How to Evict a Former Owner After Foreclosure Print E-mail
Written by Kerry S. Doolittle   
Wednesday, 26 October 2011

    The purpose of this article is to explain the offensive strategies for prosecuting a dispossessory action quickly to eviction in Georgia, and how to respond to the various defensive arguments commonly asserted by former owners.  Most citations of authority are omitted to simplify the text.

    Eviction of a tenant of the former owner will be the subject of a separate article.  New laws give special protections to tenants who occupy the foreclosed property pursuant to a “bona fide written lease.” 

    If you are a former owner you may nonetheless find this article helpful.


    When prosecuting a dispossessory action to evict the former owner of a home following a foreclosure sale, such former owner may assert desperate arguments to “save his home.”  The former owner may file an appeal simply to cause more delay in the eviction process.  A few go so far as to file a federal court action or seek removal of the case to federal court in an attempt to delay eviction.  In each case, the former owner argues some variation of “wrongful foreclosure,” contending that the foreclosure is invalid and therefore he still owns the home.

    A great deal of information and material is widely available through the Internet, but often of dubious accuracy.  The result is a former owner who asserts a basketful of legal jargon, fully convinced he ought to prevail, even though he has no substantive understanding of any argument being made.  It is simply rote repetition of what others wrote somewhere on the internet.  Only in rare cases has a lender made an actual error.  When the error is discovered, the lender will start the foreclosure process over to correct the error. 

    Such former owners usually act pro se, representing themselves, but are occasionally represented by an attorney who feels compassionate and wants to help.  An ethical and knowledgeable attorney can do very little to help.  The former owner will be evicted.  Filing frivolous appeals or lawsuits to delay the inevitable is not ethical in my book. 

    I cannot count the number of times I found former owners on the verge of eviction, after months of manipulating the system to delay that eviction, who are still totally unprepared to move to a new residence.  They did not use the time to find a new residence and begin the process of moving, instead clinging to a false hope that they would be allowed to stay.  I believe clients are better served with the truth and the opportunity to spend their time and money wisely. 

    In most cases, the former owner will readily admit that he was in default on his home loan, that the bank conducted a foreclosure sale of the property, and that he has not made a loan payment in many months or even years.  Essentially, the former owner concedes that he lived “rent free” for many months.  How then can he justify remaining on the property rent free when everyone else in the courtroom has to pay rent or mortgage installments to remain in their homes?  That is the fundamental question these former owners lose sight of in their desperate attempt to keep their home.  If you do not pay, you cannot stay.

    In my experience, as soon as you are able to obtain a writ of possession, and the former owner can no longer delay eviction, the fight is generally over.  Staying in the home was the objective.  Once that issue is lost, most former owner’s lose interest in litigation they cannot afford. 

    Motion to Compel Payment of Rent.

    The single biggest weakness of most former owners is lack of money, otherwise they could have paid their loan to avoid foreclosure.  That makes the best offensive weapon a motion to compel payment of a reasonable rent.  Some argue that no rent is due because no lease agreement exists, but Georgia law clearly holds that when no rent has been established by contract, the owner of the property is entitled to a reasonable rent if the resolution of the dispossessory action cannot be accomplished within two weeks of the filing of the dispossessory affidavit.

    I ask the Court to calculate rent from the date the affidavit of dispossessory was filed until the defendant surrenders possession, whether voluntarily or through execution of a writ of possession.  You could argue the rent should start on the date of the foreclosure sale or the date of a demand for possession, but I prefer the filing date because it is definite, reasonably justified and difficult for the former owner to argue against.

    The Magistrate judge will find in the new owner’s favor with regard to the right of possession and set a date by which the former owner must vacate the premises or a Writ of Possession will issue.  Some Magistrate Judges will also order the payment of rent in the event of appeal.  If rent is not paid into court, the judge will issue the writ of possession.  Be sure to ask for that relief.

