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White v. CitiMortgage, Inc.

United States Court of Appeals, Eighth Circuit

June 16, 2017

David L. White Plaintiff- Appellant
v.
CitiMortgage, Inc. Defendant-Appellee

          Submitted: January 11, 2017

         Appeal from United States District Court for the Western District of Missouri - Kansas City

          Before RILEY, [1] Chief Judge, LOKEN and BENTON, Circuit Judges.

          RILEY, CHIEF JUDGE.

         David White thought he had saved his house from foreclosure. He paid the mortgage servicer, CitiMortgage, Inc., thousands of dollars to undo a sale to the Federal Home Loan Mortgage Corporation (Freddie Mac) and to let White continue paying off his debt. Thereafter he paid many thousands more on the statements CitiMortgage resumed sending him each month. Yet when White tried to sell the house five years later, he discovered he did not own it, Freddie Mac did-it turns out the title was never actually transferred back to White after the foreclosure sale and White's reinstatement payment. The district court ruled it was too late for White to sue CitiMortgage for misleading him, because, as fate would have it, five years is also the governing statute of limitations. See Mo. Rev. Stat. § 516.120. The limitation clock had been running the whole time, according to the district court, because White could and should have checked with the county recorder to make sure his title was restored after he made the reinstatement deal with CitiMortgage. We reverse and remand.

         I. BACKGROUND

         White refinanced his house in 2003. By early 2008, Freddie Mac had acquired the debt, CitiMortgage was servicing it, and White was in default. CitiMortgage notified White and held a foreclosure sale, which White did not attend. Freddie Mac made the winning bid, equal to the amount necessary to pay off the loan, just over $90, 000. The deed transferring title to Freddie Mac was recorded in Jackson County, Missouri, on April 7, 2008. Three days later, Freddie Mac began eviction proceedings.

         About two months later, in June, White reached an oral agreement with CitiMortgage to pay roughly $6, 600 to "reinstate" the debt so he could continue living in the house. Freddie Mac acquiesced and dropped its efforts to evict White. Freddie Mac, as did White and at least some of the CitiMortgage employees involved in the transaction, assumed CitiMortgage would take the necessary steps to rescind the deed and restore White's title.[2] For unknown reasons, CitiMortgage failed to do so.

         CitiMortgage also failed to apply White's "reinstatement" payment to the loan right away. By the time CitiMortgage processed the $6, 600, it was no longer enough to bring the debt current. Treating the shortfall as a trigger for "loss mitigation options, " CitiMortgage then approached White about modifying his loan. White and CitiMortgage's agent signed a modification agreement in October 2008. The modification unquestionably was premised on White again owning the house. Among other things, the agreement-which CitiMortgage prepared and presented to White-provided that the original deed of trust securing the loan "shall remain in full force and effect, " necessarily presupposing that the subsequent "Trustee's Deed Under Foreclosure" reflecting the sale to Freddie Mac had not overridden the original trust deed. More fundamentally, there simply would have been no reason for such a transaction (or, for that matter, for CitiMortgage to continue dealing with White at all) if the foreclosure were complete and effective, extinguishing the debt, and the house belonged to Freddie Mac.

         In the fall of 2013, White moved and decided to sell the house. His realtor ran a title search and discovered White was not the record owner. By then, White had paid almost $90, 000 on the modified loan. White sued CitiMortgage in Missouri state court in late January 2014. Freddie Mac intervened and removed the case to federal court, see 12 U.S.C. § 1452(f)(3), seeking an order setting aside the deed from the foreclosure sale and enforcing the modified loan-in other words, judicial permission to proceed as if everything happened the way it was supposed to occur. White resisted Freddie Mac's proposed disposition, arguing the circumstances had changed and he now wanted money damages, not the house.[3] White ultimately pled four counts: fraud, "negligent inducement/negligent non-disclosure, " "constructive fraud/restitution, " and "violation of the Missouri Merchandising Practices Act" (MMPA), Mo. Rev. Stat. § 407.020(1).

         On cross-motions for summary judgment, the district court held White's claims were all time-barred, without addressing the merits. Citing Federal Rule of Civil Procedure 41(a)(1)(A)(ii) and (c), the parties then agreed to have Freddie Mac's claims dismissed with prejudice. The district court entered an order to that effect.[4]Having disposed of all the parties and claims in the case, the district court also entered final judgment, from which White appeals. See 28 U.S.C. § 1291 (appellate jurisdiction).

         II. DISCUSSION

         We review the grant of summary judgment de novo. See, e.g., Johnson v. Blaukat, 453 F.3d 1108, 1112 (8th Cir. 2006). See generally Fed.R.Civ.P. 56(a). The parties agree White's claims are all subject to a five-year statute of limitations. See Mo. Rev. Stat. § 516.120; see also, e.g., Klemme v. Best, 941 S.W.2d 493, 497 (Mo. 1997) ("Section 516.120(4) does apply to claims of breach of fiduciary duty or constructive fraud."); Royal Forest Condo. Owners's Ass'n v. Kilgore, 416 S.W.3d 370, 373 (Mo.Ct.App. 2013) ("An action for unjust enrichment is . . . subject to the five-year statute of limitations in Section 516.120(1)."). The dispute is over whether the five years started running-in the summer or fall of 2008, or the fall of 2013.

         Generally, claims accrue "when the damage . . . is sustained and is capable of ascertainment." Mo. Rev. Stat. § 516.100. As White points out on appeal, Missouri law provides a more forgiving standard for "action[s] for relief on the ground of fraud, " which are "deemed not to have accrued until the discovery . . . of the facts constituting the fraud." Mo. Rev. Stat. § 516.120(5). We can ignore that exception, and need not parse which of White's claims it covers, cf. Huffman v. Credit Union of Tex., 758 F.3d 963, 968-69 (8th Cir. 2014) ("[T]he five-year statute of limitations for a narrow subclass of MMPA claims-those based on allegations of 'fraud'-may be governed by ...


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