Townsend v. CitiMortgage Inc.

WILLIAM L. TOWNSEND, et al., Plaintiffs, v. CITIMORTGAGE INC., et al., Defendants.

CASE NO. 2:19-cv-251-RAH-SMD (WO)

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF ALABAMA NORTHERN DIVISION

January 6, 2021

MEMORANDUM OPINION AND ORDER

This matter concerns an equity builder program¹ into which the Plaintiffs William L. Townsend and Bertha Townsend enrolled in 2001 when they obtained a residential loan. The Townsends claim they have dutifully made their payments under the program for 18 years, and therefore were entitled to satisfaction and release of the mortgage against their home in 2020. The Defendants, CitiMortgage, Inc., CitiFinancial Servicing LLC and CitiBank, N.A. (collectively, "Citi" or "Defendants"), claim the Townsends withdrew from the equity builder program in2003 and then re-enrolled in 2008, the effect of which results in the anticipated satisfaction of the mortgage in 2024.

The Townsends filed this lawsuit in 2019 when they claim to have learned for the first time that, under the equity builder program, they still had several years remaining on their loan before it was satisfied and paid off. In their Complaint, as amended, they bring claims against Citi alleging breach of contract, violation of the Real Estate Settlement Procedures Act, 12 U.S.C. § 2605, quiet title, and requesting a declaratory judgment.² (Doc. 23.)

Pending before the Court is Defendants' Motion for Summary Judgment (Doc. 46) and Motion to Strike Affidavits (Doc. 56), to which the Townsends have duly responded. For the following reasons, the Court concludes that Citi's summary judgment motion is due to be granted and the motion to strike denied as moot.

SUMMARY JUDGMENT STANDARD

Summary judgment is proper if there is "no genuine issue as to any material fact and... the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). See also Fed. R. Civ. P. 56(a). The party asking for summary judgment "always bears the initial responsibility of informing the district court of the basis for its motion," and should rely on submissions "whichit believes demonstrate the absence of a genuine issue of material fact." Id. at 323. Once the moving party has met its burden, the nonmoving party must "go beyond the pleadings" and show that there is a genuine issue for trial. Id. at 324. Both the party "asserting that a fact cannot be," and a party asserting that a fact is genuinely disputed, must support their assertions by "citing to particular parts of materials in the record," or by "showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." Fed. R. Civ. P. 56 (c)(1)(A), (B).

To avoid summary judgment, the nonmoving party "must do more than show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). On the other hand, the evidence of the nonmovant must be believed and all justifiable inferences must be drawn in its favor. See Anderson v. Liberty Lobby, 477 U.S. 242, 255 (1986).

BACKGROUND

On June 8, 2001, the Townsends obtained a loan from Travelers Bank & Trust FSB ("Travelers") by executing a Disclosure Statement, Note and Security Agreement (the "Note"), which was secured by a mortgage ("Mortgage"). (Doc. 47-1 at 8, 10, 61-64.) Pursuant to the Note, the Townsends were required to make monthly payments of $662.98 beginning on July 13, 2001, and ending on June 13, 2031. (Doc. 47-1 at 52-56.)

The Townsends also entered into an equity builder program (the "Program") offered by the loan originator whereby the Townsends could make bi-weekly payments of $331.49 rather than a monthly mortgage payment of $662.98. (Doc. 47-1 at 13, 67-72.) As long as the Townsends remained in the Program, the lender agreed to lower the simple rate of interest set forth in the Note by 0.25%. (Doc. 47-1 at 16, 67-72.) Also, under the Program, if the Townsends made the scheduled bi-weekly payments, the Program projected that the loan would become fully paid in June 2020, rather than July 2031. (Doc. 47-1 at 16, 67-72.)

When they entered into the Program, the Townsends were provided an amortization schedule showing how their bi-weekly payments would be applied and would result in the early satisfaction of the loan. (Doc. 47-1 at 16-17, 67-72.) The schedule however included cautionary language stating that "any benefit of acceleration shown, assumes all payments are made via transfer from your checking account according to the S.M.A.R.T. Loan® Equity Builder payment schedule you have selected and reflects the effect of the .25% Equity Builder Interest rate discount," and that "[a]ctual savings may vary." (Doc. 47-1 at 16, 70.)

Payment history records from Citi and the Townsends' own bank records show that the Townsends made bi-weekly payments of $331.49 from July 27, 2001, until July 8, 2003. (Doc. 47-3 at 3-5, 24-52.) According to Citi, the Townsends contacted their loan servicer in 2003, stating that they no longer wanted to participatein the Program. (Doc. 47-3 at 5.) Therefore, the Townsends' participation in the Program ceased, and they reverted back to making monthly payments of $662.98 beginning in July 2003. (Docs. 47-4; 47-5; 47-3 at 5.)

