Court Opinion

ID: 4092306
Source: CourtListenerOpinion
Date Created: 2016-10-25 07:08:21.763693+00
Date Added: 2024-06-11T09:19:38.151473
License: Public Domain

FOURTH DIVISION
                              ELLINGTON, P. J.,
                           BRANCH and MERCIER, JJ.

                    NOTICE: Motions for reconsideration must be
                    physically received in our clerk’s office within ten
                    days of the date of decision to be deemed timely filed.
                                http://www.gaappeals.us/rules

                                                                    October 11, 2016

In the Court of Appeals of Georgia
 A16A1444. HARRIS et al. v. DEUTSCHE BANK NATIONAL JE-050
     TRUST COMPANY.

      ELLINGTON, Presiding Judge.

      Clarence and Althea Harris filed this action in the Superior Court of Oconee

County against Deutsche Bank National Trust Company, alleging claims for breach

of contract and wrongful foreclosure of their home in March 2012. Deutsche Bank

filed a motion to dismiss for failure to state a claim under OCGA § 9-11-12 (b) (6).

The trial court granted this motion on the basis that these claims are barred under the

doctrine of res judicata. The Harrises appeal, contending that the trial court erred

because there was not identity of the cause of action with a prior judgment. We affirm

the trial court’s ruling for the reasons explained below.
      The record shows that, in ruling on Deutsche Bank’s motion, the trial court

considered matters outside the pleadings in this case, including the pleadings and

judgments in two cases previously prosecuted by the Harrises against Deutsche Bank

and other defendants. Therefore, “we will treat this appealed order as one granting

summary judgment to [Deutsche Bank,] . . . [and] [w]e review de novo a trial court’s

grant of summary judgment, construing the evidence in a light most favorable to the

nonmoving party.” (Citation and punctuation omitted.) Host Intl. Inc. v. Clayton

County, 311 Ga. App. 414, 415 (1) (715 SE2d 805) (2011) (applying the de novo

standard of review to a lower court’s grant of motion to dismiss for collateral estoppel

because lower court considered matters outside the pleadings in the case at bar).1

      Viewed in the light most favorable to the Harrises, the record shows the

following undisputed facts. The Harrises purchased their home in Oconee County in

1993. In 2006, they refinanced their mortgage. Through a series of transfers, the loan

and security deed were assigned to Deutsche Bank. American Home Mortgage

      1
       “[I]f, on a motion to dismiss for failure of the pleading to state a claim upon
which relief can be granted, matters outside the pleading are presented to and not
excluded by the court, the motion shall be treated as one for summary judgment and
disposed of as provided in [OCGA §] 9-11-56[.]” OCGA 9-11-12 (b). See also
Johnson v. RLI Ins. Co., 288 Ga. 309, 309-310 (704 SE2d 173) (2010) (outlining
process for appellate review when lower court goes beyond pleadings and a motion
to dismiss is converted into motion for summary judgment).

                                           2
Servicing Inc. (“AHM”) serviced the loan. The Harrises began to experience financial

difficulties and fell behind on their loan payments. In March 2012, Deutsche Bank

conducted a foreclosure sale and purchased the home at the auction.

      In April 2012, the Harrises filed their first lawsuit in the Superior Court of

Oconee County.2 The case was removed to the federal district court for the Middle

District of Georgia.3 The Harrises alleged numerous counts against Deutsche Bank

including “contractual breach of good faith and fair dealing and fraud” and wrongful

foreclosure. The breach of contract claim rested upon the allegations that Deutsche

Bank did not have the right to proceed with foreclosure and non-judicial sale of the

property for two reasons: Deutsche Bank did not provide notice as required by OCGA

§ 44-14-162.2 and Deutsche Bank was not the actual holder of the note with authority

to foreclose. The wrongful foreclosure claim was based on similar allegations.

Ultimately, the district court dismissed the first case for failure to state a claim in

February 2013. Although the Harrises appealed this dismissal, the appellate court

accepted their voluntary dismissal of their appeal in April 2013.

      2
       Harris v. American Home Mortgage Servicing, Inc. et al., Civil Action File
No. 2012-CV-0322-SW.
      3
     Harris v. American Home Mortgaging Servicing, Inc. et al., Case No. 3:12-
OCGA §-00083-CDL.

