georgia legislature.” (Id.) On April 25, 20 13, Defen dan t filed its reply in support of its Motion to Dism iss. (Doc. 75.) Defen dan t con ten ds th at the statute does n ot merely defin e “gran tors” to in clude successors in in terest; rather, it defin es th e term to “m ean ” such successors. (Id. at 2.) Defen dan t also argues that th e legislature’s act of replacin g th e term “include” with th e term “m ean s” in 1983 im plies that the Georgia legislature “acted specifically to exclude a mere gran tor of a security in strumen t in the defin ition ” of “gran tor.” (Id. at 3.) Defendan t also conten ds that Plaintiffs’ argum ent of absurd consequences ignores th e fact that § 44-14-3 h as been “routin ely” con strued in a man n er th at has denied stan ding to oth er classes of plaintiffs. (Id. at 5-6.) Fin ally, as to Plain tiffs’ request for certification in lieu of an unfavorable ruling, Defendan t m aintains that there is no need to certify in terpretation of th e term “gran tor” to th e Supreme Court, arguin g that this Court can sufficien tly apply the plain lan guage of § 44-14-3 to determin e wh eth er Plain tiffs have stan din g. The briefin g is fully complete, an d the Court fin ds Defen dan t’s m otion to be ripe for review. II. D ISCU SSION A. Le ga l Sta n d a rd fo r Ru le 12 ( b) ( 6 ) Mo tio n . Federal Rule of Civil Procedure 12(b)(6) perm its a party to assert by m otion th e defen se of failure to state a claim upon which relief can be gran ted. A motion to dismiss a plain tiff’s complain t un der Rule 12(b)(6) should n ot be gran ted un less the plain tiff fails to plead en ough facts to state a claim to relief that is plausible, an d n ot merely just con ceivable, on its face. Bell Atl. Corp. v. Tw om bly , 550 U.S. 544, 570 (20 0 7). “Dismissal for failure to state a claim is proper if th e factual allegation s are n ot ‘en ough to raise a right to relief above th e speculative level.’” Edw ards v . Prim e, In c., 60 2 F.3d 3 1276, 1291 (11th Cir. 20 10 ) (quotin g Rivell v. Private Health Care Sy s., In c., 520 F.3d 130 8, 130 9 (11th Cir. 20 0 8)). “Stated differen tly, the factual allegation s in th e complain t must ‘possess enough h eft’ to set forth ‘a plausible en titlemen t to relief.’” Edw ards, 60 2 F.3d at 1291 (quotin g Fin. Sec. Assurance, In c. v . Stephens, In c., 50 0 F.3d 1276, 1282 (11th Cir. 20 0 7)). Wh ile the Court must con duct its an alysis “acceptin g th e allegation s in th e complain t as true an d construin g th em in the ligh t most favorable to th e Plain tiff,” Hill v. W hite, 321 F.3d 1334, 1335 (11th Cir. 20 0 3), in evaluating the sufficien cy of a Plain tiff’s pleadin gs the Court must “m ake reason able in feren ces in [p]lain tiff’s favor, ‘but we are n ot required to draw Plain tiff’s in feren ce.’” Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252, 1260 (11th Cir. 20 0 9) (quotin g Aldana v. Del Monte Fresh Produce, N.A., In c., 416 F.3d 1242, 1248 (11th Cir. 20 0 5).) The Suprem e Court instructs th at wh ile on a Motion to Dism iss “a court must accept as true all of th e allegation s con tain ed in a Com plain t,” this prin ciple “is in applicable to legal con clusion s,” wh ich “must be supported by factual allegation s.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 194954 (20 0 9) (citing Tw om bly , 550 U.S. at 555, for th e proposition th at courts “are n ot boun d to accept as true a legal con clusion couched as a factual allegation ” in a complain t.) In th e post-Tw om bly era, “[d]etermin in g wheth er a complain t states a plausible claim for relief . . . [is] a con text-specific task th at requires th e reviewin g court to draw on its judicial experien ce an d com m on sen se.” Iqbal, 556 U.S. at 679. B. An alys is The issue of wh eth er the Georgia legislature in tended to design ate “heirs, devisees, executors, adm inistrators, successors, tran sferees, or assign s” as th e exhaustive list of parties with the stan din g to pursue rem edies un der O.C.G.A. § 44-14-3 h as n ever been squarely addressed by an y court in Georgia. However, in determ in in g 4 whether Defen dan t’s strict-con struction ist view carries th e day over Plain tiffs’ legislative-in ten t-based con struction , th e Court first turns to the rules of statutory con struction . “[T]he in itial rule of statutory con struction is to look to the legislative in ten t an d to con strue statutes to effectuate that in ten t.” Gavin v. State, 292 Ga. App. 40 2, 40 3-0 4 (20 0 8 ) (citations om itted). “In arriving at the intention of th e legislature, it is appropriate for th e court to look to the old law an d the evil which the legislature sought to