Jones v. Citimortgage, Inc.

Filing 29

ORDER granting 17 Motion to Dismiss. Signed by Judge William T. Moore, Jr on 9/24/14. (bcw)

U.S.
IN THE UNITED STATES DISTRICT COUR'
THE SOUTHERN DISTRICT OF GEORGI"-2
SAVANNAH DIVISION

LINDA JONES,

PI

SO. 01ST. OF GA.

)

Plaintiff,
V.

CASE NO. CV412-157

CITIMORTGAGE, INC.,
Defendant.

ORDER

Before the Court is Defendant Citimortgage's ("Citi")
Motion to Partially Dismiss Amended Complaint. (Doc. 17.)
For the following reasons, Defendant's motion

is GRANTED.

As a result, Plaintiff's claims for wrongful foreclosure,
violation of the Fair Debt Collection Practices Act
("FDCPA"), and violation of United States Housing and Urban
Development ("HUD") regulations are

DISMISSED.

Remaining

in this case are Plaintiff's claims for breach of contract
and promissory estoppel.
BACKGROUND

This case stems from Defendant's foreclosure on
Plaintiff Linda Jones's home.' Plaintiff purchased the home

1

f.

For the purposes of ruling on Defendants' Motion to
Dismiss, the Court views the complaint in the light most
favorable to Plaintiff and accepts as true all of
Plaintiff's well-pled facts. Am. United Life Ins. Co. v.
Marinez, 480 F.3d 1043, 1057 (11th Cir. 2007)

with her now deceased husband in 1977.

(Doc. 13 ¶ 2.) In

December 2008, Plaintiff refinanced the mortgage through
Georgia Heritage FCU ("Georgia Heritage"), executing a
security deed in favor of Mortgage Electronic Registration
Systems ("MERS") . (Id.

It 3-4.) After struggling to pay

the mortgage, Plaintiff attempted to negotiate with
Defendant for a loan modification. (Id. ¶ 5.) According
to Plaintiff, Defendant agreed to modified payments of
$537.44 a month for 4 months. (Id. ¶ 6.)
Despite making the modified payment for six months,
Plaintiff was informed by Defendant that it would not honor
her performance. (Id.) In May 2010, Defendant notified
Plaintiff that her loan was in default. (Id. ¶ 7.) In
June 2011, Plaintiff received a letter from Defendant
informing her that it had denied her loan modification
request. (Id. ¶ 12.) Ultimately, Defendant foreclosed on
Plaintiff's home on June 7, 2011. (Id.)
In response, Plaintiff filed a complaint in the State
Court of Chatham County. (Doc. 1, Ex. B.) On May 30,
2012, Defendant timely removed the case to this Court based
on the presence of a federal question in the underlying
State Court action. (Doc. 1.) On June 20, 2012, Plaintiff
filed an amended complaint. (Doc. 13.)
ON

In the amended complaint, Plaintiff brings claims for
wrongful foreclosure, breach of contract, promissory
estoppel, violation of the FDCPA, and "failure to provide
FHA pre-foreclosure loss mitigation." (Id.) Plaintiff's
wrongful foreclosure claim is based on her allegation that
"Citi Mortgage did not possess the original note of
indebtedness." (Id. ¶ 22.) The breach of contract and
promissory estoppel claims stem from Defendant's alleged
failure to honor an agreement to modify the terms of her
mortgage. (Id. ¶j 25-39.) Plaintiff argues that Defendant
violated the FDCPA when it attempted to collect Plaintiff's
mortgage payments, to which it was not entitled.
¶ 40-46.)

(Id.

Finally, Plaintiff reasons that Defendant

violated various HUD regulations by failing to take certain
required actions prior to foreclosing on her home. (Id.

¶I 47-54.)
In its Motion to Partially Dismiss, Defendant seeks to
dismiss Plaintiff's claims for wrongful foreclosure,
violation of the FDCPA, and violation of HUD regulations.
(Doc. 17, Attach. 1 at 2.) First, Defendant argues that it
is not required to physically possess or provide the
original note prior to foreclosing on a property.
8-11.)

(Id. at

Second, Defendant maintains that it is not a debt
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collector and has not engaged in any debt collection under
the FDCPA. (Id. at 11-16.) Finally, Defendant reasons
that the HUD regulations do not provide Plaintiff with any
private right of action for the alleged violations. (Id.
at 16-18.)
In response, Plaintiff contends that Defendant cannot
be the legal holder of Plaintiff's mortgage absent
possession of the original note with an allonge 2 physically
attached transferring title to Defendant. (Doc. 20 at 34.) In addition, Plaintiff argues that Defendant qualifies
as a debt collector attempting to collect a debt because it
was attempting to collect a debt that Plaintiff owed to a
third-party. (Id. at 4-6.) Finally, Plaintiff alleges
that she was a third-party beneficiary of HUD regulations
requiring a face-to-face meeting and exploration of
mortgage modification prior to foreclosure. (Id. at 7-12.)
ANALYSIS

I.

