Estate of Dr. John Ellis, Jr. v. American Advisors Group, Inc.

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[DO NOT PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 21-13270
Non-Argument Calendar
____________________
ESTATE OF DR. JOHN ELLIS, JR.,
THE JDE TRUST BY MARK J. PODLIN,
Attorney at Law, P.C., as Executor and Trustee,
Plaintiffs-Appellants,
versus
AMERICAN ADVISORS GROUP, INC.,
a California Corporation,
MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.,
a Delaware Corporation,
Defendants-Appellees.
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2 Opinion of the Court 21-13270
____________________
Appeal from the United States District Court
for the Southern District of Georgia
D.C. Docket No. 2:18-cv-00070-LGW-BWC
____________________
Before WILSON, LUCK, and ANDERSON, Circuit Judges.
PER CURIAM:
John Ellis got a reverse mortgage from American Advisors
Group, Inc. When he died, his Estate sued American Advisors
Group for state law violations. The district court dismissed most
of the counts for failure to state a claim, and later granted summary
judgment on the remaining two counts to American Advisors
Group. The Estate appeals. We affirm.
FACTUAL BACKGROUND
From 1995 until his death twenty years later, Ellis owned a
house on Saint Simons Island, Georgia. On October 1, 2014, he
took out a reverse mortgage on the house, signing a security deed
for the loan. Paragraph 10 of the security deed provided: “[the
l]ender may require immediate payment in full of all sums secured
by [the deed] if a [b]orrower dies and the [p]roperty is not the
[p]rincipal [r]esidence of at least one surviving [b]orrower.” The
deed also provided: “[i]f [the l]ender requires immediate payment-
in-full under [p]aragraph 10, [the l]ender may invoke the power of
sale granted by [the b]orrower and any other remedies permitted
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by applicable law.” At the time of the loan, the house was ap-
praised at $1,160,000.00.
Ellis died on June 26, 2015. “[A]bout a week” later, the Es-
tate called American Advisors Group and said that Ellis had died.
An unidentified woman who “was the person to talk to about” the
subject told the Estate: “just let us know formally within the first
six months after the date of [Ellis’s] death that he’s died, and pro-
vided you are actively marketing the property for sale, we’ll give
you two more [ninety]-day periods to sell it so that you’ll have one
year from the date of his death to sell the property before we would
begin to initiate the process of starting a foreclosure.”
In November 2015, the Estate received an “annual occu-
pancy request form.” The form asked whether Ellis was still occu-
pying the house, because his occupancy was a condition of the re-
verse mortgage. On December 1, 2015, the Estate put the house
up for sale for $1,499,000.00. Nine days later, the Estate sent a letter
to American Advisors Group letting it know that Ellis had died.
This letter also said that Ellis’s personal property had been sold, the
house had been marketed for sale, taxes and insurance for the
house had been paid for the next year, the house’s interior and ex-
terior had been repainted in full, all the carpeting had been re-
placed, and the roof was being repaired. The same day, the Estate
spoke with a representative of American Advisors Group over the
telephone. The representative, a “Tamika,” said that given the no-
tice of Ellis’s death, the Estate “would be given two additional
three[-]month periods up until one year following the death.” In
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follow-up phone calls, other unidentified representatives of Amer-
ican Advisors Group confirmed that the Estate “would have until
one year after the death” to sell the house before American Advi-
sors Group would begin foreclosure.
On December 11, 2015, the Estate sent American Advisors
Group another letter (addressed to Tamika), along with Ellis’s
death certificate and related legal papers. This letter mentioned the
call with Tamika, the sale of Ellis’s personal property, the repaint-
ing of the house, the recarpeting of all carpeted rooms, the sanding
and refinishing of the wood floor, and ongoing roof repairs and
landscaping improvements. The letter concluded: “[w]e expect
[Ellis’s] house to sell quickly because [it] is located approximately
[one hundred] yards from the St. Simons Island beach, and is now,
because of our recently completed work on it, in excellent new-
looking condition, and has a magnificent roof deck the entire
length of the house which provides excellent views of the beach
and nearby Jekyll Island across the ocean.”
