L.J. JACKSON, ET AL.
January 18, 2017
from the Chancery Court for Shelby County No. CH-14-1217
James R. Newsom, Chancellor
appeal involves a dispute between a loan servicer and a
family who subsequently defaulted on a mortgage for a piece
of property. The loan servicer foreclosed and sold the
property according to the express terms of the mortgage note
and deed of trust after the family had been in default for
multiple years and after multiple failed attempts to seek
loan modification. The family sued for breach of contract and
the covenant of good faith and fair dealing, promissory
estoppel, and intentional misrepresentation, asserting that
the loan servicer promised to postpone the foreclosure sale
until after completion of the most recent loan modification
review process. The trial court granted summary judgment to
the loan servicer on all claims. The family appealed on all
four issues. We affirm the trial court's judgment in all
R. App. P. 3 Appeal as of Right; Judgment of the Chancery
Court Affirmed; Case Remanded
Alexander Brewer, Memphis, Tennessee, for the appellants, L.
J. Jackson and Brenda Jackson.
Nicholas Henry Adler, Brentwood, Tennessee, for the appellee,
W. McClarty, J., delivered the opinion of the court, in which
Arnold B. Goldin and Brandon O. Gibson, JJ., joined.
W. MCCLARTY, JUDGE
appeal arises from a contract dispute between CitiMortgage,
Inc. ("Citi") and Brenda and L.J. Jackson
(collectively "the Jacksons" and individually
"Mr. Jackson" and "Mrs. Jackson"). We
find the findings of fact provided by the trial court to be
an exhaustive and relevant summation of the record, and we
draw from them below.
26, 2005, the Jacksons refinanced the mortgage on their house
and property located on Ross Creek Drive in Memphis,
Tennessee ("the Property"). They refinanced and
obtained a new loan from Argent Mortgage Company, LLC
("Argent"). Under the terms of the refinancing and
to obtain the new loan, the Jacksons executed two documents.
The first document, executed May 26, 2005, was a 30-year
adjustable rate mortgage note ("the Note") in the
amount of $118, 750 owed to Argent. The second document,
executed June 10, 2005, was a deed of trust ("the
Deed") conveying a security interest in the Property to
Lender (here, Argent).
Note required monthly payments by the Jacksons. In the event
of the Jacksons' default, the Note allowed the Lender to
enforce the security interest guaranteed by the Deed by
accelerating the debt and the eventual sale of the Property
in a foreclosure proceeding.
the Note contained a provision allowing for the free,
alienable transfer of the Note by Lender (originally Argent)
to another party. Whosoever possesses the Note and has the
right to receive payments under it is the "Note
Holder." The Note also provided in pertinent part:
Oral agreements, promises or commitments to lend money,
extend credit, or forbear from enforcing repayment of a debt
including promises to extend, modify, renew or waive such
debt, are not enforceable. This written agreement contains
all the terms Borrower(s) and Lender have agreed to. Any
subsequent agreement between us regarding this Note or the
instrument which secures this note, must be in a signed
writing to be legally enforceable.
1, 2008, Argent transferred the servicing of the
Jacksons' mortgage to Citi. The previous month, Argent
had provided written notice to the Jacksons that their
mortgage was being "assigned, sold or transferred"
to Citi and that future payments would be owed to Citi. The
notice further stated that the assignment, sale, or transfer
of the mortgage loan "does not affect any terms or
conditions of the mortgage instruments, other than the terms
directly related to the servicing of your loan."
the adjustable rates and the recession beginning in 2008, the
Jacksons first defaulted on payments on their mortgage on
October 1, 2008. The Jacksons remained in default thereafter
until the initiation of this lawsuit. After three months,
Citi notified the Jacksons that it would only accept full
payment for the past due payments to satisfy the arrearage.
