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Conway v. CitiMortgage, Inc.

Supreme Court of Missouri

August 19, 2014

DAVIS R. CONWAY AND SHERI D. CONWAY, Appellants,
v.
CITIMORTGAGE, INC. AND FEDERAL NATIONAL MORTGAGE ASSOCIATION, INC., Respondents

Page 411

APPEAL FROM THE CIRCUIT COURT OF ST. CHARLES COUNTY. The Honorable Jon A. Cunningham, Judge.

The Conways were represented by Mitchell B. Stoddard of Consumer Law Advocates in St. Louis.

CitiMortgage and Fannie Mae were represented by Amy J. Thompson of Bryan Cave LLP in St. Louis.

The attorney general, who filed a brief as a friend of the Court, was represented by Solicitor General James R. Layton and Brian Bear of the attorney general's office in Jefferson City.

Mary R. Russell, Chief Justice. All concur.

OPINION

Page 412

Mary R. Russell, Chief Justice.

Homeowners appeal from the trial court's judgment dismissing their claim against Federal National Mortgage Association (" Fannie Mae" ) and CitiMortgage under the Missouri Merchandising Practices Act (MMPA), section 407.020,[1] for an alleged wrongful foreclosure of a deed of trust. The trial court held the MMPA did not apply because Fannie Mae and CitiMortgage were not parties to the original loan transaction. It further held that the MMPA did not apply to post-sale activities that were unrelated to claims or representations made before or at the time of the transaction. Homeowners contend the trial court erred in construing the phrase " in connection with" too narrowly to exclude post-transaction activities from MMPA coverage.

At issue in this case is whether the homeowners sufficiently pleaded that the defendants' alleged wrongful foreclosure was " in connection with" the sale of merchandise so as to state a claim under the MMPA. For the purposes of the MMPA, a loan is an agreed upon bundle of services being " sold" by the lender to the borrower, and the " sale" of a loan lasts until the last service is performed or the loan is repaid. Accordingly, allegations of fraud and deception in the course of those services are " in connection with" the " sale," as required by section 407.020.1. This is true even where, as here, the party committing the alleged fraud or deception is not the seller. As long as the plaintiff alleges that the misconduct occurred in connection with the services that comprise the " sale" of a loan, the actor can be liable under the MMPA.

Here, the homeowners allege that the defendants committed fraud and deception in the course of performing some of the services that were agreed to at the outset of the loan. Because the sale of a loan lasts as long as the agreed upon services are being (or could be) performed, the homeowners' allegations of fraud and deception must have occurred " in connection with" the " sale" of their loan. Other questions relating to whether loan modification negotiations are done " in connection with" the initial extension of credit in a loan are

Page 413

considered in a second case decided today, Watson v. Wells Fargo Home Mortg., Inc., 438 S.W.3d 404, (Mo. banc 2014) (No. SC93769). The trial court's ...


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