Edward v. Bank of Am., N.A.

• Decision Date: 02 August 2012
• Docket Number: CIVIL ACTION NO. 1:11 -CV-2465-RWS-LTW
• Parties: CHRISTY EDWARD and GERALD CHINNAPPAN, Plaintiffs, v. BANK OF AMERICA, N.A. formerly known as BAC HOME LOAN SERVICING LP, BANK OF NEW YORK MELLON (TRUSTEE FOR CWABS INC., ASSET-BANAKED CERTIFICATES SERIES 2007-8), and JOHN DOE(S), Defendants.
• Court: U.S. District Court — Northern District of Georgia

CHRISTY EDWARD and GERALD CHINNAPPAN, Plaintiffs,

v.BANK OF AMERICA, N.A. formerly known as BAC HOME LOAN SERVICING LP,

BANK OF NEW YORK MELLON (TRUSTEE FOR CWABS INC.,

ASSET-BANAKED CERTIFICATES SERIES 2007-8), and JOHN DOE(S), Defendants.

CIVIL ACTION NO. 1:11 -CV-2465-RWS-LTW

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION

Dated: August 2, 2012

MAGISTRATE JUDGE'S NON-FINAL ORDER AND REPORT AND

RECOMMENDATION

This case is presently before the Court on Defendants Bank of America, N.A. and the Bank of New York Mellon's Motion to Dismiss Plaintiffs' First Amended Complaint, Bank Defendants' Motion for Leave to File Sur-Reply, Plaintiffs' Joint Motion for Leave to Amend Complaint and Extension of Time to Amend Complaint, Defendants Bank of America, N.A. and the Bank of New York Mellon's Motion for Leave to File Sur-Reply. Docket Entries [18, 19, 32, 37].

For the reasons outlined below, the parties' motions are adjudicated as follows:

(1) This Court RECOMMENDS that Bank of America, N.A. and the Bank of New York Mellon's Motion to Dismiss Plaintiffs' First Amended Complaint beGRANTED IN PART AND DENIED IN PART. Docket Entry [18].

(2) Bank Defendants' Motion for Leave to File Sur-Reply is DEEMED MOOT because the Court has already adjudicated the Plaintiffs' Motion to Remand and Motion to Strike in Defendants' favor. Docket Entry [19].

(3) Plaintiffs' Joint Motion for Leave to Amend Complaint and Extension of Time to Amend Complaint is DENIED. Docket Entry [32].

(4) Defendants Bank of America, N.A. and the Bank of New York Mellon's Motion for Leave to File Sur-Reply is GRANTED. Docket Entry [37].

BANK OF AMERICA, N.A. AND THE BANK OF NEW YORK MELLON'S

MOTION TO DISMISS PLAINTIFFS' FIRST AMENDED COMPLAINT

I. BACKGROUND

Plaintiff Christy Edward ("Plaintiff Edward") filed the instant lawsuit in the Superior Court of DeKalb County on June 23, 2011, for claims arising out of BAC Home Loan Servicing, LP's ("BAC") scheduled sale of her residence at a foreclosure sale. (Am. Compl. ¶¶ 4, 69). On August 24, 2011, Plaintiff Edward filed an Amended Complaint as a matter of right in which she added Gerald Chinnappan as a Plaintiff and added multiple causes of action. In Plaintiffs' Amended Complaint, they contend that they obtained a mortgage loan from CTX Mortgage Company, LLC ("CTX") and executed a Security Deed in favor of Mortgage Electronic Registration Systems, Inc. ("MERS") for the financing of their residence. (Am. Compl. ¶¶ 5-9). In March 2007, CTX sold the Note to Countrywide Bank, N.A. ("Countrywide"). (Am. Compl. ¶¶ 5-9).According to Plaintiffs, Countrywide "pledged, hypothecated sold and/or assigned" the loan to New York trust CWABS Asset-Backed Certificates Trust 2007-2008. (Am. Compl. ¶ 10). Plaintiffs allege without presenting facts in support that the transfer was done "without proper assignment or endorsement." (Am. Compl. ¶ 10). Plaintiffs further asserted that their loan Note "has been securitized and is in the pool of over 2000 Loans . . . under CWABS Asset-Backed Certificates Trust 2007-8" and the Bank of New York Melon was appointed as the trustee. (Am. Compl. ¶ 11). Plaintiffs state that around the same time period, Bank of America, N.A. ("BOA") sent them notice claiming to be the servicer for the Trustee and Plaintiffs began making their loan payments to BOA. (Am. Compl. ¶ 12). On May 14, 2010, the law firm of Shuping, Morse & Ross, LLP ("SMR"), filed an Assignment of the Security Deed on behalf of MERS, which was executed by Andrew Shuping, Jr. ("Shuping"), as Vice President of MERS. (Am. Compl. ¶ 13). Shuping was a partner with SMR. (Am. Compl. ¶ 13). Plaintiffs contend that MERS executed the Assignment using a State of Georgia corporate seal even though MERS dissolved the corporation in the State of Georgia as of June 4, 2008, and MERS is no longer registered in Georgia. (Am. Compl. ¶ 16).

