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Ayoub v. CitiMortgage, Inc.

United States District Court, D. Massachusetts

June 17, 2019




         Plaintiff Marie Claire Ayoub (“Ayoub”) filed this action against her mortgage servicer, Defendant CitiMortgage, Inc. (“Citi”), based on the denial of her applications for a loan modification. The Court dismissed one of Ayoub's claims prior to discovery pursuant to Federal Rule of Civil Procedure 12(b)(6). Ayoub v. CitiMortgage, Inc., No. 15-cv-13218-ADB, 2018 WL 1318919, at *8 (D. Mass. Mar. 14, 2018). Currently pending before the Court is Citi's motion for summary judgment on Ayoub's remaining claims under Massachusetts General Laws Chapter 93A (“Chapter 93A”). [ECF No. 79]. For the reasons discussed herein, the motion is GRANTED.

         I. BACKGROUND

         This factual summary is drawn from Citi's statement of undisputed material facts and from Ayoub's statement of disputed material facts. [ECF No. 81 (“SOF”); ECF No. 99-1 at 7- 10].

         On May 9, 2007, Ayoub took out a $293, 600 loan from Prime Mortgage Financial, Inc. (“Prime”) that was secured by a mortgage on her home at 169 Jackson Street in Methuen, Massachusetts (the “Property”). [Corrected First Am. Compl., ECF No. 37 (“CFAC”) ¶ 1]. The mortgage was originally held by Mortgage Electronic Registration Systems, Inc. (“MERS”) as Prime's nominee. [SOF ¶ 1]. On August 13, 2013, MERS assigned the mortgage to Citi. [Id. ¶ 2].[1]

         In 2011, Ayoub's husband, Hussein Youssef (“Youssef”), closed his full-time commercial auto repair business in Lawrence, Massachusetts, which had been a significant source of income for the couple. [ECF 99-1 at 8]. The closure created at least a temporary decline in their income, which Youssef attempted to remedy through part-time auto work that he performed from his home garage. [Id. at 8-9]. In addition to his auto-related self-employment, Youssef began working as a manager at Rabieh & Hati, which ran a gas station. [Id. at 8, 10]. Nevertheless, the couple's financial circumstances were such that Ayoub fell behind on her mortgage payments and, on February 16, 2013, applied to Citi for assistance under the Home Affordable Modification Program (“HAMP”). [SOF ¶ 4]. Ayoub informed Citi that she was a homemaker and therefore reliant on her husband's income. [ECF No. 81-8]. She further explained that she had become delinquent on her mortgage due to a hardship that began when Youssef's auto repair business suffered a 50 percent downturn and that his income from the gas station was insufficient to pay the mortgage. [Id.].

         In July 2013, after considering the financial details provided by Ayoub, Citi denied her February 16, 2013 application. [SOF ¶¶ 12-13]. Citi explained that there was an “irreconcilable discrepancy” in the application and invited Ayoub to contact Citi to discuss the reason for the non-approval. [Id. ¶ 13]. The “irreconcilable discrepancy” was a reference to a significant disparity between the $5, 000 per month that Ayoub claimed Youssef was able to contribute to household expenses and the significantly lower income implied by his 2012 tax return. [Id. ¶¶ 6-9].

         On November 12, 2013, Ayoub submitted a second application for a HAMP modification to Citi. [Id. ¶ 14]. The new application referenced Youssef's income from the Rabieh & Hati gas station but did not include any income from his repair business. [Id. ¶ 15]. On December 11, 2013, in response to a request from Citi, Youssef submitted a letter saying that he was not self-employed. [Id. ¶¶ 16-17].[2] Although Citi initially denied the November 2013 application because it found that Ayoub was barred from consideration for a loan modification due to misrepresentation of income in her prior modification request, Citi later considered the application on its merits and concluded that Youssef's income was insufficient to support a modification. [Id. ¶¶ 18-19]. Citi informed Ayoub that it was “unable to create an affordable payment equal to 31% of [their] reported monthly gross income without changing the terms of [the] loan beyond the requirements of the program” and that the “principal forbearance amount exceed[ed] the limit available under HAMP.” [Id. ¶ 19].

