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JPMorgan Chase Bank, N.A. v. Durie

Court of Appeals of Georgia, First Division

June 24, 2019

JPMORGAN CHASE BANK, N. A. et al.
v.
DURIE.

          BARNES, P. J., MERCIER and BROWN, JJ.

          Mercier, Judge.

         Robert Durie filed a complaint for wrongful foreclosure against JPMorgan Chase Bank, N. A. ("Chase") and Federal National Mortgage Association ("Fannie Mae") (collectively the "Appellants"). The trial court denied the Appellants' motion to dismiss. The Appellants appeal the trial court's order. For the following reasons, we reverse.

         We review the trial court's ruling on motions to dismiss de novo. Montia v. First-Citizens Bank & Trust, 341 Ga.App. 867, 869 (801 S.E.2d 907) (2017). "The motion to dismiss should not be granted unless the averments in the complaint disclose with certainty that the plaintiff would not be entitled to relief under any state of facts which could be proved in support of his or her claim." Id. at 868 (citation and punctuation omitted).

         On April 20, 2012, Durie filed his wrongful foreclosure complaint against the Appellants. The complaint, as amended, asserted that Durie, along with his now deceased father, Samuel Durie, purchased real property in Sharpsburg, Georgia on August 27, 2002, from Kenneth Colby and Linda Colby.[1] Durie obtained a mortgage from Georgia Mortgage Services, Inc., to purchase the property. Durie claims that before he purchased the property the Colbys and "their agents" made misrepresentations to him regarding the construction of the house and the condition of the land, such as that the property had "passed all building permit inspections and was suitable for human habitation." Durie states that Georgia Mortgage Services obtained an appraisal which stated that the property was in "excellent physical condition and suffered from no major structural defects[.]" As a result of these misrepresentations, Durie claims that he paid more than $150, 000 in excess of the price the Colbys paid to purchase the same property. On the date the Duries purchased the property, Georgia Mortgage Services assigned its security interest to Washington Mutual Bank.

         After Durie moved into the property, in November 2002, he discovered "numerous building and structural defects that severely reduced the value of the house from the original purchase price." Durie asserted that "all representations regarding the [property] condition made by [Georgia Mortgage Services], the Colbys, or their relators were false and were known to be false at the time the contract was entered [into] by the parties."

         In 2008, Washington Mutual Bank "merged into" Chase. Thereafter, in August 2009, Durie began to fall behind on his mortgage payments. Chase foreclosed on the property on December 7, 2010.[2] Chase generated a new title in its name and filed a quitclaim deed transferring the property to Fannie Mae for a nominal sum. On January 12, 2011, Fannie Mae filed a dispossessory action against Durie in Coweta County magistrate court and received an order for possession of the property on August 2, 2011.

         Durie's wrongful foreclosure claim states that Chase failed to comply "with its statutory duties to exercise the power of sale set forth in the Security Deed" and seeks "rescission of the foreclosure and reinstatement as title [owner] of the Property." Durie seems to claim that the foreclosure notice was deficient because the contact information on the foreclosure notice was listed for "Washington Mutual Bank," but when Durie called the listed telephone number he was connected to Chase, who had told him on a prior occasion that it had no authority to modify his mortgage.

         The Appellants filed a motion to dismiss Durie's third amended complaint, claiming, inter alia, that they could not be held liable for statements made by Georgia Mortgage Services, the Colbys and their real estate agents. Following a hearing, the trial court denied the Appellants' motion to dismiss. The Appellants argue that the trial court erred by failing to dismiss Durie's breach of contract, fraudulent inducement, wrongful foreclosure, quiet title, negligence and declaratory judgment claims.

         1. The Appellants state that the trial court erred by failing to dismiss the breach of contract claim, which Durie expressly abandoned. Durie conceded in both his response to the Appellants' motion to dismiss and in his appellate brief that he "has not pursued a Breach of Contract claim against [the] Appellants." As such, the trial court erred in denying the Appellants' motion to dismiss Durie's breach of contract claim.

         2. The Appellants argue that Durie fails to state a fraudulent inducement claim because Durie does not contend that the Appellants made any fraudulent statements. Instead, Durie alleges that the misrepresentations were made by the Colbys, their agents and Georgia Mortgage Services, but through the Appellants' "assumption of the security interest" the Appellants are "likewise liable" for the statements.

         "The tort of fraud[, ] including fraudulent inducement[, ] has five elements: a false representation by a defendant, scienter, intention to induce the plaintiff to act or refrain from acting, justifiable reliance by plaintiff, and damage to plaintiff." Stafford v. Gareleck, 330 Ga.App. 757, 762 (2) (769 S.E.2d 169) (2015) (citation and punctuation omitted). "Although OCGA § 9-11-9 (b) requires that claims of fraud be pled with particularity, a complaint alleging fraud should not be dismissed for failure to state a claim unless it appears beyond a doubt that the pleader can prove no set of facts in support of his claim which would entitle him to relief." Id. (citation and punctuation omitted).

         Durie's claim that the Appellants are "likewise liable" for the statements made by the Colbys, their agents and Georgia Mortgage Services through their assumption of the security interest is insufficient to state a claim for fraudulent inducement. See Stafford, supra. A key element of fraudulent inducement is a "false representation by a defendant." Id.; see also Wall v. Century 21 Winnerville Realty, 244 Ga.App. 762, 763-764 (1) (536 S.E.2d 798) (2000) (an essential element of a fraudulent inducement claim is "a representation made by the defendant") (citation omitted; emphasis supplied). Here Durie does not claim that Chase or Fannie Mae, the only remaining defendants in the underlying action, made any representations to him or his father to induce them to buy the property. Moreover, Durie does not claim that Chase or Fannie Mae had an interest in the property until after the Duries had purchased the property. As such, Durie can prove no set of facts in support of his fraudulent inducement claim which would entitle him to relief from Chase or Fannie Mae. See generally Stafford, supra. Of note, the present matter is unlike cases where this Court has reversed and remanded for a more definite statement of fraud. See Babalola v. HSBC Bank USA, 324 Ga.App. 750, 755 (2) (c) (751 S.E.2d 545) (2013) (where a pro se plaintiff failed to identify the allegedly fraudulent acts or statements on which his fraud claim was based, the proper remedy was a more definite statement, not a dismissal); Osprey Cove Real Estate v. Towerview Constr., 343 Ga.App. 436, 441 (3) (808 S.E.2d 425) (2017) (where complaint vaguely discussed "the alleged one-sided nature" of the contracts, but failed to specifically identify instances of fraud, the matter was reversed for a more definite statement.). In the present matter Durie has identified with particularity the alleged misrepresentations made by the Colbys, their agents and Georgia Mortgage Services. As he does not claim that Chase or Fannie Mae made any of the statements, and no evidence could be presented to support his fraudulent inducement claim against Chase and Fannie Mae as they did not have an interest in the property at the time the inducements were made, Durie fails to state a fraudulent inducement claim. See generally Stafford, supra; Babalola, supra at 752 (2).

         3. The Appellants argue that Durie fails to state a claim for negligence because they did not owe Durie a duty to investigate appraisal fraud. Durie claims that the Appellants are guilty of negligence "through their adoption of the security interest in the mortgage as well as their failure to detect that there was a significant ...


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