[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 11-13100
Non-Argument Calendar
________________________
D.C. Docket No. 1:08-cv-00595-CAP
ELLERY STEED,
llllllllllllllllllllllllllllllllllllll Plaintiff-Counter Defendant-Appellant,
versus
EVERHOME MORTGAGE COMPANY,
MERSCORP INC.,
MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC.,
CITIMORTGAGE INC.,
COUNTRYWIDE FINANCIAL CORPORATION,
GMAC-RFC HOLDING COMPANY, LLC,
MORSERV INC.,
WELLS FARGO and CO.,
DOES 1-11, INCLUSIVE,
llllllllllllllllllllllllllllllllllllllllDefendants-Appellees,
FANNIE MAE,
llllllllllllllllllllllllllllllllll Defendant-Counter Claimant-Appellee,
HSBC FINANCE CORPORATION, et al.,
l llllllllllllllllllllllllllllllllDefendants.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
________________________
(July 11, 2012)
Before TJOFLAT, CARNES and BLACK, Circuit Judges.
PER CURIAM:
On July 29, 2003, Ellery Steed, an African-American, obtained a mortgage
loan to purchase a home in Atlanta, Georgia. In addition to executing a
promissory note, he executed a security deed (“mortgage”) to Mortgage Electronic
Registration Systems, Inc. (“MERS”). On October 1, 2005, EverHome Mortgage
Company (“EverHome”) became the servicer for the mortgage. EverHome
thereafter purchased a hazzard insurance policy to protect the mortgage loan
balance as permitted under the terms of the mortgage.1 This increased Steed’s
monthly payments by $220 and Steed didn’t like it, so he stopped making his
mortgage payments. When EverHome threatened foreclosure, Steed made the loan
current. Steed eventually failed to make the mortgage payments, however, and
1
EverHome purchased the hazard insurance because Steed failed to provide it.
2
EverHome commenced foreclosure proceedings. The Superior Court of Fulton
County entered a judgment of foreclosure, and, on February 5, 2008, Steed’s home
was foreclosed.
Steed brought suit against EverHome on four occasions, two before and two
after the foreclosure. The first suit (“Steed I”) was filed in the Fulton County
Superior Court, Steed v. Everhome Mortgage Co. On February 22, 2006. Steed’s
complaint sought, among other things, relief from the various fees and
assessments EverHome had imposed. He voluntarily dismissed the suit on
November 27, 2006, prior to trial. The second suit (“Steed II”) was filed against
EverHome in the U.S. District Court for the Northern District of Georgia, Steed v.
Everhome Mortgage Co., on December 19, 2006. His complaint sought relief
under the Fair Housing Act, 42 U.S.C. § 3605 et seq., the Fair Credit Reporting
Act, 15 U.S.C. § 1681 et seq., the Georgia Fair Housing Act, O.C.G.A. § 8-3-200
et seq., the Georgia Fair Business Practices Act, O.C.G.A. § 10-1-390 et seq., and
Georgia tort law, fraud and negligence. In response, EverHome, citing Steed’s
mortgage loan defaults, counterclaimed for the full amount due on the promissory
note. On May 14, 2008, the district court granted EverHome summary judgement
on Steed’s claims, and EverHome dismissed its counterclaim (its foreclosure
3
proceedings having concluded with the February 5, 2008 foreclosure).2 Steed
appealed the summary judgment, and we affirmed. Steed v. EverHome Mortgage
Company, 308 F. App’x 364 (11th Cir. 2009). The third lawsuit (“Steed III”) was
filed in the Fulton County Superior Court, Steed v. Everhome Mortgage Co., on
January 25, 2008, after Steed received from EverHome in December 2007 notice
of the impending foreclosure sale. In Steed III, in addition to EverHome, Steed
sued most of the parties now before this court as appellees. Before service of
process was effected on any of these parties, EverHome removed the case to the
District Court based on diversity of citizenship. Shortly after the removal, the
District Court denied Steed’s application for an order enjoining the foreclosure
proceedings. Steed voluntarily dismissed Steed III on March 4, 2008.
