Bredlow v. CitiMortgage, Inc.

• Decision Date: 26 January 2016
• Docket Number: Civil No. 15-3087 (DWF/JJK)
• Parties: Gregory P. Bredlow, Plaintiff, v. CitiMortgage, Inc., Wilford, Geske & Cook, P.A., ATD Holdings, LLC, and Andrew T. Dibble, Defendants.
• Court: U.S. District Court — District of Minnesota

Gregory P. Bredlow, Plaintiff, v. CitiMortgage, Inc., Wilford, Geske & Cook, P.A.,ATD Holdings, LLC, and Andrew T. Dibble, Defendants.

Civil No. 15-3087 (DWF/JJK)

UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

January 26, 2016

MEMORANDUM OPINION AND ORDER

Plaintiff Gregory P. Bredlow, Pro Se.¹

Cameron A. Lallier, Esq., and Thomas J. Lallier, Esq., Foley & Mansfield, PLLP, counsel for Defendant CitiMortgage, Inc.

Michael A. Klutho, Esq. and Uzodima F. Aba-Onu, Esq., Bassford Remele, PA, counsel for Defendant Welford, Geske & Cook, P.A.

Kelly Vince Griffitts, Esq., Griffitts Law Offices PLLC, counsel for ATD Holdings, LLC and Defendant Andrew T. Dibble.

INTRODUCTION

This matter is before the Court on a Joint Motion to Dismiss brought by Defendants CitiMortgage, Inc. ("CMI"), Wilford, Geske & Cook ("WGC"), ATD Holdings, LLC ("ATD"), and Andrew T. Dibble ("Dibble") (together, "Defendants")(Doc. No. 8); and a Motion for Leave to File Second Amended Complaint brought by Plaintiff Gregory P. Bredlow ("Bredlow" or "Plaintiff") (Doc. No. 23). For the reasons set forth below, the Court grants Defendants' motion to dismiss Counts I through V, as stated in the Amended Complaint; grants Bredlow's motion for leave to file his Second Amended Complaint; and remands Bredlow's remaining state law claim to state court.

BACKGROUND

On or about March 6, 2003, Bredlow executed a promissory note, secured by a mortgage, for the purchase of real property located in Plymouth, Minnesota (the "Property"). (Doc. No. 1, Ex. 2 ("Am. Compl.") ¶ 23.) The mortgage states that Citizens State Bank ("Citizens") is the lender, while Mortgage Electronic Registration Systems, Inc. ("MERS") is the mortgagee, "acting solely as a nominee for [Citizens] and [Citizen's] successors and assigns." (Id. ¶ 24, Ex. A.) The mortgage expressly authorizes MERS to "foreclose and sell the Property." (Id.) It also includes what appears to be a drafting error—namely, that "MERS is the mortgage," rather than "MERS is the mortgagee." (Id. (emphasis added).)

On or about January 1, 2005, Principal Residential Mortgage, Inc. ("Principal"), the servicer of Bredlow's mortgage, merged with CMI, which thereafter became the servicer of the mortgage. (Id. ¶ 25.) On or about July 22, 2010, MERS assigned its interest in Bredlow's mortgage to CMI. (Id. ¶ 26.)

Subsequently, Bredlow fell behind on payments on his mortgage loan. (Id. ¶ 27.) On or about October 27, 2014, CMI recorded its notice of pendency and power of attorney to foreclose on the Property through WGC. (Id. ¶ 28.) WGC, as power ofattorney for CMI, commenced foreclosure by advertisement on the Property. (Id. ¶ 29.) On or about November 4, 2014, WGC served Bredlow with a Notice of Mortgage Foreclosure Sale by way of a sheriff's sale scheduled for December 15, 2014. (Id. ¶ 30.)

On or about November 14, 2014, Bredlow provided information to, and requested information from, ClearPoint Credit Counseling Solutions ("ClearPoint"). (Id. ¶ 31.) ClearPoint is a third-party housing counselor, and Bredlow communicated with ClearPoint regarding loss mitigation programs, including the federal Home Affordable Modification Program ("HAMP"). (Id.) From December 8, 2014 through at least December 12, 2014, Bredlow, through his authorized representative John Jacobsen ("Jacobsen"), engaged in direct discussions with CMI relating to a possible loan modification. (Id. ¶ 33.) During these discussions, CMI requested additional authorization from Bredlow to speak with Jacobsen about Bredlow's mortgage. (Id. ¶ 34.) On December 15, 2014, WGC advised Bredlow, through Jacobsen, that the sheriff's sale of the Property had been postponed pending loan modification. (Id. ¶ 35.)

On January 15, 2015, CMI sent Bredlow a loan modification offer that included an opportunity for Bredlow to enter into a Trial Period Plan. (Id. ¶ 36, Ex. C.) Jacobsen contacted CMI to discuss loan modification, at which time CMI informed him that the sheriff's sale of the Property had occurred as scheduled on December 15, 2014. (Id. ¶ 37, Ex. D.) On or about January 15, 2015, Tiburon Homeowners Association, Inc. ("Tiburon") recorded an association lien against the Property, assigned its interest in the lien to P.A.G., LLC ("P.A.G."), and recorded the assignment. (Id. ¶¶ 39, 40.) P.A.G., in turn, recorded a notice of intent to redeem its interest in the lien, assigned its interest inthe lien to ATD, and recorded the assignment. (Id. ¶¶ 41-42.) On June 16, 2015, ATD redeemed its interest in the lien as junior creditor. (Id. ¶ 43.) Dibble is the registered agent and owner of ATD. (Id. ¶ 21.)

