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Bennett v. Cit Bank, N.A.

United States District Court, N.D. Alabama, Southern Division

January 28, 2019

JEANETTE BENNETT, et al., Plaintiffs,
CIT BANK, N.A., et al., Defendants.



         This convoluted case involves a reverse mortgage, a death, an inheritance, a fire, a foreclosure, and an insurance payout, after which Plaintiffs Jeanette Bennett and Maggie Bell contend their money ended up in the wrong hands.

         Plaintiffs allege that, among other Defendants, CIT Bank, N.A., CIT Group, Inc., and Federal National Mortgage Association (“Fannie Mae”) wrongfully took insurance proceeds that belonged to Plaintiffs or their mother's estate through a series of misrepresentations; the setting arises out of an insurance claim on real property that Fannie Mae bought at a foreclosure sale. In their amended complaint, Plaintiffs seek to recover the insurance proceeds from Defendants by bringing claims for declaratory judgment, conversion, fraud, and wantonness. CIT and Fannie Mae filed substantively identical motions to dismiss. (Doc. 4, Doc. 6, respectively).

         The court will DENY the motions to dismiss as to Plaintiffs' claims for declaratory judgment and conversion. Plaintiffs have alleged a plausible interest in the insurance proceeds because they owned the realty covered by the insurance policy at the time they filed the insurance claim, the insurance company listed Plaintiffs' mother's estate as a payee on the insurance proceeds check, and Plaintiffs owed no debt to Defendants after foreclosure. Because Plaintiffs allege that Defendants took the insurance proceeds to the exclusion of Plaintiffs' rights, Plaintiffs have sufficiently alleged an actual controversy to bring a cause of action for declaratory judgment and conversion.

         But the court will GRANT the motions to dismiss as to Plaintiffs' claims for fraud and wantonness. Plaintiffs have not pled facts showing (1) reliance by them on any misrepresentation to support their fraud claim, or (2) any non-economic harm to support a standalone claim for wantonness.


         A motion to dismiss challenges the legal sufficiency of a complaint. Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a defendant can move to dismiss a complaint for “failure to state a claim upon which relief can be granted.” The complaint will survive the motion to dismiss if it “allege[s] ‘enough facts to state a claim to relief that is plausible on its face.'” Adinolfe v. United Tech. Corp., 768 F.3d 1161, 1169 (11th Cir. 2014) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

         For a complaint to be “plausible on its face, ” it must contain enough “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). And the court accepts as true the factual allegations in the complaint. Id.

         But not all allegations can defeat a motion to dismiss. “[L]abels and conclusions” and speculation “will not do.” Twombly, 550 U.S. at 555. So, the court will look only at well-pled facts, and if those facts, accepted as true, state a plausible claim for relief, then the complaint will survive the motion to dismiss. Iqbal, 556 U.S. at 678.


         The Plaintiffs are heirs of Catherine Getaw and the personal representatives of her estate. In November 2005, Ms. Getaw executed a promissory note that was secured by a reverse mortgage that encumbered her home in Birmingham, Alabama. Financial Heritage held the reverse mortgage and CIT acted as agent and servicer of the reverse mortgage. (Doc. 3 at ¶¶ 12-13).

         Ms. Getaw died in April 2015. Her will devised her home to the Plaintiffs without limitations; so, under Ala. Code § 43-2-830(c), the Plaintiffs took the home subject to the reverse mortgage. (Doc. 3 at ¶¶ 3, 14).

         CIT then sent a letter to the Plaintiffs that included the following option for paying off the reverse mortgage loan:

[T]he mortgage will be released and no deficiency judgment will be taken if the property has no junior liens and is sold for at least 95 percent of the appraised value with the net proceeds paid to the investor, even if the debt is greater than the appraised value.

(Doc. 3 at ¶ 17) (emphasis in original).

         In October 2015, CIT initiated foreclosure proceedings on the home. Then, on October 28, 2015, a fire burned the home. At the time of the fire, Defendant Foremost Insurance Company insured the home. The Foremost insurance policy is not in the record and Plaintiffs do not allege any specific terms of the policy. Plaintiffs promptly notified CIT of the fire and filed an insurance claim for fire damage with Foremost. (Doc. 3 at ¶¶ 19-21).

         On November 2, 2015, CIT sold the property to Fannie Mae at a foreclosure sale. According to Plaintiffs, the foreclosure sale completely satisfied the repayment of the reverse mortgage loan pursuant to the foreclosure deed and the terms of the reverse mortgage. Though the foreclosure deed and the reverse mortgage contract itself are not in the record, Plaintiffs allege that the reverse mortgage contract stated:

Lender may enforce the debt only through sale of the Property. Lender shall not be permitted to obtain a deficiency judgment against Borrower if the Security Instrument is foreclosed.

(Doc. 3 at ¶ 18). And Plaintiffs allege that CIT “elected to accept the foreclosure proceeds in lieu of any other repayment options or terms.” (Id. at ¶ 25).

         After the sale, Fannie Mae, through its attorney, contacted CIT regarding insurance information for the home. Then, on February 11, 2016, Fannie Mae filed an insurance claim with Foremost for the fire damage to the home. Foremost responded by requesting evidence from Fannie Mae related to any lien holder's interest in the home, the insurance claim, and any resulting proceeds. Fannie Mae then requested the same information from ...

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