Gina McClain v. Bank of America, N.A.

• Court: Court of Appeals for the Eleventh Circuit
• Decided: January 4, 2016
• Docket: 15-11810
• Status: Unpublished

Opinion

Case: 15-11810 Date Filed: 01/04/2016 Page: 1 of 8

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT ________________________

No. 15-11810 Non-Argument Calendar ________________________

D.C. Docket No. 1:13-cv-00443-CC

GINA McCLAIN,

Plaintiff-Appellant,

versus

BANK OF AMERICA, N.A.,

Defendant-Appellee.

________________________

Appeal from the United States District Court for the Northern District of Georgia ________________________

(January 4, 2016)

Before WILSON, JORDAN, and JILL PRYOR, Circuit Judges.

PER CURIAM: Case: 15-11810 Date Filed: 01/04/2016 Page: 2 of 8

Gina McClain appeals the final order of the district court granting a motion

for summary judgment in favor of Bank of America, N.A. (BANA). In her

amended complaint, McClain alleged fraud, tortious conversion, and two counts of

trespass in connection with the foreclosure of her home. After thorough

consideration of the briefs and review of the record, we affirm summary judgment

with respect to McClain’s tortious conversion and trespass claims, but reverse the

finding of summary judgment as to McClain’s fraud claim.

I. BACKGROUND

On September 23, 2003, McClain obtained a mortgage loan from BANA for

$141,300, secured by her home (the Property). McClain executed a note and

security deed (the Security Deed) in favor of BANA, conveying to BANA the

power of sale of the Property.

McClain made her last regular mortgage payment in July 2006 and has not

made any payments since, causing her loan to be in default. Foreclosure was

initiated on the Property around October 2006. The Property has since undergone

two foreclosure sales that were later rescinded, one on which occurred on

September 4, 2007. During this period, McClain was evicted from her home.

Notably, BANA failed to present any evidence of why the 2007 foreclosure was

rescinded, or, most importantly for purposes of this case, when the rescission took

place. From 2007 to 2010, BANA represented on multiple occasions that it had

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foreclosed on the Property, including: communications made in 2007 to McClain

and her real estate agent; a report to the credit bureau that BANA had foreclosed

on the Property; a 1099 Form filed with the Internal Revenue Service; BANA’s

collection of over $38,000 from a private mortgage insurer as a loss incurred by

BANA from its acquisition of the Property; 2008 and 2009 communications with

McClain that BANA later told her to disregard; and several 2010 communications

with McClain (after she received violation notices from the city about the

Property’s unkempt condition) in which BANA informed McClain that it owned

the Property and not to concern herself as BANA would remedy the violation. In

late 2010, McClain made a property insurance claim to complete repairs on the

Property. Insurance proceeds were paid directly to BANA, who refused to release

such proceeds to McClain when asked.

As of the date of this appeal, the Property has not been sold pursuant to the

latest foreclosure activity, and McClain owns the Property.

II. STANDARD OF REVIEW

“We review a district court’s grant of summary judgment de novo, viewing

all of the facts in the record in the light most favorable to the non-movant.”

Haynes v. McCalla Raymer, LLC, 793 F.3d 1246, 1249 (11th Cir. 2015) (internal

quotation marks omitted). Where “there is no genuine dispute as to any material

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fact and the movant is entitled to judgment as a matter of law,” summary judgment

is appropriate. Fed. R. Civ. P. 56(a).

III. DISCUSSION

1. Fraud

McClain alleges that BANA fraudulently represented its ownership of the

Property and, accordingly, did not have the authority to evict McClain from her

home. We find there is sufficient evidence in the record for McClain’s fraud claim

to survive BANA’s motion for summary judgment. As recounted above, there is

an issue of material fact as to whether BANA made false representations to

McClain regarding the status of the Property and the foreclosure proceedings.

Although the representations made to McClain and her real estate agent in 2007

could have been true given that the Property was admittedly sold through public

foreclosure on September 4, 2007, at some unknown point in time the 2007

foreclosure was rescinded. Yet BANA continued to represent the veracity of the

2007 foreclosure up until late 2010.1 Moreover, the magistrate judge’s conclusion

that McClain failed to present any evidence that BANA knew its representation

1 BANA also argued McClain could not establish a fiduciary or confidential relationship between herself and BANA such that BANA had a duty to update or disclose its voluntary rescission of the 2007 foreclosure. The relevance of this argument, likewise, depends on the timing of BANA’s rescission and also ignores the ongoing nature of the representations made by BANA regarding the Property. 4 Case: 15-11810 Date Filed: 01/04/2016 Page: 5 of 8

was false was dependent on his previous finding that BANA had not made any

false representations.

With respect to damages, McClain argues that BANA’s continuous

representations that it successfully foreclosed on the Property caused her, among

other harms, to lose the use of her home for three years. 2 We do not yet know how

much of this time actually falls under the post-rescission period, when BANA’s

representations of ownership may be found to be fraudulent, and McClain’s

damages would be limited accordingly.

