Townsend et al v. CitiMortgage Inc. et al

Filing 76

MEMORANDUM OPINION AND ORDER: it be and is hereby ORDERED as follows: (1) Summary Judgment (Doc. 46 ) is GRANTED as to Counts Four and Six of the Amended Complaint, and therefore these counts are dismissed, with prejudice; (2) Summary Judgment (D oc. 46 ) is GRANTED as to Counts Eight and Nine of the Amended Complaint, and therefore these counts are dismissed, without prejudice; (3) Counts One, Two, Three, Five, and Seven of the Amended Complaint are dismissed, without prejudice, upon agreement (Doc. 29 ) of the parties; (4) The Dfts' 56 motion to strike is DENIED, as moot. Signed by Honorable Judge R. Austin Huffaker, Jr on 1/6/2021. (wcl, )

IN THE UNITED STATES DISTRICT COURT FOR
THE MIDDLE DISTRICT OF ALABAMA
NORTHERN DIVISION
WILLIAM L. TOWNSEND, et al.,
Plaintiffs,
v.
CITIMORTGAGE INC., et al.,
Defendants.

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

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 in

1

Under most equity builder or acceleration programs, instead of making a mortgage payment every
month (i.e., twelve per year), the borrower makes a payment every two weeks (twenty-six times
per year). The theory behind such a program is that by converting to bi-weekly payments, the debt
is paid off faster because the borrower is not only making an extra monthly payment every year
but is also making half of each month’s payment earlier each month, thereby reducing the amount
of accrued interest.

1

2003 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 “which

2

The Townsends previously agreed to voluntarily dismiss their state law claims for negligence,
wantonness, and unjust enrichment and their federal claims for violations of the Truth in Lending
Act and the Telephone Consumer Protection Act. (See Doc. 29.)

2

it 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. 471 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.)
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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. 471 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. 471 at 16, 67-72.) Also, under the Program, if the Townsends made the scheduled biweekly 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 participate
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in 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; 471 at 21, 94-103).
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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,

3

Sometimes, the parties refer to these letters as Notices of Error. A QWR may come in the form
of a Notice of Error (“NOE”) or a Request for Information (“RFI”). See Walker v. Branch Banking
and Trust Co., 237 F.Supp.3d 1326, 1331 (S.D. Fla. 2017); 12 U.S.C. § 2605(e)(1)(B); 12 C.F.R.
§1024.35(a) (“A qualified written request that asserts an error relating to the servicing of a
mortgage loan is a notice of error for purposes of this section, and a servicer must comply with all
requirements applicable to a notice of error with respect to such qualified written request.”); 12
C.F.R. §1024.36(a) (“A qualified written request that requests information relating to the servicing
of the mortgage loan is a request for information for purposes of this section, and a servicer must
comply with all requirements applicable to a request for information with respect to such qualified
written request.”). For simplicity, the Court will refer to the letters as QWRs.

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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 a

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QWR 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 of the signed letters. Not a copy of, for
example, the Word version of the data file for the letters. Not even proof of mailing,
such as a USPS receipt. Further, even the Townsends’ own testimony is specious, as
they provide no detail, other than purported dates, about where they mailed each
letter, how they mailed each letter, whether they pre-paid postage, or what the
contents of each letter included. Indeed, their own testimony is totally lacking to
support any assertion that proper QWRs were sent to Citi.