On December 22, 2015, American Advisors Group sent to
the Estate, through certified mail, a letter entitled “Mortgage Due
[and] Payable Notification.” This letter stated that “[t]he reverse
mortgage . . . [wa]s technically in default due to the death of the
borrower,” and “[i]f the debt [wa]s not paid-in-full, or the property
[wa]s not sold within [thirty] days,” American Advisors Group was
“required to initiate foreclosure proceedings.” Even after the filing
of the foreclosure action, said the letter, the Estate could “still pay
all monies due” to stop it. The Estate never received the letter.
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American Advisors Group got an extension from the United
States Department of Housing and Urban Development (which
regulates reverse mortgages) such that the Estate had until
March 9, 2016 to sell the house. In exchange for the extension, the
Estate had to provide monthly updates about its efforts to market
and sell the house. According to American Advisors Group’s notes
for Ellis’s loan account, representatives told the Estate on Decem-
ber 10 and 15, 2015 that American Advisors Group needed monthly
updates. But the Estate denied ever being told to provide monthly
updates. On January 4, 2016, the Estate provided an update. Be-
tween then and the end of the extension period on March 9, the
Estate didn’t provide any other updates.
After March 9, 2016, American Advisors Group began pro-
ceedings to foreclose on the house. In a letter dated March 11, it
told the Estate that it was seeking to foreclose. On March 13, the
Estate lowered the listing price from $1,499,000.00 to $1,179,000.00
“to sell [the house] quickly.” On March 19, a local newspaper pub-
lished a foreclosure notice for the house stating that American Ad-
visors Group was the holder of the security deed and that the debt
secured by the deed was “due because of . . . failure to pay the in-
debtedness as and when due and in the manner provided in the
[n]ote and [s]ecurity [d]eed.” After receiving the March 11 letter,
the Estate asked for—and received—more time to sell the house.
On April 2, 2016, the Estate received its first written offer on
the house. The offer was for $1,000,000.00. The buyers acknowl-
edged that the Estate “recently lowered the price” (to
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$1,179,000.00), but explained that they felt “comfortable with”
their offer ($179,000.00 less than that) because the house required
“extensive updates.” After negotiations, the buyers bought the
house for $1,145,000.00 on June 10, 2016. The Estate paid the re-
verse mortgage debt in full on June 22, and American Advisors
Group released the lien on the house and ended the foreclosure
process.
Shortly after the foreclosure process stopped, representative
Brandi O’Bryant from American Advisors Group called the Estate
to confirm receipt in December 2015 of the notifications about El-
lis’s death and the marketing of the house for sale and to apologize
for mistakenly initiating foreclosure. She said: “I’m sorry. We just
screwed up. We made a mistake. It’s our fault. There was no
default. You did everything you were supposed to do. The depart-
ment that received your letter in December was partying over
Christmas and with all the Christmas partying and festivities, they
just never got the message to the foreclosure department that they
had received the letter from you and that we shouldn’t start fore-
closure.” The Estate told Ms. O’Bryant that the improper foreclo-
sure had hurt it because real estate agents wouldn’t show a house
in foreclosure and they advised their clients to “wait until after fore-
closure” to “buy [the house] for a bargain price.”
PROCEDURAL HISTORY
The Estate brought nine counts against American Advisors
Group, five of which are on appeal: (one) promissory estoppel;
(two) wrongful attempted foreclosure; (three) negligence (because
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American Advisors Group didn’t tell its foreclosure department not
to foreclose on the house); (four) negligence (in commencing
wrongful attempted foreclosure); and (seven) elder abuse in breach
of a private duty.1 American Advisors Group moved to dismiss for
failure to state a claim. The district court granted the motion in
part, dismissing all counts except one and two for promissory es-
toppel and wrongful attempted foreclosure.
The district court dismissed counts three and four—for neg-
ligence—because the alleged negligence arose from a contract
without an independent duty in tort, and it dismissed count eight
because the count made liability arguments without stating a cause
of action. Count seven failed, the district court explained, because
American Advisors Group’s purported misconduct wasn’t elder
abuse under the Disabled Adults and Elder Persons Protection Act,
O.C.G.A. section 30-5-1 et seq., and because the statute that sup-
posedly allowed the Estate to bring a claim under the Act,
O.C.G.A. section 51-1-8, didn’t create an independent cause of ac-
tion.
