PACE v. CITIMORTGAGE INC
Filing
17
ORDER granting 14 Motion to Dismiss for Failure to State a Claim. Ordered by Judge Clay D. Land on 01/03/2013 (jcs)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
COLUMBUS DIVISION
MATTHEW PACE,
*
Plaintiff,
*
vs.
*
CASE NO. 4:12-cv-127 (CDL)
CITIMORTGAGE, INC., a member of *
CITIGROUP, INC.,
*
Defendant.
*
O R D E R
This action represents yet another example of a person who
borrows money, agrees to pay it back, and when he cannot do so
seeks
to
blame
the
financial
collecting what he owes.
institution
responsible
for
Blaming the recent so-called financial
crisis, many commentators and elected officials have remarkably
labeled persons as victims when they cannot pay back loans that
they voluntarily agreed to repay.
Many of these “victims,”
perhaps encouraged by such rhetoric, file lawsuits to escape
responsibility for their obligations.
may
tempt
a
court
to
rescue
these
While human compassion
persons
from
their
dire
financial circumstances, compassion and justice are not always
synonymous.
Justice requires the Court to follow the law, and
the law simply does not provide a remedy in many of these cases.
This is one of those cases.
After
falling
behind
on
his
mortgage
loan,
Plaintiff
Matthew Pace (“Pace”) wanted his mortgage servicer, Defendant
CitiMortgage, Inc. (“Citi”), to reduce his payments.
Although
Citi did temporarily modify his loan to allow for lower payments
during a trial period, Citi never modified his loan permanently.
Pace thinks this was unfair and seeks to have this Court force
Citi to do what it never agreed nor had an obligation to do—
reduce his loan payments.
relief.
Pace seeks damages and injunctive
He asserts claims for breach of contract, breach of
covenant of good faith and fair dealing, promissory estoppel,
fraud,
and
a
Practices Act.
statutory
claim
under
Georgia’s
Fair
Business
Citi moves to dismiss all of Pace’s claims.
As
discussed below, Pace’s claims fail as a matter of law, and
therefore,
the
Court
grants
Defendant’s
Motion
to
Dismiss
Plaintiff’s Amended Complaint (ECF No. 14).
MOTION TO DISMISS STANDARD
When considering a 12(b)(6) motion to dismiss, the Court
must
accept
complaint
as
and
true
all
facts
limit
its
consideration
exhibits attached thereto.
set
forth
to
in
the
the
plaintiff’s
pleadings
and
Bell Atl. Corp. v. Twombly, 550 U.S.
544, 556 (2007); Wilchombe v. TeeVee Toons, Inc., 555 F.3d 949,
959
(11th
Cir.
2009).
“To
survive
a
motion
to
dismiss,
a
complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on its
2
face.’”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Twombly,
550
U.S.
at
570).
The
complaint
must
include
sufficient factual allegations “to raise a right to relief above
the
speculative
level.”
Twombly,
550
U.S.
at
555.
“[A]
formulaic recitation of the elements of a cause of action will
not do[.]”
Id.
Although the complaint must contain factual
allegations that “raise a reasonable expectation that discovery
will reveal evidence of” the plaintiff=s claims, id. at 556,
“Rule
12(b)(6)
does
not
permit
dismissal
of
a
well-pleaded
complaint simply because ‘it strikes a savvy judge that actual
proof of those facts is improbable,’” Watts v. Fla. Int’l Univ.,
495 F.3d 1289, 1295 (11th Cir. 2007) (quoting Twombly, 550 U.S.
at 556).
FACTUAL ALLEGATIONS
Pace
obtained
experiencing
a
financial
payment in April 2009.
to
inquire
about
obligation.
Pace
home
loan
in
difficulties,
December
Pace
2007.
missed
a
After
mortgage
Pace called Citi, his mortgage servicer,
receiving
alleges
a
that
modification
Citi
informed
of
his
him
monthly
about
the
federal Home Affordable Modification Program (“HAMP”), which has
a ninety-day trial period “to test whether the consumer can make
the modified payments and to allow for the submission of all
documents.”
Am. Compl. ¶ 8, ECF No. 12.
Citi instructed Pace
to complete the “Customer Hardship Assistance Package,” which
3
included worksheets on his expenses and required that he provide
copies of recent pay stubs, tax forms, income statements, bank
statements, and property tax information.
Id. ¶¶ 23-24.
Pace
promptly submitted the package, but Citi asked Pace to submit
additional or duplicate documentation that Citi claimed it did
not receive.
Pace continued to make his full loan payments
during this time.
Citi acknowledged receipt of the package in
July 2009 and stated that it would take thirty days to process.