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Here, the Townsends’ vague, conclusory statements regarding the
unaccounted for QWRs are insufficient to create a bona fide issue of material fact
on their RESPA claim. See, e.g., Tonea v. Bank of America, N.A., 6 F.Supp.3d 1331,
1346 (N.D. Ga. 2014) (addressing plaintiff’s unsupported conclusory allegation that
he mailed a QWR to the defendant, and finding that the plaintiff’s failure to “provide
any allegations about the content of his mailing” and to “attach copies of the mailing
to the complaint” is insufficient “to survive a motion to dismiss”); Lucero v.
Diversified Investments Inc., No. 09-cv-1742 BTM, 2010 WL 3463607, at *4 (S.D.
Cal. Aug. 31, 2010) (“[B]ecause [the plaintiffs] do not allege the contents of the
QWR or attach it to their Complaint, it is unclear whether Plaintiffs included enough
information for the servicer to identify them, or asked for information covered by 12
U.S.C. § 2605.”); Carrillo v. Bank of New York, No. 09–61642–CIV, 2009 WL
5708925, at *4 (S.D. Fla. Dec. 22, 2009) (Section 2605 claim failed to state a cause
of action because, among other deficiencies, the complaint “does not indicate the
subject matter of the written correspondence”); Costine v. BAC Home Loans, 946
F.Supp.2d 1224, 1232-33 (N.D. Ala. 2013) (“It is not enough to simply use the words
‘qualified written request’ somewhere in the Complaint. Rather, Plaintiff[ ] must
plead facts demonstrating that a written request was actually made, such as by ...
describing its contents showing they satisfied the requirements enumerated in 12
U.S.C. § 2605(e)(1)(B).”);

Odum v. Specialized Loan Servicing, No. 1:15-cv9

001949, 2016 WL 4582070, at *4 (N.D. Ga. July 5, 2016) (finding plaintiff’s
RESPA claim could not survive a motion to dismiss where he failed to plead specific
facts that a written request was actually made); Saint-Felix v. Bayview Loan
Servicing LLC, No. 1:15-cv-1679, 2015 WL 13777024, at *8 (N.D. Ga. Nov. 12,
2015). See also Konst v. Florida East Coast Ry. Co., 71 F.3d 850, 851 (11th Cir.
1996) (a “‘presumption of receipt’ arises upon proof that the item was properly
addressed, had sufficient postage, and was deposited in the mail.”). Accordingly,
Citi is entitled to summary judgment on the RESPA claim.
2. The Breach of Contract Claim.
In Count Four, the Townsends bring a claim for breach of contract. This
claim, which is somewhat confusing, appears to be premised upon the Program that
Citi allegedly breached because, according to the Townsends, they “have made each
and every monthly payment required of them.” (Doc. 23 at 7, ¶ 32.) As the
Amended Complaint alleges:
The Plaintiffs have been on this program of bi-weekly payment
automatically bank drafted for over 18 years having made each and
every payment as required. Moreover, the Townsends have sent
payments directly to the Defendants in addition to the auto draft
payments making more than the monthly required payments. Some of
these additional payments were improperly credited to the account.
Some of the additional payments were improperly held in a “suspense
account”. Some of the payments were accepted and cashed, but the
Defendants failed to apply them properly to the Plaintiffs’ mortgage
account in violation of the mortgage contract. In addition, Defendants
improperly returned payments to the Townsends again also in violation
of the mortgage contract.
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(Doc. 23 at 7, ¶ 31.)
In a similarly vague manner, the Amended Complaint goes on to allege that
Citi mishandled the escrow account, charged improper and unauthorized fees and
expenses, and failed to send proper monthly statements. (Doc. 23 at 7, ¶ 29.)
Presumably, these allegations too are generally tied to Citi’s alleged failure to abide
by the terms of the Program.
In its summary judgment motion, Citi argues that there is no evidence that it
breached any provision of the loan documents or Program. It also contends that “all
of the payments made by the Townsends were properly applied.” (Doc. 48 at 14.)
And as it concerns the Program and the payoff in 2020, it argues that the Townsends
did not participate in the Program from 2003 to 2008 and therefore there could be
no breach by Citi when the loan was not paid off in 2020 as projected by the
amortization schedule provided to the Townsends in 2001. As evidence, Citi points
to its own payment history records, the Townsends’ bank records, the bankruptcy
reaffirmation agreement signed by the Townsends in 2006, and the re-enrollment
paperwork signed by the Townsends in 2008.
Lastly, Citi argues that the Townsends’ claim is barred by the applicable
statute of limitations because the Townsends exited the Program in 2003 and
reenrolled in 2008. (Doc. 48 at 16.) Thus, according to Citi, the Townsends’ cause
of action for breach of contract would have first accrued in 2003 and would have re11

