Jpmorgan Chase Bank, N.A. v. Robert A. Durie

• Court: Court of Appeals of Georgia
• Decided: June 24, 2019
• Docket: A19A0351
• Status: Published

Opinion

FIRST DIVISION BARNES, P. J., MERCIER and BROWN, JJ.

NOTICE: Motions for reconsideration m us t be physically re ceived in our clerk’s office within ten days of the date of decision to be deemed timely filed. http://www.gaappeals.us/rules

June 24, 2019

In the Court of Appeals of Georgia A19A0351. JPMORGAN CHASE BANK, N. A. et al. v. DURIE.

MERCIER, Judge.

Robert Durie filed a complaint for wrongful foreclosure against JPMorgan

Chase Bank, N. A. (“Chase”) and Federal National Mortgage Association (“Fannie

Mae”) (collectively the “Appellants”). The trial court denied the Appellants’ motion

to dismiss. The Appellants appeal the trial court’s order. For the following reasons,

we reverse.

We review the trial court’s ruling on motions to dismiss de novo. Montia v.

First-Citizens Bank & Trust, 341 Ga. App. 867, 869 (801 SE2d 907) (2017). “The

motion to dismiss should not be granted unless the averments in the complaint

disclose with certainty that the plaintiff would not be entitled to relief under any state of facts which could be proved in support of his or her claim.” Id. at 868 (citation and

punctuation omitted).

On April 20, 2012, Durie filed his wrongful foreclosure complaint against the

Appellants. The complaint, as amended, asserted that Durie, along with his now

deceased father, Samuel Durie, purchased real property in Sharpsburg, Georgia on

August 27, 2002, from Kenneth Colby and Linda Colby.1 Durie obtained a mortgage

from Georgia Mortgage Services, Inc., to purchase the property. Durie claims that

before he purchased the property the Colbys and “their agents” made

misrepresentations to him regarding the construction of the house and the condition

of the land, such as that the property had “passed all building permit inspections and

was suitable for human habitation.” Durie states that Georgia Mortgage Services

obtained an appraisal which stated that the property was in “excellent physical

condition and suffered from no major structural defects[.]” As a result of these

misrepresentations, Durie claims that he paid more than $150,000 in excess of the price

the Colbys paid to purchase the same property. On the date the Duries purchased the

1 Kenneth Colby and Linda Colby were added as defendants to the underlying action and subsequently dismissed. They are not parties to this appeal.

2 property, Georgia Mortgage Services assigned its security interest to Washington

Mutual Bank.

After Durie moved into the property, in November 2002, he discovered

“numerous building and structural defects that severely reduced the value of the house

from the original purchase price.” Durie asserted that “all representations regarding the

[property] condition made by [Georgia Mortgage Services], the Colbys, or their

relators were false and were known to be false at the time the contract was entered

[into] by the parties.”

In 2008, Washington Mutual Bank “merged into” Chase. Thereafter, in August

2009, Durie began to fall behind on his mortgage payments. Chase foreclosed on the

property on December 7, 2010.2 Chase generated a new title in its name and filed a

quitclaim deed transferring the property to Fannie Mae for a nominal sum. On January

12, 2011, Fannie Mae filed a dispossessory action against Durie in Coweta County

magistrate court and received an order for possession of the property on August 2,

2011.

2 While the complaint states that the foreclosure occurred on December 7, 2011, this appears to be a scriveners error as the parties both state in their appellate briefs that the foreclosure occurred in December, 2010.

3 Durie’s wrongful foreclosure claim states that Chase failed to comply “with its

statutory duties to exercise the power of sale set forth in the Security Deed” and seeks

“rescission of the foreclosure and reinstatement as title [owner] of the Property.” Durie

seems to claim that the foreclosure notice was deficient because the contact

information on the foreclosure notice was listed for “Washington Mutual Bank,” but

when Durie called the listed telephone number he was connected to Chase, who had

told him on a prior occasion that it had no authority to modify his mortgage.

The Appellants filed a motion to dismiss Durie’s third amended complaint,

claiming, inter alia, that they could not be held liable for statements made by Georgia

Mortgage Services, the Colbys and their real estate agents. Following a hearing, the

trial court denied the Appellants’ motion to dismiss. The Appellants argue that the trial

court erred by failing to dismiss Durie’s breach of contract, fraudulent inducement,

wrongful foreclosure, quiet title, negligence and declaratory judgment claims.

1. The Appellants state that the trial court erred by failing to dismiss the breach

of contract claim, which Durie expressly abandoned. Durie conceded in both his

response to the Appellants’ motion to dismiss and in his appellate brief that he “has

not pursued a Breach of Contract claim against [the] Appellants.” As such, the trial

4 court erred in denying the Appellants’ motion to dismiss Durie’s breach of contract

claim.

