BURGOS v. SAND CANYON CORP, No. 4:2019cv00076 - Document 38 (M.D. Ga. 2019)

Court Description: ORDER granting 14 Motion to Dismiss Complaint; denying 5 Motion to Remand; denying 16 Amended Motion to Remand; denying 17 Motion to Set Aside; denying 19 Motion to Strike; denying 23 Motion for Declaratory Judgment; denying 26 Motion to Strike; denying 33 Amended Motion to Set Aside; denying 35 Motion to Certify Questions. Ordered by US DISTRICT JUDGE CLAY D LAND on 10/3/19 (CCL)
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IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF GEORGIA COLUMBUS DIVISION PEDRO J. BURGOS, * Plaintiff, * vs. * CASE NO. 4:19-CV-76 (CDL) SAND CANYON CORP., f/k/a OPTION * ONE MORTGAGE COMPANY, * Defendant. * O R D E R Plaintiff alleges that Defendant, his loan originator, fraudulently assigned his security deed to Wells Fargo Bank and that Wells Plaintiff County. Fargo sued later wrongfully Defendant in the foreclosed Superior on Court his of home. Muscogee Plaintiff did not properly serve the Defendant, and he did not name Wells Fargo as a defendant. Plaintiff nonetheless obtained a default judgment against Defendant that set aside the original security deed, the assignment to Wells Fargo, and the deed under power. Years later, Defendant learned of the action and filed a motion to set aside the default judgment due to lack of personal jurisdiction. The Superior Court granted the motion, then Defendant removed the action to this Court and filed a motion to dismiss Plaintiff’s complaint. Plaintiff, who is represented by counsel, has flooded the Court with a series of motions and briefs, but the resolution of them requires the Court to answer three simple questions: (1) was this action properly removed to this Court such that this Court has judgment subject matter previously jurisdiction? entered in the (2) state was court the default properly set aside? and (3) does Plaintiff’s complaint state a claim upon which relief questions is may be yes, granted? and the The answer answer to to the the first third is two no. Accordingly, this action is dismissed. I. Was Removal Proper and Does the Court Have Jurisdiction? It is undisputed that complete diversity of citizenship exists and that the amount in controversy requirement is met. Plaintiff is a Georgia citizen. Compl. at 2 ¶ 1, ECF No. 1-1. Defendant is a citizen of California. Compl. Ex. A, Certificate of Withdrawal, ECF No. 1-1 at 31 (stating that defendant is a California corporation). $75,000.00. $5 million The amount in controversy exceeds See, e.g., Compl. at 23 ¶ 1 (seeking more than in compensatory damages). Accordingly, diversity jurisdiction exists under 28 U.S.C. § 1332(a)(1). Plaintiff’s arguments that this run-of-the-mill wrongful foreclosure/fraud/RICO action asserting in personam tort claims is somehow subject to the exclusive in rem jurisdiction of the Georgia state courts are so unpersuasive that the disposition of them requires no further elaboration. also misunderstands Younger abstention. 2 Court’s Plaintiff It has no application here. See generally Younger v. Harris, 401 U.S. 37 (1971) (in exceptional circumstances, federal courts should abstain from adjudicating actions being litigated in state courts). It is clear that Plaintiff’s quiet title action in state court is not an exceptional circumstance warranting abstention. The general rule is that pendency of a parallel state court action “is no bar to proceedings concerning the same matter in the Federal court having jurisdiction.” Sprint Commc’ns, Inc. v. Jacobs, 571 U.S. 69, 73 (2013) (quoting Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976)). No legitimate basis exists for abstention under the circumstances presented in this action. Finally, Defendant’s removal was timely. A notice of removal must be filed “within 30 days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based.” 