On or about June 19, 2015, Bredlow filed an action in Hennepin County District Court against CMI and WGC, asserting five claims: (I) violation of Minnesota's Dual Tracking Statute, Minn. Stat. § 582.043; (II) violation of the federal Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C §§ 1692-1692p; (III) violation of the Mortgage Servicer Standards of Conduct, Minn. Stat. § 58.13; (IV) quiet title, under Minn. Stat. § 559.01; and (V) declaratory judgment, under Minn. Stat. § 555.01. (Doc. No. 1 ("Notice of Removal"); Doc. No. 1, Ex. 1 ("Compl.").) Thereafter, on June 26, 2015, ATD commenced an eviction action against Bredlow. (Am. Compl. ¶ 45.)

On July 1, 2015, Bredlow filed an Amended Complaint, adding ATD and Dibble as Defendants. (Notice of Removal; Am. Compl.) On July 17, 2015, Defendants removed the lawsuit to this Court, and on July 24, 2015, they filed a joint motion to dismiss the Amended Complaint. (Doc. Nos. 1, 8.)

On September 4, 2015, Bredlow filed a motion for leave to file a second amended complaint. (Doc. No. 23.) The proposed Second Amended Complaint adds allegations that CMI participated in the federal Making Home Affordable program ("MHA") and, accordingly, entered into servicer participation agreements ("SPAs") with the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac"). (Doc. No. 26, Ex. 1 ("Proposed Second Am. Compl.") ¶¶ 2-4, 24-26, 32-42.) It further alleges that CMI violated the SPAs by failing to respondto Bredlow's request for a loan modification prior to the sheriff's sale. (Id. ¶¶ 59-67.) Violation of the SPAs, it alleges, constitutes an additional violation of the Mortgage Servicer Standards of Conduct, Minn. Stat. § 58.13, specifically subd. 1(a)(5). (Id. ¶¶ 96-117.) CMI opposes Bredlow's motion for leave to file the proposed Second Amended Complaint. (Doc. No. 29.)

DISCUSSION

I. Defendants' Joint Motion to Dismiss

A. Legal Standard

In deciding a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), a court assumes all facts in the complaint to be true and construes all reasonable inferences from those facts in the light most favorable to the complainant. Morton v. Becker, 793 F.2d 185, 187 (8th Cir. 1986). In doing so, however, a court need not accept as true wholly conclusory allegations, Hanten v. Sch. Dist. of Riverview Gardens, 183 F.3d 799, 805 (8th Cir. 1999), or legal conclusions drawn by the pleader from the facts alleged, Westcott v. City of Omaha, 901 F.2d 1486, 1488 (8th Cir. 1990). A court deciding a motion to dismiss may consider the complaint, matters of public record, orders, materials embraced by the complaint, and exhibits attached to the complaint. Porous Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir. 1999).

To survive a motion to dismiss, a complaint must contain "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Although a complaint need not contain "detailed factual allegations," it must contain facts with enough specificity "to raise a right to relief above the speculativelevel." Id. at 555. As the United States Supreme Court reiterated, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements," will not pass muster under Twombly. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555). In sum, this standard "calls for enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of [the claim]." Twombly, 550 U.S. at 556.

B. Count I: Violation of Minnesota's Dual Tracking Statute

In Count I, Bredlow alleges that CMI violated Minnesota's Dual Tracking Statute, Minn. Stat. § 582.043, subd. 6, by failing to halt the sheriff's sale of the Property. (Am. Compl. ¶¶ 47-52.) Bredlow seeks relief under subdivision 6(c), which provides that a servicer must halt foreclosure proceedings to evaluate a timely loan modification application:

(c) If the servicer receives a loss mitigation application after the foreclosure sale has been scheduled, but before midnight of the seventh business day prior to the foreclosure sale date, the servicer must halt the foreclosure sale and evaluate the application. If required to halt the foreclosure sale and evaluate the application, the servicer must not move for an order of foreclosure, seek a foreclosure judgment, or conduct a foreclosure sale unless:

(1) the servicer determines that the mortgagor is not eligible for a loss mitigation option, the servicer informs the mortgagor of this determination in writing, and the applicable appeal period has expired without an appeal or the appeal has been properly denied;

(2) where a written offer is made and a written acceptance is required, the mortgagor fails to accept the loss mitigation offer within the time frame specified in the offer or within 14 days after the date of the offer, whichever is longer; or

(3) the mortgagor declines a loss mitigation offer in writing.

Minn. Stat. § 582.043, subd. 6(c).

As a threshold matter under subdivision 6(c), Bredlow must sufficiently allege that the servicer, CMI, received Bredlow's loss mitigation application "before midnight of the seventh business day prior to the foreclosure sale date." (Id.) That is, Bredlow must allege that CMI received a loss mitigation application on or...