The United States Court of Appeals for the Eleventh Circuit favored CitiMortgage
in a putative class action suit. In
Nicklaw v. CitiMortgage, Inc., the plaintiff accused CitiMortgage of negligence when filing a notice
of satisfactory fulfillment of a mortgage agreement. Using precedent from
Spokeo, Inc. v. Robins, the court dismissed the case for lack of Article III standing. In
Spokeo, the Supreme Court held that “Article III standing requires a concrete
injury even in the context of a statutory violation.” This is the
first time a court has applied the
Spokeo opinion in a similar case; but most likely, it won’t be the last.
In July 2012, Roger Nicklaw sold his property in the State of New York
and used the proceeds to satisfy his existing mortgage. New York Law requires
a mortgage company to record a certificate of discharge within 30-days
of final payment in order to put the public on notice that the borrower
successfully fulfilled his financial contract with the institution. CitiMortgage,
however, did not file such certificate until ninety days after Nicklaw’s
final installment was paid. Nicklaw filed a class-action complaint in
federal court alleging CitiMortgage had committed a statutory violation
due to the delayed recordation of the certificate of discharge.
Nicklaw argued that he suffered a concrete injury as a result of CitiMortgage’s
negligence. He presented his case on appeal to the federal court after
his district court case was dismissed as moot. According to Nicklaw, his
right to have the satisfactory fulfillment of his mortgage agreement on
the public record was violated when CitiMortgage dragged its feet on the
matter. He also argued that New York legislation supports the consumer’s
right to have his financial records updated promptly.
Although his argument was well-researched and persuasive, the plaintiff’s
case was rejected by the Eleventh Circuit Court on several grounds, including:
1. A plaintiff is burdened to prove that he suffered a real injury, which
Nicklaw failed to present. The court noted that New York law regarding
timely filing of a certificate of discharge was not in question. The plaintiff
did not need to prove that the law, but rather, how did CitiMortgage’s
purported negligence impact his life?
2. Nicklaw could not provide evidence of actual harm due to the recordation
delay. Plaintiff waited two years to file suit and was not denied credit
due to his lack of mortgage reconveyance.
3. Robert Nicklaw relied on
Spokeo, Inc. v. Robins to further add to his claim. What he did not realize, however, is that
his reference to this case put the burden on him to prove actual injury—something
he could not do.
4. Nicklaw did not provide adequate evidence to support his claim of suffering
as a result of CitiMortgage’s negligence. The court noted that the
plaintiff did not allege that he lost money, nor was there any proof that
Nicklaw’s credit rating suffered due to the document’s late
filing. Plaintiff did not even demonstrate there was a “material
risk of harm” in the absence of actual harm. Essentially, Plaintiff
was not injured, and without injury, there is no recovery in federal court
available even if CitiMortgage committed a violation of New York law.
The Eleventh Circuit dismissed the case for lack of jurisdiction because
plaintiff did not have standing to sue.
It is important to note that the United States Constitution’s Article
III only allows federal courts to have jurisdiction when a litigant has
the standing to sue. By definition, standing to sue has the elements of
injury in fact, causation, and redressability. In this instance, Nicklaw
was unable to prove any of these elements, which is why CitiMortgage prevailed
and obtained a dismissal.
Find out more about the author,
Amy Martinez by reading her bio.