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Davis v. JPMorgan Chase Bank, N.A.

United States District Court, S.D. Mississippi, Western Division

March 25, 2014



DAVID BRAMLETTE, District Judge.

This cause is before the Court on defendant JPMorgan Chase Bank, N.A. ("Chase")'s Motion for Summary Judgment (docket entry 7) and Motion to Dismiss (docket entry 9). Having carefully considered the motions, to which no responses have been filed, and being fully advised in the premises, the Court finds as follows:

On February 11, 2013, the plaintiff Geddieth E. Davis ("Davis") filed suit in Adams County Circuit Court against the defendants seeking damages for fraudulent inducement, fraud, misrepresentation, fraud in the procurement, breach of fiduciary duty, breach of contract, breach of the covenant of good faith and fair dealing - tortious interference, wanton gross negligence, wrongful foreclosure, and private nuisance - malice, all in connection with the purchase, financing, and foreclosure of a home. The state court suit was removed to this Court on March 21, 2013.

In its motion for summary judgment, Chase shows that the home was purchased in March of 2004, that the purchase was financed by First Mortgage Company, and that Davis defaulted on the note in 2011. On November 2, 2011, the trustee instituted foreclosure proceedings, and the property was sold to defendant Chase on December 1, 2011. The plaintiff has asserted two types of claims in this action: (1) those associated with the origination of the loan in 2004, and (2) those involving the 2011 foreclosure.

The plaintiff's loan closing took place on March 2, 2004. Because this action was not commenced until nine years later, all of the plaintiff's claims relating to the origination of the loan are time-barred. See Miss. Code Ann. § 15-1-49 (three-year statute of limitations for tort and breach of contract claims).

The plaintiff's claims involving the foreclosure consist of: (1) fraud and misrepresentation, (2) breach of fiduciary duty, (3) breach of contract, (4) negligence, (5) wrongful foreclosure, and (6) private nuisance - malice.

Fraudulent misrepresentation must be related to past or presently existing facts, not future conduct. Spragins v. Sunburst Bank , 605 So.2d 777, 781 (Miss. 1992). A party must also state with particularity the circumstances constituting fraud, and the failure to do so requires "dismissal on the pleadings for failure to state a claim." Southland Securities Corp. v. Inspire Ins. Solutions, Inc. , 365 F.3d 353, 361 (5th Cir. 2004). The particulars of a misrepresentation claim must likewise be stated with particularity. Grissom v. Liberty Mutual Fire Ins. Co. , 678 F.3d 397, 403 (5th Cir. 2012). The plaintiff fails to allege any of the particulars of her fraud and misrepresentation claims. Furthermore, the terms of her loan including interest rate and repayment terms, as well as specific compensation First Mortgage Company was to receive, were fully disclosed in the documents signed by the plaintiff. Thus, the plaintiff cannot have reasonably relied on any oral representations.

The plaintiff's breach of fiduciary duty claim fails because she has not shown a fiduciary relationship with Chase. The Mississippi Supreme Court has never held that the relationship between a mortgagor and a mortgagee is a fiduciary one. Hopewell Enterprises, Inc. v. Trustmark National Bank , 680 So.2d 812, 816 (Miss. 1996). Nor did Chase have a contractual relationship with the plaintiff; therefore, her breach of contract and breach of implied covenant of good faith and fair dealing claims fail as a matter of law. See Austin Firefighters Relief & Retirement Fund v. Brown , 760 F.Supp.2d 662, 676 (S.D.Miss. 2010); Baldwin v. Laurel Ford Lincoln-Mercury, Inc. , 32 F.Supp.2d 894, 899 (S.D.Miss. 1998); BC's Heating & Air and Sheet Metal Works, Inc. v. Vermeer Mfg. Co., 2012 WL 642304, at *7 (S.D.Miss. Feb. 27, 2012).

Likewise, the plaintiff has not offered any proof to establish any tortious interference with any contractual relationship she had with any other party. She offers no evidence of her alleged contractual relationship with First Mortgage, nor does she establish that such contract "would have been performed but for the alleged interference of" Chase. See Southern General Agency, Inc. v. ACCC Ins. Co., 2011 WL 1343160, at *2 (S.D.Miss. March 31, 2011).

