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Gray v. Citimortgage, Inc.

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

March 21, 2017

DOMINICK GRAY, Plaintiff,
v.
CITIMORTGAGE, INC., Defendant.

          OPINION & ORDER DENYING DEFENDANT CITIMORTGAGE, INC.'S MOTION TO DISMISS (DKT. 19)

          MARK A. GOLDSMITH United States District Judge.

         This is a breach of contract case arising out of Defendant CitiMortgage, Inc.'s (“CMI”) foreclosure of Plaintiff Dominick Gray's home. Gray filed an amended complaint on September 16, 2016 (Dkt. 18), and CMI filed a motion to dismiss in lieu of an answer (Dkt. 19). For the reasons discussed below, CMI's motion is denied.

         I. BACKGROUND

         Gray defaulted on his mortgage in 2010. In August 2013, Gray filed his first lawsuit in connection with his mortgage, see Gray v. CitiMortgage, 13-13415 (E.D. Mich.), alleging violations of RESPA, breach of contract, defamation of title, fraud, and other state-law claims. That case settled. In November 2014, Gray filed his second lawsuit in connection with his mortgage, see Gray v. CitiMortgage, 14-14306 (E.D. Mich.), alleging breach of contract and seeking injunctive relief. In that lawsuit, Gray claimed that CMI had breached the terms of the settlement agreement in the 2013 case by failing to negotiate a loan modification - as required by the 2013 settlement agreement - in good faith. That case, too, settled, and, again, a settlement agreement (the “Agreement”) required Defendant to (i) review Plaintiff for a loan modification and, if Plaintiff qualified, (ii) modify the loan. See Am. Compl. ¶ 6 (Dkt. 18). The Agreement appears in the record as an exhibit to Gray's state-court motion for a temporary restraining order, which motion is CMI's Exhibit C to its Notice of Removal. See Pl. State Ct. Mot. for TRO, Ex. C to Notice of Removal, at 13-17 (cm/ecf pages) (Dkt. 1-4).

         Prior to the November 20, 2015 execution of the Agreement, Gray's property was sold at a sheriff's sale on January 13, 2015. See Def. Br. at 1.

         The instant case alleges breach of contract and requests injunctive relief and specific performance in addition to money damages. That settlement agreement contained the following disclaimer:

Borrower understands and acknowledges that a loan modification review may result in a denial even if Borrower returns all required documents timely and in a completed form. If the modification review results in a denial, a denial letter will be generated and foreclosure and/or eviction proceedings will resume. Borrower understands and acknowledges that a denial due to Borrower's failure to qualify for a loan modification and the resumption of foreclosure and/or eviction proceedings is not a breach of this Agreement.

See Def. Br. at 2. Gray submitted his loan modification application package. On March 9, 2016, CMI informed Gray that he had been denied a loan modification because (i) his current monthly household expenses - including the principle plus interest, plus property taxes, insurance premiums, and “homeowner's dues” - was less than or equal to 31% of his gross monthly income; and (ii) Gray's loan had become “60 or more days delinquent and was modified within the last 12 months.” Am. Compl. ¶ 9. Gray filed this lawsuit in Oakland Circuit Court on March 25, 2016, and Defendants removed to this Court on April 8, 2016 (Dkt. 1).[1]

         II. STANDARD OF DECISION

         On a motion to dismiss pursuant to Rule 12(b)(6), “[t]he defendant has the burden of showing that the plaintiff has failed to state a claim for relief.” Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007) (citing Carver v. Bunch, 946 F.2d 451, 454-455 (6th Cir. 1991)). Such a motion “should not be granted unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Id. The plausibility standard requires courts to assume that all the alleged facts are true, even when their truth is doubtful, and to make all reasonable inferences in favor of the plaintiff. Twombly, 550 U.S. 544, 555-556 (2007); In re NM Holdings Co., LLC, 622 F.3d 613, 618 (6th Cir. 2010). The complaint “does not need detailed factual allegations.” Twombly, 550 U.S. at 555; see also Erickson v. Pardus, 551 U.S. 89, 93 (2007) (“specific facts are not necessary”). It needs only enough facts to suggest that discovery may reveal evidence of illegality, even if the likelihood of finding such evidence is remote. Twombly, 550 U.S. at 556. Evaluating a complaint's plausibility is a “context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).[2]

         III. ANALYSIS

         CMI's chief argument is that Gray conceded that a proper loan modification review had taken place, and that, under the disclaimer in the Agreement quoted above, no modification was guaranteed. See Def. Br. at 6 (“[i]t is undisputed that CMI reviewed [Gray] for a loan application”). Gray did not concede this, however. In support of this assertion, CMI cites paragraph 9 of the amended complaint, but that paragraph merely recounts some contents of the rejection letter that CMI sent to Gray. See Am. Compl. ¶ 9. Gray's claims are that the Agreement required a modification to be considered, in good faith, according to CitiMortgage's standard procedures and that whatever “review” occurred resulted in a denial due to either bad faith or incompetence. The amended complaint cannot be fairly read to concede that CMI conducted the loan modification review that was promised by the Agreement.

         One of CMI's two alternative reasons for denying Gray's loan modification application was that his housing debt did not exceed 31% of his gross income. See Am. Compl. ¶ 9(a). On this point, Gray alleges that his monthly housing expense in fact exceeded 31% of his gross income, id. ¶ 10; that CMI “knowingly inflated” his income “for the sole purpose of denying him a loan modification, ” id. ¶ 11; that CMI “knowingly lowered [his] monthly payment by approximately $300.00 for the sole purpose of denying him a loan modification, ” id. ¶ 13; that CMI “knowingly considered data that was false, which inflated [his] gross income and lowered [his] monthly payment, ” id. ¶ 16; and, finally, that he did, in fact, qualify for a loan modification under CMI's criteria, id. ¶ 18.

         CMI argues that these pleadings are insufficient because Gray fails to identify his specific monthly income, his exact monthly housing expenses, or how CMI's calculations are incorrect. See Def. Br at 7-8. This, claims CMI, is an insufficient, “unadorned, the-defendant-unlawfully-harmed-me accusation.” Id. (quoting Twombly, 550 U.S. at 555). But CMI did not provide any case law relating to the context ...


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