Rehbein v. CitiMortgage, Inc.
937 F. Supp. 2d 753
E.D. Va.2013Background
- Rehbein owns Oaklawn Court property in Virginia Beach and has a mortgage with Citi; loan is in default.
- She sought loan modification; temporary modification granted but final modification denied or pending as of 1/11/2013.
- Foreclosure proceedings were initiated; foreclosure auction set for 1/16/2013.
- Rehbein filed in state court (1/11/2013) for injunction and damages; Citi removed to federal court in 2012 with SBA’s consent.
- Motions to dismiss filed by Citi and SBA; Rehbein moved to remand; arguments ripe for court’s ruling.
- Court ultimately denied remand and granted the motions to dismiss, dismissing the complaint in its entirety.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether removal to federal court was proper | Rehbein asserts lack of jurisdiction or improper removal. | Citi/SBA contend prerequisites for diversity and amount in controversy are satisfied. | Remand denied; federal jurisdiction found under 28 U.S.C. § 1332. |
| Fraudulent joinder of SBA defeats diversity | SBA wrongly named; claims against SBA lack substance. | Nondiverse SBA should be ignored under fraudulent joinder doctrine. | SBA improperly named; dismissed; diversity remains between Rehbein and Citi. |
| Enforceability of the National Mortgage Settlement rights | Rehbein is an intended beneficiary with enforcement rights under the Settlement. | Third-party beneficiaries are not intended beneficiaries; no private right to sue. | Claims seeking enforcement of the Settlement are dismissed; no enforceable third-party rights. |
| State-law claims and implied covenant considerations | Violation of contract via implied covenant and servicing standards constitutes breach. | Implied covenant not applicable where contract grants explicit rights; Settlement not applicable law. | Implied covenant claim fails; breach regarding Settlement standards not viable; servicing standards not incorporated as Applicable Law. |
| Injunctive relief viability | Foreclosure injunction necessary to prevent irreparable harm during modification review. | Plaintiff lacks likelihood of success on merits; no irreparable harm established. | Preliminary injunction denied; relief not warranted. |
Key Cases Cited
- Dixon v. Edwards, 290 F.3d 699 (4th Cir. 2002) (amount in controversy and jurisdictional assessment guidance)
- Gov’t Emps. Ins. Co. v. Lally, 327 F.2d 569 (4th Cir. 1964) (principles on amount in controversy in diversity cases)
- Mayes v. Rapoport, 198 F.3d 457 (4th Cir. 1999) (fraudulent joinder doctrine and retention of jurisdiction)
- Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723 (U.S. 1975) (expressio unius est exclusio alterius; contract interpretation)
- Prudential Sec., Inc. v. Chase, 136 F.3d 159 (D.C. Cir. 1998) (intended beneficiaries under government consent decrees)
- United States v. ITT Cont. Baking Co., 420 U.S. 223 (U.S. 1975) (consent decrees treated as contracts for enforcement purposes)
- Va. Vermiculite, Ltd. v. W.R. Grace & Co., 156 F.3d 535 (4th Cir. 1998) (implied covenant; good faith and fair dealing in Virginia-contract context)
- Wolf v. Fannie Mae, 512 F. App’x 336 (4th Cir. 2013) (implied covenant applicability in Virginia law context)
- Condel v. Bank of Am., 2012 WL 2673167 (E.D. Va. 2012) (contracts generally incorporate laws existing at formation)