Jane McGinnis v. American Home Mortgage Servicing, Inc.

Case: 17-11494 Date Filed: 08/22/2018 Page: 1 of 21
[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
No. 17-11494
D.C. Docket No. 5:11-cv-00284-CAR
JANE MCGINNIS,
Plaintiff - Appellee,
versus
AMERICAN HOME MORTGAGE SERVICING, INC.,
Defendant - Appellant.
Appeal from the United States District Court
for the Middle District of Georgia
(August 22, 2018)
Before TJOFLAT, ROSENBAUM, and BRANCH, Circuit Judges.
BRANCH, Circuit Judge:
American Home Mortgage Servicing, now known as Homeward, appeals the
denial of a new trial concerning an award of punitive damages arising from a
Case: 17-11494 Date Filed: 08/22/2018 Page: 2 of 21
wrongful foreclosure. Jane McGinnis, the owner of several rental properties,
brought suit against Homeward, the servicer of seven of her residential properties’
mortgages, alleging wrongful foreclosure, conversion, interference with property,
and intentional infliction of emotional distress. The jury found against Homeward
on all claims and awarded McGinnis $3,506,000 in damages ($6,000 for economic
injury, $500,000 for emotional distress, and $3,000,000 in punitive damages).
Homeward appeals the district court’s denial of a motion for a new trial, arguing
(1) that the punitive damages award was unconstitutionally excessive under the
Due Process Clause of the Fourteenth Amendment and (2) that the punitive
damages award unlawfully exceeded Georgia’s $250,000 cap on punitive damages
under O.C.G.A. § 51-12-5.1(f), (g). 1 Because we conclude that the award violates
neither the U.S. Constitution nor Georgia law, we affirm the judgment of the
district court.
I. FACTUAL BACKGROUND
McGinnis owns numerous residential rental properties in Georgia that served
as her nest egg. McGinnis entrusted her son, Adam, with managing the properties.
1
“In a tort case in which the cause of action does not arise from product liability, if it is found
that the defendant acted, or failed to act, with the specific intent to cause harm . . . there shall be
no limitation regarding the amount which may be awarded as punitive damages.” O.C.G.A. § 51-
12-5.1(f). “For any tort action not provided for by subsection . . . (f) of this Code section in
which the trier of fact has determined that punitive damages are to be awarded, the amount
which may be awarded in the case shall be limited to a maximum of $250,000.00.” Id. § 51-12-
5.1(g).
2
Case: 17-11494 Date Filed: 08/22/2018 Page: 3 of 21
McGinnis refinanced seven of her properties with Taylor, Bean & Whitaker
(“TB&W”), granting security deeds and promissory notes to TB&W. Her monthly
payment to TB&W for one such rental property, located at 172 Hilton Street, was
$605.58, including $490.13 for principal and interest and $115.45 for the escrow
deposit. On October 17, 2009, Homeward obtained the rights to service
McGinnis’s seven loans. Homeward sent McGinnis a welcome letter that said
McGinnis’s payment on 172 Hilton Street for November 2009 was $843.58
without explaining the basis for the increase. McGinnis disputed the increase and
paid $605.58 for November. In December 2009, Homeward sent McGinnis an
escrow analysis showing a present payment of $843.58, including $490.13 for
principal and interest and $353.45 for the escrow deposit. No explanation was
given for the high percentage increase in the escrow deposit portion of the
payment. The statement described McGinnis’s new monthly payment beginning
February 1, 2010 as $680.08. McGinnis sent a fax to Homeward asserting that the
escrow amounts were incorrect and continued paying $605.58.
On January 15, 2010, Homeward sent McGinnis a letter explaining that the
escrow analysis on her loan could have reflected an escrow error and directing her
to disregard the December analysis and continue making payments at the previous
amount. On February 20, 2010, Homeward sent a second escrow statement that
described McGinnis’s present payment as $843.59 through March 2010 and her
3
Case: 17-11494 Date Filed: 08/22/2018 Page: 4 of 21
new payment, effective April 1, 2010, as $638.32. Homeward treated the past
payments of $605.58 as partial, and held the funds in a suspense account until there
were enough funds to pay off the oldest past-due monthly payment. The interest
and late fees continued to mount and Homeward frequently contacted Adam and
Jane by phone and mail demanding payment. On May 19, 2010, McGinnis sent
Homeward a fax explaining that the correct payment for November 2009 through
March 2010 should have been $605.58 and providing her own escrow analysis,
which was identical to Homeward’s analysis with respect to payments after April
2010. The only difference was the $843.58 that McGinnis refused to pay for
November 2009 through March 2010 and associated late fees. Homeward failed to
explain or retract the $843.48 amount and the issues persisted throughout 2010.
