Giordano v. Stubbs, Civ. A. No. 15577.

• Decision Date: 17 December 1971
• Docket Number: Civ. A. No. 15577.
• Citation: 335 F. Supp. 110
• Parties: Joseph P. GIORDANO et al. v. Hiram F. STUBBS et al.
• Court: U.S. District Court — Northern District of Georgia

335 F. Supp. 110

Joseph P. GIORDANO et al. v. Hiram F. STUBBS et al.

Civ. A. No. 15577.

United States District Court, N. D. Georgia, Atlanta Division.

December 17, 1971.

Haas, Holland, Levison & Gibert, Atlanta, Ga., for plaintiffs.

Stark & Stark, Lawrenceville, Ga., for Peevy.

Huie & Harland, Atlanta, Ga., for Stubbs.

ORDER

EDENFIELD, District Judge.

Plaintiffs seek declaratory and injunctive relief against the enforcement of 1970 Supp. Ga.Code Ann. § 67-1506¹ on the ground that this statute, as authoritatively construed by the Georgia courts, deprives them of their property without due process of law and is unconstitutional. A three-judge court has already determined that this case should be decided by a single judge. Giordano v. Stubbs, 335 F.Supp. 107 (N.D.Ga., 1971). Jurisdiction is alleged under 28 U.S.C. § 1331(a) (1970).

Plaintiffs' complaint alleges that they were indebted to defendant Stubbs in the amount of $30,000 which was secured by a first security deed on certain real property owned by them. Subsequently plaintiffs sold the property to defendant Pope who assumed the debt to Stubbs and also gave plaintiffs a note for $163,500 secured by a second security deed on the property. Pope defaulted both on the debt to Stubbs and the debt to plaintiffs and is now insolvent. Thereafter Stubbs foreclosed on the property by selling it at public outcry pursuant to a power of sale contained in his first security deed. He did not give actual notice of the sale to plaintiffs and his agent purchased the property at the sale for $35,000 which he applied against the debt, interest, and expenses of the foreclosure sale, leaving no excess. The land is allegedly worth $200,000. As a result of the sale a deed was executed in favor of Stubbs purporting to convey the property to him, and the deed was recorded in Gwinnett County, Georgia, by defendant Peevy, the Clerk of the Superior Court of Gwinnett County.

Plaintiffs claim that under § 67-1506 of the Georgia Code, defendant Stubbs was required only to advertise the foreclosure sale; he was not statutorily required to give them actual notice. They say that had they received notice they would have appeared at the sale and bid on the property to protect their interest. Since § 67-1506 does not require actual notice in such circumstances, plaintiffs contend it is unconstitutional because it deprives them of their property without due process.

The matter is now before the court on defendants' motions to dismiss and on plaintiffs' motion for summary judgment.

The pleadings reveal that plaintiffs filed an action in the Superior Court of DeKalb County, Georgia, on February 5, 1970 which sought to annul the sale of the property in question by Stubbs and to enjoin its future sale. Plaintiffs filed an amendment to their original complaint which was allowed filed by the Superior Court on February 20th. In paragraph 15 of the amendment plaintiffs alleged that Stubbs gave them no notice of the foreclosure proceedings. In paragraph 20 of the amendment plaintiffs alleged that Stubbs' conduct violated the Constitution of the State of Georgia and the Fifth and Fourteenth Amendments to the Constitution of the United States in that it deprived them of their property without due process of law. In his answer to the complaint, Stubbs, as part of the third defense, alleged that he had duly advertised the time, terms, and place of sale once a week for four weeks immediately preceding the sale in the Gwinnett Daily News. As part of his fourth and fifth defenses, Stubbs alleged that he had provided the notice required under the power of sale provisions of the security deed and had not violated any of plaintiffs' legal or equitable rights.

On March 4, 1970 Stubbs moved for summary judgment in the Superior Court on the ground that there was no legal or equitable claim sufficient to authorize a judgment against him. On October 1, 1970 plaintiffs moved for summary judgment in the Superior Court and in paragraph 4 of their motion contended that no actual notice of the foreclosure had been given them by Stubbs. On March 8, 1971, the Superior Court denied both motions for summary judgment on the ground that genuine issues of material fact existed. Giordano v. Stubbs, Civil No. 54927 (Super.Ct. DeKalb County, Ga., Mar. 8, 1971). However, the order was certified for review.

