The Eleventh Circuit recently held in Nicklaw v. CitiMortgage, Inc.(No. 15-14216) that a plaintiff lacks standing to sue a creditor where the plaintiff merely alleges that the creditor failed to timely record a mortgage satisfaction, as it is statutorily required to do, but does not allege any additional concrete injury.
On July 2, 2012, Roger Nicklaw sold real estate that he owned in Buchanan, New York, and used the proceeds to pay off a mortgage held by CitiMortgage, Inc. Under New York law, CitiMortgage was required to record a satisfaction of the mortgage with the appropriate county clerk within 30 days of receiving Nicklaw’s mortgage payoff. The state statute provided for statutory damages if the satisfaction was not recorded within the required timeframe, with damages to increase over time. CitiMortgage did not record the satisfaction for more than 90 days.
In 2014, Nicklaw sued CitiMortgage for damages on the basis that CitiMortgage had failed to timely record the satisfaction. Nicklaw did not allege, however, that he had been aware of CitiMortgage’s failure to record the satisfaction until after CitiMortgage had, in fact, fulfilled its statutory obligations. CitiMortgage moved to dismiss the complaint, arguing that the claim was barred by a prior suit on the same issues. The district court agreed, and dismissed the suit as barred. Nicklaw appealed, and CitiMortgage moved to dismiss the appeal for lack of jurisdiction. The Eleventh Circuit dismissed the appeal, but on different grounds. The Court held that although Nicklaw had alleged that CitiMortgage violated the New York statute, Nicklaw had not alleged either that he was harmed or could have been harmed by CitiMortgage’s failure. The Court also held that Nicklaw was no longer being harmed because CitiMortgage had remedied its failure several years before he filed suit. Because he had failed to allege that he had suffered an injury in fact, Nicklaw lacked standing sue CitiMortgage.
This holding is an important reminder to creditors that remediating potential statutory violations even after they have occurred may be sufficient to avoid lawsuit. In this case, CitiMortgage’s belated compliance with New York’s recording statutes was sufficient to foreclose Nicklaw’s suit because CitiMortgage’s tardiness did not cause Nicklaw any actual damage. So while frontend compliance with all applicable statutes is always desirable, creditors should not underestimate the benefits of remedying violations after-the-fact.