    If the Magistrate Judge does not add this rent requirement to his order, then once the appeal is docketed in Superior Court, file a motion to compel rent with rule nisi as quickly as possible.  By the time the motion is heard, usually at least two months after the initial filing of the dispossessory affidavit, the Superior Court Judge will order rent be paid.  The law requires such a ruling.  With two months worth already owed and a third month due or quickly approaching, the former owner suddenly finds that he owes a very large sum of money because of his delaying tactics.  Often the  amount owed is enough to compel the former owners to voluntarily surrender possession in exchange for not paying the court ordered rent (and dismissing my client from any federal action).  On the flip side, if the former owner pays the rent, at least the current owner is collecting compensation during the delay, which helps to offset his attorney’s fees.

    Foreclosure Sale Not Set Aside.

    The second biggest weakness is the fact that the foreclosure sale already occurred, at which point it is too late to make a difference.

    Under Georgia law, the purchaser at a foreclosure sale is the sole owner of the property until and unless the sale is set aside.  It is not germane to a dispossessory proceeding to allege defects in the foreclosure sale process or the underlying loan documents.  If the sale of the premises under the power of sale in the loan deed was void on account of its improper exercise, or because the loan was not mature, this cannot be set up as a defense to a dispossessory proceeding.   Jackman v. LaSalle Bank, N.A., 683 S.E.2d 925, at 927, 299 Ga.App. 894 (2009).

    If the foreclosure sale deed has not been set aside, the former owner loses.  The arguments raised in attacking the foreclosure sale, the former lender, the original loan documents, the chain of assignments, or any other perceived flaw is irrelevant, immaterial and inadmissible in the dispossessory proceeding.

     The basic intent of all those arguments is the assertion that the foreclosure sale was in some way defective, therefore the defendant still owns the home, but Georgia law clearly holds that this argument is not a defense to a dispossessory “until and unless the sale is set aside.”  Such a rule is necessary in order to assure that the buyer of a property at a foreclosure sale acquires a good and marketable title.

    Incidently, the litigation process to challenge and set aside a foreclosure sale is lengthy, expensive, and requires an experienced attorney to prosecute.  The odds of winning such a case and actually obtaining an order setting aside the foreclosure sale is slim to none because most foreclosures are justified by a significant default and were carried out correctly.  In the rare case where some error actually occurred, the bank will usually acknowledge the error and start the foreclosure process over again.

    Modification Agreement.

    I frequently hear former owners argue that they had a modification agreement with the lender to lower their payments, therefore the lender should not have foreclosed their home.  The best response to this is to ask to see a copy of the modification agreement with the lender’s signature.  In most cases you will find the former owner does not have a written modification agreement.  An oral agreement is not binding and the former owner usually has no evidence to even suggest the existence of an oral agreement beyond his own testimony.

    Often the lender offered the former owner a trial period modification for three to six months, during which the former owner must make all the payments on time and meet all of the other lender requirements to qualify for a permanent modification.  Former owners seem to assume such trial modifications are permanent.  If the lender proceeded to foreclose after that, it means the former owner did not qualify and a substantial default still exists since the trial period payments are lower.  No progress is made in curing the default. 

    Former owners will assert that they made every payment on time during the trial period, and continued to make the trial payments afterwards, but never received a permanent modification agreement from the lender.  The response to this is found in the preceding section.  The foreclosure sale occurred and the deed has not been set aside, so the court must assume the sale was valid and the purchaser, or his successor, is the current owner of the property. 

    To be fair, former owners often encounter difficulty when dealing with large lenders with multiple offices and departments.  The former owner is usually communicating by telephone with someone from a department devoted to distressed properties and loan modifications.  Their job is to  be upbeat and reassuring while trying to find a way to keep the former owner making payments.  Foreclosures are handled by an entirely different department which may not even be located in the same state.  This department’s job is to execute a foreclosure when a particular loan crosses some threshold established by that lender’s policy.  In a classic case of the right hand not knowing what the left hand is doing, the modification department may well be communicating with the former owner right up to the day of the foreclosure sale.  That may not be a particularly good business practice, but it does not mean the foreclosure sale was defective or improper in any way. 

    Rescission Requires Restitution.

