RULING ON DEFENDANTS’ MOTION TO DISMISS THE FIRST AMENDED COMPLAINT
Table of Contents
I. Introduction... 242
II. Factual Allegations,. .243
A. State Foreclosure Proceedings. . .244
B. Mortgage Modification Requests ...245
C. Other Correspondence between the Tanasis and CitiMortgage.. .246
D. Single Point of Contact.. .247
E. Defendant M & T Bank.'. .247
F. The Current Proceedings,. .248
III. Standard of Review.. .249
IV. , Discussion.-. .250
A. Motion to Dismiss for Lack of Jurisdiction under Rule 12(b)(1).. .250
IV The Rooker-Feldman Doctrine ...250
2. The Tanasis’ Claims '.. .251 ‘
a. The Tanasis do not Invite Review and Rejection of the Foreclosure Action.. .252
b. The Tanasis do not Complain of an injury Caused by a State Court Judgment.. .253 ’•
3. Res Judicata.. .255
a. The Transaction Test and Foreclosure Actions.. .256
b. The Tanasis’ Claims... 259
B. Motion to Dismiss, under Rule 12(b)(6).. .261
1.The Tanasis’ RESPA Claims.. .262
a. CitiMortgage’s Liability under 12 U.S.C. § 2605(e).. .262
b. CitiMortgage’s Liability under Regulation X.. .265
i. Liability under 12 C.F.R. § 1024.36 for Failure to Respond to RFIs.. .265
ii. Liability under 12 C.F.R. § 1024.35 for Failure to Respond to NOEs.. .267
c. Damages under RE SPA., .269
i. Emotional Distress Damages, . .269
ii. Postage Costs.. .271
iii. Miscellaneous Damages.. .271
iv. Statutory Damages.. .271
2. The Tanasis’ ' Negligence Claims,.. 272
a. CitiMortgage’s Duty of Care, Generally. . .272
b. Negligent Infliction of Emotional Distress.. .273
3. The Tanasis’ CUTPA Claims.. .274
a. Unfair Business Practice... 275
b. The Tanasis’ Ascertainable Loss under CUTPA.. .275' '
4. Statute . of Limitations for Negligence and CUTPA claims.. .277
5. Defendant M & T Bank.. .278
V.Conclusion... 279
I. Introduction
Richard and Athansula Tanasi (“the Ta-nasis”) bring this action against CitiMort-gage, Inc. (“CitiMortgage”), which serviced a mortgage on their home, and M & T Bank Corporation (“M & T”), the successor by merger to Hudson City Savings Bank (“Hudson”), which owned the mortgage. The Tanasis allege that both Defendants violated the Real Estate Settlement Procedures Act of 1974 (“RESPA”), 12
Defendants move to dismiss all three causes of action. Defendants first argue that this Court lacks jurisdiction over the Tanasis’ claims because of the Rooker-Feldman doctrine and res judicata. Defendants further argue that the Tanasis fail to state claims upon which relief can be granted.
The Couit concludes that jurisdiction is permissible under Rooker-Fciérnan, but agrees with Defendants that most of the Tanasis’ claims are barred by res judicata and cannot be asserted here. For the remaining claims, it reviews Defendants’ motion to dismiss under Rule 12(b)(6), and concludes that the Tanasis’ remaining RESPA, CUTPA, and negligence claims cannot be dismissed. Accordingly, Defendants’ motion to dismiss is GRANTED in part and DENIED in part.
Specifically, regarding Claim One, the Court must dismiss under res judicata the claims that Defendants violated RESPA and Regulation X by failing to acknowledge or properly review loss mitigation applications (Compl., ¶¶ 71-81). This includes claims that arise under Regulation X’s 12 C.F.R. § 1024.41. It also must dismiss under Rule 12(b)(6) the Tanasis’ claims under Section 2605(e) of RESPA relating to qualified written requests that did not pertain to “servicing” and therefore were not actionable under the statute. While Count One is not dismissed, because the Tanasis’ claims under Regulation X’s 12 C.F.R. § 1024.36 and 1024.35 remain, the Court notes the limitations on their damages relating to these claims. The Court dismisses any of the Tanasis’ claims for RESPA damages relating to “costs related to stripping the Property of equity,” “unnecessary costs of maintaining the Property due to delayed foreclosure,” and the creation of a “public record of foreclosure.” See Compl. ¶¶ 61-65. It also dismisses the Tanasis claims for compensatory damages for costs relating to the preparation of requests for information, because these costs would have been incurred regardless of CitiMortgage’s alleged violations.
In Claim Two, the Court dismisses under res judicata the Tanasis’ claims concerning Defendants’ negligent processing of their loss mitigation and mortgage modification applications. Because some of the negligence claim arises out of other acts, the Court does not dismiss Claim Two in its entirety.
There are many components to Claim Three, in which the Tanasis allege violations of CUTPA. Of these, the claim that CitiMortgage violated CUTPA by unfairly applying its existing loss mitigation policies, see Compl. at ¶ 149(d), is dismissed under res judicata.
II. Factual Allegations
In 2007, Richard Tanasi and Athansula Tanasi (“the Tanasis”) bought a piece of property at 27 Briarwood Drive in Old Saybrook, Connecticut (the “Property”). First Amended Complaint (“Compl.”), ECF No. 18, ¶4. The Property was encumbered by a first-position mortgage loan in the principal amount of $656,250, dated August 2, 2007, which was given as security for a promissory note of the same date and recorded on August 6, 2007. Id. at ¶ 12. The original underwriter sold or otherwise transferred the mortgage to Wa-chovia Savings Bank and CitiMortgage purchased the mortgage shortly after-
In 2010, the Tanasis fell behind on their mortgage payments. CitiMortgage initiated a foreclosure action in 2011 and foreclosed on the Property on March 7, 2016. See CitiMortgage’s Mot., Exhibit C, ECF No. 26-4, Docket (“Foreclosure Docket”). Before and during the foreclosure process, the Tanasis communicated with CitiMort-gage about their mortgage. These communications — as well as the reach of consumer-protection statutes, the relative duties of state and federal courts, and the tension between the finality of judgments and the promise of full relief — are at the heart of this case.
A. State Foreclosure Proceedings
The Tanasis missed their first mortgage payment on or about July 1, 2010, and did not make any payments after that date. CitiMortgage’s Mot., Exhibit D, ECF No. 26-5, CitiMortgage’s Motion to Terminate Mediation Stay, MMX-cv-11-6005630-S (Middlesex Superior Court), 2.
CitiMortgage filed a foreclosure action in Connecticut Superior Court (the “Foreclosure Action”) on July 18, 2011. See Compl. ¶ 18; Foreclosure Docket, p. 1. Shortly thereafter, the Tanasis filed a request to participate in the court’s foreclosure mediation program, which was granted on August 28, 2011. See Foreclosure Docket, 102.00. The parties met in “numerous mediation sessions” between October 26, 2011 and December 4, 2012. CitiMort-gage’s Motion to Terminate Mediation Stay, 4.
On July 10, 2014, CitiMortgage 'moved for summary judgment in the foreclosure case. See Foreclosure Docket, 138.00. The Superior Court granted this motion on October 10, 2014. See CitiMortgage’s Mot., Ex. E, Mem. of Decision on Mot. for Summ. J. On July 23, 2015, the Tanasis moved to dismiss the foreclosure action, contesting CitiMortgage’s standing to commence the foreclosure action and arguing that it “fraudulently invoked the rebutta-ble presumption of ownership.” Foreclosure Docket, 149.00. This motion was denied. Id. at 149.10. On March 7, 2016, the Superior Court granted CitiMortgage a judgment of strict foreclosure and'found that the outstanding debt under the Note and Mortgage was' $960,871.75. See Citi-Mortgage’s Mot., Ex. H, ECF No. 26-9, Notice of Judgment of Strict Foreclosure. In March of 2016, before the extinguishment of their right of redemption, the Tanasis filed an appeal with the Connecticut Appellate Court. Foreclosure Docket, 171.00. On May 11, 2016, the Tanasis filed a motion for articulation of the Superior Court’s decision on their motion to dismiss. Id. at 172.00. After their motion was granted, the Superior Court published an articulation of its factual and legal basis for denying the Tanasis’ motion to dismiss the Foreclosure Action. Id. at 175.00.
B. Mortgage Modification Requests
The Tanasis allege that they have been “engaged in loss mitigation efforts with CitiMortgage continuously since 2009,” Compl. ¶ 14, and many of their claims concern CitiMortgage’s improper solicitation and dispensation of their loss mitigation and mortgage modification applications. The Tanasis also allege that CitiMortgage moved for summary judgment on the Foreclosure Action when several of their mortgage modification and loss mitigation applications were pending. Id. at ¶ 26.