STANDARD FOR MOTIONS TO DISMISS
Federal Rule of Civil Procedure 8(a) (2) requires a

complaint to contain "a short and plain statement of the
claim showing that the pleader is entitled to relief."
"[T] he pleading standard Rule 8 announces does not require
2

An allonge is a slip of paper attached to a negotiable
instrument used to receive indorsements. Black's Law
Dictionary 88 (9th ed. 2009)
4

'detailed factual allegations,' but it demands more than an
unadorned, the-defendant-unlawfully-harmed-me accusation."
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (q u oting Bell
Ati. Corp. v. Twombly, 550 U.S. 544, 555 (2007))

.3

"A

pleading that offers 'labels and conclusions' or a
'formulaic recitation of the elements of a cause of action
will not do.' "

Id. (quoting Twombly, 550 U.S. at 555).

"Nor does a complaint suffice if it tenders 'naked
assertion[s]' devoid of 'further factual enhancement.'
Id.

(quoting Twombly, 550 U.S. at 557) (alteration in

original).
"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 face.'
Id. (quoting Twombly, 550 U.S. at 570).

For a claim to

have facial plausibility, the plaintiff must plead factual
content that " 'allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.' "

Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252,

Iqbal makes clear that Twombly has been the controlling
standard on the interpretation of Federal Rule of Civil
Procedure 8 in all cases since it was decided. Igbal, 556
U.S. at 684 ("Though Twombly determined the sufficiency of
a complaint sounding in antitrust, the decision was based
on our interpretation and application of Rule 8 . .
[that] in turn governs the pleading standard in all civil
actions and proceedings in the United States district
courts." (internal quotations and citations omitted)).
5

1261 (11th Cir. 2009) (quoting Iqbal, 556 U.S. at 678)
Plausibility does not require probability, "but it asks for
more than a sheer possibility that a defendant has acted
unlawfully."

Iqbal, 556 U.S. at 678.

"Where a complaint

pleads facts that are 'merely consistent with' a
defendant's liability, it 'stops short of the line between
possibility and plausibility of entitlement to relief.'
Id.

(quoting Twombly, 550 U.S. at 557.)

Additionally, a

complaint is sufficient only if it gives " 'fair notice of
what the . . . claim is and the grounds upon which it
rests.' " Sinaltrainal, 578 F.3d at 1268 (quoting Twombly,
550 U.S. at 555).
When the Court considers a motion to dismiss, it
accepts the well-pleaded facts in the complaint as true.
Sinaltrainal, 578 F.3d 1252 at 1260. However, this Court
is "not bound to accept as true a legal conclusion couched
as a factual allegation." Iqbal, 556 U.S. at 678.
Moreover, "unwarranted deductions of fact in a complaint
are not admitted as true for the purpose of testing the
sufficiency of plaintiff's allegations." Sinaltrainal, 578
F.3d at 1268. That is, "[t]he rule 'does not impose a
probability requirement at the pleading stage,' but instead
simply calls for enough facts to raise a reasonable
expectation that discovery will reveal evidence of the
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necessary element."

Watts v. Fla. Int'l Univ., 495 F.3d

1289, 1295-96 (11th Cir. 2007) (quoting Twombly, 550 U.S.
at 545)
Generally, a motion to dismiss should be decided based
on the contents of the complaint.
F.2d 869, 871 (6th dr. 1945).

Emmons v. Smitt, 149
However, the Court may

consider documents attached to a defendant's motion if
those documents are "relationship-forming contracts [that]
are central to a plaintiff's claim." SFM Holdings, Ltd. v.
Banc of Am. Sec., LLC, 600 F.3d 1334, 1337 (11th Cir.
2010) . Therefore, the Court will review the note, security
deed, and transfer and assignment Defendant included as
exhibits in its Motion to Dismiss. (Doc. 17, Exs. A-C.)
II. DEFENDANT'S MOTION TO DISMISS
A.