    On of the more creative attempts by former owners is to claim that the former owner unilaterally rescinded the security deed and now owns free and clear title to the property.  Of course, this claim never succeeds.  First, the former owner does not have any right to unilaterally rescind the loan documents.  Second, the former owner never tenders a refund of the money borrowed back to the lender.  An essential element of rescission is that both parties be restored to the position each was in prior to the transaction.  The bank has to be paid back its money if the borrower wants to rescind.  This is generally impossible since the former owner used the loan proceeds to either buy the property or refinance an earlier debt or to cash out equity.  If the former owner had the money to tender in rescission, the former owner could simply pay off the debt to avoid foreclosure in the first place.  Third, the former owner has no grounds for rescission.  The typical claim is that some disclosure or notice required by law was not given at the original closing or during the foreclosure process, therefore the borrower can rescind at any time.  Before getting into the accuracy of that argument, consider how long ago the closing took place.  Generally a claim relating to the alleged error is barred by the applicable statute of limitations.  Then remember the first point, the foreclosure sale deed has not been set aside.

    Georgia's procedure for cancelling security interests is laid out in O.C.G.A. § 44 14 3, which requires a creditor to direct the clerk of court to cancel the security interest within 60 days of the debt's being paid in full and to send the debtor the cancellation document.  In one case, the plaintiff contended that her Clayton County Notices cancelled the defendant's security interest in the Property, even though the loan had not been paid in full and sought a declaratory judgment that she owned free and clear title to the Property.  Liggion v. Branch Banking and Trust, Slip Copy 2011 WL 3759832 (N.D.Ga. Aug. 24, 2011).  The court found that to the extent Plaintiff asked the court to ratify her Clayton County Notices by cancelling defendant's security interest in the property, Georgia law did not give the District Court such authority.  A plaintiff may not use equity to obtain the cancellation of a security deed or promissory note if the plaintiff has not paid the note or tendered payment of the note.

    Wrongful Foreclosure.

    An allegation of wrongful foreclosure can be found in many guises, each of which generally asserts some sort of underlying defect in the documents or procedure.  As noted above, attacking the foreclosure is not a defense to the dispossessory, but since the arguments will be made, it helps to have a response shooting down such arguments.

    To assert a claim of wrongful foreclosure, Georgia law requires the plaintiff to 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. 

    Frequently in a post foreclosure dispossessory, the bank which conducts the foreclosure sale buys the property at the foreclosure sale, but then transfers the property to Fanny Mae or Freddy Mac under a loan guarantee program.  Fanny or Freddie files the dispossessory.  In that situation the new owner of the property is not liable for wrongful foreclosure because (1) it was not the entity that foreclosed on the property, and (2) it no duty to the former owner to postpone or cancel the foreclosure.  Worrell v. Fed. Nat. Mortg. Assoc., Slip Copy 2011 WL 2489951 (N.D.Ga. June 21, 2011).

    Even if the dispossessory is filed by the same creditor which conducted the foreclosure sale, proving all four elements of a wrongful foreclosure allegation is usually impossible.  Under Georgia law,  [i]t is clear that a security deed which includes a power of sale is a contract and its provisions are controlling as to the rights of the parties thereto and their privies.  Gordon v. S. Cent. Farm Credit, ACA, 213 Ga.App. 816, 446 S.E.2d 514, 515 (Ga.Ct.App.1994).

    Most allege a general duty created by O.C.G.A. § 23 2 114, which mandates that powers of sale be fairly exercised, and, similarly, O.C.G.A. § 44 14 82, which bars suits to recover property when an action to foreclose and the exercise of power of sale are barred.  Although a breach of the duties imposed by these statutes can give rise to a cause of action for wrongful foreclosure, such a cause of action is very difficult to establish because this rule does not apply if the power is unambiguous and is being exercised as the deed provides.  Atlanta Dwellings, Inc. v. Wright, 272 Ga. 231, 527 S.E.2d 854 (2000).  In other words, if the debtor defaults and the lender follows the correct procedures to foreclose, then the power has been exercised fairly. 

    I did find one case which found the lender had not exercised the foreclosure sale fairly.  The lender foreclosed on the wrong tract of land, one which was not included in the security deed. 

