Finlay et al v. Ocwen Loan Servicing, Llc et al

REPLY BRIEF re Second MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM

N.D. Ga.March 15, 2017

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION DAVID JOHN FINLAY and ) MANUELA MULLER FINLAY, ) ) Plaintiffs, ) ) v. ) ) CIVIL ACTION FILE NO. BANK OF AMERICA CORPORATION, ) 1:16-cv-01895-SCJ-AJB CHRISTIANA TRUST, a division of ) WILMINGTON SAVINGS FUND ) SOCIETY, FSB, not in its individual ) capacity, but as Trustee of ARLP TRUST 3, ) and OCWEN LOAN SERVICING, LLC, ) as servicer for CHRISTIANA TRUST, ) a division of WILMINGTON SAVINGS ) FUND SOCIETY, FSB, not in its individual ) capacity, but as Trustee of ARLP TRUST 3, ) ) Defendants. ) ) DEFENDANT BANK OF AMERICA, N.A.’S REPLY IN SUPPORT OF ITS SECOND MOTION TO DISMISS PLAINTIFFS’ AMENDED AND RECAST COMPLAINT COMES NOW Defendant Bank of America, N.A. (“Defendant” or “BANA”), by and through counsel, and hereby files its Reply (“Reply”) in Support of its Second Motion to Dismiss (“Motion”) Plaintiffs David John Finlay and Manuela Muller Finlay’s (“Plaintiffs”) Amended and Recast Complaint (the “Amended Complaint” or “Am. Compl.”). Case 1:16-cv-01895-SCJ-AJB Document 47 Filed 03/15/17 Page 1 of 11 2 In support thereof, BANA provides the following memorandum of points and authorities. INTRODUCTION Plaintiffs filed their Response to the Motion to Dismiss on March 1, 2017 (“Opposition”). Despite the allegations in the Amended Complaint and their Opposition, Plaintiffs’ claims remain insufficiently pleaded and fail as a matter of law. In particular, the allegations of the Amended Complaint affirmatively demonstrate that Plaintiffs have no right to relief against BANA. For the reasons outlined in the Motion and this Reply, BANA’s Motion should be granted. ARGUMENT AND CITATION OF AUTHORITIES I. RYAN BOWIE’S PURPORTED EMAILS TO PLAINTIFFS DO NOT SATISFY GEORGIA’S STATUTE OF FRAUDS. Plaintiffs’ second claim for relief asserts that BANA breached a purported oral contract for modification of Plaintiffs’ mortgage loan, alleging that a BANA employee named Ryan Bowie emailed them modification terms which showed that the principal balance of the subject loan would be reduced from $880,000 to $250,000. See, generally, Am. Compl. In its Motion, BANA emphasized to the Court that: (a) a modification of a written mortgage loan such as Plaintiffs’ requires a signed writing to satisfy Georgia’s statute of frauds, O.C.G.A. § 13-5- 30(4); and (2) Plaintiffs fail to allege the existence of such a signed writing. Case 1:16-cv-01895-SCJ-AJB Document 47 Filed 03/15/17 Page 2 of 11 3 In their Opposition, Plaintiffs contend that the statute does not apply because the modification was allegedly a “settlement agreement” but that, even if it does apply, emails supposedly sent by BANA employee Ryan Bowie constitute an electronic signature which satisfies the statute. Opp, pp. 8-11. As an initial matter, nowhere in the Amended Complaint do Plaintiffs allege that the purported agreement was a “settlement agreement.” Plaintiffs continuously refer to it in the Amended Complaint as a “modification agreement” and never explain, either in the Amended Complaint or Opposition, exactly what BANA received in consideration for the purported agreement. See, generally, Am. Compl. and Opp. Moreover, Ryan Bowie’s purported emails do not contain an “electronic signature” as defined by the Georgia Electronic Records Act (the “GERA”), O.C.G.A. § 10-12-1, et seq. Plaintiffs do not allege that Mr. Bowie electronically signed any of his emails purportedly sent to Plaintiffs. Rather, they simply and erroneously conclude that because his name and contact information appear at the bottom of the purported emails, Mr. Bowie’s emails were electronically signed. This argument should be disregarded. It is called the “statute of frauds” for a reason, requiring actual signatures to prevent assertions of false interests in land or contracts involving land. Plaintiffs’ Case 1:16-cv-01895-SCJ-AJB Document 47 Filed 03/15/17 Page 3 of 11 4 interpretation – that the listing of someone’s name and contact information at the bottom of an email which could easily be doctored or faked satisfies the