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Stoudemire v. HSBC Bank USA, N.A.

Court of Appeals of Georgia

June 3, 2015


Reconsideration denied July 23, 2015 -- Cert. applied for.

Wrongful foreclosure. DeKalb Superior Court. Before Judge Jackson.

Richard S. Alembik, for appellants.

Baker, Donelson, Bearman, Caldwell & Berkowitz, Joshua N. Tropper, Dylan W. Howard, Daniel P. Moore, Jennifer L. Ervin, for appellee.

McFadden, Judge. Ellington, P. J., and Dillard, J., concur.


McFadden, Judge.

Derrick and Sonya Stoudemire filed an action against HSBC Bank USA, N.A. seeking to rescind an allegedly wrongful foreclosure and to quiet title. They based their complaint on the assertion that Wells Fargo's assignment of their security deed to HSBC was ineffective, so that HSBC did not have a valid interest in the security deed and thus did not have the legal right to foreclose. The trial court granted HSBC's motion to dismiss on the ground that the Stoudemires lacked standing to challenge the assignment of the security deed because they were not parties to the assignment. We agree and therefore affirm.

[333 Ga.App. 375] The Stoudemires signed a promissory note for $187,000 in favor of Wells Fargo and granted Wells Fargo by security deed an interest in their property. The security deed was recorded on September 27, 2005. On September 30, 2006, Wells Fargo assigned its

Page 484

interest in the security deed to HSBC. The assignment was recorded September 29, 2010. The Stoudemires defaulted on the loan. HSBC sold the property at foreclosure on October 5, 2010. The Stoudemires filed this action, alleging that HSBC lacked the authority to foreclose because the purported assignment from Wells Fargo to HSBC was void on its face.

The Stoudemires acknowledge that we have held that a person who is not a party to an assignment lacks standing to contest its validity. Montgomery v. Bank of America, 321 Ga.App. 343, 346 (2) (740 S.E.2d 434) (2013) ) (plaintiff lacked standing to contest validity of assignment of note and security deed because assignment was a " contract between MERS and [loan servicing company]" ); Breus v. McGriff, 202 Ga.App. 216 (1) (413 S.E.2d 538) (1991) (" Appellants are strangers to the assignment contract between appellee and [the bank] and thus have no standing to challenge its validity." ). They argue that Montgomery is incompatible with Scott v. Cushman & Wakefield of Ga., 249 Ga.App. 264 (547 S.E.2d 794) (2001), in which this court held that an obligor had standing to challenge an assignment even though he was not a party to the assignment. In Scott, however, the obligor did not challenge the validity of an assignment, but challenged the existence of such an assignment in the first place. In Montgomery, as in the instant case, there is no question that an assignment exists.

The Stoudemires argue that the rule that only parties can challenge an assignment's validity should not apply to facially void assignments. This assignment, they argue, is void on its face because it is a forgery and it was not signed by the necessary corporate officers. We need not decide whether facially void assignments are excepted from the rule because the Stoudemires have not shown that their assignment is facially void.

A void contract is one that has no effect whatsoever and is incapable of being ratified, while a voidable contract is one that is unenforceable at the election of the injured party. See Dal-Tile Corp. v. Cash N' Go, 226 Ga.App. 808, 811-812 (487 S.E.2d 529) (1997) (Beasley, J., concurring specially). Contracts to do illegal or immoral things, contracts against public policy, and gambling contracts, for example, are void. OCGA § § 13-8-1; 13-8-2; 13-8-3. On the other hand, for example, fraudulent contracts and contracts entered under duress are voidable at the election of the injured party. OCGA § § 13-5-5; 13-5-6. The kind of procedural irregularities that the Stoudemires contend infect this assignment render it, at most, voidable.

[333 Ga.App. 376] The Stoudemires rely on the notary seal to support their claim that the assignment is a forgery. They assert that the notary seal shows that the notary's commission was to expire on August 5, 2014, that notary commissions are limited to four years under OCGA § 45-17-5 (a), and that the assignment was dated September 30, 2006. They argue that because notary commissions cannot exceed four years, the notary could not have witnessed the signatures on September 30, 2006. We agree with the Stoudemires that these facts raise a serious question about the attestation of the signatures on the assignment. But questions about the validity of a signature do not render a document void on its face. Keogh v. Bryson, 319 Ga.App. 294, 298 (3) (735 S.E.2d 293) (2012) (" Whether a signature is valid is a factual ...

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