United States District Court, S.D. Ohio, Western Division
SHAWN M. STANLEY, et al., Plaintiffs,
CITIMORTGAGE, INC., Defendants.
J. NEWMAN MAGISTRATE JUDGE
AND ENTRY SUSTAINING PLAINTIFFS SHAWN M STANLEY AND REBECCA
STANLEY'S FILING OF SUPPLEMENTAL AUTHORITY (DOC. #23) AND
ADOPTING REPORT AND RECOMMENDATIONS OF UNITED STATES
MAGISTRATE JUDGE (DOC. #19), AND OVERRULING OBJECTIONS OF
PLAINTIFFS (DOC #21) TO SAID JUDICIAL FILING; MOTION TO
DISMISS OF DEFENDANT CITIMORTGAGE, INC. (DOC. #10) IS
SUSTAINED CLAIMS ONE THROUGH SIX OF PLAINTIFFS COMPLAINT (DOC
#1) ARE DISMISSED WITH PREJUDICE; CLAIM SEVEN AS RAISED BY
SHAWN STANLEY IS DISMISSED WITHOUT PREJUDICE SUBJECT TO
REFILING IN A STATE COURT OF COMPETENT JURISDICTION-JUDGMENT
SHALL ENTER IN FAVOR OF DEFENDANT AND AGAINST PLAINTIFFS ON
CLAIMS ONE THROUGH SIX; TERMINATION ENTRY
H. RICE, UNITED STATES DISTRICT JUDGE
Shawn M. Stanley ("Shawn") and Rebecca Stanley
("Rebecca") (collectively "Plaintiffs"),
allege that Defendant CitiMortgage, Inc.
("Defendant" or "Citi"), in foreclosing
on a mortgage and promissory note held by Defendant as to
Plaintiffs' domicile in Jamestown, Ohio ("the
Property"), breached the mortgage and violated the Real
Estate Settlement Procedures Act of 1974 ("RESPA"),
12 U.S.C. § 2601 et seq. Doc. #1. Defendant
filed a Motion to Dismiss, arguing that Plaintiffs'
claims were barred by res judicata. Doc. #10. On
October 30, 2017, Magistrate Judge Michael J. Newman issued a
Report and Recommendations, recommending that all claims in
Plaintiffs' Complaint be dismissed with prejudice, and
that the captioned cause be terminated on the Court's
docket. Doc. #19. Plaintiffs filed Objections to the Report
and Recommendations, Doc. #21, and Defendant filed a response
thereto. Doc. #22. Plaintiffs subsequently filed a Notice of
Supplemental Authority ("Notice"), bringing to the
Court's attention Sandaler v. Wells Fargo Bank,
N.A., Case No. 6:16-cv-1919-Orl-41GJK (M.D. Fla. Nov.
14, 2017), which was decided after the filing of the Report
and Recommendations, and which, Plaintiffs argued,
"pertain[ed] to the issues at the heart of their
Objections. Doc. #23; Doc. #23-1. Defendant filed a response
to Plaintiffs' Notice, Doc. #24, to which Plaintiffs did
reasons set forth below, the Court SUSTAINS Plaintiffs'
filing of Notice, Doc. #23, ADOPTS IN FULL the Report and
Recommendations of the Magistrate Judge, Doc. #19, and
OVERRULES Plaintiffs' Objections thereto. Doc. #21. In so
ruling, the Court SUSTAINS Defendant's Motion to Dismiss.
reside on the Property, which was subject to a non-recourse
mortgage and secured by a promissory note, to which Shawn was
the only signatory. Defendant was the holder of the
promissory note and servicer of the mortgage at all times
relevant to Plaintiffs' claims. Doc. #1, ¶¶ 1,
4-5, PAGEID#1, 2; Doc. #10-2, PAGEID #186-216. From 2008
through early 2015, Shawn attempted to modify the terms of
his mortgage with Defendant, individually and through the
Department of Veterans Affairs ("VA"), by
submitting numerous loan modification applications to
Defendant. Id., ¶¶ 29-30, 32, PAGEID #6.
Shawn submitted an application on or about January 7, 2015,
which he believed "was a 'full and complete
application' as those terms are defined under
RESPA." Id., ¶ 30. Defendant allegedly
accepted Shawn's January 7, 2015, application and
"persistently advised Plaintiffs that a foreclosure
proceeding would not take place while they were being
considered for a loan modification pursuant to 12 C.F.R.
