Court: District Court, M.D. Georgia; March 2, 2015; Federal District Court
The court, presided over by Chief Judge Clay D. Land, addresses a case involving Plaintiffs Jim and Robyn Quasebarth who are suing their mortgage servicer, Defendant Green Tree Servicing, LLC. The Quasebarths claim violations of Georgia's RICO Act, along with allegations of breach of contract, interference with property rights, fraud, intentional infliction of emotional distress, and negligence per se. Green Tree has filed motions to transfer the case and to dismiss the claims for failure to state a claim. The court denies the motion to transfer but partially grants and partially denies the motion to dismiss.
The applicable legal standards indicate that venue transfers are at the discretion of the trial court, which must consider the convenience of parties and the plaintiffs' choice of forum. For a dismissal under Rule 12(b)(6), a complaint must present sufficient factual content to support a plausible claim for relief, and the court must accept the plaintiffs' factual allegations as true at this stage.
Factual allegations reveal that the Quasebarths purchased their home in Acworth, Georgia, in February 2007, with Green Tree servicing the mortgage. After falling behind on payments in 2012, they applied for a loan modification but were later informed by Green Tree that their home would be foreclosed upon, despite the modification application being pending. The Quasebarths allege that Green Tree made several misrepresentations intended to defraud them and hinder their efforts to resolve the default on their mortgage.
The Quasebarths engaged in multiple interactions with Green Tree regarding their home foreclosure while seeking a loan modification. Green Tree assured them it would assess their modification application before the scheduled foreclosure on December 4, 2012, if they submitted a new application, which the Quasebarths did on November 8, 2012. Green Tree further promised to notify them of their modification eligibility within thirty days and to postpone the foreclosure if they hadn't received a decision by December 4. However, Green Tree failed to communicate any decisions by the promised dates.
On December 6, the Quasebarths learned from a Green Tree representative that their home had been sold at foreclosure two days prior, contrary to their understanding. Green Tree continued to misrepresent the situation, claiming the December 4 sale was final and even initiated an ejection proceeding against them. The Quasebarths allege that Green Tree was aware that the foreclosure had not yet occurred and that they still owned the home, but they executed a contract releasing their claims against Green Tree in exchange for $1,050 for relocation expenses, believing they had lost ownership.
The Quasebarths vacated the property on January 6, 2013, only to later receive a letter demanding payment on their mortgage, which confused them since they thought their home had already been sold. They remained unaware that the home had not been sold until May 23, 2013, when Green Tree filed a deed from the actual sale on March 5, 2013. Upon realizing the misrepresentations, they rescinded their contract and returned the relocation payment on September 11, 2013. Subsequently, the Quasebarths filed a lawsuit against Green Tree, citing violations of Georgia's RICO statute, breach of contract, interference with property rights, fraud, intentional infliction of emotional distress, and negligence per se.
The Quasebarths allege that Green Tree engaged in fraudulent misrepresentations leading to wrongful foreclosures against multiple homeowners, including Maxwell and Cynthia Jones in Columbus, Georgia, and Karina Nichols in Oklahoma. Following the foreclosure of the Jones' home, Green Tree unlawfully attempted to collect the mortgage balance, and similar harassment occurred with Nichols after her wrongful foreclosure.
Green Tree has filed a motion to transfer the case to the United States District Court for the Northern District of Georgia. The court undertook a two-step analysis to evaluate this motion. First, it confirmed that the Quasebarths could have originally brought the case in the Northern District, as the district has subject matter jurisdiction due to complete diversity and an amount in controversy exceeding $75,000, personal jurisdiction over Green Tree due to its substantial business activities there, and proper venue based on the location of relevant events.
Second, the court assessed whether the convenience of parties and witnesses and the interest of justice favored the transfer, referencing nine factors established by the Eleventh Circuit. Ultimately, the court determined that these factors did not support the transfer, concluding that the case will remain in its current jurisdiction.
Several factors under 28 U.S.C. § 1404(a) are deemed neutral in the assessment of venue transfer. The convenience of witnesses is neutral as some reside in the Middle District of Georgia while others live in the Northern District, rendering both equally inconvenient for witnesses outside Georgia. The location of documents is also neutral; Green Tree acknowledges that transporting documents to either district is equally feasible. The availability of process to compel witnesses is neutral as well, since Green Tree fails to specify any witnesses outside the Court's subpoena power, rendering its argument hypothetical. Both districts are capable of compelling witnesses, further supporting neutrality.
The only factor favoring transfer is the locus of operative facts, primarily because the foreclosure of the Quasebarths' home and related communications occurred in the Northern District of Georgia. However, two factors oppose transfer: convenience of the parties and the Quasebarths' preference for the Middle District. Green Tree's operations span nationwide, making both districts equally convenient for it, while the Quasebarths find the Middle District more favorable due to the location of their counsel and some witnesses. Consequently, this factor weighs against transfer.
