CitiMortgage, Inc. Plaintiff - Appellant
Platinum Home Mortgage, Corp. Defendant-Appellee
Submitted: September 26, 2018
from United States District Court for the Eastern District of
Missouri - St. Louis
SMITH, Chief Judge, MELLOY and STRAS, Circuit Judges.
MELLOY, CIRCUIT JUDGE.
CitiMortgage, Inc. ("CitiMortgage" or
"CMI"), a purchaser and reseller of mortgage loans,
sued Defendant Platinum Home Mortgage, Corp.
("Platinum"), an originator and seller of mortgage
loans. CitiMortgage alleged Platinum breached a contract by
failing to repurchase seven allegedly defective loans after
CitiMortgage demanded repurchase by sending multiple notices
to Platinum for each loan. The district court granted summary
judgment for Platinum, holding CitiMortgage failed to satisfy
a condition precedent contained in the agreement by failing
to prescribe a time within which Platinum could correct or
cure the alleged defects. Because we conclude CitiMortgage
adequately and substantially complied with the contract
(which neither specified a form of notice nor indicated that
the prescription of a time for cure had to be contained
within the notice), we reverse.
originated mortgage loans. CitiMortgage bought approximately
750 loans from Platinum for more than $140 million. This case
involves seven of those loans (valued around $1 million).
CitiMortgage had resold the loans at issue in this case to
Fannie Mae but was forced by Fannie Mae to repurchase the
loans due to Platinum's alleged failures to comply with
agreement between Platinum and CitiMortgage was a February
13, 2004 agreement supplemented with an October 14, 2004
addendum. The addendum addressed the delegation of
underwriting/loan-origination authority to Platinum and was
added years before loan origination for the seven loans at
issue in this case. Relevant to the present case, the
addendum purported to "add" terms to an existing
"Section 11" of the original agreement. By the time
the loans at issue in the present case were originated and
sold, the underlying agreement between CitiMortgage and
Platinum was one integrated agreement. Although we refer to
the agreement and to the addendum when identifying specific
sources of contractual terms, there is only one integrated
agreement at issue in this case.
to the agreement, CitiMortgage possessed discretion to
determine if a loan under the agreement was defective. This
discretion included the right to determine if Platinum had
breached the standards applicable for underwriting the loans
and to determine if CitiMortgage itself was required to
repurchase a loan it had resold to a third party (such as
Fannie Mae). This discretion was broad in that it was subject
to no express limitations and was identified as
CitiMortgage's "sole and exclusive discretion."
contract provided that Platinum was to be afforded an
opportunity to correct or cure an alleged defect and that,
absent correction or cure to CitiMortgage's
"complete satisfaction," Platinum could be required
to repurchase the loan. Moreover, if CitiMortgage itself was
required to repurchase a loan after sale to a third party,
CitiMortgage could assert the fact of that third party's
demand for repurchase as grounds to demand Platinum, in turn,
repurchase that same loan.
material contract provisions of the original agreement (with
emphasis added) are as follows:
11. CURE OR REPURCHASE
If CMI [CitiMortgage], in its sole and exclusive discretion,
determines any Loan purchased pursuant to this Agreement:
(i) was underwritten and/or originated in violation of any
term, condition, requirement or procedure contained in this
Agreement or the CMI Manual in effect as of ...