Citibank v. Dalessio

• Decision Date: 10 December 2010
• Docket Number: Case No. 2:09–cv–83–FtM–36DNF.
• Citation: 756 F.Supp.2d 1361
• Parties: CITIBANK, N.A., as Trustee for American Home Mortgage Assets Trust 2006–3 Mortgaged–Backed Pass–Through Certificates, Series 2006–3, Plaintiff,v.Christopher DALESSIO, et al., Defendants.Christopher Dalessio, Third Party Plaintiff,v.American Home Mortgage Servicing, Inc., Third Party Defendant.
• Court: U.S. District Court — Middle District of Florida

756 F.Supp.2d 1361

CITIBANK, N.A., as Trustee for American Home Mortgage Assets Trust 2006–3 Mortgaged–Backed Pass–Through Certificates, Series 2006–3, Plaintiff,

v.Christopher DALESSIO, et al., Defendants.Christopher Dalessio, Third Party Plaintiff,

v.American Home Mortgage Servicing, Inc., Third Party Defendant.

Case No. 2:09–cv–83–FtM–36DNF.

United States District Court, M.D. Florida,Ft. Myers Division.

Dec. 10, 2010.

Edmund S. Whitson, III, Leslie Utiger, Akerman Senterfitt, Tampa, FL, William P. Heller, Akerman Senterfitt, Ft. Lauderdale, FL, for Plaintiff/Third Party Defendant.Joseph Trunkett, Trunkett Law Firm, LLC, Ft. Myers, FL, for Defendants.

ORDER AND OPINION

CHARLENE EDWARDS HONEYWELL, District Judge.I. INTRODUCTION

Citibank, N.A.(“Citibank”) filed a complaint in the Circuit Court of the Twentieth Judicial Circuit, in and for Lee County, Florida, for mortgage foreclosure based on payment default and to reestablish a lost note.¹In response to the foreclosure complaint, Christopher Dalessio(“Dalessio”) filed an answer, affirmative defenses, and counterclaims against Citibank and a third-party complaint against American Home Mortgage Servicing, Inc.(“AHMSI”).²Dalessio sought to avoid foreclosure and to assert entitlement to affirmative relief under the Truth in Lending Act (“TILA”).A non-jury trial was held before the Court on September 16, 2010.At the trial, the Court heard testimony from Christopher Dalessio and Roger Kistler.

II.FEDERAL JURISDICTION

On February 13,2009, AHMSI removed this case to federal court.Removal was based on federal question jurisdiction pursuant to 28 U.S.C. §§ 1331,1441(b), and1441(c).Federal question jurisdiction arose under the Truth in Lending Act, 15 U.S.C. § 1601, et seq., the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601, et seq.(“RESPA”), and the Fair Debt Collection Practice Act, 15 U.S.C. § 1692, et seq.(“FDCPA”).

III.FINDINGS OF FACT

The following facts were admitted by the parties and presented as evidence at the trial.Citibank is a national bank regulated by the Office of the Comptroller of the Currency.Dalessio is a Florida resident residing in Lee County, Florida.SeeDkt. 86(“Bench Trial Transcript,” hereinafter referenced as “Trial Tr.”).Dalessio moved to his present address in Cape Coral, Florida in January 2006. TrialTr. p. 25:25–26:3.When he initially purchased his home, he obtained a 30–year fixed mortgage at a rate of approximately 6.75%.TrialTr. p. 26:4–15.In June 2006, Dalessio received a solicitation in the mail from the Loan Corporation and decided to re-finance his mortgage.TrialTr. p. 27:16–28:3.“The Solicitation” made representations including, but not limited to the following:

a. The loan was an “Asset Builder Loan;”

b. “Imagine receiving a 50% off coupon with your mortgage statement every month;”

c. Real estate is an appreciating asset;

d. “Did you know that the Asset Builder Mortgage has a minimum monthly payment equivalent to less than half that of a 30 year fixed loan payment—for any given amount financed?That's a guaranteed monthly savings of 50% for the next 5 years!”

e. The Loan Corporation was offering an “amazing loan product;”

f. A testimonial statement, which proclaimed, “If I had known about this when I first purchased my home seven years ago, I would have had it entirely paid off by now.”

Ex. 91.

Dalessio contacted The Loan Corporation and spoke with Ryan Duncan about refinancing his home after receiving the Solicitation.TrialTr. pp. 28:4–7; 29:21–24.Based on his conversations with Duncan, Dalessio believed that his loan would be fixed for five years at a rate of 2.5%.TrialTr. p. 41:4–8.Dalessio communicated solely with Mr. Duncan about the loan transaction.

Delessio obtained the loan with Ryan Duncan of the Loan Corporation.He executed a number of preliminary loan documents on June 14, 2006, two weeks before closing the loan refinancing on June 29, 2006. TrialEx. 3–18.Dalessio does not remember signing these documents.The loan was offered through American Brokers Conduit.³TrialTr. p. 31:1–4.Dalessio closed on the loan with American Brokers Conduit on June 29, 2006. TrialTr. p. 30:21–25.On the night of the closing, a man came to Dalessio's door, alone.TrialTr. p. 86:6–14.No one explained the documents to Dalessio, and the man could not answer questions.TrialTr. pp. 87:12–23, 90:12–13.Dalessio did not read the documents thoroughly or ask anyone about the information contained in the documents prior to signing them.TrialTr. pp. 85:21–86:6; 88:7–10; 89:20–22.

