McGinnis v. Am. Home Mortg. Servicing, Inc., 14–13404.

Citation817 F.3d 1241
Decision Date22 March 2016
Docket NumberNo. 14–13404.,14–13404.
Parties Jane McGINNIS, Plaintiff–Appellant Cross Appellee, v. AMERICAN HOME MORTGAGE SERVICING, INC., Defendant–Appellee Cross Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (11th Circuit)

Naveen Ramachandrappa, Michael B. Terry, Bondurant Mixson & Elmore, LLP, Atlanta, GA, Miranda J. Brash, Charles A. Gower, Charles A. Gower, PC, Columbus, GA, for PlaintiffAppellantCross Appellee.

Daniel S. Reinhardt, Michael E. Johnson, Troutman Sanders, LLP, Benjamin Wayne Cheesbro, Caplan Cobb, LLP, Russell J. Rogers, Thompson Hine, LLP, Two Alliance Ctr., Atlanta, GA, for DefendantAppelleeCross Appellant.

Before JORDAN and JULIE CARNES, Circuit Judges, and ROBRENO,* District Judge.

ROBRENO, District Judge:

PlaintiffAppellant/Cross Appellee Jane McGinnis ("McGinnis"), a landlord of rental properties, brought suit against DefendantAppellee/Cross Appellant American Home Mortgage Servicing, Inc. ("Homeward"),1 the servicer of the loans on seven of her residential properties, alleging that Homeward violated terms of the deed and promissory note governing the loans. At the end of a bifurcated trial, the jury found in McGinnis's favor on all claims and awarded her $6,000 in compensatory damages, $500,000 in emotional distress damages, and $3,000,000 in punitive damages.

Following the verdict, however, the district court granted Homeward's renewed motion for judgment as a matter of law ("JMOL") on the issue of punitive damages and reduced the jury's punitive damages award to $250,000 based on a cap imposed by a Georgia statute. Both parties now appeal on several grounds.

After careful review, and having had the benefit of oral argument, we will affirm all of the district court's rulings except its grant of Homeward's renewed JMOL motion on the issue of reducing the amount of punitive damages. We hold that Homeward failed to preserve this argument in its initial JMOL motion, and thus remand to the district court for consideration of whether Homeward is entitled to a new trial on the issue of punitive damages.


McGinnis owns a number of residential rental properties, and she has entrusted her son Adam with managing the properties and their financial affairs.2 On October 31, 2006, McGinnis refinanced seven of her rental properties with Taylor, Bean & Whitaker ("TB & W"). She granted security deeds and promissory notes to TB & W, and each loan was subject to a family rider providing that a default on any one of the loans triggers a default on all of the others.

According to the deed, the lender may "collect and hold Funds in an amount ... not to exceed the maximum amount a lender can require under [the Real Estate Settlement Procedures Act ("RESPA") ]." The "Lender shall estimate the amount of Funds due on the basis of current data and reasonable estimates of expenditures of future Escrow Items or otherwise in accordance with Applicable Law." "If there is a shortage of Funds held in escrow, as defined under RESPA, Lender shall notify Borrower as required by RESPA, and Borrower shall pay to Lender the amount necessary to make up the shortage in accordance with RESPA, but in no more than 12 monthly payments."3

Once TB & W originated McGinnis's loans, it packaged and sold them as part of a mortgage-backed security. On October 17, 2009, Homeward obtained the rights to service McGinnis's seven loans, upon which it sent McGinnis a welcome letter for each of McGinnis's seven loans.

Although McGinnis's monthly payments to TB & W had been $605.58 until that point, the welcome letter included a payment coupon stating—with no explanation—that McGinnis's November 2009 payment had risen to $843.58. The same thing happened with McGinnis's other loans. Believing that she did not in fact owe $843.58, McGinnis disputed and refused to pay the increased amount. Instead, she submitted a check to Homeward for $605.58 to cover her November 2009 payment for the loan for 172 Hilton Street, and made similar payments for the other loans.

In December 2009, after McGinnis again submitted payments on all of her loans in the amounts she had previously been paying, Homeward conducted an escrow analysis for 172 Hilton Street and mailed this escrow disclosure statement to McGinnis on December 17, 2009. The statement describes McGinnis's "present payment" as $843.58, consisting of $490.13 for principal and interest and $353.45 for escrow deposit. Thus, McGinnis's escrow deposit payment—which had previously been $115.45—had inexplicably increased by roughly 200% to $353.45. The statement also describes her "new payment effective 02/01/2010" as $680.08, consisting of $490.13 for principal and interest, $138.46 for escrow deposit, and $51.49 for escrow shortage.

