Firestone v. CitiMortgage Inc.

• Decision Date: 12 August 2022
• Docket Number: 5:19-cv-1539
• Parties: MAGDA[1] FIRESTONE, PLAINTIFF, v. CITIMORTGAGE, INC., et al., DEFENDANTS.
• Court: U.S. District Court — Northern District of Ohio

MAGDA^[1] FIRESTONE, PLAINTIFF, v. CITIMORTGAGE, INC., et al., DEFENDANTS.

No. 5:19-cv-1539

United States District Court, N.D. Ohio, Eastern Division

August 12, 2022

MEMORANDUM OPINION AND ORDER

HONORABLE SARA LIOI UNITED STATES DISTRICT JUDGE

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^[1] While the case caption identifies plaintiff's first name as “Madga,” elsewhere in the complaint and throughout the parties' briefing plaintiff's first name is spelled “Magda.” For purposes of this opinion, the Court assumes the spelling adopted by the parties in their briefing is the correct spelling.

Plaintiff Magda Firestone (“plaintiff” or “Mrs Firestone”) brought this federal action challenging a 2001 “consumer loan transaction” involving her late husband and seeking to “halt foreclosure” of her property located in Akron, Ohio and recover damages. (Doc. No. 1 (Complaint) ¶¶ 8, 11; see id at 13^[2] (Prayer for Relief).) Presently pending before the Court are dispositive motions filed by defendants CitiMortgage, Inc. (“CitiMortgage”) and Kirkland Financial LLC (“Kirkland”). Specifically, the Court shall address herein CitiMortage's renewed motion to dismiss, pursuant to Fed.R.Civ.P. 12(b)(1) and (6) (Doc No. 27), and Kirkland's motion for judgment on the pleadings, pursuant to Fed.R.Civ.P. 12(c). (Doc. No. 30.) Plaintiff filed an omnibus response to the motions (Doc. No 31), and Kirkland and CitiMortgage^[1]each filed replies. (Doc. No. 32 (Kirkland Reply); Doc. No. 33 (CitiMortgage Reply).)

I. Background

In 1999, plaintiff and her husband Steve Firestone (“Mr. Firestone”) purchased the Akron property, upon which was a single-family dwelling, as “joint tenants with rights of survivorship.” (Doc. No. 1 ¶ 14.) On June 28, 2001, the mortgage on the property was refinanced by means of a note executed in favor of defendant First NLC Financial Services, LLC (“First NLC”). (Id. ¶ 8, 14; Doc. No. 1-2 (Promissory Note).) Plaintiff contends First NLC and defendant Country Home Mortgage of Ohio (“Country Home”), “while acting as agents, mere straw entities, conduits, or pass through companies for CitiMortgage[,] used predatory lending practices to induce [Mr.] Firestone [] into refinancing [the couple's] home.”^[3] (Doc. No. 1 ¶ 14.) According to the complaint, these predatory lending practices included overvaluing the property, forging plaintiff's signature on the mortgage and other closing documents, misrepresenting the nature of the mortgage as a second mortgage, including in the note an unconscionable final balloon payment, and subsequently claiming that the note had been destroyed. (Id. ¶¶ 8, 13, 15, 16, 17, 20, 21, 23.)

On January 15, 2002, the refinanced mortgage and the note were assigned to CitiMortgage. (Id. ¶ 10.) Plaintiff alleges that CitiMortgage was aware, or should have been aware, of First NLC's fraudulent activities, and actively “encouraged, motivated, and rewarded” these activities. (Id. ¶ 22.) Between 2004 and 2008, CitiMortgage collected approximately $96,000 in payments from plaintiff on the refinanced mortgage. (Id. ¶ 29.) She claims that these payments were made, despite the fact that she owed no personal obligation on the note and mortgage. (Id. ¶¶ 28, 29.) Plaintiff also avers that her efforts to discover information regarding the nature of the note and mortgage were thwarted by CitiMortgage and First NLC. (Id. ¶¶ 25-29.)

On February 20, 2008, CitiMortgage initiated a foreclosure action on the property in the Summit County Court of Common Pleas. (Id. ¶¶ 36-37; Doc. No. 28-1 (Docket for CitiMortgage, Inc. v. Steve Firestone, Case No. CV-2008-02-1570).) Plaintiff asserted counterclaims in this state court action and filed a motion to dismiss. (See Doc. No. 28-1.) On April 29, 2009, the state court granted CitiMortgage's motion for summary judgment and entered judgment against plaintiff in the amount of $267,795.63 with interest. (Doc. No. 1 ¶ 39; Doc. No. 1-4 (State Court Judgment Entry).) Plaintiff appealed, and the judgment was reversed and the case remanded. (Doc. No. 1 ¶ 40.) CitiMortgage voluntarily dismissed the case on September 7, 2012. (Id. ¶ 41.) On May 1, 2014, CitiMortgage filed a second foreclosure action in state court. (Id. ¶ 42; Doc. No. 28-2 (Docket for CitiMortgage, Inc. v. Steve Firestone, Case No. CV-2014-05-2242).) Plaintiff defended this second state court action, alleging that First NLC and CitiMortgage engaged in fraudulent and deceptive behavior. CitiMortgage ultimately assigned the note and mortgage to Kirkland on October 11, 2017, and Kirkland was substituted for CitiMortgage as the plaintiff in the second foreclosure action. (Doc. No. 1 ¶ 4; see Doc. No. 28-2.) Plaintiff alleges herein that Kirkland “is a mere conduit to which CitiMortgage” assigned the note “for the sole purpose of concealing its actions.” (Doc. No. 1 ¶ 12.)