The fourth suit (“Steed IV”), Steed v. Everhome Mortgage Co., is the case
presently before us on appeal. Steed filed it on February 25, 2008, after
EverHome had executed a foreclosure sale on his residence on February 5, 2008,
in an effort to vacate the foreclosure sale. Steed’s complaint, as amended, mirrors
the complaint in Steed III and asserts essentially the same claims Steed asserted in
2
Before granting summary judgment, the district court denied Steed’s application for an
injunctive order restraining the foreclosure proceedings because Steed admitted to the court that
he owed EverHome for the past due mortgage payments and was in default because he lacked the
financial resources to make the payments.
4
a suit in the District of Delaware, Trevino v. Merscorp, Inc., et al., Case No.
1:07-CV-658 (D. Del. Sep. 20, 2007). In addition to EverHome, the complaint
seeks relief against Merscorp, Inc., MERS, Citimortgage, Inc., Countrywide
Financial Corporation, GMAC-RFC Holding Company, LLC, Morserv, Inc.,
Wells Fargo and Co., the controlling shareholders of MERS and Merscorp, Inc.,
HSBC Finance Corporation, Fannie Mae and various unnamed persons or entities.
As amended, the complaint included a variety of federal and state law claims,
among them claims for breach of contract, false representation, breach of the duty
of good faith and fair dealing, unfair trade practices, negligent commencement of
foreclosure proceedings, fraud, fraudulent conspiracy, denial of free access to the
courts, in violation of the United States and Georgia constitutions, racketeering, in
violation of federal and state “RICO” statutes, and race discrimination, in violation
of the Federal Fair Housing Act, 42 U.S.C. § 3605, and the Georgia Fair Housing
Act, O.C.G.A. § 8-3-204.
The district court found no merit in any of Steed’s claims and gave the
defendants judgment. It disposed of Steed’s claims in the orders Steed challenges
in this appeal: the orders entered on September 30, 2009 (dismissing claims
against EverHome), on January 29, 2010 (dismissing claims against MERS and
Merscorp, Inc. and their shareholders, EverHome, GMAC-FRC Holding
5
Company, LLC, HSBC Finance Corporation, and Fannie Mae), on May 18, 2011
(granting EverHome, MERS and Merscorp, Inc. summary judgment), and on June
8, 2011 (denying Steed’s motion for reconsideration of the May 18, 2011 order).
In his opening brief, Steed appears to be challenging the district court’s
judgments in favor of EverHome, MERS, Merscorp, Inc., and the MERS and
Merscorp, Inc. shareholders. He argues that the court erred in dismissing his state
law claims for wrongful foreclosure, negligent foreclosure, fraud, fraudulent
conspiracy, and his claims under the federal and state RICO statutes. He also
argues that the court erred in granting EverHome summary judgment on his claims
under the federal and state fair housing acts.3 We find no merit in any of Steed’s
arguments. And with the exception of Steed’s claims under the fair housing acts,
none warrant discussion.
The Federal Fair Housing Act (“FHA”) provides, in pertinent part:
(a) In general
It shall be unlawful for any person or other entity whose
business includes engaging in residential real
estate-related transactions to discriminate against any
3
In addition to the above, Steed argues that the district court abused its discretion in
refusing to grant him declaratory relief, a statement that the foreclosure sale of his residence was
invalid, erred in denying his motion for a default judgment against EverHome, and erred in
denying his motion for summary judgment against MERS and Merscorp, Inc. for breach of
contract and their duty of good faith and fair dealing. The challenges are patently meritless and
require no comment.
6
person in making available such a transaction, or in the
terms or conditions of such a transaction, because of
race, color, religion, sex, handicap, familial status, or
national origin.
(b) “Residential real estate-related transaction” defined
As used in this section, the term “residential real
estate-related transaction” means any of the following:
(1) The making or purchasing of loans or providing
other financial assistance--
(A) for purchasing, constructing, improving,
repairing, or maintaining a dwelling; or
(B) secured by residential real estate.
(2) The selling, brokering, or appraising of
residential real property.
42 U.S.C. § 3605.
The Georgia Fair Housing Act provides, in pertinent part:
(a) As used in this Code section, the term “residential
real estate related transaction” means any of the
following:
(1) The making or purchasing of loans or providing
other financial assistance:
(A) For purchasing, constructing, improving,
repairing, or maintaining a dwelling; or
(B) Secured by residential real estate; or
(2) The selling, brokering, or appraising of
residential real property.
