McCallum v. Bank of Am., N.A. (In re McCallum)

• Decision Date: 22 March 2018
• Docket Number: Adversary Proceeding No. 17-5054,Case No. 17-51487-JPS
• Parties: In the Matter of: NIKIKI MCCALLUM, Debtor NIKIKI MCCALLUM, Plaintiff v. BANK OF AMERICA, N.A. and NARJARIAN CAPITAL, LLC, Defendants
• Court: U.S. Bankruptcy Court — Middle District of Georgia

In the Matter of: NIKIKI MCCALLUM, DebtorNIKIKI MCCALLUM, Plaintiff v. BANK OF AMERICA, N.A. and NARJARIAN CAPITAL, LLC, Defendants

Case No. 17-51487-JPS

Adversary Proceeding No. 17-5054

UNITED STATES BANKRUPTCY COURT MIDDLE DISTRICT OF GEORGIA MACON DIVISION

March 22, 2018

Chapter 13

BEFORE James P. Smith United States Bankruptcy Judge

APPEARANCE:

For Debtor/Plaintiff:

Daniel Lewis Wilder

Law Offices of Emmett L. Goodman, Jr.

544 Mulberry Street

Suite 800

Macon, GA 31201

For Defendant Bank of

America, N.A.:

Paul A. Rogers

McGuire Woods, LLP

1230 Peachtree Street NE

Promenade II, Ste 2100

Atlanta, GA 30309-3534

For Defendant Narjarian

Capital, LLC:

Kane St. John

Law Office of Kane St. John

2164 Pawnee Drive

Marietta, GA 30067

MEMORANDUM OPINION

In this adversary proceeding, Debtor seeks to set aside the alleged wrongful foreclosure on her residence. Defendant Bank of America, N.A. ("BOA") has filed a motion for judgment on the pleadings. The Court, having considered the motion, the response, the pleadings, the briefs of counsel and the applicable law, now publishes this memorandum opinion.

As a threshold matter, BOA argues that the Court lacks subject matter jurisdiction¹ because the claims asserted in Debtor's complaint are non-core proceedings that do not arise under and are not related to a case under Title 11.² 28 U.S.C. § 1334(b) provides:

(b) Except as provided in subsection (e)(2)³ and notwithstanding any Act of Congress that confers exclusive jurisdiction on a court or courts other than the district courts, the district courts shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11.⁴

In Continental Nat'l Bank v. Sanchez (In re Toledo), 170 F.3d 1340, 1345 (11th Cir.1999), the Eleventh Circuit stated:

"Arising under" proceedings are matters invoking a substantive right created by the Bankruptcy Code. Wood v. Wood (In re Wood), 825 F.2d 90, 97 (5th Cir. 1987); 1 Collier on Bankruptcy ¶ 3.01[4][c][i]. The "arising in a case under" category is generally thought to involve administrative-type matters. 1 Collier on Bankruptcy ¶ 3.01[4][c][iv], or as the Wood court put it, "matters than could arise only in bankruptcy," Wood, 825 F.2d at 97.

In Miller v. Kemira, Inc. (In re Lemco Gypsum, Inc.), 910 F.2d 784, 788 (11th Cir. 1990) the Eleventh Circuit stated:

In Pacor, Inc. v. Higgins the Third Circuit enunciated a test for determining whether a civil proceeding is sufficiently related to bankruptcy to confer federal jurisdiction on the district court. "The usual articulation of the test for determining whether a civil proceeding is related to bankruptcy is whether the outcome of the proceeding could conceivably have an effect on the estate being administered in bankruptcy. The proceeding need not necessarily be against the debtor or against the debtor's property. An action is related to bankruptcy if the outcome could alter the debtor's rights, liabilities, options, or freedom of action (either positively or negatively) and which in any way impacts upon the handling and administration of the bankruptcy estate." We join the majority of the circuits that have adopted the Pacor formulation.

Count One of Debtor's complaint seeks to set aside the foreclosure on her residence. If Debtor is successful, title will revert to Debtor, the debt to BOA will be reinstated and Debtor will have to provide for the debt in her Chapter 13 plan. Clearly, the Court has "related to" jurisdiction over Count One because "the outcome could alter the debtor's rights, liabilities, options...." Id.

Counts Two and Three assert avoidance claims under 11 U.S.C. §§ 547, 548, and 549. Count Four asserts a claim for violation of the automatic stay under 11 U.S.C. § 362. Accordingly, all of these claims "arise under title 11" and the Court, therefore, has subjectmatter jurisdiction.

FACTS

The Court now turns to the merits of Debtor's complaint.

"'Judgment on the pleadings is appropriate where there are no material facts in dispute and the moving party is entitled to judgment as a matter of law.' In determining whether a party is entitled to judgment on the pleadings, we accept as true all material facts alleged in the non-moving party's pleading, and we view those facts in the light most favorable to the non-moving party. If a comparison of the averments in the competing pleadings reveals a material dispute of facts, judgment on the pleadings must be denied."

Perez v. Wells Fargo N.A., 774 F.3d 1329, 1335 (11th Cir. 2014) (internal quotation marks and citation omitted).

