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Covarrubias v. Citimortgage, Inc.

United States District Court, E.D. Virginia, Richmond Division

December 8, 2014

KIMBERLY COVARRUBIAS, Plaintiff,
v.
CITIMORTGAGE, INC., Defendant.

MEMORANDUM OPINION

JOHN A. GIBNEY, District Judge.

This matter comes before the Court on the defendant's motion for summary judgment and motion for judgment on the pleadings. In Counts I and II of a five-count complaint, the plaintiff, Kimberly Covarrubias, alleges that CitiMortgage, Inc., wrongfully foreclosed on her house in violation of regulations promulgated by the Department of Housing and Urban Development ("HUD") and incorporated by reference into her Note and Deed of Trust. In Counts III and IV, Covarrubias says that CitiMortgage committed actual and constructive fraud by promising not to foreclose until certain events happened. In Count V, Covarrubias claims that CitiMortgage breached the implied covenant of good faith and fair dealing when it decided to foreclose.

All five claims fail. First, as to the breach of contract claims (Counts I, II, and V), no reasonable jury could find that CitiMortgage's actions proximately caused Covarrubias's default on her loan and the corresponding alleged damages. Further, Virginia law does not recognize an action for breach of the implied covenant of good faith and fair dealing in the circumstances of this case. As to the fraud claims (Counts III and IV), the record does not show the requisite intent for a fraud claim, and it does not show reasonable reliance on any statements made to Covarrubias. Moreover, the fraud claims relate to representations about future events, which cannot form the basis of a claim of fraud.

Accordingly, the Court GRANTS CitiMortgage's motion for summary judgment on all counts.

I. Statement of Facts[1]

In 2001, Kimberly Covarrubias purchased a home in Richmond, Virginia. At all relevant times, CitiMortgage held a Note and Deed of Trust on the property. At some point, Covarrubias decided to quit her job in order to stay at home with her children. Although she worked a few very brief temporary jobs, her then-husband made all the payments on her mortgage from December 2001 until they separated in 2011.

Covarrubias first became delinquent in her payments during 2010, and by January 2011 she needed to make up $2053.35, about three payments, to bring her loan current. In addition to being unemployed during this time, Covarrubias admits to using heroin beginning in January 2011. By May 2011, Covarrubias remained behind in her payments, and she accepted CitiMortgage's offer of a forbearance plan. This plan relieved her from making payments from November 2010 to May 2011, and required her to resume regular payments on May 13, 2011, and make three additional monthly payments of $150, ending on July 13, 2011.

On July 11, 2011, CitiMortgage sent Covarrubias a letter as a "friendly reminder that your forbearance payment is due. Please remember, there is no grace period on your Forbearance agreement." (Dk. No. 1, Ex. D.) Nevertheless, Covarrubias failed to make the final $150 payment as required by the terms of the forbearance plan. On July 21, 2011, CitiMortgage sent a letter telling Covarrubias that her "mortgage account is still delinquent, " and that the "agreement was that we would receive payment no later than 07/21/11." (Dk. No. 1, Ex. E.) The letter required immediate payment of the total amount past due, now $7723.24, to bring her mortgage current.

In early August 2011, CitiMortgage informed Covarrubias that it would not accept her late $150 payment and that she needed to seek an additional forbearance. Between August and November 2011, Covarrubias and CitiMortgage went back and forth via phone calls, letters, and faxes. CitiMortgage sent a letter dated November 1, 2011, indicating that Covarrubias had defaulted on her mortgage and owed at least $1325.69. On November 9, 2011, Covarrubias claims that one of CitiMortgage's representatives, "Latonya, " assured her that her foreclosure would not proceed until a loan specialist contacted her. Despite whatever "Latonya" may have said, CitiMortgage authorized a foreclosure sale of her home, which occurred on November 17, 2011.

II. Discussion

A. Breach of Contract Claims

1. Incorporated Terms

In order to prevail on a claim for a breach of contract under Virginia law, a plaintiff must show "(1) a legally enforceable obligation of a defendant to a plaintiff; (2) the defendant's violation or breach of that obligation; and (3) injury or damage to the plaintiff caused by the breach of obligation." Filak v. George, 267 Va. 612, 619, 594 S.E.2d 610 (2004). Regarding causation, "a plaintiff must show a causal connection between the defendant's wrongful conduct and the damages asserted." Saks Fifth Ave., Inc. v. James, Ltd., 272 Va. 177, 181, 630 S.E.2d 304 (2006). A plaintiff bears "the burden of proving that its damages were proximately caused by wrongful conduct." Id. (quoting Hop-In Food Stores, Inc. v. Serv-N-Save, Inc., 247 Va. 187, 190, 440 S.E.2d 606 (1994)) (internal quotation marks omitted).

Covarrubias's Note and Deed of Trust incorporate by reference certain HUD regulations. The Note states that the lender may require "immediate payment in full of the principal balance remaining due and all accrued interest, " "except as limited by regulations of the [HUD] Secretary in the case of payment defaults." (Dk. No. 1, Ex. A at 2.) The Deed of Trust states that "[t]his Security Instrument does not authorize ...


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