BALL et al v. JPMORGAN CHASE BANK NA, No. 1:2012cv00132 - Document 36 (M.D. Ga. 2013)
Court Description: ORDER granting 34 Motion for Judgment on the Pleadings. Ordered by Judge W. Louis Sands on 10/10/2013. (bcl)
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BALL et al v. JPMORGAN CHASE BANK NA Doc. 36 IN TH E U N ITED S TATES D ISTRICT COU RT FOR TH E MID D LE D ISTRICT OF GEORGIA ALBAN Y D IVISION J OHNNY FRANK BALL, J R., and TEMPIE BALL : : : Plaintiffs, : : v. : : J PMORGAN CHASE BANK, N.A. and : FEDERAL HOME LOAN MORTGAGE : CORPORATION, : : Defendants. : : CASE NO.: 1:12-cv-132 (WLS) ORD ER Before the Court is Defendants J P Morgan Chase Bank N.A. and Federal Hom e Loan Mortgage Corporation’s Motion for J udgm ent on the Pleadings. (Docs. 18, 34.) For the reasons that follow, Defendants’ m otion is GRAN TED . I. Pro ce d u ral Backgro u n d Plaintiffs J ohnny Frank Ball J r. and Tem pie Ball filed this suit in the Superior Court of Sum ter County, Georgia, seeking to set aside the non -judicial foreclosure of their hom e. They also seek com pensatory and punitive dam ages against J P Morgan Chase Bank (Chase) and the Federal Hom e Loan Mortgage Corporation (Freddie Mac) for wrongful foreclosure and fraudulent and negligent m isrepresentation. The basic legal theory underlying these causes of action is prem ised on the definition of a “secured creditor” in the Georgia Code. Plaintiffs claim that Chase lacked authority to foreclose its property because only a “secured creditor”—a creditor who holds the prom issory note— m ay initiate a non-judicial foreclosure, and Chase held only the security deed. Because 1 Dockets.Justia.com the Georgia Suprem e Court recently rejected this theory, the Court grants Defendants’ Motion for J udgm ent on the Pleadings. First, the factual background: On J une 5, 20 0 9, to secure financing for a singlefam ily hom e, J ohnny Frank Ball and Tem pie Ball executed a prom issory note in the am ount of $ 158,0 0 0 to First Choice Financial Corporation, the lender. The prom issory note was secured by a security deed, which identified Mortgage Electronic Registration System s, Inc. (MERS) and its successors and assigns as the grantees of the security instrum ent. The security deed gave MERS and its successors and assigns a power of sale and provided that “Borrower understands and agrees that MERS holds only legal title to the interests granted by Borrower in this Security Instrum ent, but, if necessary to com ply with law or custom, MERS (as nom inee for Lender and Lender’s successors and assigns) has the right: to exercise any or all of those interests, in cluding, but not lim ited to, the right to foreclose and sell the Property; and to take any action required of Lender including, but not lim ited to, releasing and canceling this Security Instrum ent.” Som etim e afterward, Freddie Mac purchased the loan and MERS assigned the security deed to Chase Hom e Fin ance LLC. Plaintiffs defaulted on their loan and Chase notified them their property would be foreclosed on the first Tuesday in J uly 20 10 and “that Chase was the secured creditor with full authority to negotiate, am end, and m odify all term s of the m ortgage.” During the foreclosure proceedings, Chase purchased the property as the highest bidder an d conveyed it to Freddie Mac. Plaintiffs essentially claim this process was unlawful because Chase, which later m erged with J P Morgan, did not hold the prom issory note and thus was not a “secured creditor” with authority to foreclose. Rather, the Plaintiffs claim , Freddie Mac was the 2 true secured creditor but no assignm ent of the m ortgage was ever recorded in the county deeds record. On August 31, 20 12, Defendants rem oved the case to this Court on the basis of diversity jurisdiction. Shortly afterward, Defendants filed a m otion for judgm ent on the pleadings. On J anuary 24, 20 13, the Court entered a stay because the U.S. District Court for the Northern District of Georgia had