28 U.S.C. § 1446(b)(1). The present record supports the finding that Defendant was not properly served with Plaintiff’s complaint until June 14, 2019, after Defendant removed the action to this Court. Plaintiff previously attempted to serve the Georgia Secretary of State with the state court action pursuant to Georgia law. But because Defendant obtained a certificate of withdrawal of its authority to transact business in Georgia in 2008, before this 3 action was filed, service of process on the Georgia Secretary of State is proper if a copy of the process is also mailed to an officer provided of the by withdrawn the company O.C.G.A. § 14-2-1520(c). corporation in its at the application mailing for address withdrawal. Merely serving a secretary of state, without more, violates due process. Ware v. Fleetboston Fin. Corp., 180 F. App’x 59, 62 (11th Cir. 2006) (per curiam) (citing Wuchter v. Pizzutti, 276 U.S. 13, 21 (1928)). Therefore, in the context of serving a foreign corporation, “the failure to comply strictly with the statutory requirements for service on such corporation renders the attempted service defective.” Id. (citing Howard v. Technosystems Consol. Corp., 536 S.E.2d 753, 756 (Ga. Ct. App. 2000)). Plaintiff did not point to any evidence that process was delivered to Defendant in 2013. of process was 6531 Irvine The correct address for service Center Drive, Irvine CA 92618. Burgos Aff. (Mar. 12, 2019) Ex. A, Letter from D. Sugimoto to Sec’y of State (Sept. 15, 2008), ECF No. 1-5 at 34. When Plaintiff originally filed his affidavit of service in state court in 2013, he presented evidence that he mailed the letter to Defendant at 6351 Irvine Center Drive, Irvine CA 92618. Burgos Aff. (Apr. 5, 2013) Ex. A, Certified Mail Receipts, ECF No. 1-3 at 92. Thus, he mailed the process and complaint to the wrong address. When Defendant moved to set aside the default 4 judgment in state court, Plaintiff submitted another affidavit, admitting that he made an error when he handwrote the address but asserting that he typed the address correctly in a separate area of the envelope. 1-5 at 30. what he Burgos Aff. ¶ 6 (Mar. 12, 2019), ECF No. In support of this assertion, Plaintiff points to says is a copy of the envelope that contained the process and complaint mailed to Defendant, which he avers he obtained from the post office.1 at 37. Not Id. Ex. B, Envelope, ECF No. 1-5 But that envelope is clearly marked “Returned to Sender, Deliverable as Addressed, Unable to Forward.” Id. Plaintiff pointed to no evidence that the envelope containing the process and complaint were delivered to Defendant, and his own evidence suggests that it was not delivered and that it was returned to him. Based on the present record, the Court finds that Defendant was not properly served with the complaint in this action before the action was removed. before service of And the removal clock cannot begin official process. Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 347-48 (1999) (“[A] named defendant’s time to remove . . . [is not triggered] by mere receipt service.”). of the complaint unattended by any formal Defendant nevertheless removed the action within 1 Defendant presented evidence that Plaintiff could not have obtained the 2013 envelope from the post office in 2019. See generally Walsh Aff., ECF No. 1-5 at 81-82. The Court does not base its ruling on this evidence but provides it for context. 5 thirty days of the state court’s order setting aside the default judgments and reopening the action. A defendant may elect to remove before service of process because “nothing in the removal statute, or any other legal provision, requires that a defendant be served with the complaint before filing a notice of removal.” Whitehurst v. Wal-Mart, 306 F. App'x 446, 448 (11th Cir. 2008) (per curiam). Removal was timely under 28 U.S.C. § 1446(b). The Court rejects Plaintiff’s argument that even if removal was timely under 28 U.S.C. § 1446(b), 28 U.S.C. § 1446(c). § 1446(b)(3) because If it a was case not it was untimely under is removed removable pursuant by the to initial pleading but later became removable, then it must be removed within one year after commencement of the action unless the court finds that the plaintiff acted in bad faith to prevent removal. 28 U.S.C. § removable based on the pursuant to 1446(c)(1). Here, the action was initial pleading, so removal was not § 1446(b)(3); thus § 1446(c)(1)’s one-year limitation does not apply. Having subject timely matter citizenship, removed jurisdiction Defendant is adjudicated in this Court. this action over based entitled to which upon have the Court diversity this has of action Plaintiff’s motion to remand and jurisdiction-related motions are denied. 