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Shah v. Bank of America

United States District Court, M.D. Georgia, Macon Division

February 1, 2018

KALPESH SHAH, Plaintiff,
v.
BANK OF AMERICA, et al., Defendants.

          ORDER

          MARC T. TREADWELL, JUDGE UNITED STATES DISTRICT COURT.

         Defendants Nationstar Mortgage, LLC. and U.S. Bank, N.A. have moved to dismiss Plaintiff Kalpesh Shah's complaint for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6). Doc. 7. The motion is GRANTED.

         I. BACKGROUND

         This is Shah's second lawsuit concerning the non-judicial foreclosure sale of a residential property located at 113 Hunters Trace, Macon, Georgia 31210 resulting from Shah's failure to make required mortgage payments.[1] Doc. 7-1 at 2; Kalpesh Shah v. Bank of America, N.A., Superior Court of Bibb County, Georgia, No. 2011CV56185. Shah executed a note in the principal amount of $256, 500.00 and a security deed in favor of lender Bank of America, N.A. (BANA) on May 21, 2004. Docs. 1-1 ¶ 24; 7-2.[2]BANA then transferred its rights, title, and interests in the security deed to U.S. Bank, an assignment that was recorded on April 18, 2011. Docs. 1-1 ¶ 25; 7-3. At that time, Nationstar became the servicer of Shah's loan on behalf of U.S. Bank. Doc. 7-1 at 4. Shah then defaulted on his mortgage payments, and a non-judicial foreclosure sale was conducted on May 2, 2017. Id. U.S. Bank then purchased the property as the highest bidder. Doc. 7-4. Shah filed this lawsuit on June 30, 2017 in the Superior Court of Bibb County, Georgia, and the Defendants removed the case to this Court the next day. Docs. 1, 1-1. Shah asserts ten claims under federal and Georgia state law: (1) wrongful foreclosure; (2) fraud in the concealment; (3) fraud in the inducement; (4) intentional infliction of emotional distress; (5) slander of title; (6) quiet title; (7) declaratory relief; (8) a violation of the Truth in Lending Act (TILA), 15 U.S.C. § 1601, et seq., and the Home Ownership and Equity Act (HOEPA), which amended TILA;(9) a violation of the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2601, et seq.; (10) and seeks rescission of the mortgage loan.

         The Defendants now move to dismiss Shah's complaint for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6). Doc. 7. Shah, who is proceeding pro se, failed to respond to the Defendants' motion despite being ordered by the Court to do so.

         II. MOTION TO DISMISS STANDARD

         The Federal Rules of Civil Procedure require a pleading contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). To avoid dismissal pursuant to Fed.R.Civ.P. 12(b)(6), a complaint must contain sufficient factual matter to “‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “At the motion to dismiss stage, all well-pleaded facts are accepted as true, and the reasonable inferences therefrom are construed in the light most favorable to the plaintiff.” Garfield v. NDC Health Corp., 466 F.3d 1255, 1261 (11th Cir. 2006) (quotation marks and citation omitted). However, “where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]'-‘that the pleader is entitled to relief.'“ Iqbal, 556 U.S. at 679 (quoting Fed.R.Civ.P. 8(a)(2)). “[C]onclusory allegations, unwarranted deductions of facts or legal conclusions masquerading as facts will not prevent dismissal.” Oxford Asset Mgmt., Ltd. v. Jaharis, 297 F.3d 1182, 1188 (11th Cir. 2002). The complaint must “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Twombly, 550 U.S. at 555 (quotation marks and citation omitted). Where there are dispositive issues of law, a court may dismiss a claim regardless of the alleged facts. Marshall Cnty. Bd. of Educ. v. Marshall Cnty. Gas Dist., 992 F.2d 1171, 1174 (11th Cir. 1993). However, when a plaintiff is proceeding pro se, his pleadings may be held to a less stringent standard than pleadings drafted by attorneys and will be liberally construed, although the pleading must still state a claim for relief. Tannenbaum v. United States, 148 F.3d 1262, 1263 (11th Cir. 1998).