accrued each month thereafter until their reenrollment in 2008. Further, Citi notes
the Townsends would have been on notice in 2003 through 2008 that they were no
longer enrolled in the Program based on the fact that the bi-weekly payments were
no longer being collected from their bank account.
In their response, the Townsends do not attempt to defend their deposition
testimony or the evidence presented by Citi. Instead, they submit virtually identical
affidavits that largely mimic, word-for-word, the general allegations in the Amended
Complaint about failing to apply payments correctly, misapplying payments,
holding payments in suspense, failing to properly credit payments, mishandling
escrow, and charging unauthorized fees. (Docs. 54-1 at 2; 54-2 at 2.) In their
affidavits, they also testify that they have been in the “program of bi-weekly payment
automatically bank drafted for over 18 years having made each and every payment
as required.” (Docs. 54-1 at 2-3; 54-2 at 2-3.) They then go on to state that they
“[a]re completely current on our mortgage payments, and have made each and every
monthly payment required by the contract.” (Docs. 54-1 at 3; 54-2 at 3.) Which
they then use to support their summary judgment position that they “made all of their
payments per the equity builder agreement that they signed with CitiMortgage” and
“apparently, the Defendants failed to properly credit all the amounts the Townsends
had made.” (Doc. 54 at 11.)

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Glaringly absent from the Townsends’ affidavits is any degree of detail or
specificity. Just like their Amended Complaint, the affidavits are full of accusations,
labels, and conclusory statements, but void of specific details. Needless to say, this
vagueness serves as the basis for Citi’s motion to strike them.4 (See Doc. 56.)
Further missing from their summary judgment response is any identification
of any particular payments that were misplaced, misapplied, or not applied at all.
Instead, the Townsends simply make a broad swipe of saying they made all of their
bi-weekly payments dating back to 2001, just as they did in their affidavits.
While the Court is highly concerned about the lack of detail and evidence
presented by the Townsends, see Avirgan v. Hull, 932 F.2d 1572, 1577 (11th Cir.
1991) (holding that a party cannot satisfy its burden at summary judgment by relying
on legal conclusions or conclusory allegations), the Court concludes that it need not
entangle itself with comparing Citi’s evidence against the Townsends’ specious,
vague and largely self-serving statements because the Townsends’ breach of contract
claim is time-barred. In Alabama, the statute of limitations for contract claims is six
years. Ala. Code § 6-2-34(9). See also McCall v. Household Finance Corp., 122
So. 3d 832, 835 (Ala. 2013); Yeager v. Ocwen Loan Servicing LLC, No. 1:17-cv-

4

Since the Court is granting summary judgment for reasons apart from what is or is not contained
in the affidavits, the Court denies the motion to strike as moot. However, the Court notes that the
motion correctly characterizes the affidavits as speculative and conclusory, and in other contexts,
contradictory of their own testimony.