certified questions ostensibly dispositive to this case to the Georgia Suprem e Court. The Court ordered the parties to file supplem ental briefs following the Suprem e Court of Georgia’s decision. The Suprem e Court of Georgia issued its opinion May 20 , 20 13. Defendants filed a supplem ental brief J une 12, 20 13, claim ing that the decision entitles them to a judgm ent on the pleadings. II. D is cu s s io n A. Stan d ard s Under Federal Rule of Civil Procedure 12(c), a party m ay m ake a m otion for judgm ent on the pleadings after the pleadings are closed, but early enough not to delay trial where a com plaint “fail[s] to state a claim upon which relief can be granted.” Federal Rule of Civil Procedure 12(b)(6) m otions to dism iss standards apply to Federal Rule of Civil Procedure 12(c) m otions for judgm ent on the pleadings. Strategic Incom e Fund, L.L.C. v. Spear, Leeds & Kellogg Corp., 30 5 F.3d 1293, 1295 n.8 (11th Cir. 20 0 2) (explaining that standard under both Rule 12(b)(6) and 12(c) is “whether the count state[s] a claim for relief”). When ruling on a m otion to dism iss for failure to state a claim , the court m ust view the allegations of the com plaint in the light m ost favorable to the plaintiff and consider the well-pleaded allegations of the com plaint as true. Quality Foods de Centro Am ., S.A. v. Latin Am erican Agribusiness Dev. Corp., S.A., 711 F.2d 989, 994-95 (11th Cir. 1983). 3 In applying this standard, a m otion to dism iss a plaintiff’s com plaint, or a portion thereof, under Rule 12(b)(6) should not be granted unless a plaintiff fails to plead enough facts to state a claim to relief that is plausible, and not m erely just conceivable, on its face. Bell Atlantic Corp. v. Tw om bly , 550 U.S. 544, 570 (20 0 7). “While a com plaint attacked by a Rule 12(b)(6) m otion to dism iss does not need detailed factual allegations, a plaintiff's obligation to provide the ‘grounds’ of his ‘entitle[m ent] to relief’ requires m ore than labels and conclusions, and a form ulaic recitation of the elem ents of a cause of action will not do.” Id. at 555 (citations om itted). Additionally, “the pleading standard Rule 8 announces does not require ‘detailed factual allegations,’ but it dem ands m ore than an unadorned, the-defendant-unlawfullyharm ed-m e accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (20 0 9) (quoting Tw om bly , 550 U.S. at 555). Thus, “[a] pleading that offers ‘labels and conclusions’ or ‘a form ulaic recitation of the elem ents of a cause of action will not do.’” Id. A court's review on a m otion to dism iss is “lim ited to the four corners of the com plaint.” St. George v. Pinellas County , 285 F.3d 1334, 1337 (11th Cir.20 0 2). A court m ay consider only the com plaint itself and any docum ents referred to in the com plaint which are central to the claim s. See Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1369 (11th Cir.1997) (per curiam ). However, where the plaintiff refers to certain docum ents in the com plaint and those docum ents are central to the plaintiff's claim , then the Court m ay consider the docum ents part of the pleadings for purposes of Rule 12(b)(6) dism issal, and the defendant's attaching such docum ents to the m otion to dism iss will not require conversion of the m otion into a m otion for sum m ary judgm ent. Venture Assoc. Corp. v. Zenith Data Sy s. Corp., 987 F.2d 429, 431 (7th Cir.1993) (“Docum ents that a defendant attaches to a m otion to dism iss are considered 4 part of the pleadings if they are referred to in the plaintiff's com plaint and are central to her claim .”). Additionally, a court “m ay take judicial notice of m atters of public record without converting a Rule 12(b)(6) m otion into a Rule 56 m otion.” Halm os v. Bom bardier Aerospace Corp., 40 4 F. App’x 376, 377 (11th Cir. 20 10 ) (citing Bry ant v. Avado Brands, Inc., 18 7 F.3d 1271, 1278 (11th Cir. 1999)). B. An alys is Plaintiffs raise various causes of action prem ised on the theory