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Cortez v. CitiMortgage, Inc.

United States District Court, C.D. California

December 11, 2014




Proceedings: (IN CHAMBERS) Order re: Defendants CitiMortgage, Inc. and U.S. Bank National Association's Motion to Dismiss (DE 19)


On October 3, 2014, plaintiff Priscilla Cortez (" Plaintiff") filed a First Amended Complaint (" FAC") against CitiMortgage, Inc. (" Citi"), U.S. Bank National Association (" U.S. Bank"), and Clear Recon Corporation (" Clear Recon") (collectively, " Defendants"). The FAC contains thirteen causes of action arising from Defendants' handling of Plaintiff's attempts to modify a residential loan agreement.

On October 20, 2014, Citi and U.S. Bank (collectively, " Moving Defendants") filed the present Motion to Dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure (" Rule") 12(b)(6). For the following reasons, the Court DENIES Moving Defendants' Motion.


The following facts are based upon Plaintiff's allegations. On October 11, 2006, Plaintiff executed a promissory note and obtained a first-position loan in the original principal amount of $257, 000 from Argent Mortgage Company, LLC. Plaintiff concurrently executed a first-lien deed of trust, which secured the note and encumbered a parcel of real property (the " Subject Property"). The deed of trust and all beneficial interest therein was eventually transferred via assignment to U.S. Bank on September 20, 2013. Clear Recon is the current trustee of record, and City is the current servicer of the loan.

Citi offered Plaintiff a trial loan modification plan (" Trial Plan") on July 30, 2013 under the federal Home Affordable Modification Program (" HAMP"). To accept Citi's offer, Plaintiff needed to make the first of three " trial period payments, " in the amount of $1, 215.78, by September 1, 2013. To qualify for a permanent modification, Plaintiff needed to make two additional trial period payments, each in the same amount, by October 1, 2013 and November 1, 2013, respectively. The letter containing Citi's offer stated that after all trial period payments were timely made and Plaintiff submitted all required documents, Plaintiff's mortgage would be permanently modified.

Plaintiff made her first Trial Plan payment via check dated August 25, 2013, which Citi accepted and cashed. Plaintiff made her second payment via check dated September 27, 2013. However, rather than accepting this timely second payment, Citi sent Plaintiff a letter dated October 2, 2013, informing her that it was returning her check " because it was less than the full amount due to bring [her] account current." (FAC, Ex. I.) The letter stated that " [u]nless prior arrangements have been made, only the full amount due will be accepted." (Id.)

Plaintiff contacted her " single point of contact" at Citi, Raymond Bookey, to ask why her second Trial Plan payment was rejected and to explain that a " prior arrangement" - the Trial Plan itself - had in fact been made. Mr. Bookey only responded that Citi " would never say why the payment was rejected, " and that Plaintiff " can get an attorney to subpoena it." Plaintiff also spoke with a manager at Citi named Jose Gigini, who told Plaintiff that it was " illegal" for Citi to refuse the payments, but that Citi employees " would get bonuses for not qualifying borrowers for modifications." Defendants never requested any additional documents in connection with the Trial Plan.

Citi and U.S. Bank, through Clear Recon, recorded (1) a notice of default on the Subject Property on February 10, 2014, (2) a notice of trustee's sale on the Subject Property on May 21, 2014, and (3) a notice of trustee's sale on the Subject Property on June 16, 2014, which set a trustee's sale date of July 17, 2014.

In the meantime, given Citi's refusal to discuss the Trial Plan further, Plaintiff applied for another loan modification, which Citi denied in a letter dated July 31, 2014. The only reason given for the denial was that " [t]here was an irreconcilable discrepancy within [Plaintiff's] application request." (FAC, Ex. M.) Plaintiff appealed this denial in a timely letter dated August 29, 2014. (Id. at Ex. N.) That letter states that Plaintiff's counsel contacted Moving Defendants' counsel on August 5, 2013 to clarify the reason for the denial, and that Moving Defendants' counsel indicated that based on his understanding at the time, Plaintiff's application was denied because the gross monthly income she listed did not match the documents she attached to verify proof of income. Plaintiff's August 29, 2014 letter re-attached a copy of the application as well as the supporting income documentation, and attempted to explain that no discrepancy existed. Citi responded with a letter dated September 17, 2014, which again simply informed Plaintiff that Citi was " unable to approve [her] mortgage assistance request" because that request contained an " irreconcilable discrepancy." (Id. at Ex. O.) Citi did not provide any further explanation or information.

The parties state that due to two postponements thus far, the most recent date set for the trustee's sale on the Subject Property was December 4, 2014.


The federal pleading standard states in relevant part that " a claim for relief must contain . . . a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). Under Rule 12(b)(6), a party may move to dismiss for failure to state a claim upon which relief can be granted. In deciding a Rule 12(b)(6) motion, the court must assume allegations in the challenged complaint are true, and construe the complaint in the light most favorable to the non-moving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). However, a court need not accept as true unreasonable inferences, unwarranted deductions of fact, or conclusory legal allegations cast in the form of factual allegations. See W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981). Furthermore, a pleading must contain sufficient factual matter that, if accepted as true, states a claim that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). A claim is facially plausible when there are sufficient factual allegations to draw a reasonable inference that the defendant is liable for the misconduct alleged. Id.


Moving Defendants argue that each of Plaintiff's thirteen causes of action fails to state a claim, and the Court will address each in turn.

A. Violation of California Civil Code Section 2923.6(f)

Plaintiff alleges that Citi's July 31, 2014 and September 17, 2014 letters failed to provide her with sufficient reasons for denying her most recent application for a loan modification, in violation of California Civil Code Section[1] 2923.6(f). Section 2924.12(a)(1) then states that " [i]f a trustee's deed upon sale has not been recorded, a borrower may bring an action ...

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