correct in en actin g th e n ew law an d th e remedy provided th erefor.” Mitchell v . Oliver, 254 Ga. 112, 116 (1985) (citation s om itted). On th e other han d, “[w]hile th e legislative in ten t prevails over th e literal im port of words, wh ere th e statutory lan guage is plain an d susceptible of but on e n atural an d reason able con struction , the court has n o auth ority to place a differen t con struction upon it, but must con strue it accordin g to its terms.” Gavin , 292 Ga. App. at 40 4. To th is end, th e court “is n ot authorized to disregard an y of the words [of a statute] un less th e failure to do so would lead to an absurdity man ifestly n ot in ten ded by the legislature.” Id. The court must con strue the statute so as “to give sensible an d intelligent effect to all of its provisions and should refrain , wh en ever possible, from con struin g th e statute in a way th at ren ders an y part of it m ean ingless.” Id.; see also Mitchell, 254 Ga. at 116 (“It is the duty of the court to con sider the results an d con sequences of an y proposed construction an d n ot so con strue a statute as will result in un reason able or absurd con sequences n ot con templated by the legislature. The construction must square with com m on sense an d sound reasoning.”) Accordin g to the Supreme Court of Georgia, “[t]he plain legislative purpose un derlyin g OCGA § 44-14-3(c) is to protect gran tors from victim ization by gran tees who un reason ably withh old satisfaction or can cellation . To accomplish this purpose, the statute compensates th e victimized gran tor, punishes th e gran tee who has perpetrated 5 th e abuse, and attempts to deter future abuses.”1 Mitchell, 254 Ga. at 116. A review of th is in ten t fails to reveal an y in dication that the Georgia legislature in ten ded to limit th e scope of § 44-14-3’s rem edies to on ly abuses perpetrated on successors in in terest. Such an in feren ce of true legislative in ten t is, in actuality, far more difficult to reach —that th e Georgia legislature th ought that successors n eeded protection from un reason able withh oldin g of satisfaction or can cellation where origin al gran tors did n ot. Th e Court finds this to be a dubious proposition as best. Furth er bolsterin g the Court’s doubt as to the reason ablen ess of such an in terpretation of the legislative in ten t is the fact that Defen dan t made n o attempt to proffer an y argumen ts as to a ration al reason why the Georgia legislature would h ave purposely sought to exclude origin al gran tors of th e security in terest. At best, Defen dan t was on ly able to poin t to in stan ces where Georgia courts have lim ited recovery under § 44-14-3, as if to show that these cases dem on strate that restrictive con struction s of § 44-14-3 are ipso facto reason able. However, a review of these cases reflects that the limits on recovery articulated by the courts were well reason ed, con sisten t with the legislative purpose of § 44-14-3, an d distin guishable from th e case at bar. In Mitchell, th e court con cluded th at im posin g statutory pen alties on a gran tee wh o h ad a good faith belief that the debt was n ot paid in full “would n ot serve th e statutory purpose of pun ishin g gran tees who h ave un reason ably withheld cancellation , Ideally, “[a] court is usually able to determ ine legislative intent by reading the statute literally—i.e., by affording the language used its plain and ordinary meaning.” State v. Free At Last Bail Bonds, 285 Ga. App. 734, 736 (200 7) (citing O.C.G.A. § 1-3-1(b)) (additional citations om itted). However, the statem ent the parties dispute—“‘grantor’ means heirs, devisees, executors, administrators, successors, transferees, or assigns”—is by itself definitional and does nothing to provide the Court with insight about the legislative intent behind the statute and to whom the Georgia legislature intended to confer standing, in a m anner consistent with the purpose of the statute. Thus, the Court will start its analysis with the known legislative intent behind the statute. 1 6 an d in fact would hin der th e object of deterren ce by arbitrarily an d capriciously im posing penalties where none are m erited.” 254 Ga. at 116. In Associated Credit Un ion v. Pin to, a form er own er of real property brought suit to obtain statutory damages for failure to comply with § 44-14-3. 