requirement of a signed writing – would render the statute of frauds meaningless. The GERA defines an electronic signature as “an electronic sound, symbol, or process attached to or logically associated with a record or adopted by a person with the intent to sign the record.” O.C.G.A. § 10-12-8(a). However, a name with contact information at the bottom of an email is not a “sound, symbol or process” evidencing an electronic signature. Indeed, the Georgia Court of Appeals recently held that an email does not constitute a written agreement or an electronic signature. In Bd. of Regents of the Univ. Sys. of Ga. v. Winter, 331 Ga. App. 528 (2015), overruled on other grounds by Rivera v. Washington, 298 Ga. 770 (2016), the court examined a plaintiff’s allegations that he accepted a written employment offer by emails. The court held that the plaintiff’s emails did not amount to a signed, written agreement for employment and that the plaintiff’s emails did not constitute an electronic signature. 331 Ga. App. at 532 and fn. 6 (“The parties clearly did not enter into a formal, traditional written agreement that both parties signed.”). Even assuming arguendo that Ryan Bowie’s purported emails did contain an electronic signature, which they did not, Plaintiffs never allege or explain Mr. Case 1:16-cv-01895-SCJ-AJB Document 47 Filed 03/15/17 Page 4 of 11 5 Bowie’s authority bind BANA to an agreement. The exhibits attached to the Amended Complaint do not show that Mr. Bowie was an officer, director, shareholder, or managing agent of BANA. See Am. Compl., Exhs. A-L. Rather, the purported emails identify Mr. Bowie as “MLO – Team Manager.” Id. In fact, these exhibits affirmatively demonstrate that Mr. Bowie did not have the requisite authority to bind BANA. In Exhibit G to the Amended Complaint, Mr. Bowie referred to the proposed modification terms and wrote, “Once deal is signed and processed…” Id., Exh. G. In Exhibit D, Mr. Bowie purportedly wrote on February 11, 2011 that the “Release Doc Date” was February 15, 2011, obviously referring to the creation of formal documents to effectuate a modification agreement. Id., ¶ Exh. D. These exhibits make clear that a signed, written agreement for modification was required to finalize the allegedly proposed modification terms and that Mr. Bowie’s emails alone were not sufficient to create an agreement in and of themselves. Finally, the purported Ryan Bowie emails which Plaintiffs contend formed the alleged modification agreement are contradictory in that they alternatively provide that there would be a principal reduction of $250,000 and that there would be a principal reduction to $250,000. Compare Am. Compl., Exhs. D, F, and H (alleged principal reduction of $250,000) with Exhs. E, G, and I (alleged principal Case 1:16-cv-01895-SCJ-AJB Document 47 Filed 03/15/17 Page 5 of 11 6 reduction to $250,000). While Plaintiffs conclusorily assert in their Opposition that they agreed to the “Principal Reduction Modification,” there are no such allegations in the Amended Complaint. See, generally, Am. Compl.; see also Opp., p. 2. Plaintiffs never set forth which of these competing and contradictory “offers” they allegedly accepted. Notably, Plaintiffs completely ignore this argument in their Opposition. Plaintiffs fail to respond to BANA’s contention that the competing and contradictory emails demonstrate that no clear promise was ever communicated to Plaintiffs, effectively conceding that the Court should be guided by this reasoning. The allegations of the Amended Complaint establish that a signed writing was necessary to modify Plaintiffs’ mortgage loan yet Plaintiffs fail to allege the existence of any such writing executed by BANA. Plaintiffs’ arguments that the purported modification terms were a “settlement agreement” and that Mr. Bowie’s emails contained his “electronic signature” lack merit and fail to salvage Plaintiffs’ deficient causes of action. As a consequence, the Amended Complaint must be dismissed as to BANA. II. PLAINTIFFS’ OTHER CAUSES OF ACTION REMAIN SUBJECT TO DISMISSAL FOR FAILURE TO STATE A CLAIM. Plaintiffs’ Opposition fails to rebut BANA’s other arguments supporting Case 1:16-cv-01895-SCJ-AJB