Moreira v. CitiMortgage, Inc.

Filing 28

District Judge Leo T. Sorokin: ORDER entered granting in part and denying in part 21 CitiMortgage, Inc.'s Motion to Dismiss the Amended Complaint for Failure to State a Claim. (Montes, Mariliz)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

JOSE MOREIRA,
Plaintiff,
v.
CITIMORTGAGE, INC.,
Defendant.

)
)
)
)
)
)
)
)
)
)
)

Civil No. 15-13720-LTS

MEMORANDUM AND ORDER ON MOTION TO
DISMISS FOR FAILURE TO STATE A CLAIM (DOC. NO. 21)
September 8, 2016
SOROKIN, J.
Plaintiff Jose Moreira (“Moreira”) filed a five-count Complaint against Defendant
CitiMortgage, Inc. (“CitiMortgage”) in Middlesex Superior Court, stemming from
CitiMortgage’s refusal to provide Moreira with a mortgage loan modification. Doc. No. 1-2 at 513. CitiMortgage removed the case to this Court, Doc. No. 1, and subsequently moved to
dismiss the Complaint, Doc. No. 9. Instead of opposing the motion, Moreira filed the operative
three-count Amended Complaint. See Doc. No. 11. CitiMortgage then filed a second Motion to
Dismiss for Failure to State a Claim. Doc. No. 21. Moreira opposed the motion, Doc. No. 23,
and CitiMortgage filed a reply brief, Doc. No. 27. As explained below, CitiMortgage’s motion is
ALLOWED IN PART and DENIED WITHOUT PREJUDICE IN PART.

I.

FACTUAL BACKGROUND 1
Moreira owns property at 62-64 Flint Street, Somerville, Massachusetts (“The Property”).

Doc. No. 11 ¶ 1. He currently lives with his wife in a different property. Id. ¶ 13. In 2005, he
purchased the Property by signing a promissory note which CitiMortgage now holds, granting it
a mortgage. Id. ¶ 6; see Doc. No. 22-3. Moreira derived rental income from the Property, but in
2008, after the Property suffered structural damage, he defaulted on the loan. Doc. No. 11 ¶ 7.
Moreira has subsequently repaired this damage and now has steady rental income from the
property. Id. In 2009, Moreira applied for a loan modification, which CitiMortgage denied. Id.
¶ 8. He unsuccessfully sued CitiMortgage over this denial in Middlesex Superior Court. Id. ¶ 9.
In 2012, Moreira, following his attorney’s advice, conveyed the property to A B C LLC (“A B
C”), a Massachusetts limited liability corporation of which Moreira was the sole manager. Id.
¶ 10. A B C dissolved in 2015. Id. Also in 2012, CitiMortgage modified Moreira’s loan. Id.
¶ 11. He nevertheless defaulted on that loan. Id.
In Fall 2013, Moreira again began applying for a loan modification with CitiMortgage
(“2013 Modification Application”). Id. ¶ 12. He applied under the Home Affordable
Modification Program (“HAMP”), a federal program designed to provide foreclosure relief. Id.
¶¶ 14-15. His income includes rental income from the Property, income from his wife for
childcare, and commissions for business referrals from a local contractor. Id. ¶ 13.
CitiMortgage’s participation in HAMP required it to review Moreira’s application and “offer him
loss mitigation assistance if he qualified.” Id. ¶ 17. Moreira included in his application, among

1

Given the motion to dismiss posture, the Court “recite[s] the facts as alleged in the complaints
and documents incorporated therein by reference.” Lister v. Bank of Am., N.A., 790 F.3d 20, 22
(1st Cir. 2015). The Court also draws from other documents sufficiently mentioned in the
Complaint. See Watterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993).
2