                                          3
      In November 2013, the Harrises filed a second lawsuit against Deutsche Bank

in the Superior Court of Oconee County.4 As amended, the complaint sought only

declaratory and injunctive relief as to the identity of the note holder and of the entity

to whom the proceeds of the foreclosure sale should be paid. In April 2014, the trial

court dismissed the complaint with prejudice; among other reasons the court held that

the Harrises could not seek equitable relief on a security deed and note for which they

were in default. In May 2014, the Harrises appealed the order to this Court. Pursuant

to Court of Appeals Rule 36, in an unpublished decision, this Court upheld the trial

court’s dismissal.5

      The Harrises filed the instant action, in the Superior Court of Oconee County

Civil Case No. 2015-CV-0113, in April 2015, shortly after the Court of Appeals’

decision in their second suit. They alleged two counts against Deutsche Bank: breach

of contract and wrongful foreclosure. Both claims rested on allegations that Deutsche

Bank did not provide proper notice to the Harrises as provided in the security deed

and as required under Georgia law. Additionally, they alleged that they were not in

      4
      Harris et al. v. Deutsche Bank National Trust Co., Civil Action File No.
2013-CV-0578.
      5
       Harris et al. v. Deutsche Bank National Trust Co., Case No. A14A2209,
decided February 20, 2015.

                                           4
default on their loan at the time of the notice of default because of payments the loan

servicer, AHM, made to Deutsche Bank. The trial court dismissed the case as barred

by the doctrine of res judicata in February 2016, leading to the instant appeal.

      Georgia’s res judicata doctrine, as codified under OCGA § 9-12-40, provides:

“A judgment of a court of competent jurisdiction shall be conclusive between the

same parties and their privies as to all matters put in issue or which under the rules

of law might have been put in issue in the cause wherein the judgment was rendered

until the judgment is reversed or set aside.” Three distinct elements must be met

before the doctrine applies. Body of Christ Church Overcoming God, Inc. v. Brinson,

287 Ga. 485, 486 (696 SE2d 667) (2010). There must be: “(1) identity of the cause

of action, (2) identity of the parties or their privies, and (3) previous adjudication on

the merits by a court of competent jurisdiction.” (Citation and punctuation omitted.)

Id.

                                           5
       The Harrises challenge only the first element, identity of the cause of action.6

“[O]ne must assert all claims for relief concerning the same subject matter in one

lawsuit and any claims for relief concerning that same subject matter which are not

raised will be res judicata[.]” (Citation omitted; emphasis in original.) Lawson v.

Watkins, 261 Ga. 147, 149 (2) (401 SE2d 719) (1991). Thus, to determine whether

there is identity of the cause of action, the court must examine “the subject matter and

the issues raised by the pleadings in the two cases.” (Citation and punctuation

omitted.) Crowe v. Elder, 290 Ga. 686, 688 (723 SE2d 428) (2012). Under Georgia

law, “[a] cause of action is deemed to be the entire set of facts which give rise to an

enforceable claim.” (Citation and punctuation omitted.) Id.

       The Harrises contend that, although the subject matter of the case at bar is

“linked” to that of the previous cases, there is not an identity of the cause of action

because some of the operative facts are different, citing Haley v. Regions Bank, 277

Ga. 85, 91 (586 SE2d 633) (2003) (“Where some of the operative facts necessary to

       6
        The other elements are plainly satisfied. Deutsche Bank was a defendant in
the previous litigation. Further, “[a] dismissal for failure to state a claim is a dismissal
on the merits and is with prejudice.” (Punctuation and footnote omitted.)
Comprehensive Pain Mgmt. v. Blakely, 312 Ga. App. 721, 722 (719 SE2d 579)
(2011). See also Johnson v. Bank of America N.A., 594 Fed. Appx. 953, 955 (11th
Cir. 2014) (“[U]under Georgia law the granting of a motion to dismiss operates as an
adjudication on the merits of the dismissed claims.”) (citation omitted).

                                             6
the causes of action are different in the two cases, the later suit is not upon the same

cause as the former, although the subject matter may be the same, and even though

the causes arose out of the same transaction.”) (citations and punctuation omitted).