Pace
received
a
letter
that
same
month,
July
2009,
informing him that his account was delinquent, but the letter
did not reveal the amount of delinquency.
that
his
request
for
repayment
The letter stated
modification
was
approved
temporarily for a trial period and included a schedule of four
payments of $893.73 to be made the last day of July, August,
September,
and
October
of
2009.
Pace
received
a
letter
in
August 2009 informing him that his reduced payment paperwork had
to
be
redone,
payments.
but
advising
him
to
keep
making
the
reduced
Pace alleges that his trial modification period began
in September 2009, that he made the first $893.73 payment that
month, and that he continued to make the $893.73 payments for
the next three months of October, November, and December 2009.
Pace
alleges
that
Citi
accepted
these
payments,
but
shortly
thereafter, Citi again informed him that he needed to resubmit
the “lending package.”
Id. ¶¶ 28, 42.
4
Citi
notified
Pace
in
February
2010
that
he
was
not
eligible for the HAMP modification because he had not made all
required trial payments and that he was delinquent in the amount
of $16,212.17.
agencies.
Citi reported the default to consumer reporting
In June 2010, Citi informed Pace that his loan was
acquired by Penny Mac Loan Services, LLC and then assigned to
Specialized
Loan
Services,
LLC,
who
sent
a
statement
$19,104.59, including late fees and delinquency charges.
for
Pace
subsequently filed this action, and Citi moved to dismiss it.
Upon reviewing the parties’ briefs, the Court allowed Pace to
amend
his
original
Complaint.
Presently
pending
before
the
Court is Citi’s motion to dismiss the Amended Complaint (ECF No.
14).
DISCUSSION
Citi contends that all of Pace’s claims must be dismissed.
As an initial matter, the Court observes that Pace has attempted
to raise several new claims and theories of recovery in his
brief in opposition to Citi’s motion to dismiss.
Pace failed to
raise these claims in his Amended Complaint, and the Court will
not consider them.
amend
his
original
The Court, having previously allowed Pace to
Complaint,
finds
no
legitimate
basis
for
allowing another amendment, particularly via a response brief.
The Court addresses the claims actually pleaded by Pace in his
Amended Complaint.
5
I.
Breach of Contract
Pace alleges Citi “did not perform in accordance with the
contract terms regarding the trial modification period.”
Compl. ¶ 45.
Am.
Citi responds that Pace’s breach of contract claim
must be dismissed because Pace fails to allege a particular
contractual provision that Citi violated.
Pace does assert that
Citi “delayed converting the trial modifications into permanent
modifications”
Compl. ¶ 45.
paperwork
at
by
demanding
documentation.1
additional
Am.
Pace relies on the fact that Citi asked for
least
three
times
over
the
course
of
months, extending the trial period beyond ninety days.
several
Pl.’s
Resp. to Def.’s Mot. to Dismiss Pl.’s Am. Compl. 5-6, 11, ECF
No. 15 [hereinafter Pl.’s Resp.].
Regardless of the alleged
consequences of Citi’s demand for additional documentation, Pace
has not adequately alleged an express contractual obligation to
convert
after
the
ninety
trial
days.
modification
Pace’s
into
a
permanent
allegations
could
modification
be
liberally
construed to state that Citi had vaguely agreed to convert the
temporary modification trial period to a permanent modification
of his loan obligations in the future under certain unspecified
conditions.
Nevertheless,
Pace
1
has
pointed
to
no
agreement
Pace also asserts that Citi “failed to implement . . . adequate
procedures and systems to respond to customer[s’] inquiries and
complaints” as required under HAMP, id., but HAMP does not create a
private right of action to enforce its provisions.
Miller v. Chase
Home Fin., LLC, 677 F.3d 1113, 1116 (11th Cir. 2012) (per curiam).
6
specifying the conditions under which Citi would agree to the
permanent modifications or precisely describing what the terms
of the permanent modified loan would be.
Under Georgia law, “unless an agreement is reached as to
all
terms
and
conditions
and
nothing
is
left
to
future
negotiations, a contract to enter into a contract in the future
is of no effect.”
Johnson v. Oconee State Bank, 226 Ga. App.
617, 618, 487 S.E.2d 369, 371 (1997) (internal quotation marks
omitted).
In
Johnson,
the
court
reasoned
that
a
letter
agreement committing to a certain interest rate for one year,
after
which
the
bank
would
agree
to
renew
the
loan
for
an
additional year “at an interest rate to be negotiated” was not
enforceable because “interest payable on a loan is an essential
term” that was lacking in the agreement.
alleged
agreement
to
offer
a
Id.
permanent
Likewise, Citi’s
modification
of
unspecified terms—such as interest rate, monthly payment amount,
principal, and loan maturity date—if Pace fulfilled the terms of
the trial payment period lacks a “meeting of the minds as to all
essential terms” and is unenforceable.
