Kenneth E. Diggs v. LaSalle National Bank Association ( 2012 )

IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
May 22, 2012 Session
KENNETH E. DIGGS v.
LASALLE NATIONAL BANK ASSOCIATION, ET AL.
Appeal from the Chancery Court for Shelby County
No. CH-11-0161-2 Arnold B. Goldin, Chancellor
No. W2011-02203-COA-R3-CV - Filed May 30, 2012
This is an appeal from the grant of a motion to dismiss for failure to state a claim upon which
relief can be granted. The trial court found that the Appellant’s claim sounded in fraud.
However, the trial court ruled that the Appellant failed to plead fraud with particularity and
dismissed. Affirmed.
Tenn. R. App. P. 3. Appeal as of Right; Judgment of the Chancery Court Affirmed
and Remanded
J. S TEVEN S TAFFORD, J., delivered the opinion of the Court, in which A LAN E. H IGHERS, P.J.,
W.S., and D AVID R. F ARMER, J., joined.
Kenneth E. Diggs, Memphis, Tennessee, for the appellant, pro se.
Donna L. Roberts and Lauren Paxton Roberts, Nashville, Tennessee, for the appellees, Bank
of America, N.A. and Bank of America Corporation.
Byron Norman Brown, IV, Memphis, TN, and James Campbell Bradshaw, Nashville,
Tennessee, for the appellees, EMC Mortgage Corporations and JP Morgan & Chase Co.
OPINION
I. Background
Plaintiff/Appellant Kenneth E. Diggs filed a pro se complaint titled “Complaint,
Fraud” on February 1, 2011 against the Defendants/Appellees Lasalle National Bank
Association (“Lasalle”), Bank of America Corporation (“Bank of America”),1 EMC
Mortgage Corporations (“EMC”), and JP Morgan & Chase Co. (“JP Morgan,” and together
with Lasalle , Bank of America and EMC, “Appellees”).
Mr. Diggs asserts that he entered into an agreement with EMC to pay $1,600.00 per
month on his mortgage. However, when his electricity was disconnected, he used the money
to pay for the electricity, rather than the mortgage. He also alleges that he received
psychiatric treatment for delusions and hallucinations due to stress caused by EMC. Due to
these psychiatric problems, Mr. Diggs alleges that he was unable to work, and therefore
unable to pay his mortgage. Mr. Diggs subsequently lost his job purportedly after he took a
thirty-day sick leave. Because Mr. Diggs was unable to pay his mortgage, EMC initiated
proceedings to foreclose on Mr. Diggs’ property.
Mr. Diggs filed for bankruptcy on May 14, 2007. On the same day, EMC foreclosed
on his property and sold it to Lasalle for $109,650.00, leaving a balance of $38,718.78 owing
on the EMC mortgage. The sale was evidenced by a Trustee’s Deed recorded in the Office
of the Shelby County Register of Deeds.
On June 11, 2007, an Affidavit of Substitute Trustee was recorded in the Office of the
Shelby County Register of Deeds. The affidavit provides that, as a result of the bankruptcy
proceeding, the May 14, 2007 foreclosure sale and Substitute Trustee’s deed were, in the
Substitute Trustee’s opinion, “null and void.”2 Accordingly, Mr. Diggs’ maintained
1
According to the brief of Lasalle and Bank of America, both parties were improperly named in Mr.
Diggs’ brief. The proper name of Lasalle is Lasalle Bank, N.A., which merged into and subsequently
operated as part of Bank of America, N.A., rather than Bank of America Corporation.
2
Federal law provides that when a debtor files a petition for bankruptcy:
[The petition] operates as a stay, applicable to all entities, of–
(1) the commencement or continuation, including the issuance or
employment of process, of a judicial, administrative, or other action or
proceeding against the debtor that was or could have been commenced
before the commencement of the case under this title, or to recover a claim
against the debtor that arose before the commencement of the case under
this title;
(2) the enforcement, against the debtor or against property of the estate, of
a judgment obtained before the commencement of the case under this title;
(3) any act to obtain possession of property of the estate or of property from
the estate or to exercise control over property of the estate; . . . .
(continued...)
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ownership of the property at this point and was ordered to make payments on his mortgage
by the bankruptcy court.
Mr. Diggs’ bankruptcy case was dismissed on February 5, 2009. On January 11 and
January 13, 2010, Wilson & Associates, PLLC, on behalf of EMC, sent Mr. Diggs a notice
of intent to initiate foreclosure proceedings on the subject property. The notice stated that
foreclosure was scheduled for February 12, 2010. On February 12, 2010, foreclosure
occurred and the property was conveyed to Bank of America National Association, a
successor by merger to Lasalle. However, the trustee’s deed evidencing this sale is not
included in the record.
