Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

McGinnis v. American Home Mortgage Servicing, Inc.

United States Court of Appeals, Eleventh Circuit

August 22, 2018

JANE MCGINNIS, Plaintiff-Appellee,
v.
AMERICAN HOME MORTGAGE SERVICING, INC., Defendant-Appellant.

          Appeal from the United States District Court for the Middle District of Georgia D.C. Docket No. 5:11-cv-00284-CAR

          Before TJOFLAT, ROSENBAUM, and BRANCH, Circuit Judges.

          BRANCH, CIRCUIT JUDGE:

         American Home Mortgage Servicing, now known as Homeward, appeals the denial of a new trial concerning an award of punitive damages arising from a wrongful foreclosure. Jane McGinnis, the owner of several rental properties, brought suit against Homeward, the servicer of seven of her residential properties' mortgages, alleging wrongful foreclosure, conversion, interference with property, and intentional infliction of emotional distress. The jury found against Homeward on all claims and awarded McGinnis $3, 506, 000 in damages ($6, 000 for economic injury, $500, 000 for emotional distress, and $3, 000, 000 in punitive damages). Homeward appeals the district court's denial of a motion for a new trial, arguing (1) that the punitive damages award was unconstitutionally excessive under the Due Process Clause of the Fourteenth Amendment and (2) that the punitive damages award unlawfully exceeded Georgia's $250, 000 cap on punitive damages under O.C.G.A. § 51-12-5.1(f), (g).[1] Because we conclude that the award violates neither the U.S. Constitution nor Georgia law, we affirm the judgment of the district court.

         I. FACTUAL BACKGROUND

         McGinnis owns numerous residential rental properties in Georgia that served as her nest egg. McGinnis entrusted her son, Adam, with managing the properties. McGinnis refinanced seven of her properties with Taylor, Bean & Whitaker ("TB&W"), granting security deeds and promissory notes to TB&W. Her monthly payment to TB&W for one such rental property, located at 172 Hilton Street, was $605.58, including $490.13 for principal and interest and $115.45 for the escrow deposit. On October 17, 2009, Homeward obtained the rights to service McGinnis's seven loans. Homeward sent McGinnis a welcome letter that said McGinnis's payment on 172 Hilton Street for November 2009 was $843.58 without explaining the basis for the increase. McGinnis disputed the increase and paid $605.58 for November. In December 2009, Homeward sent McGinnis an escrow analysis showing a present payment of $843.58, including $490.13 for principal and interest and $353.45 for the escrow deposit. No explanation was given for the high percentage increase in the escrow deposit portion of the payment. The statement described McGinnis's new monthly payment beginning February 1, 2010 as $680.08. McGinnis sent a fax to Homeward asserting that the escrow amounts were incorrect and continued paying $605.58.

         On January 15, 2010, Homeward sent McGinnis a letter explaining that the escrow analysis on her loan could have reflected an escrow error and directing her to disregard the December analysis and continue making payments at the previous amount. On February 20, 2010, Homeward sent a second escrow statement that described McGinnis's present payment as $843.59 through March 2010 and her new payment, effective April 1, 2010, as $638.32. Homeward treated the past payments of $605.58 as partial, and held the funds in a suspense account until there were enough funds to pay off the oldest past-due monthly payment. The interest and late fees continued to mount and Homeward frequently contacted Adam and Jane by phone and mail demanding payment. On May 19, 2010, McGinnis sent Homeward a fax explaining that the correct payment for November 2009 through March 2010 should have been $605.58 and providing her own escrow analysis, which was identical to Homeward's analysis with respect to payments after April 2010. The only difference was the $843.58 that McGinnis refused to pay for November 2009 through March 2010 and associated late fees. Homeward failed to explain or retract the $843.48 amount and the issues persisted throughout 2010. McGinnis continued to pay $605.58 until January 2011 when she began paying the $638.32.

