Fraudulent Misrepresentation Case Falls Short

In Jackson v. CitiMortgage, Inc., No. W2016-00701-COA-R3-CV (Tenn. Ct. App. May 31, 2017), the Tennessee Court of Appeals affirmed summary judgment on an intentional misrepresentation (or fraud) claim where the plaintiffs could not establish that an “explicit promise or representation was made[.]”

During the 2008 recession, plaintiffs defaulted on their mortgage, which was held by defendant. Defendant notified plaintiffs in December 2010 that if the default was not cured, foreclosure proceedings would begin. In 2011, plaintiffs applied for loan modification assistance, but were denied. In March 2014, plaintiffs received a letter from a trustee stating that foreclosure would occur. Plaintiffs hired representation (“Mrs. Mitchell”), and Mrs. Mitchell and one of defendant’s representatives began emailing.

The foreclosure was postponed two times, and then was set for July 29, 2014. Before that date, Mrs. Mitchell and defendant’s representative were again in contact via email. Defendant’s representative told Mrs. Mitchell in an email that the “underwriter has requested some additional information from your client to complete their review file,” and that he would “follow up to confirm receipt or check progress by” the set foreclosure date. Plaintiffs asserted in their complaint that they provided the documents to Mrs. Mitchell and were told by her that defendant had agreed not to foreclose on July 29th. Defendants alleged they never received the documents, and Mrs. Mitchell died before the lawsuit was filed, so plaintiffs’ only evidence of the alleged promise to not foreclose was plaintiff wife’s uncorroborated testimony regarding what Mrs. Mitchell told her. The property was sold at foreclosure as scheduled on July 29, 2014.

Plaintiffs filed suit, asserting several contractual claims. The trial court granted summary judgment to defendant on all of these claims, and the Court of Appeals affirmed. In addition to their contractual claims, plaintiffs asserted a claim for intentional misrepresentation, which was also dismissed on summary judgment.

A plaintiff asserting an intentional misrepresentation claim must prove six elements, the first being “that the defendant made a representation of a present or past fact.” In this case, plaintiffs “argue[d] that while no explicit promise or representation was made in the email chain between Mrs. Mitchell and [defendant’s representative], the emails and the circumstances present a strong inference that a promise was made by Citi to complete the loan review process, provide [plaintiffs] with a decision, and postpone the foreclosure sale.” Defendant, on the other hand, asserted that the evidence was “insufficient to prove the first element of the claim, a representation or promise,” and the Court of Appeals agreed. The Court reasoned:

The emails regarding the third and final foreclosure sale only mention ‘checking progress’ by the foreclosure sale date on July 29, 2014. Second, nothing in the emails suggests anything remotely resembling a promise or a representation to postpone the third and final foreclosure sale date. …Mrs. Mitchell’s unfortunate passing means [plaintiffs] are unable to present sufficient evidence to show a genuine issue of material fact exists regarding their intentional misrepresentation claim.

Accordingly, summary judgment was affirmed.

Intentional misrepresentation claims are difficult to prove, and this one was destined to be even more difficult due to the death of a main witness. This case reminds us, though, to pay attention to the explicit elements of a fraud claim when gathering evidence and drafting complaints.