On July 5, 2019-while the second foreclosure action was still pending in state court- plaintiff filed suit in federal court. (See Doc. No. 1.) In her complaint, she raised claims for mortgage fraud, fraudulent concealment and fraudulent collection activities, fraudulent presentment and misrepresentation, and mail fraud and wire fraud. She also alleged violations of the Truth In Lending Act (“TILA”), the Fair Debt Collections Practice Act (“FDCPA”), and the Federal Racketeer Influence and Corrupt Organization Act (“RICO”). In addition to CitiMortgage and Kirkland, plaintiff named First NLC and Country Home as defendants. (See generally id.)

On November 12, 2019, CitiMortgage filed a motion to dismiss the complaint or, alternatively, to stay the federal action pending disposition of the second state court foreclosure action. (Doc. No. 10.) On March 18, 2020, after the Court afforded Kirkland several extensions, Kirkland filed its answer and two counterclaims seeking declaratory relief. (Doc. No. 21.) The Court thereafter granted CitiMortgage's alternative motion to stay the federal action pending resolution of the second state court foreclosure action and denied without prejudice the motion to dismiss. (Doc. No. 23.)

A bench trial was conducted in state court before a magistrate in July 2019, at the conclusion of which the magistrate issued findings of fact and conclusions of law and provisionally granted judgment in favor of Kirkland. (Doc. No. 28-2 at 9.) On September 7, 2021, the state court judge overruled the objections to the magistrate's judgment and entered an order granting final judgment in favor of Kirkland. (Doc. 28-5.) In so ruling, the state court specifically held, in part, as follows:

In summary, [Mrs. Firestone] argues that the mortgagor(s) allegedly engaged in fraudulent dealings either at the inception of the loan, throughout the loan process, or when the loan was sold/transferred to another entity. However, a review of the transcript in this matter does not suggest any credible evidence was elicited to support these claims. Moreover, the Magistrate found in her Findings of Facts that both Mr. Firestone and Mrs. Firestone signed the original mortgage back in 1999 and that it was filed with the Recorder. The Magistrate also found that Mr. Firestone had secured a refinanced loan from which he paid off a loan from a prior mortgage, paid off other debts and that some of the proceeds were given directly to the Firestones. There is no evidence that Mr. Firestone objected to the terms of the refinanced loan back in 2001, that the loan documents were not proper, or had any other issues with that loan. Indeed, the Firestones appeared to have utilized that money to their benefit.

Any objection to this initial mortgage and filing with the Recorder should have been addressed many years ago pursuant to the Truth in Lending Act. That Act states any claims of recession or other private causes of action need to be made within three years of closing. 15 U.S.C. 1635(t), 15 U.S.C. 1640(e). The same is true for the Refinanced mortgage that was secured by Mr. Firestone. Thus, the statute of limitations expired many years ago.

The Magistrate also found that both Mr. and Mrs. Firestone were listed as ‘borrowers' for purposes of the mortgage that secured the Refinanced Loan and, that they both signed, initialed, all of the paperwork. Although M[r]s. Firestone offered Ms. Stemple to refute that she signed the documents, the Magistrate did not find the testimony actually established that fact. The Court agrees and will not substitute its judgment for that of the Magistrate. Likewise, the Magistrate did find credible the testimony of [Kirkland's] expert witness, a forensic handwriting expert, who ‘authenticated' Mrs. Firestone's signature that appears on the mortgage documents. Finally, the Magistrate found that the testimony of the notary who actually witnessed and notarized Mrs. Firestone's signature to be credible and effectively established it was her signature on the mortgage documents. Notably, the Magistrate found no evidence of [f]raud.

(Id. at 2-3.) The state court issued a judgment and decree of foreclosure in rem on January 11, 2022. (Doc. No. 28-6.)

In light of the resolution of the second foreclosure case, the Court lifted the stay in this action and set the matter for a case management conference. (Non-document Order, 10/05/2021.) At defendants' request, the Court stayed the case management conference and permitted defendants to file dispositive motions. On March 7, 2022, CitiMortgage renewed its Rule 12(b) motion, arguing that the Rooker-Feldman doctrine divested this Court of jurisdiction to reverse a state court judgment and that plaintiff's claims are otherwise barred by the doctrine of res judicata. CitiMortgage also maintains that many of the claims are time-barred and that the fraud claims were plead without the requisite particularity. On March 14, 2022 Kirkland filed its Rule 12(c) m...