Specifically, they point to their allegation, made for the first time in their most recent

complaint, that, because of the advance payments made by AHM, they were not in

default on their loan when any notice of default was sent in early 2012. They did not

include this specific allegation in any previous action. In addition, they argue that in

the present complaint they raised for the first time that the notice of foreclosure was

defective because it omitted notice of intent to accelerate and omitted the name and

contact information for the person or entity with authority to negotiate, as required

under OCGA § 44-14-162.2.

       It is the relevant facts themselves, once they occur, however, that give rise to

the cause of action, regardless whether the party fails to include certain facts in the

first action to proceed to judgment. See Kaylor v. Rome City School District, 267 Ga.

App. 647, 649 (1) (b) (600 SE2d 723) (2004) (finding identity of the cause of action

where the first suit was for breach of contract and second suit was for fraudulent

inducement to enter that contract). The doctrine of res judicata

                                            7
      applies even if some new factual allegations have been made, some new
      relief has been requested, or a new defendant has been added. It is only
      where the merits were not and could not have been determined under a
      proper presentation and management of the case that res judicata is not
      a viable defense. If, pursuant to an appropriate handling of the case, the
      merits were or could have been determined, then the defense is valid.

(Punctuation and footnote omitted; emphasis in original.) Neely v. City of Riverdale,

298 Ga. App. 884, 887 (2) (681 SE2d 677) (2009). Thus, in Leggett v. Gibson-Hart-

Durden Funeral Home, Inc., 123 Ga. App. 224 (180 SE2d 256) (1971), this Court

observed that res judicata applied to bar a widow in a later suit against a funeral home

for the improper interment of her husband where the widow failed to allege the

allegations as a counterclaim in a previous suit between the parties under the burial

contract. This was despite the widow’s argument that she did not know that the

funeral home did not perform the burial in the manner provided in the contract and

only learned of the breach when the body was exhumed four days after judgment in

the previous suit. Id. at 225. The court held that the widow had “a duty to litigate each

and every issue which existed between the parties touching on the subject matter of

this action when she was sued on open account for the burial expenses incurred in

interment of her husband.” Id. at 224-225. The widow did not claim that the funeral

                                           8
home defrauded her, preventing her from learning of the alleged discrepancy between

the funeral ordered and the funeral provided. Id. Thus, the claim was required to be

litigated in the first suit because the claim could have been litigated then. Id. at 225.

       Here, the alleged breach – foreclosing on the Harrises if they were not actually

in default – occurred before they filed the first suit. Haley, cited by the Harrises, is

inapposite, because the plaintiff in that case based claims on operative facts that arose

after previous litigation and therefore the merits of the claim could not have been

determined in the earlier action. Haley, 277 Ga. at 91 (“[T]he former [suit] resolved

the nature and transferability of the defeasible and reversionary interests under the

will, while the latter [suit] concern[ed] the validity of a subsequent transfer[.]” Thus,

the operative facts were different because the second suit involved questions which

“arose after the holding in [the first suit].” ) (emphasis added). See also, Humphrey

v. JP Morgan Chase Bank, N.A., _ Ga. App. _ (787 SE2d 303) (Case No. A16A0289,

decided June 8, 2016) (2016 Ga. App. Lexis 323, *8) (holding no identity of causes

of action for breach of contract of a security deed and wrongful foreclosure because

the allegations in the subsequent complaint arose after the two previously dismissed

actions). In both cases, the plaintiffs could not have litigated the operative facts of the

                                            9
second suit at the time of the first suit because the underlying circumstances had not

yet occurred.