After taking discovery, American Advisors Group moved for
summary judgment on counts one and two. The district court
granted the motion. As to count one, the district court explained
that it was unreasonable for the Estate to rely on unwritten prom-
ises by unidentified representatives about possible extensions for
1
The Estate does not appeal the dismissal of its other counts, so we don’t ad-
dress them in our discussion.
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paying off the reverse mortgage. Count two failed, said the district
court, because the record didn’t support that American Advisors
Group knowingly published untrue information about the reverse
mortgage.
STANDARD OF REVIEW
We review de novo a dismissal for failure to state a claim.
Cinotto v. Delta Air Lines, Inc., 674 F.3d 1285, 1291 (11th Cir.
2012). We accept the well-pleaded factual allegations as true and
construe them in the light most favorable to the plaintiff. Id. To
avoid dismissal, “a complaint must plead enough facts to state a
claim to relief that is plausible on its face.” Cavalieri v. Avior Air-
lines C.A., 25 F.4th 843, 847–48 (11th Cir. 2022) (cleaned up). A
claim is plausible on its face “when the plaintiff pleads factual con-
tent that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Id. at 848 (quoting
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
We also review de novo a grant of summary judgment.
Ginsburg v. United States, 17 F.4th 78, 83 (11th Cir. 2021). We
“view[] the facts and draw[] all reasonable inferences in the light
most favorable to the non-moving party.” Id. “Summary judg-
ment is appropriate if there is no genuine dispute of material fact
and the moving party is entitled to judgment as a matter of law.”
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DISCUSSION
We address the counts dismissed for failure to state a
claim—negligence and elder abuse—before turning to the counts
on which summary judgment was granted—promissory estoppel
and wrongful attempted foreclosure.
Negligence
The Estate contends that the district court erred in dismiss-
ing its negligence counts because American Advisors Group “had a
duty—whether that duty was created by virtue of a contractual
duty created by (a) [f]ederal [s]tatute, (b) the doctrine of promissory
estoppel, or (c) by a duty of care under tort law”—and “clearly
breached its duty.” American Advisors Group representatives, the
Estate says, “had a legal duty to notify their own foreclosure de-
partment to halt any wrongful foreclosure not authorized by
[r]everse [m]ortgage [s]tatutes and [r]egulations.” And, argues the
Estate, American Advisors Group “breached its contractual duty
under [r]everse [m]ortgage [r]egulations when it falsely reported in
the Brunswick News to the public that the borrower was in default,
when it was not,” and “was negligent in not properly verifying and
confirming that it was legally appropriate . . . to begin such a seri-
ous act as the foreclosure of a [s]ecurity [d]eed.”
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The general rule2 in Georgia is that “a contracting party who
suffers purely economic losses must seek his remedy in contract
and not in tort.” GE v. Lowe’s Home Ctrs., Inc., 608 S.E.2d 636,
637 (Ga. 2005). “The four elements of a tort cause of action” like
negligence “are a duty, a breach of that duty, causation, and dam-
ages.” Wallace v. State Farm Fire & Cas. Co., 539 S.E.2d 509, 512
n.7 (Ga. Ct. App. 2000) (cleaned up). “A defendant’s mere negli-
gent performance of a contractual duty does not create a tort cause
of action”; the plaintiff may sue in tort only if the defendant also
breached a duty independent of the contract. Id. at 512. Cf.
Flintkote Co. v. Dravo Corp., 678 F.2d 942, 948 (11th Cir. 1982)
(“The economic loss rule prevents recovery in tort when a defec-
tive product has resulted in the loss of the value or use of the thing
sold, or the cost of repairing it. Under such circumstances, the duty
breached is generally a contractual one and the plaintiff is merely
suing for the benefit of his bargain.”).
The security deed was a contract. See Wilson v. Mountain
Valley Cmty. Bank, 759 S.E.2d 921, 924 (Ga. Ct. App. 2014) (“A se-
curity deed which includes a power of sale is a contract and its pro-
visions are controlling as to the rights of the parties thereto and
their privies.” (alteration adopted)). Thus, Ellis (represented by the
Estate) and American Advisors Group were contracting parties.
