United States District Court, D. Connecticut
RULING ON DEFENDANTS' MOTION TO DISMISS THE FIRST
A. BOLDEN UNITED STATES DISTRICT JUDGE.
Factual Allegations 2
State Foreclosure Proceedings 3
Mortgage Modification Requests 5
Other Correspondence between the Tanasis and CitiMortgage 6
Single Point of Contact 8
Defendant M&T Bank 9
Current Proceedings 9
Standard of Review 11
Motion to Dismiss for Lack of Jurisdiction under Rule
Rooker-Feldman Doctrine 13
Tanasis' Claims 14
Tanasis do not Invite Review and Rejection of the 16
Tanasis do not Complain of an Injury Caused by a 18 State
Transaction Test and Foreclosure Actions 23
Tanasis' Claims 27
Motion to Dismiss under Rule 12(b)(6) 30
Tanasis' RESPA Claims 31
CitiMortgage's Liability under 12 U.S.C. § 2605(e)
CitiMortgage's Liability under Regulation X 37
Liability under 12 C.F.R. § 1024.36 for Failure to 37
Respond to RFIs
Liability under 12 C.F.R. § 1024.35 for Failure to 40
Respond to NOEs
Damages under RESPA 42
Emotional Distress Damages 43
Postage Costs 45
Miscellaneous Damages 46
Statutory Damages 47
Tanasis' Negligence Claims 48
CitiMortgage's Duty of Care, Generally 48
Negligent Infliction of Emotional Distress 49
Tanasis' CUTPA Claims 52
Unfair Business Practice 52
Tanasis' Ascertainable Loss under CUTPA 53
Statute of Limitations for Negligence and CUTPA claims 55
Defendant M&T Bank 57
and Athansula Tanasi (“the Tanasis”) bring this
action against CitiMortgage, Inc.
(“CitiMortgage”), which serviced a mortgage on
their home, and M&T Bank Corporation
(“M&T”), the successor by merger to Hudson
City Savings Bank (“Hudson”), which owned the
mortgage. The Tanasis allege that both Defendants violated
the Real Estate Settlement Procedures Act of 1974
(“RESPA”), 12 U.S.C. 2601 et seq., and
its implementing regulations, specifically Regulation X
Mortgage Servicing Final Rule, 78 F.R. 10695 (February 14,
2013), 12 CFR § 1024 (“Regulation X”). They
also allege that Defendants breached a duty of care owed to
them under those regulations and a related consent decree.
Finally, they allege that Defendants violated the Connecticut
Unfair Trade Practices Act (“CUTPA”).
move to dismiss all three causes of action. Defendants first
argue that this Court lacks jurisdiction over the
Tanasis' claims because of the Rooker-Feldman
doctrine and res judicata. Defendants further argue
that the Tanasis fail to state claims upon which relief can
Court concludes that jurisdiction is permissible under
Rooker-Feldman, but agrees with Defendants that most
of the Tanasis' claims are barred by res
judicata and cannot be asserted here. For the remaining
claims, it reviews Defendants' motion to dismiss under
Rule 12(b)(6), and concludes that the Tanasis' remaining
RESPA, CUTPA, and negligence claims cannot be dismissed.
Accordingly, Defendants' motion to dismiss is GRANTED in
part and DENIED in part.
regarding Claim One, the Court must dismiss under res
judicata the claims that Defendants violated RESPA and
Regulation X by failing to acknowledge or properly review
loss mitigation applications (Compl., ¶¶ 71-81).
This includes claims that arise under Regulation X's 12
C.F.R. § 1024.41. It also must dismiss under Rule
12(b)(6) the Tanasis' claims under Section 2605(e) of
RESPA relating to qualified written requests that did not
pertain to “servicing” and therefore were not
actionable under the statute. While Count One is not
dismissed, because the Tanasis' claims under Regulation
X's 12 C.F.R. § 1024.36 and 1024.35 remain, the
Court notes the limitations on their damages relating to
these claims. The Court dismisses any of the Tanasis'
claims for RESPA damages relating to “costs related to
stripping the Property of equity, ” “unnecessary
costs of maintaining the Property due to delayed foreclosure,
” and the creation of a “public record of
foreclosure.” See Compl. ¶¶ 61-65.
It also dismisses the Tanasis claims for compensatory damages
for costs relating to the preparation of requests for
information, because these costs would have been incurred
regardless of CitiMortgage's alleged violations.
