If that's the case, and we have our way, she's going to have to find some funds (and then some) to compensate us for what amounts to civil theft. Our research indicates it could be criminal theft, and we are looking at filing a complaint -- against Duke and others responsible -- with the appropriate law-enforcement agency.
In a Motion to Dismiss (MTD) filed on December 1, Duke offered no defense at all -- in fact, she did not mention the excess foreclosure funds. After we responded to her MTD, Duke filed a reply that mentions the funds, but again, offers no valid defense. This time, Duke admits that the funds went to her, but she cites no law showing they were supposed to wind up in her hands,
For one thing, Duke's reply was due to be filed by December 19, per an order from U.S. District Judge R. David Proctor. It was filed on December 22, meaning it was three days late and is due to be denied in its entirety. (Court's order and Duke's reply are embedded at the end of this post.)
Even if you ignore the timeliness problem with Duke's reply, she still offers no defense that holds up. From her reply:
The Plaintiffs continue to allege that Defendant Duke "essentially stole 'converted' roughly $9,000 in excess foreclosure funds" from them. . . . There are no other allegations of anything Duke did that would give rise to a cause of action against her.
These allegations in the Plaintiffs' Complaint do not "allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Twombly 550 U.S. 544, 556, 127 S.Ct. 1955 (sic). Again, it's not the inclusion of Duke in a list that warrants her dismissal but rather the Plaintiffs' failure to comply with basic pleading standards.
The claim that "there are no other allegations" against Duke is plainly false. But even if it were true, a rational person might conclude that claims Duke stole thousands of dollars are serious, on their own. That Duke seems incapable of understanding would make me chuckle -- if it wasn't my money we are talking about. (Note: Duke's citation to Twombly is incorrect. The opinion was issued in 2007, not 1955.)
The closest Duke comes to presenting an actual defense is to haul out the infamous Twombly case for the proposition that it requires heightened pleading standards. But we already have shown, in court documents and at this blog, that no such standards are required in the Eleventh Circuit (covering Alabama, Georgia, and Florida), per a case styled Randall v. Scott, 610 F.3d 701, 710 (11th Cir. 2010).
Duke does make one other reference to the excess foreclosure funds. From her reply:
With regard to Count Five, the only item allegedly converted by the Defendants, including Duke, is the proceeds from the foreclosure sale. Again, Duke received funds in satisfaction of a valid judgment against the Plaintiffs. There is no evidence that the judgment was invalidated prior to the receipt of funds. Therefore, the conversion count must fail.
We learn two important facts here:
(1) Duke admits she received the funds. Huntsville attorney Robert Wermuth, who represented Chase Mortgage in the foreclosure, told me via e-mail that the funds went to Duke, and we now know he actually told the truth about that.
(2) Like Wermuth, Duke can cite no law that shows she was entitled to receive the funds. The actual law on the issue can be found at a case styled Cheryl Williams v. Wells Fargo Home Mortgage (S.D., Alabama, 2015). Wermuth and Duke seem blissfully unaware of the findings in Williams, which are based on a 1968 Alabama state-court ruling, which provides binding precedent in our case -- and it's not exactly new law:
[A] mortgagee (Chase) is, in a sense, a trustee for the mortgagor (Carol and me), and is charged with the `duty of fairness and good faith in its execution to the end that the mortgagor's property may be disposed of to his pecuniary advantage in the satisfaction of his debt.'" Springer, 562 So. 2d at 139 (quoting J.H. Morris, Inc. v. Indian Hills, Inc., 212 So. 2d 831, 843 (Ala. 1968) (emphasis added)). Thus, "[t]he mortgagee, as trustee for the mortgagor, is obligated to apply that profit realized after foreclosure and during the redemption period to the reduction of the mortgagor's debt.
Translation: The money is ours, and we've been deprived of it for more than two years. Liberty Duke does not come close to showing otherwise.