On February 11, 2011, Mr. Diggs filed his complaint for damages in Shelby County
Chancery Court. The complaint seeks monetary damages of four billion dollars
($4,000,000,000) or three hundred million ($300,000,000) per year from EMC and JP
Morgan. In addition, the complaint seeks damages of four billion dollars ($4,000,000,000)
from Lasalle and Bank of America, or, in the alternative to be made a partner of one of these
companies, and paid fifty-four million dollars ($54,000,000.00) quarterly.
On March 9, 2011, Lasalle and Bank of America filed a motion to dismiss Mr. Diggs’
complaint for failure to state a claim upon which relief could be granted. Additionally, on
March 10, 2011, EMC and JP Morgan filed a motion to dismiss, or, in the alternative, a
motion for a more definite statement. The motions argued that Mr. Diggs failed to plead
fraud with particularity and failed to put any of the defendants on notice as required by Rule
8.01of the Tennessee Rules of Civil Procedure.3 Mr. Diggs filed several motions to strike
the Appellee’s motions to dismiss.
On April 1, 2011, Mr. Diggs filed another pleading titled “Amended Complaint -
Fraud.” On April 25, 2011, EMC and JP Morgan filed an amended and supplemental motion
to dismiss, arguing that the amended complaint again failed to plead fraud with particularity
and failed to put any of the defendants on notice as required by Rule 8.01 of the Tennessee
Rules of Civil Procedure. In addition, the motion noted that Mr. Diggs had previously filed
2
(...continued)
11 U.S.C. § 362 (2010). Once Mr. Diggs initiated bankruptcy proceedings, an automatic stay was placed on
his property. EMC was, therefore, not entitled to foreclose on the property without court approval. As such,
the foreclosure on May 14, 2007 was void ab initio and had no legal effect. Accordingly, the property was
still owned by Mr. Diggs at that time.
3
Rule 8.01 of the Tennessee Rules of Civil Procedure requires only a “short and plain statement of
the claim.”
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a similar claim in Division VI of Shelby County Circuit Court. Because that complaint had
been dismissed with prejudice, EMC and JP Morgan argued that the complaint and amended
complaint filed by Mr. Diggs were barred by the doctrine of res judicata. On May 25, 2011,
Lasalle and Bank of America also filed a supplemental motion to dismiss, with an essentially
identical argument as EMC’s and JP Morgan’s motion. Mr. Diggs again filed several motions
to strike the Appellee’s supplemental motions to dismiss.
A hearing was held on August 22, 2011. After hearing arguments, the trial court
dismissed Mr. Diggs' complaint without prejudice for failure to plead fraud with particularity.
A written order reflecting that ruling was entered on September 2, 2011, which order was
clarified by an amended order of dismissal filed December 2, 2011. The amended order
specifically denies all outstanding motions filed by any party. Mr. Diggs appeals.
II. Analysis
Before we can address the merits of Mr. Diggs’ appeal, we must first consider the
deficiencies in Mr. Diggs’ brief. Tennessee Rule of Appellate Procedure 27 provides, in
pertinent part:
(a) Brief of the Appellant. The brief of the appellant shall contain under
appropriate headings and in the order here indicated:
(1) A table of contents, with references to the pages in the brief;
(2) A table of authorities, including cases (alphabetically arranged), statutes
and other authorities cited, with references to the pages in the brief where they
are cited;
(3) A jurisdictional statement in cases appealed to the Supreme Court directly
from the trial court indicating briefly the jurisdictional grounds for the appeal
to the Supreme Court;
(4) A statement of the issues presented for review;
(5) A statement of the case, indicating briefly the nature of the case, the course
of proceedings, and its disposition in the court below;
(6) A statement of facts, setting forth the facts relevant to the issues presented
for review with appropriate references to the record;
(7) An argument, which may be preceded by a summary of argument, setting
forth:
(A) the contentions of the appellant with respect to the issues
presented, and the reasons therefor, including the reasons why
the contentions require appellate relief, with citations to the
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authorities and appropriate references to the record (which may
be quoted verbatim) relied on; and
(B) for each issue, a concise statement of the applicable standard
of review (which may appear in the discussion of the issue or
under a separate heading placed before the discussion of the
issues);
(8) A short conclusion, stating the precise relief sought.
Tenn. R. App. P. 27. In this case, Mr. Diggs’ brief contains a section titled “Statement of the
Issues,” but the statement is merely a quotation from the June 11, 2007 Affidavit of the
Substitute Trustee, and contains no statement of purported errors committed by the trial
court. See Tenn. R. Ct. App. 6(a)(1) (noting that the brief should contain “[a] statement by
the appellant of the alleged erroneous action of the trial court which raises the issue”). In
addition, Mr. Diggs’ statement of the facts contains only the following:
Lasalle National Bank Association, Bank of America
Corporation, EMC Mortgage Corporations, and JP Morgan &
Chase Co. failed to return Kenneth E. Diggs['] property 2628
Fulham Place Memphis, Tennessee 38128 Deed: Instrument
#06028433 to the Shelby County, Tennessee Register's Office.
