McCalla Raymer, LLC v. Foxfire Acres, Inc.

• Citation: 356 Ga.App. 117,846 S.E.2d 404
• Decision Date: 01 July 2020
• Docket Number: A20A0160,A20A0159,A20A0161
• Parties: MCCALLA RAYMER, LLC v. FOXFIRE ACRES, INC. Foxfire Acres, Inc. v. McCalla Raymer, LLC et al. Suntrust Mortgage, Inc. v. Foxfire Acres, Inc.
• Court: United States Court of Appeals (Georgia)

356 Ga.App. 117

846 S.E.2d 404

MCCALLA RAYMER, LLC

v.FOXFIRE ACRES, INC.

Foxfire Acres, Inc.

v.McCalla Raymer, LLC et al.

Suntrust Mortgage, Inc.

v.Foxfire Acres, Inc.

A20A0159

A20A0160

A20A0161

Court of Appeals of Georgia.

July 1, 2020

Page Scrantom Sprouse Tucker & Ford, Alan G. Snipes, for McCalla Raymer, LLC.

James D. Patrick, Jr., for Foxfire Acres, Inc.

The Gilroy Firm, Monica K. Gilroy, for Suntrust Mortgage, Inc.

Barnes, Presiding Judge.

Foxfire Acres, Inc., a company engaged in the business of buying, renovating, then reselling foreclosed properties, was the high bidder at a foreclosure sale upon residential property (Property) located in Columbus, Georgia. A year later, and still without either "clear, insurable" title or a refund of the bid amount paid, Foxfire filed suit against the foreclosing entity and its law firm, SunTrust Mortgage, Inc., and McCalla Raymer, LLC, respectively. These interlocutory appeals concern the denial of the defendants’ joint motion for summary judgment, as well as rulings on certain of Foxfire's discovery requests. For reasons explained below, we affirm in part and reverse in part.

Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law[.]" OCGA § 9-11-56 (c). "We review a grant or denial of summary judgment de novo and construe the evidence in the light most favorable to the nonmovant." Matson v. Bayview Loan Servicing , 339 Ga. App. 890, 890, 795 S.E.2d 195 (2016).

So viewed, the record shows the following. In 1992, the owners of the Property, Charles W. McDaniel and Leslie L. McDaniel, executed a $106,400 promissory note in favor of Trust Company Bank of Columbus, N.A., and a related deed to secure the debt in favor of that bank, pledging the Property as security (Security Deed). In 2010, the loan was declared to be in default.

Trust Company Bank had meanwhile been acquired by SunTrust Bank, and SunTrust Mortgage, Inc. (SMI) had become the servicer for the McDaniels’ loan. SMI hired McCalla as legal counsel to handle a foreclosure upon the Property. To that end, McCalla advertised in a Columbus newspaper that the Property would be auctioned on November 2, 2010. On the scheduled date, Foxfire was the high bidder for the Property at $126,000 (Foreclosure Sale). Foxfire's representative gave to McCalla's agent a cashier's check covering the bid amount; in turn, McCalla's agent provided Foxfire's representative with: (i) a document that included a "Receipt and Consent to Terms of Sales" section, which they each executed acknowledging the terms of the Foreclosure Sale; and (ii) a "Receipt" in connection with the Foreclosure Sale.¹ Thereafter, in December 2010, McCalla forwarded to Foxfire a "Deed Under Power of Sale" for the Property.

The next month, in January 2011, an attorney working on behalf of Foxfire to obtain title insurance for the Property alerted Foxfire and McCalla that he had encountered a problem with the title. In particular, the newspaper advertisement had stated that "SunTrust Mortgage, Inc. fka Trust Company Bank of Columbus, N.A." was foreclosing on the Property as "Attorney in Fact for Charles W. McDaniel and Leslie L. McDaniel." However, as is now undisputed, SunTrust Bank – not SMI – was the entity formerly known as Trust Company Bank.² When the Foreclosure Sale was conducted, the Security Deed had not been assigned to SMI. Hence, at the time of the Foreclosure Sale, no assignment of the Security Deed to SMI had been recorded amongst the county's real estate records.³

Nevertheless, Foxfire remained interested in the Property to the extent it could obtain "clear, insurable" title, and thus engaged in discussions with McCalla to make that happen. Foxfire's sole owner contemplated, for example, "a proper foreclosure ... done in the right name and everything else." Alternatively, he discussed with McCalla a refund of the bid price, plus payment of interest, legal fees, and other amounts to recoup various other costs and lost profits.

