Little v. Fleet Finance

• Decision Date: 05 February 1997
• Docket Number: No. A97A0227,A97A0227
• Citation: 224 Ga.App. 498,481 S.E.2d 552
• Parties: , 97 FCDR 457 LITTLE v. FLEET FINANCE et al.
• Court: Georgia Court of Appeals

Page 552

481 S.E.2d 552

224 Ga.App. 498, 97 FCDR 457

LITTLE v. FLEET FINANCE et al.

No. A97A0227.

Court of Appeals of Georgia.

Feb. 5, 1997.

McDonald & Cody, Douglas W. McDonald, Sr., Douglas W. McDonald, Jr., Cornelia, for appellant.

Johnson & Montgomery, Harry W. MacDougald, Atlanta, Timothy A. Baxter, for appellees.

ELDRIDGE, Judge.

This case arose as a result of plaintiff/appellant Victoria Little's entry of an unsuccessful bid at a non-judicial foreclosure sale for a piece of property on Old National Highway, the subsequent sale of the property to another, and a re-conducted foreclosure sale caused by appellant's objections to the original sale. Appellant challenges the trial court's granting of appellees' motion to dismiss her claim of fraud for failure to state a claim upon which relief can be granted.

As it relates to appellant's fraud claim, the record demonstrates that appellee Fleet Finance (Fleet) was the holder of a note and deed to secure debt for real property located at 5319 Old National Highway, College Park (property), which was owned by Mitchell Lampley, a former client of appellant. Lampley defaulted on the note. Fleet accelerated the debt and initiated foreclosure proceedings under the power of sale provisions in the mortgage contract. The foreclosure sale of the property was advertised for April 2, 1991, and the foreclosure advertisement stated that the property would be sold for cash to the highest bidder. The alleged outstanding indebtedness, including attorney fees and costs, was $85,925.11.

On April 2, 1991, appellees Phillip Hasty and John E. Tomlinson, acting as agents for Fleet through their employer, appellee John E. Tomlinson, P.C., commenced the foreclosure sale; just prior to the commencement of the sale, Fleet had informed potential bidders that a check would be accepted for the amount of the successful high bid. Fleet entered the first bid for the amount of the outstanding debt. Appellant was present and offered a bid of $85,925.12, one penny over the amount of indebtedness. John K. Adams, not a party to this action, was also present and entered into the bidding. Appellant and Adams each tendered several bids. Fleet accepted the highest bid, $135,000, from Adams, who wrote a check for the amount of the bid. Fleet agreed to hold the check until Adams finished obtaining the cash funds to cover the check. Adams had entered into negotiations with Fleet prior to the foreclosure sale wherein Fleet had agreed to finance the undetermined purchase price of the property, should Adams' bid be the highest and thus the successful bid at the sale.

On the same afternoon, appellant learned that although the foreclosure sale was "cash" only, Adams did not yet have sufficient cash funds to cover his $135,000 check. Appellant called Fleet's agents and had "numerous conversations" with them. In her complaint, appellant states that because she had "learned of the illegal agreement [between Adams and Fleet] ... Fleet was withdrawing its offer to lend the purchase price to Adams."

Fleet re-advertised the property for public sale on the first Tuesday in May; both appellant and Adams were given notice of the pending sale. On May 7, 1991, the property was sold at public outcry on the steps of the Fulton County Courthouse to the highest bidder. Neither appellant nor Adams was present, nor did they have bids tendered on their behalf. ¹

Appellant filed a complaint alleging: (1) breach of contract for failure to sell the property to her as next highest bidder; (2) fraud; and (3) violations of the Georgia Racketeer Influenced & Corrupt Organizations Act (RICO). Appellant sought actual damages of $264,074.88, which sum demonstrated the difference between her bid of $85,925.12 and $350,000, which was the alleged fair market value of the property, i.e., loss of profit.

Appellees separately filed motions to dismiss on the ground that appellant's complaint failed to state a claim upon which relief could be granted pursuant to OCGA § 9-11-12(b)(6). The trial court issued an order finding that (1) appellant failed to allege a factual basis for a breach of contract claim because, under the law, the failure of the high bidder, Adams, to complete the terms of his bid did not permit Fleet to simply offer the property to appellant as the next highest bidder without adhering to statutory procedures; ² (2) appellant's fraud claim failed because damages for loss of profit as alleged in the complaint were too remote and speculative to sustain such a claim; and (3) appellant failed to allege a factual basis for her claims of RICO violations. Thus, the trial court granted appellees' motion to dismiss for failure to state a claim.