Plaintiffs assert that the "Promissory note was not negotiated or assigned to BOA or BONY by CTX or CWB and BOA has never been the holder of the Note or the Security Deed." (Am. Compl. ¶ 18). Plaintiffs state that when they asked BOA to give them a chance to contact the lender, BOA told them that there was no lender, only an investor, and Plaintiffs could not contact the investors. (Am. Compl. ¶ 19). Plaintiffscontend that as a result they have been denied actual knowledge of the holder of the Note or whether BOA is the real party in interest or the holder in due course. (Am. Compl. ¶ 19). Plaintiffs assert when BOA and SMR sent them copies of the Note in December 2010 and March 2011, Plaintiffs observed that they were different and indicated different terms of the deal.¹ (Am. Compl. ¶ 24).

Plaintiffs contend that they received a Notice of Default and Notice of Sale Under Power and Foreclosure Advertisement from BOA on May 27, 2011. (Am. Compl. ¶ 25). Plaintiffs also contend that the Notice was insufficient under O.C.G.A. § 44-14-162.2 because the Notice only included the name of BOA as the party to negotiate, amend, or modify the terms of the mortgage when BOA was just a servicer and did not have legal standing to initiate a foreclosure action. (Am. Compl. ¶¶ 25-26). Plaintiffs assert that they sent a letter offering to tender the amount remaining due under the loan to BOA at the address listed in BOA's payoff letter on March 24, 2011. (Am. Compl. ¶ 22).

In Count I of Plaintiffs' Amended Complaint, Plaintiffs allege that they are entitled to temporary and permanent injunctive relief to prevent the foreclosure sale of their home because Defendants are without standing to institute a foreclosure action. Plaintiffs also argue that Defendants have denied Plaintiffs the right to know the "actual holder in due course" and the name and address of the entity that is a "true secured partyof interest." Plaintiffs also appear to argue that Defendants have ignored the requirement to cease collection of the debt until they obtain verification of the debt and mail it to the consumer in violation of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692g. (Am. Compl. ¶¶ 59-72). In Count II of Plaintiffs' Amended Complaint, Plaintiff's seek a declaration that Defendants have no legal right to foreclose because Assignments from CTX and MERS were invalid, servicers cannot institute foreclosure actions, Defendants have withheld the identity of Plaintiffs "lawful lender," and Defendants failed to convey "the interest to the CWABS-TRUST according to the trust's governing documents." (Am. Compl. 73-83). In Count III (Fraud) of Plaintiffs' Amended Complaint, Plaintiff's contend that Andrew Shuping, with knowledge that BAC is a mere servicer with no authority to foreclose on the mortgage, signed an Assignment of the Security Deed on behalf of MERS as MERS's Vice President while he was still employed by SMR, added "unearned and highly inflated attorneys' fees to the principal balance of the note," and used a Georgia corporation seal for MERS when MERS is no longer registered in the state of Georgia. (Am. Compl. ¶¶ 84-92). Plaintiffs also contend that Defendants BOA and BONY "with full knowledge that Plaintiffs' loan is not even part of the alleged Trust, purposefully tried to produce false documentation and collected payments through misrepresentation and fraud." In Count IV (Slander of Title) of Plaintiffs' Amended Complaint, Plaintiffs assert that BOA advertised the impending foreclosure sale in the newspaper on three or four different occasions which disparaged their title and embarrassed Plaintiffs when their friends and colleagues asked whether their home wasgoing to be foreclosed. (Am. Compl. ¶¶ 93-96). In Count V (Interference With Contract and Business Relationships), Plaintiff's contend that Defendants refused to disclose the identity of the Note holder, which interfered with Plaintiffs' ability to sell the property to private parties and investors who indicated a willingness to purchase the property. (Am. Compl.¶¶ 97-102). In Plaintiffs' sixth cause of action (Suit for Quiet Title to Land), Plaintiffs also contend that title to their Property should be quieted and the Assignment from MERS to BOA should be rendered void because Shuping, instead of an "authorized signor for the beneficiary," signed the Assignment as Vice President of MERS. (Am. Compl. ¶¶ 98-104). Plaintiffs further appear to contend that the Assignment did not comply with the Pooling and Servicing Agreement because the "security instrument" was not properly endorsed or negotiated to the trust before May 31, 2011. In Count VII of Plaintiffs' Amended Complaint (Conspiracy), they argue that BOA misdirected them to default on their payments so that they could get a modification with a lower payment, but BOA ultimately raised their loan payments and assigned them a higher interest rate, in order to extort more money from them. (Am. Compl. ¶¶ 105-109). Plaintiffs further contend that Shuping executed a fraudulent assignment, which was also invalid under the terms of the Pooling and Servicing Agreement, so that he could foreclose on the property and gain 10% of the loan balance plus attorneys' fees. In Count VIII (Defamation), Plaintiffs assert that BOA advertised the impending foreclosure sale in the newspaper on three or four different occasions causing them contempt and ridicule. (Am. Compl. ¶¶ 110-11). In Count IX (Intentional Infliction ofEmotional Distress), Plaintiffs contend that unspecified acts by Defendants "constitute an outrage" and that Plaintiffs suffered emotional distress as a result. (Am. Compl. ¶¶ 112-15). In Count X (Negligence), Plaintiffs contend that Defendants committed tortious acts when they enforced a Security Deed which they knew was void, made a fraudulent assignment to CWABS-TRUST for the purpose of pursuing the instant nonjudicial foreclosure action, failed to mail a copy of the foreclosure sale notice to Plaintiffs, failed to identify the owner or holder of the Note within the notice, gave notice of default,...