Id. (internal quotation
marks omitted).
Pace also alleges that Citi “breached an implied term that
required it to extend offers for permanent modifications within
a reasonable time period following [Pace]’s performance under
the trial modification agreements.”
7
Am. Compl. ¶ 47.
Even if
such an agreement were enforceable, which it is not for the
reasons previously explained, Pace’s own allegations demonstrate
that he failed to comply with his end of the alleged bargain.
Although
Pace
generally
alleges
that
he
complied
with
all
obligations by timely submitting all requested documentation and
payments as agreed, id. ¶¶ 9, 29, this general allegation is
inconsistent with the specific facts alleged.
Pace alleges in
his Amended Complaint that he did not start making the $893.73
payments until September 2009; yet, he also alleges that he was
supposed
to
Therefore,
establish
start
even
the
making
if
these
Pace’s
existence
of
payments
allegations
an
were
enforceable
allegations
demonstrate
that
obligations
under
agreement.
that
he
in
failed
to
Because
2009. 2
July
sufficient
contract,
comply
the
with
facts
to
his
his
Pace
alleges show that Pace failed to perform in accordance with the
implied term and thus trigger Citi’s duty to perform, his claim
that Citi breached the implied term must fail.
See Budget Rent-
a-Car of Atlanta, Inc. v. Webb, 220 Ga. App. 278, 279, 469
S.E.2d
712,
713
(1996)
(explaining
that
breach
of
contract
requires a breach and “resultant damages to the party who has
the right to complain about the contract being broken”).
2
Citi pointed out these same flaws in the original Complaint in its
first motion to dismiss. Def.’s Mot. to Dismiss 4 n.3, ECF No. 4.
8
Citi’s motion to dismiss Pace’s breach of contract claim is
granted because Pace has failed to allege sufficient facts to
establish
the
Alternatively,
existence
Pace’s
of
claim
must
an
enforceable
fail
because
agreement.
Pace
has
not
adequately alleged a breach of the alleged contract.
II.
Breach of Covenant of Good Faith and Fair Dealing
Unable to establish a breach of an enforceable agreement to
modify
his
allegations
loan
that
payments
Citi
acted
permanently,
Pace
resorts
to
unfairly
thus
breached
the
and
implied covenant of good faith and fair dealing.
Pace argues
that Citi acted in bad faith when it misled him into believing
that
he
would
receive
a
permanent
modification
to
his
loan
payments, failed to disclose that his modified payments may be
reported to credit bureaus as delinquent, delayed the processing
of his loan modification by allegedly losing paperwork, failed
to provide adequate information or communication regarding the
loan modification programs, and reinstated the amount due under
the loan
denied.
and resulting
late fees
after
the modification was
Am. Compl. ¶ 51.
Under Georgia law, “every contract imposes upon each party
a duty of good faith and fair dealing in its performance and
enforcement.”
Martin v. Hamilton State Bank, 314 Ga. App. 334,
335, 723 S.E.2d 726, 727 (2012); see Stuart Enters. Int’l, Inc.
v. Peykan, Inc., 252 Ga. App. 231, 233, 555 S.E.2d 881, 884
9
(2001) (describing the common law duty as a “duty to diligently
and in good faith seek to comply with all portions of the terms
of
a
contract”).
This
duty,
however,
does
not
create
an
independent cause of action disconnected from the contract from
which it arises.
S.E.2d at 884.
Stuart Enters., 252 Ga. App. at 233-34, 555
If no contract provision exists upon which this
duty of good faith can be imposed, then no cause of action
exists for the failure to act in good faith generally without a
distinct connection to the contract terms.
Here,
Pace
fails
to
even
point
to
Id.
a
provision
in
an
enforceable contract which Citi allegedly failed to perform in
good faith.
As previously found by the Court, no enforceable
contract exists obligating Citi to modify Pace’s loan payments.
Without an enforceable agreement on which to base his lack of
good faith performance claim, Pace likewise cannot prevail on
his breach of implied duty of good faith claim.
See Heritage
Creek Dev. Corp. v. Colonial Bank, 268 Ga. App. 369, 374, 601
S.E.2d 842, 847 (2004) (holding that where a plaintiff “cannot
prevail on [his] breach of contract claim, [he] cannot prevail
on a cause of action based on the failure to act in good faith
in performing the contract”).
III. Promissory Estoppel
Pace’s promissory estoppel claim must also be dismissed.
Pace
alleges
that
he
relied
10
to
his
detriment
on
Citi’s
representations about loan modification programs by pursuing a
HAMP
modification
through
Citi
to
the
exclusion
alternatives for curing and avoiding his default.