On February 10, 2012, Beckett Law, LLC submitted a mortgage modification application on behalf of the Tanasis. Compl. ¶18. CitiMortgage acknowledged the request on March 7, 2012, when it requested additional documents, which the Tanasis later submitted. Id. On May 10, 2012, CitiMortgage denied the mortgage modification application. Id. Less than one month later, the Tanasis allege, CitiMort-gage solicited them to submit a new mortgage modification application. Id. at ¶ 19. The Tanasis completed this application on November 2, 2012. Id. CitiMortgqge allegedly did not respond to the Tanasis’ November 2, 2012 modification application.
Instead of responding to their pending applications, CitiMortgage solicited the Ta-nasis to modify their mortgage again. Citi-Mortgage allegedly sent letters to the Ta-nasis on January 7, 2014 and December 17, 2015, asking them to submit new mortgage modification applications. Compl. at ¶¶ 18-20. On January 28, 2016, as well as on several dates in February and March of that year, CitiMortgage allegedly communicated by mail and e-mail with the Tana-sis, requesting loss mitigation applications and stating that “[wjhether you want to remain in your home dr want to consider other alternatives, we are here to work with you to find the best option for your current situation.” Id: at ¶ '39.
The Tanasis also allege that CitiMort-gage “had a policy of automatically requesting duplicative information for loss mitigation applications every 30 days in order to avoid exercising reasonable diligence in completing an application.” Compl. at ¶ 25. CitiMortgage allegedly responded to loss mitigation applications with requests for bank statements, pension and pay stubs', property tax forms, and affidavits of hardship. See id. at ¶¶ 23, 27-28. • The Tanasis allege that CitiMortgage requested additional documents on eleven occasions in 2014 and twice in 2015. Id.
C. Other Correspondence between the Tanasis and CitiMortgage
.The Tanasis also allege that CitiMort-gage failed to respond to many of their requests for information, some of which, they allege, were qualified written requests, requests for information, or notices of error under RESPA. They allege that this “persistent and ongoing failure to provide adequate responses ... deprived [them] of information to which they are legally entitled about their mortgage and ... prevented them from making accurate and informed choices about the best avenue to save their home.” Compl. ¶ 87.
The Tanasis allege that they mailed two qualified written requests to CitiMortgage, seeking “information about the payoff of their loan and the holder of their note,” on January 13, 2014 (¶ 21) and March 5, 2015 (¶ 34). CitiMortgage responded to both requests in a letter dated April 2, 2015, “arguing that it was not required to provide a response because the Plaintiffs were in an active bankruptcy case.” Id. at 35. The Tanasis had filed- for bankruptcy on February 10, 2011, but the case was closed on .July 6, 2011. Id. at n.2. They therefore allege that CitiMortgage was required under RESPA to respond to their requests.
The Tanasis also allege that they requested information from CitiMortgage on or about October 27, 2014 (¶ 83), March 16, 2016 (¶ 40),' March 30, 2016 (¶ 41), and May 11, 2016 (¶42). The March 16, 2016 request sought information about “(1) alleged, investor restrictions, (2) evidence that CitiMortgage submitted waiver requests, and (3) evidence of CitiMortgage’s efforts to obtain a waiver of investor restrictions.” Id. at ¶ 40. CitiMortgage allegedly responded to the March 16, 2016 request with a statement that the information was “privileged.” Id.
In the March 30, 2016 request, the Ta-nasis sought -information about “(1). the owner/assignee of the loan, (2) the servi-cer’s participation in HAMP and the national mortgage settlement, and (3) the parameters of loan modification programs.” Id. at ¶ 41. CitiMortgage allegedly responded to the March 30, 2016 request on April 14, 2016, with , information about the owner/assignee of the loan but not about loan modification programs. Id.
■ In the May 11,2016 request, the Tanasis sought information about -“broker prices opinions and appraisals ... to see if Citi-Mortgage was engaging in any meaningful loss mitigation review.” Id. at ¶42. The Complaint does not allege whether Citi-Mortgage responded to the May 11 request. The Tanasis contend that CitiMort-
The Tanasis also allege that CitiMort-gage received two notices of error on their behalf, on July 6, 2015 (¶ 45) and May 13, 2016 (¶ 43). In the first, the “errors asserted included 1) not answering as to if the Investor participates in the HAMP program ..., 2) not responding as to if the investor participates in the FHA-HAMP program or in the National Mortgage Settlement Modification; 3) not replying as to what proprietary modification programs are available, and 4) not ■ providing the surplus or deficit of income requirements for proprietary modifications.” Id. at ¶ 45. CitiMortgage, they allege, did not respond. Id.
The second alleged notice of error stated that CitiMortgage “failed to 1) provide evidence of its efforts at waiving investor restrictions, 2) provide any information about its servicer participation agreement for HAMP or its compliance with the National Mortgage Settlement, 3) acknowledge the three previous requests for information, and 4) provide information about the loss mitigation options the Plaintiffs were eligible for.” Compl. ¶43. CitiMort-gage allegedly responded to this notice in a letter dated June 6, 2016, in which it “1) claimed that it was not required to give Plaintiffs BPOs or appraisals, 2) it argued that it had exercised all efforts to qualify the Plaintiffs for all Home Owners Assistance Programs ... 3) did not provide any information about its compliance with [HAMP or the National Mortgage Settlement], 4) stated it was providing copies of the acknowledgements for the prior requests but did not actually attach them, and 5) declined to provide any information about the availability of loss mitigation programs, other than to state that it was reviewing the Plaintiffs for a modification.” Id. at ¶ 44.
D. Single Point of Contact
The Tanasis allege that, in a letter that they received on November 11, 2014, Citi-Mortgage identified a single point of contact with whom the Tanasis could communicate about their mortgage. Compl. ¶ 120. On November 23, 2014, CitiMortgage allegedly sent a letter changing the point of contact to “Na Na, with telephone number (999) 999-9999, ext. 0000000’" and email N/A.” Id. at ¶ 121. On February 17, 2016, CitiMortgage allegedly identified a new single point of contact, Claudia Martinez, and provided her phone number, but not an extension for her direct line. Id. at ¶ 122. When Mr. Tanasi called Ms. Martinez’s phone number, he was able to reach an employee named “Jose” and another named “Schiad,” who told him that the Tanasis would need to schedule a “call back appointment” with Ms. Martinez. Id. at ¶ 124. Ms. Martinez did not return the Tanasis’ call :at the scheduled callback time. Id. at ¶ 125 When the Tanasis called her office, they were allegedly informed that she would not be able to speak with them because her PC “was down.” Id. The Tanasis made another appointment for a “call back” with Ms. Martinez, but she did not call them at that time. Id. at ¶126. CitiMortgage then assigned a new single point of contact to the Tanasis on March 29, 2016. Id. The new single point of contact allegedly told the Tanasis that they “would not have any access to a [single point of contact] because of the pending appeal of the foreclosure judgment.” Id.
E. Defendant M & T Bank
The Tanasis allege that CitiMortgage was the mortgage servicing agent for Hudson City Savings Bank, M & T’s predecessor, and that CitiMortgage was under
F. The Current Proceedings
On May 16, 2016, the Tanasis filed a Complaint against both Defendants, alleging violations of RE SPA, CUTPA, and common law negligence. Both Defendants moved to dismiss on July 29, 2016. On August 19, 2016, the Tanasis filed their First Amended Complaint, alleging the same three causes of action. Both Defendants moved to dismiss on September 16, 2016. See CitiMortgage’s Mot., ECF No. 26-1; M & T’s Mot., ECF No. 25-1. After oral argument on this motion in November, the parties submitted supplemental briefs to the Court concerning the availability of damages for emotional distress under CUTPA. See ECF Nos. 34-85.
In their First Amended Complaint, the Tanasis assert three causes of action, all of which Defendants seek to dismiss. The Tanasis first claim that CitiMortgage violated RE SPA and Regulation X by failing to provide acknowledgement notices in response to loss mitigation applications and for improperly responding to the applications when it did reply, and by failing to respond to the Tanasis’ various requests for information and notices of error. See Compl. ¶¶ 66-95. The Tanasis also allege that CitiMortgage “engaged in a pattern and practice of noncompliance with RES-PA and Regulation X.” Id. at ¶ 96.
In the second cause of action, the Tana-sis claim that CitiMortgage negligently and consistently failed to provide accurate information about the loss mitigation options available to the Tanasis, failed to provide an accessible single point of contract, and misrepresented loan modification options to the Tanasis “through a combination of duplicative, exhaustive, and ever-changing requests.” Compl. ¶¶ 98-136. These actions, the Tanasis allege, violated a duty that CitiMortgage owed to them under Regulation X as well as the National Mortgage Settlement, a consent decree between CitiMortgage, the federal government, and 49 states’ attorneys general, Id. at ¶ 99. In the National Mortgage Settlement, CitiMortgage allegedly agreed to engage in loss mitigation programs and disclose accurate information to borrowers. Id. at ¶¶ 100-108. The Tanasis’ Complaint also lays out the elements of a negligent infliction of emotional distress claim. Id. at ¶¶ 137-38. In them motions to dismiss, Defendants seek to dismiss this claim as well. See CitiMortgage’s Mot., 25.