         On June 3, 2014, Ayoub submitted a third application for a HAMP modification. [Id. ¶ 20]. Although Youssef had not reported any self-employment income on his 2013 tax return, Ayoub claimed that that he was making $3, 000 a month from his home auto-repair business. [Id. ¶¶ 21-22]. Citi requested additional documentation to verify the self-employment income, including personal tax returns and up-to-date profit and loss statements. [Id. ¶ 23]. In response, Ayoub submitted one-page profit and loss statements for the three-month periods ending June and July 2014 that purported to show exactly $3, 000 in profits per month. [Id. ¶ 24]. On September 22, 2014, Citi requested a breakdown of business expenses, a profit and loss statement updated through August 2014, an explanation as to why the income was not reported in Youssef's personal tax returns, business tax returns for 2012 and 2013, and bank statements for the business. [Id. ¶ 25]. Youssef acknowledged in a September 30, 2014 letter that he operated the repair business “somewhat informally through [his] home garage and accept[ed] only cash, ” and that therefore “the self-employment income [is] not reflect[ed] on [his] tax returns.” [Id. ¶ 27]. In January 2015, Citi informed Ayoub that her June 2014 application had been denied due to an “irreconcilable discrepancy” and invited her to call if she had questions. [Id. ¶ 29]. In response to a Chapter 93A demand letter, on April 16, 2015, Citi further explained that Ayoub had not supplied the requisite financial documents that Citi required in order to proceed, including profit and loss statements, banking records, and tax returns. [Id. ¶ 30].

         On July 8, 2015, Ayoub filed this case in Essex County Superior Court, claiming that Citi had violated Chapter 93A through its efforts to delay and obstruct approval of Ayoub's applications for a HAMP loan modification (“Count I”) and breach of the implied covenant of good faith and fair dealing (“Count II”). [ECF No. 1-1 ¶¶ 1, 13]. On August 24, 2015, Citi removed the case to this Court. [ECF No. 1 at 12-14]. In an effort to resolve this case, on September 12, 2015, Ayoub submitted a fourth HAMP application to Citi through counsel, which was denied on December 1, 2016. [SOF ¶¶ 31, 38]. On April 24, 2017, Ayoub filed her Corrected First Amended Complaint, [3] which added a claim asserting that Citi also violated Chapter 93A by failing to explain its denial of the fourth HAMP application (“Count III”). [CFAC ¶¶ 67-76; SOF ¶ 31]. As with her prior applications, the September 2015 application was denied given the incongruity between Youssef's purported self-employment income and his tax returns and financial records. [SOF ¶¶ 35-39].

         On June 9, 2017, Citi filed a motion to dismiss the Corrected First Amended Complaint for failure to state a claim. [ECF No. 44]. The Court granted Citi's motion to dismiss Count II and denied the motion with respect to Counts I and III. [ECF No. 58].

         On January 24, 2019, Citi filed a motion for summary judgment. [ECF Nos. 79, 80]. Ayoub obtained four extensions of time to oppose the motion for summary judgment. [ECF Nos. 85, 90, 93, 95]. She did so by maintaining that there was a real prospect of a successful mortgage modification, promising that she and her husband would amend the tax returns that apparently understated their income to help Citi verify relevant financial information, asserting that she had unexpectedly found a pre-approved buyer for the Property, and then stating that she needed more time to oppose the motion for summary judgment after the unexpected collapse of the planned sale and due to counsel's illness. See [ECF Nos. 83, 90, 92, 94]. On January 30, 2019, while the summary judgment motion was pending, Ayoub filed an “emergency motion” to address an “emergency matter” that required resolution on an “emergency basis.” [ECF No. 88 (emphasis removed)]. Following receipt of this emergency motion, on February 6, 2019, the Court held a conference to address the issues raised by Plaintiff's motion. [ECF No. 89]. During the conference, Ayoub's counsel acknowledged that tax returns relevant to the modification effort likely required amendment but was unable to explain why the tax returns had not been updated before the hearing. See [ECF No. 90].


         Summary judgment is appropriate where the moving party can show that “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “[A]n issue is ‘genuine' if it ‘may reasonably be resolved in favor of either party.'” Robinson v. Cook, 863 F.Supp.2d 49, 60 (D. Mass. 2012) (quoting Vineberg v. Bissonnette, 548 F.3d 50, 56 (1st Cir. 2008)). “A fact is material if its resolution might affect the outcome of the case under the controlling law.” Cochran v. Quest Software, Inc., 328 F.3d 1, 6 (1st Cir. 2003) (citation omitted). Thus, “[a] genuine issue exists as to such a fact if there is evidence from which a reasonable trier could decide the fact either way.” Id. (citation omitted). By invoking summary judgment, “the moving party in effect declares that the evidence is insufficient to support the nonmoving party's case.” United States v. One Parcel of Real Prop. (Great Harbor Neck, New Shoreham, R.I.), 960 F.2d 200, 204 (1st Cir. 1992) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)). “To succeed in showing that there is no genuine dispute of material fact, ” the moving party must “‘affirmatively produce evidence that negates an essential element of the ...

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