And when the Estate brought its promissory estoppel count, it sued
in contract. See Pepsi Cola Bottling Co. v. First Nat’l Bank, 281
2
The Estate doesn’t argue that an exception to the general rule applies.
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S.E.2d 579, 581 (Ga. 1981) (“The main purpose of contract law is
the realization of reasonable expectations induced by promises.
This court has previously held that [a] party may enter into a con-
tract invalid and unenforceable, and by reason of the covenants
therein contained and promises made in connection with the same,
wrongfully cause the opposite party to forego a valuable legal right
to his detriment, and in this manner by his conduct waive the right
to repudiate the contract and become estopped to deny the oppo-
site party any benefits that may accrue to him under the terms of
the agreement.” (quotations omitted)).
In the amended complaint, the Estate took the first listing
price ($1,499,000.00) as showing the house’s fair market value, sub-
tracted the selling price ($1,145,000.00), and came up with actual
damages of $354,000.00. Then, the Estate alleged that American
Advisors Group caused these damages—and only these damages—
when it breached its contract with (or broke its promises to) the
Estate, wrongfully attempted to foreclose on the house by publish-
ing that Ellis was in default when he wasn’t, negligently failed to
notify its foreclosure department not to foreclose on the house,
negligently breached its “duty not to speak or write untruthfully”
about Ellis’s financial condition, and “intentionally or negligently
breached [its] private duty to not advertise that it was beginning
foreclosure on the [house] when there was no default under the
[s]ecurity [d]eed.”
The Estate claimed that American Advisors Group improp-
erly performed on its contractual duties when it broke its
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representatives’ promises not to foreclose on the house until a year
after Ellis’s death. And it calculated the value of its contracted-for
benefit through the diminution in value of the house. It sued under
both contract and negligence theories to recover these damages.
But Georgia law limited it to contract claims. See GE, 608 S.E.2d
at 637.
The Estate’s arguments on appeal show that the contract
and negligence counts sought the same relief. The arguments also
imply that it doesn’t matter where American Advisors Group’s
duty came from, only that it had a duty, breached it, and caused
the Estate damages. But under Georgia law, it does matter where
the duty came from, because it matters whether the duty arose in-
dependently of the parties’ contractual arrangements. See Wal-
lace, 539 S.E.2d at 512. Because American Advisors Group alleg-
edly breached a duty in contract, the Estate cannot also sue in neg-
ligence for the damages caused by that breach. Thus, the district
court didn’t err in dismissing the negligence counts.
Elder Abuse
The Estate asserts that the district court erred in dismissing
its elder abuse count because O.C.G.A. section 51-1-8 allowed pri-
vate duties to arise from statute and the Disabled Adults and Elder
Persons Protection Act created a private duty not to abuse the el-
derly. The Estate also implies that American Advisors Group’s “re-
peated[] reassur[ances] . . . that the borrowing process [wa]s safe
and . . . specifically approved by the [f]ederal [g]overnment” cre-
ated “a special relationship” between the parties and “impos[ed]
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the special private duty to not abuse [Ellis] through reckless disre-
gard and mistake in starting the wrongful foreclosure on [his
house] after his death.”
Section 51-1-8 provides that “[p]rivate duties may arise from
statute or from relations created by contract, express or implied,”
and that “[t]he violation of a private duty, accompanied by damage,
shall give a right of action.” O.C.G.A. § 51-1-8. But the Georgia
Supreme Court has interpreted this statute as “merely set[ting]
forth general principles of tort law.” Reilly v. Alcan Aluminum
Corp., 528 S.E.2d 238, 240 (Ga. 2000); accord Reilly v. Alcan Alu-
minum Corp., 221 F.3d 1170, 1171 (11th Cir. 2000) (“The court re-
viewed the language of [sections] 51-1-8 and 51-1-6 and found that
the statutes . . . merely set out general principles of tort law.”);
Wells Fargo Bank, N.A. v. Jenkins, 744 S.E.2d 686, 688 (Ga. 2013)
(“A duty in this case cannot rest solely upon [section] 51-1-6 be-
cause this statute sets forth merely general principles of tort law.”).
