Jones v. Bank of Am. Corp.
| Decision Date | 27 November 2013 |
| Docket Number | CASE NO.: 4:08-CV-152 (WLS) |
| Parties | JEFFREY JAY JONES and SANDRA D. JONES, Individually and on behalf of a class of similarly situated persons, Plaintiffs, v. BANK OF AMERICA CORPORATION, Defendant. |
| Court | U.S. District Court — Middle District of Georgia |
Before the Court is Defendant Bank of America Corporation's Motion to Dismiss. (Doc. 50.) Although the Court concludes the Bank's motion should be granted, the case will remain stayed for forty-five days with leave for plaintiffs to seek ratification, joinder, or substitution from the real party in interest.
PROCEDURAL POSTURE
Plaintiffs Jeffery Jay Jones and Sandra D. Jones brought suit on behalf of themselves and a putative class against Bank of America Corporation (the Bank) for its alleged failure to timely cancel security deeds under section 44-14-3 of the Georgia Code. That section provides $500 in liquidated damages against the grantee of a security instrument that fails to cancel the instrument within sixty days of full payment on the indebtedness. O.C.G.A. § 44-14-3(c).
The matter is before the Court on the Bank's Motion to Dismiss under Rules 12(b)(1) and (6). The central facts underlying the motion are the following. In 1991, the Joneses purchased a home in Columbus, Georgia. They financed the purchase with ahome loan secured by a security deed on the property. Three years later, the Joneses paid off the indebtedness. On September 16, 2002, they conveyed the property via warranty deed to a buyer. At the time of the conveyance, despite the previous payoff, the Bank's security deed remained on the property. In June 2003, the Joneses mailed the Bank a certified letter demanding cancelation of the deed and noticing the Bank of their right to seek $500 in liquidated damages under section 44-14-3. Shortly thereafter, the Bank canceled the deed. The Joneses filed suit seeking $500 in liquidated damages in November 2008.
Because the Joneses sold the property before seeking damages and filing suit, the Bank argues that they are not the real parties in interest with standing to sue under O.C.G.A. § 44-14-3. This argument is premised on a Court of Appeals of Georgia decision, Associated Credit Union v. Pinto, 677 S.E.2d 789 (Ga. Ct. App. 2009), which held that a plaintiff who did not own the property at the time of filing suit or face marketability issues was not the real party in interest under O.C.G.A. § 44-14-3. The Bank also claims that the Joneses, as "original grantors," cannot recover regardless of whether they possess the property because the statute defines grantors to "mean[] heirs, devisees, executors, administrators, successors, transferees, or assigns."
In response, the Joneses argue that Pinto is distinguishable or should be disregarded. They claim Pinto is distinguishable, because, unlike the Pinto plaintiff, the Joneses are the original grantors to the security instrument, not merely a "one-time successor in interest." The Joneses also assert in the alternative that if Pinto requires property ownership at the time of filing, it is inconsistent with Georgia rules of statutory construction and the remedial purposes of O.C.G.A. § 44-14-3. Finally, they urge the Court to allow substitution of a class representative if the Court grants the motion to dismiss.
Although the Court concludes the Joneses are not the real parties in interest, it grants leave for plaintiffs to provide the current property owners an opportunity to ratify, join, or substitute themselves as plaintiffs in this action.
DISCUSSION
Under Federal Rule of Civil Procedure 12, a party may assert a motion to dismiss for lack of subject matter jurisdiction. Fed. R. Civ. P. 12(b)(1) & (h)(3). If at any time the Court finds that jurisdiction is lacking, it must dismiss the case. Fed. R. Civ. P. 12(h)(3). Subject matter jurisdiction over an action may be attacked facially or factually. Stalley ex rel. U.S. v. Orlando Reg'l Healthcare Sys, Inc., 524 F.3d 1229, 1232 (11th Cir. 2008). On a factual attack, the Court may consider evidence outside of the complaint. McElmurray v. Consol. Gov't of Augusta-Richmond County, 501 F.3d 1244, 1251 (11th Cir. 2007).
The Court agrees with the Bank that the Joneses are not the real parties in interest under O.C.G.A. § 44-14-3. The Parties do not dispute that, like the plaintiff in Pinto, the Joneses did not own the property at the time they demanded damages and filed suit. Under Georgia law, this fact precludes them from collecting liquidated damages.