53-57.
that
of
other
Am. Compl. ¶¶
In Georgia, a claim for promissory estoppel requires
“(1)
the
defendant
made
a
certain
promise[;]
(2)
the
defendant should have reasonably expected the plaintiff to rely
on such promise[;] (3) plaintiff did, in fact, rely on such
promise . . . to his detriment; and (4) an injustice can be
avoided only by the enforcement of the promise[.]”
Everts v.
Century Supply Corp., 264 Ga. App. 218, 220, 590 S.E.2d 199, 202
(2003).
“Promissory
estoppel
indefinite promises.”
does
not
.
.
.
apply
to
vague
or
Lovell v. Ga. Trust Bank, No. A12A1234,
2012 WL 5935975, at *5 (Ga. Ct. App. Nov. 28, 2012) (internal
quotation
marks
omitted).
Georgia
courts
have
held
that
a
promise to renew a loan of unspecified terms is too vague to
support
a
promissory
estoppel
claim.
See,
e.g.,
Ga.
Invs.
Int’l, Inc. v. Branch Banking & Trust Co., 305 Ga. App. 673,
675-76, 700 S.E.2d 662, 663-64 (2010) (finding that a promise
contemplating
a
loan
renewal
for
a
certain
duration
without
specifying the interest rate or maturity date could not support
a promissory estoppel claim); Jackson v. Ford, 252 Ga. App. 304,
308, 555 S.E.2d 143, 147-48 (2001) (holding that a promise which
could not support breach of contract allegations was also too
11
vague and indefinite to sustain a promissory estoppel claim).
For the same reason, Pace’s promissory estoppel claim fails.
In
facts
addition,
Pace
establishing
has
not
adequately
“[d]etrimental
substantial change in position.”
reliance
alleged
which
sufficient
cause[d]
a
Clark v. Byrd, 254 Ga. App.
826, 828, 546 S.E.2d 742, 745 (2002).
Pace fails to state how
pursuing a HAMP modification through Citi prevented him from
“pursu[ing] other options for curing the immediate default [and]
prevent[ing] further delinquency.”
Pl.’s Resp. 11.
The Court
also observes that Pace actually benefitted from making reduced
payments
while
still
living
in
his
house
and
avoiding
foreclosure for a period after his default.
For all of these reasons, Pace’s promissory estoppel claim
is dismissed.
IV.
Fraud
Pace has also failed to allege sufficient facts to maintain
his
fraud
claim.
Federal
Rule
of
Civil
Procedure
9(b)
articulates a heightened pleading standard for fraud requiring
that “a party must state with particularity the circumstances
constituting
fraud.”
Fed.
R.
Civ.
P.
9(b).
The
Eleventh
Circuit has held that Rule 9(b) requires a complaint to set
forth (1) precisely what oral statements or omissions were made
or what written statements were made in what documents, (2) the
time and place of each such statement or omission and the person
12
responsible for making or not making them, “(3) the content of
such
statements
and
the
manner
in
which
they
misled
the
plaintiff, and (4) what the defendants obtained as a consequence
of the fraud.”
Ziemba v. Cascade Int’l, Inc., 256 F.3d 1194,
1202 (11th Cir. 2001).
Pace’s Amended Complaint is devoid of
specific factual allegations establishing the essential elements
of
a
fraud
claim.
In
more
straightforward
(and
perhaps
colloquial) terms, Pace is simply grasping for straws.
V.
Georgia Fair Business Practices Act Claim
Pace’s last straw is his statutory claim under the Georgia
Fair Business Practices Act, O.C.G.A. § 10-1-393, et seq.
Citi
argues that the Georgia Fair Business Practices Act does not
apply to claims arising from a lender’s failure to modify a
residential mortgage because residential mortgage transactions
are regulated by other state and federal statutes, including the
Truth in Lending Act, the Real Estate Settlement Procedures Act,
and
the
Citi’s
alleged
Georgia
argument
in
Residential
persuasive
Pace’s
Amended
Mortgage
under
the
Complaint,
Act.
The
specific
Court
finds
circumstances
particularly
given
that
Citi was considering the modification under a federal program.
See Chancellor v. Gateway Lincoln-Mercury, Inc., 233 Ga. App.
38,
45,
502
S.E.2d
799,
805
(1998)
(stating
that
the
Fair
Business Practices statute was intended to “have a restricted
application
only
to
the
unregulated
13
consumer
marketplace”).
Accordingly, Pace’s Georgia Fair Business Practices Act claim
must be dismissed.
CONCLUSION
For
the
reasons
stated
above,
Citi’s
Motion
to
Dismiss
Plaintiff’s Amended Complaint (ECF No. 14) is granted.
IT IS SO ORDERED, this 3rd day of January, 2013.
S/Clay D. Land
CLAY D. LAND
UNITED STATES DISTRICT JUDGE
14
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