McGinnis continued to pay $605.58 until January 2011 when she began paying the
$638.32.
From February through May 2011, Homeward returned McGinnis’s
payments. On March 22, 2011, Homeward sent a formal notice of foreclosure on
172 Hilton Street and finally foreclosed on July 7, 2011.2 At trial McGinnis
testified that the experience traumatized her. Her clinical psychologist, Dr. Andrew
Sappington, also testified that the events leading up to the foreclosure were a
2
Each loan was subject to a family rider providing that default on any one of the loans triggered
a default on the others. McGinnis v. Am. Home Mort. Servicing, Inc., 817 F.3d 1241, 1247 (11th
Cir. 2016). And Homeward’s conduct at issue here involved all seven properties. Id. at 1249.
4
Case: 17-11494 Date Filed: 08/22/2018 Page: 5 of 21
“major cause of . . . depression” for McGinnis as well as of physical symptoms that
included projectile vomiting. McGinnis, who is retired and relies on her rental
properties as her income, described the effect of the foreclosure: “I am too old to
start over. They have taken my life away from me.” McGinnis also presented at
trial a letter that Adam had sent a fax to Homeward on December 17, 2009
describing the “und[ue] stress” Homeward’s constant demands had caused him and
his mother. At trial, McGinnis also presented recordings of phone conversations
with Homeward in which Adam mentioned his and his mother’s frustration with
Homeward’s repeated demands for payment and refusal to explain the increase.
Homeward’s only witness, a default case manager at Homeward, insisted that
McGinnis was obligated to pay any amount Homeward demanded whether
reasonable or in error.
II. PROCEDURAL HISTORY
McGinnis filed suit against Homeward in the United States District Court for
the Middle District of Georgia asserting claims of (1) wrongful foreclosure, (2)
violation of the Real Estate Settlement Procedures Act (“RESPA”), (3) intentional
infliction of emotional distress (“IIED”), (4) conversion, (5) tortious interference
with property rights, (6) defamation, and (7) violation of Georgia’s Racketeer
Influenced and Corrupt Organizations (“RICO”) Act. McGinnis sought attorney’s
fees and punitive damages. After discovery, Homeward moved for summary
5
Case: 17-11494 Date Filed: 08/22/2018 Page: 6 of 21
judgment. The district court granted summary judgment for Homeward on the
RESPA, defamation, and Georgia RICO Act claims.
The case then proceeded to trial, which was bifurcated into two phases: one
phase on liability and the other on punitive damages and attorney’s fees. At the end
of McGinnis’s case on liability, Homeward moved for judgment as a matter of law
pursuant to Federal Rule of Civil Procedure 50(a), which the district court denied.
By special verdict, the jury found for McGinnis on all of her remaining
claims—conversion, wrongful foreclosure, interference with property rights, and
IIED. The jury awarded McGinnis $6,000 in economic damages and $500,000 in
emotional distress damages. In the second phase of the trial, McGinnis withdrew
her claim for attorney’s fees, and the jury found that Homeward acted with the
specific intent to cause McGinnis harm and awarded $3,000,000 in punitive
damages.
After trial, Homeward filed a renewed motion for judgment as a matter of
law pursuant to Federal Rule of Civil Procedure 50(b), and in the alternative, for a
new trial on the issue of punitive damages. The district court granted in part the
renewed judgment as a matter of law and reduced the punitive damages award to
the statutory cap of $250,000 pursuant to O.C.G.A. § 51-12-5.1(g), finding that
there was insufficient evidence Homeward acted with specific intent to cause
6
Case: 17-11494 Date Filed: 08/22/2018 Page: 7 of 21
harm. 3 On appeal regarding Homeward’s post-trial motions, we determined that
Homeward did not properly preserve the issue of specific intent with regard to
punitive damages in its Rule 50(a) motion, and was therefore precluded from
raising the argument in its Rule 50(b) motion. McGinnis, 817 F.3d at 1261–64.
