Taylor v. Wells Fargo Bank, N.A. (In re Taylor)
| Decision Date | 08 March 2018 |
| Docket Number | CASE NO. 16-69706-PMB,ADVERSARY PROCEEDING NO. 17-5253 |
| Parties | In re: TAWAKALIT TAYLOR, Debtor. TAWAKALIT TAYLOR, Plaintiff, v. WELLS FARGO BANK, N.A., McCALLA RAYMER LEIBERT PIERCE, LLC, RESIDENTIAL CAPITAL MANAGEMENT FUND 1, LP, and WRI PROPERTY MANAGEMENT, LLC, Defendants. |
| Court | U.S. Bankruptcy Court — Northern District of Georgia |
IT IS ORDERED as set forth below:
ORDER GRANTING MOTIONS TO DISMISS PLAINTIFF'S COMPLAINT AS TO DEFENDANT-MOVANTS WELLS FARGO BANK, N.A. AND McCALLA RAYMER LEIBERT PIERCE, LLC
Before the Court are the following matters:
In the Wells Fargo Motion to Dismiss and the MRLP Motion to Dismiss, Wells Fargo and MRLP (collectively, the "Movants") argue that the Debtor has failed to assert a claim uponwhich relief may be granted under Federal Rule of Civil Procedure 12(b)(6), applicable herein through Federal Rule of Bankruptcy Procedure 7012(b), on each cause of action alleged by the Debtor against them.
In the complaint filed by Plaintiff-Chapter 7 Debtor (the "Debtor") on October 9, 2017 (Docket No. 1)(the "Complaint"), the Debtor asserts that the Defendants conducted an improper foreclosure sale (the "Foreclosure Sale") of real property located at 1070 Saddle Lake Court, Roswell, Georgia (the "Property"), which the Debtor then owned and in which she then resided, on November 1, 2016 without informing her. The Debtor further asserts that she continued to reside in the Property after the Foreclosure Sale, later learned that a dispossessory action had been filed against her, and was evicted from the Property on January 4, 2017, while out of town. The Debtor claims, however, that the bankruptcy petition commencing this Chapter 7 case (the "Petition") was filed thirteen (13) minutes after the Foreclosure Sale was conducted on November 1, 2016. The Debtor further contends that the filing of the Petition occurred before the Foreclosure Sale was consummated, since the execution and delivery of a deed under power (the "Deed Under Power") did not occur until on or about February 10, 2017, and the Deed Under Power was not filed of record until February 21, 2017. On these facts, and under applicable law, the Debtor insists that she retained her equitable right of redemption at the time of filing of her Petition, and that the post-petition actions taken against her and the Property with knowledge of the filing of the bankruptcy case, violated the automatic stay of 11 U.S.C. § 362, resulting in actual damages and damages for emotional distress (Count I). The Complaint alsocontains counts for surprise (Count II)(O.C.G.A. § 23-2-54), trespass (Count III)(O.C.G.A. § 51-9-1), wrongful eviction (Count IV), and slander of title (Count V)(O.C.G.A. § 51-9-11).
Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, dismissal is appropriate if a complaint fails "to state a claim upon which relief can be granted." Under this standard, "to survive a motion to dismiss, a complaint must now contain factual allegations that are 'enough to raise a right to relief above the speculative level.'"1 The factual content alleged must "state a claim to relief that is plausible on its face." Ashcroft, supra, 556 U.S. at 678, quoting Twombly, supra, 550 U.S. at 570. Facial plausibility is shown "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id., quoting Twombly, supra, at 556. Although the Court must accept all of the factual allegations in the complaint as true and construe them in the light most favorable to the Plaintiff, "conclusory allegations, unwarranted deductions of facts or legal conclusions masquerading as facts" are not sufficient. Jackson v. BellSouth Telecomms., 372 F.3d 1250, 1263 (11th Cir. 2004)(citations omitted). Dismissal is appropriate "when, on the basis of a dispositive issue of law, no construction of the factual allegations will support the cause of action." Marshall County Bd. of Educ. v. Marshall County Gas Dist., 992 F.2d 1171, 1174 (11th Cir. 1993)(citations omitted).
With these pleading standards in mind, the Court concludes that the Complaint falls short of plausibly demonstrating a basis for the Movants' asserted liability on certain of the grounds alleged. From a review of the pleadings, it appears that the material facts as to the occurrence ofthe Foreclosure Sale and the execution and recording of the relevant post-foreclosure documents are not in dispute, and the issue for decision centers on the application of the law to those facts.