The Disabled Adults and Elder Persons Protection Act aims
“to provide protective services for abused, neglected, or exploited
disabled adults and elder persons,” O.C.G.A. § 30-5-2, and to that
end requires certain persons to report a need for protective ser-
vices, id. § 30-5-4, and criminalizes the failure to report, id. § 30-5-
8. The Act also defines “[a]buse” as “the willful infliction of physi-
cal pain, physical injury, sexual abuse, mental anguish, unreasona-
ble confinement, or the willful deprivation of essential services to
a disabled adult or elder person.” Id. § 30-5-3(1).
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The Estate alleged that the improper early foreclosure on
the house amounted to elder abuse under the Act. The Estate at-
tempted to use section 51-1-8 to create a cause of action under the
Act. American Advisors Group, the Estate claimed, “had a duty to
not abuse” Ellis or the Estate and breached that duty when it “neg-
ligently or intentionally wrongfully attempt[ed] the foreclosure of
the [r]everse [m]ortgage.”
For two independently sufficient reasons, the district court
didn’t err in dismissing the elder abuse count. First, the foreclosure
didn’t amount to elder abuse under the Act. It did not involve “the
willful infliction of physical pain, physical injury, sexual abuse,
mental anguish, unreasonable confinement, or the willful depriva-
tion of essential services” to Ellis or the Estate. Id. And second,
section 51-1-8 cannot be used to create causes of action. See Reilly,
528 S.E.2d at 240.
Promissory Estoppel
The Estate argues that the district court erred in granting
summary judgment to American Advisors Group on the promis-
sory estoppel count because “it was entirely reasonable . . . to rely
upon” American Advisors Group employees’ unwritten confirma-
tions of Federal Housing Administration and Housing and Urban
Development policies “without a separate written confirmation.”
The Estate’s reliance was reasonable, it says, given the federal reg-
ulatory scheme for reverse mortgages.
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To prove promissory estoppel under Georgia law, a plaintiff
must show: “(1) the defendant made certain promises, (2) the de-
fendant should have expected that the plaintiffs would rely on such
promises, and (3) the plaintiffs did in fact rely on such promises to
their detriment.” Adkins v. Cagle Foods JV, L.L.C., 411 F.3d 1320,
1326 (11th Cir. 2005). The promises must concern “past or present
facts,” not the future. Id.; accord Reuben v. First Nat’l Bank, 247
S.E.2d 504, 507 (Ga. Ct. App. 1978) (“[E]stoppel applies to represen-
tations of past or present facts and not to promises concerning the
future . . . .”). Although the statute of frauds requires that “[a]ny
contract for sale of lands, or any interest in, or concerning lands”
“must be in writing” to be binding, O.C.G.A. § 13-5-30(a)(4),
“promissory estoppel allows enforcement of promises that would
otherwise be defeated by the statute of frauds.” Johnson v. Univ.
Health Servs., 161 F.3d 1334, 1340 (11th Cir. 1998). But “[p]romises
that do not conform to the statute of frauds . . . will often be equally
unenforceable under a promissory estoppel theory” because
“[p]romissory estoppel requires that reliance on the promise be rea-
sonable” and “[i]t usually is unreasonable to rely on a substantial
promise that has not been reduced to writing.” Id. (citing R.T. Pat-
terson Funeral Home v. Head, 451 S.E.2d 812, 817 (Ga. Ct. App.
1994), for “the general rule that there is no justifiable reliance upon
future promises which must be in writing to be enforceable”).
A week after Ellis’s death, when the Estate called American
Advisors Group to let it know informally about the death, an uni-
dentified representative said: “let us know formally within the first
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six months after the date of [Ellis’s] death that he’s died, and pro-
vided you are actively marketing the property for sale, we’ll give
you two more [ninety]-day periods to sell it so that you’ll have one
year from the date of his death to sell the property before we would
begin to initiate the process of starting a foreclosure.” About five
months later, a woman known only as “Tamika” said that the Es-
tate “would be given two additional three[-]month periods up until
one year following [Ellis’s] death.” And other unidentified repre-
sentatives later confirmed that the Estate “would have until one
year after the death” to sell the house before foreclosure.