(b) It shall be unlawful for any person or other entity
whose business includes engaging in residential real
estate related transactions to discriminate against any
person in making available such a transaction or in the
terms or conditions of such a transaction because of
race, color, religion, sex, handicap, familial status, or national origin.
7
O.C.G.A. § 8-3-204. As the district court correctly noted, the Georgia courts
consider federal court interpretations of the FHA as persuasive and rely on those
interpretations in construing the Georgia Act.
Steed’s fair housing act claims of race discrimination were based on
defendants’ (1) fraudulent charging and overcharging of
late fees, (2) inflated escrow charges, (3) inexplicable
and unaccounted-for mortgage payment(s) dispersed to
EverHome from the bankruptcy trustee, (4) grossly
excessive, unsubstantiated and fraudulent charges of
attorneys fees and foreclosure fees,
discriminatory/predatory servicing and charging of
mortgage and hazard insurance premiums, intentional and
fraudulent commencement of foreclosure proceedings and
various other unsubstantiated, unreasonable and inflated
charges denoted as corporate advances.
Order, May 18, 2011 at 15. Since Steed lacked direct evidence of discrimination,
and thus based his claim of discrimination on circumstantial evidence, the district
court applied the familiar burden-shifting framework of McDonnell Douglas v.
Corp. V. Green, 411 U.S. 792, 93 S. Ct. 1817, 36 L. Ed.2d 668 (1973), and Texas
Department of Community Affairs v. Burdine, 450 U.S. 248, 101 S. Ct. 1089, 67 L.
Ed.2d 207 (1981). Steed’s claims of discrimination bundled together amount to
what has been referred to as “reverse redlining.” As the district court observed, in
Steed II, after noting that no circuit court had addressed the elements of an FHA
claim of “reverse discrimination,” this court took the approach taken by the district
8
court in Hargraves v. Capital City Mortgage Corp., 140
F. Supp.2d 7 (D.D.C.2000). Hargraves, we said,
defined “reverse redlining” as “the practice of extending credit on
unfair terms” because of the plaintiff's race and geographic area. Id.
at 20 (quotations omitted). Using this definition, the Hargraves court
required the plaintiff to prove reverse redlining by “show[ing] that the
defendants' lending practices and loan terms were ‘unfair’ and
‘predatory,’ and that the defendants either intentionally targeted on
the basis of race, or that there is a disparate impact on the basis of
race.” Id. (emphasis added). It also held that the plaintiff need not
show that the defendant made loans on preferable terms to
non-African–Americans. Id. It further explained that predatory
lending practices include exorbitant interest rates, equity stripping,
acquiring property through default, repeated foreclosures, and loan
servicing procedures that involve excessive fees. Id. at 20–21.
Finally, the court held that whether the practices alleged occurred,
and whether the practices were unfair and predatory, is a jury
question. Id. at 21.
308 Fed. App’x at 368-69.
The district court assumed, for sake of argument, that the practices Steed
complained of (as outlined above) actually occurred and that they were unfair or
predatory for the purposes of federal and state fair housing acts, and then
concluded that Steed’s claims failed for lack of evidence that the practices were
based on racial animus. What Steed presented were the affidavits of three other
African-Americans (in addition to his own testimony) who said that EverHome
engaged in practices similar to those Steed complained of. The court held that this
9
was not enough, standing alone to prove “a pattern of servicing practices that
target African Americans . . . or have a disparate impact on African Americans.”
Order, May 18, 2011 at 16. The court explained its holding thusly:
In the current case, the record . . reveals only that four African Americans
living in communities predominantly composed of African Americans
believe that EverHome has treated them unfairly by adding inappropriate
fees, refusing requests for information, and ultimately improperly
foreclosing. Even assuming these allegations to be true, however, the
record does not allow the plaintiff’s fair housing act claims to survive
summary judgment. The absolute number (four) reveals nothing to the court
about the proportion of loans serviced by EverHome that belong to African
Americans (as opposed to those belonging to some other race) nor whether
EverHome applies the allegedly predatory or unfair practices more often to
African Americans than to people of other races. By failing to present any
such evidence, the plaintiff fails to carry his burden of showing a prima
facie case of discrimination based on race.
Id. at 17-18. We find no fault in the district court’s holding, and therefore its
rejection of Steed’s fair housing act claims.
For the foregoing reasons, the judgment of the district court is
AFFIRMED.
10