Claim Two, the Court dismisses under res judicata
the Tanasis' claims concerning Defendants' negligent
processing of their loss mitigation and mortgage modification
applications. Because some of the negligence claim arises out
of other acts, the Court does not dismiss Claim Two in its
are many components to Claim Three, in which the Tanasis
allege violations of CUTPA. Of these, the claim that
CitiMortgage violated CUTPA by unfairly applying its existing
loss mitigation policies, see Compl. at ¶
149(d), is dismissed under res judicata.
2007, Richard Tanasi and Athansula Tanasi (“the
Tanasis”) bought a piece of property at 27 Briarwood
Drive in Old Saybrook, Connecticut (the
“Property”). First Amended Complaint
(“Compl.”), ECF No. 18, ¶ 4. The Property
was encumbered by a first-position mortgage loan in the
principal amount of $656, 250, dated August 2, 2007, which
was given as security for a promissory note of the same date
and recorded on August 6, 2007. Id. at ¶ 12.
The original underwriter sold or otherwise transferred the
mortgage to Wachovia Savings Bank and CitiMortgage purchased
the mortgage shortly afterwards. Id. CitiMortgage
then sold the mortgage to Hudson on or about November 27,
2007, but continued to service the mortgage. Id. at
¶ 12. Hudson later merged with Defendant M&T Bank.
Id. at ¶¶ 5. Both CitiMortgage and M&T
Bank are corporations organized under the laws of New York.
Id. at ¶¶ 2-3.
2010, the Tanasis fell behind on their mortgage payments.
CitiMortgage initiated a foreclosure action in 2011 and
foreclosed on the Property on March 7, 2016. See
CitiMortgage's Mot., Exhibit C, ECF No. 26-4, Docket
(“Foreclosure Docket”). Before and during the
foreclosure process, the Tanasis communicated with
CitiMortgage about their mortgage. These communications-as
well as the reach of consumer-protection statutes, the
relative duties of state and federal courts, and the tension
between the finality of judgments and the promise of full
relief- are at the heart of this case.
State Foreclosure Proceedings
Tanasis missed their first mortgage payment on or about July
1, 2010, and did not make any payments after that date.
CitiMortgage's Mot., Exhibit D, ECF No. 26-5,
CitiMortgage's Motion to Terminate Mediation Stay,
MMX-cv-11-6005630-S (Middlesex Superior Court),
They allege, however, that CitiMortgage solicited them for
loss mitigation on their mortgage as early as June 2009.
Compl. ¶ 14. The Tanasis applied for a mortgage
modification in response to one of these solicitations, a
letter they received from CitiMortgage on June 17, 2009.
Id. CitiMortgage denied their application on
November 27, 2009. Id. at ¶ 15. On December 1,
2009, CitiMortgage followed up with another letter, which
stated that the Tanasis' income exceeded the allowable
amount under the Home Affordable Modification Program
(“HAMP”) and that the Tanasis had insufficient
credit for modification. Id. The Tanasis applied for
loss mitigation two more times before CitiMortgage commenced
a foreclosure action, allegedly at “CitiMortgage's
request.” Id. CitiMortgage denied these
applications on October 6, 2010 and November 14, 2010.
filed a foreclosure action in Connecticut Superior Court (the
“Foreclosure Action”) on July 18, 2011.
See Compl. ¶ 18; Foreclosure Docket, p. 1.
Shortly thereafter, the Tanasis filed a request to
participate in the court's foreclosure mediation program,
which was granted on August 28, 2011. See
Foreclosure Docket, 102.00. The parties met in
“numerous mediation sessions” between October 26,
2011 and December 4, 2012. CitiMortgage's Motion to
Terminate Mediation Stay, 4.
December 27, 2012, CitiMortgage moved to terminate the
mediation efforts. Id. The Tanasis did not object to
this motion and the Superior Court granted it on January 4,
2013. Id. On November 11, 2013, the Tanasis filed an
answer and special defense to the Foreclosure Action,
admitting that they had signed the Note and Mortgage, but
denying the “authenticity of, and authority to make,
each signature on the Note.” CitiMortgage's Mot.,
Ex. E, ECF No. 26-6, Mem. of Decision on Mot. for Summ. J.,
MMX-cv-11-6005630-S (Middlesex Superior Court).
10, 2014, CitiMortgage moved for summary judgment in the
foreclosure case. See Foreclosure Docket, 138.00.
The Superior Court granted this motion on October 10, 2014.