    Note and Deed to Secure Debt Split.

    The argument that a lender cannot foreclose on the property when the Note and Security Deed are “split”, meaning each is held by a different entity, has been rejected by the federal courts of Georgia.   Jackman v. Hasty, Slip Copy 2011 WL 854878 (N.D.Ga. March 8, 2011).  This situation usually arises when the original security deed has been assigned to MERS.  The plain language of the Deed will typically recognize that the Note is held by the  Lender,  but nonetheless expressly grants MERS and its assigns  the right to foreclose and sell the property.

    Fair Debt Collection Practices Act (the  FDCPA ), 15 U.S.C. 1692, et seq.

    Former owners often argue that some violation of the Fair Debt Collection Practices Act makes the foreclosure wrongful.  The earlier responses still apply, i.e. the foreclosure deed has not been set aside and the current owner is not the party accused of the violation, but there is also a more direct response to such arguments.

    To prevail on an FDCPA claim, the former owner must show: (1) he has been subject to collection activity (2) arising from a consumer debt; (3) the foreclosing creditor qualifies as a  debt collector  under the FDCPA; and (4)  the defendant has engaged in a prohibited act or has failed to perform a requirement imposed by the FDCPA.  Worrell v. Fed. Nat. Mortg. Assoc., Slip Copy 2011 WL 2489951 (N.D.Ga. June 21, 2011). 

    Occasionally the debt is not a consumer debt.  If the collateral was a vacation home, a rental property, a business or commercial property, the FDCPA does not apply.  Usually in these situations the property is the primary residence of the former owner, but it never hurts to verify. 

    The primary response is that the foreclosing “creditor” was not a “debt collector.”  For purposes of the FDCPA, the two terms have distinct definitions. The FDCPA only applies to “debt collectors.”

    The term “debt collectors” is defined as excluding repossessors and other enforcers of security interests, 15 U.S.C. § 1692a(6), except that a repossessor may not take or threaten to take nonjudicial action to dispossess a person of property if  there is no present right to possession of the property claimed as collateral through an enforceable security interest.  § 1691f(6)(A).”  Jackman v. Hasty, Slip Copy 2011 WL 854878 (N.D.Ga. March 8, 2011).  The caveat does not apply.  By definition pursing a dispossessory action is a judicial action to dispossess the former owner and the current owner has a present right to possession.  The current owner is not acting as a debt collector in pursuing the dispossessory.  No debt is in issue, merely the question of possession of the property.

    A  debt collector  is “any person who uses any instrumentality of interstate commerce [for which the] principal purpose ... is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.  15 U.S.C. § 1692a(6).

    The federal courts are in agreement: A bank that is a creditor is not a debt collector for the purposes of the FDCPA and creditors are not subject to the FDCPA when collecting their accounts.  Aubert v. Am. Gen. Fin., Inc., 137 F.3d 976, 978 (7th Cir.1998).  Creditors who collect in their own name and whose principal business is not debt collection are not subject to the FDCPA.  Liggion v. Branch Banking and Trust, Slip Copy 2011 WL 3759832 (N.D.Ga. Aug. 24, 2011).  A creditor in the process of collecting a debt owed to the creditor is not a debt collector as defined by the act.  Worrell v. Fed. Nat. Mortg. Assoc., Slip Copy 2011 WL 2489951 (N.D.Ga. June 21, 2011).  Liability under the FDCPA cannot attach when the foreclosing entity was not a debt collector as defined by the law; and a foreclosure does not constitute a debt collection activity.  Worrell v. Fed. Nat. Mortg. Assoc., Slip Copy 2011 WL 2489951 (N.D.Ga. June 21, 2011). 

    The FDCPA defines  debt collector  to exclude  any officer or employee of a creditor while, in the name of the creditor, collecting debts for such creditor.  Id. § 1692a(6) (A).  Liggion v. Branch Banking and Trust, Slip Copy 2011 WL 3759832 (N.D.Ga. Aug. 24, 2011). 