2. Tortious Conversion

McClain alleges tortious conversion of insurance proceeds by BANA in the

amount of $7,000. In order to make out a prima facie case for conversion of

personal property, “the plaintiff must show title to the property, possession by the

defendant, demand for possession, and refusal to surrender the property.” Taylor

v. Powertel, Inc., 551 S.E.2d 765, 769 (Ga. Ct. App. 2001) (internal quotation

marks omitted).

Although we find sufficient alleged facts and arguments in the record to

support McClain’s claim under the second, third, and fourth prongs of her tortious

2 We are not convinced by BANA’s argument that McClain’s damages, if any, were caused by her admitted default on the loan. The caselaw cited in support is distinguishable and does not stand for the broad proposition that McClain’s default grants BANA a free pass to make false representations at any point in time. See Heritage Creek Dev. Corp. v. Colonial Bank, 601 S.E.2d 842, 845 (Ga. Ct. App. 2004) (technical default in a foreclosure advertisement); Haynes v. McCalla Raymer, LLC, 793 F.3d 1246, 1253 (11th Cir. 2015) (notice of foreclosure sale that wrongly identified the entity with full authority to modify the loan). 5 Case: 15-11810 Date Filed: 01/04/2016 Page: 6 of 8

interference claim when viewed through the lens most favorable to McClain, she

has failed to meet the first prong of demonstrating title to the insurance proceeds.

McClain could establish title to the money by demonstrating that the

insurance proceeds were earmarked for her. See In re Hercules Auto. Prod., Inc.,

245 B.R. 903, 912 (Bankr. M.D. Ga. 1999) (stating that a showing of earmarking

proceeds establishes plaintiff has title to the allegedly converted property). Under

the Security Deed, there is a question as to whether the contract provides clear

earmarking of insurance of proceeds in favor of McClain. And McClain fails to

make any non-conclusory argument that she is entitled to the proceeds under the

terms of the contract. While the magistrate judge invited McClain to make an

argument showing she falls under the Hercules exception, McClain instead simply

indicated in a footnote of her brief to this court that she “agrees with the

conclusion” promulgated in Hercules. This is insufficient to show that the Security

Deed language indicates earmarked proceeds are intended for her. Though it is

true, as McClain argues, that BANA was required to promptly inspect the Property

before issuing the proceeds, she fails to make a clear argument that BANA is

contractually obligated to pay the proceeds directly to her as opposed to paying by

some other means that would be applied directly to repairs.

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Because we see no genuine issue of material fact to save the deficiency in

demonstrating title, we affirm the district court’s grant of summary judgment to

BANA on this issue.

3. Trespass

Neither party disputes the fact that at the time of BANA’s entrances onto the

Property to make repairs, McClain was in monetary default under the mortgage.

The Security Deed grants BANA wide latitude in protecting its security interest in

the Property in the event of default. If McClain

fails to perform the covenants and agreement contained in this Security [Deed] . . . then [BANA] may do and pay for whatever is reasonable or appropriate to protect [BANA]’s interest in the Property and rights under the Security [Deed], including protecting and/or assessing the value of the Property, and securing and/or repairing the Property.

Security Deed ¶ 9. McClain’s failure to make mortgage payments, arguably her

most significant obligation under the Security Deed, triggers BANA’s ability to

enter the Property and protect its security interest by all reasonable and appropriate

means necessary. Permitted actions include “making repairs,” which presumably

involves entrance onto the Property. 3 See Tacon v. Equity One, Inc., 633 S.E.2d

3 McClain claims Paragraph 7 of the Security Deed requiring BANA to provide notice in order to inspect the Property governs even when McClain is in monetary default under the agreement. However, she fails to make any argument addressing how this term defeats BANA’s right to “do . . . whatever is reasonable” to protect its security interest triggered by McClain’s own monetary default. Moreover, the breach of covenant trigger language in Paragraph 9 suggests that this section would govern over any other general language in the contract regarding BANA’s rights with respect to the Property. Combined with the fact that this broad language is designed to 7 Case: 15-11810 Date Filed: 01/04/2016 Page: 8 of 8

599, 604 (Ga. Ct. App. 2006) (recognizing that, under Georgia law, “[t]he common

law right to the exclusive use and possession of property may be modified by

agreement, in which the landowner grants permission to enter his property under

certain circumstances”). Therefore, BANA did not violate McClain’s common law

property rights in exercising its contractual rights, and no action for trespass may

lie on the facts. See id.

We find no genuine issue of material fact to save either of McClain’s

trespass claims. McClain’s legal arguments also fail as a matter of law. Therefore,

the district court properly granted BANA summary judgment on both counts.

IV. CONCLUSION

We hold there are no genuine issues of material fact with respect to

McClain’s tortious conversion and trespass claims, and find that BANA is entitled

to judgment as a matter of law. See Fed. R. Civ. P. 56(c). We reverse the grant of

summary judgment on McClain’s fraud claim because we find there is a genuine

issue of material fact as to whether BANA made false representations to McClain

regarding the status of the Property and the foreclosure proceedings. Accordingly,

we affirm in part, and reverse in part.

allow BANA to protect its only secured remedy to default (the Property), McClain’s claim that Paragraph 7 governs over BANA’s rights under Paragraph 9 is not persuasive. 8