Judge Won’t Revive Citi Mortgage Mishandling Class Action Lawsuit

Last week, a federal judge refused to allow homeowners to file an amended complaint against Citi Mortgage Inc. and two other defendants that would have revived the Citi Mortgage mishandling class action lawsuit that was dismissed in April.

U.S. District Judge Mark Hornak refused the plaintiffs’ motion to reconsider their second amended complaint and granted Citi’s motion to dismiss the class action lawsuit finding that the plaintiffs’ claims that Citi improperly foreclosed on their homes did not constitute a claim under the Pennsylvania Unfair Trade Practices and Consumer Protection (UTPCPL) law. The plaintiffs had argued that “they not only suffered a ‘cash loss’ but a ‘lien loss’ due to an inflation of the amount required to clear their mortgage lien.”

“To maintain any private action under the UTPCPL, a plaintiff must allege and prove that he or she sustained an ‘ascertainable loss of money or property … as a result of the defendant’s allegedly deceptive conduct,’” Judge Hornak wrote. “As the law now stands in Pennsylvania, there is no controlling legal authority to support plaintiffs’ theory that sending a payment demand automatically put a ‘lien’ on their property, thereby diminishing their property’s value and triggering a UTPCPL claim, nor do plaintiffs cite to any Pennsylvania law saying so.”

“Simply put,” continued the judge, “plaintiffs have failed to plausibly allege that they suffered any loss of ‘money or property’ through the mere issuance of payment demands on Citi’s behalf.” Judge Hornak referenced another separate Pennsylvania federal case where a judge dismissed similar claims brought against Bank of America.

Judge Hornak did grant motions by other defendants in the case who handled the mortgage paperwork to reconsider claims against those defendants for allegedly excessive fees and costs. Additionally, the judge retained claims against those defendants, but not Citi, for alleged violations of Pennsylvania consumer protection laws, the federal Fair Debt Collection Practices Act, and a claim for unjust enrichment.

In the original class action lawsuit, which was filed more than three years ago, the plaintiffs argued that Citi mishandled foreclosure proceedings. The plaintiffs allege that they took out mortgages from Citi in 2007 but then defaulted in 2010. They allege that they were able to arrange a payment agreement with Citi that would allow them to keep their home. However, days after submitting payment, they say they received a foreclosure notice. By April of this year, Judge Hornak dismissed most of the claims in the class action lawsuit, limiting the action to claims alleging Citi violated the Pennsylvania’s Unfair Trade Practices and Consumer Protection Law and refusing to certify the plaintiffs’ proposed Class.

The plaintiffs are represented by Michael P. Malakoff of Michael P. Malakoff PC.

The Citi Mortgage Mishandling Class Action Lawsuit is Alexandra R. Trunzo, et al. v. Citi Mortgage, et al., Case No. 2:11-cv-01124, in the U.S. District Court for the Western District of Pennsylvania.