      In this case, the record shows that the Harrises alleged in their wrongful

foreclosure claim in their first lawsuit in Oconee County that Deutsche Bank “had

[no] right to proceed with a foreclosure and non-judicial sale of [their] property, as

proper notice was not given as required by OCGA § 44-14-162.2[.]” In their wrongful

foreclosure claim in the instant action, they alleged that Deutsche Bank “failed to

provide in any notice of foreclosure the name, address, and telephone number of the

individual or entity who had full authority to negotiate, amend, and modify all terms

of the mortgage as required by OCGA § 44-14-162.2,” which exactly mirrors the

statutory language from that Code section.7 In their first lawsuit, the Harrises alleged

      7
          (a) Notice of the initiation of proceedings to exercise a
          power of sale in a mortgage, security deed, or other lien
          contract shall be given to the debtor by the secured creditor
          no later than 30 days before the date of the proposed
          foreclosure. Such notice shall be in writing, shall include
          the name, address, and telephone number of the individual
          or entity who shall have full authority to negotiate, amend,
          and modify all terms of the mortgage with the debtor, and
          shall be sent by registered or certified mail or statutory
          overnight delivery, return receipt requested, to the property
          address or to such other address as the debtor may
          designate by written notice to the secured creditor.
OCGA § 44-14-162.2.

                                          10
that Deutsche Bank’s “notice of default did not comply with the terms of the security

deed.” The breach of contract claim in the instant action alleged that Deutsche Bank’s

“breached the contract by failing to provide accurate notices [of default] as required

by paragraph 22 of the Security Deed.”8 The subject matter of both of the Harrises’

claims in the instant action concern the 2012 foreclosure, specifically whether proper

notice was given. The operative fact concerns the notice given once foreclosure

proceedings were initiated; whether that was adequate according to statute or contract

does not convert the operative fact into something different. The alleged misconduct

that gives rise to the claims is the same. See Crowe, 290 Ga. at 688 (holding identity

of causes of action although first action was based in fraud and second action in

contract because the allegation of the misconduct forms the basis of each and is the

same; the recasting of the same alleged conduct does not constitute a new or different

cause of action).

      8
         Paragraph 22 specifies the contents of the notice the lender shall provide
when the borrower breaches the contract, prior to acceleration of the borrower’s
obligations. Paragraph 15 provides: “If any notice required by this Security
Instrument is also required under Applicable Law, the Applicable Law requirement
will satisfy the corresponding requirement under this Security Instrument[,]” OCGA
§ 44-14-162.2 in this case.

                                         11
      The Harrises argue that they could not have based the causes of action in their

previous litigation on the present operative facts because they were unaware of them

at the time. The doctrine of res judicata still operates even where the plaintiff is

unaware of the potential claim through no fault of another. See, Neely, 298 Ga. App.

at 887, n. 10 (2) (“We find entirely unpersuasive [the plaintiff’s] argument that res

judicata does not apply here since he was not aware of his contract claims at the time

he filed his federal complaint because his lawyer had not yet found a [particular]

Court of Appeals case that he asserts supported his breach of contract claim.”)

(citation and punctuation omitted); see also, Leggett, supra, 123 Ga. App. at 225-226.

“[A] judgment rendered in litigation arising under a contract is conclusive of all the

accrued rights of the parties arising under the contract, whether they were actually

inquired into or not; and such judgment may, in a subsequent suit between the parties

arising under the same contract, be pleaded as res judicata.” (Citation omitted;

emphasis supplied.) Missouri State Life Ins. Co. v. Pilcher, 179 Ga. 231, 232-233 (1)

(175 SE 586) (1934).

      Here, the record shows that the operative facts at issue (that AHM’s advance

payments to Deutsche Bank kept the Harrises’ account current) could have been

presented when the Harrises brought their first suit against Deutsche Bank concerning

                                         12
the 2012 foreclosure and non-judicial sale of the property. Because “[t]he doctrine of

res judicata prevents re-litigation of matters that were or could have been litigated in

a previously adjudicated action[,]” the Harrises’ new challenge to the 2012

foreclosure and non-judicial sale of the property is barred. (Punctuation and footnote

omitted; emphasis supplied.) Neely, 298 Ga. App. at 886 (2). “A litigant must

discharge all his weapons, and not reserve a part of them for use in a future

reencounter. He must realize that one defeat will not only terminate the campaign, but

end the war.” (Citation and punctuation omitted.) Piedmont Cotton Mills v. Woelper,

269 Ga. 109, 111 (498 SE2d 255) (1998). The trial court did not err in ruling that the

current suit is barred by res judicata.

      Judgment affirmed. Branch and Mercier, JJ., concur.

                                          13