         III. WRONGFUL FORECLOSURE

         Shah first argues that the foreclosure was wrongful because the Defendants lacked standing to foreclose on the property. Doc. 1-1 ¶ 51-62. To the extent Shah claims that only BANA had the right to foreclose based on the initial loan, that argument fails because BANA lawfully transferred its rights under the note to U.S. Bank. Doc. 7-2. And a mortgagee's assignee has the right to foreclose as a matter of law. O.C.G.A. § 23-2-114 (“Unless the instrument creating the power specifically provides to the contrary, a personal representative, heir, heirs, legatee, devisee, or successor of the grantee in a mortgage, deed of trust, deed to secure debt, bill of sale to secure debt, or other like instrument, or an assignee thereof, or his personal representative, heir, heirs, legatee, devisee, or successor may exercise any power therein contained.”). Next, Shah appears to argue that the process of securitization itself is per se improper and thus the Defendants lacked standing to foreclose. See Doc. 1-1 ¶ 50-62. This argument lacks merit, and Shah only provides conclusory allegations with no legal support. Indeed, that the loan was sold and securitized did not affect the Defendants' standing to foreclose on the property if, in fact, that right to foreclose was transferred, which it was. See Tonea v. Bank of America, N.A., 6 F.Supp.3d 1331, 1336 (N.D.Ga. 2014). Finally, Shah appears to argue the Defendants lacked standing because they violated the “pooling and servicing agreement” (PSA), which governs the rights and obligations of U.S. Bank and BANA regarding the securitization of the loan, but Shah himself lacks standing to allege breach of the PSA because he is not a party to that agreement. Docs. 1-1 ¶53; 7-1 at 12.

         Moreover, to the extent Shah argues that the securitization of the loan altered his obligations to pay under the note, affecting the Defendants' standing to foreclose, that argument fails as well. Despite the securitization of his loan, Shah was still obligated to make the payments owed under the note. See Tonea v. Bank of America, N.A., 6 F.Supp.3d 1331, 1336 (N.D.Ga. 2014). And because Shah was still obligated to pay under the note, he has failed to state a claim.

         To state a claim of wrongful foreclosure under Georgia law, a plaintiff must “establish a legal duty owed to it by the foreclosing party, a breach of that duty, a causal connection between the breach of that duty and the injury it sustained, and damages.” Heritage Creed Dev. Corp. v. Colonial Bank, 268 Ga.App. 369, 371, 601 S.E.2d 842, 844 (2007); see also All Fleet Refinishing, Inc. v. West Georgia Nat. Bank, 280 Ga.App. 676, 681, 634 S.E.2d 802, 807 (2006); Racette v. Bank of America, N.A., 318 Ga.App. 171, 174, 733 S.E.2d 457, 462 (2012). But if a party has not tendered or attempted to tender the payments owed under the note then any damage they suffered as a result of the foreclosure are because of their own actions, and not those of the Defendants, thus defeating any claim for wrongful foreclosure. See Heritage, 268 Ga.App. at 371-72, 601 S.E.2d at 845. Here, Shah does not allege that he has either tendered the payments owed or attempted to do so. Accordingly, Shah has failed to allege that any damages he suffered are a result of the Defendants' actions. In addition, Shah has not alleged any legal duty owed to him by the Defendants. As such, he has failed to state a claim for wrongful foreclosure.

         IV. FRAUD CLAIMS

         Next, Shah alleges the Defendants committed fraud in the inducement and fraud in the concealment. Doc. 1-1 ¶ 63-79. To state a claim for fraud, both in the inducement and concealment, a plaintiff must allege: “(1) a false representation or omission of a material fact; (2) scienter; (3) intention to induce the party claiming fraud to act or refrain from acting; (4) justifiable reliance; and (5) damages.” Lehman v. Keller, 297 Ga.App. 371, 372-72, 677 S.E.2d 415, 417 (2009); see also JarAllah v. Schoen, 243 Ga.App. 402, 403-04, 531 S.E.2d 778, 780 (2000). To allege a claim for fraud in the inducement, a plaintiff must also allege “that the defendant failed to perform a promised act and that the defendant had no intention of performing when the promise was made.” Nash v. Roberts Ridge Funding, LLC, 305 Ga.App. 113, 116, 6999 S.E.2d 100, 102 (2010). Further, under Rule 9(b), fraud must be pled with particularity, which requires a plaintiff set forth:

(1) precisely what statements were made in what documents or oral representations or what omissions were made; and (2) the time and place of each such statement and the person responsible for making (or, in the case of omissions, not making) same; and (3) the content of such statements and the manner in which they misled ...

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