Zhong v. PNC Bank, N.A.

Decision Date13 March 2018
Docket NumberA17A1891
Citation812 S.E.2d 514
Parties ZHONG v. PNC BANK, N.A. et al.
CourtGeorgia Court of Appeals

Yasha Heidari, Yenniffer Steffany Delgado, Norcross, for Appellant.

Sarah Tope Reise, Daniel J. Tobin, Linda S. Finley, Joseph Richard Buller III, Atlanta, Jonathan Evan Green, Kristin Schneider Miller, for Appellee.

McFadden, Presiding Judge.

This is the second appearance before us of this case, which arises from Fei Zhong’s action for breach of contract, negligence, and wrongful foreclosure against Wells Fargo Bank, N.A. and PNC Bank, N. A. In Zhong v. PNC Bank, N.A. , 334 Ga. App. 653, 780 S.E.2d 92 (2015) ( Zhong I ), we reversed the trial court’s grant of summary judgment to Wells Fargo and PNC on the ground that the trial court based his ruling on an erroneous legal theory—that Zhong could seek as damages only her equity in the property at issue—and we remanded the case to the trial court for further proceedings. On remand, and after further evidence and a hearing, the trial court again granted summary judgment to Wells Fargo and PNC, and Zhong appeals.

As detailed below, Wells Fargo is not entitled to summary judgment because the well-pled allegations of Zhong’s complaint—as to which Wells Fargo defaulted—have established its liability and there exist genuine issues of material fact on the amount of damages, which is the only question remaining for resolution. PNC, on the other hand, is entitled to summary judgment on Zhong’s claims for breach of her security deed and negligence based on a breach of its duties under the Real Estate Settlement Procedures Act (RESPA), but it is not entitled to summary judgment on Zhong’s claim for wrongful foreclosure. And although Zhong’s oral agreement with PNC regarding her monthly payment is not enforceable, she has pointed to facts allowing her to pursue a claim for breach of that agreement under the theory of promissory estoppel.

We therefore affirm in part and reverse in part the trial court’s judgment.

1. Facts and procedural posture.

"We review a grant of summary judgment de novo and the evidence, and all reasonable conclusions and inferences drawn from it, in the light most favorable to the nonmovant." Zhong I , 334 Ga. App. at 653 (1), 780 S.E.2d 92 (citation omitted). So viewed, the evidence at the time of Zhong I showed:

Zhong purchased the property, a house, in 2004 for $600,000. She first lived in the house and then leased it to tenants. In 2005, PNC bought the loan Zhong used to purchase the property.
For more than six years, Zhong paid her mortgage without incident. On March 31, 2010, PNC paid Zhong’s delinquent 2009 property taxes, more than $11,000. Months later, PNC informed Zhong that she had an escrow shortage of $23,310.98 that had to be paid over 12 months. It established an escrow account and informed her that her monthly payment would be increased to $5,527.06. Zhong’s payment had been $2,731.11. Zhong immediately called PNC to ask for an explanation and was told that PNC would investigate the matter but she should keep making the current payment.
In November 2010, Zhong paid $2,731.11, which PNC applied to principal and interest, but asked Zhong to pay the difference of $2,795.97. In December 2010 and January 2011, Zhong paid $2,838.92, which PNC applied to the negative escrow balance. PNC wrote Zhong, notifying her of the insufficiency of the payments, in letters mailed to the property address. Zhong again contacted PNC, not having
received an explanation from the investigation that PNC earlier had promised, to ask how PNC determined the amount owed and for an explanation of the escrow account.
Eventually PNC told Zhong that the increase reflected an increase in her escrow payment but it did not explain why the increase was necessary. In January 2011, PNC and Zhong agreed that Zhong would make payments of $3,891.98 for the next five years, retroactive to December 2010, and PNC sent Zhong a coupon book reflecting payments due in that amount, with the first coupon due February 2011.
The day after reaching that agreement, on January 28, 2011, Zhong made a payment of $3,891.98. PNC returned the check, with a letter stating that the payment did not "meet current acceptance guidelines." Zhong mailed payments of $3,891.98 in February and March 2011 through an overnight delivery service and using her online banking account, but PNC returned the payments. Zhong again contacted PNC for an explanation, but received none. She hired counsel and instructed PNC to direct all communication to him.
In the meantime, on January 20, 2011, PNC sent a letter to Zhong at the property address that she was in breach and that if she failed to pay a $16,990.96 deficiency by February 19, 2011, it would accelerate the loan. In March 2011, PNC wrote Zhong that she owed $560,000, that Wells Fargo was the creditor, and that PNC was the servicer. Zhong called the number listed on the letter, but received no explanation. Her attorney contacted PNC, and eventually PNC said that it would forebear foreclosure. Per PNC’s request, Zhong repeatedly submitted a hardship application and related documents.
In 2012, Wells Fargo foreclosed on the property. Neither Zhong nor her counsel received notice of the foreclosure sale, which was sent to the vacant property address even though Zhong had instructed PNC to direct all communications to counsel. As a result, Zhong lost the property, her credit was damaged, and she was "devastat[ed] and embarrass[ed]."