2. The Appellants argue that Durie fails to state a fraudulent inducement claim

because Durie does not contend that the Appellants made any fraudulent statements.

Instead, Durie alleges that the misrepresentations were made by the Colbys, their

agents and Georgia Mortgage Services, but through the Appellants’ “assumption of

the security interest” the Appellants are “likewise liable” for the statements.

“The tort of fraud[,] including fraudulent inducement[,] has five elements: a false

representation by a defendant, scienter, intention to induce the plaintiff to act or refrain

from acting, justifiable reliance by plaintiff, and damage to plaintiff.” Stafford v.

Gareleck, 330 Ga. App. 757, 762 (2) (769 SE2d 169) (2015) (citation and punctuation

omitted). “Although OCGA § 9-11-9 (b) requires that claims of fraud be pled with

particularity, a complaint alleging fraud should not be dismissed for failure to state a

claim unless it appears beyond a doubt that the pleader can prove no set of facts in

support of his claim which would entitle him to relief.” Id. (citation and punctuation

omitted).

Durie’s claim that the Appellants are “likewise liable” for the statements made

by the Colbys, their agents and Georgia Mortgage Services through their assumption

5 of the security interest is insufficient to state a claim for fraudulent inducement. See

Stafford, supra. A key element of fraudulent inducement is a “false representation by

a defendant.” Id.; see also Wall v. Century 21 Winnerville Realty, 244 Ga. App. 762,

763-764 (1) (536 SE2d 798) (2000) (an essential element of a fraudulent inducement

claim is “a representation made by the defendant”) (citation omitted; emphasis

supplied). Here Durie does not claim that Chase or Fannie Mae, the only remaining

defendants in the underlying action, made any representations to him or his father to

induce them to buy the property. Moreover, Durie does not claim that Chase or Fannie

Mae had an interest in the property until after the Duries had purchased the property.

As such, Durie can prove no set of facts in support of his fraudulent inducement claim

which would entitle him to relief from Chase or Fannie Mae. See generally Stafford,

supra. Of note, the present matter is unlike cases where this Court has reversed and

remanded for a more definite statement of fraud. See Babalola v. HSBC Bank USA,

324 Ga. App. 750, 755 (2) (c) (751 SE2d 545) (2013) (where a pro se plaintiff failed

to identify the allegedly fraudulent acts or statements on which his fraud claim was

based, the proper remedy was a more definite statement, not a dismissal); Osprey

Cove Real Estate v. Towerview Constr., 343 Ga. App. 436, 441 (3) (808 SE2d 425)

(2017) (where complaint vaguely discussed “the alleged one-sided nature” of the

6 contracts, but failed to specifically identify instances of fraud, the matter was reversed

for a more definite statement.). In the present matter Durie has identified with

particularity the alleged misrepresentations made by the Colbys, their agents and

Georgia Mortgage Services. As he does not claim that Chase or Fannie Mae made any

of the statements, and no evidence could be presented to support his fraudulent

inducement claim against Chase and Fannie Mae as they did not have an interest in the

property at the time the inducements were made, Durie fails to state a fraudulent

inducement claim. See generally Stafford, supra; Babalola, supra at 752 (2).

3. The Appellants argue that Durie fails to state a claim for negligence because

they did not owe Durie a duty to investigate appraisal fraud. Durie claims that the

Appellants are guilty of negligence “through their adoption of the security interest in

the mortgage as well as their failure to detect that there was a significant increase in the

sale price of the Property that was indicative of mortgage fraud.”

The essential elements of a negligence claim are the existence of a legal duty; breach of that duty; a causal connection between the defendant’s conduct and the plaintiff’s injury; and damages. Thus, the threshold issue in a negligence action is whether and to what extent the defendant owes a legal duty to the plaintiff. A legal duty sufficient to support liability in negligence is either a duty imposed by a valid statutory enactment of the

7 legislature or a duty imposed by a recognized common law principle declared in the reported decisions of our appellate courts.

Ceasar v. Wells Fargo Bank, 322 Ga. App. 529, 533 (2) (b) (744 SE2d 369) (2013)

(citation and punctuation omitted).

Durie failed to allege any cognizable statutory or common law duty that the

Appellants allegedly breached. The Appellants had no statutory or common law duty

to investigate the sale price of the property, and the “adoption of the security interest”

did not create a duty. “It is well settled that a bank owes no legal duty to act as a

customer’s legal or financial advisor.” Baxter v. Fairfield Financial Svcs., 307 Ga.