         From February through May 2011, Homeward returned McGinnis's payments. On March 22, 2011, Homeward sent a formal notice of foreclosure on 172 Hilton Street and finally foreclosed on July 7, 2011.[2] At trial McGinnis testified that the experience traumatized her. Her clinical psychologist, Dr. Andrew Sappington, also testified that the events leading up to the foreclosure were a "major cause of . . . depression" for McGinnis as well as of physical symptoms that included projectile vomiting. McGinnis, who is retired and relies on her rental properties as her income, described the effect of the foreclosure: "I am too old to start over. They have taken my life away from me." McGinnis also presented at trial a letter that Adam had sent a fax to Homeward on December 17, 2009 describing the "und[ue] stress" Homeward's constant demands had caused him and his mother. At trial, McGinnis also presented recordings of phone conversations with Homeward in which Adam mentioned his and his mother's frustration with Homeward's repeated demands for payment and refusal to explain the increase. Homeward's only witness, a default case manager at Homeward, insisted that McGinnis was obligated to pay any amount Homeward demanded whether reasonable or in error.

         II. PROCEDURAL HISTORY

         McGinnis filed suit against Homeward in the United States District Court for the Middle District of Georgia asserting claims of (1) wrongful foreclosure, (2) violation of the Real Estate Settlement Procedures Act ("RESPA"), (3) intentional infliction of emotional distress ("IIED"), (4) conversion, (5) tortious interference with property rights, (6) defamation, and (7) violation of Georgia's Racketeer Influenced and Corrupt Organizations ("RICO") Act. McGinnis sought attorney's fees and punitive damages. After discovery, Homeward moved for summary judgment. The district court granted summary judgment for Homeward on the RESPA, defamation, and Georgia RICO Act claims.

         The case then proceeded to trial, which was bifurcated into two phases: one phase on liability and the other on punitive damages and attorney's fees. At the end of McGinnis's case on liability, Homeward moved for judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50(a), which the district court denied.

         By special verdict, the jury found for McGinnis on all of her remaining claims-conversion, wrongful foreclosure, interference with property rights, and IIED. The jury awarded McGinnis $6, 000 in economic damages and $500, 000 in emotional distress damages. In the second phase of the trial, McGinnis withdrew her claim for attorney's fees, and the jury found that Homeward acted with the specific intent to cause McGinnis harm and awarded $3, 000, 000 in punitive damages.

         After trial, Homeward filed a renewed motion for judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50(b), and in the alternative, for a new trial on the issue of punitive damages. The district court granted in part the renewed judgment as a matter of law and reduced the punitive damages award to the statutory cap of $250, 000 pursuant to O.C.G.A. § 51-12-5.1(g), finding that there was insufficient evidence Homeward acted with specific intent to cause harm.[3] On appeal regarding Homeward's post-trial motions, we determined that Homeward did not properly preserve the issue of specific intent with regard to punitive damages in its Rule 50(a) motion, and was therefore precluded from raising the argument in its Rule 50(b) motion. McGinnis, 817 F.3d at 1261-64. Accordingly, we reversed the district court's ruling that Homeward had preserved the issue of specific intent and vacated the judgment that had reduced the jury's award to $250, 000. Id. We remanded and instructed the district court to rule on the motion for a new trial on the issue of punitive damages. Id. at 1264.

         On remand, the district court denied Homeward's motion for a new trial, concluding that the punitive damages award was not unconstitutionally excessive and that the jury's finding of specific intent-a prerequisite to an award in excess of Georgia's $250, 000 statutory cap-was not against the clear weight of the evidence. Homeward filed the present appeal.

         III. STANDARDS OF REVIEW

         The district court's "decision that the punitive damages award does not run afoul of the federal Constitution . . . is subject to de novo review, though we 'defer to the District Court's findings of fact unless they are clearly erroneous.'" Action Marine, Inc. v. Cont'l Carbon Inc., 481 F.3d 1302, 1309 (11th Cir. 2007) ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.