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Kent v. Seterus, Inc.

United States District Court, W.D. Missouri, Western Division

July 20, 2018

KELLY W. KENT, Plaintiff,
v.
SETERUS, INC., et al., Defendants.

          ORDER GRANTING IN PART DEFENDANT QUICKEN LOAN, INC.'S MOTION TO DISMISS

          GREG KAYS, CHIEF JUDGE UNITED STATES DISTRICT COURT.

         This case arises out of unpaid real estate taxes. Plaintiff Kelly Kent (“Kent”) alleges that he made payments to his mortgage company, including amounts for real estate taxes, but that the taxes were never paid to the taxing authority. Kent is suing two lenders, a loan servicer, and a company that provided property tax reporting and monitoring services on his loan.

         Now before the Court is Defendant Quicken Loan, Inc.'s (“QLI”) motion to dismiss (Docs. 65 & 97). As explained below, the motion is GRANTED IN PART.

         Background

         The third amended complaint (Doc. 92) alleges the following:

         Kent purchased a condo in Cook County, Illinois in 2007. On July 19, 2012, he refinanced his loan and in doing so, obtained a mortgage loan (the “Loan”) through QLI. Kent arranged an escrow account with QLI for payment of the property taxes and insurance (“Escrow Items”) on the condo. The escrow agreement requires Kent to pay QLI for the Escrow Items and that QLI would apply those payments to the underlying obligation. The escrow agreement states QLI has the ability to waive Kent's obligation to pay for any or all of the Escrow Items and that QLI would provide Kent an annual accounting of the Escrow Items.

         On July 27, 2012, QLI sold or assigned its rights and interest in the Loan to Defendant Federal National Mortgage Association (“Fannie Mae”). On September 1, 2012, QLI sold or assigned the servicing rights in the Loan to Defendant Seterus, Inc. (“Seterus”). Plaintiff alleges that Seterus was outsourcing the property tax reporting and monitoring services to Defendant Lereta, LLC (“Lereta”) during this time.

         During the relevant time, Kent made timely payments on his loan and the Escrow Items. He received yearly mortgage statements reflecting the beginning and ending balance of his loan, beginning and end balance of his escrow account, and the real estate taxes paid. Nevertheless, on November 10, 2016, Kent learned his tax year 2012 real estate taxes owed to Cook County, Illinois, had been sold to ATCF II Illinois, LLC (“ATCF”) at the county's annual tax sale, due to nonpayment. Later, Kent learned that his real estate taxes for tax years 2013, 2014, and 2015 also had not been paid, despite his yearly mortgage statements indicating they had.

         Real estate taxes in Cook County, Illinois, are payable in two installments. The first installment is due the first business day in March, and the second due date is generally sometime in August or September.

         Kent alleges that when QLI sold its interest in the Loan to Fannie Mae and/or sold its servicing rights in the Loan to Seterus, it provided the incorrect property account number PIN, thereby causing his real estate taxes to go unpaid. Kent also alleges this error went unnoticed for years by the other Defendants.

         On December 8, 2016, Kent received an escrow account statement indicating the account had a deficiency of $4, 252.86. Then on January 3, 2017, Fannie Mae, Seterus, and/or Lereta redeemed the delinquent real estate taxes, including those sold to ATCF, for $9, 782.70. This redemption payment included penalties of $1, 176.56. Kent continued to receive statements claiming the escrow account had a shortage. Kent alleges Defendants increased his escrow payment to cover the shortfall caused, at least in part, by the penalties assessed for the late payment of his taxes.

         Initially, Kent sued Lereta and Seterus, but on October 23, 2017, amended his complaint to add QLI as a party.

         In his third amended complaint, Kent alleges seven counts against Defendants for breach of contract, breach of fiduciary duty, and various common law negligence claims. QLI moved to dismiss the claims against it. After the motion was fully briefed, Kent moved to amend the complaint to clarify certain facts alleged. In granting the motion to amend his ...


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