Reese v. Provident Funding Assocs., LLP.

• Decision Date: 12 July 2012
• Docket Number: No. A12A0619.,A12A0619.
• Citation: 317 Ga.App. 353,730 S.E.2d 551
• Parties: REESE et al. v. PROVIDENT FUNDING ASSOCIATES, LLP.
• Court: Georgia Court of Appeals

317 Ga.App. 353

730 S.E.2d 551

REESE et al.

v.PROVIDENT FUNDING ASSOCIATES, LLP.

No. A12A0619.

Court of Appeals of Georgia.

July 12, 2012.

Reconsideration Denied July 31, 2012.

David Charles Ates, Atlanta, for Appellants.

Ellis, Painter, Ratterree & Adams, Sarah Brown Akins, Savannah, for Appellee.

MILLER, Judge.

Izell and Raven Reese filed the underlying lawsuit against Provident Funding Associates, LLP ("Provident"), seeking damages for wrongful foreclosure.¹ Both parties sought summary judgment, which the trial court granted in favor of Provident and denied in favor of the Reeses. On appeal, the Reeses contend that the trial court erred in granting Provident's motion for summary judgment on the wrongful foreclosure claim, and in denying the Reeses' cross-motion for summary judgment on that issue, because (1) Provident's June 2009 foreclosure notice did not comply with the requirements of OCGA § 44–14–162.2 ; and (2) Provident's notice of default did not comply with the terms of the security deed. For the reasons set forth below, we reverse the judgment of the trial court and remand this case with direction to the trial court to enter summary judgment in favor of the Reeses.

Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. On appeal from the grant or denial of a motion for summary judgment, this Court must conduct a de novo review of the evidence and view the undisputed facts in the light most favorable to the nonmoving party.

(Footnotes omitted.) ChoicePoint Svcs. v. Graham, 305 Ga.App. 254, 255, 699 S.E.2d 452 (2010).

So viewed, the evidence shows that on July 23, 2004, the Reeses executed a promissory note (the "Note") in exchange for a $650,000 loan from Provident in order to purchase real property in Roswell, Georgia. The loan was secured by a deed conveying Provident and its nominee an interest in the property and a power of sale in the event of a default (the "Security Deed"). Pursuant to the Security Deed, Mortgage Electronic Registration Systems, Inc. ("MERS"), acting solely as the nominee for Provident and its successors and assigns, was designated as the grantee of the Security Deed.² After Provident funded the loan, Provident sold and delivered the Note to Residential Funding Company, LLC ("RFC"). Although RFC succeeded Provident as the holder of the Note, Provident nevertheless remained as the loan servicer, retaining the right to collect payments and perform all other mortgage loan servicing functions authorized by the Security Deed.

In January 2009, the Reeses defaulted on their loan, and on February 13, 2009, Provident sent the Reeses a notice of default as required by the terms of the Security Deed. The Reeses failed to cure their default within 30 days, and on June 3, 2009, Provident, through its attorneys, sent a letter notifying the Reeses that Provident was commencing foreclosure proceedings. On July 7, 2009, Provident held a non-judicial sale of the property. Provident purchased the property and subsequently filed a dispossessory action against the Reeses to evict them from the property.³

On July 30, 2009, the Reeses filed a complaint against Provident, alleging wrongful foreclosure. Provident filed a motion for summary judgment on the grounds that it had full authority to foreclose on the property and that it had done so properly. The Reeses filed a cross-motion for summary judgment, contending that (i) Provident failed to comply with the Security Deed terms requiring that the Reeses be given notice that they had a right to bring a court action to assert the non-existence of default or any other defense to acceleration and sale; and (ii) the notice of foreclosure provided by Provident did not include information on the "secured creditor," which violated OCGA § 44–14–162.2. Following a hearing on the parties' motions, the trial court denied the Reeses' cross-motion for summary judgment on the wrongful foreclosure claim and granted Provident's motion for summary judgment on that issue. The trial court's order specifically found in pertinent part that Provident's notice of foreclosure "was in keeping with ... OCGA § 44–14–162.2," and that the Reeses could not sustain a claim for wrongful foreclosure. We disagree.

