Gina McClain v. Bank of America, N.A.

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
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No. 15-11810
Non-Argument Calendar
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D.C. Docket No. 1:13-cv-00443-CC
GINA McCLAIN,
Plaintiff-Appellant,
versus
BANK OF AMERICA, N.A.,
Defendant-Appellee.
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Appeal from the United States District Court
for the Northern District of Georgia
________________________
(January 4, 2016)
Before WILSON, JORDAN, and JILL PRYOR, Circuit Judges.
PER CURIAM:
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Gina McClain appeals the final order of the district court granting a motion
for summary judgment in favor of Bank of America, N.A. (BANA). In her
amended complaint, McClain alleged fraud, tortious conversion, and two counts of
trespass in connection with the foreclosure of her home. After thorough
consideration of the briefs and review of the record, we affirm summary judgment
with respect to McClain’s tortious conversion and trespass claims, but reverse the
finding of summary judgment as to McClain’s fraud claim.
I. BACKGROUND
On September 23, 2003, McClain obtained a mortgage loan from BANA for
$141,300, secured by her home (the Property). McClain executed a note and
security deed (the Security Deed) in favor of BANA, conveying to BANA the
power of sale of the Property.
McClain made her last regular mortgage payment in July 2006 and has not
made any payments since, causing her loan to be in default. Foreclosure was
initiated on the Property around October 2006. The Property has since undergone
two foreclosure sales that were later rescinded, one on which occurred on
September 4, 2007. During this period, McClain was evicted from her home.
Notably, BANA failed to present any evidence of why the 2007 foreclosure was
rescinded, or, most importantly for purposes of this case, when the rescission took
place. From 2007 to 2010, BANA represented on multiple occasions that it had
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foreclosed on the Property, including: communications made in 2007 to McClain
and her real estate agent; a report to the credit bureau that BANA had foreclosed
on the Property; a 1099 Form filed with the Internal Revenue Service; BANA’s
collection of over $38,000 from a private mortgage insurer as a loss incurred by
BANA from its acquisition of the Property; 2008 and 2009 communications with
McClain that BANA later told her to disregard; and several 2010 communications
with McClain (after she received violation notices from the city about the
Property’s unkempt condition) in which BANA informed McClain that it owned
the Property and not to concern herself as BANA would remedy the violation. In
late 2010, McClain made a property insurance claim to complete repairs on the
Property. Insurance proceeds were paid directly to BANA, who refused to release
such proceeds to McClain when asked.
As of the date of this appeal, the Property has not been sold pursuant to the
latest foreclosure activity, and McClain owns the Property.
II. STANDARD OF REVIEW
“We review a district court’s grant of summary judgment de novo, viewing
all of the facts in the record in the light most favorable to the non-movant.”
Haynes v. McCalla Raymer, LLC, 793 F.3d 1246, 1249 (11th Cir. 2015) (internal
quotation marks omitted). Where “there is no genuine dispute as to any material
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fact and the movant is entitled to judgment as a matter of law,” summary judgment
is appropriate. Fed. R. Civ. P. 56(a).
III. DISCUSSION
1. Fraud
McClain alleges that BANA fraudulently represented its ownership of the
Property and, accordingly, did not have the authority to evict McClain from her
home. We find there is sufficient evidence in the record for McClain’s fraud claim
to survive BANA’s motion for summary judgment. As recounted above, there is
an issue of material fact as to whether BANA made false representations to
McClain regarding the status of the Property and the foreclosure proceedings.
Although the representations made to McClain and her real estate agent in 2007
could have been true given that the Property was admittedly sold through public
foreclosure on September 4, 2007, at some unknown point in time the 2007
foreclosure was rescinded. Yet BANA continued to represent the veracity of the
2007 foreclosure up until late 2010.1 Moreover, the magistrate judge’s conclusion
that McClain failed to present any evidence that BANA knew its representation
1
BANA also argued McClain could not establish a fiduciary or confidential relationship between
herself and BANA such that BANA had a duty to update or disclose its voluntary rescission of
the 2007 foreclosure. The relevance of this argument, likewise, depends on the timing of
BANA’s rescission and also ignores the ongoing nature of the representations made by BANA
regarding the Property.
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was false was dependent on his previous finding that BANA had not made any
false representations.
With respect to damages, McClain argues that BANA’s continuous
representations that it successfully foreclosed on the Property caused her, among
other harms, to lose the use of her home for three years. 2 We do not yet know how
much of this time actually falls under the post-rescission period, when BANA’s
representations of ownership may be found to be fraudulent, and McClain’s
damages would be limited accordingly.
2. Tortious Conversion
McClain alleges tortious conversion of insurance proceeds by BANA in the
amount of $7,000. In order to make out a prima facie case for conversion of
personal property, “the plaintiff must show title to the property, possession by the
defendant, demand for possession, and refusal to surrender the property.” Taylor
v. Powertel, Inc., 551 S.E.2d 765, 769 (Ga. Ct. App. 2001) (internal quotation
marks omitted).
