Samadi v. Fed. Home Loan Mortg. Corp.

• Decision Date: 14 December 2017
• Docket Number: A17A1686.
• Citation: 809 S.E.2d 69
• Parties: SAMADI v. FEDERAL HOME LOAN MORTGAGE CORPORATION.
• Court: Georgia Court of Appeals

344 Ga.App. 111

809 S.E.2d 69

SAMADI

v.FEDERAL HOME LOAN MORTGAGE CORPORATION.

A17A1686.

Court of Appeals of Georgia.

December 14, 2017

Mike Samadi, pro se.

McCalla Raymer Leibert Pierce, Kimberly Anne Wright, Norcross, and Jimmy Thomas Howell Jr., for Appellee.

Barnes, Presiding Judge.

Proceeding pro se, Mike Samadi appeals the trial court's order granting the motion to open default filed by the Federal Home Loan Mortgage Corporation ("Freddie Mac") and the trial court's final order and judgment granting Freddie Mac's motion to dismiss based on the doctrines of res judicata and collateral estoppel. For the reasons discussed more fully below, we conclude that the trial court abused its discretion in determining that the present lawsuit was a

"proper case" for opening default under OCGA § 9-11-55 (b) based solely on the fact that Freddie Mac ultimately raised meritorious defenses to Samadi's lawsuit; the trial court also was required to consider whether Freddie Mac had a reasonable explanation for its approximately 15-month delay in responding to Samadi's complaint. Accordingly, we vacate the trial court order opening the default and its final order and judgment dismissing Samadi's claims, and we remand for the trial court to apply the proper legal standard for determining whether the default should be opened.

Factual Background. The record reflects that in June 2002, Samadi obtained a $281,000 loan from Mortgage Portfolio Services to purchase certain real property located in Columbia County, Georgia (the "Property"). Samadi executed a promissory note in connection with the loan that was secured with a deed to secure debt on the Property. The note and security deed were assigned to SunTrust Mortgage, Inc. ("SunTrust").

Samadi later defaulted on the note, and in November 2012, SunTrust foreclosed on the Property pursuant to the security deed. SunTrust was the highest bidder at the foreclosure sale and then conveyed the Property to Freddie Mac. In March 2013, Freddie Mac initiated dispossessory proceedings against Samadi in the Magistrate Court of Columbia County (the "Dispossessory Proceeding"). Later in March, the magistrate court granted a writ of possession to Freddie Mac in the Dispossessory Proceeding, and Freddie Mac proceeded with the eviction and with the removal of Samadi's personal belongings from the Property.

The First Action. Since his default on the Note, Samadi has filed three separate lawsuits that have resulted in a complex procedural history. In January 2009, Samadi filed suit in the Superior Court of Columbia County against SunTrust for alleged deceptive trade practices relating to his mortgage loan (the "First Action"). The trial court entered summary judgment in favor of SunTrust on all of Samadi's claims, this Court affirmed without opinion,¹ and the Supreme Court of Georgia denied Samadi's petition for a writ of certiorari.

The Second Action. In November 2012, Samadi filed a second suit in the Superior Court of Columbia County against SunTrust, alleging that the foreclosure proceedings on the Property were illegal and seeking a temporary restraining order ("TRO") and injunctive relief (the "Second Action"). Samadi later amended his complaint to add Freddie Mac as a defendant and to add a quiet title claim, but Samadi did not specifically assert any claims pertaining to the Dispossessory

Proceeding or his eviction from the Property. The trial court initially granted a TRO and preliminary injunction prohibiting the foreclosure of the Property, but the trial court later dissolved the TRO and injunction nunc pro tunc and dismissed Samadi's claims against SunTrust and Freddie Mac with prejudice. Samadi sought appellate review from this Court, but the trial court dismissed his appeal for an unreasonable delay in filing the transcript, and this Court affirmed the dismissal without opinion.² Samadi filed a petition for writ of certiorari, which the Georgia Supreme Court denied.

The Current Action. In April 2015, while the appeal of the Second Action remained pending, Samadi filed the current pro se action against Freddie Mac in the State Court of Cobb County, arguing that the Dispossessory Proceeding and removal of his personal belongings from the Property had been conducted in an illegal manner (the "Current Action"). The complaint alleged that Freddie Mac had never properly served Samadi with notice of the Dispossessory Proceeding, such that he had been unaware of the eviction and removal of his personal belongings when they occurred during the pendency of the Second Action. The complaint further alleged that Freddie Mac's eviction of Samadi and removal of his personal belongings had been illegal because they occurred while the TRO and preliminary injunction were still in force in the Second Action.