other things, the leases for the Property, bank accounts verifying his income, and affidavits
“explaining his income and need for a loan modification.” Id. ¶ 18. He promptly responded to
CitiMortgage’s requests for additional materials. Id. ¶ 19. CitiMortgage, claiming that Moreira
failed to provide all the requested documents, denied the 2013 Modification Application. Id.
¶ 20.
In February 2014, Moreira submitted another modification application to CitiMortgage
(“2014 Modification Application”). Id. ¶ 21. Moreira included a proposed modification
proposal under HAMP. Id. ¶ 22. After receiving his application, CitiMortgage, between
February and November 2014, “continually requested that [Moreira] resubmit the same
documents over and over again and provide repeated explanations on [sic] his income.” Id. ¶ 24.
While Moreira timely complied with these requests, id. ¶ 25, CitiMortgage denied the 2014
Modification Application on November 7, 2014, claiming an “irreconcilable discrepancy within
[his] application request.” Id. ¶ 26.
In 2015, Moreira applied for yet another modification (“2015 Modification Application”).
Id. ¶ 27. In January 2015, with the aid of counsel, he “participated in an in-depth initial phone
call regarding his eligibility for a loan modification” with CitiMortgage. Id. ¶ 28. This call
included Moreira explaining, “in depth,” his need for a modification and “specific explanations
as to the amount of income that he earned each month and where it came from.” Id.
CitiMortgage’s loss mitigation representative informed Moreira after this phone call “that it
appeared that he qualified for a loan modification.” Id. ¶ 29.
Moreira then decided to pursue the 2015 Modification Application further. Id. ¶ 30. He
submitted an application including: leases for the Property, showing consistent rental income;
bank accounts proving his income; affidavits explaining his income and need for a modification;

3

and an affidavit from his wife, proving the income he received from her. Id. ¶ 31. From January
through May 2015, CitiMortgage repeatedly requested Moreira to provide the same documents
and explanations of his income. Id. ¶ 32. Specifically, CitiMortgage repeatedly asked for more
information about a painting business Moreira purportedly had. Id. ¶ 34. During that time,
Moreira submitted seven supplements to his application with the requested documents and
information. Id. ¶ 33. These included multiple records and explanations indicating he did not
have a painting business. Id. ¶ 35.
On May 1, 2015, CitiMortgage, citing an “irreconcilable discrepancy,” denied the 2015
Modification Application. Id. ¶ 36. CitiMortgage also denied the 2015 Modification
Application on the grounds that Moreira rented out the property on a seasonal, non-year-round
basis. Id. Moreira appealed the denial. Id. ¶ 37. As part of his appeal, he gave CitiMortgage
year-round leases to the Property and requested an explanation of the “irreconcilable
discrepancy” which prompted CitiMortgage to deny his application. Id.
CitiMortgage denied Moreira’s appeal on June 2, 2015. Id. ¶ 39. It again noted an
“irreconcilable discrepancy” in Moreira’s application, and did not specify further. Id. In a
subsequent phone call, a CitiMortgage representative cited Moreira’s alleged, yet non-existent,
painting business and $50,000 in unaccounted-for income as causes of the denial. Id. ¶ 40. As
CitiMortgage had already denied his appeal, Moreira had no avenue to address these issues. Id.
¶ 41.
II.

LEGAL STANDARD
To survive a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil

Procedure, a Complaint must contain sufficient factual matter, accepted as true, to “state a claim
to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell

4

Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The Court “must take the allegations in the
complaint as true and must make all reasonable inferences in favor of the plaintiff[].” Watterson
v. Page, 987 F.2d 1, 3 (1st Cir. 1993). “[F]actual allegations” must be separated from
“conclusory statements in order to analyze whether the former, if taken as true, set forth a
plausible, not merely a conceivable, case for relief.” Juarez v. Select Portfolio Servicing, Inc.,
708 F.3d 269, 276 (1st Cir. 2013) (internal quotations omitted). This “highly deferential”
standard of review “does not mean, however, that a court must (or should) accept every
allegation made by the complainant, no matter how conclusory or generalized.” United States v.
AVX Corp., 962 F.2d 108, 115 (1st Cir. 1992). Dismissal for failure to state a claim is
appropriate when the pleadings fail to set forth “factual allegations, either direct or inferential,
respecting each material element necessary to sustain recovery under some actionable legal
theory.” Berner v. Delahanty, 129 F.3d 20, 25 (1st Cir. 1997) (quoting Gooley v. Mobil Oil
Corp., 851 F.2d 513, 515 (1st Cir. 1988)).
While the Court typically “may not consider any documents that are outside of the
complaint, or not expressly incorporated therein, unless the motion is converted into one for
summary judgment," Alt. Energy, Inc. v. St. Paul Fire & Marine Ins. Co., 267 F. 3d 30, 33 (1st
Cir. 2001), there is an exception “for documents the authenticity of which are not disputed by the
parties; for official public records; for documents central to plaintiffs' claim; or for documents
sufficiently referred to in the complaint.” Watterson, 987 F.2d at 3.
III.

DISCUSSION
Moreira alleges three claims of relief against CitiMortgage: 1) unfair and deceptive

business practices in violation of Mass. Gen. Laws ch. 93A (Count I), see Doc. No. 11 at 7-8;
promissory estoppel (Count II), id. at 8; and equitable estoppel (Count III), id. at 8-9.