6 II. Should this Court Disturb the State Court’s Setting Aside of Plaintiff’s Default Judgment? After receiving briefs from the parties and holding a hearing where Plaintiff was represented by counsel, the state court determined Defendant in the that state previously obtained court aside set jurisdiction. Plaintiff court default the not action properly in judgments. default Plaintiff had judgments which served the Plaintiff had Therefore, for lack the of state personal claims that the state court had no authority to set aside the judgment and that this Court should not accept the default judgment as having been set aside. “As district a general court rule, under when original a case is removed jurisdiction the to federal federal court treats everything done in the state court as if it had in fact been done in the federal court.” Salery v. United States, 373 F. App’x 29, 30 n.1 (11th Cir. 2010) (citing Savell v. S. Ry. Co., 93 F.2d 377, 379 (5th Cir. 1937)). “Therefore, assuming an error occurred in the state court, a federal district court ‘may dissolve or proceedings modify which injunctions, have taken removal.’” Id. (quoting orders, place in and state all court other prior Maseda v. Honda Motor Co., 861 F.2d 1248, 1252 (11th Cir. 1988)). The Court finds no error in the state court’s decision to set aside the default judgment. discussed previously, to the record supported the finding As that Defendant had not been properly served with the complaint, and 7 thus the state court did not have personal jurisdiction over the Defendant at Accordingly, the time setting the that default judgment judgment aside was was entered. required. The Court finds Plaintiff’s other arguments in favor of setting the judgment aside unpersuasive, and quite frankly, not worthy of additional discussion.2 III. Does Plaintiff’s Complaint State a Claim? Having concluded that removal was proper and that the default judgment was correctly set aside, the Court turns to Defendant’s motion to dismiss. In deciding a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the Court must determine whether a complaint contains “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The complaint must include sufficient factual allegations “to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. Plaintiff alleges the following in his complaint in support of his claims in this action. 2 The Court recognizes that Plaintiff argues that the state court order setting aside the default judgments was void because Plaintiff filed a notice of appeal regarding a post-judgment order that merely set a hearing on a post-judgment motion. Plaintiff pointed to no authority that a Georgia state court’s order setting aside a default judgment is void for lack of jurisdiction under the unique circumstances presented here, where the clearly frivolous “appeal” did not seek review of the default judgment and the action was never even transmitted to the appellate court. 8 Plaintiff admits that he signed a security deed in favor of Defendant. Compl. 3 ¶ 1. He claims that there was no witness to the deed at the time of closing. Id. at 3 ¶ 2. Plaintiff further alleges that Defendant made a “fraudulent and forged assignment” of the security deed to Wells Fargo Bank. ¶¶ 3-4. Id. at 3 He also contends that Defendant committed fraud on him by making false representations to him “by virtue of the deed and assignment filed with the Superior Court.” Compl. 4 ¶ 6, 5 ¶ 17. And, Plaintiff asserts that Wells Fargo “wrongfully foreclosed” on the property that was secured by the deed. at 3 ¶ 3; breached proper accord the terms notice of id. at of the 4 ¶¶ 7-9 security default). The (alleging deed by question that failing for the Id. Defendant to give Court is whether Plaintiff asserts any valid claim for relief based on these allegations. A. Plaintiff Does Not Allege Facts to Suggest that the Security Deed Was Void Due to Forgery Plaintiff’s first contention is that the deed was “forged” and thus void.3 It is true that a forged deed can pass no title. Vatacs Grp., Inc. v. U.S. Bank, N.A., 738 S.E.2d 83, 85 (Ga. 2013) (finding that evidence supported 3 the special master’s Most of Plaintiff’s claims appear to be based on the foreclosure by Wells Fargo who is not a party to this action, although Plaintiff also seems to allege in his fraud, racketeering, and unjust enrichment claims that Defendant collected money from him that he did not owe. Plaintiff did not allege any specific facts to support such a claim, and the Court assumes that these claims are based on Plaintiff’s assertion that the security deed was void due to forgery. 