In their third cause of action, the Ta-nasis allege that Defendants violated the Connecticut Unfair Trade Practices Act (“CUTPA”) by “a) soliciting the Tanasis to apply for a loan modification for which they were not eligible; b) repeatedly requesting duplicative, unnecessary, or updates to documentation during
The Tanasis contend that Hudson, the predecessor of M & T, retained CitiMort-gage to act as its mortgage servicing agent, directly supervised CitiMortgage’s negligent servicing of the mortgage, Compl. ¶¶ 46-51, and is “vicariously liable” for CitiMortgage’s violations. Id. at ¶ 145.
As a result of the alleged violations, the Tanasis claim to have suffered losses relating to the “stripping [of] the Property of equity” (Compl. ¶ 61), the unnecessary maintenance of the Property due to delayed foreclosure (id. at ¶ 62), the expenditure of “postage, copying and fees” when submitting loss mitigation applications and requests for information (id. at ¶ 63), the creation of a public record of foreclosure (id. at ¶ 64), and “emotional trauma” (id. at ¶65). The Tanasis also claim that Citi-Mortgage is liable for statutory damages under RESPA of up to $2,000 for its pattern or practice of RESPA violations (id. at ¶ 97).
III. Standard of Review
Defendants move to dismiss under Federal Rule 12(b)(1), arguing that this Court lacks subject matter jurisdiction, and under Rule 12(b)(6), arguing that the Tanasis fail to state a claim. Dismissal under 12(b)(1) is appropriate when the Court lacks the statutory or constitutional power to adjudicate the claim. Fed. R. Civ. P. 12(b)(1); Makarova v. United States,
To survive a motion to dismiss under Rule 12(b)(6), a plaintiff must state a claim for relief that is plausible on its face. Fed. R. Civ. P. 12(b)(6); see also Ashcroft v. Iqbal,
IV. Discussion .
- Defendants move to dismiss the Tanasis’ Complaint in its entirety. Defendants, argue that this Court lacks jurisdiction over . the Tanasis’ claims, requiring dismissal urn der Rule 12(b)(1). In the alternative, Defendants .argue- that the Tanasis’ claims should be dismissed for failure to state a claim under Rule 12(b)(6).
A. Motion to Dismiss for Lack of Jurisdiction under Rule 12(b)(1)
Defendants assert two arguments, in support , of their motion to dismiss under Rule 12(b)(1). First, Defendants argue that the Tanasis’ claims are prohibited by the Rooker-Feldman doctrine. Second, Defendants argue that the Tanasis’ claims are precluded by principles of res judicata. The Court examines each of these arguments in turn.
1. The Rooker-Feldman Doctrine
CitiMortgage first argues that the Court lacks jurisdiction to review the Tanasis’ claims under the Rooker-Feldman doctrine.- The Court disagrees. The doctrine does not prevent jurisdiction over the alleged violations, of RESPA, nor does it prevent jurisdiction over the negligence and CÚTPA claims that are based on the same alleged misconduct.
The Rooker-Feldman doctrine provides that federal district courts do hot have jurisdiction to review final decisions of state courts or reverse or modify state court judgments. See Rooker v. Fidelity Trust Co.,
Courts in the Second Circuit apply Rooker-Feldman to foreclosure actions. See Vossbrinck v. Accredited Home Lenders, Inc.,
The Court, however, must engage in a “case-by-case determination of the applicability of the Rooker-Feldman doctrine,” even in a case concerning a foreclosure. See McCann v. Rushmore Loan
The Tanasis lost in the Foreclosure Action, which was rendered before they filed their Complaint. See Notice of Judgment of Strict Foreclosure (entered March 7, 2016), Foreclosure Docket, 168.00; Compl. (filed May 16, 2016), EOF No. 1. The Rooker-Feldman doctrine applies, therefore, if Hoblock’s two “substantive” requirements, Hoblock,
a. The Tanasis’ Claims
To assess the Tanasis claims under the two remaining Rooker-Feldman requirements, .the Court must review the claims themselves. The Tanasis raise claims under RESPA, CUTPA, and- of common law negligence. These claims do. not satisfy either of Hoblock’s substantive requirements, making the Rooker-Feldman doctrine inapplicable.
Congress enacted RESPA “to insure that consumers throughout the Nation are provided with greater and more timely information on the nature and costs of the settlement process and are protected from unnecessarily high settlement charges caused by certain abusive practices that have developed in some areas of the country.” 12 U.S.C. § 2601(a). In 2010, it amended the Act, creating the Consumer Financial Protection Bureau (the “CFPB”), which was tasked with.prescribing rules and regulations, as well as interpretations, “as may be necessary to achieve” RESPA’s purpose. See Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub.L. 111-203, § 2617(a), 124 Stat. 1376, 2184 (2010). In 2013, the CFPB promulgated Regulation X, RES-PA’s implementing regulations. See 12 C.F.R. §§ 1024.1-1024.41.
RESPA is a “consumer protection statute.” Roth v. CitiMortgage Inc.,
Under RESPA, borrowers have a private right of action to enforce many of Regulation X’s procedural requirements, as well as the statute itself. The remedies available are set forth in Section 6(f) of RE SPA, which provides for the recovery of monetary damages in the amount of “(A) any actual damages to the borrower as a result of the failure; and (B) any additional damages, as the court may allow, in the case of a pattern or practice of noncompliance with the requirements of this section, in an amount not to exceed $2,000.” 12 U.S.C. § 2605(f). The Tanasis claim damages under both subsections relating to CitiMortgage’s alleged failure to respond to their communications and improper processing of their loss mitigation applications.
. .The Tanasis also claim. that CitiMort-gage was negligent in its handling and
CUTPA is also a consumer protection statute. Philip Morris, Inc. v. Blumenthal,
b. The Tanasis do not Invite Review and Rejection of the Foreclosure Action
By asserting these three causes of action, the Tanasis do not invite this Court’s review and rejection of the Foreclosure Action and therefore do not meet Hoblock’s third requirement. Rooker-Feldman precludes a district court from entertaining a suit that “would require the federal court to review [a state’s] proceedings and determine that the foreclosure judgment was issued in error.” Vossbrinck,
Under Vossbrinck, the Court lacks jurisdiction over a plaintiffs allegation that a foreclosure was improperly obtained or that it was entered in error. Courts have dismissed RESPA claims that challenge the foreclosure process itself. See Gordon v. Ocwen Loan Servicing, No. 3:15-CV-507(RNC),
If a plaintiff “presents some independent claim,” however, “albeit one that denies a legal conclusion that a state court has reached in a case to which he was a party[,] then there is jurisdiction.” Exxon Mobil Corp. v. Saudi Basic Indus. Corp.,
The Tanasis allege that Defendants improperly processed their loan modification applications, failed to respond to their requests for information, and “engaged in a pattern or practice of non-compliance with RESPA and Regulation X.” Compl. ¶96. In all three causes of action, the Tanasis “pointedly avoid” arguing that their foreclosure was wrongly decided or seeking injunctive relief against the foreclosure. See McCann,
At this stage of the proceedings, the Court concludes the Tanasis’ claims are sufficiently “independent” from the Foreclosure Action and do not invite the Court’s “review and rejection of that judgment.” Hoblock,
c. The Tanasis do not Compjiain of an Injury Caused by a State Court Judgment
The Tanasis’ case presents a closer call when evaluated against Hob-lock ⅛ second requirement, which, as the Second Circuit has explained, is the “core requirement” of the Rooker-Feldman doctrine. Hoblock,
[A] federal suit complains of injury from a state-court judgment, even if it appears to complain only of a third party’s actions, when the third party’s actions are produced by a state-court judgment and not simply ratified, acquiesced in, or left unpunished by it. Where a state-court judgment causes the challenged third-party action, any challenge to that third-party action is necessarily the kind of challenge to the state judgment that only the Supreme Court can hear.
Id. at 88; see also McKithen v. Brown,
The Second Circuit has observed that a plaintiff “is not complaining of an injury ‘caused by1 a state-court judgment when the exact injury of which the party complains in federal court existed prior in time to the state-court proceedings, and so could not have been ‘caused by’ those proceedings.” McKithen,
The Tanasis complain of injuries allegedly caused by CitiMortgage’s improper servicing of their mortgage. While these errors may have shaped the eventual Foreclosure Action, they were not “produced by [the] state-court judgment.” Hoblock,
The Court notes that the Complaint could be read to describe injuries produced by the Foreclosure Action. For example, the Tanasis allege that CitiMortgage’s
2. Res Judicata
Defendants also argue that dismissal is warranted under the doctrine of res judi-cata, because “all of Plaintiffs claims in the instant matter were raised, or could have been raised, in the Foreclosure Action.” CitiMortgage’s Mot., 11. The Tanasis respond that their claims cannot be precluded because they were not required to bring any of them in state court and were in fact barred from bringing some of them. Opp, Mem., 11. The Court agrees that res judi-cata bars most of the Tanasis claims.