    To the extent that Jackman v. Hasty, 2011 WL 854878, at *4 *5 (N.D.Ga. Mar. 8, 2011), arguably stands for the proposition that a “servicer creditor” can be a  debt collector,  it is incorrect because § 1692a(6)(A) states that creditors are not debt collectors.   Liggion v. Branch Banking and Trust, Slip Copy 2011 WL 3759832 (N.D.Ga. Aug. 24, 2011). 

    Real Estate Settlement Procedures Act ( RESPA ).

    Former owners often argue that some violation of the Real Estate Settlement Procedures Act makes the foreclosure wrongful.  Such claims may relate to the original loan closing and documents or to the “servicing” of the debt.  The earlier responses still apply, i.e. the foreclosure deed has not been set aside and the current owner is not the party accused of the violation, but again there is also more direct responses to such arguments.

    First, RESPA applies to consumer credit transactions.  RESPA does not apply to credit transactions involving extensions of credit primarily for business, commercial, or agricultural purposes.  12 U.S.C. § 2606(a).  Oliver v. LIB Properties, Ltd., Slip Copy 2010 WL 2867932 (N.D.Ga. June 21, 2010).  Most dispossessory after foreclosure cases involve a primary residence and are, therefore consumer credit transactions, but it never hurts to verify.

    Second, if the claim is based on the loan closing procedures and documents, such event usually occurred several years earlier.  The claims are often barred by statute of limitations, and after the passage of several years, defenses like waiver, ratification, and estoppel apply. 

    Third, even assuming that the Court could draw a reasonable inference that a violation of RESPA occurred, a former owner must also quantify damages incurred to establish a RESPA claim.  Without quantifiable damages, the claim fails.  Worrell v. Fed. Nat. Mortg. Assoc., Slip Copy 2011 WL 2489951 (N.D.Ga. June 21, 2011).  A conclusory allegation that the foreclosing creditor breached legal duties under RESPA in servicing a residential mortgage loan does not support a claim under the statute.  Stimus v. Citimortgage, Inc., Slip Copy 2011 WL 2610391 (M.D.Ga. July 1, 2011). 

    In most cases, the former owner cannot show quantifiable damages. 

    Qualified Written Request.

    Perhaps the most frequent allegation made under RESPA is that the lender failed to respond to a qualified written request.  RESPA allows consumers to request from their lenders information on the nature and costs of real estate transactions. 26 U.S.C. § 2601.  Servicing is defined as receiving any scheduled periodic payments from a borrower pursuant to the terms of any loan and making the payments of principal and interest and such other payments with respect to the amounts received from the borrower as may be required pursuant to the terms of the loan. 12 U.S.C. § 2605(i)(3).

    Under RESPA, loan servicers have a duty to respond to a borrower's “qualified written request.”  The term  qualified written request  is defined as written correspondence relating to the servicing of a loan that (1) includes or otherwise enables the servicer to identify the name and account of the borrower and (2) contains a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower. 12 U.S.C. § 2605(e)(1).  Liggion v. Branch Banking and Trust, Slip Copy 2011 WL 3759832 (N.D.Ga. Aug. 24, 2011).

    Any servicer of a federally related mortgage loan must provide a written response within 20 days acknowledging receipt of the qualified written request from the borrower or the borrower’s agent.  Additionally, within 60 days of receiving the qualified written request, the servicer must conduct an investigation about the request, make appropriate corrections in the borrower's account, and provide to the borrower a written explanation of the servicer's conclusions from the investigation.

    Such a claim usually fails to meet one or more of the requirements for the former owner’s request for information to be a “qualified written request” or to state a claim for relief under RESPA.

    1.  RESPA allows servicers to designate an exclusive office and address to receive and handle qualified written requests. 24 C.F.R. § 3500.21(e)(1).  If the request is not sent to the designated office, then no claim for failure to respond to such request can be sustained.

    2.  A request is not a proper qualified written request under RESPA if it does not relate to the servicing of the loan.  A request for information about the validity of the loan and mortgage documents, but making no inquiry as to the status of the account balance does not relate to  servicing  of the loan.

