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Sanguinetti v. Citimortgage, Inc.

United States District Court, Ninth Circuit

September 11, 2013

GINA SANGUINETTI and GERALD SANGUINETTI, Plaintiffs,
v.
CITIMORTGAGE, INC., CITIBANK, N.A., AND DOES 1-10, Defendants.

ORDER GRANTING MOTION TO DISMISS

SAMUEL CONTI, District Judge.

I. INTRODUCTION

Now before the court is Defendants CitiMortgage, Inc. and Citibank, N.A.'s (collectively "Defendants") motion to dismiss Plaintiffs Gina and Gerald Sanguinetti's ("Plaintiffs") Second Amended Complaint. ECF Nos. 29 ("SAC"), 33 ("MTD"). The motion is fully briefed, ECF Nos. 34 ("Opp'n"), 35 ("Reply"), and appropriate for decision without oral argument, Civ. L.R. 7-1(b). For the reasons explained below the Court GRANTS Defendants' motion and DISMISSES this case with prejudice.

II. BACKGROUND

In her first amended complaint, Plaintiff Gina Sanguinetti brought an action against Defendants, claiming that she and her husband had been harmed by Defendants' malicious lending practices. In that complaint, Ms. Sanguinetti claimed that Defendants had misled her into entering an unsustainably expensive adjustable-rate mortgage ("ARM"), despite knowing that her income was below what was reasonable (and in fact falsifying her income information in the lending documents). She also alleged that Defendants did not disclose legally required information or follow proper loan modification proceedings, and that Defendants were under a Consent Judgment that imposed a duty of care and rendered some of Defendants' activities actionably negligent.

Defendants contended that Ms. Sanguinetti's first amended complaint was impermissibly vague and did not allege sufficient facts as to any claim; that some of her claims were time-barred; and that she had failed to join her husband Gerald Sanguinetti as a necessary plaintiff. The Court agreed with Defendants and dismissed the complaint with leave to amend so that Plaintiffs could add more detail on the following points: the illegality of the mortgage loan, the completion of the loan application, the Consent Judgment, statutes of limitations, the specificity of Defendants' actions, and the joinder of Mr. Sanguinetti. ECF No. 25 ("Order on MTD FAC"). Plaintiffs then filed the SAC.

The only fact that the parties do not now dispute is that Plaintiffs obtained a second mortgage from CitiMortgage, a CitiBank subsidiary, sometime in March 2008, and later defaulted on it. SAC ¶ 17. Plaintiffs allege that Defendants are alter egos of each other. Id . ¶ 12. Plaintiffs allege, as background facts, that Defendants have:

(1) provided a loan without providing and disclosing to Plaintiffs, as required under law, the required Truth in Lending Disclosures;
(2) failed to provide to Plaintiffs, as required under law, the required disclosure of the Annual Percentage Rate ("APR") to be charged for the loan;
(3) failed to provide to Plaintiffs, as required under law, a detailed Good Faith estimate detailing all relevant fees to be charged to Plaintiffs;
(4) failed to provide to Plaintiffs, as required under law, a signed original of the Promissory Note relevant to Plaintiffs' loan; and
(5) charged an excessive and undisclosed amount in interest charges in violation of law.

SAC ¶ 14. Additionally, Plaintiffs allege that Defendants tried to get Plaintiffs to pay excessive fees related to a loan modification or settlement, and that Defendants also insisted that Plaintiffs pay all existing fees and arrears despite knowing Plaintiffs could not afford to do so. Id . Plaintiffs' SAC also adds an array of facts related to the Court's permitted amendments. See Order on MTD FAC at 7-8. The Court summarizes these facts below.

Plaintiffs contend that Defendants, via CitiMortgage acting as Citibank's agent or broker, misled them about the terms of the mortgage loan they received and falsified Plaintiffs' financial information, in order to force Plaintiffs into an ARM, the payments of which would escalate to more than 100 percent of Plaintiffs' income. See SAC ¶¶ 14-22. Plaintiffs add that because Defendants were incentivized to push as many of these unsustainable loans onto unsophisticated buyers as possible, Defendants simply entered false information about Plaintiffs into their applications, and did not proceed with due diligence as to Plaintiffs' financial situation. See id. ¶¶ 24-26. Sometime in 2009, Plaintiffs became unable to make their monthly payments on the mortgage, and they received a Notice of Default on November 15, 2009. Id . ¶ 38.

Plaintiffs requested a loan modification or settlement from Defendants, but they claim that Defendants consistently mismanaged their requests by ignoring them and failing to give them correct paperwork and information. Id . ¶¶ 27-28. Plaintiffs claim that as a result of Defendants' negligent and unlawful activities, the mortgage and deed of trust are illegal and unconscionable, thereby depriving Defendants of the legal capacity to sell Plaintiffs' home or take other action against Plaintiffs based on their default. Id . ¶¶ 29-30. ...


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