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Sandlin v. Citimortgage, Inc.

United States District Court, W.D. Tennessee, Western Division

December 18, 2014



S. THOMAS ANDERSON, District Judge.

Appellant Jesse Sandlin, who is proceeding pro se, appeals the decision of the United States Bankruptcy Court for the Western District of Tennessee to grant Appellee CitiMortage, Inc.'s ("CitiMortgage") motion for summary judgment and deny Sandlin's cross-motion for summary judgment. For the reasons set forth below, the decision of the Bankruptcy Court is AFFIRMED.


In its May 5, 2014 summary judgment order, the Bankruptcy Court set out the full factual and procedural background of this case. Mr. Sandlin filed a Chapter 13 petition on May 14, 2009. CitiMortgage holds a note and deed of trust secured by Mr. Sandlin's residential property located at 4742 Kassell Cove, Memphis, Tennessee. During the Chapter 13 case, CitiMortgage filed a claim, and a claims allowance process dispute arose between the parties. The Bankruptcy Court eventually overruled Mr. Sandlin's objection to CitiMortgage's proof of claim in an order dated April 21, 2010. Mr. Sandlin timely appealed the decision to this Court, and the appeal was docketed as civil case no. 10-2716-STA-dkv. Mr. Sandlin also filed a separate civil suit in this District, case no. 09-2294-JPM-cgc, alleging wrongful foreclosure and other causes of action against CitiMortgage.[1] While Mr. Sandlin's appeal and civil suit were pending, the parties participated in mediation and agreed to a global settlement of all disputes.

The parties memorialized their global settlement in a Settlement Agreement and Release dated June 5, 2012, and a Modification Agreement dated August 6, 2012. On August 6, 2012, this Court entered an agreed order dismissing Mr. Sandlin's bankruptcy appeal in case no. 10-2716-STA-dkv and a separate agreed order dismissing Mr. Sandlin's civil suit in case no. 09-2294-JPM-cgc, both with prejudice. Thereafter, on August 13, 2012, the Bankruptcy Court entered an Amended Agreed Order Resolving Pending Contested Matters and Approving Loan Modification. Together, all of these agreements and orders resolved all pending litigation between the parties, released CitiMortgage from all of Mr. Sandlin's claims, and resulted in a modified loan agreement. Specifically, the parties agreed, among other things, to a reduced loan balance of $144, 385.99 to be amortized over 30 years beginning on July 1, 2012, at a modified contractual interest rate of 2.5%. Mr. Sandlin was responsible for the payment of local property taxes and insurance on the home, eliminating the need for an escrow account.

Following the loan modification and global settlement, Mr. Sandlin made all monthly home mortgage payments as they became due. However, when Mr. Sandlin did not pay all of the 2012 or 2013 real property taxes, CitiMortgage exercised its rights under the modification agreement and paid the delinquent taxes for 2012 and 2013. To recoup its expenses from Mr. Sandlin, CitiMortgage setup a new escrow account.

On September 27, 2013, Mr. Sandlin filed an adversary proceeding with the Bankruptcy Court, requesting that CitiMortgage turn over improperly collected funds. Mr. Sandlin sought the intervention of the Bankruptcy Court to resolve the dispute over the payment of the Sandlins' local property taxes.[2] Mr. Sandlin actually styled the filing as a motion for an order requiring CitiMortgage, Inc. to turnover escrow funds and an objection to CitiMortgage increasing his monthly payment to escrow property taxes. Mr. Sandlin alleged that CitiMortgage had collected and held funds in escrow for the 2012 property taxes and then failed to pay them. Mr. Sandlin also objected to CitiMortgage's decision to require the Sandlins to escrow their property taxes, based on Mr. Sandlin's belief that CitiMortgage already held the tax payments in escrow. Mr. Sandlin requested that the Bankruptcy Court order CitiMortgage to turnover a total of $16, 275.00 in improperly withheld funds.[3] CitiMortgage filed an answer on November 15, 2013, and a motion for summary judgment on March 21, 2014. Mr. Sandlin filed a cross-motion for summary judgment on April 16, 2014.

Following a hearing on the parties' Rule 56 motions, the Bankruptcy Court granted CitiMortgage's motion for summary judgment and denied Mr. Sandlin's cross-motion on May 5, 2014. The Bankruptcy Court held that although the parties disagreed over many immaterial facts, there was no genuine dispute as to any material fact. The Bankruptcy Court found that the material facts were as follows: the parties entered into a global settlement, which was approved by the Bankruptcy Court. Mr. Sandlin released all of his pre-settlement claims and dismissed his bankruptcy appeal and civil suit with prejudice. Despite the parties' agreement that Mr. Sandlin would pay his local property taxes directly, Mr. Sandlin failed to pay all of his property taxes for 2012 and 2013. CitiMortgage paid the delinquent property taxes and set up a new escrow account to recover the payments it had advanced Mr. Sandlin. Mr. Sandlin was current on his monthly mortgage payments of principal and interest but had not made payments for the balances in the escrow account. All of the other facts related to pre-settlement events were now moot in light of the parties' settlement agreement.