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574-WKW, 2018 WL 1004742, at *6 (M.D. Ala. Feb. 21, 2018). It begins to run
“from the time a breach occurs rather than from the time actual damage is sustained.”
AC, Inc. v. Baker, 622 So. 2d 331, 335 (Ala. 1993).
The Townsends’ Amended Complaint and summary judgment argument
repeatedly assert that, for the entire duration of the loan and beginning in 2001, they
were enrolled in and were making bi-weekly payments and that Citi failed to apply
their payments as required under that Program. Because Citi did not apply their
payments as contractually required, the theory goes, the principal balance of the loan
did not decrease as quickly as they expected and as represented in the amortization
schedule. The evidence presented by Citi, including the Townsends’ own bank
records, shows that the Townsends were not enrolled in the Program from 2003 to
2008 and therefore the breach, if any, occurred in that time frame. The statute began
to run at that time, thereby resulting in the expiration of the six-year statute of
limitations years before the date the Complaint was filed in 2019.
Although the Townsends did not benefit the Court with any written legal
argument concerning the statute of limitation issue, during oral argument, they
argued that the limitations period did not begin to run until 2020 when the loan failed
to mature as expected. The extended maturity (2024 instead of 2020), however,
would be an element of damage and does not extend the time for filing a complaint
for a precedent breach. See McCall v. Household Finance Corp., 122 So. 3d 832,
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835 (Ala. 2013)(concluding the breach occurred when the lender failed to apply
payments and not years later when the loan did not pay off as expected); Stephens v.
Creel, 429 So. 2d 278 (Ala. 1983) (the statute of limitations for breach of contract
begins to run when the breach occurs even if it precedes any actual damage). In
actuality, the Townsends’ first damage occurred in 2003 during the first month that
a payment was not applied consistent with the Program.
And finally, unlike a fraud claim, there is no discovery rule for breach of
contract claims under Alabama law. See McCullough Enterprises LLC v. Marvin
Windows & Doors, No. 09–0573–WS–B, 2010 WL 5014670 (S.D. Ala. Dec. 2,
2010). Thus, it is irrelevant whether the Townsends had actual notice that Citi was
not withdrawing bi-weekly payments or applying payments consistent with the
Program from 2003 to 2008.
In short, Citi is entitled to summary judgment on the Townsends’ breach of
contract claim because the claim is time-barred.
3. The Quiet Title and Declaratory Judgment Claims
Counts Eight (Quiet Title) and Nine (Declaratory Relief) are tied together by
the same common allegation. That is, both counts seek a determination that the Note
is paid in full and therefore that the Mortgage should be treated and considered as
satisfied. (See Doc. 23 at 14-15.) Presumably, both counts were originally filed as
tag-along claims to the Townsends’ breach of contract claim relating to the equity
15

builder program because, at that time, there was an outstanding balance associated
with the loan. Since that time, however, the Townsends have paid off and satisfied
the loan in full through a lump sum payment made in July 2020, a point
acknowledged by the parties in this case. (Docs. 65-1; 72.) There being no further
debt and therefore no corresponding mortgage premised on an outstanding debt,
there is no longer a justiciable claim regarding a mortgage (or cloud) against the
property. See, e.g., Snyder v. U.S., 260 F. App’x 488 (3rd Cir. 2008)(affirming
summary judgment on quiet title claim because the claim was moot in light of the
IRS’s release of the tax lien); Obonyano v. Aderibigbe, No. 1:07-cv-1854-ODE,
2009 WL 10672142, a *3 (N.D. Ga. Feb. 10, 2009) (recognizing that quiet title claim
was moot since lien had been canceled).5

Therefore, these claims are due to be

dismissed without prejudice.

CONCLUSION
For all of the foregoing reasons, it be and is hereby ORDERED as follows:
(1) Summary Judgment (Doc. 46) is GRANTED as to Counts Four and Six of
the Amended Complaint, and therefore these counts are dismissed, with
prejudice;

5

To the extent the Townsends seek a declaratory judgment concerning the servicing of the loan,
such a claim is simply redundant and duplicative of their breach of contract claim, which as the
Court has already concluded, is time-barred as a matter of law. Moreover, declaratory judgment
is not a substantive claim for relief, but instead a remedy. See Griffin v. Lee County Bd. Of Educ.,
No. 3:16-cv-67, 2019 WL 1338896 (M.D. Ala. Mar. 25, 2019) (citing cases).

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(2) Summary Judgment (Doc. 46) is GRANTED as to Counts Eight and Nine
of the Amended Complaint, and therefore these counts are dismissed,
without prejudice;
(3) Counts One, Two, Three, Five, and Seven of the Amended Complaint are
dismissed, without prejudice, upon agreement (Doc. 29) of the parties;
(4) The Defendants’ motion to strike (Doc. 56) is DENIED, as moot;
A separate judgment will enter.
DONE, this 6th day of January, 2021.

/s/ R. Austin Huffaker, Jr.
R. AUSTIN HUFFAKER, JR.
UNITED STATES DISTRICT JUDGE

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