See Tenn. R. Ct. App. 6(a)(2) (requiring the appellant to include “[a] statement of each
determinative fact relied upon with citation to the record where evidence of each such fact
may be found”). However, facts are included in the argument section of Mr. Diggs’ brief.
In addition, Mr. Diggs’ Statement of the Case contains no summary of the litigation in the
trial court, but instead includes citations to case law. See Tenn. R. App. P. 27 (a)(5). Finally,
the brief contains no citation whatsoever to the record. Rule 6 of the Tennessee Rules of the
Court of Appeals provides, in pertinent part:
No complaint of or reliance upon action by the trial court will be
considered on appeal unless the argument contains a specific
reference to the page or pages of the record where such action
is recorded. No assertion of fact will be considered on appeal
unless the argument contains a reference to the page or pages of
the record where evidence of such fact is recorded.
Tenn. R. Ct. App. 6(b); see also Bean v. Bean, 40 S.W.3d 52, 55 (Tenn. Ct. App. 2000)
(noting that Tennessee “[c]ourts have routinely held that the failure to make appropriate
references to the record and to cite relevant authority in the argument section of the brief as
required by Rule 27(a)(7) constitutes a waiver of the issue”). We recognize that Mr. Diggs
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is proceeding pro se in this appeal, as he was in the trial court, and therefore may not be
fluent in the Rules of this Court. However, it is well-settled that, “[w]hile a party who
chooses to represent himself or herself is entitled to the fair and equal treatment of the courts,
[p]ro se litigants are not . . . entitled to shift the burden of litigating their case to the courts.”
Chiozza v. Chiozza, 315 S.W.3d 482, 487 (Tenn. Ct. App. 2009). Accordingly, “[p]ro se
litigants must comply with the same substantive and procedural law to which represented
parties must adhere.” Id.
Although there are profound deficiencies in Mr. Diggs’ brief, we discern that there
is only one dispositive issue in this case: whether the trial court erred in dismissing Mr.
Diggs’ complaints without prejudice based on his failure to plead fraud with particularity.
Accordingly, under our authority under Rule 2 of the Tennessee Rules of Appellate
Procedure,4 we proceed to consider the substance of this appeal.
Because this is an appeal from a motion to dismiss, we take all allegations of fact in
the complaint as true, and review the lower courts' legal conclusions de novo with no
presumption of correctness. Tenn R. App. P. 13(d); Mid-South Industries, Inc. v. Martin
Mach. & Tool, Inc., 342 S.W.3d 19, (Tenn. Ct. App. 2010) (citing Owens v. Truckstops of
America, 915 S.W.2d 420, 424 (Tenn. 1996)).
Mr. Diggs’ complaint contains factual allegations against the Appellees surrounding
the foreclosure of his home. According to Mr. Diggs, he defaulted on his mortgage and
EMC, the mortgage holder, was unwilling to work with Mr. Diggs to create a payment plan
that would be satisfactory to both parties. Accordingly, Mr. Diggs filed for bankruptcy. While
the bankruptcy was still pending, EMC sold the home at a foreclosure sale to Lasalle for
$109,650.00. The sale left a balance of $38,718.78 to be paid by Mr. Diggs. However,
because the house was sold while the bankruptcy case was pending, the Substitute Trustee
declared the sale null and void. After the bankruptcy case was dismissed, EMC properly
foreclosed on the property.
Mr. Diggs’ complaint and amended complaint are captioned “Fraud.” From our
review of the complaints, Mr. Diggs alleges neither a breach of contract, nor failure of the
mortgage holder to follow statutory or contractual rules regarding notice of the foreclosure
4
Rule 2 of the Tennessee Rule of Appellate Procedure provides, in relevant part:
For good cause, including the interest of expediting decision upon any
matter, the Supreme Court, Court of Appeals, or Court of Criminal Appeals
may suspend the requirements or provisions of any of these rules in a
particular case on motion of a party or on its motion and may order
proceedings in accordance with its discretion.
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sale.5 Accordingly, giving Mr. Diggs’ the benefit of all reasonable inferences, we discern no
cause of action other than an allegation that the Appellees committed fraud in the foreclosure
sale.