Accordingly, we reversed the district court’s ruling that Homeward had preserved
the issue of specific intent and vacated the judgment that had reduced the jury’s
award to $250,000. Id. We remanded and instructed the district court to rule on the
motion for a new trial on the issue of punitive damages. Id. at 1264.
On remand, the district court denied Homeward’s motion for a new trial,
concluding that the punitive damages award was not unconstitutionally excessive
and that the jury’s finding of specific intent—a prerequisite to an award in excess
of Georgia’s $250,000 statutory cap—was not against the clear weight of the
evidence. Homeward filed the present appeal.
III. STANDARDS OF REVIEW
The district court’s “decision that the punitive damages award does not run
afoul of the federal Constitution . . . is subject to de novo review, though we ‘defer
to the District Court’s findings of fact unless they are clearly erroneous.’” Action
Marine, Inc. v. Cont’l Carbon Inc., 481 F.3d 1302, 1309 (11th Cir. 2007) (quoting
3
The district court did not conditionally rule on Homeward’s motion for a new trial on the issue
of punitive damages.
7
Case: 17-11494 Date Filed: 08/22/2018 Page: 8 of 21
Cooper Indus., Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 436, 440 n.14
(2001)).
“The district court’s denial of a motion for a new trial is reviewed for an
abuse of discretion.” Id. (citing Middlebrooks v. Hillcrest Foods, Inc., 256 F.3d
1241, 1247 (11th Cir. 2001)). “Deference to the district court is particularly
appropriate where a new trial is denied and the jury’s verdict is left undisturbed.”
Id. at 1309 (quoting Middlebrooks, 256 F.3d at 1247–48 (internal quotation marks
omitted)).
IV. DISCUSSION
This appeal raises two issues related to the jury’s punitive damages award:
(1) whether the award violates Homeward’s due process rights because it is grossly
excessive; and (2) whether the district court abused its discretion when it
concluded Homeward is not entitled to a new trial on the basis that there was
insufficient evidence Homeward acted with specific intent to harm.
A. The Punitive Damages Award Is Not Unconstitutionally Excessive.
Homeward argues that the jury’s punitive damages award is excessive in
violation of due process. The Supreme Court has said that a punitive damages
award violates due process when it is “grossly excessive” in relation to the State’s
interest in punishment and deterrence. BMW of N. Am., Inc. v. Gore, 517 U.S. 559,
568 (1996). The Supreme Court has instructed courts to consider three guideposts
8
Case: 17-11494 Date Filed: 08/22/2018 Page: 9 of 21
when determining whether an award violates due process: (1) the degree of
reprehensibility of the defendant’s misconduct; (2) the ratio between the actual or
potential harm suffered by the plaintiff and the punitive damages award; and (3)
the difference between the punitive damages awarded by the jury and the civil
penalties authorized or imposed in comparable cases. Id. at 575–83. The district
court concluded that under those factors the award in this case is not
unconstitutionally excessive. We agree and address each factor in turn.
The reprehensibility of the defendant’s conduct is the “dominant
consideration” in assessing whether a jury’s punitive damages award is excessive.
Goldsmith v. Bagby Elevator Co., Inc., 513 F.3d 1261, 1283 (11th Cir. 2008). To
determine reprehensibility, the Supreme Court has instructed courts to consider
several sub-factors: (1) whether the harm caused was physical or economic; (2)
whether the conduct evinced an indifference to or reckless disregard of the health
or safety of others; (3) whether the target of the conduct was financially
vulnerable; (4) whether the conduct involved repeated actions rather than an
isolated event; and (5) whether the conduct involved intentional malice, trickery, or
deceit rather than mere accident. State Farm Mut. Auto. Ins. Co. v. Campbell, 538
U.S. 408, 419 (2003) (citing Gore, 517 U.S. at 576–77).
On the first Gore guidepost, we find a high degree of reprehensibility in
Homeward’s conduct based on the relevant sub-factors. First, Homeward’s conduct
9
Case: 17-11494 Date Filed: 08/22/2018 Page: 10 of 21
caused McGinnis physical and emotional harm in addition to economic harm.
