Gallegos v. CitiMortgage, Inc.

• Decision Date: 04 March 2022
• Docket Number: Civ. 21-0486 JB/GJF
• Parties: JOE GALLEGOS and LISA GALLEGOS, Plaintiffs, v. CITIMORTGAGE, INC.; CENLAR FSB; SECRETARY OF HOUSING AND URBAN DEVELOPMENT; EQUIFAX INFORMATION SERVICES, LLC; EXPERIAN INFORMATION SOLUTIONS, INC. and TRANS UNION, LLC, Defendants.
• Court: U.S. District Court — District of New Mexico

JOE GALLEGOS and LISA GALLEGOS, Plaintiffs, v. CITIMORTGAGE, INC.; CENLAR FSB; SECRETARY OF HOUSING AND URBAN DEVELOPMENT; EQUIFAX INFORMATION SERVICES, LLC; EXPERIAN INFORMATION SOLUTIONS, INC. and TRANS UNION, LLC, Defendants.

Civ. No. 21-0486 JB/GJF

United States District Court, D. New Mexico

March 4, 2022

Cassie Marie Fleming New Mexico Legal Aid Albuquerque, New Mexico and David C. Kramer Law Office of David C. Kramer, LLC Albuquerque, New Mexico Attorneys for the Plaintiffs

Sam David Smith Gabriella Alonso Bradley Arant Boult Cummings LLP Houston, Texas Attorneys for Defendants CitiMortgage Inc. and Cenlar FSB

Fred J. Federici Acting United States Attorney Manuel Lucero Assistant United States Attorney United States Attorney's Office Albuquerque, New Mexico Attorneys for Defendant Secretary of Housing and Urban Development

Patricia Williams Wiggins, Williams, & Wiggins Albuquerque, New Mexico and Adam Theodore Hill Seyfarth Shaw LLP Chicago, Illinois and Courtney Sophie Stieber Seyfarth Shaw, LLP New York, New York and Lakai C. Vinson Seyfarth Shaw, LLP Charlotte, North Carolina Attorneys for Defendant Equifax Information Services, LLC

Charles J. Vigil Rodey, Dickason, Sloan, Akin, & Robb, P.A. Albuquerque, New Mexico and Angela M. Taylor Jones Day Irvine, California Attorneys for Defendant Experian Information Solutions, Inc.

Paul W. Sheldon Quilling, Selander, Lownds, Winslett and Moser, P.C. Plano, Texas and Michael Adam Merar Seyfarth Shaw LLP Houston, Texas Attorney for Defendant Trans Union, LLC

MEMORANDUM OPINION AND ORDER

THIS MATTER comes before the Court on: (i) Defendants Equifax Information Services LCC, Experian Information Solutions Inc., and Trans Union LLC's Motion to Dismiss Plaintiffs' Complaint and Supporting Memorandum of Law, filed October 28, 2021 (Doc. 62)(“MTD”); (ii) Defendant CitiMortgage, Inc's and Cenlar FSB's Motion for Abatement and Brief in Support, filed December 3, 2021 (Doc. 78)(“MFA”); and (iii) Defendants CitiMortgage, Inc.'s and Cenlar FSB's Opposed Motion for Leave to File Counterclaim, filed December 15, 2021 (Doc. 82)(“Counterclaim Motion”). The Court held a hearing on the MTD on December 20, 2021. See Clerk's Minutes, filed December 20, 2021 (Doc. 98). The Court held a hearing on the MFA and the Counterclaim Motion on January 5, 2022. See Amended Clerk's Minutes, filed January 5, 2022 (Doc. 127). The primary issues are: (i) whether the Court should dismiss in its entirety the Second Amended Complaint, filed September 3, 2021 (Doc. 20)(“Complaint”), because Plaintiffs Joe Gallegos and Lisa Gallegos do not plead adequately a factual inaccuracy in their credit file to support a claim under the Fair Credit Reporting Act, 15 U.S.C. §§ 1681e(b) and 1681i(a) (“FCRA”); (ii) whether the Court should order J. Gallegos and L. Gallegos to withdraw their CitiMortgage, Inc v. Joey M. Gallegos, et al., No. D-202-CV-201804195, Homeowners' Motion for Sanctions in State court, because ordering withdrawal is necessary to protect the Court's jurisdiction; (iii) whether Defendants CitiMortgage, Inc. and Cenlar FSB may assert a counterclaim against J. Gallegos and L. Gallegos for an equitable lien on the contested real property and for unjust enrichment. The Court concludes that: (i) it will not dismiss J. Gallegos and L. Gallegos' Complaint in its entirety and that it will not dismiss J. Gallegos and L. Gallegos' FCRA claim, because, as pled, J. Gallegos and L. Gallegos allege that Equifax Information, Experian Information, and Trans Union incorrectly reported debt owed to CitiMortgage, Inc. or Cenlar FSB; (ii) it will not order J. Gallegos and L. Gallegos to withdraw their State court sanctions motion, because the All Writs Act, 28 U.S.C. § 1651, does not give the Court exclusive jurisdiction over all disputes arising out of a certain set of facts, because the Anti-Injunction Act, 28 U.S.C. § 2283, precludes the Court from ordering J. Gallegos and L. Gallegos to withdraw their State court sanctions motion; and (iii) CitiMortgage, Inc., and Cenlar FSB may assert an unjust enrichment counterclaim against J. Gallegos and L. Gallegos, but may not assert a counterclaim for an equitable lien on the contested real property, because it would be futile under rule 15 of the Federal Rules of Civil Procedure. Accordingly, the Court will: (i) deny the MTD; (ii) deny the MFA; and (iii) deny the Counterclaim Motion in part and grant the Counterclaim Motion in part.