See CitiMortgage's Mot., Ex. E, Mem. of Decision
on Mot. for Summ. J. On July 23, 2015, the Tanasis moved to
dismiss the foreclosure action, contesting CitiMortgage's
standing to commence the foreclosure action and arguing that
it “fraudulently invoked the rebuttable presumption of
ownership.” Foreclosure Docket, 149.00. This motion was
denied. Id. at 149.10. On March 7, 2016, the
Superior Court granted CitiMortgage a judgment of strict
foreclosure and found that the outstanding debt under the
Note and Mortgage was $960, 871.75. See
CitiMortgage's Mot., Ex. H, ECF No. 26-9, Notice of
Judgment of Strict Foreclosure. In March of 2016, before the
extinguishment of their right of redemption, the Tanasis
filed an appeal with the Connecticut Appellate Court.
Foreclosure Docket, 171.00. On May 11, 2016, the Tanasis
filed a motion for articulation of the Superior Court's
decision on their motion to dismiss. Id. at 172.00.
After their motion was granted, the Superior Court published
an articulation of its factual and legal basis for denying
the Tanasis' motion to dismiss the Foreclosure Action.
Id. at 175.00.
Mortgage Modification Requests
Tanasis allege that they have been “engaged in loss
mitigation efforts with CitiMortgage continuously since 2009,
” Compl. ¶ 14, and many of their claims concern
CitiMortgage's improper solicitation and dispensation of
thier loss mitigation and mortgage modification applications.
The Tanasis also allege that CitiMortgage moved for summary
judgment on the Foreclosure Action when several of their
mortgage modification and loss mitigation applications were
pending. Id. at ¶ 26.
February 10, 2012, Beckett Law, LLC submitted a mortgage
modification application on behalf of the Tanasis. Compl.
¶ 18. CitiMortgage acknowledged the request on March 7,
2012, when it requested additional documents, which the
Tanasis later submitted. Id. On May 10, 2012,
CitiMortgage denied the mortgage modification application.
Id. Less than one month later, the Tanasis allege,
CitiMortgage solicited them to submit a new mortgage
modification application. Id. at ¶ 19. The
Tanasis completed this application on November 2, 2012.
Id. CitiMortgage allegedly did not respond to the
Tanasis' November 2, 2012 modification application.
of responding to their pending applications, CitiMortgage
solicited the Tanasis to modify their mortgage again.
CitiMortgage allegedly sent letters to the Tanasis on January
7, 2014 and December 17, 2015, asking them to submit new
mortgage modification applications. Compl. at ¶¶
18-20. On January 28, 2016, as well as on several dates in
February and March of that year, CitiMortgage allegedly
communicated by mail and e-mail with the Tanasis, requesting
loss mitigation applications and stating that
“[w]hether you want to remain in your home or want to
consider other alternatives, we are here to work with you to
find the best option for your current situation.”
Id. at ¶ 39.
it continued to solicit mortgage modification applications
from the Tanasis, CitiMortgage allegedly failed to respond to
the many applications that the Tanasis did submit. The
Tanasis allege that CitiMortgage generally had a policy of
“automatically closing mortgage modification
applications internally after they were open for sixty
days.” Compl. ¶ 24. The Tanasis allegedly applied
to modify their mortgage three times after Regulation X
became effective on January 10, 2014: On February 21, 2014,
July 3, 2014, and August 17, 2015. Id. at
¶¶ 20, 23, 26. CitiMortgage never responded to
these applications. Id.
Tanasis also allege that CitiMortgage “had a policy of
automatically requesting duplicative information for loss
mitigation applications every 30 days in order to avoid
exercising reasonable diligence in completing an
application.” Compl. at ¶ 25. CitiMortgage
allegedly responded to loss mitigation applications with
requests for bank statements, pension and pay stubs, property
tax forms, and affidavits of hardship. See id at
¶¶ 23, 27-28. The Tanasis allege that CitiMortgage
requested additional documents on eleven occasions in 2014
and twice in 2015. Id.
Other Correspondence between the Tanasis and
Tanasis also allege that CitiMortgage failed to respond to
many of their requests for information, some of which, they
allege, were qualified written requests, requests for
information, or notices of error under RESPA. They allege
that this “persistent and ongoing failure to provide
adequate responses … deprived [them] of information to
which they are legally entitled about their mortgage and
… prevented them from making accurate and informed
choices about the best avenue to save their home.”
Compl. ¶ 87.