Relying on her previous allegations, the plaintiff also charges Chase with "wanton gross negligence." However, under Mississippi law, "[n]egligence can only proceed from a duty imposed by contract, or by the statutes of the state, or by well-defined public policy. A claim sounding in negligence fails as a matter of law unless the plaintiff was owed a legal duty." Anderson v. Litton Loan Servicing, LP, 2010 WL 445593, at *4 (S.D.Miss. Feb. 1, 2010). A mortgage is "simply an arms length business transaction involving a normal debtor-creditor relationship" under which "the loan agreement fixes the contractual term." Hopewell Enterprises , 680 So.2d at 817. Thus, the parties are free to pursue any contractual or statutory rights, including the exercise of any "lawful remedies against a borrower in default." Temple-Inland Mortg. Corp. v. Jones , 749 So.2d 1161, 1169 (Miss. App. 1999).

The terms of the relationship between the plaintiff and Chase were fixed by the terms of the loan. Hopewell Enterprises , 680 So.2d at 817. The plaintiff defaulted by failing to make the required payments in a timely manner. Chase's Exhibits "A" at ¶ 3, and "B" at ¶ 1. Because of the plaintiff's default, Chase was free to foreclose, and owed no further duty to the plaintiff. Anderson, 2010 WL 445593, at *4; Rosemont Gardens Funeral Chapel-Cemetery, Inc. v. Trustmark National Bank , 330 F.Supp.2d 801, 811 (S.D.Miss. 2004); Teeuwissen v. JPMorgan Chase Bank, N.A., 2011 WL 5593164, at *8 (S.D.Miss. Nov. 17, 2011).

The plaintiff's claim for "wrongful foreclosure" is based on her allegation that the foreclosure sale was conducted without legal right or authority. Mississippi is an "intermediate theory" title state. See O'Neal Steel, Inc. v. EB Inc., 186 F.3d 638, 643-44 (5th Cir. 1999); Anderson v. Kimbrough , 741 So.2d 1041, 1047-48 (Miss. App. 1999). As a result, "the borrower maintains title to the property" after executing the mortgage, "however, once the loan goes into default, the mortgagee immediately receives title and the right to possess the property." Millette, 186 F.3d at 643 n.10. "The subsequent foreclosure is the mechanism by which the trustee procedurally perfects the interest which is automatically transferred upon default. Indeed, the transfer of title to the trustee upon default is not affected even if a subsequent foreclosure sale is set aside due to procedural irregularities." Martin v. USDA Rural Housing Service , 276 B.R. 552, 556 (Bankr. N.D. Miss. 2001). The undisputed evidence confirms that there was no wrongful foreclosure.

The plaintiff was required to make all the monthly payments required by her loan. See Chase's Exhibit "B" at ¶ 1. However, the plaintiff concedes that by October 2010 she was in default. See Chase's Exhibit "Q" at ¶ 95. The substitute trustee's deed further confirmed the plaintiff's "default" under the deed of trust at the time of the December 1, 2011 sale. See Chandler v. Bank of Brooksville , 178 So. 797, 799 (Miss. 1938) ("A deed made by a trustee will be presumed, prima facie, to have been made after compliance with its requirements of notice, of time, place, and terms of sale"). As a result, Chase "was free to foreclose on the security" and cannot be guilty of "bad faith." See Rosemont Gardens , 330 F.Supp.2d at 811; Peoples Bank & Trust Co. v. L & T Developers, Inc. , 434 So.2d 699, 708 (Miss. 1983). Procedurally, state law requires that notice of a non-judicial foreclosure be posted at the courthouse and published for three consecutive weeks before the sale. Miss. Code Ann. § 89-1-55. The substitute trustee's deed establishes that notice was posted at the Adams County Courthouse on November 8, 2011, and published in the Natchez Democrat for three consecutive weeks beginning on November 10, 2011. See Chase's Exhibit "P." Thus, all of the substantive and procedural foreclosure requirements were met.

The plaintiff also has no standing to challenge the foreclosure based upon her default. By failing to make all of her contractually required payments, title to the property passed to Chase "immediately" upon her default. See Millette, 186 F.3d at 643 n.10. Because she had "no possessory interest in the Property at the time of the foreclosure, " the plaintiff does "not have standing to pursue claims for wrongful foreclosure" in ...

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