As part of the June 2006 loan refinance, Dalessio executed an Adjustable Rate Note on June 29, 2006 in the amount of $235,000, and the mortgage was to secure the payment of the note.TrialTr. p. 4:14–16; 41:20–42:3.In the documents signed by Dalessio, the following information was included: 1) an annual percentage rate of 6.745%; 2) twelve (12) payments in the amount of $774.98; 3) twelve (12) payments in the amount of $833.10; 4) four hundred thirty-three (433) payments in the amount of $1,581.89; and 5) a final payment in the amount of $1,587.93.Trial Tr.pp. 48:20–49:14;Ex. 19.The initial interest rate of 2.5% would only last for one month after the inception of the loan.TrialTr. p. 51:5–19;Ex. 26.The documents included Truth in Lending Statement Disclosures that listed different annual percentage rates of 9.055% from The Loan Corporation and 8.972% from American Brokers Conduit.Trial Tr.p. 54:18–55:12;Ex. 22; 56:25–57.3.The loan included an adjustable rate note and explained that the loan was a negative amortization loan.TrialTr. p. 56:5–20;Ex. 25; 67:20–70:12;Ex. 41.After the closing Dalessio called Duncan from The Loan Corporation who assured him that he received the 2.5% interest rate loan.TrialTr. p. 87:25–88:1, 89:23–14.

Dalessio noticed that his principal balance was increasing each month on his mortgage.Trial Tr.p. 71:22–72:12.He then sought an explanation of the increase and learned that he had a negative amortization loan with an interest rate that changed each month.TrialTr. p. 72:12–20.He eventually stopped making payments in September 2008. TrialTr. pp. 74:14–22; 76:10–13; 77:4–7; 79:19–80:11; 81:1–3.After Dalessio failed to make his payment in September 2008, American Brokers Conduit sent him a letter notifying him that he was in default.Ex. 60.Dalessio, through counsel, notified American Brokers Conduit, by letter dated December 23, 2008, that he was rescinding the loan transaction.TrialTr. p. 7:20–25;Ex. 61.The current market value of the property is $73,000.TrialTr. p. 8:1–2.

IV.LEGAL ANALYSISA.Complaint—Mortgage Foreclosure

“To foreclose upon a promissory note, the plaintiff must be the ‘holder’ in order to be the real party in interest.The ‘holder’ is the ‘person who is in possession of a document of title or an instrument or an investment security drawn, issued or endorsed to him or to his order or to the bearer or in blank.’ ”Troupe v. Redner,652 So.2d 394, 395–96(Fla. 2d DCA1995)(citations omitted);seeFla. Stat. § 671.201(21)(2010);Mortg. Elec. Registration Sys. v. Azize,965 So.2d 151, 153(Fla. 2d DCA2007)(same).Once the plaintiff establishes that it can enforce the promissory note in a foreclosure action, it must also demonstrate that the defendant failed to pay pursuant to the note.SeeCherry v. Chase Manhattan Mortg. Corp.,190 F.Supp.2d 1330, 1333–34(M.D.Fla.2002)(The mortgagor's “failure to tender payments from the escrow account or make deposits with the court is more than just a ‘technical breach’ of the mortgage and note.”);Smiley v. Manufactured Hous. Assocs. III Ltd. Partnership,679 So.2d 1229, 1232(Fla. 2d DCA1996)(“ ‘Failure to pay goes to the heart of the agreement between the mortgagor and mortgagee, and is not a mere technical breach.’ ”)(quotingPezzimenti v. Cirou,466 So.2d 274(Fla. 2d DCA1985)).

In this case, Citibank presented sufficient evidence at trial to establish its foreclosure action against Dalessio.First, Citibank demonstrated that it holds the note endorsed in blank and is, therefore, entitled to enforce the note and foreclose the mortgage.TrialTr. p. 99:9–114:21;Ex. 70, 84, 75.The original note and mortgage were entered into evidence at trial.Second, it is undisputed that Dalessio defaulted under the note and mortgage by failing to make the payments due from September 2008 and thereafter.Third, Dalessio received due and appropriate notice of his default under the note and mortgage and failed to cure such default within the time permitted under the note and mortgage or at any time thereafter.Finally, Citibank demonstrated that it holds a lien under the note and mortgage in the amount of $284,037.49, which encumbers the subject property located in Lee County, Florida and described as

LOTS 13 AND 14, BLOCK 2266, CAPE CORAL UNIT 33, AS RECORDED IN PLAT BOOK 16, PAGES 40 TO 61, IN

THE PUBLIC RECORDS OF LEE COUNTY, FLORIDA.⁴Ex. 69.

Therefore, Citibank may recover the amount of the mortgage indebtedness unless the Court finds a limited circumstance to deny the request.SeeCherry,190 F.Supp.2d at 1334(citingFirst Texas Savings Assoc. v. Comprop Investment Properties, Ltd.,752 F.Supp. 1568, 1575(M.D.Fla.1990)).The Court now outlines its determinations on the affirmative defenses asserted by Dalessio.TrialTr. p. 10:5–25.The remaining affirmative defenses are Affirmative Defenses Number One, Five, Seven and Eight.

1.Affirmative DefenseNo. 1: Failure to State a Cause of Action Based on Standing

“The party seeking foreclosure must present evidence that it owns and holds the note and mortgage in question in order to proceed with a foreclosure action.”Lizio v. McCullom,36 So.3d 927, 929(Fla. 4th DCA2010).A plaintiff must tender the original promissory note to the trial court or seek to reestablish the lost note under Florida Statute Section 673.3091.State Street Bank...