Saul Catalan v. RBC Mortgage Compan
2011 U.S. App. LEXIS 574
| 7th Cir. | 2011Background
- Catalan and Morris sued GMAC Mortgage Corp. and RBC Mortgage Co. under RESPA and Illinois law for various claims including gross negligence, breach of contract, and willful and wanton negligence.
- District court dismissed the gross negligence claim as duplicative, and granted GMAC summary judgment on RESPA, breach, and remaining negligence claims.
- RESPA requires notification of loan transfers and response to qualified written requests; a qualified written request must identify the borrower and account and state reasons or requests for information.
- RBC mismanaged the loan, causing incorrect due dates and default status; GMAC acquired the loan without timely notifying the borrowers of the transfer.
- Borrowers sent several letters (notably Oct. 6 and Dec. 17, 2004) that were deemed qualified written requests, while other letters were not qualifying requests.
- Court reverses in part: RESPA and breach-of-contract claims survive for merits review, negligence claims affirmed as to dismissal, and damages questions remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether GMAC qualifies for RESPA safe harbor | Catalan/Morris not entitled; GMAC failed to notify and did not satisfy §2605(f)(4). | GMAC should be exempt if corrections made within 60 days and no excess payment required. | GMAC not protected by safe harbor; remand for merits. |
| Whether October 6, 2004 and December 17, 2004 letters were qualified written requests | Letters sufficiently identified accounts and stated reasons; triggered RESPA duties. | Only some letters qualified; others did not state reasons for error or request information. | October 6 and December 17 letters qualified; others did not. |
| Whether GMAC breached RESPA by notifying of transfers and handling requests | GMAC failed to provide notice and timely responses; caused delinquency reporting. | Information may have been unavailable or responsive; responses were provided in some form. | Remanded for determination of RESPA violations on transfers and responses. |
| Whether GMAC breach of contract occurred by refusing payments | GMAC improperly refused or delayed applying payments; caused damages. | No clear contract violation; timing of performance was discretionary. | Reversed summary judgment on breach for further fact-finding. |
| Whether damages exist for RESPA and breach claims | Damages include credit denials and emotional distress; evidence supports actual damages. | Damages insufficient or speculative; must prove actual damages. | Damages issues survive partial reversal and are remanded for proper proof. |
Key Cases Cited
- Hukic v. Aurora Loan Servs., 588 F.3d 420 (7th Cir. 2009) (economic-loss doctrine and contract-interaction principles in mortgage servicing)
- Moorman Mfg. Co. v. National Tank Co., 435 N.E.2d 443 (Ill. 1982) (economic-loss doctrine; limits tort recovery for purely economic losses)
- First Midwest Bank, N.A. v. Stewart Title Guaranty Co., 843 N.E.2d 327 (Ill. 2006) (recognizes exceptions to Moorman for extra-contractual duties)
- Judd v. First Federal Sav. & Loan Ass'n of Indianapolis, 710 F.2d 1237 (7th Cir. 1983) (fiduciary-duty considerations in lender-borrower relationships)
- Ploog v. HomeSide Lending, Inc., 209 F. Supp. 2d 863 (N.D. Ill. 2002) (duty to manage escrow; potential extra-contractual duties)