297 Ga. App. 60 5 (20 0 9). The court found that, at th e time he filed his complain t to recovery statutory damages, th e plain tiff-appellee n o lon ger own ed th e property at issue, an d th erefore, lacked stan din g un der § 44-14-3’s defin ition of “gran tor.” Though the court in Pin to followed th e literal defin ition of “gran tor” as set forth in § 44-14-3 in determin in g that th e plain tiff lacked standin g, key to th e court’s rulin g appeared to be th e fact th at th e security deed w as cancelled by th e time plain tiff filed h is suit an d th e successful con veyance demonstrated th at th e failure to can cel th e security deed in timely fashion was of little to n o con sequen ce to th e former own er. Id. at 60 7. In Heritage Creek Developm en t Corp. v. Colon ial, 268 Ga. App. 369, 373 (20 0 4), the court con cluded th at a plain tiff waived an y claims it might have had to statutory damages wh en it sign ed loan modification documen ts releasin g th e gran tee from an y claims arisin g out of th e sale of th e properties at issue. Notably, th e court made clear th at th e defen dan t migh t have been liable under § 44-14-3 to the plain tiff—th e origin al gran tor of the security in terest—had the plain tiff made its written deman d after the properties were sold an d before sign in g the loan modification documen ts. Id. Suntrust Bank v. Hightow er, 291 Ga. App. 62 (20 0 8), in volved a putative class action filed by an origin al gran tor who fin anced his hom e with a loan from SunTrust. Similar to th e plain tiffs here, when High tower paid off his loan , Sun Trust failed to can cel the security deed within 60 days, as required by § 44-14-3. Sun Trust filed a motion to dismiss th e complain t on the groun ds that plain tiff failed to make a pre-suit deman d for damages, which was denied by the trial court. Alth ough th e Georgia Court 7 of Appeals reversed the trial court’s order denyin g SunTrust’s Motion to Dism iss, con cludin g that a written demand cann ot be made for th e first time in th e complain t, plain tiff’s stan din g as th e origin al gran tor was n either challen ged n or raised as an issue. Sim ilarly, in Shree Annpuran a, In c. v. Udhw ani, 255 Ga. App. 799 (20 0 2), the plain tiff, the origin al gran tor of a n ote secured by a secon d-in-priority security deed, sued the gran tee for failin g to can cel the security deed within 60 days of full paym en t of th e n ote. Th e trial court gran ted summary judgmen t to defen dan t because plain tiff’s written deman d failed to in clude a request for liquidated damages, an d th e appellate court affirm ed. Again , plain tiff’s stan din g as th e origin al gran tor was n either challen ged n or raised. Con trary to Defen dan t’s belief, the Court does n ot con clude th at the aforemen tion ed cases stan d for th e broad proposition th at the limitation on stan din g advanced h ere would be just on e m ore in a long line of cases narrowing § 44-14-3’s reach in a perm issible way. On ly Pin to in volves in terpretin g th e scope of the term “grantor,” an d H eritage, in dicta, im plies that original gran tors are en titled to statutory damages wh en deeds are n ot can celled in complian ce with § 44-14-3. Put simply, Defen dan t h as n ot articulated, an d th e Court fails to see, what legislative purpose would be served by excludin g origin al gran tors of th e security in terest from recovery. Although th e Court is n ot statin g that Defen dan t should be h eld to th e burden of divinin g th e in ten t of th e Georgia legislature, th e fact that Defen dan t’s can n ot offer on e reason as to wh y th e Georgia legislature would have in tended to in clude successors in in terest to the exclusion of original gran tors of the security interest supports the conclusion that con struin g th e statute to so exclude would be un reason able an d absurd.2 In support of its position, Defendant also cites to the variations interpretations of standing other legislatures across the country use for their lien-release statutes. Ironically, none of these statutes excludes original grantors from relief—further evidence that construing a lien-release statute to only 2 8 Furth ermore, the fact th at Georgia legislature substituted th e term “m ean s” for the term “in clude” does n ot ch an ge the Court’s con clusion . As th e Court n oted above, explicitly limitin g to § 44-14-3’s statutory penalties to successors in in terest as the term “m ean s” would require, if taken literally, would require that the Court completely ign ore the legislative purpose behin d the statute. Georgia Pow er Co. v. Monroe Cn ty ., 284 Ga. App. 70 7, 70 9 (20 0 7) (“When literal readin g of th e statute produces such an absurdity, the . . . court must then seek to make sense out of the statute, while bein g faithful to the legislative in ten t.”) Common sen se an d reason in g are supposed to guide th e Court’s in terpretation of § 44-14-3, in th e absen ce