Steve Q. Muhammad v. JP Morgan Chase Bank, NA ( 2014 )

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
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No. 13-13851
Non-Argument Calendar
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D.C. Docket No. 1:13-cv-00353-MHS
STEVE Q. MUHAMMAD,
Plaintiff-Appellant,
versus
JPMORGAN CHASE BANK, NA,
LAW FIRM OF MCCALLA RAYMER, LLC,
Defendants-Appellees.
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Appeal from the United States District Court
for the Northern District of Georgia
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(May 29, 2014)
Before TJOFLAT, MARCUS and JORDAN, Circuit Judges.
PER CURIAM:
Steve Q. Muhammad appeals the district court’s dismissal of his pro se civil
complaint, filed in response to foreclosure proceedings against his home, for
failure to state a claim. On appeal, he argues that the district court erred by: (1)
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dismissing his claims without first providing him an opportunity to amend his
complaint; and (2) by failing to conduct a sua sponte inquiry into the validity of his
security deed’s assignment by Mortgage Electronic Registration Systems, Inc.
(“MERS”) to defendant J.P. Morgan Chase Bank, N.A. (“Chase”) and into Chase’s
“standing” to foreclose. After careful review, we affirm.
We review de novo the grant of a motion to dismiss under Fed. R. Civ. P.
12(b)(6), accepting the allegations in the complaint as true and construing them in
the light most favorable to the plaintiff. Speaker v. U.S. Dep’t of Health & Human
Servs., 623 F.3d 1371, 1379 (11th Cir. 2010). Although pro se pleadings are
construed liberally, a pro se appellant abandons an issue if he fails to raise it in his
initial brief. See Timson v. Sampson, 518 F.3d 870, 874 (11th Cir. 2008).
To survive dismissal for failure to state a claim, “a complaint must contain
sufficient factual matter, accepted as true, to state a claim to relief that is plausible
on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quotation omitted). A
plaintiff must assert “more than labels and conclusions, and a formulaic recitation
of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555 (2007). Where the plaintiff refers to certain documents in the
complaint that are central to the plaintiff’s claim, then the court may consider the
documents part of the pleadings for purposes of Rule 12(b)(6) dismissal, and the
defendant’s attaching such documents to the motion to dismiss will not require
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conversion of the motion into a motion for summary judgment. Brooks v. Blue
Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1369 (11th Cir. 1997).1
First, we are unpersuaded by Muhammad’s claim that the district court erred
by dismissing his claims without first providing him an opportunity to amend his
complaint. A party may amend its pleading once as a matter of course within: (1)
21 days after serving it; or (2) if the pleading is one to which a responsive pleading
is required, 21 days after service of a responsive pleading or 21 days after service
of certain motions, whichever is earlier. Fed.R.Civ.P. 15(a)(1). In other situations,
a court should give leave to amend freely “when justice so requires.” Fed.R.Civ.P.
15(a)(2). “Where it appears a more carefully drafted complaint might state a claim
upon which relief can be granted, we have held that a district court should give a
plaintiff an opportunity to amend his complaint instead of dismissing it,” even if
the plaintiff did not file a motion to amend or request leave to amend. Bank v. Pitt,
928 F.2d 1108, 1112 (11th Cir. 1991), overruled in part by Wagner v. Daewoo
Heavy Indus. Am. Corp., 314 F.3d 541 (11th Cir. 2002) (en banc). Although we
negated this holding with respect to counseled litigants who did not file a motion to
amend or request leave to amend in Wagner, that decision expressly did not
address pro se litigants, and therefore did not apply to them. See Wagner, 314 F.3d
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Here, Muhammad’s security deed, assignment contract, and notice of foreclosure were all
mentioned in Muhammad’s complaint and central to his claims. Therefore, it was proper for the
district court to consider those documents in ruling on the motion to dismiss.
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at 542 n.1. While a pro se litigant must generally be given an opportunity to
amend his complaint, a district court need not allow an amendment where it would
be futile. See Cockrell v. Sparks, 510 F.3d 1307, 1310 (11th Cir. 2007). “Leave to
amend a complaint is futile when the complaint as amended would still be properly
dismissed or be immediately subject to summary judgment for the defendant.” Id.
The Fair Debt Collection Practices Act (“FDCPA”) prohibits debt collectors
from, among other things, taking or threatening to take “any nonjudicial action to
effect dispossession or disablement of property if . . . there is no present right to
possession of the property claimed as collateral through an enforceable security
interest.” 15 U.S.C. § 1692f(6)(A). It also prohibits using “any false, deceptive, or
misleading representation or means in connection with the collection of any debt.”
15 U.S.C. § 1692e.
A claim for wrongful foreclosure under Georgia law can arise when the
creditor has no legal right to foreclose. DeGolyer v. Green Tree Servicing, LLC,
662 S.E.2d 141, 147 (Ga. Ct. App. 2008). Further, when a foreclosing creditor
does not comply with their statutory duty to provide notice of sale in compliance
with Georgia law, the debtor may sue for damages for the tort of wrongful
foreclosure. Calhoun First Nat. Bank v. Dickens, 443 S.E.2d 837, 839 (Ga. 1994).