In May 2015, Freddie Mac was served through its registered agent with the summons and complaint in the Current Action. Because Freddie Mac did not timely file an answer to the complaint,³ the Current Action went into automatic default. See OCGA § 9-11-55 (a).⁴ Nor did Freddie Mac open the default as a matter of right within 15 days of the automatic default. See id.

In September 2015, Samadi filed a motion for entry of default judgment against Freddie Mac pursuant to OCGA § 9-11-55 (a). Freddie Mac did not respond to the motion, but in November 2015, the lawsuit was transferred to the Superior Court of Cobb County before the state court ruled on the motion because Samadi sought equitable relief in his complaint.⁵ Following the transfer of the case, the superior court issued a rule nisi in April 2016 ordering the parties to attend a hearing in May 2016 to address Samadi's motion for entry of default judgment.

Upon receiving the rule nisi in May 2016, Freddie Mac realized that it had not responded to the lawsuit and retained counsel, but it did not initially respond to Samadi's motion for entry of default judgment or apparently attend the hearing. Rather, in June 2016, Freddie Mac filed a motion to dismiss Samadi's complaint on the grounds of res judicata, collateral estoppel, and failure to state a claim upon which relief could be granted. Subsequently, in August 2016, Freddie Mac filed a motion to open the default pursuant to OCGA § 9-11-55 (b),⁶ along with a verified answer, notice of payment of court costs, and a supporting affidavit. In the sworn affidavit, a Freddie Mac employee who monitors and manages litigation on the company's foreclosed properties averred that Freddie Mac had been served with Samadi's complaint in the Current Action in May 2015. The employee further averred that Freddie Mac had failed to answer the complaint in the Current Action filed in Cobb County because it had "inadvertently assumed" that Samadi's pro se complaint had been filed as part of the Second Action in Columbia County, which had already been dismissed with prejudice. Freddie Mac's verified answer raised several defenses, including res judicata and collateral estoppel based on the Second Action, the appeals of which had been concluded by that point.

In December 2016, the trial court entered an order granting Freddie Mac's motion to open the default in the Current Action. The trial court concluded that the statutory prerequisites for opening default under OCGA § 9-11-55 (b) had been satisfied and that the Current Action was a "proper case" for opening default to avoid a manifest injustice, given Freddie Mac's meritorious defenses of res judicata and collateral estoppel. The trial court thereafter entered a final order and judgment granting Freddie Mac's motion to dismiss all of Samadi's claims on res judicata and collateral estoppel grounds. Samadi now appeals these rulings by the trial court.

1. Samadi contends that the trial court erred in granting Freddie Mac's motion to open the default.

A trial court's decision to open a prejudgment default under OCGA § 9-11-55 (b) is reviewed for an abuse of discretion as long as certain prerequisites are met. After the 15-day grace period for opening default as a matter of right under OCGA § 9-11-55 (a), a trial court has no discretion to open default unless the defendant's showing for opening the default meets four conditions: it must (1) be made under oath, (2) offer to plead instanter, (3) announce ready to proceed with trial, and (4) set up a meritorious defense. Compliance with the conditions of OCGA § 9-11-55 (b) is mandatory, and in its absence, the trial court has no discretion to open default.... Once those four prerequisites are satisfied, a trial court may [exercise its discretion and] open default on any one of three grounds: (1) providential cause, (2) excusable neglect, or (3) that a proper case has been made for opening default.

(Citations and punctuation omitted.) Franklin v. Eaves , 337 Ga. App. 292, 293-294 (1), 787 S.E.2d 265 (2016). See Cavender v. Taylor , 285 Ga. 724, 724-725 (2), 681 S.E.2d 139 (2009) ; Constructamax v. Andy Bland Constr. , 280 Ga. App. 403, 404 (1), 634 S.E.2d 168 (2006).

Although the rule permitting opening of default is remedial in nature and should be liberally applied, and whenever possible cases should be decided on their merits as default judgment is not favored in law, this rule is not absolute. A defendant must still satisfy the requirements of OCGA § 9-11-55 (b).

(Citation and punctuation omitted.) Comcast Corp. v. Warren , 286 Ga. App. 835, 836-837 (1), 650 S.E.2d 307 (2007).

(a) The trial court did not err in finding that Freddie Mac met the four statutory prerequisites for opening default in OCGA § 9-11-55 (b). As previously noted, Freddie Mac presented the sworn affidavit of a representative to explain its delay in timely answering Samadi's complaint in the Current Action. In addition, Freddie Mac offered to plead instanter in its motion to open default and attached a verified answer to its motion, and Freddie Mac also announced that it was ready to proceed with trial. Given this record, the trial court was authorized to find that the...