Editor: David Reiss
Brooklyn Law School

April 5, 2013

The 11th Circuit Court in Georgia Holds that Homeowners’ Claim of Wrongful Foreclosure Must be Dismissed Because there Has Not Been an Actual Foreclosure Sale on the Property Yet

By Robert Huberman

In Jenkins v. McCalla Raymer, LLC, 492 F. App’x 968 (11th Cir. 2012), the court dismissed homeowners’ second amended complaint for failure to state a claim.

Wendy Jenkins and Eleanor Spratlin Crawford appealed from the District Court’s order dismissing their second amended complaint for failure to state a claim. Appellants were Georgia homeowners who brought a class action suit against McCalla Raymer, LLC and other various defendants alleging, among other things, wrongful foreclosure. On appeal, Appellants allege that: 1) the magistrate judge erred in failing to sua sponte recuse himself, and 2) the District Court erred in dismissing the appellants’ wrongful foreclosure claim.

28 U.S.C. § 455(a) requires a judge to recuse himself in any proceeding in which his impartiality might reasonably be questioned. The test is whether an “objective, disinterested, lay observer . . . would entertain a significant doubt about the judge’s impartiality.” McWhorter v. City of Birmingham, 906 F.2d 674, 678 (11th Cir. 1990). And pursuant to 28 U.S.C. § 455(b)(1), a judge is required to recuse himself only where the judge has an actual bias or prejudice against a litigant. Here, Appellants suggest that the magistrate judge should have recused himself because of his participation in two seminars on residential mortgage regulation.  In Appellants’ opinion, the recusal was required because the magistrate judge was presumably giving his judicial perspective on claims similar to the instant case. The court stated, however, that when a judge has spoken or written on a particular area of law, he does not automatically need to recuse himself unless specific remarks indicate that he harbors a bias towards or against a litigant or legal claim. The court then held that the magistrate judge was not required to recuse himself because Appellants did not provide information regarding the substance of the magistrate judge’s comments or topics discussed during the seminar. Thus, the court could not conclude that an objective observer would “entertain a significant doubt about the magistrate judge’s impartiality.”

Appellants’ also claimed that the non-judicial foreclosure proceedings were improperly commenced because certain defendants did not have the power to initiate the foreclosure proceedings—the security deeds were not properly assigned to the foreclosing parties. The court noted, however, that although there were no Georgia cases with law directly on point, other non-judicial foreclosure states have held that a homeowner cannot seek damages in a wrongful foreclosure action unless there has been an actual foreclosure sale. Because the Appellants failed to cite any authority indicating that Georgia courts would rule differently, the court concluded that Georgia law required a plaintiff seeking damages for wrongful foreclosure to establish that the property at issue was actually sold at foreclosure. Because Appellants failed to allege that their properties were foreclosed on, they did not state a claim for wrongful foreclosure. Thus, Appellants’ claim of wrongful foreclosure was properly dismissed.

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