Moody v. CitiMortgage, Inc.

• Decision Date: 14 July 2014
• Docket Number: No. 1:13–CV–1104.,1:13–CV–1104.
• Citation: 32 F.Supp.3d 869
• Parties: David MOODY, Plaintiff, v. CITIMORTGAGE, INC. and Trott & Trott, P.C., Defendants.
• Court: U.S. District Court — Western District of Michigan

32 F.Supp.3d 869

David MOODY, Plaintiff

v.CITIMORTGAGE, INC. and Trott & Trott, P.C., Defendants.

No. 1:13–CV–1104.

United States District Court, W.D. Michigan, Southern Division.

Signed July 14, 2014.

Janet A. Kachoyeanos, Robert B. Baker, Surdyk & Baker, Chicago, IL, for Plaintiff.

Lucia Nale, Maritoni Derecho Kane, Thomas V. Panoff, Mayer Brown LLP, Chicago, IL, Jessica Lynn Berg, Trott & Trott PC, Farmington Hills, MI, for Defendants.

OPINION

ROBERT HOLMES BELL, District Judge.

This case is brought by a homeowner against a mortgage servicer and its law firm for: violation of the Real Estate Settlement Practices Act (RESPA), 12 U.S.C. § 2605(e) ; violation of the Racketeer Influenced and Corrupt Organizations (RICO) Act, 18 U.S.C. §§ 1962, 1964 ; common law fraud; and for declaratory judgment. Defendants have filed independent Motions to Dismiss for failure to state a claim upon which relief can be granted under Fed.R.Civ.P. 12(b)(6). (ECF Nos. 7, 11.) Plaintiff has filed a Response (ECF No. 13) only to Defendant CitiMortgage, Inc.'s (CMI) motion, to which Defendant CMI has filed a Reply (ECF No. 14). Finally, Defendant CMI has filed a Motion to Cite New Authority (ECF No. 15). The Court holds that oral argument is unnecessary for disposition of the motions.

For the reasons that follow, the Court will grant both motions to dismiss and will dismiss with prejudice Plaintiff's complaint. Because the motions are decided without reference to Defendant CMI's new authority, the Court will deny its motion to cite the same as moot.

I.

In 2002, Plaintiff bought residential real estate in Grand Rapids, Michigan. He financed the purchase through a mortgage. Defendant CMI became the servicer of the loan by assignment. Defendant CMI told Plaintiff in Fall 2008 that “he could skip his payment for December at Christmastime, and make up the payment by paying increased payments starting in January, 2009.” (Compl. ¶ 8, ECF No. 1.) Plaintiff was supposed to receive written confirmation of this arrangement, but never did. Plaintiff began receiving statements requiring what amounted to double payments in January 2009. In February 2009, Plaintiff contacted Defendant CMI about the increased payment amount and was told it was a clerical error that was being corrected. However, late fees and penalties were assessed that Plaintiff was told he would later have to dispute.

In April 2009, Plaintiff began closely monitoring his payments to Defendant CMI and obtaining confirmation numbers of each payment. He continued this practice through April 2010. In March through May of 2010, Plaintiff began to receive notices from Defendant CMI, informing him of overdue balances, late fees, and delinquency fees. Plaintiff did not understand why his account was seemingly in arrears and over the next few months he attempted to speak to management at Defendant CMI and bring his account up to date.

On August 16, 2010, Plaintiff received a letter from Defendant Trott & Trott, Defendant CMI's counsel, stating that the amount to reinstate his loan was $5,735.79. The letter was dated July 8, 2010, and stated that the reinstatement amount was due on August 16, 2010.

Finally, on October 8, 2010, Plaintiff sent a letter (the Letter) to Defendant CMI, mailing it to Defendant Trott & Trott. The Letter outlined “the events that had transpired between the fall of 2008 and October 2010” and requested “clarification regarding the irregularities in connection with the servicing” of Plaintiff's loan. (Compl. ¶ 23.) Plaintiff received a letter in late October acknowledging his inquiry and stating that his account was in foreclosure. In mid-November he received a letter that stated his account had been investigated and that the fees assessed were valid per his loan agreement, and included a copy of his payment history, the note, and the mortgage. The letter included a toll-free number and a Default Research Specialist's name for Plaintiff to contact. Plaintiff attempted to call the Default Research Specialist, but the number on the letter connected him to an unrelated party. Between November 2010 and March 2011, Plaintiff continued unsuccessfully to attempt to get more information about the charges on his account.