The doctrine of res judicata provides that “a final judgment, when rendered on the merits, is an absolute bar to a subsequent action, between the same parties or those in privity with them.” Mazziotti v. Allstate Ins. Co.,
State court judgments have res judicata effect in federal courts. Migra v. Warren City School Dist.,
The Tanasis correctly note that Connecticut is a permissive counterclaim jurisdiction. Connecticut courts are mixed as to whether a plaintiff is precluded by the res judicata doctrine from bringing a claim that she could have brought, but was not required to bring, as a counterclaim in a previous action. The majority of courts, though, apply res judicata to permissive counterclaims, keeping in mind “the public policy that a party should not be able to relitigate a matter which it already has had an opportunity to litigate.” Weiss v.
Rather than concluding that res judicata can never apply to permissive counterclaims, most Connecticut courts use a -transactional test for determining whether res judicata should apply. See Weiss,
a. The Transaction Test and Foreclosure Actions
Connecticut courts also use the transaction. test to evaluate the viability of counterclaims in foreclosure actions, thereby providing a guide to the test’s application in the foreclosure context. CitiMortgage, Inc. v. Rey,
Claims questioning the validity of the plaintiffs right to seek foreclosure are sufficiently connected to the foreclosure action. In Rey, CitiMortgage sought to foreclose on a residential property before the Connecticut Superior Court. Rey,
Claims relating to a broad range of conduct, or to an extrinsic agreement between the parties, rather than “narrowly bearing on the mortgage note itself or its enforcement,” do not pass the transaction test. JP Morgan Chase Bank v. Rodrigues,
Similarly, in U.S. Bank National Assn. v. Sorrentino, which the Tanasis cite, the borrowers’ allegations regarding the bank’s improper conduct during a foreclosure mediation program could not have been properly joined with their complaint.
Under the transaction test, RES-PA claims are proper counterclaims to foreclosure actions when “the ' alleged RESPA violations arise out of the same transaction that is the subject of the foreclosure action, that is, the execution of the note and mortgage and the subsequent default.” Webster Bank v. Linsley, No. CV970260406S,
“Even though the alleged RESPA violations cannot affect the validity or enforceability of the note and mortgage,” .the court held “they may relate to the making of the note and mortgage or the default” and qualify as counterclaims. Webster Bank,
Similarly, defendants can assert CUTPA violations as counterclaims if they “relate to the making, validity or enforcement” of the underlying mortgage. In Rod-rigues, the court held that the defendant’s CUTPA counterclaim did not “arise out of the same transaction as the complaint.” Rodrigues,
b. The Tanasis’s Claims
Defendants argue that the Tanasis raise claims that arise out of the “same core of operative facts that gave rise to the Foreclosure Action,” and that their claims “were raised, or could have been raised,” in that proceeding. CitiMortgage’s Mot., 11; M & T’s Mot., 9. The Tanasis assert that their allegations do not “negate” any of the elements of a foreclosure claim and that they could not have brought their RESPA allegations in the foreclosure action all. Opp. Mem., 12. The Court agrees with Defendants regarding most, but not all, of the Tanasis’ claims.
Most of the Tanasis’ claims involve Defendants’ failure to respond to loan modification or loss mitigation applications. The Tanasis allege that CitiMortgage failed to respond to their pending applications and closed their applications without reviewing them. See Compl. ¶¶ 66-90. Unlike the counterclaims at issue in Sorrentino, these allegations were part of a pattern or practice of conduct that began, by the Tanasis’ own admission, in 2009, before the Foreclosure Action. Id. at ¶ 1. Indeed, the Ta-nasis raised some of these issues in their “Motion to Open and Set Aside Summary Judgment and to Strike Summary Judgment.” See Motion to Open and Set Aside Summary Judgment, CitiMortgage’s Mot., Ex. F, ECF No. 26-7.
Furthermore, like the counterclaims in Rey, the Tanasis’ allegations that Defendants improperly or negligently processed their requests to reduce their mortgage relate to the underlying amount of the note and mortgage and “directly implicate” the eventual foreclosure judgment. Rey,
Some of the Tanasis’ claims, however, are separate from the Foreclosure Action and therefore survive Defendants’ motion to dismiss. These claims arise from interactions between the parties that were unrelated to the Foreclosure Action and conduct that occurred after the proceedings had commenced. The Tanasis could not have maintained these claims as counterclaims in the Foreclosure Action and may bring them now.
Where does this leave the Tana-sis? In their first cause of action, the Ta-nasis allege that CitiMortgage violated RESPA and Regulation X by failing to acknowledge or properly review loss mitigation applications (Compl., ¶¶ 71 — 81), by failing to properly respond to the Tanasis’ requests for information (id. at ¶¶ 83-85), mortgage modification applications (id. at ¶ 86), and qualified written requests (id. at ¶87), and by engaging in a pattern or practice of non-compliance with RE SPA (id. at ¶¶ 96-97). The claims concerning the Tanasis’ loss mitigation and mortgage modification applications must be dismissed under res judicata, because they “reasonably relate [to] the execution of the note and mortgage, and the subsequent default.” Sorrentino,
In their second cause of action, the Tanasis allege that CitiMortgage negligently failed to review mortgage modification requests (id. at ¶¶ 109-114), negligently failed to provide a single point of contact to the Tanasis (id. at ¶¶ 119-127), and “continually” and “actively” solicited mortgage modification applications that it never intended to consider, seeking to accrue
In the third cause of action, the Tanasis claim that CitiMortgage violated CUTPA by misleading consumers about its loss mitigation policies ■ (id. at ¶ 157), soliciting mortgage modification applications and demanding “large amounts of sensitive personal information,” only to deny these applications without review (id. at ¶¶ 149, 159), misleading consumers concerning the availability of loss mitigation policies, and “requesting duplicative, unnecessary, or updates to documentation during the application process” (id. at ¶ 149(b)). These claims are not transaction-ally related to the Foreclosure Action and therefore should not be dismissed under res judicata. The Tanasis also claim that CitiMortgage violated CUTPA by unfairly applied its existing loss mitigation policies (id. at ¶ 149(d)). This claim “directly implicates” the eventual foreclosure judgment, Rey,
B. Motion to Dismiss under Rule 12(b)(6)
The Court has held that many of the Tanasis’ claims fail under res judicata. Whether or not Defendants’ allegedly improper processing of the Tanasis’ loan modification applications violated RESPA, any complaints about that process could have been raised in the Foreclosure Action and cannot be adjudicated here. Some claims remain, however, and Defendants have moved to dismiss these claims under Rule 12(b)(6).
CitiMortgage argues that the- Tanasis’ RESPA claims should be dismissed because (1) the Tanasis do not allege sufficient actual or statutory damages under RESPA; (2) the Tanasis fail to state a claim concerning CitiMortgage’s response to their January 13, 2014 loss mitigation application; (3) the Qualified Written Requests (“QWRs”) on which the Tanasis’ base their RESPA claims do not trigger RE SPA liability; (4) CitiMortgage’s responses to the Tanasis Requests for Information (“RFIs”) were adequate under RE SPA; (5) CitiMortgage appropriately responded to the Tanasis’ Notices of Error (“NOEs”), and (6) CitiMortgage was not required to comply with Regulation ! X when processing the Tanasis’ loss mitigation application. CitiMortgage also argues that the Tanasis (7) do not adequately allege that CitiMortgage .was not diligent in processing their loss mitigation applications. Regarding the Tanasis’ other claims, CitiMortgage argues that (8) it did not owe a duty of care to the Tanasis and did not
As discussed above, the Court does not have jurisdiction over any claims concerning CitiMortgage’s processing of the Tar nasis’ loss mitigation applications. Accordingly, it will not review CitiMortgage’s arguments numbered (2), (6), and (7), because the related claims have been dismissed. It reviews the rest of CitiMort-gage’s arguments as well as M & T’s about vicarious liability, and concludes that the Tanasis have stated a claim under RESPA, by way of Regulation X, and under CUTPA. They have also stated a cause of action for negligence. Finally, the Court cannot dismiss the Tanasis’ claim that M & T was vicariously liable for CitiMortgage’s alleged misconduct. While the Tanasis’ Complaint may not be dismissed, their damages are limited, as the Court describes below. ■
1. The Tanasis’ RESPA Claims
The Tanasis’ remaining RESPA claims concern CitiMortgage’s obligations to respond to certain communications from borrowers. The Tanasis bring these claims under section 2605(e) of the statute, which requires that servicers of “federally related mortgage loan[s]” respond in- a prescribed time and manner to “qualified written requests” from borrowers, see 12 U.S.C. § 2605(e), and Regulation X, its implementing regulation. See Opp. Mem., 17.