5

CitiMortgage has moved to dismiss all three counts. See Doc. No. 21. The Court discusses each
Count in turn, grouping the estoppel claims together, as the parties do in their briefs.
A.

Mass. Gen. Laws ch. 93A (Count I) Claim

“Chapter 93A is a broad, Massachusetts consumer protection statute. A plaintiff seeking
relief under Chapter 93A must prove that the defendant engaged in ‘unfair or deceptive acts or
practices in the conduct of any trade or commerce.’” Walsh v. TelTech Sys., Inc., 821 F.3d 155,
160 (1st Cir. 2016) (quoting Mass. Gen. Laws ch. 93A, § 2). While violating HAMP does not
automatically give rise to a 93A claim, HAMP violations “may support Chapter 93A claims
when they are inherently unfair and deceptive.” Sullivan v. Bank of N.Y. Mellon Corp., 91 F.
Supp. 3d 154, 174 (D. Mass. 2015). “Under Chapter 93A, an act or practice is unfair if it falls
‘within at least the penumbra of some common-law, statutory, or other established concept of
unfairness’; ‘is immoral, unethical, oppressive, or unscrupulous’; and ‘causes substantial injury
to consumers.’” Walsh, 821 F.3d at 160 (quoting PMP Assocs. v. Globe Newspaper Co., 321
N.E.2d 915, 917 (Mass. 1975)). Unfair acts or practices are “generally . . . of an egregious, nonnegligent nature. Under Chapter 93A, an act or practice is deceptive if it possesses a tendency to
deceive and if it could reasonably be found to have caused a person to act differently from the
way he [or she] would have acted.” Id. (citations and quotation marks omitted).
Moreira alleges multiple unfair and deceptive business practices from CitiMortgage. The
first is that CitiMortgage “repeatedly requir[ed] him to resubmit the same documents over and
over again and provide repeated explanations over the contents of his application.” Doc. No. 11
¶ 47. Specifically, Moreira claims (and the Court assumes as true) that he submitted seven
supplements to his 2015 Modification Application, id. ¶ 33, in response to repeated requests
from CitiMortgage between January and May of 2015. Id. ¶ 32. He also alleges that he, on

6

multiple occasions, submitted affidavits and bank statements responding to CitiMortgage’s
concerns about a painting business, which indicated that he did not have in fact have any such
business. Id. ¶¶ 34-35.
The second unfair and deceptive business practice Moreira posits is that CitiMortgage
“repeatedly den[ied his] loan modifications for ambiguous and false reasons,” and that this lack
of specificity precluded Moreira’s ability to appeal the denials. Id. ¶ 48. Specifically, he alleges
(and the Court accepts as true) that CitiMortgage initially denied the 2015 Modification
Application on the grounds that there was an unspecified “irreconcilable discrepancy” in his
application and that he derived only seasonal, not year-round, rental income from the Property.
Id. ¶ 36. CitiMortgage subsequently denied Moreira’s appeal, citing again the unexplained
“irreconcilable discrepancy,” id. ¶ 39, and, in a subsequent phone call, Moreira’s purported, yet
nonexistent, painting business and $50,000 in unexplained income, id. ¶ 40. CitiMortgage
reached this conclusions in spite of Moreira’s submission of affidavits explaining his income and
leases for the Property showing “consistent rental income.” See id. ¶ 31. 2 And, because
CitiMortgage did not explain the irreconcilable discrepancy until after denying Moreira’s appeal,
he “had no means of addressing these purported reasons for denial.” Id. ¶ 41.
CitiMortgage argues two deficiencies in Moreira’s allegations. Both are unavailing.
First, CitiMortgage asserts that Moreira has not alleged facts showing that CitiMortgage acted in
bad faith, as opposed to merely negligently. Doc. No. 22 at 11. That assertion does not comport
with the Amended Complaint. Moreira specifically alleged numerous instances of

2

While Moreira does not allege that he specifically gave CitiMortgage leases showing yearround tenants at the Property until after CitiMortgage’s initial denial of the 2015 Modification
Application on May 1, 2015, see Doc. No. 11 ¶¶ 36, 38, the Court can, in the 12(b)(6) posture,
reasonably infer that the leases to the Property that Moreira did provide as part of the 2015
Modification Application, see id. ¶ 31, included year-round leases.
7