1. The Reeses contend that the trial court's decision was erroneous because Provident's June 2009 foreclosure notice did not comply

with the requirements of OCGA § 44–14–162.2. Specifically, the Reeses argue that Provident was not the "secured creditor" for purposes of sending the notice, and that the identity of the secured creditor was never revealed. This case is one of first impression in a Georgia appellate court. The inquiry is whether the provisions of OCGA § 44–14–162.2(a) require that a notice of foreclosure disclose the identity of the secured creditor. Upon considering the statute in its entirety, as well as the legislative intent, we conclude that the statute does require that the notice properly identify the secured creditor and reflect that the notice is being sent by the secured creditor or by an entity with authority on behalf of the secured creditor.

OCGA § 44–14–162.2(a) mandates that

[n]otice 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[.]

(Punctuation omitted; emphasis supplied.) "Where a foreclosing creditor fails to comply with the statutory duty to provide notice of sale to the debtor in accordance with OCGA § 44–14–162 et seq., the debtor may either seek to set aside the foreclosure or sue for damages for the tort of wrongful foreclosure." (Citation omitted.) Roylston, supra, 290 Ga.App. at 559(1)(b), 660 S.E.2d 412.

Here, it is undisputed that at the time Provident sent the June 3, 2009, notice of the foreclosure sale, it was not the secured creditor. Provident admitted that it was not the holder of the Note, and the record reflects that MERS, and not Provident, was the grantee of the Security Deed until June 24, 2009. Rather, RFC was the secured creditor, i.e., owner of the loan, and Provident was merely the loan servicer. It is also undisputed that Provident made misrepresentations in the contents of the notice of foreclosure sale. First, the notice misidentified Provident as the holder of the Note and the Security Deed. Second, the notice misidentified Provident as the "Lender," rather than as the loan servicer. Indeed, the notice made no mention whatsoever of RFC, the secured creditor, resulting in a complete failure to properly reflect that the notice was sent by, or on behalf of, the proper secured creditor.

At first glance, if you read the first or second sentence of OCGA § 44–14–162.2(a) in isolation, it may seem unambiguous. However, a statute must be viewed "as a whole to construe all parts of a statute together to make all its parts harmonize[.]" (Citation and punctuation omitted.) ALLTEL Ga. Communications Corp. v. Ga. Public Svc. Comm., 270 Ga. 105, 107(1), 505 S.E.2d 218 (1998).⁴ Following the general legal principles of statutory construction, the ambiguity of the statute is highlighted when it is applied in the context of the facts of this case, where a notice is sent by a third party other than the secured creditor and that third party misrepresents the identity of the true secured creditor. In that situation, it becomes unclear whether the plain language of OCGA § 44–14–162.2(a) requires the notice to reflect both the identity of the secured creditor giving the notice, as well as the person or entity with the full authority to negotiate, amend, and modify the mortgage.

In resolving this issue, we look to the literal language of the statute, the rules of statutory construction and rules of reason and logic, the most important of which is to construe the statute so as to give effect to the legislature's intent. In all interpretations of statutes, the courts shall look diligently for the intention of the General Assembly, keeping in view at all times the old law, the evil, and the remedy.

(Citations and punctuation omitted.) Moore v. Moore–McKinney, 297 Ga.App. 703 706(1), 678 S.E.2d 152 (2009) ; see also Mason v. Home Depot U.S.A., 283 Ga. 271, 277–278(3), 658 S.E.2d 603 (2008) ("It is always the duty of a court, in construing a statute, to ascertain and give full effect to the legislative intent.") (citation and punctuation omitted).

A persuasive discussion of the legislature's intent is set out by the Northern District of Georgia in Stubbs v. Bank of America, 844 F.Supp.2d 1267, 1271 (N.D.Ga.2012) (originally filed in state court and removed to the Northern District of Georgia based on diversity jurisdiction), which held as follows:

While it may be of no consequence who actually sends the notice, and that task may properly be delegated to a servicing agent (or, as is often the case, an attorney), the amendments of sections [OCGA § 44–14–]162 and [OCGA § 44–14–] 162.2 in 2008 make clear that the identity of the secured creditor conducting the sale is a material element of that notice.

These 2008 amendments included the following clause added to OCGA § 44–14–162 : "The security instrument or assignment thereof vesting the secured creditor with title to the security instrument shall be filed prior to the time of sale in the office of the clerk of the superior court of the county in which the real property is located." OCGA § 44–14–162(b) ; see Ga. L. 2008, p. 576, § 1. OCGA § 44–14–162.2(a) was also amended to require the secured creditor to send the pre-foreclosure notice 30 days prior to sale (rather than 15) and to require that this notice "shall include the...