App. 286, 293 (4) (704 SE2d 423) (2010) (citation and punctuation omitted). There

is “no confidential relationship between lender and borrower or mortgagee and

mortgagor for they are creditor and debtor with clearly opposite interests. The mere

fact that one reposes trust and confidence in another does not create a confidential

relationship.” Id. As the Appellants did not owe a legal duty sufficient to support

liability in negligence to Durie, the trial court erred by denying the motion to dismiss

Durie’s negligence claim. See Ceasar, supra at 533 (2) (b).

4. The Appellants contend that Durie fails to state a claim for wrongful

foreclosure because he sought relief in equity but he never tendered the full amount

8 owed on his loan. “He who would have equity must do equity, and give effect to all

equitable rights in the other party respecting the subject matter of the suit.” Berry v.

Govt. Nat. Mtg. Assn., 231 Ga. 503 (202 SE2d 450) (1973) (citation omitted). “[I]n

a typical wrongful foreclosure action, the plaintiff is required to tender the amount due

under the security deed and note in order to maintain an action in equity.” Metro

Atlanta Task Force for the Homeless v. Ichthus Community Trust, 298 Ga. 221, 236

(4) (a) (780 SE2d 331) (2015) (citation and footnote omitted). There are exceptions,

such as when the sale of notes was procured via improper actions of the mortgagee

which may have prevented the mortgagor from tendering its debt. See id. However,

grounds such as “poverty, non-compliance with foreclosure procedures, or other acts

not involving tortious interference with the funds that would potentially comprise the

tender itself” will not serve as an excuse for failure to tender the amount due under the

security deed. Id. at 237 (4) (a) (citations omitted).

Durie states in his complaint that he “made regular payments due on [the]

mortgage until August 2009, when [he] experienced a financial hardship and began

falling behind on the payments.” Durie does not claim that he tendered the full amount

due under the security deed. As such, because Durie failed to “do equity and tender

the amount due under the security deed and note,” he cannot state a claim for wrongful

9 foreclosure. Berry, supra at 503 (citations omitted); see also Ceasar, supra at 532-533

(2) (a) (affirmed dismissal of a wrongful foreclosure claim in equity as the mortgagors

“admittedly fell behind on their mortgage payments, and they did not tender the

balance due on their loan”).

5. Durie seeks declaratory judgment that Fannie Mae “has no legal or beneficial

interest or title in the Property.”

A declaratory judgment is authorized when there are circumstances showing a necessity for a determination of the dispute to guide and protect the plaintiff from uncertainty and insecurity with regard to the propriety of some future act or conduct, which is properly incident to his alleged rights and which if taken without direction might reasonably jeopardize his interest.

Sparra v. Deutsche Bank Nat. Trust, 336 Ga. App. 418, 422 (1) (e) (785 SE2d 78)

(2016) (citation omitted). “[W]here the party seeking declaratory judgment does not

show it is in a position of uncertainty as to an alleged right, dismissal of the declaratory

judgment action is proper[.]” Walker v. Owens, 298 Ga. 516, 519 (783 SE2d 114)

(2016) (citation and punctuation omitted).

The pleadings make clear that Durie is not entitled to the declaration he seeks.

In his complaint, Durie states that Fannie Mae holds the quitclaim deed and received

10 an order granting possession of the property, which was obtained in a separate

dispossessory proceeding. Durie does not claim that he appealed the dispossessory

proceeding. As Durie has failed to claim that he is in a position of uncertainty, he has

failed to state a claim for declaratory judgment. See Sparra, supra at 422 (1) (e).

6. Finally, the Appellants argue that the trial court erred in denying their motion

to dismiss Durie’s quiet title claim as Durie does not allege that he holds title to the

land. We agree.

“[A] deed to land for the purpose of securing a debt passes legal title to the

lender. Such a deed does not, however, transfer equitable title. That is, the lender does

not gain complete title over the property unless and until it forecloses thereon.” Metro

Atlanta Task Force for the Homeless, supra at 235 (3) (citations omitted). Here, Durie

states in his complaint that Chase foreclosed on the property. Even though Durie

claims that the foreclosure was wrongful, he was still “divested of all title at that point.”

Id. Accordingly, the trial court erred in denying the Appellant’s motion to dismiss the

quiet title claim. See id. at 235-236 (3) (“To state a claim for quiet title relief, a plaintiff

must allege more than a right to acquire title; it must allege that it presently holds

current title or current prescriptive title.”) (citation and punctuation omitted).

Judgment reversed. Barnes, P. J., and Brown, J., concur.