The Tanasis claim that CitiMortgage violated several sections of Regulation X, including 12 C.F.R. § 1024.35, which provides “error resolution procedures” (Opp. Mem., 18); 12 C.F.R. § 1024.36, which concerns “requests for information” (id. at 16); and 12 C.F.R. § 1024.41, -which sets out “loss mitigation procedures” (Compl. ¶ 70). RESPA provides that “[a] servicer of a federally regulated mortgage shall not ... fail to comply with any other obligation found by the [CFPB], by regulation, to be appropriate to carry out the consumer protection purposes of this chapter.” 12 U.S.C. 2605(k)(l)(E).
Because the Court does not have jurisdiction over the Tanasis’ claims concerning the processing of their loss mitigation applications, it only addresses CitiMortgage’s motion to dismiss to the extent that it pertains to the Tañaste’ claims under 12 U.S.C. § 2605(e), 12 C.F.R. § 1024.35, and 12 C.F.R. § 1024.36. CitiMortgage’s Mot., 16-18. The Second Circuit has not yet addressed these provisions of RESPA or Regulation X. The Court therefore draws from the decisions of district courts in this Circuit and others when evaluating the Tanasis’ claims, but is ultimately bound only by this Circuit’s requirement that the Complaint “contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Fink v. Time Warner Cable,
a. CitiMortgage’s Liability under 12 U.S.C. § 2605(e)-
The Tanasis allege that CitiMort-gage violated RESPA by improperly responding to several of their qualified written requests for information (“QWRs”). Specifically, they'point to their January 13, 2014 and March 5, '2015 letters to Citi-Mortgage, which “sought information pertaining to the payoff of their loan and the
RESPA requires servicers of federally related mortgage loans to comply with certain disclosure requirements after receiving a qualified written request (“QWR”). 12 U.S.C. § 2605(e). A QWR is “a written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer,- that—
(i) includes, or otherwise enables the setvicer to identify, the name and account of the borrower; and
(ii) includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower.”
12 U.S.C. § 2605(e)(1)(B). A servicer is required to respond to a QWR from a borrower only to the extent that the QWR seeks “information relating to the servicing of [the] loan.” 12 U.S.C. § 2605(e)(1)(A). “Servicing” is defined as “receiving any scheduled periodic payments from a borrower pursuant to the terms of any loan[,] and making the payments of principal and interest' and such other payments with respect to the amounts received from the borrower as may be required pursuant to the terms of the loan.” 12 U.S.C. § 2605(i)(3).
To plead a claim for failure to respond to QWRs under RESPA, a plaintiff must offer proof by “attaching the letter or pleading with specificity such facts — such- as when the letter was sent and to whom it was directed, why it was sent, and the contents of the letter — [so] that the Court may determine, if the letter qualifies as a QWR or notice of error.” Kilgore v. Ocwen Loan Servicing, LLC,
The Tanasis allege that they “mailed a qualified written request for information about the payoff of their loan and the holder of their note” to CitiMort-gage on January 13, 2014 and March 5, 2014. Compl. ¶21. CitiMortgage argues that this claim should be dismissed because the Tanasis have not alleged that CitiMortgage received the letter.
CitiMortgage also argues that the Tana-sis’ letters, which requested “information about the payoff of their loan and the holder of them note,” Compl. ¶ 12, did not concern “servicing.” CitiMortgage’s Mot., 16. The Court agrees with CitiMortgage.
Federal regulations define a payoff statement as an “accurate statement of the total outstanding balance that would be required to pay the consumer’s obligation in full as of a specified date.” See Truth in Lending (Regulation Z), 76 Fed. Reg. 79772 (Dec. 22, 2011), 12 CFR § 1026(a). The CFPB further explains that “a payoff statement is necessary any time a borrower repays a mortgage loan, and servicers routinely provide payoff statements for borrowers to refinance or pay in full their mortgage loan obligations.” Mortgage Servicing Rules,
Furthermore, in its official commentary on Regulation X, the CFPB states that it intended the Truth in Lending Act, as implemented by Regulation Z, to be the sole source of servicers’ obligations concerning payoff statements. The CFPB notes that “the failure to provide a payoff balance is an error only in those circumstances in which TILA section 129G, as implemented by § 1026.36(c)(3) of the 2013 TILA Servicing Final Rule, applies,” and adds that “there would be little consumer benefit to subjecting servicers to potentially overlapping standards under TILA and RESPA as to the provision of a payoff statement.” Mortgage Servicing Rules,
CitiMortgage also asserts that the Tana-sis’ inquiry into the owner of them mortgage does not concern servicing. District courts have come to different conclusions about whether communications regarding the holder of a mortgage note pertain to “servicing.” See Wolfbauer v. Ocwen Loan Servicing, LLC, No. 4:15CV3141,
RESPA’s definition of servicing narrowly focuses on the exchange of “payments” between a servicer and a borrower. 12 U.S.C. § 2605(i)(3). Under this definition, inquiries about the holder of a mortgage note do not pertain to “servicing,” because they do not concern the receipt and processing of mortgage payments. Furthermore, both RESPA and Regulation X include separate provisions that lay out servicers’ obligations to respond to requests concerning the identity of the owner of the note. 12 U.S.C. § 2605(k)(l)(D) (describing “servicer prohibitions ... in general”); 12 C.F.R. § 1024.36(d)(2)(i)(A) (providing that a servicer must respond “within 10 business days to a request from a borrower to provide the identity, address, and other relevant contact information about the owner or assignee of the loan.”). The Court concludes, therefore, that the Tanasis’ request for information concerning the owner of their note did not relate to “servicing” and did not trigger CitiMortgage’s liability under section 2605(e). Because the Tanasis have not sufficiently alleged that CitiMortgage received QWRs relating to “servicing” on their behalf, the Court dismisses their claim under section 2605(e) of RESPA.
b. CitiMortgage’s Liability under Regulation X
i. Liability under 12 C.F.R. § 1024.36 for Failure to Respond to RFIs
The Tanasis allege they sent many requests for information (“RFIs”) to CitiMortgage and that CitiMortgage failed to properly respond to these requests. Specifically, the Tanasis allege that they requested information by mail about the following:
[A]lleged investor restrictions, evidence that CitiMortgage submitted waiver requests, and evidence of CitiMortgage’s efforts to obtain a waiver of investor restrictions.” See Compl. at ¶ 40 (referring to the March 16, 2016 request).
[T]he owner/assignee of the loan, the servicer’s participation in HAMP and the national mortgage settlement, and the parameters of loan modification programs.” Id. at 41 (referring to the March 30, 2016 request), and
[Bjroker prices opinions and appraisals ... to see if CitiMortgage was engaging 'in any meaningful loss mitigation review.
Id. at ¶ 42 (referring to the May 11, 2016 request). ■
They allege that CitiMortgage failed to respond to most of the requests, and improperly responded -to the March 23, 2016 request with a statement that the information was “privileged.” Id. at ¶ 40. CitiMort-gage argues that it properly invoked the exception for “privileged” information and that the information the Tanasis sought was irrelevant and did not trigger then-duties to respond. Opp. Mem., 18.
The. Court agrees with the Tanasis. Their claims regarding CitiMortgage’s failure to respond to RFIs survive this motion to dismiss, except to the extent that the Tanasis sought information regarding loan modification programs.
Regulation X obligates a servicer, “within five days ... of receiving an information request from a borrower,” to acknowledge the request and provide a “reasonable” response. 12 C;F.R. § 1024.36. A mortgage servicer, however, is hot obligated to comply with disclosure requirements if it “reasonably determines that the information sought by the borrower is confidential, proprietary, privileged, or irrelevant to the borrower’s mortgage account.” 12 C.F.R. § 1024.35(e) (“If a servicer withholds documents relied upon because it has determined that such documents constitute confidential, proprietary or privileged information, the servi-cer must notify the borrower of its determination in writing within 15 days ... of receipt of the borrower’s request for such documents”). Regulation X also provides that a “QWR that requests information relating to the servicing of the mortgage loan is a request for information'for purposes of this section,” meaning that “a servicer must comply with all requirements applicable to a request for information.” 12 C.F.R. § 1024.36(a).