    3.  RESPA does not provide for such a claim against foreclosure counsel or its employees.  Jackman v. Hasty, Slip Copy 2011 WL 854878 (N.D.Ga. March 8, 2011). 

    4.  The current owner may not be the servicer if the lender was not the purchaser at the foreclosure sale or the lender subsequently conveyed the property to Fanny or Freddy.

    5.  Failing to allege any factual basis for any loss as a result of improper servicing, fails to state a claim under RESPA.

    6.  If a servicer does not comply with the statute, it shall be liable for  any actual damages to the borrower as a result of the failure.  § 2605(f)(1).  Worrell v. Fed. Nat. Mortg. Assoc., Slip Copy 2011 WL 2489951 (N.D.Ga. June 21, 2011).  A borrower is limited to actual damages unless the failure to respond was part of a  pattern or practice of noncompliance  with RESPA's requirements.  Liggion v. Branch Banking and Trust, Slip Copy 2011 WL 3759832 (N.D.Ga. Aug. 24, 2011).  This limitation to actual damages proximately caused by the failure precludes the contention that such a violation prevents the creditor foreclosing the property. 

    Federal Trade Commission Act ( FTCA ).

    The Federal Trade Commission Act ( FTCA ), 15 U.S.C. § 57b, provides for civil actions for violations of, inter alia, the rules respecting unfair or deceptive acts or practices in violation of 15 U.S.C. § 45(a). The Act authorizes suits by the Federal Trade Commission.  It does not grant private individuals or other entities the right to bring a civil action. See 15 U.S.C. § 57b(a).  Oliver v. LIB Properties, Ltd., Slip Copy 2010 WL 2867932 (N.D.Ga. June 21, 2010).

    Equal Credit Opportunity Act ( ECOA ).

    The Equal Credit Opportunity Act ( ECOA ), 15 U.S.C. § 1691, et seq., makes it  unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction :

    (1) on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract);
    (2) because all or part of the applicant's income derives from any public assistance program; or
    (3) because the applicant has in good faith exercised any right under this chapter.

    A credit applicant may bring a civil action against any creditor who fails to comply with any requirement imposed under ECOA. 15 U.S.C. § 1691e(a). However, the Act provides no ECOA action shall be brought later than two years from the date of the occurrence of the violation. 15 U.S.C. § 1691e(f). The violation occurs, and the limitations period begins to run, upon the signing of the note. Oliver v. LIB Properties, Ltd., Slip Copy 2010 WL 2867932 (N.D.Ga. June 21, 2010).

    Fair Credit Reporting Act ( FCRA ).

    The Fair Credit Reporting Act ( FCRA ), 15 U.S.C. § 1681, et seq., imposes duties on those who furnish information to credit reporting agencies in an effort to ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy.  However, the FCRA does not apply to mortgage companies and their nominees.  A bank reporting information solely on its own experience with one of its customers is not acting as a  consumer reporting agency  within the meaning of the FCRA.  Oliver v. LIB Properties, Ltd., Slip Copy 2010 WL 2867932 (N.D.Ga. June 21, 2010).

    Federal Action Seeking a Temporary Injunction to Set Aside the Foreclosure Sale and Stop Dispossessory.

    When a former owner seeks a temporary injunction to set aside the foreclosure sale, and to stop the dispossessory proceedings, Federal Rule of Civil Procedure 65(c) states:  The court may issue a preliminary injunction or a temporary restraining order only if the movant gives security in an amount that the court considers proper to pay the costs and damages sustained by any party found to have been wrongfully enjoined or restrained. 

    Typically, the former owner is unable and/or unwilling to provide security.  If the former owner possessed such financial means, then he most likely could have paid the debt, avoided default, and thereby avoided foreclosure.

    Georgia’s Uniform Commercial Code.

    The Georgia Uniform Commercial Code does not provide a basis for federal question jurisdiction.  It is not a federal statute.  Thus, a civil action based on the UCC does not arise under the laws of the United States, and does not provide a court with federal question jurisdiction.   Oliver v. LIB Properties, Ltd., Slip Copy 2010 WL 2867932 (N.D.Ga. June 21, 2010).