The situation in Pinto is analytically indistinguishable from the one here. In that case, Plaintiff Daniel Pinto purchased property encumbered by a security deed. 677 S.E.2d 789, 790. He then sold the encumbered property to a buyer. Id. Months after the conveyance, in the same manner as the Joneses, Pinto mailed the grantee of the security instrument a letter seeking cancelation of the deed. Id. Unaware that Associated Credit Union, the grantee, had canceled the deed, Pinto filed suit seeking liquidated damages. Id.
Under these facts, the Court of Appeals of Georgia held that Pinto was not the real party in interest under O.C.G.A. § 44-14-3. Id. at 790-91. The court reasoned that Pinto did not own the property at the operative time, had suffered no injury, and had filed suit after the deed had been canceled. Id. at 791. In further support of the holding, the court explained that the statute contemplates one person with standing to recover:
In addition, OCGA § 44-14-3(c) provides that "the" grantor (not "all" or "a" grantor) is entitled to liquidated damages and attorney fees. Further, the statute defines "grantor" as: "heirs, devisees, executors, administrators, successors, transferees, or assigns" of the original grantor of the security interest. And at the time Pinto filed the complaint, he had already sold the property to Nguyen. Thus, Pinto is not "the" grantor contemplated by the statute, and he, therefore, lacks the capacity to prosecute the claims set forth in his complaint.
Id. at 791. Thus, under Pinto, neither of the Joneses is "the grantor" under the statute because both conveyed the property prior to filing suit.
The Court finds the Joneses' attempt to distinguish Pinto unpersuasive. The Joneses claim Pinto does not apply to original grantors of the security instrument. Nothing in Pinto turned on the plaintiff's status as a "one-time successor in interest." To the contrary, under the reasoning of Pinto, if the statute permits recovery for "the" grantor alone, and the current property owner is "the real party in interest," it follows that the original grantors in Pinto were in no better a position than the plaintiff. As even Plaintiffs' counsel has argued in a related case they now want consolidated, "Pinto makes clear that 'the grantor' for purposes of section 44-14-3 is the person or entity with the current interest in the property at the time the complaint is filed, i.e., the only one who could suffer harm from the security deed not being cancelled." Response In Opposition to Motion to Dismiss, Schorr v. Countrywide Home Loans, No. 4:07-cv-19-WLS (M.D. Ga. Mar. 25, 2013).
Intermediate state appellate court opinions such as Pinto are binding on this Court unless "there is some persuasive indication that the highest court of the state would decide the issue differently." McMahan v. Toto, 311 F.3d 1077, 1080 (11th Cir. 2002). In other words, "[w]here an intermediate state appellate court rests its considered judgment upon the rule of law which it announces, that is a datum for ascertaining state law which is not to be disregarded by a federal court unless it is convinced by other persuasive data that the highest court of the state would decide otherwise." West v.American Telephone & Telegraph Co., 311 U.S. 233, 237 (1940). A federal court may not disregard an intermediate state appellate court's decision simply because it disagrees with the reasoning or outcome of the case. Williams v. Singletary, 78 F.3d 1510, 1515 (11th Cir. 1996).
The Joneses urge the Court to disregard Pinto because the Supreme Court of Georgia has held that Georgia courts cannot attach new conditions to a statute and must construe remedial statutes broadly to advance their legislative purposes. But the Court of Appeals in Pinto did not attach a new condition to the deed-cancelation statute. Under Georgia and federal law, every plaintiff must be a real party in interest to prosecute a particular cause of action. Fed. R. Civ. P. 17(a); O.C.G.A § 9-11-17. As already stated, the Joneses are not the real parties in interest. The plain text of the statute defines "grantors" in the present possessory sense. § 44-14-3(a)(4) (). In addition, the Joneses offer no explanation for why they—and not a current owner whose interest is clouded—should be "the grantor" to recover liquidated damages.
Mitchell v. Oliver, 327 S.E.2d 216, 220 (Ga. 1985) (citation omitted). The victim harmed in the first instance by the failure to cancel the deed is the property owner whose interest and title is devalued by the grantee's unreasonable delay. The statute explicitly provides that such people—"transferees"—have standing to recover liquidated damages. § 44-14-3(a)(4) (...
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