A servicer’s obligations to respond to RFIs are broader than its obligations under RESPA to respond to QWRs, in that a RFI does not need to relate to “servicing.” Mortgage Servicing Rules, 78 FR 10696 at 10761 (“the final rule ... does not limit information requests to those related to servicing”). The request, however, may not seek “[i]rrelevant information,” meaning that the “the information requested [must be] directly related to the borrower’s mortgage loan account.” 12 C.F.R. 1024.36(f)(l)(iii). The CFPB’s official guidance gives several examples of irrelevant information:
i. Information that relates to the servicing of mortgage loans other than a borrower’s mortgage loan, including information reported to the owner of a mortgage loan'regarding individual or aggregate collections for mortgage loans owned by that entity;
ii. The servicer’s training program for servicing personnel;
iii. The servicer’s servicing program guide; or
iv. Investor instructions or requirements for servicers regarding criteria for negotiating or approving any program with a borrower, including any loss mitigation option.
12 C.F.R. § .Pt. 1024, Supp. I, Interpretation of 1024.26(f)(1) (iii).
CFPB’s own guidance supports this conclusion and separately refers to “the new [section] 1024.36, which will require servi-cers to respond to information requests, and new [section] 1024.38(b)(2)(i), which requires servicers to maintain policies and procedures that are reasonably designed to ensure that servicers provide accurate information regarding loss mitigation options available to a borrower.” Mortgage Servicing Rules, 78 FR 10696-01 at 10799. Because Regulation X contains a separate section to regulate the mortgage modification process, loan modification information does not properly fall within Regulation X’s definition of an RFI. See Ditto v. JPMorgan Chase Bank, N.A., No. ' 16-81017-CIV,
The Court, however, notes that some of the Tanasis’ requests concerned the “owner/assignee” of their note. See Compl. ¶41 (referring to the March 30, 2016 request), id. at ¶21 (January 13, 2014), and id. at ¶34 (March 5, 2015). CitiMortgage was obligated to respond to these requests. Furthermore, there is no evidence that CitiMortgage “acknowledged” the Tanasis’ RFIs within Regulation X’s five-day window, making dismissal of the Tanasis’ claim under 12 C.F.R. § 1024.36 inappropriate. See 12 C.F.R. § 1024.36. The Tanasis’ claims under 12 C.F.R. § 1024.36 are not dismissed, except to the extent that they relate to the Tana-sis’ efforts to seek information about loan modification programs.
ii. Liability under 12 C.F.R. § 1024.35 for Failure to Respond to NOEs
The Complaint alleges that Citi-Mortgage failed to respond properly to two of the Tanasis’ notices of error (“NOEs”). On May 12, 2016, the CitiMort-gage allegedly received a notice of error from the Tanasis “stating that it was an error for [CitiMortgage] to fail to:
(i) provide evidence of its efforts to waive investor restrictions;
(ii) provide information about its servi-cer participation agreement for [the Home Affordable Modification Program] and its compliance with the National Mortgage Settlement;
(iii) acknowledge Plaintiffs RFIs;
(iv) provide information about Plaintiffs’ current loss mitigation options; and
(v) provide income requirements for proprietary loan modification.
Compl. ¶ 43; see id. at ¶ 44 (alleging that CitiMortgage’s response was deficient). The Tanasis also allege that they mailed additional notices of error to CitiMortgage on July 6 and July 9, 2015, asserting that CitiMortgage had failed to respond to the Tanasis’ questions about loss mitigation options under the HAMP program, the “National Mortgage Settlement Modification” program, and various proprietary modification programs. Id. at ¶ 45. Citi-Mortgage did not respond. Id.
Section 1024.35 of Regulation X “allows borrowers to notify mortgage servicers of possible account errors.” 12 C.F.R. § 1024.35. This section requires servicers to respond to “any written notice from the borrower that asserts an error and that includes ... information that enables the servicer to identify the borrower’s mortgage loan account, and the error the borrower believes has occurred.” 12 C.F.R. § 1024.35(a). As both parties acknowledge, the regulation only applies to the “covered errors” listed in § 1024.35(b). Section 1024.35(b) contains a “catch all provision,” which applies to “any other error relating to the servicing of a borrower’s mortgage loan.” 12 C.F.R. § 1024.35(b)(ll). Opp. Mem., 18-19.
The “failure to provide accurate information to a borrower regarding loss mitigation options and foreclosure, as required by 12 C.F.R. 1024.39,” is a “covered error.” 12 C.F.R. 1024.35(b)(7). The specific section of Regulation X referenced in subsection (b)(7) inquires a servicer to, within 45 days of a borrower’s delinquency, send the “delinquent borrower a written notice ... providing a brief description of examples of loss mitigation options that may be available from the servicer.” 12 C.F.R. § 1024.39. The CFPB has observed that “it is critical for borrowers to have information regarding available loss mitigation options and requiring that a servicer comply with error resolution procedures as to a borrower assertion that a servicer failed to provide such information is important to ensure that borrowers receive this information.” Mortgage Servicing Rules, 78 FR 10696-01 at 10742.
Courts have concluded that notices of errors in the processing of loss mitigation applications are not “covered errors” within the scope of 1024.35(b). See Sutton v. CitiMortgage, Inc.,
The Tanasis, however, allege that they notified CitiMortgage of its failure to provide information about loss mitigation options, not about its failure to properly pro
c. Damages under RESPA
CitiMortgage argues that the Tanasis “fail to sufficiently allege actual or statutory damages” under RESPA, meriting dismissal of their RESPA claim. CitiMort-gage’s Mot., 11. CitiMortgage asserts that the Complaint provides only “conclusory factual allegations establishing how [the Tanasis] were harmed by CitiMortgage’s alleged RESPA and Regulation X violations,” given that “neither the foreclosure judgment nor Plaintiffs’ legal expenses in opposing the foreclosure could have been caused by any alleged failure on the part of CitiMortgage to timely' review or respond to Plaintiffs’ loss mitigation applications, loss mitigation appeals, RFIs, QWRs or notices of error.” Id. at 13. The Tanasis respond that they ■ have adequately pled damages that were proximately caused by CitiMortgage’s violations. Opp. Mem., 15. The Court agrees with the Tanasis.
The Tanasis argue that CitiMortgage’s RESPA violations caused a variety of pecuniary harms, including costs related to stripping the Property of equity (Compl. ¶ 61), unnecessary costs of maintaining the Property due to delayed foreclosure (id. at ¶ 62), postage costs for applications and requests for information (id. at ¶ 63), creating a public record of foreclosure (id. at ¶ 64), and “emotional trauma” (id. at ¶ 65). The Tanasis also claim that CitiMortgage is liable for statutory damages of up to $2,000 for- a pattern or practice of RESPA violations (id. at ¶ 97).
As a genera] matter, section 2605 provides for damages “as a result of [the loan servicer’s] failure” to comply with its provisions. 12 U.S.C. § 2605(f). For this reason, a plaintiff seeking actual damages under § 2605 must allege that the damages were proximately caused by the defendant’s .violation of RE SPA.” See In re Griffin, No. 10-22431-RDD,
i. Emotional Distress Damages
Damages for a violation of RESPA are defined in section 2605(f) to include “any actual damages to the borrower as a result” of the violation as well as “any additional damages in the case of a pattern or practice of non-compliance.” 12 U.S.C, § 2605(f)(1)(A) & (B). The statute does not define “actual damages,” and some courts have interpreted the phrase to ^llow for emotional distress damages. In re Residential Capital, LLC,
The Tanasis’ claims for emotional distress damages are limited by RESPA’s causation requirement. See Sutton,
In Residential Capital, the court observed that RE SPA required the plaintiff to. “separate the emotional distress resulting from the failure to respond to the QWR from the emotional distress due to the foreclosure action,” and that he “face[d] an uphill battle in demonstrating causation and damages.” In re Residential Capital,
To support them claim for damages relating to “emotional trauma,” the Tanasis cite a study that describes the physical and psychological impact of- the foreclosure process on borrowers. Compl. at ¶¶ 139-40. These allegations do not “separate the emotional distress resulting from the alleged RESPA violations from the emotional distress due to the. Foreclosure Action.” In re Residential Capital,
The Tanasis nevertheless provide a plausible theory of causation. They allege that CitiMortgage failed to respond to their inquiries about the servicing of their loan, leading to frustration and unnecessary stress during the foreclosure process. Given RESPA’s interest in “providing consumers with greater and more timely information,” the Court cannot conclude that these costs.- are insignificant. Cohen v. JP Morgan Chase & Co.,
ii.Postage Costs
The Tanasis also claim damages relating to “postage costs for applications and requests for information.” Compl. ¶ 63. Once again, a plaintiff seeking actual damages under § 2605 must allege that the damages were proximately caused by the defendant’s violation of RESPA. Gorbaty v. Wells Fargo Bank, N.A.,
The Tanasis, therefore, can only claim compensatory damages that relate to costs that they incurred after CitiMortgage allegedly failed to respond to their requests for information. They cannot recover for costs related to “preparing” and “submitting requests for information,” Compl. ¶ 63, to the extent that these costs involve the Tanasis’ initial requests for information. The Tanasis would have incurred these costs regardless of CitiMortgage’s alleged violations. Accordingly, Defendants’ motion to dismiss is granted with respect to the Tanasis’ claim for compensatory damages relating to their preparation of their initial request for information, but not for damages stemming from the preparation of later requests, or of notices of error that they would not have needed to prepare but for CitiMortgage’s alleged violations.