9 conclusion that a deed was forged and thus that the grantee of the forged deed had no interest in the property). Plaintiff’s own allegations contradict his assertion that the deed itself was forged. signature fraud. on Plaintiff also alleges no facts to suggest that his the security deed was obtained by trickery or In fact, he admits that he granted a security deed to Defendant, that he maintained his property as collateral for the loan, and that he made payments on the loan. Plaintiff contends, though, that the witness’s signature on the security deed was forged because no witness signed the deed at the time of closing. Taking this allegation as true, it simply means that the deed was not properly recordable under Georgia law. See Hooten v. Goldome Credit Corp., 481 S.E.2d 550, 551 (Ga. Ct. App. 1997) (“Despite a statutory requirement that the signature of the maker of a deed must be attested by two witnesses, the requirement relates only to the record ability of the instrument, and a deed may be valid between the parties without attestation.” (quoting Bramblett v. Bramblett, 310 S.E.2d 897, 898 (Ga. 1984)). authority that a deed which is Plaintiff did not point to any nonrecordable for lack of a proper witness is invalid and void, perhaps because Georgia law is clear that an allegation that a deed was improperly witnessed “is insufficient to void the deed to secure debt, since a deed without attestation conveys the title as against the grantor and 10 his heirs.” Budget Charge Accounts, Inc. v. Peters, 96 S.E.2d 887, 889 (Ga. 1957); accord Allgood v. Allgood, 196 S.E.2d 888, 889 (Ga. 1973) (“Attestation recordability.”). Because of a deed Plaintiff’s only affects Complaint its contains no factual allegations to suggest that his signature on the deed was forged, he has no claim based on his unfounded assertion that the security deed was void due to forgery. B. Plaintiff Asserts No Valid Claims Based Assignment from Defendant to Wells Fargo on the Plaintiff next claims that Defendant made a fraudulent and forged assignment of the security deed to Wells Fargo, and he seeks relief against Defendant on this ground. Plaintiff alleges that Defendant sold “servicing and property rights” to his security deed to American Home Mortgage Servicing, Inc. in 2008. Compl. 3 ¶ 4. Then, in 2011, Defendant assigned the security deed to Wells Fargo. Id. at 3 ¶ 3. Plaintiff asserts that the assignment to Wells Fargo was invalid because Defendant had previously sold its “property rights” to American Home Mortgage Servicing, Inc. and thus “had no legal rights to make any assignments.” Id. at 3 ¶ 4. To the extent that Plaintiff is attempting to challenge Defendant’s assignment of the security deed to Wells Fargo, he does not have standing to do so. between Defendant and Wells The assignment was a contract Fargo. If the assignment flawed, the proper party to bring a claim against 11 was Defendant “would be the other party to the assignment,” Wells Fargo. Montgomery v. Bank of Am., 740 S.E.2d 434, 437–38 (Ga. Ct. App. 2013); accord Ames v. JP Morgan Chase Bank, N.A., 783 S.E.2d 614, 619-21 (Ga. 2016) (finding that debtors lacked standing to challenge the assignment of a security deed and thus could not pursue wrongful foreclosure proceedings based on an allegedly flawed assignment); see also Edward v. BAC Home Loans Servicing, L.P., 534 F. App’x 888, 891 (11th Cir. 2013) (per curiam) (finding that the district court properly dismissed claims based on the transfer of a security deed because the plaintiffs did not have standing to contest the validity of the transfer). Plaintiff has thus failed to state a claim against Defendant based on the assignment. C. Most Plaintiff Does Not State Any Claim Against Defendant Based on Wells Fargo’s Alleged Wrongful Foreclosure of Plaintiff’s claims are based on the alleged wrongful foreclosure by Wells Fargo, who is the assignee of the security deed and not a party to this action. The security deed provides that if Plaintiff defaults on the security deed, then the lender (or its successors and assigns) may invoke the power of sale. Plaintiff alleges that Wells Fargo initiated foreclosure proceedings even though it held no interest in the security deed because Defendant had no interest in the security deed when it made the assignment to Wells Fargo. 