McGinnis’s psychologist testified that the events leading up to the foreclosure were
a major cause of her depression as well as her physical symptoms, including
projectile vomiting. Second, Homeward’s conduct evinces an indifference to
McGinnis’s health. Adam informed Homeward in writing that its actions were
causing both of them “und[ue] stress.” Further, “the sheer volume of adversarial
communications . . . and looming threats of foreclosure” that Homeward
repeatedly offered reflect that Homeward almost certainly knew its conduct was
causing McGinnis emotional harm. McGinnis v. Am. Home Mort. Servicing, Inc.,
240 F. Supp. 3d 1337, 1352 (M.D. Ga. 2017).
Third, Homeward knew that McGinnis was financially vulnerable. The
seven properties at issue in the foreclosure represented McGinnis’s “livelihood, her
nest egg, her security, her life’s work, and a representation of her character in the
community.” McGinnis, 817 F.3d at 1259. And in the numerous communications
with Jane and Adam, “Homeward almost certainly learned the stakes involved with
the foreclosure, and yet it never looked back.” Id.
Fourth, Homeward’s conduct involved repeated actions rather than an
isolated event. Adam “repeatedly notified Homeward of errors in the handling of
[the] account and attempted to resolve the errors in good faith.” Id. Each time,
however, Homeward refused to correct its error or justify the increase. Moreover,
10
Case: 17-11494 Date Filed: 08/22/2018 Page: 11 of 21
“Homeward’s agents frequently” contacted McGinnis and Adam “by phone and
mail” such that according to Adam, Homeward’s demands became “a constant
fixture of their lives.” Id. at 1258. Indeed, the correspondence was so extensive that
the collection letters stacked together reached five feet high. Id. Homeward also
began placing each of McGinnis’s monthly payments into a suspense account from
which it “deducted, as its own income, late fees and other expenses,” McGinnis,
240 F. Supp. 3d at 1351, numerous times over the course of five months,
McGinnis, 817 F.3d at 1248, which, as noted below, facilitated the collection of
more monies to which it was not entitled.
Fifth, Homeward’s conduct went well beyond a calculation error. As we
previously noted, Homeward’s failure to explain, even at trial, how it arrived at the
payment amount “speaks volumes” about its conduct. McGinnis, 817 F.3d at 1257.
Homeward had numerous opportunities to correct any error but failed to do so each
time. And when Adam and Jane reached out for help Homeward responded “with
indifference, obstinacy, and, at times, belligerence.” McGinnis, 240 F. Supp. 3d at
1350. Homeward also repeatedly contacted Jane and Adam to demand payment of
an amount to which it knew it was not entitled. McGinnis, 817 F.3d at 1258.
Indeed, “we [found] Homeward’s awareness of its error rendered its opaqueness,
unresponsiveness, and belligerence—in pursuing foreclosure in a fairly short
11
Case: 17-11494 Date Filed: 08/22/2018 Page: 12 of 21
amount of time for a relatively small amount of money—extreme and outrageous
as a matter of law.” Id. at 1259. Such conduct is more than mere accident.
Homeward’s use of the suspense account also involved intentional malice,
trickery, or deceit. Homeward’s placement of McGinnis’s monthly payments in a
suspense account, rather than crediting those payments to her account, allowed it to
collect fees and expenses that Homeward knew McGinnis did not owe. McGinnis,
240 F. Supp. 3d at 1351. The jury determined that such conduct amounted to
unlawful conversion—an intentional tort. Id. That is no surprise. Homeward knew
that it had increased McGinnis’s monthly payment beyond what was owed because
McGinnis repeatedly pointed out the error. Id. Therefore, Homeward knew that the
fees and expenses it deducted from the suspense account were not in fact due but
deducted them anyway. Id. And Homeward knew that the suspense account would
pressure McGinnis to pay the disputed amount in order to stop the deduction of
late fees or to avoid foreclosure. Id. Thus, each of the State Farm sub-factors
supports the conclusion that Homeward’s conduct was highly reprehensible.
Turning to the second Gore guidepost, we consider whether the ratio of
punitive damages to compensatory damages awarded by the jury in this case—
5.9:1—is unconstitutionally excessive. We conclude that it is not. As an initial
matter, the Supreme Court has approved of “single-digit multipliers” as “more
likely to comport with due process, while still achieving the State’s goals of
12
Case: 17-11494 Date Filed: 08/22/2018 Page: 13 of 21
deterrence and retribution, than awards with [higher] ratios.” State Farm, 538 U.S.
at 425.