The following facts from the pleadings are deemed true. Debtor owed a debt to BOA that was secured by a deed to secure debt on real property at 617 Crabapple Place, Macon, Georgia 31217 (the "Property"). In early 2017, Debtor became delinquent on the debt. Unbeknownst to Debtor, BOA commenced foreclosure proceedings on or about May 25, 2017. Although BOA sent notice of the foreclosure proceedings to Debtor by certified mail, this notice was not delivered to Debtor by the U.S. Postal Service and remains "In Transit." BOA could have determined that the notice, which was sent by certified mail, had not been delivered to Debtor.

On July 5, 2017, BOA sold the Property at a non-judicial foreclosure sale to Najarian Capital, LLC for the bid price of $88,500. At the time of the sale, Debtor had sufficient funds to bring her debt current. Debtor first became aware of the foreclosure proceedings a day or two after the sale when Najarian Capital posted an ownership and eviction notice on Debtor'sdoor. Najarian Capital filed an eviction proceeding in the Magistrate Court of Bibb County, which has been stayed by consent of Debtor and Najarian Capital pending further order of this Court.

Debtor filed a Chapter 13 bankruptcy case on July 14, 2017. Her schedules reflect that she owed BOA $103,000 and that the value of the Property was $123,000. BOA filed in the real-estate records a foreclosure deed conveying the Property to Najarian Capital postpetition on July 28, 2017. BOA has failed and refused Debtor's requests to consent to set aside the foreclosure sale.

DISCUSSION

In Count One of her complaint, Debtor asserts a wrongful foreclosure claim against BOA, contending that the foreclosure sale did not comply with applicable state law and violated due process. The sole basis for this contention is the fact that she did not receive the notice of foreclosure which BOA is required to give pursuant to O.C.G.A. § 44-14-162.2.⁵ Debtor seeks to set aside the foreclosure, have title to the Property restored to her, and an award of damages.⁶

"In Georgia, a plaintiff asserting a claim of wrongful foreclosure must establish a legal duty owed to it by the foreclosing party, a breach of that duty, a causal connection between thebreach of that duty and the injury it sustained, and damages." (citations and punctuation omitted). Racette v. Bank of America, N.A., 318 Ga.App. 171, 174, 733 S.E.2d 457 (2012). O.C.G.A. § 44-14-162.2 provides:

(a) Notice of the initiation of proceedings to exercise a power of sale in a mortgage, security deed, or other lien contract shall be given to the debtor by the secured creditor no later than 30 days before the date of the proposed foreclosure. Such notice shall be in writing, shall include the name, address, and telephone number of the individual or entity who shall have full authority to negotiate, amend, and modify all terms of the mortgage with the debtor, and shall be sent by registered or certified mail or statutory overnight delivery, return receipt requested, to the property address or to such other address as the debtor may designate by written notice to the secured creditor. The notice required by this Code section shall be deemed given on the official postmark day or day on which it is received for delivery by a commercial delivery firm. Nothing in this subsection shall be construed to require a secured creditor to negotiate, amend, or modify the terms of a mortgage instrument.

(b) The notice required by subsection (a) of this Code section shall be given by mailing or delivering to the debtor a copy of the notice of sale to be submitted to the publisher.

(emphasis added).

Exhibit A⁷ to Debtor's complaint (Doc. #4) is the USPS Tracking Results reflecting that an item⁸ was sent on May 28, 2017 by "First Class Mail, Certified Mail", and is still "InTransit". Since the notice was not actually delivered to Debtor, she argues that BOA failed to comply with O.C.G.A. § 44-14-162.2 and due process. However:

In McCollum v. Pope, 261 Ga. 835, 411 S.E. 2d 874 (1992), this Court plainly determined that when the grantee in a security deed mails a notification of the sale under power correctly addressed to the grantor of the security deed in accordance with the provisions of OCGA § 44-14-162.2, the actual receipt, or want of receipt, by the grantor is immaterial to the right of the grantee to sale under power.

Parks v. Bank of N.Y., 279 Ga. 418, 420, 614 S.E.2d 63, 65 (2005); Accord, Thompson-El v. Bank of America, N.A., 327 Ga. App. 309, 759 S.E. 2d 49, 52 (2014); Arrington v. Reynolds, 255 Ga. App. 291, 564 S.E. 2d 870, 871 (2002); Walker v. JPMorgan Chase Bank, N.A., 987 F.Supp. 2d 1348 (N.D. Ga. 2013).

Debtor distinguishes McCollum by noting that it contains no recitation of facts and simply states a general proposition in a single paragraph. In Parks and Walker, she argues, the certified mail receipts were in fact signed by some unknown persons, so at least the notices were delivered to the property.

The case of Eason v. PNC Bank, N.A. 2014 WL 11460477 (N.D. Ga. Aug. 13, 2014), aff'd 617 F.Appx. 942 (11th Cir. 2015) is squarely on point. Foreclosure counsel for PNC sent Eason notices of the foreclosure proceedings via both first class and certified mail. Eason did not receive either notice. The notices sent by certified mail were returned to PNC's foreclosure counsel, marked "return to sender, no such number,...