Georgia law permits nonjudicial power of sale foreclosures to enforce a
debtor’s obligation to repay a loan secured by real property. You v. JP Morgan
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Chase Bank, N.A., 743 S.E.2d 428, 430 (2013). The process “permits private
parties to sell at auction, without any court oversight, property pledged as security
by a debtor who has come into default.” Id. Nonjudicial foreclosures are governed
by contract law and limited statutory law. Id. at 430-31. The statute defines debtor
as “the grantor of the mortgage, security deed, or other lien contract.” Ga. Code.
Ann. § 44–14–162.1. The statute refers to the other party to the foreclosure as the
“secured creditor,” but does not define that term. You, 743 S.E.2d at 431; see
generally Ga. Code Ann. §§ 44–14–160–162.4. The statutory requirements
“consist primarily of rules governing the manner and content of notice that must be
given to a debtor in default prior to the conduct of a foreclosure sale.” You, 743
S.E.2d. at 431. Under the statute, these notice requirements must be given to the
debtor prior to a foreclosure sale:
[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, and shall be sent by registered or certified mail or statutory overnight
delivery, return receipt requested, to the property address or to such other
address as the debtor may designate by written notice to the secured creditor.
Ga. Code Ann. § 44–14–162.2(a).
In You, the Georgia Supreme Court clarified that the holder of a security
deed possesses full authority to exercise the power of sale and foreclose after the
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debtor’s default, regardless of whether the holder also possesses the mortgage note
or otherwise has a beneficial interest in the debt obligation underlying the security
deed. You, 743 S.E.2d at 433. Moreover, the notice provided to the debtor need
only identify “the individual or entity who shall have full authority to negotiate,
amend, and modify all terms of the mortgage with the debtor,” and, thus, the notice
does not need to identify the secured creditor unless the secured creditor happens
to be the party with such authority. Id. at 433-34 (quotation omitted).
Under Georgia law, property owners may also maintain an action for
trespass under certain circumstances. See Ga. Code Ann. § 51-9-1. A trespass is
“any wrongful, continuing interference with a right to the exclusive use and benefit
of a property right.” Lanier v. Burnette, 538 S.E.2d 476, 480 (Ga. Ct. App. 2000).
In this case, the district court dismissed Muhammad’s action in July 2013,
more than 21 days after service of a 12(b) motion, so Muhammad no longer had
the right to amend his complaint once as a matter of course. Fed.R.Civ.P. 15(a).
Moreover, while Bank is still applicable to pro se litigants like Muhammad, the
district court did not err by dismissing the case with prejudice without granting
leave to amend, because it correctly determined that amending the complaint
would be futile. See Cockrell, 510 F.3d at 1310.
As the record shows here, Muhammad has alleged no facts suggesting that
Chase did not have the legal right to foreclose -- and Chase submitted documents
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showing the contrary. The record further reflects that Chase, through local law
firm McCalla Raymer, gave adequate notice. Therefore, Muhammad would not
have been able to state a claim under the FDCPA, a wrongful foreclosure claim, or
a trespass claim even if he had been given the chance to amend his complaint,
because each of those claims would have been predicated on improper foreclosure
proceedings. As a result, the district court did not err in dismissing Muhammad’s
complaint without giving him the opportunity to amend his pleadings.
We also find no merit in Muhammad’s claim that the district court erred by
failing to conduct a sua sponte inquiry into the validity of the assignment of the
deed to Chase or into Chase’s standing to foreclose. Article III of the Constitution
limits the power of the federal courts to resolving “cases” and “controversies.”
U.S. Const. art. III, § 2. Standing is an essential and unchanging part of the case-
or-controversy requirement. DiMaio v. Democratic Nat’l Comm., 520 F.3d 1299,
1301 (11th Cir. 2008). Standing requires the plaintiff to demonstrate injury in fact,
causation, and redressability. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-
61 (1992).
In Montgomery v. Bank of America, 740 S.E.2d 434 (Ga. Ct. App. 2013),
the Georgia Court of Appeals addressed another dispute that stemmed from
MERS’s assignment of a security interest. The court held that under Georgia law,
the assignment was a contract, and therefore the plaintiff homeowner -- who was
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not a party to the assignment contract -- could not contest the validity of the
assignment. Id. at 437-38.
As the record shows, Muhammad was not a party to the assignment at issue,
so he could not contest the assignment under Georgia law. See id. We are
unpersuaded by Muhammad’s claim that even if he could not contest the
assignment, the district court had a duty to independently inquire into its validity
sua sponte. First, Chase foreclosed on Muhammad’s property through an extra-
judicial foreclosure sale, as authorized by Georgia law. See You, 743 S.E.2d at
430. As a result, the foreclosure did not involve a case and controversy before a
federal court that would have triggered Article III’s standing requirement. Second,
the defendants did not counterclaim or seek damages for any injury in the instant
case, so they were not plaintiffs subject to standing requirements before the district
court. See Lujan, 504 U.S. at 560-61. For these reasons, the district court did not
err by not investigating the validity of the assignment from MERS to Chase or
Chase’s standing to foreclose. Accordingly, we affirm the district court’s grant of
the defendants’ motion to dismiss.
AFFIRMED.
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