Document 47 Filed 03/15/17 Page 6 of 11 7 dismissal of the Amended Complaint. In particular, BANA has shown the following: (a) Plaintiffs’ equitable causes of action against BANA seeking enforcement of the purported loan modification – promissory estoppel, specific performance, reformation of the deed, and injunctive relief - are moot because BANA has no current interest in the loan. The loan is owned by Christiana Trust and serviced by Ocwen Loan Servicing. Ordering BANA to specifically perform the purported loan modification agreement would be moot and illusory given that BANA is now a stranger to the loan and Christiana would not be subject to any such order. In response, Plaintiffs state that these equitable causes of action withstand the mootness argument because BANA allegedly promised Plaintiffs that it would re-acquire the loan from Christiana and Ocwen. See Opp., pp. 5-7. However, this does not alter the issues. The fact remains that Christiana owns the loan and BANA certainly cannot force Christiana to transfer the loan back to it. Notably, Plaintiffs do not allege that Christiana ever promised to transfer the loan back to BANA and, therefore, Plaintiffs cannot force Christiana to do so. Plaintiffs’ equitable causes of action all fail as a result. Case 1:16-cv-01895-SCJ-AJB Document 47 Filed 03/15/17 Page 7 of 11 8 (b) In their Opposition, Plaintiffs contend that they may be entitled to damages, rather than specific performance, on their promissory estoppel theory. Opp., pp. 5-6. Even if Plaintiffs are correct in this interpretation, it is clear that BANA communicated no clear promise of a loan modification. “While the promise need not meet the formal requirements of a contract, it must, nonetheless, have been communicated with sufficient particularity to enforce the commitment.” See Mooney v. Mooney, 245 Ga. App. 780, 783 (2000) (“Estoppel does not apply, however, to vague, indefinite promises.”). Because the Bowie emails communicated competing and contradictory proposed modification terms, as discussed above, the emails demonstrate that there was no clear, unambiguous promise of a loan modification. Compare Am. Compl., Exhs. D, F, and H (alleged principal reduction of $250,000) with Exhs. E, G, and I (alleged principal reduction to $250,000). Plaintiffs’ promissory estoppel claim therefore fails for this additional reason. CONCLUSION WHEREFORE, for the above and foregoing reasons, BANA respectfully requests that this Court grant its Second Motion to Dismiss Plaintiffs’ Amended and Recast Complaint pursuant to Fed. R. Civ. P. 12(b)(6). Case 1:16-cv-01895-SCJ-AJB Document 47 Filed 03/15/17 Page 8 of 11 9 This 15th day of March, 2017. /s/ Jarrod S. Mendel Jarrod S. Mendel, GA Bar No. 435188 McGuireWoods LLP 1230 Peachtree Street, NE Promenade II, Suite 2100 Atlanta, Georgia 30309-3534 Telephone: (404) 443-5500 Facsimile: (404) 443-5599 jmendel@mcguirewoods.com Attorney for Defendant Bank of America, N.A. Case 1:16-cv-01895-SCJ-AJB Document 47 Filed 03/15/17 Page 9 of 11 10 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION DAVID JOHN FINLAY and ) MANUELA MULLER FINLAY, ) ) Plaintiffs, ) ) v. ) ) CIVIL ACTION FILE NO. BANK OF AMERICA CORPORATION, ) 1:16-cv-01895-SCJ-AJB CHRISTIANA TRUST, a division of ) WILMINGTON SAVINGS FUND ) SOCIETY, FSB, not in its individual ) capacity, but as Trustee of ARLP TRUST 3, ) and OCWEN LOAN SERVICING, LLC, ) as servicer for CHRISTIANA TRUST, ) a division of WILMINGTON SAVINGS ) FUND SOCIETY, FSB, not in its individual ) capacity, but as Trustee of ARLP TRUST 3 ) ) Defendants. ) ) CERTIFICATE OF SERVICE, FONT AND MARGINS I hereby certify that on March 15, 2017, I electronically filed the foregoing Defendant Bank of America, N.A.’s Reply in Support of its Second Motion to Dismiss Plaintiffs’ Amended and Recast Complaint with the Clerk of the Court using the CM/ECF System. Case 1:16-cv-01895-SCJ-AJB Document 47 Filed 03/15/17 Page 10 of 11 11 I further certify that I prepared this document in 14 point Times New Roman font and complied with the margin and type requirements of this Court. /s/ Jarrod S. Mendel Jarrod S. Mendel Case 1:16-cv-01895-SCJ-AJB Document 47 Filed 03/15/17 Page 11 of 11