Clark v. West

Citations: 395 S.E.2d 884; 196 Ga. App. 456; 1990 Ga. App. LEXIS 925Docket: A90A0096

Court: Court of Appeals of Georgia; June 28, 1990; Georgia; State Appellate Court

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Luvenia Clark initiated a wrongful foreclosure action against Thomas and Mildred West, aiming to set aside the foreclosure sale and seek damages for mental suffering and attorney fees. The trial court granted partial summary judgment, nullifying the foreclosure sale and canceling the deed. However, the court later dismissed the remaining claims when Clark did not appear for a scheduled hearing. Clark subsequently refiled her lawsuit for the unresolved matters, but the trial court granted the Wests' motion to dismiss, citing several potential reasons, including the notion that Clark had already obtained relief, her claims being punitive in nature, and that attorney fees should have been part of the initial motion. The court clarified that the dismissal of Clark's first action was without prejudice, allowing her to refile within six months. It acknowledged that while a party must choose between equitable cancellation and a damages claim when seeking to redress property value loss, cases have permitted both cancellation and damages when the claims arise from different breaches of duty. Since Clark sought cancellation to recover her property and additional damages for emotional distress due to the alleged intentional misconduct of the Wests, the court concluded that she could pursue her separate claim for damages, rejecting the argument that the cancellation of the foreclosure barred her from seeking further relief.

Appellant's claim for damages due to mental anguish is not considered punitive damages as defined by the trial court. The court reasoned that damages under OCGA § 51-12-5 are "additional" and punitive, and damages under OCGA § 51-12-6 are "vindictive," but found punitive damages inapplicable since no actual damages were recovered and because wrongful foreclosure actions are contract-based. However, the appellant argues that wrongful foreclosure includes a statutory duty for mortgagees to act in good faith, which constitutes a tort. Citing precedents like Curl v. First Federal Savings and Decatur Investments Co. v. McWilliams, which upheld awards for mental pain and punitive damages in wrongful foreclosure cases, the appellant contends that damages for mental distress can be recovered without physical injury when intentional misconduct is involved. The trial court's dismissal of the appellant's claims for mental distress and attorney fees was erroneous. Specifically, the court misunderstood the nature of the claims and the applicability of OCGA § 13-6-11 regarding attorney fees, as the appellant alleged bad faith and stubborn litigiousness, which if proven, could justify such an award. Therefore, the trial court's dismissal of these claims was incorrect.

In Bowers v. Fulton County, 227 Ga. 814 (1971), the court determined that attorney fees are generally not included as an element of just compensation in condemnation cases, which was deemed not applicable to the current case, leading to a reversal of judgment. The majority concurred, while several judges dissented. Presiding Judge Banke, in a special concurrence, differentiated the current case from East River Savings Bank v. Steele, 169 Ga. App. 9 (1983), arguing that the emotional distress claim in East River was dismissed not due to negligence but because the defendant's actions were analogous to legal pleadings, which do not typically support such claims. Banke noted that the current case involves wrongful foreclosure on a personal residence, which could indeed cause significant emotional distress, unlike the partnership property in East River. If the appellant can prove that the foreclosure was initiated with knowledge of her non-default status and that she suffered emotional distress as a result, she may be entitled to damages for intentional infliction of emotional distress. The motion to dismiss should not be granted if the complaint could potentially support a claim. Judge Beasley, also concurring specially, pointed out that the complaint's lack of clarity complicated the case, as it presented two counts: one for wrongful foreclosure and the other for intentional infliction of emotional distress due to the wrongful foreclosure, with claims of severe mental strain and damages sought under OCGA § 51-12-6.

Plaintiff successfully received summary judgment on her first count related to wrongful foreclosure, but her second count was dismissed under USCR 20. Subsequently, she refiled only the intentional infliction of emotional distress claim without relitigating the entire lawsuit. The new complaint clarified that the previous relief granted pertained to the wrongful foreclosure. For her claim to be recognized, emphasis is placed on paragraph 7 and the prayer section of the complaint, interpreting her reference to "intentional infliction of mental pain and suffering" as "intentional infliction of emotional distress," which is a recognized tort in Georgia.

The court applied a liberal construction of pleadings, affirming that if the defendants knowingly foreclosed on her home while she was not in default, she could potentially recover damages for emotional distress. The case was distinguished from precedents where the actions did not rise to the level of causing emotional distress. The court noted that the entire process, including declaring her in default and accelerating the loan, could constitute grounds for emotional distress, unlike previous cases focused solely on legal proceedings.

Despite the defendants receiving a summary judgment, the court found that evidence presented did not eliminate a key element of the plaintiff's claim, allowing her to proceed to trial. The law mandates that individuals refrain from actions that intentionally inflict emotional distress, with such actions defined as being "so terrifying or insulting" that they naturally humiliate or frighten the plaintiff. The defendants' motion for summary judgment relied on an unsigned notice regarding the cancellation of a fire policy, which they claimed violated the mortgage agreement and justified foreclosure. However, the security deed requiring insurance was part of the record.

Plaintiff was in default for a brief period until obtaining new insurance, which commenced on October 1, 1984, immediately after the previous policy ended. The default and subsequent foreclosure occurred prior to the new insurance taking effect. Defendants acknowledged that the plaintiff claimed no lapse in fire insurance and that they were denied possession; the foreclosure was set aside and the warranty deed cancelled. These facts are critical, and defendants failed to justify their request for summary judgment under OCGA 9-11-56, leading to a concurrence in reversing the judgment.

Chief Judge Carley dissented, believing the trial court's dismissal of the appellee-defendants' motion was correct, albeit for different reasons. He argued that while a party may seek cancellation of a foreclosure sale and potentially damages for wrongful conduct, the plaintiff's claim of intentional infliction of emotional distress due to wrongful foreclosure did not meet the legal threshold. The situation, in Carley's view, did not constitute actions that could be deemed humiliating, insulting, or terrifying as required to support such a claim, and thus he concluded that the trial court's dismissal was justified. He noted that the dissent is joined by Presiding Judge Deen, Judge Birdsong, and Judge Pope.