Christenson v. CitiMortgage, Inc.

• Decision Date: 01 June 2017
• Docket Number: Civil Action No. 16-cv-03080-RBJ.
• Citation: 255 F.Supp.3d 1099
• Parties: Eugene CHRISTENSON and Sharon Christenson, Plaintiffs, v. CITIMORTGAGE, INC., Defendant.
• Court: U.S. District Court — District of Colorado

255 F.Supp.3d 1099

Eugene CHRISTENSON and Sharon Christenson, Plaintiffs,

v.CITIMORTGAGE, INC., Defendant.

Civil Action No. 16-cv-03080-RBJ.

United States District Court, D. Colorado.

Signed June 1, 2017

Blair Kenneth Drazic, Blair K. Drazic, Attorney at Law, Grand Junction, CO, for Plaintiffs.

Patrick H. Pugh, Ballard Spahr, LLP, Denver, CO, for Defendant.

ORDER

R. Brooke Jackson, United States District Judge

This matter is before the Court on defendant CitiMortgage, Inc.'s motion to dismiss [ECF No. 5]. For the reasons below, the Court GRANTS that motion.¹

I. FACTS

This case is but the latest chapter in an ongoing saga over the mortgage encumbering plaintiffs Eugene and Sharon Christenson's property in Grand Junction, Colorado. See Christenson v. Citimortgage, Inc. , No. 12-cv-02600-CMA-KLM, 2013 WL 5291947, at *2 (D. Colo. Sept. 18, 2013). The saga began when plaintiffs defaulted on the mortgage on their property in May of 2010. ECF No. 5–3 at 2–3 (December 1, 2014 letter); Def.'s Mot. to Dismiss, ECF No. 5, at 3 (representing that the date of plaintiffs' default was in May of 2010).² Several months later on October 8, 2010 defendant, which holds the promissory note and deed of trust on plaintiffs' property and held them at the time plaintiffs defaulted, subsequently commenced foreclosure proceedings. ECF No. 5–8 (Notice of Election and Demand for Sale).

With foreclosure fast approaching, plaintiffs tried four things to try to prevent the loss of their home. First, they sent defendant a letter dubbed a "formal written inquiry under" the Real Estate Settlement Procedures Act or "RESPA" (the "March 2011 letter"). Christenson , 2013 WL 5291947, at *3 ; ECF No. 5–2 (March 31, 2011 letter). That letter requested information from defendant about its "loss mitigation" activities to date—in other words, information that might enable plaintiffs to determine whether defendant had met its legal obligations to work with plaintiffs to avoid the loss of their home. See ECF No. 5–2 at 2. Defendant allegedly failed to respond. Christenson , 2013 WL 5291947, at *3.

Second, in June of 2011 plaintiffs filed for an admittedly "unnecessary" Chapter 13 bankruptcy. See id. ; ECF No. 5–1 at 2 (October 30, 2014 letter); ECF No. 5–3 at 2 (December 1, 2014 letter). That pending bankruptcy automatically stopped plaintiff's foreclosure proceedings for the time being. See Christenson , 2013 WL 5291947, at *3 ; 11 U.S.C. § 362(a).

Third, with their foreclosure on pause plaintiffs filed suit against defendant before another division within this Court on October 1, 2012. See Christenson , 2013 WL 5291947, at *3. In that lawsuit, plaintiffs asserted, among other things, that by failing to respond to their letter defendant violated § 2605(e) of RESPA. See id. However, my colleague, Judge Christine Arguello, wasn't buying it. Id. at **4–6. Dismissing plaintiffs' RESPA claim on September 18, 2013, Judge Arguello held that defendant had no legal obligation to respond to plaintiffs' letter under 12 U.S.C. § 2605(e). Id. She explained that that requirement only comes into play when a borrower requests information related to the "servicing" of a mortgage—i.e., the scheduled payments of the loan's principal and interest or other pre-established payments—not when a borrower requests information related to loss mitigation activities. Id.

Finally, roughly one month after Judge Arguello denied plaintiffs' motion to reconsider that holding, see Christenson v. Citimortgage, Inc. , No. 12-cv-02600-CMA-KLM, 2014 WL 4637119, at *3 (D. Colo. Sept. 16, 2014), and roughly one month after plaintiffs' bankruptcy case was finally dismissed, ECF No. 5–13, plaintiffs sent defendant a second "RESPA" letter ("the October 2014 letter"), ECF No. 5–1. As both parties acknowledge, this second letter was almost identical to plaintiffs' first. See Compl., ECF No. 3, at ¶ 15 (admitting that the October 2014 letter "was largely, but not completely, the same as a letter Plaintiffs sent in 2011"); ECF No. 5 at 5. However, it differed in one seemingly important respect. Unlike their March 2011 letter, plaintiffs' October 2014 letter added a request that defendant explain why it had not accepted payments plaintiffs purportedly made while in bankruptcy on their loan and their arrearage. ECF No. 5–1 at 4.