Tanasis allege that they mailed two qualified written
requests to CitiMortgage, seeking “information about
the payoff of their loan and the holder of their note,
” on January 13, 2014 (¶ 21) and March 5, 2015
(¶ 34). CitiMortgage responded to both requests in a
letter dated April 2, 2015, “arguing that it was not
required to provide a response because the Plaintiffs were in
an active bankruptcy case.” Id. at 35. The
Tanasis had filed for bankruptcy on February 10, 2011, but
the case was closed on July 6, 2011. Id. at n.2.
They therefore allege that CitiMortgage was required under
RESPA to respond to their requests.
Tanasis also allege that they requested information from
CitiMortgage on or about October 27, 2014 (¶ 83), March
16, 2016 (¶ 40), March 30, 2016 (¶ 41), and May 11,
2016 (¶ 42). The March 16, 2016 request sought
information about “(1) alleged investor restrictions,
(2) evidence that CitiMortgage submitted waiver requests, and
(3) evidence of CitiMortgage's efforts to obtain a waiver
of investor restrictions.” Id. at ¶ 40.
CitiMortgage allegedly responded to the March 16, 2016
request with a statement that the information was
March 30, 2016 request, the Tanasis sought information about
“(1) the owner/assignee of the loan, (2) the
servicer's participation in HAMP and the national
mortgage settlement, and (3) the parameters of loan
modification programs.” Id. at ¶ 41.
CitiMortgage allegedly responded to the March 30, 2016
request on April 14, 2016, with information about the
owner/assignee of the loan but not about loan modification
May 11, 2016 request, the Tanasis sought information about
“broker prices opinions and appraisals … to see
if CitiMortgage was engaging in any meaningful loss
mitigation review.” Id. at ¶ 42. The
Complaint does not allege whether CitiMortgage responded to
the May 11 request. The Tanasis contend that CitiMortgage
failed to respond to another request, dated October 27, 2014,
but the Complaint does not include any allegations about the
content of that request. Id. at ¶ 83.
Tanasis also allege that CitiMortgage received two notices of
error on their behalf, on July 6, 2015 (¶ 45) and May
13, 2016 (¶ 43). In the first, the “errors
asserted included 1) not answering as to if the Investor
participates in the HAMP program …, 2) not responding
as to if the investor participates in the FHA-HAMP program or
in the National Mortgage Settlement Modification; 3) not
replying as to what proprietary modification programs are
available, and 4) not providing the surplus or deficit of
income requirements for proprietary modifications.”
Id. at ¶ 45. CitiMortgage, they allege, did not
second alleged notice of error stated that CitiMortgage
“failed to 1) provide evidence of its efforts at
waiving investor restrictions, 2) provide any information
about its servicer participation agreement for HAMP or its
compliance with the National Mortgage Settlement, 3)
acknowledge the three previous requests for information, and
4) provide information about the loss mitigation options the
Plaintiffs were eligible for.” Compl. ¶ 43.
CitiMortgage allegedly responded to this notice in a letter
dated June 6, 2016, in which it “1) claimed that it was
not required to give Plaintiffs BPOs or appraisals, 2) it
argued that it had exercised all efforts to qualify the
Plaintiffs for all Home Owners Assistance Programs …
3) did not provide any information about its compliance with
[HAMP or the National Mortgage Settlement], 4) stated it was
providing copies of the acknowledgements for the prior
requests but did not actually attach them, and 5) declined to
provide any information about the availability of loss
mitigation programs, other than to state that it was
reviewing the Plaintiffs for a modification.”
Id. at ¶ 44.