point, the Jacksons began the loan modification process in an
attempt to salvage their mortgage and their ownership of the
Property. The testimony is disputed. The Jacksons claim that
they began the loan modification process before default on
October 1, 2008; Citi denies this. The Jacksons assert that
an unnamed Citi employee told them to cease payments to
assist them in qualifying for a loan modification; Citi
denies this. The trial court did not find this information
material to Citi's motion for summary judgment.
sent the Jacksons a letter on December 10, 2010, notifying
them that failure to cure the default for the past due amount
of $26, 375.09 by January 10, 2011 would result in
acceleration of the debt and subsequent foreclosure
proceedings as permitted under the Note and the Deed. By that
date, the Jacksons would have been in default for over 26
months. The Jacksons failed to cure the default by January
10, 2011, and Citi accelerated the debt in an effort to seek
eventual foreclosure on the home.
point prior to June 30, 2011, the Jacksons sought loan
modification assistance from Citi. While the exact date this
process began is unclear from the record, Citi mailed the
first Home Affordable Modification Program ("HAMP")
denial letter to the Jacksons on June 30, 2011. Citi mailed
the Jacksons similar denial letters for HAMP and other loss
mitigation options on November 25, 2013, June 5, 2014, and
June 16, 2014.
March 2014, the Jacksons received noticed from Brock &
Scott, PLLC that foreclosure proceedings were being started
regarding the Property. As required by the Deed, Citi named
Brock & Scott Substitute Trustee so as to conduct the
foreclosure proceedings on or about April 8, 2014. The
Jacksons received a letter on April 29, 2014 from Brock &
Scott notifying them that the foreclosure sale would take
place on May 27, 2014.
the record is unclear of the specific date, the Jacksons
hired Chris Mitchell ("Mrs. Mitchell") of
Everything Financial Company to aid them in the loan
modification/HAMP process after Citi denied the Jacksons'
loss mitigation options. Mrs. Mitchell exchanged emails with
an employee of Citi, Stephen Ortwerth (a Making Homes
Affordable Executive Response Unit Specialist) regarding the
Jacksons' loan modification application. Those emails
form the bulk of the Jacksons' evidence of alleged
contractual malfeasance on Citi's part. The pertinent
parts are reproduced below.
Mrs. Mitchell, the Jacksons submitted documentation as
requested by Mr. Ortwerth and Citi. Through the loan
modification process and her communications with Citi, Mrs.
Mitchell obtained a postponement of the foreclosure from May
27, 2014, until June 24, 2014. Brock & Scott notified the
Jacksons of the postponement through certified mail
postmarked on May 28, 2014. The foreclosure was again
postponed until July 29, 2014, and Brock & Scott
similarly sent the Jacksons notice of postponement on June
25, 2014, the day after the second foreclosure date. Mrs.
Mitchell also informed the Jacksons of the second
June 24, 2014 email, Mr. Ortwerth notified Mrs. Mitchell that
he was monitoring the Jacksons' HAMP review and that he
would notify Mrs. Mitchell of the decision by July 1, 2014.
In a July 21, 2014 email, Mrs. Mitchell sent the following
email to Mr. Ortwerth:
Good afternoon Mr. Ortwerth,
Thank you for this communication. However, I am a bit
concerned. There is a posted sale date for July 29, 2014. I
am a bit concerned, inasmuch as I have not received
communication within the last 12 days. Is there a requirement
for further documentation? If so, please advise. Thank you.
Mr. Ortwerth responded to Mrs. Mitchell in an email on July
22, 2014, requesting additional documentation from the
I hope you're well. Our Underwriter has requested some
additional information from your client to complete their
- [P]rovide supporting documents for L.J.'s new
- 2014 year-to-date profile and loss statement for Brenda
- most recent statement (all pages) for Orion Federal Credit
Union showing schedule C income
- [P]rovide three months proof of boarder income: bank
statements and copies of canceled rent checks . . . .
I need this information as soon as possible and will follow
up to confirm receipt or check ...