FACTUAL BACKGROUND

The Court sets forth two sets of facts. The first set of facts are for the MTD's purposes, so the Court takes its facts from the Complaint. See Fed.R.Civ.P. 12(b)(6); Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). For the MTD facts, the Court “accepts as true all factual allegations asserted in the complaint.” Al-Owhali v. Holder, 867 F.3d 1236, 1240 (10th Cir. 2012). The second set of facts are for the MFA and the Counterclaim Motion. For the second set of facts, the Court takes its facts from the Complaint, the MFA, the Counterclaim Motion, the Plaintiffs' Response in Opposition to Defendant CitiMortgage, Inc.'s and Cenlar FSB's Motion for Abatement, filed December 17, 2021 (Doc. 87)(“MFA Response”), the December 20, 2021, hearing, and the January 5, 2022, hearing.

1. Facts for the MTD.

Around 2000, J. Gallegos and L. Gallegos took out a loan with Old Republic Mortgage. See Complaint ¶ 14, at 3. In 2018, CitiMortgage, Inc. sued J. Gallegos and L. Gallegos in State court for foreclosure, arguing that it is entitled to collect the loan. See Complaint ¶ 14, at 3. On August 9, 2019, the Honorable Beatrice Brickhouse, District Court Judge for the County of Bernalillo, Second Judicial District Court, State of New Mexico, granted summary judgment in J. Gallegos and L. Gallegos' favor, concluding that, as a matter of law, CitiMortgage, Inc. does not have the right to collect on the note that the mortgage secures. See Complaint ¶ 15, at 3. Judge Brickhouse concluded that CitiMortgage, Inc. is not entitled to enforce the mortgage, because CitiMortgage, Inc. was not in possession of the original Promissory Note when a prior holder lost it. See Complaint ¶ 15, at 3. CitiMortgage, Inc. did not appeal Judge Brickhouse's decision. See Complaint ¶ 16, at 3.

Both before and after Judge Brickhouse's August 9, 2019, ruling, CitiMortgage, Inc. contract with Cenlar FSB to service J. Gallegos and L. Gallegos' mortgage. See Complaint ¶ 17, at 4. Since Judge Brickhouse's August 9, 2019, ruling, CitiMortgage, Inc. and Cenlar FSB continue to send J. Gallegos and L. Gallegos “bills, letters, and other documents falsely representing that” J. Gallegos and L. Gallegos owed CitiMortgage, Inc. money. Complaint ¶ 18, at 4. On April 1, 2020, Cenlar FSB sent a letter to J. Gallegos and L. Gallegos that states: “‘We are sending you this notice to you because you are behind on your mortgage payments. We want to notify you of possible ways to avoid losing your home. We have a right to invoke foreclosure based on the terms of your mortgage contract, '” Complaint ¶ 19, at 4 (quoting Letter from Cenlar FSB to J. Gallegos and L. Gallegos at 1, dated April 1, 2020, filed September 3, 2021 (Doc. 20-2)). On December 31, 2019, Cenlar FSB sent a letter to J. Gallegos and L. Gallegos listing a “‘payoff amount'” of $125, 976.82. Complaint ¶ 19, at 4 (quoting Annual Disclosure Letter to Mortgagor at 4, dated December 31, 2019, filed September 3, 2021 (Doc. 20-2)). A February 20, 2020, letter states that J. Gallegos and L. Gallegos owe $645.36 to Cenlar FSB per month. See Complaint ¶ 19, at 4 (citing Annual Escrow Account Disclosure Statement at 6, dated February 20, 2020, filed September 3, 2021 (Doc. 20-2)). A bill sent to J. Gallegos and L. Gallegos, dated October 1, 2020, states a “‘past due amount'” of $44, 069.00, and asserts that “‘You are late on your mortgage payments. Failure to bring your loan current may result in fees and foreclosure --the loss of your home.'” Complaint ¶ 19, at 4 (quoting Loan Statement at 9, dated October 1, 2020, filed September 3, 2021 (Doc. 20-2)).

After Judge Brickhouse's August 9, 2019, ruling, CitiMortgage, Inc. and Cenlar FSB continued to send a property inspector to J. Gallegos and L. Gallegos' home every month. See Complaint ¶ 20, at 4. This practice is “employed by mortgage companies to determine whether a homeowner continues to occupy a home that is in foreclosure.” Complaint ¶ 20, at 4. CitiMortgage, Inc. and Cenlar FSB “routinely trespassed” on J. Gallegos and L. Gallegos' property, “peered into their home windows, attempted to open their gate, lurked in the street in front of the home and conspicuously took photographs of the home.” Complaint ¶ 21, at 5. Through CitiMortgage, Inc. and Cenlar FSB's counsel, J. Gallegos and L. Gallegos' attorney asked CitiMortgage, Inc. and Cenlar FSB to stop inspecting J. and L. Gallegos' property, but the monthly inspections continued for nearly two years. See Complaint ¶ 22, at 5. The monthly property inspections “upset, embarrassed and confused” J. Gallegos and L. Gallegos. Complaint ¶ 23, at 5.

As a result of CitiMortgage, Inc.'s refusal to release its mortgage on the home, J. Gallegos and L. Gallegos have not been able to purchase a homeowner's insurance policy for the home. See Complaint ¶ 24, at 5. CitiMortgage, Inc., and Cenlar FSB report “negative and inaccurate information” to J. Gallegos and L Gallegos' credit reports, which damages J. Gallegos and L. Gallegos' credit. Complaint ¶ 25, at 5. CitiMortgage, Inc. and Cenlar FSB's “inaccurate negative reporting to the Gallegos' credit reports caused them to be denied credit in August 2021.” Complaint ¶ 26, at 5. In January, 2021, the six-year statute of limitations “ran on collection...