The basic facts as alleged by the Debtor are generally as follows, and are undisputed. Wells Fargo retained MRLP to conduct a non-judicial Foreclosure Sale of the Property, in which Wells Fargo held a first-position security title under Georgia law. On November 1, 2016 at 1:38 p.m., the Foreclosure Sale went forward and the Property was sold to Defendant Residential Capital Management Fund 1 LP ("Res-Cap") as the high bidder. The Petition commencing this Chapter 7 bankruptcy case was filed at 1:51 p.m. on November 1, 2016.2 The Debtor was dispossessed from the Property by Res-Cap and its agent, WRI Property Management, Inc. ("WRI"), in January of 2017. The Deed Under Power conveying the Property to Res-Cap was executed, delivered and filed in February of 2017.
The Debtor argues that, based on those facts, she retained her equitable right of redemption in the Property at the time of filing of the Petition because the Foreclosure Sale had not been completed at that time. Citing Tampa Inv. Grp., Inc. v. Branch Banking & Trust Co., 290 Ga. 724, 727, 723 S.E.2d 674 (2012), the Debtor contends that, in Georgia, a foreclosure sale does not occur until the sale is consummated. See also Tait v. Nationstar Mortg. LLC, 2015 WL 5725249, *2(N.D.Ga. Sept. 30, 2015). According to the Debtor, a foreclosure sale is complete upon execution and delivery of the deed under power and the exchange of consideration from the bidder to the creditor, which is applied to reduce the borrower's debt. Tait, at *2, citing Building Block Enters. v. State Bank and Trust Co., 314 Ga.App. 147, 150-51, 723 S.E.2d 467 (2012); Legacy Communities Grp. v. Branch Banking & Trust Co., 310 Ga.App. 466, 470, 713 S.E.2d 670 (2011), rev'd in part on other grounds, Tampa Inv. Grp., supra, 290 Ga. 724, 723 S.E.2d 674. Submission of the highest bid only forms a contract for sale. Chase Home Fin. LLC v. Geiger (In re Geiger), 340 B.R. 422, 423-24 (Bankr. M.D.Ga. 2006)(Hershner, B.J.)(citations omitted), but see Williams v. SunTrust Bank (In re Williams), 393 B.R. 813, 820 (Bankr. M.D.Ga. 2008)(Hershner, B.J.). Thus, divestment of a debtor's right to possession and equity of redemption require a tender of the bid amount or execution of the deed in completion of the sale. Geiger, supra, at 424-25 (citations omitted).
It is not disputed that the actions taken by the Movants with respect to the Deed Under Power, as well as application of the sale proceeds, occurred after the filing of the Petition. The Debtor asserts that, because the Foreclosure Sale was not consummated when the Petition was filed, the right of redemption was never terminated and became property of this bankruptcy estate. Moreover, the post-petition actions of the Movants to enforce the Foreclosure Sale without first obtaining a modification of the automatic stay, despite their knowledge of the filing of this case, constitute willful violations of the stay causing injury to the Debtor and her rights in the Property.
In response, Wells Fargo contends that, under a proper reading of Georgia law, it is well-settled that acceptance of the high bid at the foreclosure sale terminates a borrower's equity of redemption. See In re Hinson Mgmt. Grp., Inc., 2012 WL 2175752 (Bankr. N.D.Ga. June 8,2012), citing Pearson v. Fleet Fin. Center, Inc. (In re Pearson), 75 B.R. 254, 255 (Bankr. N.D.Ga. 1985)(citing Carrington v. Citizens' Bank of Waynesboro, 144 Ga. 52, 85 S.E. 1027 (1915); McKinney v. South Boston Sav. Bank, 156 Ga.App. 114, 274 S.E.2d 34 (1980). When a high bid is accepted before a bankruptcy filing, as is the case here, no interest in the underlying Property becomes property of the subsequently created bankruptcy estate because the borrower (the Debtor herein), retained no such interest as of the filing of the Petition. Bishop v. GMAC Mortg., LLC, 470 B.R. 633, 638 (Bankr. M.D.Ga. 2011), citing Williams v. SunTrust Bank, supra, 393 B.R. at 820; First Nationwide Mortg. Corp. v. Davis (In re Davis), 1998 WL 34066146 (Bankr. S.D.Ga. Jan. 21, 1998); see also In re Haynes, 2007 WL...
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