CitiMortgage’s troubling conduct regarding the 2015 Modification Application alone (setting
aside entirely the 2013 and 2014 Modification Applications), including: sending seven
supplements to his 2015 Modification Application (including documents he had already sent);
explaining repeatedly, yet to no avail, that he did not have a painting business; denying the 2015
Modification Application on the grounds that Moreira only accrued seasonal rental income from
the Property, when the application included evidence that Moreira earned year-round rental
income; penalized Moreira, repeatedly, for an unexplained “irreconcilable discrepancy,” even
though Moreira provided extensive documentation regarding his income; did not explain to
Moreira the nature of the “irreconcilable discrepancy” until after it denied his appeal; and rooting
the “irreconcilable discrepancy” in Moreira’s non-existent painting business. This pattern of
conduct suffices to plausibly allege that CitiMortgage acted with the requisite bad faith. See
Sullivan, 91 F. Supp. 3d at 175 (“In the end, looking at the totality of Defendants’ conduct as
alleged, the court has little trouble concluding that Defendants engaged in unfair and deceptive
business practices in violation of Chapter 93A.”) (emphasis added).
CitiMortgage next contends that Moreira failed to plausibly allege that its conduct
regarding the 2015 Modification Application caused Moreira injury. Specifically, CitiMortgage
postulates that it is implausible to say Moreira would have received a modification both because
he was in default at the time of the 2015 Modification Application, and because Moreira had
conveyed the Property to A B C LLC prior to submitting the 2015 Modification Application.
This argument fails for two reasons. First, even assuming that Moreira has not plausibly alleged
that he would have received a modification but for CitiMortgage’s misconduct, Moreira has
alleged CitiMortgage’s unfair and deceptive conduct caused increased debt on his loan, damage
to his credit score, increased fees on his loan, costs associated with the various loan modification

8

applications. Doc. No. 11 ¶ 49. These allegations suffice at this stage of the proceedings. See
Young, 717 F.3d 224, 241-42 (1st Cir. 2013).
Second, Moreira has sufficiently alleged that he plausibly would have received a
modification but for the misconduct. The fact that a CitiMortgage representative told him that he
appeared to qualify for a loan modification, Doc. No. 11 ¶ 29, indicates that, notwithstanding his
history of defaulting, CitiMortgage was at least open to the idea of offering Moreira a
modification. Whether he would in fact have received one is a fact question which discovery
will help illuminate. For that reason, CitiMortgage’s motion is DENIED WITHOUT
PREJUDICE to renewal at summary judgment for Count I.
B.

Promissory Estoppel (Count II) and Equitable Estoppel (Count III) Claims

“Circumstances that may give rise to an estoppel are (1) a representation intended to
induce reliance on the part of a person to whom the representation is made; (2) an act or
omission by that person in reasonable reliance on the representation; and (3) detriment as a
consequence of the act or omission.” Sullivan v. Chief Justice for Admin. and Mgmt. of Trial
Court, 858 N.E.2d 699, 711 (Mass. 2006) (quoting Bongaards v. Millen, 793 N.E.2d 335, 339
(Mass. 2003)). The difference between promissory estoppel and equitable estoppel claims
centers around the temporal nature of the misrepresentation—the former concern
misrepresentations of future intent, the latter past or present facts. Id. at 28 n.9. Regardless, the
representation at issue must be unambiguous. See R.I. Hosp. Trust Nat. Bank v. Varadian, 647
N.E.2d 1174, 1178 (Mass. 1995); accord Egan v. Tenet Health Care, No. 15-14169-FDS, 2016
WL 3561866, at *9 (D. Mass. June 27, 2016).
Moreira relies solely on the representation that CitiMortgage’s loss mitigation
representative made in informing Moreira “that it appeared that he qualified for a loan

9

modification.” Doc. No. 11 ¶ 29. This statement clearly falls short of an unambiguous promise
that CitiMortgage would provide Moreira with a modification. Inter alia, it left open the
possibility that CitiMortgage’s further review of a more detailed application from Moreira would
prove this initial conclusion incorrect. In fact, other sessions of this court have reached a similar
conclusion. See Almedia v. U.S. Bank. Nat’l Ass’n, No. 12-11565-RWZ, 2014 WL 907673, at
*5 (D. Mass. Mar. 10, 2014). Accordingly, CitiMortgage’s motion is ALLOWED for Counts II
and III, and those claims are DISMISSED.
IV.

CONCLUSION
For the foregoing reasons, CitiMortgage’s motion is ALLOWED IN PART and DENIED

WITHOUT PREJUDICE IN PART.

SO ORDERED.

/s/ Leo T. Sorokin
Leo T. Sorokin
United States District Judge

10