Deutsche Bank Nat'l Trust Co. v. Citibank

• Decision Date: 06 April 2011
• Docket Number: Civil Action Nos. 2:09cv324–WHA,2:10cv001–WHA.
• Citation: 775 F.Supp.2d 1334
• Parties: DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee Under the Pooling and Servicing Agreement Related to IMPAC Secured Assets Corporation, Mortgage Pass–Through Certificates, Series 2007–1, Plaintiff,v.CITIBANK, N.A., Defendant.Johnny M. Portis, et al., Plaintiffs,v.Citibank, N.A., et al., Defendants.
• Court: U.S. District Court — Middle District of Alabama

775 F.Supp.2d 1334

DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee Under the Pooling and Servicing Agreement Related to IMPAC Secured Assets Corporation, Mortgage Pass–Through Certificates, Series 2007–1, Plaintiff,

v.CITIBANK, N.A., Defendant.Johnny M. Portis, et al., Plaintiffs,

v.Citibank, N.A., et al., Defendants.

Civil Action Nos. 2:09cv324–WHA

2:10cv001–WHA.

United States District Court, M.D. Alabama, Northern Division.

April 6, 2011.

Scott Anthony Holmes, Smith Spires & Peddy, PC, Birmingham, AL, for Plaintiffs.James Aubrey Bradford, Balch & Bingham LLP, Birmingham, AL, Louis Michael Calligas, Balch & Bingham, Montgomery, AL, for Plaintiffs/Defendants.Edward Devereaux Cotter, Rik Standford Tozzi, Burr & Forman LLP, Birmingham, AL, for Defendants.

MEMORANDUM OPINION AND ORDER

W. HAROLD ALBRITTON, Senior District Judge.

I. INTRODUCTION

This case is before the court on a Motion for Summary Judgment filed by Citibank, N.A. on February 8, 2011 (Doc. # 58), and a Motion for Summary Judgment filed by Johnny M. Portis and Lisa H. Portis on February 9, 2011 (Doc. # 59).

The case consists of two consolidated cases which arise out of the same real estate mortgage transaction. Deutsche Bank National Trust Company (“Deutsche Bank”) filed a Complaint for Declaratory Judgment against Citibank, N.A. (“Citibank”) in state court. That case was removed to federal district court on the basis of diversity jurisdiction. Johnny M. Portis and Lisa H. Portis (together referred to as “the Portises”) similarly filed a Complaint in state court which was removed to this court on the basis of diversity jurisdiction. The Portises' claims are brought against both Citibank and Deutsche Bank. The cases were consolidated by Order of the court, at the request of the parties.

Citibank has moved for summary judgment on the claims of Deutsche Bank against it, and the Portises have moved for summary judgment on Deutsche Bank's claims against Citibank.

For the reasons to be discussed, the Citibank Motion for Summary Judgment is due to be GRANTED, and the Portises' Motion for Summary Judgment is due to be DENIED as moot.

II. SUMMARY JUDGMENT STANDARD

Summary judgment is proper “if there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

The party asking for summary judgment “always bears the initial responsibility of informing the district court of the basis for its motion,” relying on submissions “which it believes demonstrate the absence of a genuine issue of material fact.” Id. at 323, 106 S.Ct. 2548. Once the moving party has met its burden, the nonmoving party must “go beyond the pleadings” and show that there is a genuine issue for trial. Id. at 324, 106 S.Ct. 2548.

Both the party “asserting that a fact cannot be,” and a party asserting that a fact is genuinely disputed, must support their assertions by “citing to particular parts of materials in the record,” or by “showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.” Fed.R.Civ.P. 56(c)(1)(A),(B). Acceptable materials under Rule 56(c)(1)(A) include “depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials.”

To avoid summary judgment, the nonmoving party “must do more than show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). On the other hand, the evidence of the nonmovant must be believed and all justifiable inferences must be drawn in its favor. See Anderson v. Liberty Lobby, 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

After the nonmoving party has responded to the motion for summary judgment, the court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a).

III. FACTS

The submissions of the parties establish the following facts, construed in a light most favorable to the nonmovants:

This case concerns the priority of two mortgages entered into by Mark and Theresa Marvin (together referred to as “the Marvins”) on a residential property in Alabama. The two mortgages are a Citi Home Equity Line of Credit Mortgage, recorded on April 17, 2006, and a mortgage to Deutsche Bank's predecessor-in-interest, Renasant Bank, recorded on October 24, 2006.

