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Goss v. Citimortgage, Inc.

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

November 16, 2017

ROBERT GOSS, JR., Plaintiff,
CITIMORTGAGE, INC., et al., Defendants.



         Plaintiff Robert Goss, Jr. brought this action for what he alleges was a wrongful foreclosure on his home. (Dkt. #1.) Plaintiff claims that Defendant CitiMortgage, Inc. and Defendant Nationstar Mortgage, LLC, the entities responsible for the mortgage on his property, failed to accept his mortgage loan payments and falsely represented the mortgage as in default. (Id.) Defendant CitiMortgage and Defendant Nationstar have each filed a Motion to Dismiss (Dkt. ##38, 41). Plaintiff filed separate responses. (Dkt. ##43, 44.) The court has determined that a hearing is unnecessary. E.D. Mich. LR 7.1(f)(2). Because the legal issues in these motions largely overlap, the court will address both motions in this order. For the following reasons, Defendants' motions are granted in part and denied in part.

         I. BACKGROUND

         In 2005, Plaintiff entered into a mortgage agreement with ABN AMRO Mortgage Group, Inc. (Dkt. #41-2.)[1] Defendant CitiMortgage, as a successor in interest by merger to ABN AMRO, later became the holder of the mortgage. (Dkt. #35-3 Pg. ID 1069.) In 2011, Defendant CitiMortgage foreclosed on the property and sold it. (Id.) After the redemption period for the sale, Plaintiff filed suit against ABN AMRO and Defendant CitiMortgage challenging the foreclosure and sale. See Goss v. ABN AMRO Mort. Grp., 549 F. App'x 466, 468 (6th Cir. 2013). The district court dismissed Plaintiff's complaint, and the Sixth Circuit affirmed. Id. at 477.

         Following litigation, Plaintiff and Defendant CitiMortgage entered into a modified loan agreement (Dkt. #35-4) and Defendant CitiMortgage expunged the foreclosure in February 2015 (Dkt. #35-3). Plaintiff alleges that he has made timely payments as required by the modified loan agreement, but that Defendant CitiMortgage provided “erroneous information” regarding his escrow and a change in his mortgage payment. (Dkt. #35 Pg. ID 1039.) According to Plaintiff, Defendant Nationstar-who was servicing the loan-also began sending Plaintiff incorrect information about the payments he had been making and a balance that Defendants contended was past due. (Dkt. #35 Pg. ID 1041; Dkt. #35-16.) He further alleges that Defendant Nationstar, which was assigned the loan in November 2016 (Dkt. #41-3), wrongfully refused Plaintiff's payments. (Dkt. #35 Pg. ID 1039, 1041.)

         Despite his timely payments, according to Plaintiff, he discovered that his payments were not being reported to major credit bureaus. (Dkt. #35 Pg. ID 1040.) When Plaintiff sent letters to Transunion and Experian disputing their reports of his payments, he received credit reports “that were contrary to his payment history and the cashed checks” he had submitted for payment. (Id.)

         Plaintiff, in an attempt to correct the “variable payment amounts from month-to-month in direct contradiction to the required monthly payments under the modification agreement, ” attempted to contact Defendant CitiMortgage. (Id.) According to Plaintiff, “Defendant Citi[M]ortgage would send correspondence that did not address the issues raised by” Plaintiff. (Id.) Plaintiff eventually sent CitiMortgage a “RESPA Qualified Written Request Letter” in June 2016. (Id.; Dkt. #35-13.) Defendant CitiMortgage's response, however, “did not address any of the information requested in the Plaintiff's Qualified Written Request.” (Dkt. #35 Pg. ID 1040-41.) Plaintiff received his last correspondence from Defendant CitiMortgage-a letter soliciting Plaintiff for loss mitigation-in August 2016. (Id. at Pg. ID 1041.)

         Plaintiff then began receiving letters from Defendant Nationstar, including a letter “indicating [Nationstar] had no record of any payments since June of 2016, when in fact, the money for the payments had been removed from Plaintiff's bank account by Defendant Citi[M]ortgage.” (Id. at Pg. ID 1041.) In September 2016, Defendant Nationstar advised Plaintiff that he needed a loan specialist. (Id.)

         Plaintiff, however, kept making payments. He submitted checks for his monthly mortgage payment in October, November, and December 2016, but all were returned with some communication from Defendant Nationstar. (Id. at Pg. ID 1041-42.) Plaintiff also received a letter and a “refund” check from Defendant Nationstar in December 2016, but says he has “no idea of what this check represented and has not cashed the check, but retained the check.” (Id. at Pg. ID 1042; Dkt. #35-21.)

