Davis R. Conway and Sheri D. Conway v. CitiMortgage, Inc. and Federal National Mortgage Association, Inc.
438 S.W.3d 410
| Mo. | 2014Background
- Davis and Sheri Conway purchased a home in 2007 with a mortgage from Pulaski Bank, later assigned to Fannie Mae and serviced by CitiMortgage.
- The Wentzville property was damaged by fire; the insurance settlement was $150,000 with checks split between Conways and CitiMortgage, funds held in escrow by CitiMortgage.
- Conways fell behind about $9,000; CitiMortgage refused to apply $15,000 escrow balance to the loan and sent a foreclosure notice to the Wentzville address.
- Foreclosure occurred, CitiMortgage foreclosed, and Fannie Mae acquired title to the property.
- Conways alleged MMPA violations by CitiMortgage (and Fannie Mae) for actions in foreclosing, including improper notice and mishandling escrow funds.
- Trial court dismissed, holding MMPA does not cover post-sale actions not related to the original transaction and that defendants were not original loan parties; Missouri Supreme Court held MMPA covers actions in connection with the ongoing sale of the loan.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the foreclosure actions were "in connection with" the sale of the mortgage loan. | Conways allege actions occurred in sale of loan. | Defendants were not original loan parties; post-sale acts not connected. | Yes; actions were in connection with the loan sale. |
| Whether CitiMortgage/Fannie Mae can be liable under MMPA despite not being original loan parties. | Servicer/assignee can be liable for MMPA if connected to the loan sale. | Only original party to loan can be liable under MMPA. | Liability extends to those connected to the sale; not required to be original lender. |
| Scope of MMPA coverage to post-sale loan servicing actions. | Post-sale misfeasance can be in connection with the sale. | MMPA coverage limited to pre-sale representations. | Post-sale loan servicing actions can be "in connection with" the sale. |
| Whether the petition sufficiently pleads a relationship between the 2007 loan and the alleged MMPA violations. | Alleged the loan was the basis for the sale and enforcement. | Insufficient connection to the 2007 loan. | Sufficient relationship alleged; MMPA claim stated. |
Key Cases Cited
- Gibbons v. J. Nuckolls, Inc., 216 S.W.3d 667 (Mo. banc 2007) (allows MMPA claim against non-direct seller)
- Ports Petroleum Co., Inc. of Ohio v. Nixon, 37 S.W.3d 237 (Mo. banc 2001) (interpreted broad scope of 'unfair practice' in MMPA)
- State ex rel. Koster v. Professional Debt Management, LLC, 351 S.W.3d 668 (Mo. App. 2011) (post-sale actions by non-parties not in connection with sale)
- State ex rel. Koster v. Portfolio Recovery Associates, LLC, 351 S.W.3d 661 (Mo. App. 2011) (similar post-sale non-party issue)
- Schuchmann v. Air Services Heating & Air Conditioning, 199 S.W.3d 228 (Mo. App. 2006) (enforcement of terms post-sale can be in connection with sale)
- Ward v. W. Cnty. Motor Co., Inc., 403 S.W.3d 82 (Mo. banc 2013) (standard for reviewing MMPA motion to dismiss)