Wrongful Foreclosure

In its motion, Defendant contends that Plaintiff's
wrongful foreclosure claim fails because Defendant is not
required to physically possess or provide the original note
prior to foreclosing on a property. (Id. at 8-11.) In
response, Plaintiff appears to argue that the transfer of
the note from Georgia Heritage to Defendant was invalid,
not that Defendant lacks possession of the note. (Doc. 20
at 3.) It seems Plaintiff reasons that title to the note
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may only be transferred by indorsement either on the face
of the instrument or on an allonge physically attached to
the note. (Id.)
Under Georgia law, Plaintiff's argument regarding the
invalidity of the note's transfer from Georgia Heritage to
Defendant is without merit. In Ware v. Multibank 2009-1
RES-ADC Venture, LLC, 327 Ga. App. 245, 758 S.E.2d 145
(2014), the Georgia Court of Appeals held that the failure
to firmly affix an allonge to an instrument did not render
invalid the purported transfer of interest. Rather, any
such failure only results in the assignee taking the note
"subject to any defense which could be raised against the
maker." Id. at , 758 S.E.2d at 150-51. In this case,
Plaintiff is not raising a defense to the foreclosure, but
arguing that Defendant never obtained title to the note.
That position, however, is clearly foreclosed by the
court's opinion in Ware. As a result, Plaintiff's claim
for wrongful foreclosure fails as a matter of law and must
be DISMISSED.
B.

Violation of the FDCPA

Plaintiff contends that Defendant violated the FDCPA,
15 U.S.C. §§ 1692-1692p, when it attempted to collect the
amount owed on the note. (Doc. 13 ¶j 40-46.) To establish
1.11

a valid claim under the FDCPA, Plaintiff must show that (1)
she has been the object of an attempt to collect a consumer
debt; (2) Defendant is a debt collector under the FDCPA;
and (3) Defendant committed some act or omission prohibited
by the FDCPA. Gibson v. Rosenthal, Stein, & Assocs., LLC,
2013 WL 3367255, at *7 (N.D. Ga. July 3, 2013)
(unpublished); Buckentin v. SunTrust Mortg. Co., 928 F.
Supp. 2d 1273, 1294 (N.D. Ala.

2012);

Bently v. Bank of

Am., N.A., 773 F. Supp. 2d 1367, 1371 (S.D. Fla. 2011).
Under the FDCPA, a debt collector is "any person who uses
any instrumentality of interstate commerce or the mails in
any business the principal purpose of which is the
collection of any debts, or who regularly collects or
attempts to collect, directly or indirectly, debts owed or
due or asserted to be owed or due another."
§ 1692a.

15 U.S.C.

However, the FDCPA excludes "any person

collecting or attempting to collect any debt owed or due or
asserted to be owed or due another to the extent such
activity . . . concerns a debt which was not in default at
the time it was obtained by such person." Id.
§ 1692a(6) (F) (iii)
In this case, Defendant acquired the note on December
11, 2008, which was the same day Plaintiff executed the

note.

(Doc. 17, Ex. A at 1, 7.)

As pled in her amended

complaint, Plaintiff did not default on the note until
sometime in May 2010. (Doc. 13 ¶ 7.) Therefore, Defendant
is not a debt collector under the FDCPA because it was
attempting to collect a debt that "was not in default at
the time it was obtained." 15 U.S.C. § 1692a(6) (F) (iii)
Accordingly, Plaintiff's claim for violation of the FDCPA
fails as a matter of law and must be DISMISSED.
C.

Violation of HUD Regulations

Plaintiff argues that Defendant violated several HUD
regulations by foreclosing on her home without first
arranging a face-to-face meeting, adapting effective
collection techniques that accounted for Plaintiff's
circumstances, modifying the terms of her mortgage, and
taking other required actions. (Doc. 13

¶f 49-54.)

However, the Eleventh Circuit has concluded that the
regulations upon which Plaintiff relies do not create a
private right of action. Miller v. Chase Home Fin., LLC,
677 F.3d 1113, 1116 (11th Cir. 2012) ("When we apply these
factors to [the Home Affordable Modification Program] and
[Emergency Economic Stabilization Act], it is clear that no
implied right of action exists."). Accordingly,
Plaintiff's claims based on Defendant's alleged violation
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of HUD regulations must be DISMISSED.
CONCLUSION

For the foregoing reasons, Defendant's Motion to
Partially Dismiss Amended Complaint (Doc. 17) is GRANTED.
As a result, Plaintiff's claims for wrongful foreclosure,
violation of the FDCPA, and violation of HUD regulations
are

DISMISSED.

Remaining in this case are Plaintiff's

claims for breach of contract and promissory estoppel.
SO ORDERED this

of September 2014.

WILLIAM T. MOORE, ,3X
UNITED STATES DISRICT COURT
SOUTHERN DISTRICT OF GEORGIA

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