In response to the escrow statement, McGinnis sent Homeward a fax, which asserted that she had made all of her payments to TB & W and Homeward, she had not been receiving billing statements, she should not be charged any late fees, and the escrow amounts were too high.

On January 15, 2010, Homeward sent McGinnis a letter explaining that the recent "escrow analysis on [her] loan ... could have erroneously reflected either an escrow overage or shortage due to missing information." The letter instructed McGinnis to disregard the December 17 escrow analysis and to continue making payments at the present monthly payment amount. However, on February 20, 2010, Homeward sent a second escrow analysis statement that described McGinnis's present payment as $843.59 (somehow the payment had been increased by one cent)4 through March 2010, and described McGinnis's new payment effective April 1, 2010 as $638.32—consisting of $490.13 for principal and interest, $140.55 for escrow deposit, and $7.64 for escrow shortage.

Pursuant to the terms of the Security Deed, Homeward placed the $605.58 payments (which it deemed to be partial) into a suspense account until enough funds accrued to pay off the oldest past-due monthly payment. Any remaining funds were held in the suspense account until enough funds accumulated to cover the next past due payment, and the process repeated itself for the entire time that Homeward serviced McGinnis's loans. As these patterns persisted, the interest, collection calls, and late fees continued to mount alongside the increasing amounts McGinnis owed on her monthly escrow payments. Moreover, over the course of 2010, Homeward also began assessing fees for collection letters, inspections, and other expenses relating to the default that Homeward caused.

On May 19, 2010, McGinnis sent Homeward another fax explaining that McGinnis's correct payment for November 2009 through March 2010 should be $605.58, and providing Homeward with Adam's own escrow analysis and offering to pay that amount:

The new total tax and insurance is 1686.59 for the year divided by 12 equals 140.55/month plus the 490.13 is ($630.68). I have tried to explain this over and over again showing you that in February the 24th via fax and conversation with someone that I though[t] understood was helping resolve this and still nothing. I know I owe you little more for the shortage in the escrow (tax and insurance) only but I have not at any time had a payment of $843.59.... I want to pay this loan off ASAP. I will not pay any late fees or any differences in monthly payments.... I need for AHMSI to come up with a payoff as of June 1st 2010[.]

Adam's analysis was essentially identical to Homeward's February 19, 2010, escrow analysis as to the correct amount for McGinnis's payments from April 2010 onward. The only difference is that McGinnis refused to pay the $843.58 amount that Homeward insisted was owed for November 2009 through March 2009 and any late fees or other fees associated with those payments.

On June 30, 2010, Homeward sent a letter in response that offered justifications for the assessment of the late fees and explained that the total amount due on the loan was $1,491.36, but failed to provide any explanation or retraction of the $843.48 amount.

The same issues persisted through the rest of 2010, and McGinnis continued to pay only $605.58 until January 2011, when she began paying the $638.32 amount that first appeared in the February 2010 escrow analysis statement.

Homeward began returning or rejecting McGinnis's payments from February 2011 through May 2011, and on March 22, 2011, Homeward's attorneys sent a formal notice of foreclosure for 172 Hilton Street. For several weeks starting in April 2011, Homeward ran foreclosure advertisements in the local newspaper. Finally, on July 7, 2011, Homeward foreclosed on 172 Hilton Street.

Following the foreclosure of 172 Hilton Street, Homeward continued the same pattern—holding payments in suspense accounts, assessing late fees, returning checks, and threatening foreclosure—with respect to the remaining properties.

At trial, McGinnis's clinical psychologist, Dr. Andrew Sappington, opined that the circumstances leading up to this foreclosure have been a "major cause of ... depression" for McGinnis. The severity of her emotional distress has caused her to suffer major physical symptoms, including "projectile vomiting," and she views the situation as "as life or death." McGinnis, a retiree, described the effect of the dispute with Homeward in her own words: "I am too old to start over. They have taken my life away from me."


McGinnis filed suit against Homeward in the United States District Court for the Middle District of Georgia. After some initial proceedings and discovery, McGinnis filed an amended complaint, asserting a number of claims, including: (1) wrongful foreclosure; (2) violation of RESPA; (3) intentional infliction of emotional distress ("IIED"); (4) conversion; (5) tortious interference with property rights; (6) defamation; and (7) the violation of Georgia's Racketeer Influenced and Corrupt Organizations ("RICO") Act. McGinnis also sought attorney fees and punitive damages.

Upon completion of discovery, Homeward filed a ...

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