Homeward argues that even a single-digit ratio award offends due process in
this case because of McGinnis’s substantial recovery of other damages. Homeward
relies on dicta in State Farm suggesting that “[w]hen compensatory damages are
substantial, then a lesser ratio, perhaps only equal to compensatory damages, can
reach the outermost limit of the due process guarantee.” Id. However, in that same
discussion the Supreme Court made clear that its suggested ratios were intended to
be “instructive” and that “[t]he precise award in any case . . . must be based upon
the facts and circumstances of the defendant’s conduct and the harm to the
plaintiff.” Id. Further, we have upheld ratios substantially greater than 1:1 in cases
with large compensatory damages awards. In Action Marine, we upheld a punitive
damages award of $17.5 million despite a sizeable $3.2 million compensatory
damages award (a ratio of nearly 5.5:1) where the defendant’s conduct was
“exceedingly reprehensible.” 481 F.3d at 1321. Similarly, in Goldsmith, we upheld
a ratio of 9.2:1 on the basis of particularly reprehensible behavior after the jury
awarded $54,321 in compensatory damages. 513 F.3d at 1283. And in Bogle v.
McClure, 332 F.3d 1347, 1362 (11th Cir. 2003), we upheld a punitive damages
award of $2,000,000 where the plaintiff recovered $500,000 in compensatory
damages, a ratio of 4:1.
13
Case: 17-11494 Date Filed: 08/22/2018 Page: 14 of 21
Homeward argues that we must discount emotional distress damages when
conducting the ratio analysis, but our case law has held otherwise. In Bogle, we
upheld a substantial punitive damages award of $2,000,000 even though the
$500,000 in compensatory damages award was based entirely on emotional
distress. Id. at 1359, 1362. Similarly, in Goldsmith, we made no distinction
between economic and emotional distress damages when upholding a punitive
damages award of $500,000 based on a $54,321 award, half of which consisted of
damages for emotional distress. 513 F.3d at 1275, 1283. Further, Homeward’s
assertion that the damages for emotional distress contained a punitive element in
this case is unfounded because the trial court instructed the jury to base its
compensatory damages award only on its determination of the appropriate amount
to compensate McGinnis for her injury.
The final Gore guidepost we must consider is the amount of civil penalties
authorized or imposed in comparable cases. Homeward asks us to compare the
punitive damages award to the civil penalties available under RESPA for failure to
provide an escrow analysis.4 However, Homeward has failed to identify any
4
This provision of RESPA provides: “In the case of each failure to submit a statement to a
borrower as required under subsection (c) of this section, the Secretary shall assess to the lender
or escrow servicer failing to submit the statement a civil penalty of $50 for each such failure, but
the total amount imposed on such lender or escrow servicer for all such failures during any 12-
month period referred to in subsection (b) of this section may not exceed $100,000.” 12 U.S.C. §
2609(d)(1). Intentional violations carry a $100 penalty and the $100,000 cap does not apply. Id.
§ 2609(d)(2).
14
Case: 17-11494 Date Filed: 08/22/2018 Page: 15 of 21
similar cases in which RESPA penalties were actually applied. And, in any event,
RESPA provides little if any guidance in this case because Homeward’s conduct
involved far more than failing to provide escrow statements. Homeward refused to
justify or correct the payment increase and repeatedly demanded payments to
which it knew it was not entitled through numerous phone calls and collection
letters. At the same time, Homeward used a suspense account to “deduct[], as its
own income,” even more in late fees and expenses that it was aware were based on
an unreasonable increase in McGinnis’s monthly payments. McGinnis, 240 F.
Supp. 3d at 1351.
In sum, after considering all of the Gore factors, we conclude that the jury’s
punitive damages award is not grossly excessive in relation to the State’s
legitimate interest in deterring Homeward’s conduct, and therefore, does not
violate the due process rights of Homeward.
B. The District Court Did Not Abuse Its Discretion by Concluding the Jury’s
Finding of Specific Intent Was Not against the Weight of Evidence.