Meanwhile, on July 31, 2006, Mrs. Townsend filed a Chapter 7 bankruptcy petition in the United States Bankruptcy Court for the Middle District of Alabama. (Doc. 47-1 at 18, 73-83.) During the pendency of the bankruptcy proceeding, the Townsends executed a reaffirmation agreement and acknowledged their obligation to make monthly payments of $662.98, beginning with the next payment due on September 13, 2006. (Docs. 47-1 at 17, 52-66; 47-3 at 6, 67-77.)

According to Citi, on December 31, 2007, the Townsends re-enrolled in the Program and executed documents to that effect. (Doc. 47-3 at 6, 53-66.) Thereafter, the Townsends again began making bi-weekly payments of $331.98, beginning March 27, 2008. (Docs. 47-5; 47-3 at 6, 26-52.) The Townsends continued making these bi-weekly payments through 2019 and made a lump sum payment of $25,500 in July 2020 to satisfy and pay off the loan in full. (Docs. 47-3 at 6; 65-1.)

In the months preceding satisfaction of the loan, on or about June 19, 2018, Citi received a "Notice of Error" from the Townsends. (Doc. 47-3 at 6, 93-94.) Citi acknowledged receipt of the Townsends' correspondence, (Doc. 47-3 at 6, 93-94), and several weeks later, on July 19, 2018, responded, (Docs. 47-3 at 6, 95-114; 47-1 at 21, 94-103).

ARGUMENT

1. The RESPA Claim

The Court begins its analysis with Count Six, in which the Townsends allege that Citi "violated the Real Estate Settlement Procedures Act (RESPA) by failing to acknowledge or respond to Townsends' Qualified Written Requests (QWR)." (Doc. 23 at 11.) According to the Townsends, they sent QWRs³ on four separate occasions: July 13, 2017, May 14, 2018, November 16, 2018, and January 18, 2019. (Doc. 23 at 11.) Citi responds that it timely and appropriately responded to the only QWR that it has record of receiving; that is, the May 14, 2018, QWR that it received on June 19, 2018. As to the other QWRs, Citi argues that the Townsends' RESPA claim must fail because the Townsends have presented no evidence beyond simply stating that they sent them. These bare statements alone cannot preserve the RESPA claim at the summary judgment stage of litigation, and here, the Townsends present nothing to help their claim survive - not a copy of the QWRs they purportedly sent,not even a computer version of the files, nor any additional detail, however salient, that would support what they claim to have sent.

"When a loan servicer receives a QWR from a borrower, the loan servicer must first provide to the borrower, within five days, a written response acknowledging receipt of the QWR.... The loan servicer must then, within thirty days of receiving the QWR, send the borrower a written response explaining any corrections to the borrower's loan account, clarifying the reasons that the loan servicer believes the borrower's account is accurate, or providing the information the borrower requested." Thomas v. US Bank Nat'l Ass'n, No. 15-14427, 2017 WL 117121, at *5 (11th Cir. Jan. 12, 2017); see also 12 U.S.C. § 2605. If the servicer fails to adequately respond to a borrower's QWR in violation of RESPA, the borrower may bring a cause of action against the servicer for "any actual damages to the borrower as a result of the failure." 12 U.S.C. § 2605(f)(1)(A). "[D]amages are an essential element in pleading a RESPA claim" and a "causal link" must exist "between the alleged violation and the damages." Renfroe v. Nationstar Mortgage, LLC, 822 F.3d 1241, 1246 (11th Cir. 2016).

Notably, there are restrictions on where a debtor can send a QWR. The Eleventh Circuit has recognized that, under RESPA, "[i]f a servicer designates a particular address for receiving QWRs, Regulation X requires a borrower to mail aQWR to that address to trigger the servicer's duty to respond." Bivins v. Bank of Am., N.A., 868 F.3d 915, 919 (11th Cir. 2017).

In their Amended Complaint, the Townsends allege they mailed QWRs on four distinct occasions; yet during discovery, they produced evidence of only one. And that one, while dated May 14, 2018, was actually post-marked and therefore sent on June 15, 2018. (Doc. 47-1 at 21, 94-95.) To that letter, Citi confirmed its receipt within five days on June 20, 2018 and then responded within thirty days on July 19, 2018. (Doc. 47-1 at 24, 108, 109-10.) Because both responses were timely, the Townsends have no claim concerning that particular QWR.

The question, then, is whether the Townsends can maintain a RESPA claim based on the other three letters they claim to have sent. Other than their vague and conclusory testimony, the Townsends present absolutely no evidence of the existence of these letters. Not a photocopy...