    Georgia's Uniform Deceptive Trade Practices Act and Fair Business Practices Act.

    Former owners may attempt to assert claims under the Uniform Deceptive Trade Practices Act ( UDTPA ), O.C.G.A. § 10-1-370, et seq., and the Fair Business Practices Act ( FBPA ), O.C.G.A. § 10-1-390, et seq.  However, both statutes do not apply to conduct subject to rules and regulations promulgated by a regulatory agency of Georgia or the United States. O.C.G.A. § 10-1-374(a)(1); O.C.G.A. § 10-1-396(1).  Because the servicing of mortgages and foreclosure sales are regulated by other state and federal rules and statutes, claims relating to either are exempt from the UDTPA and FBPA.  Jackman v. Hasty, Slip Copy 2011 WL 854878 (N.D.Ga. March 8, 2011).


    “To state a claim for fraud under Geogia law, a plaintiff must plead five essential elements:  (1) That the defendant made the representations; (2) that at the time he knew they were false; (3) that he made them with the intention and purpose of deceiving the plaintiff; (4) that the plaintiff relied on the representations; [and] (5) that the plaintiff sustained the alleged loss and damage as the proximate result of their having been made.”  Jackman v. Hasty, Slip Copy 2011 WL 854878 (N.D.Ga. March 8, 2011).

    Former owners generally fail to plead fraud with the required specificity, and are generally unable to demonstrate reliance or proximate damage.

    Slander of Title.

    A former owner may throw in a slander of title claim by arguing that the foreclosure was wrongful, therefore he still owns the property, therefore the assertions that he does not own the property are slanderous.  Such a claim is by nature dependent upon establishing the wrongful foreclosure first.  Even then, making the claim is difficult.  For example, court pleadings are privileged, and therefore cannot serve as a basis for slander of title.  This privilege rules out the dispossessory affidavit as a basis for the claim.  Another difficulty lies in proving all of the elements of such a claim.

     The owner of any estate in lands may bring an action for libelous or slanderous words which falsely and maliciously impugn his title if any damage accrues to him therefrom.  O.C.G.A. § 51-9-11.  In order to sustain an action of this kind, the plaintiff must allege and prove the uttering and publishing of the slanderous words; that they were false; that they were malicious; that he sustained special damage thereby; and that he possessed an estate in the property slandered.  Latson v. Boaz, 598 S.E.2d 485, 487, 278 Ga. 113 (Ga.2004) (citation omitted).

    Such former owners usually do not alleged that they sustained any special damages and therefore fails to allege an essential element of the cause of action.  Jackman v. Hasty, Slip Copy 2011 WL 854878 (N.D.Ga. March 8, 2011). 

    Removal from State to Federal Court.

    One strategy which might be employed by a former owner is attempting to remove the dispossessory case from state to federal court in order to further delay the process.  I end with this section because I do not claim expertise in federal court procedure.  I merely provide the following excerpts of authority to argue that the dispossessory case should not be removed to federal court or should be remanded to state court if removal occurred.

    A defendant may only remove a case from state to federal court if the federal court has original jurisdiction over the case. 28 U.S.C. § 1441(a).  Original jurisdiction under § 1441 arises if there is diversity of parties or a federal question.  The district court may remand a case sua sponte for lack of subject matter jurisdiction at any time.  Wells Fargo Bank v. Cyrus, Slip Copy 2010 WL 3294320 (N.D.Ga. July 15, 2010)

Diversity Jurisdiction

    Under 28 U.S.C. § 1332, district courts have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000 and is between citizens of different states. 28 U.S.C. § 1332(a). An in-State plaintiff may invoke diversity jurisdiction in a federal court that sits in the State where the plaintiff resides.  However, the removal statute does not provide an in-State party defendant the same flexibility in removing cases.  Instead, § 1441(b) bars removal on the basis of diversity if the party is a citizen of the State in which the action is brought.   Wells Fargo Bank v. Cyrus, Slip Copy 2010 WL 3294320 (N.D.Ga. July 15, 2010).

    Generally the former owner cannot show diversity jurisdiction for two reasons.

