July 10, 2013
District of Minnesota Rules in Favor of CitiMortgage, Finding Foreclosure and Assignment of Mortgage Proper Despite Alleged Oral Modification of the Mortgage Prior to Assignment
In LaBrant v. MERS 870 F. Supp. 2d 671 (D. Minn. 2012) 0:11-cv-03029-JRT-LIB the court granted CitiMortgage’s motion to dismiss LaBrant’s claim. LaBrant brought action against CitiMortgage to enforce an oral loan modification as a binding agreement and also sought to have the modification enforced under theories of promissory estoppel, misrepresentation, and unjust enrichment.
LaBrant first contracted for a mortgage with Prime Mortgage Corporation who immediately assigned to CitiMortgage. LaBrant never received a written confirmation of a loan modification from CitiMortgage but claims that CitiMortgage assured him that upon filing the correct paperwork a modification would be granted given Mr. LaBrant’s excessive medical expenses. CitiMortgage claimed that they never agreed to a modification. CitiMortgage later assigned to PennyMac Loan Services who foreclosed on the property when LaBrant failed to continue payments. LaBrant unsuccessfully requested postponement of the foreclosure so he could have time to cure his default.
Enforcing an Oral Agreement. The court dismissed LaBrant’s claim that the alleged oral agreement with CitiMortgage for a loan modification should be enforced. Under Minnesota Statute § 513.33 and Minnesota case law an agreement regarding any financial accommodation is a credit agreement that can only be enforced if it is in writing. LaBrant argued that the arrangement was not a credit agreement but rather a modification to an existing credit agreement. The court disagreed finding that a “credit agreement” includes any “agreement by a creditor to take certain actions, such as . . . forbearing from exercising remedies under prior credit agreements.”
Promissory Estoppel. The court determined LaBrant failed to fulfill a prima facie case for estoppel. LaBrant did not establish that CitiMortgage made a clear and definite promise to modify the loan payments nor did LaBrant show that reliance upon CitiMortgage’s promise to modify the loan arrange would entitle LaBrant to stop payments altogether, rather than to simply decrease payments. Furthermore, Minn. Statute §513.33 precludes the claim of promissory estoppel when plaintiffs seek to enforce “an agreement to enter into a new credit agreement” or a modification of such an agreement.
Misrepresentation and Unjust Enrichment. The court ruled that LaBrant failed on his claim of negligent misrepresentation and unjust enrichment. LaBrant only showed that he was provided with false information when he was told that he would receive a loan modification upon submission of his application. There was no further proof of claim that CitiMortgage knew the statements were false at the time they were made or that CitiMortgage directed LaBrant to stop making payments altogether. Establishing an unfulfilled promise is not sufficient to show negligent misrepresentation. The court found that LaBrant failed on his unjust enrichment claim for merely alleging that a party has received a voluntary payment but not showing that such payments were unlawful or why the payments to defendants were not justified.
Violation of Minnesota Statute § 580. LaBrant further claimed that the defendants violated Minnesota Statute § 580 by failing to provide clear notice of the foreclosure and failing to postpone the foreclosure so LaBrant could cure his default. The court also rejected these claims finding that the record before the court clearly established that LaBrant was given notice of foreclosure and the § 580.11 does not impose a general fiduciary duty upon a mortgagee which would require the defendants to honor a request for postponement of foreclosure. The court mentioned that in two prior cases the plaintiff’s attorney made identical arguments which the court rejected in both cases. See Scott v. Wells Fargo Bank, 2011 WL 381766 at 4 (D. Minn. 2011); Cox v. MERS 794 F. Supp. 2nd at 1065 (D. Minn. 2011).
Finally, the court dismissed the LaBrant’s claim for “temporary and permanent injunctive relief” because injunctive relief is only proper as a remedy and not as a separate claim.
The court found in favor of CitiMortgage on all claims.