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Goss v. Citimortgage, Inc.

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

June 27, 2017

ROBERT GOSS JR., Plaintiff,
v.
CITIMORTGAGE, INC. and NATIONSTAR MORTGAGE, LLC, Defendants.

          OPINION AND ORDER GRANTING MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT

          ROBERT H. CLELAND UNITED STATES DISTRICT JUDGE

         On December 19, 2016, Plaintiff Robert Goss Jr. filed an “Emergency Motion for Temporary Restraining Order” (Dkt. # 4) asking the court to stay the December 20, 2016 sheriff's foreclosure sale of his home at 6263 Malvern Drive, Troy, Michigan. The court denied the motion in an order entered the next day (Dkt. # 5), explaining that the court lacked sufficient time to review the motion before the sale and, in any event, Plaintiff had not shown that irreparable harm would result, as Michigan law provided a variety of mechanisms by which the parties could effectively undue the foreclosure sale. (Dkt. # 5, Pg. ID 201-02.) The auction was held and Plaintiff's home was sold to a then-unidentified third party.

         Defendants Citimortgage, Inc. and Nationstar Mortgage, LLC, have filed motions to dismiss (Dkt. ## 17, 18), which have been fully briefed. On May 9, 2017, Plaintiff filed a motion for leave to file an amended complaint-adding a claim under the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2605 (Dkt. # 25)-and a “Renewed Emergency Motion for a Temporary Restraining Order” (Dkt. # 26). Plaintiff's renewed TRO asked the court to stay the running of the six month statutory period during which Plaintiff may redeem his allegedly-defaulted mortgage. (Id.) In a May 25, 2017 opinion and order (Dkt. # 31), the court construed the renewed TRO as a motion for a preliminary injunction. In its opinion, the court explained that Michigan's redemption period does not begin to run until the sheriff's deed from the foreclosure sale is recorded, and that the sheriff's deed had not yet be recorded by the third-party purchaser. (Id. at Pg. ID 814.) The court also explained that it could not enjoin any action by the purchaser until that individual was joined as a party to this proceeding. (Id.) Finding that “Plaintiff's requested injunction would have no effect[, ]” the court denied the motion without prejudice. (Id.) The court took no action on the motion for leave to file the first amended complaint or on the motions to dismiss, all of which remain pending.

         Now before the court is a motion for leave to file a second amended complaint, joining Zana Zaitouna-the third-party purchaser-as a Defendant. (Dkt. # 32.)[1]Defendants Citimortgage and Nationstar stipulate to joining Zaitouna as a Defendant, but ask the court to deny leave add the RESPA claim.[2] Defendants contend that adding this claim would be futile, they were not given proper notice, and adding the claim now would be unduly prejudicial. (Dkt. # 33, Pg. ID 990.) The court agrees with the parties that joining Zaitouna is appropriate and will grant that aspect of the motion without discussion. After reviewing the briefing and finding no hearing necessary, see E.D. Mich. L.R. 7.1(f)(2), the court will also grant leave to bring the RESPA claim.

         Except for amendments allowed as a matter of course under Federal Rule of Civil Procedure 15(a)(1), “a party may amend its pleading only with the opposing party's written consent or the court's leave. The court should freely give leave when justice so requires.” Fed.R.Civ.P. 15(a)(2). Factors that may affect the determination include undue delay in filing, bad faith or dilatory motive, undue prejudice, repeated failure to cure deficiencies by previous amendment or futility of amendment by the moving party. Head v. Jellico Hous. Auth., 870 F.2d 1117, 1123 (6th Cir. 1989) (citation omitted). The ultimate decision to grant or deny leave to amend a pleading is left to the sound discretion of the district court. Robinson v. Michigan Consol. Gas Co., Inc., 918 F.2d 579, 591 (6th Cir. 1990).

         Plaintiff's second amended complaint alleges that he “inquired about information on his account and for correction of the errors made . . . . [and] Defendant Citimortgage failed to respond to Plaintiff's inquiry and make the necessary corrections to [his] mortgage, in violation of 12 U.S.C.[ §] 2605(e). (Dkt. # 32-2, Pg. ID 840.) Attached to the proposed second amended complaint is Plaintiff's inquiry, which identifies itself as a “Qualified Written Request under RESPA” and is dated June 8, 2016. (Dkt. # 32-2, Pg. ID 931.) Under the statute, mortgage servicers are required to respond to qualified written requests (“QWRs”) within thirty days. 12 U.S.C. § 2605(e)(2).

         Defendants advance two arguments for why granting leave to bring this claim would be futile. First, Defendants contend that Plaintiff's inquiry was not a QWR under the statute because Plaintiff sent his inquiry to the wrong address. The relevant regulatory provision, promulgated by the Consumer Financial Protection Bureau, provides in pertinent part:

A servicer may, by written notice provided to a borrower, establish an address that a borrower must use to submit a notice of error in accordance with the procedures in this section. The notice shall include a statement that the borrower must use the established address to assert an error. If a servicer designates a specific address for receiving notices of error, the servicer shall designate the same address for receiving information requests pursuant to § 1024.36(b). A servicer shall provide a written notice to a borrower before any change in the address used for receiving a notice of error. A servicer that designates an address for receipt of notices of error must post the designated address on any Web site maintained by the servicer if the Web site lists any contact address for the servicer.

12 C.F.R. § 1024(c). According to an exhibit attached to the proposed second amended complaint, Citimortgage provided Plaintiff with the following address for written requests for information, notices of error, or qualified written requests on May 26, 2016:

Citimortgage, Inc. Attn: Customer Research Team P.O. Box 10002 Hagerstown, MD 21747-0002

(Dkt. # 32-2, Pg. ID 924.) On June 8, 2016, Plaintiff mailed his inquiry to:

Citimortgage, Inc. P.O. Box 6243 Sioux Falls, S.D. 57117-6263 Attn: Mortgage Loan Accounting Department

(Dkt. # 32-2, Pg. ID 931.) Defendants argue that Plaintiff's failure to use the “established” Hagerstown mailing address renders his inquiry not a “qualified written request” under the RESPA and relieves Citimortgage of its duty to respond, citing Best v. Ocwen Loan Servicing, LLC, 2016 WL 125875 (E.D. Mich. January 12, 2016) (Luddington, J.). (Dkt. # 33, Pg. ID 993.)

         Setting aside whether a failure to use an established address would be fatal to Plaintiff's statutory claim, it is not obvious to the court that Citimortgage had “established a QWR mailing address” (id.) at the time. In addition to requiring the servicer to provide the borrower with written notice of the designated address, the servicer “must post the designated address on any Web site maintained by the servicer if the Web site lists any contact address for the servicer.” 12 C.F.R. § 1024(c). Nothing in Defendants' briefing or attachment addresses this requirement-Defendants' block quotation from the regulation omits it entirely (Dkt. # 33, Pg. ID 992). A cursory glance at Citimortgage's website provides a Sioux Falls address, though not ...


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