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Moreira v. Citimortgage Inc.

United States District Court, D. Massachusetts

September 8, 2016

JOSE MOREIRA, Plaintiff,


          Leo T. Sorokin United States District Judge.

         Plaintiff Jose Moreira (“Moreira”) filed a five-count Complaint against Defendant CitiMortgage, Inc. (“CitiMortgage”) in Middlesex Superior Court, stemming from CitiMortgage's refusal to provide Moreira with a mortgage loan modification. Doc. No. 1-2 at 5-13. CitiMortgage removed the case to this Court, Doc. No. 1, and subsequently moved to dismiss the Complaint, Doc. No. 9. Instead of opposing the motion, Moreira filed the operative three-count Amended Complaint. See Doc. No. 11. CitiMortgage then filed a second Motion to Dismiss for Failure to State a Claim. Doc. No. 21. Moreira opposed the motion, Doc. No. 23, and CitiMortgage filed a reply brief, Doc. No. 27. As explained below, CitiMortgage's motion is ALLOWED IN PART and DENIED WITHOUT PREJUDICE IN PART.


         Moreira owns property at 62-64 Flint Street, Somerville, Massachusetts (“The Property”). Doc. No. 11 ¶ 1. He currently lives with his wife in a different property. Id. ¶ 13. In 2005, he purchased the Property by signing a promissory note which CitiMortgage now holds, granting it a mortgage. Id. ¶ 6; see Doc. No. 22-3. Moreira derived rental income from the Property, but in 2008, after the Property suffered structural damage, he defaulted on the loan. Doc. No. 11 ¶ 7. Moreira has subsequently repaired this damage and now has steady rental income from the property. Id. In 2009, Moreira applied for a loan modification, which CitiMortgage denied. Id. ¶ 8. He unsuccessfully sued CitiMortgage over this denial in Middlesex Superior Court. Id. ¶ 9. In 2012, Moreira, following his attorney's advice, conveyed the property to A B C LLC (“A B C”), a Massachusetts limited liability corporation of which Moreira was the sole manager. Id. ¶ 10. A B C dissolved in 2015. Id. Also in 2012, CitiMortgage modified Moreira's loan. Id. ¶ 11. He nevertheless defaulted on that loan. Id.

         In Fall 2013, Moreira again began applying for a loan modification with CitiMortgage (“2013 Modification Application”). Id. ¶ 12. He applied under the Home Affordable Modification Program (“HAMP”), a federal program designed to provide foreclosure relief. Id. ¶¶ 14-15. His income includes rental income from the Property, income from his wife for childcare, and commissions for business referrals from a local contractor. Id. ¶ 13. CitiMortgage's participation in HAMP required it to review Moreira's application and “offer him loss mitigation assistance if he qualified.” Id. ¶ 17. Moreira included in his application, among other things, the leases for the Property, bank accounts verifying his income, and affidavits “explaining his income and need for a loan modification.” Id. ¶ 18. He promptly responded to CitiMortgage's requests for additional materials. Id. ¶ 19. CitiMortgage, claiming that Moreira failed to provide all the requested documents, denied the 2013 Modification Application. Id. ¶ 20.

         In February 2014, Moreira submitted another modification application to CitiMortgage (“2014 Modification Application”). Id. ¶ 21. Moreira included a proposed modification proposal under HAMP. Id. ¶ 22. After receiving his application, CitiMortgage, between February and November 2014, “continually requested that [Moreira] resubmit the same documents over and over again and provide repeated explanations on [sic] his income.” Id. ¶ 24. While Moreira timely complied with these requests, id. ¶ 25, CitiMortgage denied the 2014 Modification Application on November 7, 2014, claiming an “irreconcilable discrepancy within [his] application request.” Id. ¶ 26.

         In 2015, Moreira applied for yet another modification (“2015 Modification Application”). Id. ¶ 27. In January 2015, with the aid of counsel, he “participated in an in-depth initial phone call regarding his eligibility for a loan modification” with CitiMortgage. Id. ¶ 28. This call included Moreira explaining, “in depth, ” his need for a modification and “specific explanations as to the amount of income that he earned each month and where it came from.” Id. CitiMortgage's loss mitigation representative informed Moreira after this phone call “that it appeared that he qualified for a loan modification.” Id. ¶ 29.

         Moreira then decided to pursue the 2015 Modification Application further. Id. ¶ 30. He submitted an application including: leases for the Property, showing consistent rental income; bank accounts proving his income; affidavits explaining his income and need for a modification; and an affidavit from his wife, proving the income he received from her. Id. ¶ 31. From January through May 2015, CitiMortgage repeatedly requested Moreira to provide the same documents and explanations of his income. Id. ¶ 32. Specifically, CitiMortgage repeatedly asked for more information about a painting business Moreira purportedly had. Id. ¶ 34. During that time, Moreira submitted seven supplements to his application with the requested documents and information. Id. ¶ 33. These included multiple records and explanations indicating he did not have a painting business. Id. ¶ 35.

         On May 1, 2015, CitiMortgage, citing an “irreconcilable discrepancy, ” denied the 2015 Modification Application. Id. ¶ 36. CitiMortgage also denied the 2015 Modification Application on the grounds that Moreira rented out the property on a seasonal, non-year-round basis. Id. Moreira appealed the denial. Id. ¶ 37. As part of his appeal, he gave CitiMortgage year-round leases to the Property and requested an explanation of the “irreconcilable discrepancy” which prompted CitiMortgage to deny his application. Id.

         CitiMortgage denied Moreira's appeal on June 2, 2015. Id. ¶ 39. It again noted an “irreconcilable discrepancy” in Moreira's application, and did not specify further. Id. In a subsequent phone call, a CitiMortgage representative cited Moreira's alleged, yet non-existent, painting business and $50, 000 in unaccounted-for income as causes of the denial. Id. ¶ 40. As CitiMortgage had already denied his appeal, Moreira had no avenue to address these issues. Id. ¶ 41.


         To survive a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a Complaint must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The Court “must take the allegations in the complaint as true and must make all reasonable inferences in favor of the plaintiff[].” Watterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993). “[F]actual allegations” must be separated from “conclusory statements in order to analyze whether the former, if taken as true, set forth a plausible, not merely a conceivable, case for relief.” Juarez v. Select Portfolio Servicing, Inc., 708 F.3d 269, 276 (1st Cir. 2013) (internal quotations omitted). This “highly deferential” standard of review “does not mean, however, that a court must (or should) accept every allegation made by the complainant, no matter how conclusory or generalized.” United States v. AVX Corp., 962 F.2d 108, 115 (1st Cir. 1992). Dismissal for failure to state a claim is appropriate when the pleadings fail to set forth “factual allegations, either direct or inferential, respecting each material element necessary to sustain recovery under some actionable legal theory.” Berner v. Delahanty, 129 F.3d 20, 25 (1st Cir. 1997) (quoting Gooley v. Mobil Oil Corp., 851 F.2d 513, 515 (1st Cir. 1988)).

         While the Court typically “may not consider any documents that are outside of the complaint, or not expressly incorporated therein, unless the motion is converted into one for summary judgment, " Alt. Energy, Inc. v. St. Paul Fire & Marine Ins. Co., 267 F.3d 30, 33 (1st Cir. 2001), there is an exception “for documents the authenticity of which are not disputed by the parties; for official public records; for documents central to ...

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