         Plaintiff's home was sold at a sheriff's sale on December 20, 2016 “for an alleged default and failure to make monthly payments.” (Dkt. #35 Pg. ID 1042.) One day before the sale, Plaintiff filed an “Emergency Motion for Temporary Restraining Order” (Dkt. #4) asking the court to stay the sale. 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.) Plaintiff thereafter moved to amend his complaint to name the third party purchaser of the property-Zana Zaitouna-as a Defendant and to add a claim for a violation of the Real Estate Settlement Procedures Act against Defendant CitiMortgage. (Dkt. #32.) The court granted Plaintiff's request (Dkt. #34), and Plaintiff filed an amended complaint (Dkt. #35.)

         Despite the sheriff's sale, Plaintiff avers that Defendant Nationstar “has accepted Plaintiff's payments for January 2017, February 2017, March 2017, and April 2017.” (Dkt. #35 Pg. ID 1042.) As a result of the negative entries on Plaintiff's credit reports, Plaintiff has been denied a business loan and a credit card; he has also had to pay higher interest on the supplies for his small business. (Id.)

         II. STANDARD

         Federal Rule of Civil Procedure 8(a)(2) requires that a complaint contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim for relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not shown-that the pleader is entitled to relief.” Id. at 679. The court views the complaint in the light most favorable to the plaintiff and accepts all well-pleaded factual allegations as true. Tackett v. M & G Polymers, USA, LLC, 561 F.3d 478, 488 (6th Cir. 2009). The court, however, “need not accept as true legal conclusions or unwarranted factual inferences.” Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007).

         “In determining whether to grant a Rule 12(b)(6) motion, the court primarily considers the allegations in the complaint, although matters of public record, orders, items appearing in the record of the case, and exhibits attached to the complaint, also may be taken into account.” Amini v. Oberlin College, 259 F.3d 493, 502 (6th Cir. 2001) (quoting Nieman v. NLO, Inc., 108 F.3d 1546, 1554 (6th Cir. 1997)). Furthermore, “when a document is referred to in the pleadings and is integral to the claims, it may be considered without converting a motion to dismiss into one for summary judgment.” Commercial Money Ctr. v. Ill. Union Ins. Co., 508 F.3d 327, 335-36 (6th Cir. 2007).


         Plaintiff brings seven claims, each-with the exception of Count VII-brought against Defendant CitiMortgage and Defendant Nationstar[2]: (1) breach of contract; (2) promissory estoppel; (3) wrongful foreclosure under Mich. Comp. Laws § 600.3204; (4) violation of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq.; (5) violation of the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq.; (6) quiet title; and (7) violation of Real Estate Settlement Procedures Act, 12 U.S.C. § 2605, as to Defendant CitiMortgage. The court will address each count in turn.

         A. Breach of Contract

         Defendants argue that Plaintiff cannot state a valid claim for breach of contract because he cannot establish all the required elements under Michigan law. A claim for breach of contract under Michigan law requires the plaintiff to prove: (1) the existence of a valid contract, (2) the terms of the contract, (3) that the other party breached the contract, and (4) that the breach caused the plaintiff's injury. Webster v. Edward D. Jones & Co., 197 F.3d 815, 816 (6th Cir. 1999). “The rule in Michigan is that one who first breaches a contract cannot maintain an action against the other contracting party for his subsequent breach or failure to perform.” Flamm v. Scherer, 198 N.W.2d 702, 706 (Mich. Ct. App. 1972).

         Defendants agree that the modified mortgage agreement constitutes a valid contract. (Dkt. #38 Pg. ID 1218; Dkt. #41 Pg. ID 1285.) But both Defendants contend that Plaintiff cannot recover for breach of contract because he breached the contract first. (Dkt. #38 Pg. ID 1218-20; Dkt. #41 Pg. ID 1285-86.) Specifically, according to Defendants, the modified mortgage agreement provides that Plaintiff was responsible for paying taxes, insurance premiums, assessments, and escrow items as required under the mortgage, and they point to this provision of the modified agreement attached to Plaintiff's amended complaint. (Dkt. #35-4 Pg. ID 1072-73.) Moreover, according to the modified agreement, “[t]he escrow payments may be adjusted periodically in accordance with applicable law and therefore borrower's total monthly payment may change accordingly.” (Id. at Pg. ID 1073.)

         Defendants aver that Plaintiff was “mailed an escrow analysis disclosure statement . . . confirm[ing] that Plaintiff's monthly payment was increasing.” (Dkt. #38 Pg. ID 1219.) They point to a letter attached to Plaintiff's amended complaint from Defendant CitiMortgage that documents an increased payment amount. (Dkt. #35-6.) Plaintiff, however, continued making the lower monthly payment. (Dkt. #38 Pg. ID 1219; Dkt. #41 Pg. ...

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