    First, the former owner cannot meet the amount in controversy requirement.  A dispossessory proceeding under Georgia law is not an ownership dispute, but rather only a dispute over the limited right to possession.  Title to the property is not at issue and, accordingly, the former owner may not rely on the value of the property as a whole to satisfy the amount in controversy requirement.  In other words, a claim for ejectment in summary dispossessory proceeding after foreclosure sale cannot satisfy the amount in controversy requirement as a matter of law.  Accordingly, 28 U.S.C. § 1332 cannot serve as a basis for removal.  Wells Fargo Bank v. Cyrus, Slip Copy 2010 WL 3294320 (N.D.Ga. July 15, 2010)

    Second, § 1441(b) does not permit removal on diversity grounds to a District of Georgia because the former owner is a citizen of the State of Georgia, which is the State where the dispossessory proceeding was brought.  A citizen of Georgia, cannot remove the case to a federal court in Georgia because dispossessory action is brought in Georgia.  Wells Fargo Bank v. Cyrus, Slip Copy 2010 WL 3294320 (N.D.Ga. July 15, 2010).

Federal Question

    A federal question exists if a civil action arises  under the Constitution, laws, or treaties of the United States.  28 U.S.C. § 1331.  To remove a case as one falling within federal-question jurisdiction, the federal question ordinarily must appear on the face of a properly pleaded complaint.  An anticipated or actual federal defense generally does not qualify a case for removal.  Unless the face of a current owner's complaint states a federal question, the former owner may not remove a case to federal court on a federal question basis, even though a possible defense might involve a federal question.  The former owner bears the burden of proving a federal question exists.  Wells Fargo Bank v. Cyrus, Slip Copy 2010 WL 3294320 (N.D.Ga. July 15, 2010)

    The current owner does not plead a claim under the FDCPA in its state court dispossessory action.  Instead, the former owner's conclusory assertion that an attempt to foreclose somehow implicates the Fair Debt Collection Practices Act is, at best, an indication that the former owner intends to assert a federal-law defense or counterclaim to the state-law foreclosure proceeding.

    TILA and RESPA, like the FDCPA, do not provide the Court with original jurisdiction over the Bank's dispossessory action. The magistrate court dispossessory complaint does not reference TILA or RESPA on its face.  Instead, the former owner argues that the foreclosure violated TILA and RESPA, indicating that former owner seeks to use TILA and RESPA as defenses.  Citing TILA and RESPA to defend against dispossession does not provide Defendant a basis for removing the dispossessory action.  Wells Fargo Bank v. Cyrus, Slip Copy 2010 WL 3294320 (N.D.Ga. July 15, 2010)

    FED. R. CIV. P. 60 does not provide a basis for removal on federal question grounds for two reasons. First, the magistrate court dispossessory complaint does not refer to Rule 60, indicating that Plaintiff's dispossessory action does not arise under this Rule. Second, even if the dispossessory proceeding made reference to Rule 60, this Rule would not provide the Court with federal question jurisdiction.  As a rule of federal procedure, FED. R. CIV. P.60 does not provide any substantive rights. It is merely a procedural rule, so Plaintiff's lawsuit could not arise under Rule 60.  Wells Fargo Bank v. Cyrus, Slip Copy 2010 WL 3294320 (N.D.Ga. July 15, 2010).

    The United States Constitution does not provide a basis for removing the dispossessory proceeding. First, the face of current owner's dispossessory action does not refer to the Fourteenth Amendment, indicating that the action did not arise under federal law.  Second, the former owner's argument concerning the Fourteenth Amendment is a defense or counterclaim to the dispossessory action.  It is well settled that federal counterclaims and defenses are  inadequate to confer federal jurisdiction,  so the former owner cannot remove the dispossessory action based on the Fourteenth Amendment.  Removal cannot be predicated on allegations contained in the former owner’s notice of removal or subsequent documents.  Wells Fargo Bank v. Cyrus, Slip Copy 2010 WL 3294320 (N.D.Ga. July 15, 2010).


Last Updated ( Monday, 05 December 2011 )
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