Although we find sufficient alleged facts and arguments in the record to
support McClain’s claim under the second, third, and fourth prongs of her tortious
2
We are not convinced by BANA’s argument that McClain’s damages, if any, were caused by
her admitted default on the loan. The caselaw cited in support is distinguishable and does not
stand for the broad proposition that McClain’s default grants BANA a free pass to make false
representations at any point in time. See Heritage Creek Dev. Corp. v. Colonial Bank, 601
S.E.2d 842, 845 (Ga. Ct. App. 2004) (technical default in a foreclosure advertisement); Haynes
v. McCalla Raymer, LLC, 793 F.3d 1246, 1253 (11th Cir. 2015) (notice of foreclosure sale that
wrongly identified the entity with full authority to modify the loan).
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interference claim when viewed through the lens most favorable to McClain, she
has failed to meet the first prong of demonstrating title to the insurance proceeds.
McClain could establish title to the money by demonstrating that the
insurance proceeds were earmarked for her. See In re Hercules Auto. Prod., Inc.,
245 B.R. 903, 912 (Bankr. M.D. Ga. 1999) (stating that a showing of earmarking
proceeds establishes plaintiff has title to the allegedly converted property). Under
the Security Deed, there is a question as to whether the contract provides clear
earmarking of insurance of proceeds in favor of McClain. And McClain fails to
make any non-conclusory argument that she is entitled to the proceeds under the
terms of the contract. While the magistrate judge invited McClain to make an
argument showing she falls under the Hercules exception, McClain instead simply
indicated in a footnote of her brief to this court that she “agrees with the
conclusion” promulgated in Hercules. This is insufficient to show that the Security
Deed language indicates earmarked proceeds are intended for her. Though it is
true, as McClain argues, that BANA was required to promptly inspect the Property
before issuing the proceeds, she fails to make a clear argument that BANA is
contractually obligated to pay the proceeds directly to her as opposed to paying by
some other means that would be applied directly to repairs.
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Because we see no genuine issue of material fact to save the deficiency in
demonstrating title, we affirm the district court’s grant of summary judgment to
BANA on this issue.
3. Trespass
Neither party disputes the fact that at the time of BANA’s entrances onto the
Property to make repairs, McClain was in monetary default under the mortgage.
The Security Deed grants BANA wide latitude in protecting its security interest in
the Property in the event of default. If McClain
fails to perform the covenants and agreement contained in this
Security [Deed] . . . then [BANA] may do and pay for whatever is
reasonable or appropriate to protect [BANA]’s interest in the Property
and rights under the Security [Deed], including protecting and/or
assessing the value of the Property, and securing and/or repairing the
Property.
Security Deed ¶ 9. McClain’s failure to make mortgage payments, arguably her
most significant obligation under the Security Deed, triggers BANA’s ability to
enter the Property and protect its security interest by all reasonable and appropriate
means necessary. Permitted actions include “making repairs,” which presumably
involves entrance onto the Property. 3 See Tacon v. Equity One, Inc., 633 S.E.2d
3McClain claims Paragraph 7 of the Security Deed requiring BANA to provide notice in order to
inspect the Property governs even when McClain is in monetary default under the agreement.
However, she fails to make any argument addressing how this term defeats BANA’s right to “do
. . . whatever is reasonable” to protect its security interest triggered by McClain’s own monetary
default. Moreover, the breach of covenant trigger language in Paragraph 9 suggests that this
section would govern over any other general language in the contract regarding BANA’s rights
with respect to the Property. Combined with the fact that this broad language is designed to
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599, 604 (Ga. Ct. App. 2006) (recognizing that, under Georgia law, “[t]he common
law right to the exclusive use and possession of property may be modified by
agreement, in which the landowner grants permission to enter his property under
certain circumstances”). Therefore, BANA did not violate McClain’s common law
property rights in exercising its contractual rights, and no action for trespass may
lie on the facts. See id.We find no genuine issue of material fact to save either of McClain’s
trespass claims. McClain’s legal arguments also fail as a matter of law. Therefore,
the district court properly granted BANA summary judgment on both counts.
IV. CONCLUSION
We hold there are no genuine issues of material fact with respect to
McClain’s tortious conversion and trespass claims, and find that BANA is entitled
to judgment as a matter of law. See Fed. R. Civ. P. 56(c). We reverse the grant of
summary judgment on McClain’s fraud claim because we find there is a genuine
issue of material fact as to whether BANA made false representations to McClain
regarding the status of the Property and the foreclosure proceedings. Accordingly,
we affirm in part, and reverse in part.
allow BANA to protect its only secured remedy to default (the Property), McClain’s claim that
Paragraph 7 governs over BANA’s rights under Paragraph 9 is not persuasive.
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