Zhong I , 334 Ga. App. at 653–654 (1), 780 S.E.2d 92. We also described in our prior opinion the procedural posture of Zhong’s first appeal:

Zhong filed this action against PNC and Wells Fargo, claiming breach of contract, wrongful foreclosure, and negligence, and seeking damages, punitive damages, and attorney
fees. Wells Fargo did not timely answer the complaint, and the trial court entered default against it.
Wells Fargo and PNC filed separate motions for summary judgment. The trial court conducted a hearing, received supplemental briefing, and granted the defendants summary judgment. The court ruled that, in the face of the evidence of Zhong’s lack of equity, her failure to point to specific evidence that she had equity in the property entitled the defendants to summary judgment. Although the order did not specifically address the negligence or breach of contract claims, the trial court directed the clerk to close the case.

Zhong I , 334 Ga. App. at 654–655 (1), 780 S.E.2d 92.

On appeal in Zhong I , we reversed the grant of summary judgment to Wells Fargo and PNC, holding that "[t]he trial court erred by adopting the argument that Zhong’s damages were limited to equity in the property and that because she had no equity, the defendants were entitled to summary judgment."

Zhong I , 334 Ga. App. at 655 (2), 780 S.E.2d 92. Because the trial court did not address other arguments Wells Fargo and PNC had raised in their summary judgment motions, we remanded the case for further proceedings not inconsistent with our opinion. Id. at 656 (2), 780 S.E.2d 92.

On remand, the trial court reopened discovery, which explored the nature of Zhong’s claimed damages, among other things. Zhong stated in response to interrogatories that she was damaged by the wrongful foreclosure in several respects, including: "losing her custom-built dream house ..., the money she put into the house and its value, damage to her credit, ... damage to her overal[l] well-being, and damage from having to go through the entire ordeal." As to her credit, she gave deposition testimony1 that there is a "negative thing on [her] credit report" from the foreclosure and that the limits on several of her credit cards were severely curtailed, other credit cards were closed, and her current credit status prevents her from renting an apartment or obtaining a car loan. But she could not testify to a specific calculation of the damage she sustained from the damaged credit. Zhong also testified that the experience of losing her house in the foreclosure caused her physical and emotional pain and suffering.

2. Summary judgment to Wells Fargo.
(a) Enumeration of errors.

Zhong enumerates as error the trial court’s grant of summary judgment to Wells Fargo. As an initial matter, we reject Wells Fargo’s assertions that "[t]his enumeration failed to identify any specific error of law or fact" by the trial court and that Zhong "did not appeal" certain aspects of the trial court’s summary judgment order. "An error of law has as its basis a specific ruling made by the trial court." Felix v. State , 271 Ga. 534, 539, 523 S.E.2d 1 (1999). The trial court’s grant of summary judgment to Wells Fargo is a specific ruling made by the trial court, and Zhong’s enumeration of that ruling as error is sufficient to place that ruling before us for review. Zhong is not required to enumerate as error the individual facets of her attack on that ruling. Felix , supra at 539–540, 523 S.E.2d 1.

(b) Default.

As detailed below, the trial court erred in granting summary judgment to Wells Fargo. Earlier in the proceeding, the trial court entered a default judgment against Wells Fargo because Wells Fargo did not timely answer Zhong’s complaint. Consequently, Wells Fargo has "admitted each and every well-pled material factual allegation of [Zhong’s] complaint, except as to the amount of damages alleged." Hooker v. Roberson , 316 Ga. App. 345 (1), 729 S.E.2d 484 (2012) (citations omitted). Accord Cohran v. Carlin , 254 Ga. 580, 585 (3), 331 S.E.2d 523 (1985) ; Hope Elec. Enterprises v. Proforce Staffing , 268 Ga. App. 302, 303 (2), 601 S.E.2d 723 (2004).

Nevertheless,

[a]lthough a default operates as an admission of the well-pled factual allegations of the complaint, it does not admit allegations not well pled, forced inferences, or conclusions of law. Default does not preclude [a] defendant[ ] from showing that under the facts as deemed admitted, no claim exists which would allow the plaintiff to recover.

Standridge v. Spillers , 263...

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