This time defendant responded. See ECF No. 5–3 (December 1, 2014 letter). It advised plaintiffs that, prior to commencing foreclosure proceedings years ago defendant had reviewed plaintiffs' account history and offered them numerous loss mitigation options. Id. at 2. It reminded plaintiff that it had sent them letters in 2009 and 2010 apprising them of such options and attached those letters again for plaintiffs' reference. Id. at 17–33 (letters). Furthermore, defendant informed plaintiffs that it had operated pursuant to the bankruptcy court's reorganization plan during plaintiffs' bankruptcy, and that it had subsequently withdrawn foreclosure. Id. at 2. Finally, among other things, defendant explained that plaintiffs could still apply for loss mitigation consideration by filling out and returning a workout package application that defendant enclosed with its letter. Id. at 2, 34–37. It is unclear whether plaintiffs took defendant up on that offer.

Procedural History

On July 14, 2016, roughly one month after Judge Arguello entered final judgment in defendant's favor on plaintiffs' other claims in the parties' first lawsuit, see Christenson v. Citimortgage, Inc. , 12–CV–2600–CMA–KLM, 2016 WL 7868812, at *10 (D. Colo. June 7, 2016), plaintiffs filed a second suit against defendant, see ECF No. 1. This time, instead of initiating their lawsuit in the District of Colorado, plaintiffs brought suit against defendant for RESPA violations in the Eastern District of Missouri—i.e., the apparent location from which defendant's response to plaintiffs' October 2014 letter originated. See id.

There, plaintiffs alleged that although defendant had responded to their October 2014 letter that defendant had nevertheless committed violations of § 2605(e) and § 2605(k) of RESPA by either failing to respond in good faith or by providing false answers to plaintiffs' inquiries. Id. at ¶¶ 1, 20–22. In addition, plaintiffs sought a declaratory judgment that any claim defendant may have against them for breach of their mortgage and acceleration of the debt was a compulsory counterclaim that defendant waived by failing to assert it in the parties' earlier lawsuit. Id. at ¶¶ 23–29.

On August 4, 2016 defendant filed a motion to dismiss plaintiff's complaint. ECF No. 5. Choosing not to decide that motion, Judge Carole E. Jackson (no relation) of the Eastern District of Missouri instead transferred the parties' case to this Court on December 14, 2016. See ECF No. 1. Three weeks later plaintiffs filed a motion to amend the second claim within their complaint. ECF No. 21. I granted that motion on February 20, 2017. ECF No. 30. I nevertheless informed the parties that I still considered defendant's motion to be fully briefed and that, after plaintiffs amended that claim, both parties could file short supplements to their briefings before I decided defendant's motion. Id. ; see also Pls.' First Am. Compl., ECF No. 21–1. Both parties subsequently did exactly that. ECF Nos. 34–35.

II. STANDARD OF REVIEW

To survive a 12(b)(6) motion to dismiss, the complaint must contain "enough facts to state a claim to relief that is plausible on its face." Ridge at Red Hawk, L.L.C. v. Schneider , 493 F.3d 1174, 1177 (10th Cir. 2007) (quoting Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). A plausible claim is a claim that "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). While the Court must accept the well-pleaded allegations of the complaint as true and construe them in the light most favorable to the plaintiff, Robbins v. Wilkie , 300 F.3d 1208, 1210 (10th Cir. 2002), conclusory allegations are not entitled to be presumed true, Iqbal , 556 U.S. at 681, 129 S.Ct. 1937. However, so long as the plaintiff offers sufficient factual allegations such that the right to relief is raised above the speculative level, he has met the threshold pleading standard. See, e.g ., Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ; Bryson v. Gonzales , 534 F.3d 1282, 1286 (10th Cir. 2008).

III. ANALYSIS

As mentioned above, plaintiffs assert two claims in this action: (1) a claim for violations of RESPA; and (2) a declaratory judgment on defendant's inability to enforce plaintiffs' default on their mortgage. See ECF No. 3 at ¶¶ 15–29. For the reasons below, I agree with defendant that both claims must be dismissed. Accordingly, the Court GRANTS defendant's motion to dismiss [ECF No. 5]. I discuss both claims in turn.

A. Claim One: RESPA Violations.

To put it mildly, plaintiffs' allegations that defendant violated RESPA with its response to their October 2014 letter are confusing. For starters, plaintiffs only actually cite the two RESPA provisions they assert defendant has violated one time in their complaint. See ECF No. 21–1 at ¶ 1. They do not, however, ever cite the specific subsections of those complex statutes they believe pertain to defendant's conduct. Furthermore, despite listing those two statutory provisions as the apparent basis for their RESPA claim, plaintiffs, as well as defendant, argue about other causes of action under different RESPA regulations in their briefings. See, e.g. , ECF No. 5 at 10–13; ECF No. 14 at 7–12. Plaintiffs, however, did not discuss these regulations in their amended complaint or even mention them until they filed their response to defendant's motion. See generally ECF No. 21–1.

Despite the apparent confusion surrounding how exactly plaintiffs allege defendant violated RESPA, I nonetheless can glean from plaintiffs' filings that they assert three main...