In Casey v. Citibank, N.A., 915 F. Supp. 2d 255 (N.D.N.Y. 2013) the Court was confronted with motions to dismiss by all defendants. The case was based on claims alleging force-placed insurance. Specifically, the plaintiffs complained that the defendants committed a variety of wrongs by forcing the plaintiffs to pay premiums for flood insurance policy limits that went way beyond their remaining loan balances.
The Federal Court agreed. The claims were upheld at the pleading stage with respect to all defendants except defendant Citigroup, Inc. The claims against that defendant were dismissed but without prejudice. The remaining motions to dismiss were all denied and the claims upheld as against all the remaining defendants: Citibank, N.A.; Citimortgage, Inc.; MidFirst Bank, N.A.; and FirstInsure, Inc.
The Court summarized its holdings as follows:
The parties dispute whether the mortgage agreements give defendants the discretion to set and change the amount of flood insurance required. Making all reasonable inferences in plaintiffs' favor at this early stage of the litigation, their interpretation of the contract language is plausible. Plaintiffs thus state plausible causes of action for breach of contract, conversion, and breach of the implied covenant of good faith and fair dealing.
Similarly, plaintiffs sufficiently allege that defendants' receipt of commissions and/or kickbacks related to the force-placed flood insurance was neither disclosed in the mortgage agreements nor permitted by federal law. They also adequately allege that defendants mismanaged their escrow funds. Therefore, plaintiffs state plausible causes of action for unjust enrichment and breach of fiduciary duty.
Finally, the amended complaint contains clear allegations that defendants misrepresented the amount of flood insurance required under the mortgage agreements, initially accepted a lesser amount of coverage, and failed to provide proper notice and disclosure before force-placing unauthorized and excessive flood insurance on plaintiffs' properties. Plaintiffs thus state plausible claims for violations of the NYDPA [New York Deceptive Practices Act] and TILA [the Federal Truth in Lending Act].
Casey v. Citibank, N.A., 915 F. Supp. 2d 255, 267 (N.D.N.Y. 2013).
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