In March 2011, Plaintiff retained counsel, who began to attempt to negotiate with Defendant Trott & Trott on Plaintiff's behalf. That same month, Defendant CMI informed Plaintiff that his property was in foreclosure and that it could not accept payments directly. In May 2011, Plaintiff paid the current reinstatement amount to Defendant Trott & Trott.

II.

A. Motion Standards

In reviewing a Rule 12(b)(6) motion to dismiss, the Court must “ ‘construe the complaint in the light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the plaintiff,’ ” Hunter v. Sec'y of U.S. Army, 565 F.3d 986, 992 (6th Cir.2009) (quoting Jones v. City of Cincinnati, 521 F.3d 555, 559 (6th Cir.2008) ), but “need not accept as true legal conclusions or unwarranted factual inferences, and conclusory allegations or legal conclusions masquerading as factual allegations will not suffice.” Terry v. Tyson Farms, Inc., 604 F.3d 272, 276 (6th Cir.2010) (internal citations omitted). Under the federal notice pleading standards, a complaint must contain “a short and plain statement of the claim showing how the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). The purpose of this statement is to “give the defendant fair notice of what the claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The complaint need not contain detailed factual allegations, but it must include more than labels, conclusions, and formulaic recitations of the elements of a cause of action. Id. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Twombly, 550 U.S. at 555, 127 S.Ct. 1955 ).

To survive a motion to dismiss under Rule 12(b)(6), a complaint must allege facts that “state a claim to relief that is plausible on its face,” and that, if accepted as true, are sufficient to “raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555, 570, 127 S.Ct. 1955.

“The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. “A claim is plausible on its face if the ‘plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.’ ” Ctr. for Bio–Ethical Reform, Inc. v. Napolitano, 648 F.3d 365, 369 (6th Cir.2011) (quoting Iqbal, 556 U.S. at 677, 129 S.Ct. 1937 ), cert. denied, ––– U.S. ––––, 132 S.Ct. 1583, 182 L.Ed.2d 172 (2012). Where a complaint pleads facts that are merely consistent with a defendant's liability, it “stops short of the line between possibility and plausibility of ‘entitlement to relief.’ ” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955 ).

Further, under Rule 10(c), the court can consider the exhibits attached to the complaint without converting defendants' Rule 12(b)(6) motion into a motion for summary judgment. FED. R. CIV. P. 10(c) ; see Koubriti v. Convertino, 593 F.3d 459, 462 n. 1 (6th Cir.2010) (“Documents attached to the pleadings become part of the pleadings and may be considered on a motion to dismiss.”). Additionally, the Court may also consider “ ‘exhibits attached [to the complaint], public records, items appearing in the record of the case and exhibits attached to defendant's motion to dismiss so long as they are referred to in the complaint and are central to the claims contained therein,’ without converting the motion to one for summary judgment.” Rondigo, L.L. C. v. Twp. of Richmond, 641 F.3d 673, 681 (6th Cir.2011) (quoting Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir.2008) ).

B. RESPA Claims

The provision of RESPA relevant to the present case is the requirement that loan servicers respond in a certain amount of time and in a certain way to Qualified Written Requests (QWR) from the borrower for information about the account or for corrections to be made to the account. 12 U.S.C. § 2605(e). Prior to its amendment by the Dodd–Frank Wall Street Reform and Consumer Protection Act, 124 Stat. 1376¹ , section 2605(e) provided that upon receipt of a QWR, a loan servicer must first, within 20 days, acknowledge receipt of the QWR in writing.

The servicer's further duties are dictated by the nature of the QWR. If the borrower is seeking information, the servicer must within 60 days of receipt of the QWR conduct an investigation and give the borrower a written statement that provides: the requested information or an explanation of why the information is not available; and the contact information of a person or department that can process further inquiries. 12 U.S.C. § 2605(e)(2)(C).

If the QWR requests a correction be made to the account, the servicer must within 60 days either (1) make appropriate corrections to the account and inform the borrower in writing of the corrections; or (2) conduct an investigation and provide the borrower a written statement that explains why the account is correct and give the borrower the contact information of a person or department that can process further inquiries. 12 U.S.C. § 2605(e)(2)(A)–(B).

These duties are only triggered, however, if: (1) the servicer receives a QWR; and (2) the written correspondence meets the statutory definition of a QWR. 12 U.S.C. § 2605(e)(1)(A). To be a QWR, the correspondence must (1) be written; (2) not be included with a payment; (3) include the name and account number of the borrower, or a way to enable the servicer to identify the account; and (4) include a statement of...