In May 2011, McCalla wrote to Foxfire's counsel, "[Y]our client is only entitled to a return of the funds paid to purchase the property, which I am currently attempting to obtain from SunTrust. In addition, in consideration of the delay in returning these funds we are willing to include interest at the rate of 18% per annum from the date of the foreclosure." The letter went on to advise that Foxfire's legal expenses incurred in the matter would be taken into consideration. Given the amount of time that had lapsed since the Foreclosure Sale, however, Foxfire's owner was disillusioned because no money – neither the bid amount, nor any amount as interest, legal expenses, or other costs – had accompanied the letter. The owner elaborated in his deposition that Foxfire needed to be "made whole," and the letter had not accomplished that. By September 2011, almost a year after the Foreclosure Sale, Foxfire's owner was so frustrated by the ongoing communications to seemingly no avail that he was no longer interested in the Property.

On September 15, 2011, Foxfire's counsel sent a letter to McCalla demanding, among other things, the return of the $126,000 paid at the Foreclosure Sale. A month later, McCalla wrote back, "We request your client continue to exercise patience while we seek to resolve the matter with you." When Foxfire's owner was asked about that response in a deposition being conducted by McCalla's counsel, Foxfire's owner replied, "It had been eleven and a half months since we gave them certified money. I don't think eleven and a half months shows any inclination to me.... We were fed up with your stalling and your letters and your promises and nothing happens."

On November 18, 2011, Foxfire filed in superior court a complaint against McCalla and SMI. As amended multiple times thereafter, Foxfire sought damages on claims of: (i) fraud; (ii) the commission of the criminal offenses of theft by taking, theft by deception, and theft by conversion; (iii) conversion; (iv) breach of contract; and (v) conspiracy. Additionally, Foxfire sought punitive damages, attorney fees, and litigation expenses.

McCalla and SMI denied liability in their answers. In June 2012, they moved for judgment on the pleadings, contending that this case was at most a breach of contract action against SMI that would justify a refund of the purchase price (as opposed to any recovery upon the numerous tort claims pursued by Foxfire). That motion was summarily denied in July 2013.

The following month, August 2013, McCalla delivered a letter to Foxfire's counsel, enclosing checks totaling $126,000, plus an amount it represented was the interest owed from the date of the Foreclosure Sale to the date of the letter. McCalla also proposed in the letter reimbursing Foxfire its reasonable attorney fees and expenses. Additionally, the letter stated, "The tender of the above funds to Foxfire made with this letter is done so without any condition of any kind." Foxfire did not cash the checks.

By then, Leslie L. McDaniel (whose residential property was foreclosed upon) had filed a bankruptcy petition in December 2012. And in connection with that, McCalla, SMI, and Foxfire were named as defendants in the bankruptcy court. The record in the instant case contains an affidavit filed by Foxfire, wherein its agent recounted that during the pendency of the bankruptcy proceedings, SMI attempted to refund money to Foxfire, but that any such proceeds were "subject to the Bankruptcy Court. The Bankruptcy Court finally gave permission to McCalla ... and [SMI] to return the $126,000.00, almost three and one-half years [after the Foreclosure Sale]." McCalla's counsel asked Foxfire's owner during his deposition about the August 2013 tender, and Foxfire's owner recapped, "[W]e were under the [stay] with bankruptcy court and we could not accept money.... You personally knew we could not accept that money and this money was turned over to the judge of the bankruptcy court.... June 6, 2014 was the date that the money was finally made available to me."

Notwithstanding, as Foxfire's owner further deposed, the amount of interest was not what McCalla had previously agreed to pay, and Foxfire was otherwise still not made whole. As he also testified during his deposition with McCalla's counsel, the prolonged and allegedly wrongful retention of the money had "stopped [Foxfire's] operations in its tracks."

On April 1, 2019, McCalla filed a motion for summary judgment as to all Foxfire's claims, and SMI joined in that motion. The trial court held a hearing on that motion, as well as on several pending discovery motions. On May 30, 2019, the trial court denied all such motions in a single order, giving rise to these appeals. In Case Nos. A20A0159 and A20A0161, McCalla and SMI, respectively, contest the denial of the summary judgment motion. And in Case No. A20A0160, Foxfire contests discovery rulings. We consider Case Nos. A20A0159 and A20A0161 together, as they present similar issues.

Case Nos. A20A0159 and A20A0161

1. McCalla and SMI contend that the trial court erred by denying them summary judgment as to Foxfire's fraud claim. We agree.

The five elements essential to a tort suit for damages resulting from a material misrepresentation constituting fraud are: (1) that the defendant made the representations; (2) that at the time he knew they were false; (3) that he made them intending to deceive the plaintiff; (4) that the plaintiff justifiably relied on the representations; and (5) that the plaintiff sustained the alleged loss and damage as the proximate result of their having been made.

(Citation and punctuation omitted.) Parrish v. Jackson W. Jones, P.C. , 278 Ga. App. 645, 647-648 (2), 629 S.E.2d 468 (2006). "For a fraud action to survive a motion for summary judgment, there must be...