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Citibank, N.A. v. Najda

United States District Court, D. Massachusetts

January 13, 2016

CITIBANK, N.A. as Trustee for the Benefit of SWDNSI TRUST SERIES 2010-3, Plaintiff,
RENEE ANNA NAJDA a/k/a RENEE NAJDA, ANDREW NAJDA, and ANY and ALL OCCUPANTS, Defendants and Counter claimants,


George A. O’Toole, Jr. United States District Judge

This case began as a declaratory judgment action brought by Citibank, N.A. (“Citibank”). Citibank seeks declaratory judgment that it holds the note and the mortgage on Renee Najda and Andrew Najda’s (the “Najdas”) Concord, Massachusetts home. Citibank claims to hold both as trustee for a trust called SWDNSI Trust Series 2010-3 (the “Trust”). Citibank brings a number of other claims in order to pursue foreclosure.[1]

The Najdas answered and brought counterclaims against Citibank as well as a number of other banking and servicing companies (dkt. no. 13). The gist of their counterclaims is that ownership of the note and the mortgage is not as clear as Citibank presents it, and that CitiMortgage, Inc. (“CitiMortgage”), the originator of the loan, breached its agreement with the Najdas to forbear on pursuing foreclosure. In addition to contract, tort, and statutory damages, the Najdas seek declaratory judgment as to who owns the note and the mortgage. Some of the entities answered these claims, while others have moved to dismiss the Najdas’ counterclaims.

PennyMac, Corp. (“PennyMac”) and PennyMac Loan Services, LLC (“PLS”), move to dismiss the Najdas’ counterclaims for failure to state a claim upon which relief can be granted (dkt. no. 25). Counts I and X of the Najdas’ counterclaim are alleged against PennyMac, and Counts VIII and X are alleged against PLS.[2]

CitiMortgage also moved to dismiss the Najdas’ counterclaims against it for failure to state a claim (dkt. no. 39). In response to CitiMortgage’s motion, the Najdas subsequently amended their pleadings against CitiMortgage (dkt. no. 45). Consequently, CitiMortgage’s initial motion to dismiss is moot. CitiMortgage responded with a new motion to dismiss all claims against it (dkt. no. 50). After full briefing and a hearing, that motion, and PennyMac and PLS’ motion to dismiss, are now resolved in this order.

When evaluating a motion to dismiss, a court must “accept as true all well-pleaded facts in the [pleading] and draw all reasonable inferences in favor of the [claimants].” Gargano v. Liberty Int’l Underwriters, Inc., 572 F.3d 45, 48 (1st Cir. 2009). “To survive a motion to dismiss, the [pleading] must allege ‘a plausible entitlement to relief.’” Fitzgerald v. Harris, 549 F.3d 46, 52 (1st Cir. 2008) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 559 (2007)); see also Ashcroft v. Iqbal, 556 U.S. 662, 677-80 (2009).

I. Background

Taking as true the content of the Najdas’ pleadings, the factual basis for their counterclaims is as follows. In 2007, the Najdas, using CitiMortgage, refinanced the mortgage on their home. In 2009, they fell behind on making their mortgage payments. In telephone conversations in 2010, the Najdas and CitiMortgage came to an agreement in which the Najdas promised to pay an additional amount monthly in order to bring their account current (the “Forbearance Plan”). This plan was memorialized in a written document signed by Andrew Najda. (See Amended Countercl., Exs. A & B (dkt. nos. 45-1, 45-2).)[3] The Najdas claim that during the telephone conversation, CitiMortgage promised to immediately report their account as current and also promised to not institute or continue any foreclosure proceedings against them. In contrast, the written Forbearance Plan provides: “Your account will continue to be reported as delinquent to our credit reporting agencies until you bring your account current.” (Amended Countercl., Ex. B, at 4.) The written agreement contains no affirmative promise by CitiMortgage not to bring foreclosure proceedings.

Shortly after the telephone call, CitiMortgage brought an action under the Massachusetts Soldiers’ and Sailors’ Civil Relief Act (a “servicemember proceeding”) in order to confirm that the Najdas were not entitled to the benefits of the Servicemembers Civil Relief Act, 50 U.S.C. §§ 3901 et seq. [formerly 50 U.S.C. app. §§ 501 et seq.]. See generally HSBC Bank USA, N.A. v. Matt, 981 N.E.2d 710, 713-16 (Mass. 2013) (describing the statutory framework for such actions). CitiMortgage pursued no other foreclosure action but continued to report the Najdas’ account as delinquent.

Throughout 2010, 2011, and 2012, the Najdas’ attempted to sell their mortgaged property. By May 2011, they had learned of CitiMortgage’s servicemember proceeding and, through counsel, unsuccessfully petitioned CitiMortgage to dismiss the action. The Najdas were also unsuccessful in selling the property. In June 2012, they received what they describe as a “lowball” offer for their house. According to their real estate broker, the pendency of the servicemember proceeding drove away potentially interested buyers. The Najdas claim that through the June 2012 lowball offer, they first learned of how the servicemember proceeding impacted the marketability of their property. The Najdas were eventually unable to continue paying under the Forbearance Plan.

Meanwhile, the underlying mortgage and note were shuttled between various banking entities. All assignments of the mortgage were publicly recorded, but there is little on the record as to the status of the note. As a part of its Complaint, Citibank alleges that it possesses the note and that the note is bearer paper. The Najdas plead that they know that CitiMortgage originally held the note, but that when they requested copies of the note from various entities, they received inconsistent versions in response, all purporting to be a true and accurate copy.

The Najdas also received letters from various entities as these papers were changing hands, often to inform them of changes in the identity of the holder or servicer of the loan. Relevant to the claims at issue here, on March 24, 2011, the Najdas received a letter from PLS which identified PennyMac as the new creditor for their loan. The Najdas later received another letter from PLS on August 11, 2014, identifying the Trust as the owner of their debt.

II. PennyMac & PLS’ Motion to Dismiss

The Najdas bring two claims against PennyMac-declaratory judgment (Count I) and violation of Massachusetts’ consumer protection law, Chapter 93A (Count X)-and two claims against PLS-violation of the Fair Debt Collection Practices Act (“FDCPA”) (Count VIII) and violation of Chapter 93A (Count X). The Najdas’ claims against PennyMac and PLS depend on their argument that Citibank is not the proper holder of the mortgage. The Najdas have not plausibly cast doubt on the mortgage transfers. For that reason and the others discussed below, all but Count I against PennyMac is dismissed.

A. Declaratory Judgment Against PennyMac (Count I)

The Najdas contest both whether Citibank holds the mortgage and whether it holds the note. Who holds the note is a factual question that cannot be resolved by the pleadings alone. The declaratory judgment count remains against PennyMac to that extent.

However, the Najdas have not plausibly shown that anyone other than Citibank holds the mortgage. As set forth in the pleadings, the recorded assignments show a clear, unbroken chain of title from Mortgage Electronic Registration System, Inc. ...

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