§ 1024.41." Id. Despite Defendant's
representation, however, Defendant filed a Complaint for
Foreclosure ("Foreclosure Action") in the Greene
County, Ohio, Court of Common Pleas ("State Court")
against Plaintiffs on April 9, 2015. Id., ¶ 31;
Doc. #10-2, PAGEID #179.
did not answer or otherwise defend the Foreclosure Action in
the Greene County Court. Rather, Plaintiffs and their VA
Representative, Ryan Vesall ("Vesall"), submitted a
new loss mitigation packet and "request[ed] the [loan]
forbearance originally purportedly offered [by Defendant]
back in 2012." Doc. #1, ¶ 36, PAGEID #7. Plaintiffs
and Vesall continued to correspond and submit new loss
mitigation packages to Defendant, id., ¶¶
37-45, PAGEID #7-8, and Defendant sent notices to Shawn
"dated September 8th, 2015, November 17th, 2015,
December 22nd, 2015, and January 12th, 2016, respectively,
which all acknowledge; (a) Citi has received a packet and it
is being processed; and, (b) if the packet is complete, Citi
will stop all foreclosure activity." Id.,
¶ 45, PAGEID #8 (citing Doc. #1-2). Nonetheless, on
August 27, 2015, Defendant filed a Motion for Default
Judgment against Plaintiffs. Doc. #10-2, PAGEID #217.
Plaintiffs, allegedly in reliance on representations made by
Defendant's employee Timothy Kovath, believed that their
continued attempts to modify their loan were sufficient to
avoid foreclosure; thus, they did not respond to the Motion
for Default Judgment. Doc. #1, ¶¶ 39, 41, 47,
PAGEID #7-8, 8-9. On September 17, 2015, the State Court
entered Judgment in Rem in favor of Defendant and
against Plaintiffs. Doc. #10-2, PAGEID #219. In so doing, the
State Court ordered that, unless Plaintiffs paid off the
remaining balance on the note, Defendant was entitled to:
[I]ssue an order of sale directed to the Sheriff of Greene
County, [Ohio, ] directing him to appraise, advertise in a
paper of general circulation within the County, and sell said
premises as upon execution and according to law, free and
clear of the interest of all parties to this action.
Id., PAGEID #223-24.
did not pay off the remaining balance on the mortgage.
Rather, on March 15, 2016, they filed in State Court an
Emergency Motion to Stay the Sheriff Sale and to Vacate
Judgment Entry. Doc. #10-2, PAGEID #229. On April 11, 2016,
Plaintiffs filed suit in this Court against the Defendant,
"asserting five causes of action based on the actions of
Citi detailed in the paragraphs above and in an attempt to
stay the pending sheriff sale." Doc. #1, ¶ 55,
PAGEID #10 (citing Case No. 3:16-cv-133). That same day,
Defendant agreed to stay the sheriff sale and to review,
again, Plaintiffs' application for loan modification, and
Plaintiffs voluntarily dismissed their suit against the
Defendant. Id., ¶ 56. Nonetheless, Defendant
again denied Plaintiffs' loan modification application on
or about July 8, 2016. Id., ¶ 58 (citing Doc.
#1-3, PAGEID #74-75). Plaintiffs appealed the denial,
pursuant to their rights under RESPA, on August 4, 2016,
id., ¶ 59, PAGEID #11, but on December 7, 2016,
having heard nothing from the Defendant regarding their
appeal, "submitted a new packet for loss
mitigation." Id., ¶ 62 (citing Doc. #1-4).
Defendant again denied the loan modification on January 18,
2017, id., ¶¶ 64-65, PAGEID #11-12 (citing
Doc. #1-6), and after mediation efforts ordered by the State
Court proved unsuccessful, Plaintiffs filed the instant
lawsuit. Id., ¶¶ 66-67, PAGEID #12. In
this lawsuit, Plaintiffs raised six claims under RESPA and
the law's administrative provisions, and one claim of
breach of contract under Ohio common law, against Defendant.
Id., ¶¶ 74-149, PAGEID #14-27.
the Federal Magistrates Act of 1968, 28 U.S.C. § 636,
the Magistrate Judge may, upon reference, file a Report and
Recommendations as to any potentially dispositive motion.
"Within 14 days after being served with a copy of the
recommended disposition, a party may serve and file specific
written objections to the proposed findings and
recommendations." Fed.R.Civ.P. 72(b)(2). The [D]istrict
[J]udge must determine de novo any part of the
[Magistrate [J]udge's disposition that has been properly
objected to. The [D]istrict [J]udge may accept, reject, or
modify the recommended disposition; receive further evidence;
or return the matter to the [M]agistrate [J]udge with
instructions." Fed.R.Civ.P. 72(b)(3). "Generally,
the failure to file specific objections to a
[Magistrate's report constitutes a waiver of those
objections." Cowherd v. Million, 380 F.3d 909,
912 (6th Cir. 2004).