iii.Miscellaneous Damages
The Tanasis also allege that Citi-Mortgage’s RESPA violations caused harm in the form of “costs related to stripping the Property of equity,” “unnecessary costs of maintaining the Property due to delayed foreclosure,” and the creation of a “public record of foreclosure.” See Compl. ¶¶ 61-65. The Tanasis explain that they were “injured by their pursuit of an unavailable [mortgage] modification,” id, at ¶ 133, and that CitiMortgage’s violations unnecessarily delayed their foreclosure. Id. Even when read in the light most favorable to the Tanasis, the Complaint does not allege that CitiMortgage’s failure to respond to its requests for information caused a delayed mortgage. These damages do not “plausibly flow” from Citi-Mortgage’s alleged violations, Gorbaty,
iv.Statutory Damages
Finally, • the Tanasis claim that they are entitled to statutory damages be
To obtain statutory damages, a plaintiff must establish “a pattern or practice of noncompliance” with RESPA. 12 U.S.C. § 2605(f)(1). “Pattern or practice means a standard or routine way of operating.” Gorbaty,
The Tanasis use the CFPB’s publicly accessible database to allege that the Bureau has received “3,100 complaints against CitiMortgage.” Compl. ¶ 90. They cite some of these complaints, all of which concern CitiMortgage’s failure to respond to loss mitigation applications. Id. at ¶¶ OI-OS. Citing the complaints in two cases filed against CitiMortgage in other federal courts, they also allege that CitiMortgage routinely fails to respond to QWRs from borrowers. Id. at ¶ 95. Accordingly, they sufficiently state a claim for statutory damages under RESPA.
2. The Tanasis’ Negligence Claims
In their second cause of action, the Ta-nasis claim that CitiMortgage is liable for negligence and negligent infliction of emotional distress. Compl. ¶¶ 102-138. They allege that CitiMortgage breached its duties under RESPA and Regulation X by failing to request a waiver of Hudson’s loan modification restrictions, providing improper and inaccurate information to borrowers, and failing to timely provide the Tanasis with a single point of contact as required by a consent decree. Compl. ¶¶ 108-15,118-27.
a. CitiMortgage’s Duty of Care, Generally
CitiMortgage alleges that it owed no duty to the Tanasis and did not proximately cause the Tanasis’ alleged injuries. CitiMortgage’s Mot., 22. The Tanasis respond that Defendants’ duty stemmed from RESPA and Regulation X and the “public policy” that those rules represent, and that they have suffered “foreseeable harm.” Opp. Mem., 27. The Court agrees with the Tanasis.
“[T]he existence of a duty of care is an essential element of negligence.” Pelletier v. Sordoni/Skanska Construction Co.,
Statutes and regulations can establish a duty of care that can form the basis of a negligence action. Small v. South Norwalk Savings Bank,
In Small, the court recognized that a statute establishing requirements for federally-approved lenders could establish a common law duty to comply with the statute and its implementing regulations, even if the statute did not include a private right of action. Id.; see also Shamber,
The Tanasis allege that CitiMortgage owed a duty of care under RESPA, Regulation X, and the National Mortgage Settlement (“NMS”), a consent decree between CitiMortgage, the federal government, and 49 states’ attorneys general. Id. at ¶ 99. At this stage in the litigation, the Court cannot determine that Citi-Mortgage did not owe a duty to the Ta-nasis, who are members of the class of consumers that Congress sought to protect by enacting RESPA.
b. Negligent Infliction of Emotional Distress
CitiMortgage also argues that the Tanasis fail to state a negligence claim because they “cannot claim that CitiMort-gage’s conduct was the cause of their harm,” CitiMortgage’s Mot., 26, and therefore, their claim for negligent infliction of emotional distress should be dismissed. See id. The Court disagrees.
To prevail on a claim of negligent infliction of emotional distress, a plaintiff must prove the following elements: “(1) the defendant’s conduct created an unreasonable risk of causing the plaintiff emotional distress; (2) the plaintiffs distress was foreseeable; (3) the emotional distress was severe enough that it might result in illness or bodily harm; and (4) the defendant’s conduct was the cause of the plaintiffs distress.” Carrol v. Allstate Ins. Co.,
Connecticut courts have recognized negligent infliction of emotional distress claims based on contracts that create “rigorous expeetation[s] for contractual performance.” Murphy v. Lord Thompson Manor, Inc.,
In Drena., the court denied the defendant’s motion to dismiss a negligent infliction of emotional distress claim when the plaintiff alleged that the defendant “improperly debited payments from his bank account, represented to him that it would promptly work with him to avoid foreclosure but instead delayed a loan modification application, did not process the documents that it repeatedly requested, and initiated a foreclosure action,” Drena, 20Í
The Tanasis’ ■ remaining negligence claims concern CitiMortgage’s negligent provision of a single point of contact and solicitation of mortgage modification applications. The Tanasis allege that this negligence caused, “years of duress,” and resulted in their “emotional trauma.” Opp. Mem,, 33. Specifically, they allege that the foreclosure process exposes mortgagors to “extraordinary stressors,” that have a physical and psychological impact. Compl. ¶¶ 139-4Ó. As the Court noted above, the Tanasis must eventually show that their claimed emotional distress flows from Defendants’ negligent processing of their mortgage, rather than the Foreclosure Action itself. Nevertheless, the Tanasis have alleged damages that could plausibly result from Defendants’ negligence, and1 their claim shall not be dismissed now.
3. The Tanasis’ CUTPA Claims
The Tanasis also claim that Defendants violated CUTPA by improperly evaluating their loss mitigation applications, repeatedly requesting duplicative or unnecessary information, soliciting them to apply for loan modifications for which they were not eligible, and improperly charging fees and interest. Compl. ¶ 149. Defendants argue that these claims are legally insufficient because the Tanasis have not alleged that Defendants were “either immoral, unethical, unscrupulous or offensive to public policy.” CitiMortgage.’s Mot., 29. The Court disagrees.
CUTPA provides that “no person shall engage in unfair methods of competition or deceptive acts or practices in the
a. Unfair Business Practice
To determine whether a business practice violates CUTPA, Connecticut courts follow the Federal Trade Commission’s “cigarette rule,” and evaluate whether a defendant’s conduct: (1) offends public policy as it has been established by statutes, the common law, or otherwise; (2) is immoral, unethical, oppressive, or unscrupulous; or (3) causes substantial injury to consumers or other businesses.” Web Press Serv. Corp. v. New London Motors, Inc.,
Connecticut courts have held that misrepresentations by a mortgage company are actionable under CUTPA, and that federal housing and lending statutes can demonstrate a “public policy” as required by the Act. See Davis v. Hunt Leibert Jacobson, P.C., No. 3:12-CV-1102 (JBA),
The Tanasis have alleged that Defendants were reckless and deceptive in their solicitation of mortgage modification agreements, causing additional costs, fees, and' frustration for consumers. They also allege that CitiMortgage’s confusing and deceptive communications with vulnerable borrowers violated an important public policy. The Tanasis’ CUTPA claims' are sufficient at this stage of the litigation.
b. The Tanasis’ Ascertainable Loss under CUTPA
Defendants further argue that the Tanasis’ emotional distress damages are not recoverable under CUTPA. Def.’s Supp. Briefing (citing Rodrigues,
To prevail on a CUTPA claim, a plaintiff must prove that the defendant engaged in “unfair or deceptive acts or practices in the conduct of any trade or commerce” and that as a result of the act or practice, the plaintiff suffered an “ascertainable loss of money or propérty.” D’Angelo Development & Construction Corp. v. Cordovano,
In Di Teresi, the court interpreted CUTPA’s ascertainable loss requirement to necessitate “actual monetary or physical loss,” concluding that claims of emotional damages, alone, would not trigger liability. Di Teresi,
A party seeking to recover damages under CUTPA must “present evidence providing the court with a basis for a reasonable estimate of the damages suffered [, but this] does not necessitate that the actual amount of ascertainable loss be proven.” Reader v. Cassarino,
The Tanasis “have alleged that they incurred an ascertainable loss in the form of professional fees in attempting to apply for a mortgage modification, attorneys’ fees, postage, copying, and other miscellaneous expenses.” Pl.’s Supplemental Brief, 2.