These promises looked forward to a time when the Estate
would give formal notice, and used the future tense to discuss con-
ditional extensions. Because they concerned the future and not
“past or present facts,” promissory estoppel didn’t apply to them.
See Adkins, 411 F.3d at 1326. Even if it did, because these unwrit-
ten promises from unidentified employees were “for sale of lands,
or any interest in, or concerning lands,” O.C.G.A. § 13-5-30(a)(4),
they didn’t “conform to the statute of frauds,” and it was “unrea-
sonable” for the Estate “to rely on” them when they were “substan-
tial” and “ha[d] not been reduced to writing.” Johnson, 161 F.3d at
1340. Thus, the district court didn’t err in granting summary judg-
ment to American Advisors Group on the promissory estoppel
count.
Wrongful Attempted Foreclosure
Lastly, the Estate appeals the district court’s summary judg-
ment to American Advisors Group on the wrongful attempted
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foreclosure count, contending that the attempted foreclosure was
wrongful because the foreclosure notice in the local newspaper
“falsely stated” that Ellis was in default when, “according to the
[r]everse [m]ortgage [r]egulations,” he wasn’t. In the Estate’s view,
federal regulations—not the security deed—“control[led] when the
indebtedness [wa]s due,” and these regulations provided that “the
indebtedness [wa]s not actually due until one year after the death
of the borrower, provided the house [wa]s being marketed for
sale.”
“Under Georgia law, to recover damages for a wrongful at-
tempted foreclosure, the plaintiff must prove a knowing and inten-
tional publication of untrue and derogatory information concern-
ing the debtor’s financial condition, and that damages were sus-
tained as a direct result of this publication.” Bates v. JPMorgan
Chase Bank, NA, 768 F.3d 1126, 1134 (11th Cir. 2014) (cleaned up).
“Where the debt is secured by a security deed and note giving the
creditor the right and power to advertise and sell the security for
the payment of the balance due on the debt upon default of the
debtor, the creditor commits no libel or tortious act by exercising
the right granted in contract.” Aetna Fin. Co. v. Culpepper, 320
S.E.2d 228, 231–32 (Ga. Ct. App. 1984) (cleaned up); accord Wilson,
759 S.E.2d at 924 (“In exercising a power of sale, the foreclosing
party is required only to advertise and sell the property in accord-
ance with the terms of the instrument and to conduct the sale in
good faith.”).
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The foreclosure notice made clear that it based its infor-
mation about Ellis’s financial condition on the terms of the security
deed. It stated that “[t]he debt secured by [the] [s]ecurity [d]eed
ha[d] been and [wa]s . . . declared due because of . . . failure to pay
the indebtedness as and when due and in the manner provided in
the [n]ote and [s]ecurity [d]eed.” The security deed gave American
Advisors Group the right to “require immediate payment in full” if
Ellis died and there were no surviving borrowers, and it allowed
American Advisors Group, in exercising this right, to “invoke the
power of sale granted by [Ellis] and any other remedies permitted
by applicable law.” Ellis died and left no surviving borrowers, so
under the security deed, American Advisors Group could require
immediate payment in full and could foreclose on the house to get
it. The published information was thus not “untrue.” See Bates,
768 F.3d at 1134. The Estate was in default under the security deed.
The only evidence that the Estate wasn’t in default under
the security deed was Ms. O’Bryant’s statement that “[t]here was
no default.” Setting aside whether she was qualified to give this
opinion, Ms. O’Bryant’s statements do not support “a knowing and
intentional publication of untrue and derogatory information.”
See id. They establish that American Advisors Group’s publication
of any untrue information was not “knowing and intentional” but
merely mistaken—the result of interdepartmental miscommunica-
tion caused by “Christmas partying.” Because the evidence didn’t
support “a knowing and intentional publication of untrue and de-
rogatory information concerning [Ellis]’s financial condition,” see
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id., the district court didn’t err in granting summary judgment to
American Advisors Group on the wrongful attempted foreclosure
count.
CONCLUSION
The district court properly dismissed the negligence and el-
der abuse counts for failure to state a claim. And it properly
granted summary judgment to American Advisors Group on the
promissory estoppel and wrongful attempted foreclosure counts.
Thus, we affirm.
AFFIRMED.