In order to state a claim for fraud or intentional misrepresentation, a plaintiff must
allege facts supporting the following essential elements: (i) the defendant made a
representation of an existing or past fact; (ii) the representation was false when made; (iii)
the representation was in regard to a material fact; (iv) the false representation was made
either knowingly or without belief in its truth or recklessly; (v) plaintiff reasonably relied on
the misrepresented material fact; and, and (vi) plaintiff suffered damage as a result of the
misrepresentation. Metro. Gov't of Nashville & Davidson County v, McKinney, 852 S.W.2d
233, 237 (Tenn. Ct. App. 1992); see also First Nat'l Bank v. Brooks Farms, 821 S.W.2d
925, 927 (Tenn. 1991); Lopez v. Taylor, 195 S.W.3d 627, 634 (Tenn. Ct. App. 2005). The
party alleging fraud bears the burden of proving each element. Hiller v. Hailey, 915 S.W.2d
800, 803 (Tenn. Ct. App. 1995) (quoting Williams v. Spinks, 7 Tenn. App. 488 (1928)).
Tennessee Rule of Civil Procedure 9.02 requires that, “[i]n all averments of fraud or
mistake, the circumstances constituting fraud or mistake shall be stated with particularity,”
while “[m]alice, intent, knowledge, and other condition of mind of a person may be averred
generally.” Tennessee Rule of Civil Procedure 9.02 requires “particularity.” “Particularity,”
or the “quality or state of being particular,” connotes a “concern[] with details, [or]
minut[ia].” The New Lexicon Webster’s Dictionary of the English Language 954 (1993).
The particularity requirement means that any averments sounding in fraud (and the
circumstances constituting that fraud) must “relat[e] to or designat[e] one thing singled out
among many.” Id. In other words, particularity in pleadings requires singularity—of or
pertaining to a single or specific person, thing, group, class, occasion, etc., rather than to
others or all. See generally PNC Multifamily Capital Institutional Fund XXVI Ltd.
Partnership v. Bluff City Community Development Corp., No. W2011-00325-COA-R3CV,
2012 WL 1572130 (Tenn. Ct. App. May 04, 2012) (discussing the fraud pleading
requirements in detail).
Appellees argue that the allegations contained in Mr. Diggs’ complaint are unclear,
conclusory, and generally insufficient. We agree. From our review of Mr. Diggs’ complaint
5
The only law cited in Mr. Diggs’ complaint or brief is Doty v. Federal Land Bank, 89 S.W.2d 337(Tenn. 1935), which concerns whether a homeowner may sue to set aside a foreclosure sale when the Trustee
fails to follow a plan of division submitted by the homeowner. Mr. Diggs states in his brief that “[w]here
Trustee fails to sell pursuant to Defendant’s plan, since sale is neither void nor voidable, and Defendant’s
only remedy is to sue Trustee for damages.” See id. at 338. However, there are no allegations in the
complaint that Mr. Diggs submitted a plan of division, nor does Mr. Diggs name the Trustee as a party in this
case.
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we find no allegations that particularly state that any of the Appellees knowingly made a false
representation of material fact that was relied on by Mr. Diggs’ to his detriment.
Accordingly, Mr. Diggs failed to comply with Rule 9.02 of the Tennessee Rules of Civil
Procedure. This Court has previously held that the trial court may properly dismiss a case for
failure to comply with the pleading requirements of Rule 9.02 of the Tennessee Rules of
Civil Procedure. See Humphries v. West End Terrace, Inc. 795 S.W.2d 128, 132 (Tenn. Ct.
App. 1990); PNC Multifamily, 2012 WL 1572130, at *15–19.
Additionally, even if Mr. Diggs’ complaint avers causes of action other than fraud,
we hold that he has failed to plead those claims in accordance with Rule 8.01 of the
Tennessee Rules of Civil Procedure. Rule 8.01 states:
A pleading which sets forth a claim for relief, whether an
original claim, counterclaim, cross-claim, or third-party claim,
shall contain (1) a short and plain statement of the claim
showing that the pleader is entitled to relief, and (2) a demand
for judgment for the relief the pleader seeks. Relief in the
alternative or of several different types may be demanded.
In this case, the facts relied on by Mr. Diggs do not show that he is entitled to any kind
of relief. At most, the complaint shows that EMC mistakenly foreclosed on Mr. Diggs’ home
while the property was part of a bankruptcy proceeding and then properly foreclosed on the
property several months after the bankruptcy proceeding was dismissed. Accordingly, even
under the more liberal pleading standard of Rule 8.01, Mr. Diggs has failed to state a claim
upon which relief can be granted. Therefore, the judgment of the trial court dismissing this
case without prejudice is affirmed.
III. Conclusion
The judgment of the Shelby County Chancery Court is affirmed and this cause is
remanded to the trial court for the collection of costs. Costs of this appeal are assessed to
Plaintiff/Appellant Kenneth E. Diggs, and his surety.
_________________________________
J. STEVEN STAFFORD, JUDGE
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