The Tanasis’ claims are insufficient to the extent that they seek damages for emotional distress, but the Tanasis CUT-PA claim survives because they have otherwise satisfied the statute’s “ascertainable loss” requirement.
4. Statute of Limitations for Negligence and CUTPA claims
CitiMortgage also moves to dismiss both thé Tanasis’ CUTPA claim and their negligence claims for economic distress, arguing that these claims are time-barred. CitiMortgage’s Mem., 25 (citing Conn. Gen. Stat. 52-577). The Tanasis respond that the statute of limitations is “tolled under the continuing course of conduct doctrine.” Opp. Mem., 24. The Court agrees with the Tanasis.
As both parties seem to acknowledge, under CUTPA, an action “may not be brought more than three years after the occurrence of a violation.” Conn. Gen. Stat. § 42 — 110g(f). Plaintiffs must bring claims for physical or emotional injuries caused by negligence within two years, id. at § 52-584, and negligence claims for economic damages within three years. Id. at § 52-577; see also Rivera v. Double A Transp., Inc.,
“A statute of limitations may be tolled under the' continuing course of conduct doctrine [when the defendant] committed an initial wrong upon the plaintiff,” and there is “evidence of [a] breach of a duty that remained in existence after commission of the original wrong.” Watts v. Chittenden,
The Court has already dismissed the Tanasis’ negligence claims to. the extent that they apply to negligent handling of loss mitigation applications. The Tanasis’ negligence claim therefore is based on Ci-tiMortgage’s failure to provide p “single point of contact,” and its “continual” solicitation of mortgage modification applications. Compl. '¶¶ 119-127; 132-134. These allegations,.as well as allegations concerning CitiMortgage’s '“misrepresentations” about its loss mitigation policies, also constitute the Tanasis’ .CUTPA claim.
The Tanasis allege that CitiMortgage owed them a duty under RESPA, Regulation X, and the National Mortgage Settlement. They allege that CitiMortgage “con
5. Defendant M & T Bank
In a single sentence, M & T argues that the Tanasis claims should be dismissed under Rule 12(b)(6) because the Tanasis “have failed to state a cause of action for which M & T can be vicariously liable.” M & T’s Mem., 11. The Tanasis respond that M & T does not “contest the imposition of vicarious liability” under RESPA, CUTPA, and negligence, and allege that it is liable for CitiMortgage’s conduct under all three causes of action. Opp. Mem. to M & T’s Mot., ECF No. 28, at 3. Thé Court agrees. •
“[Traditional vicarious liability rules ordinarily make principals or employers vicariously liable for acts of their agents or employees in the scope of their authority or employment.” Meyer v. Holley,
An individual has apparent authority to act for a principal when “(1) the principal held the agent out as possessing sufficient authority to embrace the act in question, or knowingly permitted him to act as having such authority, and (2) in consequence thereof the person dealing with the agent, acting in good faith, reasonably believed, under all the circumstances, that the agent had the necessary authority.” Levine v. Advest, Inc.,
The Tanasis have alleged that Hudson delegated to CitiMortgage the authority to change the terms of mortgage loans, waive contract terms, and “take such action as it shall deem to be in .the best interest of [Hudson].” Compl. ¶ 59. This delegation is broad, and would include the authority to properly communicate with borrowers concerning their mortgages. Although the Ta-
The Court notes that RESPA and Regulation X limit liability to “servicer[s]” of qualified mortgages. See, e.g. 12 C.F.R. § 1024.35 (“a servicer shall comply with the requirements of this section.... ”); 12 C.F.R. § 1024.35 (describing obligations of “servicers”); see also 12 U.S.C. § 2605(k)(l)(E) (“A servicer of a federally related mortgage shall not ... fail to comply with any other obligation found by the Bureau of Consumer Financial Protection, by regulation, to be appropriate to carry out the consumer protection purposes of this Act.”). Some courts have concluded that defendant mortgage owners cannot be vicariously liable for mortgage servicers under these rules. Compare Rouleau v. US Bank, N.A., No. 14-CV-568-JL,
As the Tanasis note, M & T does not argue that vicarious liability is impossible under RESPA, but rather that it should not be vicariously liable in this ease. For this reason, the Court does not conclude, at this stage of the litigation, that the Tanasis have failed to state a RESPA claim against M & T.
V. Conclusion
In their Amended Complaint, the Tana-sis claimed “tens of thousands of dollars” in damages, arguing that Defendants were liable for their “interest, attorneys’ fees, default fees, and other costs relating to foreclosure,” the “significant” expenses of preparing mortgage modification applications, and the “embarrassment,” “anxiety,” and “elevated stress levels for fear of losing their home.” See Compl, ¶¶ 61-65. These claims have been reduced, however, by the doctrine of res judicata. Under res judicata, the Court cannot exercise jurisdiction over the RE SPA and negligence claims relating to CitiMortgage’s allegedly improper processing of the Tanasis’ loss mitigation applications.
The Tanasis’ claims for emotional distress damages under CUTPA (Count Three) are not actionable, and their claims
For the reasons stated above, the Defendants’ Motions to Dismiss are GRANTED in part and DENIED in part.
SO ORDERED at Bridgeport, Connecticut this_day of June 2017.
Notes
. The Court considers the state court documents that CitiMortgage attaches to its complaint in its evaluation of CitiMortgage’s motion. Generally, when a defendant attempts to counter a plaintiffs Complaint with its own factual allegations and exhibits, such allegations and exhibits are inappropriate for consideration by the Court at the motion to dismiss stage. See, e.g., Dual Groupe, LLC v. Gans-Mex LLC,
. The Tanasis assert that their dual-tracking claims were made in a motion for temporary injunctive relief, which is not a final judgment for res judicata purposes. See Opp Mem., 16 ("The grant or denial of a post-judgment application for temporary injunctive relief does not support a res judicata or collateral estop-pel defense because it is not an adjudication on the merits.”). The Tanasis invoked Regulation X in a motion to set aside the summary judgment decision and enjoin CitiMortgage from filing further such motions until it processed the Tanasis’ modification applications. See Motion to Open and Set Aside Summary Judgment, 7. A court’s decision on a motion to set aside a summary judgment motion has the same finality as a decision on a motion for summary judgment, “A judgment otherwise final for purposes of the law of res judicata is not deprived of such finality by the fact that time still permits commencement of proceedings in the trial court to-set aside the judgment and grant a new trial or the like; nor does the fact that a party has made such a motion render the judgment non-final." Re-stan 2d of Judgments, § 136; see also Zabelle v. Coratolo,
. The res judicata doctrine applies to Defendant M & T, although it was not a party in the foreclosure action. Under the doctrine of res judicata, "a final judgment, when rendered on the merits, is an absolute bar to a subsequent action, between the same parties or those in privity with them, upon the same claim.” Dontigney v. Roberts,
. The remaining claims that have not been dismissed under Rule 12(b)(1) are the following: Count One, RESPA claims concerning CitiMortgage’s responses to the Tanasis’ requests for information (Compl. ¶¶ 83-85), qualified written requests (id. at ¶ 87), and notices of error (id. at ¶¶ 43, 45), as well as pattern or practice claims under RESPA (id. at ¶¶ 96-97); Count Two, negligence claims concerning CitiMorlgage's failure to provide a single point of contact to the Tanasis (id. at ¶¶ 119-127), and solicitation of the Tanasis’ mortgage modification applications (id. at ¶¶ 132-134); and Count Three, all of the Ta-nasis’ CUTPA claims besides the claim that CitiMortgage violated CUTPA by unfairly applied its existing loss mitigation polipies (id. at ¶ 149(d)).
. CitiMortgage raises this argument when discussing a loss mitigation application that the Tanasis allegedly mailed on January 13, 2014. The Court addresses it here to the extent that it impacts CitiMortgage’s motion to dismiss the Tanasis’ QWR claim as well.
. The Tanasis also allege that their two QWRs, each of which sought a payoff statement and the identity of the owner of their mortgage, triggered Regulation X’s response obligations under section 1024.36. CitiMort-gage responds that these requests were not related to the "servicing of the loan,” making this section inapplicable. As the Court has concluded that these requests did not relate to servicing, it does not engage with this argument again.
. The Court notes that some of the Tanasis’ CUTPA claims are related to CitiMortgage’s negligent handling of their mortgage modification applications and have been dismissed under res judicata, and reiterates that the Tanasis’ CUTPA claim is limited to ascertainable losses stemming from Citimortgage's other allegedly injurious practices — such as the negligent solicitation of mortgage modification applications. The Court further notes that some of the Tanasis' postage and professional fees relating to requests for information have been disallowed as RESPA damages, and reiterates that these are not the same postage and professional fees that the Tanasis seek to recover in their CUTPA claim, which, presumably, claims losses relating to the preparation of mortgage modification applications that Ci-timortgage solicited in an allegedly negligent manner.