The Marvins originally entered into a mortgage on their property with Regions Bank in 2005. In March 2006, Theresa Marvin entered into a Home Equity Line of Credit (“Home Equity”) agreement with Citibank, secured by a second mortgage on the same property. The draw period on this agreement was ten years. The agreement provided that Theresa Marvin would be charged an early closure fee if within 36 months of the date of the agreement she requested that the account be closed, or took any other action which resulted in the release of the mortgage. Home Equity Agreement, Def. Ex. B, at 4. At the same time, the Marvins entered into a Home Equity Mortgage. The Home Equity mortgage provides that it is an open-end mortgage pursuant to the provisions of Alabama Code § 35–10–26. The Home Equity mortgage further provides that upon payment of all sums secured by the mortgage and any applicable early closure fee or other fees, and upon (a) expiration of the agreement or (b) the Marvins' request, Citibank shall release the mortgage, and the Marvins will pay “all costs of recordation along with any reconveyance fees and any statement of obligation fee, if any.” Home Equity Mortgage, Def. Ex. C, at 7.

In October 2006, the Marvins entered into a refinancing mortgage with Renasant Bank. The closing was overseen by an attorney. Deutsche Bank now stands in the shoes of Renasant Bank, and in this Memorandum Opinion the court will refer to actions and agents of Renasant simply as being those of Deutsche Bank.

As part of the refinancing on their property, the Marvins paid off their Regions mortgage and they received a Discharge of Mortgage, which was recorded.

Citibank provided the closing attorney a Payoff Statement for the Citibank Home Equity mortgage showing a total payoff amount of $181,168.69, including a $789 early closure release fee. The letter sent by Citibank in response to the request for the payoff amount states in bold lettering as follows:

If the account is a Home Equity Line of Credit/Equity Source Account/Preferred Line, the Close/Termination letter must accompany the payoff funds in order to secure a release of lien. If this letter is not returned with the payoff funds, the line will remain OPEN and it will be considered a paydown only. This may cause the account to incur additional fees.

Def. Exhibit J.

A check was written from the closing attorney's trust account in the amount of $181,168.59, and mailed to Citibank. The check included a payment of $789.00 for the Early Closure Release Fee. The check referenced “marvin413refi Payoff.” Pl. Ex. # 16. No Close/Termination letter accompanied the check. Citibank negotiated the check.

Citibank states that it sent a letter dated October 23, 2006 to Theresa Marvin informing her that Citibank needed authorization if she wished to close the Home Equity account. The Marvins deny ever receiving this letter. Deutsche Bank also states that Citibank's standard procedure would require Citibank to contact the originator of the payoff check, among other steps, which were not followed.

The title insurance commitment obtained by Renasant Bank required the mortgage to Citibank to be paid in full and canceled of record. While paid in full, the Home Equity mortgage was not cancelled of record.

In January 2007, Citibank sent Theresa Marvin a check for $789, which was a return of the Early Closure Release Fee. There was no explanation for the check and the Marvins thought it was a refund of overpayment of the pay off. In February, the Marvins called Citibank and asked whether they could use the Citibank account. The Marvins state that after talking with Citibank they believed that the Citibank mortgage had been released and then reopened as a third mortgage. The Marvins told Citibank they had refinanced the Citibank mortgage.

Theresa Marvin cashed the $789 check on March 13, 2007.

The Marvins took advances against the Citibank Home Equity Account in the amount of $175,000.00 in February 2007 and $4,950 in May 2007.

The Marvins defaulted on their Renasant mortgage and the Citibank Home Equity mortgage. On September 11, 2008, Deutsche Bank foreclosed on the Renasant mortgage. At the foreclosure sale, Renasant was the highest bidder at $833,000.00. On November 18, 2008, Citibank foreclosed on the Marvins' Home Equity mortgage for a credit bid of $194,149.60, and recorded its foreclosure deed.

The Portises contend that they acquired the Marvins' statutory right to redeem Citibank's interest in the property. They say that after the Deutsche Bank foreclosure, but before the Citibank foreclosure, specifically in October 2008, Sherwin Williams obtained a judgment against Theresa Marvin. That judgment was filed with the Judge of Probate of Montgomery County, Alabama.

The Portises state that on or before November 3, 2009, they purchased Sherwin Williams' right to redeem the property as judgment creditor. The Portises state that they faxed a letter to Citibank and requested a statement of the amount due to redeem the property from Citibank. Citibank did not respond to the letter. The Portises also state that on November 13, 2009, they purchased the Marvins' right of redemption, and that the Marvins executed a Quit Claim deed granting all...