HEYMAN et al v. CITIMORTGAGE, INC.

Filing 38

MEMORANDUM AND ORDER granting 36 Motion for leave to file a Second Amended Complaint. Plaintiffs are directed to sign and file the proposed Second Amended Complaint that is now, unsigned, at ECF nos. 36-2,3 & 4. Signed by Judge Kevin McNulty on 9/22/16. (sr, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

ABRAHAM S. HEYMAN and
GEULA HEYMAN,

Civ. No. 14-1680 (KM)

Plaintiffs,

MEMORANDUM OPINION
AND ORDER

V.

CITIMORTGAGE, INC.,
Defendant.

KEVIN MCNULTY, U.S.D.J.:
Before the Court is the motion (ECF no. 36) of the plaintiffs, Abraham
and Geula Heyman (the “Heymans”), to file a second amended complaint
(“2AC”), pursuant to Fed. R. Civ. P. 15. The defendant, CitiMortgage, Inc.
(“Citi”), has filed a letter response (ECF no. 37) on grounds of futility, arguing
that the proposed 2AC would not withstand a motion to dismiss for failure to
state a claim under the standards of Fed. R. Civ. P. 12(b)(6).
I have filed two prior opinions and orders (ECF nos. 13/14, 27/29)
dismissing the Heymans’ complaint and first amended complaint pursuant to
Fed. R. Civ. P. 12(b)(6). Those two complaints failed to meet the most basic
requisites of federal pleading. To the extent I could discern the claims being
asserted, I necessarily dismissed them. My second opinion, dated October 9,
2015, granted the Heymans leave to file a motion for leave to file a second
amended complaint within 30 days. Through their then-counsel, David M.
Schlachter, Esq., they did so. (ECF no. 30). The Heymans then changed
counsel; currently appearing on their behalf is Elizabeth Tandy Foster, Esq.
Ms. Foster sought and received leave to withdraw her predecessor’s motion to
file a second amended complaint and to file a substitute motion. (ECF no. 35)
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That substitute motion, filed on December 8, 2015, is the one curren
tly before
the Court.
The proposed 2AC (ECF no. 36-2, with exhibits, ECF nos. 36-3, 36-4)
on
its face remedies some of the failings of the prior two. For one
thing, it is
divided into defined causes of action, and it alleges the essential
elements of
each. The claims are: Count I (New Jersey Consumer Fraud Act);
Count II
(Promissory Estoppel); Count Ill (Conversion); Count IV (Negligent
Misrepresentation); Count V (Breach of Contract); Count VI (Unjus
t
Enrichment); Count VII (Slander of Title); Count VIII (RESPA Violat
ion).
The facts on which these claims are based are apparent. (I summa
rize
2AC

¶

4—48.) The Heymans took out an adjustable rate mortgage on their
home in the amount of $460,000. By 2012, the adjustment to
the rate made
the mortgage unaffordable for them. Through counsel, they sought
to negotiate
with the lender, defendant Citi. A Citi employee, Patricia Ruiz,
asked them to
provide documentation for a RAMP modification. The Heymans acknow
ledge
that their loan might not have been eligible for that program, but
Citi
nevertheless led them to believe that a HAMP modification was being
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considered. The 2AC attaches the correspondence on which the
Heymans base
these factual claims.
Citi placed the Heymans on a TPP (trial payment plan), to consist
of four
monthly payments. The first payment, in May 2013, was for
$3500. The
Heymans believe it should have been considered part of the TPP,
but Citi took
the position that the TPP had not yet begun. Thereafter, the Heyma
ns made
four more TPP payments (the fourth under protest).

The Home Affordable Modification Plan (“HAMP”) is a federal program design
ed
to help distressed homeowners avoid foreclosure. Under HAMP, participating
lenders
will modify the terms of loans for borrowers that meet certain criteria
. The borrower
and servicer enter into a “trial period” of three months or more, and
if the borrower
meets all of its obligations during the trial period, the proposed loan
modification
becomes effective. See Sinclair u. Citi Mortgage, Inc., 519 F. App’x 737,
738 (3d Cir.
2013); Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 554 (7th Cir.
2012).
I

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Citi offered a modification. It was based on an overestimate of the
Heymans’ income. It did not conform to RAMP guidelines, most particularly
because it did not lower payments to 31% of the Heymans’ gross income, was
at an interest rate of 5.25%, rather than 2%, and did not include a waiver of
late fees/interest. There was also some confusion about the principal amount.
The Heymans estimate that the excess payments they made in reliance on
Citi’s promise of a RAMP modification totaled $15,000.
The Heymans declared bankruptcy, Case no. 13-32151. As of March 5,
2014, their unsecured debts, including mortgage debt in excess of the value of
the property, were discharged. Post-bankruptcy, Citi allegedly continued to
charge for late fees that had been the subject of the automatic stay. This
discharge of debts and stay of late fees may be the basis of the allegation that
Citi “tried to add on this more than $200,000 to the modification.”
The 2AC is clear enough. It is possible to discern the nature of the claims
from the allegations and supporting exhibits. The allegations may or may not
be proven; the sufficiency of the Heymans’ legal theories remains to be
established. I will, however, grant the motion and direct plaintiffs to sign and
file the proposed second amended complaint.
I have considered the 2AC under a Rule 12(b)(6) standard. Citi may wish
to consider simply answering it so that the parties may engage in discovery and
position this becalmed case for summary judgment.
ORDER
For the reasons stated above,
IT IS this 22d day of September, 2016
ORDERED that the motion (ECF no. 36) for leave to file the second
amended complaint is GRANTED. Plaintiffs are directed to sign and file the
proposed 2AC that is now, unsigned, at ECF nos. 36-2, 3, & 4.

/ZL

HON. KEVIN MCNULTY
United States District
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