12 To the extent that Plaintiff is attempting to assert a wrongful foreclosure claim against Defendant based on its own conduct, he did not allege any facts to suggest that Defendant was involved specifically in the alleges foreclosure that proceedings. Defendant had no Rather, interest in he the security deed at the time of the foreclosure and that Wells Fargo, not Defendant, initiated and conducted the foreclosure proceedings. To the extent that Plaintiff is attempting claim against Defendant based on Wells proceedings, that claim also fails. Fargo’s to assert a foreclosure “A plaintiff asserting a claim of wrongful foreclosure must establish (1) a legal duty owed to it by the foreclosing party, (2) a breach of that duty, (3) a causal connection between the breach of that duty and the injury it sustained, and (4) damages.” Dixon v. Branch Banking & Tr. Co., 824 S.E.2d 760, 764 (Ga. Ct. App. 2019) (emphasis added) (quoting Canton Plaza v. Regions Bank, 732 S.E.2d 449, 454 (Ga. Ct. App. 2012)). “A claim for wrongful exercise of a power of sale . . . can arise when the creditor has no legal right to foreclose.” Id. at 764-65 (quoting DeGolyer v. Green Tree Servicing, LLC, 662 S.E.2d 141, 147 (Ga. Ct. App. 2008)). Thus, Plaintiff may have a claim against Wells Fargo if his allegations are true. But he has not made sufficient factual 13 allegations to impute Wells Fargo’s alleged wrongful conduct to Defendant. Instead, Plaintiff summarily alleges, without any supporting facts, that Wells Fargo acted as Defendant’s agent when it received the assignment of the security deed and when it conducted foreclosure proceedings. In the complaint, Plaintiff refers to Wells Fargo as Defendant’s “agent,” e.g., Compl. 3 ¶ 3, but he does not make any factual allegations to support a plausible inference that Wells Fargo was Defendant’s agent. the Court previously explained, a complaint must As contain “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Iqbal, 556 U.S. at 678 (emphasis added) (quoting Twombly, 550 U.S. at 570). Simply calling someone an agent does not make it so. A “bare assertion of the existence of an agency relationship, when made by an outsider to the alleged relationship, is not a statement of fact, but merely an unsupported conclusion of law.” Thornton v. Carpenter, 476 S.E.2d 92, 94 (Ga. Ct. App. 1996) (quoting Young v. John Deere Co., 471 S.E.2d 19, 21 (Ga. Ct. App. 1996)) (finding that the trial court did not err in concluding that no genuine fact dispute existed as to an agency relationship where the plaintiff presented no evidence of such a relationship). In S.B. v. Tenet Healthcare Corp., for example, the plaintiff alleged that the defendant hospital, through an 14 agent clinic, made misrepresentations to her. 724 (11th Cir. 2018) (per curiam). Circuit concluded that the 732 F. App’x 721, A panel of the Eleventh district court did not err in dismissing the plaintiff’s fraud and misrepresentation claims based on those representations because the plaintiff “alleged no facts to support a plausible inference” of an agency relationship and “provided only conclusory allegations” that the clinic acted as the hospital’s agent. Id. The plaintiff also “failed to allege facts to support a plausible inference that” the hospital made any statements or engaged in any conduct that reasonably caused the plaintiff to believe that the hospital consented to have the clinic act on its behalf. here, Plaintiff alleged no facts to Id. support Similarly, a plausible inference that Wells Fargo was an agent of Defendant. In the absence of facts to support a plausible inference of an agency relationship between Defendant and Wells Fargo, any wrongful foreclosure claim Plaintiff has would be against the entity that foreclosed on his property. entity. Defendant is not that Accordingly, Plaintiff’s claims against Defendant based on the alleged wrongful foreclosure are dismissed. CONCLUSION For the reasons set forth above, the Court denies all of Plaintiff’s motions: Motion to Remand (ECF No. 5), Amended Motion to Remand (ECF No. 16), Motion to Set Aside an order by 15 the Superior Court (ECF No. 17), Motion for Declaratory Judgment (ECF No. 23), Motion to Strike several of Defendant’s filings (ECF No. 26), Amended Motion to Set Aside an order by the Superior Court (ECF No. 33), and Motion to Certify Questions (ECF No. 35). The Court grants Defendant’s Motion to Dismiss (ECF No. 14) and denies the Motion to Strike (ECF No. 19). IT IS SO ORDERED, this 3rd day of October, 2019. S/Clay D. Land CLAY D. LAND CHIEF U.S. DISTRICT COURT JUDGE MIDDLE DISTRICT OF GEORGIA 16