Before this Court, appellant does not assign error to the trial court's determinations concerning her allegations of breach of contract and RICO violations. Appellant travels solely on her fraud theory. Appellant alleges that the trial court erred in "finding that this [foreclosure sale] was a lawful sale," and in determining that the damages alleged in the complaint were too speculative and uncertain to provide a basis for recovery.

In analyzing appellant's contentions, we note at the outset that "a motion to dismiss for failure to state a claim should be granted only where a complaint shows with certainty that the plaintiff would not be entitled to relief under any state of facts that could be proven in support of the claim." (Citations and punctuation omitted.) English v. Liberty Mtg. Corp., 205 Ga.App. 141, 421 S.E.2d 286 (1992). With this principle in mind, we turn to the allegations of the complaint and the trial court's order.

1. We find that the speculative nature of damages alleged in a complaint may not afford a basis for the granting of a motion to dismiss wherein the allegations of a complaint are taken as true, as opposed to a motion for summary judgment wherein the merits of a complaint are addressed. ³ Moreover, the trial court's granting of the motion to dismiss as to appellant's fraud claim, based on damages, ignored the issue of nominal damages which a jury might find upon the commission of an unlawful act. "[N]ominal damages are always allowed for any tortious invasion of a property right, though no actual damage results therefrom." Williams v. Harris, 207 Ga. 576, 579, 63 S.E.2d 386 (1951). Notwithstanding this determination and for the reasons that follow, this Court finds that the trial court properly granted appellees' motion to dismiss appellant's fraud claim pursuant to OCGA § 9-11-12(b)(6).

In order to prevail on a claim of fraud, one must prove five essential elements: a false representation, scienter, inducement, reliance, and injury resulting from reliance on the false representation. See Doe v. Prudential-Bache/A.G. Spanos, etc., 222 Ga.App. 169, 474 S.E.2d 31 (1996). Further, fraud must be pled with particularity. OCGA § 9-11-9(b). Here, even if the averments in appellant's complaint are considered as true for the purposes of a motion to dismiss, she has failed to demonstrate either that appellees made a false representation upon which she relied or that she was in any way injured by virtue of appellees' actions. See Hardy v. Gordon, 146 Ga.App. 656, 657, 247 S.E.2d 166 (1978).

Under the facts as asserted in the complaint, there was a "confidential agreement" between Adams and Fleet, made prior to the public sale of the property, wherein Fleet agreed to "extend credit," i.e., financing, to Adams for a then undetermined sum which would cover the amount of his bid, if he was the successful high bidder. Appellant contends that this confidential agreement made the sale of the property unlawful and thus fraudulent. However, appellant fails to allege how an agreement between Adams and Fleet could be considered a false representation made to her upon which she relied to her detriment so as to sustain a claim of fraud.

Moreover, such agreement, as alleged by appellant, was not fraudulent. A finance company which holds the security interest in a property is permitted to bid on and obtain the property at public auction. See Bellamy v. Resolution Trust Corp., 266 Ga. 630, 469 S.E.2d 182 (1996); Stepp v. Farm & Home Life Ins. Co., 222 Ga.App. 257, 474 S.E.2d 108 (1996); Wheeler v. Coastal Bank, 182 Ga.App. 112, 354 S.E.2d 694 (1987). Thus, there is nothing improper about the financing company's agreement with a third party to finance their bid. "[W]hen a power of sale is exercised, all that is required of the foreclosing party is to advertise and sell the property according to the terms of the instrument, and that the sale be conducted in good faith." (Citations and punctuation omitted.) Kennedy v. Gwinnett Commercial Bank, 155 Ga.App. 327, 330, 270 S.E.2d 867 (1980). Under the facts as put forth in appellant's complaint, Fleet's financing agreement with Adams for an undetermined sum reflecting the amount of Adams' bid, should he be the high bidder, presents no circumstance which would illustrate that the sale was conducted by Fleet other than in good faith and in accordance with the terms of the deed and all statutes; such sale was to the benefit of the debtor who was relieved of liability on the note when the property sold for the amount of the debt and expenses. Kennedy, supra at 333, 270 S.E.2d 867. Further, proceeds from a high bid that exceeds the amount of indebtedness, such as in the instant case, go to the debtor. OCGA § 44-14-190.

Appellant contends the fact that the agreement was made prior to the sale demonstrates the fraudulent nature of the agreement and subsequent sale. In support of this contention, appellant cites: "Where under a power of sale in a security deed the grantee in case of default was authorized, on compliance with certain conditions, to sell the land described in the deed to the highest bidder 'for cash,' and the sale was duly advertised and auctioned on that basis, the sale was not rendered invalid by a subsequent...