We review the district court’s decision to deny a new trial for abuse of
discretion. 5 Rule 59 of the Federal Rules of Civil Procedure6 allows a district court
5
McGinnis argues that Homeward lost its right to challenge the jury’s finding of specific intent
under Rule 59 because it failed to make that argument under Rule 50. We disagree. This Court
instructed the district court on remand to consider “Homeward’s Rule 59 motion for a new trial
on the issue of punitive damages.” McGinnis, 817 F.3d at 1264. And although a movant cannot
use Rule 59 to press matters that could have been pressed earlier, Michael Linet, Inc. v. Village
of Wellington, Fla., 408 F.3d 757, 763 (11th Cir. 2005), Rule 50 motions “are not prerequisites
15
Case: 17-11494 Date Filed: 08/22/2018 Page: 16 of 21
to order a new trial if it determines that that the jury’s verdict is against the weight
of the evidence presented at trial. Montgomery Ward & Co. v. Duncan, 311 U.S.
243, 251 (1940); Hewitt v. B.F. Goodrich Co., 732 F.2d 1554, 1556 (11th Cir.
1984).
Homeward argues that the punitive damages award unlawfully exceeded the
$250,000 statutory cap in O.C.G.A. § 51-12-5.1(g) because there was no evidence
from which a jury could conclude that it acted with the specific intent to harm
McGinnis. Georgia law caps punitive damages at $250,000 unless “it is found that
the defendant acted, or failed to act, with the specific intent to cause harm,” in
which case there is no statutory limitation. O.C.G.A. § 51-12-5.1(f), (g). Specific
intent to cause harm exists where an actor desires to cause the harm resulting from
his or her actions or believes that the resulting harm is substantially certain to
result from his or her actions. Action Marine, 481 F.3d at 1313.7 In other words,
specific intent can be established by showing that the actor engaged in a course of
conduct even though he or she believed the conduct was almost certain to cause
to a motion for a new trial,” Urti v. Transp. Commercial Corp., 479 F.2d 766, 769 (5th Cir.
1973). Here, Homeward’s argument that the jury’s finding of specific intent is against the weight
of the evidence could not have been made until after the jury reached a verdict.
6
“The court may, on motion, grant a new trial on all or some of the issues—and to any party—as
follows: . . . after a jury trial, for any reason for which a new trial has heretofore been granted in
an action at law in federal court.” Fed. R. Civ. P. 59.
7
The district court in the instant case gave the jury an instruction on the definition of specific
intent nearly identical to the definition used by the Action Marine court. See Action Marine, 481
F.3d at 1313. Because Homeward did not object to that instruction it cannot now argue that more
is required to establish specific intent. See id.
16
Case: 17-11494 Date Filed: 08/22/2018 Page: 17 of 21
harm. McGinnis, 240 F. Supp. 3d at 1349.8 The district court determined that it
was not against the weight of the evidence for the jury to conclude that Homeward
knew its conduct was substantially certain to cause McGinnis emotional harm from
four pieces of evidence: Homeward’s awareness of its error and refusal to retract
its demands, Homeward’s use of the suspense account, Homeward’s knowledge of
the emotional harm suffered by McGinnis, and Homeward’s offer to avoid
foreclosure. We agree.
First, the jury’s finding of specific intent was supported by evidence
showing Homeward knew its escrow analysis was in error yet proceeded to
demand payment repeatedly without explanation and then foreclose on McGinnis’s
property. See DeGolyer v. Green Tree Servicing, LLC, 291 Ga. App. 444, 450, 662
S.E.2d 141, 148 (2008) (concluding that proceeding to foreclosure based on a
known calculation error could constitute extreme or outrageous conduct supporting
a claim for IIED). At trial, McGinnis presented evidence that she and Adam
repeatedly made good-faith attempts to inform Homeward of its escrow calculation
error. McGinnis, 817 F.3d at 1259. Undeterred, Homeward continued to demand
payment of the unexplained amount, collect unwarranted late fees, and proceed to
8
Homeward argues that an intentional tort is not the same as specific intent. That is correct. But
as the district court explained, specific intent does not only mean having the desire to cause harm
but also “engag[ing] in a course of conduct despite knowing that it would almost certainly” cause
harm. McGinnis, 240 F. Supp. 3d at 1349. It is the latter meaning of specific intent that the
district court determined, and we agree, a jury could find supported by the evidence here.
17
Case: 17-11494 Date Filed: 08/22/2018 Page: 18 of 21
foreclosure without ever justifying the increase. And, even at trial, Homeward
failed to produce any justification for the increase and insisted that McGinnis was
required to pay any amount Homeward demanded. McGinnis, 817 F.3d at 1259.