On March 12, 1971 plaintiffs appealed to the Georgia Court of Appeals. From the pleadings it appears that plaintiffs appealed to that court rather than the Georgia Supreme Court because they believed that all equitable issues had been removed from the case and that the Superior Court had not passed on the constitutional issue which plaintiffs had raised. The Constitution of the State of Georgia provides that the Georgia Court of Appeals has appellate jurisdiction in all cases in which such jurisdiction has not been conferred upon the Georgia Supreme Court, and the Georgia Supreme Court has appellate jurisdiction over all equity cases and all cases involving constitutional issues. Ga.Const. art. 6, § 37, ¶¶ 4, 8. Stubbs filed a cross-appeal in the Georgia Court of Appeals, and he filed an appeal in the Georgia Supreme Court, to which plaintiffs cross-appealed, on the ground that the action was an equity case. On its own motion, the Georgia Court of Appeals transferred plaintiffs' appeal to the Georgia Supreme Court where it was consolidated with Stubbs' appeal.

In his Enumeration of Errors filed in the Georgia Supreme Court, Stubbs contended the Superior Court had erred in denying his motion for summary judgment since, among other things, as a matter of law he was not required to give actual notice of the foreclosure sale to plaintiffs and as a matter of law the foreclosure sale did not deprive plaintiffs of their property without due process of law in violation of the Constitution of the State of Georgia and the Fifth and Fourteenth Amendments to the Constitution of the United States. In his brief Stubbs argued, among other things, that Georgia law required no more than that he give publication notice of the foreclosure sale, which he contended he gave, and that the United States Supreme Court in Scott v. Paisley, 271 U.S. 632, 46 S.Ct. 591, 70 L.Ed. 1123 (1926), had explicitly held that this Georgia notice procedure in foreclosures did not amount to a deprivation of property without due process of law and was not unconstitutional. Plaintiffs filed a general Enumeration of Errors, but in their brief they argued that jurisdiction of their appeal was properly in the Georgia Court of Appeals since the action was not an equity case and the constitutional issue raised had not been passed on by the Superior Court. They also argued, among other things, that if the Georgia Supreme Court did have jurisdiction, it should hold the Georgia notice procedure in foreclosure sales unconstitutional. They contended that recent decisions of the United States Supreme Court completely undermined the foundations of Scott v. Paisley.

On August 31, 1971, after argument had been completed in the appeals pending before the Georgia Supreme Court, plaintiffs filed the instant action in this court. Two weeks later Stubbs brought this to the attention of the Georgia Supreme Court in a "Reply Brief" and argued that the filing of the action in this court by plaintiffs showed that they abandoned all claims in the pending state appeal save the constitutional claim. As to that claim, argued Stubbs, Scott v. Paisley offered a clear rebuttal. Plaintiffs then filed a "Supplementary Reply Brief" in the Georgia Supreme Court in which they denied they had abandoned any of their claims by filing the instant action in this court and reiterated their argument that the constitutional issue they had raised before the Superior Court had never been passed upon and need not be reached by the Georgia Supreme Court.

On September 27, 1971, the Georgia Supreme Court held that Stubbs was entitled to summary judgment and that the lower court erred in denying his motion therefor. Giordano v. Stubbs, 228 Ga. 75, 184 S.E.2d 165 (1971). In the very first conclusion of law, the Georgia Supreme Court held that the notice by publication which Stubbs had given complied both with the provisions of the security deed and with 1970 Supp. Ga. Code Ann. § 67-1506 and that such notice was sufficient. The court rejected plaintiffs' claims that they were entitled to actual notice and it cited Scott v. Paisley for support. It is not clear whether plaintiffs have appealed this decision to the United States Supreme Court, but they obtained an order from the Georgia Supreme Court on October 6th staying remittitur of the case for ninety days to allow for such an appeal.

The court has recited this rather involved history because the basis for Stubbs' motion to dismiss in the instant case is that the constitutional cause of action raised by plaintiffs here has been raised, fully litigated, and finally adjudicated in state court proceedings involving the same parties and is therefore barred under the principle of res judicata. Stubbs further contends that this court lacks subject matter jurisdiction over the case. The court will deal with the jurisdictional issue first.

In Brown v. Chastain, 416 F.2d 1012 (5th Cir. 1969), cert. denied, 397 U.S. 951, 90 S.Ct. 976, 25 L.Ed.2d 134 (1970), the Fifth Circuit, in a 2-1 decision, held that a federal district court lacks jurisdiction to directly review a final determination of a federal constitutional question voluntarily submitted to and decided by state courts. It placed primary reliance for this holding on Rooker v. Fidelity Trust Co., 263 U.S. 413, 44 S.Ct. 149, 68 L.Ed.2d 362 (1923).

The facts in Brown v. Chastain were that a divorced mother and her child filed an appeal in a state court of appeals in which they sought to reverse an order of a lower court which had changed the custody of the child from her mother to her father. The mother...