Single Point of Contact
Tanasis allege that, in a letter that they received on
November 11, 2014, CitiMortgage identified a single point of
contact with whom the Tanasis could communicate about their
mortgage. Compl. ¶ 120. On November 23, 2014,
CitiMortgage allegedly sent a letter changing the point of
contact to “Na Na, with telephone number (999)
999-9999, ext. 0000000* and email N/A.” Id. at
¶ 121. On February 17, 2016, CitiMortgage allegedly
identified a new single point of contact, Claudia Martinez,
and provided her phone number, but not an extension for her
direct line. Id. at ¶ 122. When Mr. Tanasi
called Ms. Martinez's phone number, he was able to reach
an employee named “Jose” and another named
“Schiad, ” who told him that the Tanasis would
need to schedule a “call back appointment” with
Ms. Martinez. Id. at ¶ 124. Ms. Martinez did
not return the Tanasis' call at the scheduled callback
time. Id. at ¶ 125 When the Tanasis called her
office, they were allegedly informed that she would not be
able to speak with them because her PC “was
down.” Id. The Tanasis made another
appointment for a “call back” with Ms. Martinez,
but she did not call them at that time. Id. at
¶ 126. CitiMortgage then assigned a new single point of
contact to the Tanasis on March 29, 2016. Id. The
new single point of contact allegedly told the Tanasis that
they “would not have any access to a [single point of
contact] because of the pending appeal of the foreclosure
Defendant M&T Bank
Tanasis allege that CitiMortgage was the mortgage servicing
agent for Hudson City Savings Bank, M&T's
predecessor, and that CitiMortgage was under Hudson's
“direct supervision, employ, and control when it
committed the wrongful and negligent acts described in the
Complaint.” Compl. at ¶¶ 5, 46. The Tanasis
also allege that “CitiMortgage's servicing of the
Mortgage is governed by a Master Mortgage Loan Purchasing and
Servicing Agreement between CitiMortgage and Hudson, ”
under which CitiMortgage had the authority to “waive,
modify or vary any term of any Mortgage Loan or consent to
the postponement of compliance with any [term], ” but
could not “permit any modification that could change
the Mortgage Interest Rate, defer or forgive they payment of
any principal or interest, change the outstanding principal
amount, [or] extend the maturity date.” Id. at
¶ 58. CitiMortgage was also allegedly permitted to
“take such action as it shall deem to be in the best
interest of [Hudson].” Id. at ¶ 59. The
Tanasis also allege that Hudson “held itself out to the
public as offering mortgage modifications, ”
id. at ¶ 54, and indicated that it had a
“Loan Modification Policy” in 10-K filings with
the Securities and Exchange Commission. Id. at
The Current Proceedings
16, 2016, the Tanasis filed a Complaint against both
Defendants, alleging violations of RESPA, CUTPA, and common
law negligence. Both Defendants moved to dismiss on July 29,
2016. On August 19, 2016, the Tanasis filed their First
Amended Complaint, alleging the same three causes of action.
Both Defendants moved to dismiss on September 16, 2016.
See CitiMortgage's Mot., ECF No. 26-1;
M&T's Mot., ECF No. 25-1. After oral argument on this
motion in November, the parties submitted supplemental briefs
to the Court concerning the availability of damages for
emotional distress under CUTPA. See ECF Nos. 34-35.
their First Amended Complaint, the Tanasis assert three
causes of action, all of which Defendants seek to dismiss.
The Tanasis first claim that CitiMortgage violated RESPA and
Regulation X by failing to provide acknowledgement notices in
response to loss mitigation applications and for improperly
responding to the applications when it did reply, and by
failing to respond to the Tanasis' various requests for
information and notices of error. See Compl.
¶¶ 66-95. The Tanasis also allege that CitiMortgage
“engaged in a pattern and practice of noncompliance
with RESPA and Regulation X.” Id. at ¶
second cause of action, the Tanasis claim that CitiMortgage
negligently and consistently failed to provide accurate
information about the loss mitigation options available to
the Tanasis, failed to provide an accessible single point of
contract, and misrepresented loan modification options to the
Tanasis “through a combination of duplicative,
exhaustive, and ever-changing requests.” Compl.
¶¶ 98-136. These actions, the Tanasis allege,
violated a duty that CitiMortgage owed to them under
Regulation X as well as the National Mortgage Settlement, a
consent decree between CitiMortgage, the federal government,
and 49 states' attorneys general. Id. at ¶
99. In the National Mortgage Settlement, CitiMortgage
allegedly agreed to engage in loss mitigation programs and
disclose accurate information to borrowers. Id. at
¶¶ 100-108. The Tanasis' Complaint also lays
out the elements of a negligent infliction of emotional
distress claim. Id. at ¶¶ 137-38. In their
motions to dismiss, Defendants seek to dismiss this claim as
well. See CitiMortgage's Mot., 25.
their third cause of action, the Tanasis allege that
Defendants violated the Connecticut Unfair Trade Practices
Act (“CUTPA”) by “a) soliciting the Tanasis
to apply for a loan modification for which they were not
eligible; b) repeatedly requesting duplicative, unnecessary,
or updates to documentation during the application process
without reasonable justification or excuse; c) making
material misrepresentations or omissions likely to mislead a
consumer acting reasonably under the circumstances, including
misrepresenting to the Tanasis their eligibility, continued
evaluation, and expectancy of receiving a modification of
their loan; d) failing to apply existing loss mitigation