Second, Homeward’s use of the suspense account could support the jury’s
finding of specific intent. The evidence at trial showed that once McGinnis refused
to pay the unexplained increase, Homeward began putting her payments in a
suspense account from which it “deducted, as its own income, late fees and other
expenses.” McGinnis, 240 F. Supp. 3d at 1351. Further, “according to the evidence,
Homeward was, while collecting these fees, also aware that it had increased
McGinnis’s monthly escrow payment by more than 300 percent,” id., and as a
consequence, that the fees and penalties were not in fact owed. Therefore, “the jury
could have considered Homeward’s use of the suspense account as evidence of
specific intent to harm” McGinnis by forcing her “to pay amounts in excess of
what she owed, by requiring her to pay penalties and fees . . . or by decreasing the
likelihood that she would be able to cure the default and avoid foreclosure.” Id.
Third, a jury could infer from the evidence that Homeward knew its conduct
was substantially certain to cause McGinnis emotional harm. The evidence showed
that Adam explained to Homeward in writing that its conduct was causing him and
Jane “und[ue] stress” and mentioned over the phone the frustration caused by
Homeward’s conduct. In addition, as the district court explained, a jury could infer
18
Case: 17-11494 Date Filed: 08/22/2018 Page: 19 of 21
that Homeward knew its conduct was substantially certain to cause emotional
distress from “the sheer volume of adversarial communications . . . and looming
threats of foreclosure.” McGinnis, 240 F. Supp. 3d at 1352. We explained similarly
in the prior appeal in this case that “Homeward almost certainly learned the stakes
involved with the foreclosure,” including McGinnis’s livelihood and reputation in
the community. McGinnis, 817 F.3d at 1259. Accordingly, the jury’s finding of
specific intent was supported by evidence that Homeward knew its conduct was
almost certain to cause McGinnis emotional harm. 9
Finally, the district court did not abuse its discretion by concluding that
Homeward’s offer to let McGinnis bring her account current and avoid foreclosure
was not contrary to the jury’s finding of specific intent. Although McGinnis could
have avoided foreclosure, she “would have had to give in to all of Homeward's
existing demands,” including by paying the unexplained monthly payment amount
as well as all of the late fees and penalties. McGinnis, 240 F. Supp. 3d at 1352. In
other words, she would have suffered the same harm even if she brought the
account current. Therefore, Homeward’s offer to allow McGinnis to bring the
9
Homeward argues that because it directed most of its correspondence to Adam, it could not
have known its conduct was causing Jane emotional harm. We are unpersuaded. Jane was
present on at least some of the phone calls between Adam and Homeward (and certainly should
be expected to be aware of correspondence regarding her property, even if addressed to Adam).
Adam also informed Homeward that the correspondence was causing both of them “und[ue]
stress.” Moreover, it is hard to see how Homeward could believe that Adam, as Jane’s agent, was
not telling her everything that was happening.
19
Case: 17-11494 Date Filed: 08/22/2018 Page: 20 of 21
account current does not contradict the jury’s finding that Homeward knew its
conduct was substantially certain to cause McGinnis harm regardless of whether
she brought the account current. In sum, we conclude that the district court did not
abuse its discretion by determining that the jury’s finding of specific intent was not
against the weight of evidence.
Homeward also argues that upholding the district court’s decision not to
reverse the jury’s award in the instant case would make a substantial punitive
damages award available in every foreclosure action wrongful or not. We disagree.
Homeward’s conduct went well beyond ordinary threats to foreclose. McGinnis
repeatedly attempted to notify Homeward of the error in its billing, but Homeward
never retracted or justified its demands. In fact, it continued to demand that
McGinnis make the increased payments even at trial where Homeward’s only
witness maintained that McGinnis was obligated to pay any amount Homeward
demanded whether reasonable or in error. Adam testified that Homeward’s
demands had “become a constant fixture of [Jane and Adam’s] lives and resulted in
a stack of collection letters that would reach five feet high. McGinnis, 817 F.3d at
1258. Homeward continued to send those demands and threaten foreclosure even
though it knew that those demands were unreasonable and that its actions were
causing McGinnis harm. At the same time, Homeward used a suspense account to
20
Case: 17-11494 Date Filed: 08/22/2018 Page: 21 of 21
collect even more money to which it was not entitled by way of fees and expenses.
The egregious actions in this case were not typical.
V. CONCLUSION
The judgment of the district court is AFFIRMED.
21