Considerable deference is given to the plaintiffs' choice of forum, which generally weighs against transferring the case, despite the plaintiffs not residing in the Middle District of Georgia and the relevant events occurring elsewhere. Only one factor supports transfer, while at least one factor opposes it, with the rest being neutral. The court emphasizes that unless there is a strong justification favoring the defendant, the plaintiffs' chosen forum should remain undisturbed. Consequently, Green Tree's motion to transfer venue is denied.
Regarding Green Tree's motion to dismiss the Quasebarths' claims under Federal Rule of Civil Procedure 12(b)(6), the court grants the motion concerning the breach of contract claim but denies it for all other claims. Green Tree contends that the Quasebarths' claims should be dismissed because they signed a contract releasing Green Tree from any claims related to their home for $1,050. Green Tree argues that the Quasebarths' attempt to rescind the contract was ineffective due to a delay in doing so. Under Georgia law, a party alleging fraud can either affirm the contract and sue for damages or promptly rescind the contract and pursue a tort claim. The Quasebarths chose to rescind. However, they must act promptly upon discovering the fraud, and their delay in rescission is a fact-dependent issue generally reserved for a jury. Courts have previously ruled delays of six or seven months as unreasonable as a matter of law, which may affect the court's decision on whether the rescission was timely.
The parties dispute when the Quasebarths first became aware of alleged fraud, impacting the timeline for their rescission of a contract. They received a letter from Green Tree on January 29, 2013, indicating a foreclosure sale was postponed, which Green Tree argues should have alerted the Quasebarths to earlier misrepresentations. Green Tree claims the Quasebarths delayed about eight months before seeking rescission. However, the Quasebarths assert they were confused by Green Tree's conflicting communications and only realized the fraud by May 23, 2013, resulting in a four-month delay. The court finds that accepting the Quasebarths' allegations as true, it cannot determine as a matter of law that their delay was unreasonable, leaving the assessment of reasonableness to a jury. Consequently, Green Tree's motion to dismiss based on untimely rescission is denied.
Additionally, the Quasebarths allege that Green Tree violated the Georgia RICO Act through mail and wire fraud and deception. To establish a civil RICO claim, the plaintiffs must demonstrate the defendant's violation, their injury, and a causal connection. Green Tree's motion to dismiss focuses solely on the causation aspect, necessitating a direct link between a RICO predicate act and the injury claimed.
To withstand a motion to dismiss a RICO claim, a plaintiff must demonstrate that their injury directly resulted from a predicate act aimed at them, indicating they were the intended victim. Merely showing that their injury was a consequence or that it would not have occurred "but for" the predicate act is insufficient. In this case, Green Tree argued that the Quasebarths' injury stemmed from their failure to pay their mortgage rather than from its misrepresentations. However, this argument is not compelling at the motion to dismiss stage, where the court evaluates whether the allegations sufficiently state a claim for relief. The Quasebarths claimed that Green Tree misrepresented the status of their home, leading them to believe it had been sold and relinquishing their rights to it. As a result of these misrepresentations, the Quasebarths experienced significant injuries, including the loss of their home and related hardships. The court found sufficient factual allegations linking Green Tree's misrepresentations to the Quasebarths' injuries, thereby denying Green Tree's motion to dismiss the RICO claim.
Additionally, the Quasebarths asserted a claim for tortious interference with property rights under O.C.G.A. § 51-9-1. They contended that Green Tree unlawfully interfered with their property rights by falsely stating that their home was sold while knowing they remained the rightful owners. This misrepresentation led the Quasebarths to vacate their home and sign an agreement releasing their claims. In Georgia, any unlawful interference with the enjoyment of private property constitutes a tort. To establish tortious interference, plaintiffs must provide evidence of the defendant's interference with their possessory interests. Green Tree sought dismissal of this claim, arguing that an attempted foreclosure could not constitute tortious interference. However, the court's previous ruling in Hauf v. HomeQ Servicing Corp did not categorically preclude such claims arising from attempted wrongful foreclosures, as it denied summary judgment on similar grounds.
Green Tree's reliance on the Hauf ruling for a trespass claim was deemed insufficient, as the Quasebarths alleged that Green Tree's unauthorized foreclosure led to the sale of their home, which constituted an entry and interference with their property rights. The Court found that the Quasebarths had provided enough allegations to avoid dismissal of their trespass claim.
In terms of fraud, the Quasebarths claimed that Green Tree made false representations regarding the postponement of the foreclosure sale. Green Tree's argument for dismissal based on the assertion that the claims were mere "broken promises" was rejected. The Quasebarths asserted that Green Tree had no intention of fulfilling its promises, which sufficiently supported their fraud claim at this stage. Additionally, the Quasebarths contended that they relied on Green Tree's misrepresentations, leading them to vacate their home, countering Green Tree's argument regarding the lack of causal connection for damages.
The Quasebarths acknowledged that their Complaint failed to state a claim for breach of contract, resulting in the Court granting Green Tree's motion to dismiss that claim. The Court denied Green Tree's motion to transfer venue and dismissed the breach of contract claim while allowing the trespass and fraud claims to proceed. Finally, the Court dismissed Green Tree's argument regarding the relevance of witnesses related to the Joneses' foreclosure, finding it inapplicable.