of in form ation regardin g th e legislature’s reason for usin g the term “m ean s” when defin in g “gran tors.” However, th e Court can find no sensible reason as to why the Georgia legislature would want to confer rem edial rights on “heirs, devisees, executors, adm inistrators, successors, tran sferees, or assign s” again st gran tees while denyin g the same rights to the origin al gran tor of the security deed. Defen dan t itself failed to proffer a reason un derlyin g such an exclusion th at would support a con clusion that the literal lan guage of the statute should govern . Fin ally, despite th e statute’s use of the term “m ean s,” in almost every case in volvin g § 44-14-3 Georgia courts have osten sibly assumed that origin al gran tors do have stan din g un der th e statute, routin ely con siderin g appeals brough t by and again st original gran tors. See, e.g., Schorr v . Country w ide H om e Loan s, In c., 287 Ga. 570 (20 10 ) (allowin g n amed plain tiffs’—origin al gran tors of th e security deed—satisfaction of pre-suit condition s to satisfy the precon dition requiremen t on behalf of the en tire putative class); SunTrust Bank, 291 Ga. App. at 66-67 (den yin g relief to origin al gran tor, but on ly on the grounds that gran tor failed to make a pre-suit written deman d as required by the statute); Fran klin Cred. Mgm t. Corp. v. Frieden berg, 275 Ga. App. 236, provide relief to successors in interest would be discordant with the m anner in which these statutes are broadly applied in other jurisdictions. 9 237-39 (20 0 5) (affirmin g trial court’s judgmen t in favor of plain tiff-origin al gran tor for liquidated dam ages pursuan t to § 44-14-3); Heritage Creek Dev. Corp, 268 Ga. App. at 8 45 (noting in dicta th at plain tiff-origin al gran tor migh t h ave otherwise been en titled to damages had th e written deman d for can cellation of the security deed been made earlier); Shree Annpurna, In c., 255 Ga. App. at 799 (den yin g relief to an origin al gran tor, but on ly on th e groun ds th at the gran tor failed to in clude a deman d for liquidated dam ages in h er pre-suit dem and); Taham tan v. Chase Man hattan Mortg. Corp., 252 Ga. App. 113, 113 (20 0 1) (con siderin g an d denyin g appeal from plain tifforigin al gran tor wh o alleged th at mortgagee wron gfully failed to can cel a security deed in violation of § 44-14-3); Dixon v. Cook Bankin g Co., 191 Ga. App. 861, 861-62 (1989) (con siderin g an d den yin g appeal from plaintiffs-origin al gran tors because appellan ts failed to give th e ban k a written deman d for can cellation of security deed); Edenfield v. Trust Co. Mortg., 185 Ga. App. 678, 680 (1988) (affirmin g trial court’s gran t of summary judgmen t in favor of gran tee again st plain tiff-origin al gran tor’s claim for statutory penalties un der § 44-14-3). Pin to, the on ly case stan din g for a con trary proposition, an d th e on e upon which Defendan t heavily relies, involved an original gran tor who was n o lon ger in possession of the property at the time h e made a claim for statutory dam ages. To th is end, Pin to does n ot n egate the almost 30 years of judicial preceden t presum ptively con ferrin g stan din g upon origin al gran tors.3 Accordin gly, th e Court fin ds that the literal lan guage of th e term “gran tor,” as set forth in O.C.G.A. § 44-14-3, should n ot be read as excludin g origin al gran tors of the security deed in question . Con sisten t with Pin to, the Court’s rulin g on ly applies to The Court recognizes that the standing of original grantors does not appear to have been an issue in these cases, and thus, this could explain why the Georgia courts entertained the appeals of these cases without addressing the standing issue. However, the fact that plaintiffs, defendants, and com petent jurists (who do not hesitate to state obvious (but never raised) issues in dicta, when applicable) have all accepted original grantors’ standing as a natural outgrowth of § 44-14-3 is good evidence that parties have not read the phrase “‘[g]rantor’ means heirs, devisees, executors, administrators, successors, transferees, or assigns” as applying so literally, as Defendant would have this Court to do. 3 10 original gran tors curren tly in possession of th e property at th e time th e complain t is filed. III. CON CLU SION For all of the above reason s, Defen dan t Countrywide Hom e Loan s, In c.’s Motion to Dism iss Plain tiffs’ First Am ended Complain t (Doc. 64) is D EN IED . SO ORD ERED , this 18 th day of J uly, 20 13. / s/ W. Louis San ds TH E H ON ORABLE W . LOU IS SAN D S, U N ITED STATES D ISTRICT COU RT 11
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