that Freddie Mac, and not Chase, was the sole “secured creditor” under Georgia law with authority to initiate a non-judicial foreclosure. This theory is based on Chase’s lack of possession of the prom issory note. These claim s fail as a m atter of law. In You v. JP Morgan Chase Bank, N .A., 743 S.E.2d 428 (Ga. 20 13), the Suprem e Court of Georgia held that “under current Georgia law, the holder of a deed to secure debt is authorized to exercise the power of sale in accordance with the term s of the deed even if it does not also hold the note or otherwise have any ben eficial interest in the debt obligation underlying the debt.” 743 S.E.2d at 433. The facts of You are identical to those in this case. In 20 0 3, Chae Yi You and Chur K. Bak financed the purchase of their hom e with a loan from Excel Hom e Loans. Id. at 429. Excel transferred the prom issory note to an unidentified entity and assigned the security deed to Chase Manhattan Mortgage Corporation. Id. After You defaulted on the loan, Chase initiated foreclosure proceedings and m ailed the plaintiffs notice of the proposed foreclosure. Id. At the nonjudicial sale, Chase was the highest bidder of the property and then quitclaim ed the property to the Federal National Mortgage Association. Id. As in You, there appears to be no dispute that Chase held the security deed. That security deed explicitly gave MERS and its successors and assigns the power of sale fol- 5 lowing a default on the m ortgage. Thus, as in You, Chase had authority to foreclose by virtue of its possession of the security deed. One way or another, all of Plaintiffs causes of action, and proposed causes of action, rest on this renounced theory of law. (See Pls. Com pl. ¶¶ 29, 31, 40 , 44, 48, 55.) The foreclosure theref0 re did not violate Georgia foreclosure statutes, so a wrongful foreclosure claim fails. See McCarter v. Bankers Trust Co., 543 S.E.2d 755, 758 (Ga. Ct. App. 20 0 0 ) (holding that “violation of [a foreclosure] statute is necessary to constitute wrongful foreclosure”). And because Chase had authority to foreclose, there was no fraudulent or n egligent m isrepresentation in telling Plaintiffs that was so. To the extent Plaintiffs allege the foreclosure notice was defective, this claim also fails. The Com plaint states that Chase notified Plaintiffs in writing that it had authority to negotiate, am end, and m odify the term s of the m ortgage. Under O.C.G.A. § 14-14162.2(a), the foreclosure notice n eed only identify the individual or entity with “full authority to negotiate, am end, and m odify all term s of the m ortgage with the debtor.” That individual m ay be the deed holder, the servicing agent, or other party with such authority. You, 743 S.E.2d at 433– 34; Harris v. Chase Hom e Finance, LLC, No. 12-10 40 6, 20 13 WL 3940 0 0 0 , at *3 (11th Cir. J ul. 31, 20 13) (“The only entity that had to be identified in the Notice was the one with the full authority to negotiate, am end, or m odify the term s of the loan, and that could be the deed holder, note holder, attorney, or servicing agent.”) Chase was both the servicing agent and deed holder (Pls. Com pl. ¶ 21) and had authority under the deed to act on behalf of the “Lender’s successors and assigns” (Doc. 1-3 at 4). Finally, recent Georgia law also forecloses Plaintiffs claim that the assignm ent of the deed to Chase from MERS was som ehow unlawful. In Montgom ery v. Bank of 6 Am erica, 740 S.E.2d 434 (Ga. Ct. App. 20 13), the Court of Appeals of Georgia held that language in a security deed identical to the Plaintiffs’ deed gave MERS authority to assign. See 740 S.E.2d at 436– 37. For those reasons, the Court concludes Defendants are entitled to a judgm ent as a m atter of law. III. Co n clu s io n Defendants’ m otion (Docs. 18. 34) is GRAN TED . SO ORD ERED , this _ 10 th day of October 20 13. _ W. Louis Sands _ TH E H ON ORABLE W . LOU IS SAN D S, U N ITED S TATES D ISTRICT COU RT 7
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