Based on the undisputed facts at summary judgment, the Bankruptcy Court ruled that the doctrine of res judicata barred the parties from relitigating disputes that were previously settled and released. "Mr. Sandlin essentially is attempting to relitigate claims that were previously settled and thereby recover funds from CitiMortgage that were released in the settlement."[4] The Bankruptcy Court found that CitiMortgage's escrow claim for the taxes "arose post-settlement." Moreover, there was no dispute that all taxes were due and owing and that Mr. Sandlin had not paid his 2012 county property taxes or his 2013 city and county property taxes. Under the circumstances CitiMortgage had a contractual right to pay any delinquent taxes and then seek repayment from Mr. Sandlin. As a result, Mr. Sandlin owed CitiMortgage for the funds advanced for his 2012 and 2013 property taxes. The Bankruptcy Court granted CitiMortgage's motion for summary judgment, denied Mr. Sandlin's cross-motion for summary judgment, and dismissed Mr. Sandlin's initial and amended complaints. After the denial of Mr. Sandlin's Rule 60 motions for relief from judgment, Mr. Sandlin filed a timely appeal.

On appeal Mr. Sandlin argues that the Court should reverse the Bankruptcy Court's order because CitiMortgage misapplied Mr. Sandlin's mortgage payments. After reviewing the full procedural history of his Chapter 13 case and other litigation with CitiMortgage, Mr. Sandlin raises three discrete claims. First, CitiMortgage has improperly attempted to collect charges and fees which supposedly accrued after Mr. Sandlin filed his bankruptcy petition, even though CitiMortgage never disclosed the charges and fees in the Chapter 13 proceedings. Mr. Sandlin asserts that CitiMortgage has willfully and intentionally violated the terms of his Chapter 13 plan and the automatic stay by concealing the charges to his mortgage account and misapplying payments. Second, Mr. Sandlin describes his post-settlement dispute with CitiMortgage over the payment of his local property taxes. According to Mr. Sandlin, CitiMortgage collected and escrowed the property taxes for 2012 but failed to pay the property taxes. Mr. Sandlin was forced then to pay the 2012 city property taxes himself. Third, Mr. Sandlin claims that although CitiMortgage agreed in the settlement to reduce Mr. Sandlin's loan balance by $10, 000.00, CitiMortgage actually added over $9, 000.00 to Mr. Sandlin's principal. Mr. Sandlin contends that CitiMortgage's actions violated the terms of the automatic stay under 11 U.S.C. ยง 362. For these reasons, the Bankruptcy Court wrongly held that the parties' post-settlement dispute was barred as res judicata, and Mr. Sandlin is entitled therefore to relief from the Bankruptcy Court-approved settlement agreement and disgorgement of the funds.

CitiMortgage has responded that the Court should affirm the Bankruptcy Court's judgment. Most of the issues raised in Mr. Sandlin's pleadings with the Bankruptcy Court are res judicata, and no genuine issue of material fact exists as to Mr. Sandlin's release of the previously settled claims. Like Mr. Sandlin, CitiMortgage reviews the extensive history of the disputes between the parties, including their settlement of Mr. Sandlin's claims against CitiMortgage in 2012. CitiMortgage argues that "[t]he majority of Mr. Sandlin's arguments on appeal speak to his unsupported allegations about activity in the Mortgage Account prior to the parties' settlement of all of his claims."[5] As such, CitiMortgage maintains that nearly all of Mr. Sandlin's claims are res judicata, and summary judgment in favor of CitiMortgage was proper.

CitiMortgage's brief focuses mainly on the parties' dispute over the Sandlins' local property taxes.[6] CitiMortgage asserts that at mediation, Mr. Sandlin and his wife specifically negotiated for the right to pay their property taxes directly in lieu of depositing the funds into an escrow account. CitiMortgage agreed to the request and modified the loan to reflect that the Sandlins would not escrow their property taxes after September 2012. CitiMortgage subsequently received notice from the City of Memphis and Shelby County, Tennessee that the Sandlins had not paid their 2012 property taxes. Although the Sandlins later paid their city property taxes for 2012, they failed to pay the 2012 county property taxes. The Sandlins also failed to pay their city and county property taxes for 2013. Faced with a tax delinquency encumbering their collateral, CitiMortgage paid the taxes and then established a new escrow account for the amounts paid on behalf of the Sandlins. CitiMortgage filed a notice of mortgage payment change with the Bankruptcy Court and increased Mr. Sandlin's monthly payment to reflect the amounts CitiMortgage had advanced the Sandlins as payment for the delinquent property taxes.[7] In the adversary proceedings before the Bankruptcy Court, Mr. Sandlin had no proof that the taxes were not actually due and owing or that his tax bill was altered as a consequence of a tax appeal. Therefore, the Bankruptcy Court correctly held that CitiMortgage had the contractual right under the terms of the settlement agreement to pay the delinquent taxes and re-establish an escrow account to collect the taxes from the Sandlins.

In his reply brief, Mr. Sandlin argues that res judicata applies in this case only as to the confirmed Chapter 13 plan. Mr. Sandlin reiterates his position that CitiMortgage has misapplied plan payments and attempted to collect undisclosed or unscheduled fees and charges outside of the terms of the Chapter 13 plan. Mr. Sandlin contends that a genuine dispute exists about CitiMortgage's accounting, though Mr. Sandlin does not cite any record evidence to support his position. Mr. Sandlin concludes by arguing that CitiMortgage fraudulently withheld information about fees and costs in an attempt to collect them outside of the appropriate bankruptcy procedures. Mr. Sandlin contends that CitiMortgage's failure to disclose these fees and costs has deprived ...

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