Catalan v. GMAC Mortgage Corp., 09-2182

Plaintiffs' suit against lenders under the Real Estate Settlement Procedures Act

Catalan v. GMAC Mortgage Corp., 09-2182, concerned plaintiffs' suit against defendant mortgage companies under the federal Real Estate Settlement Procedures Act (RESPA), and under Illinois law for gross negligence, breach of contract, and willful and wanton negligence.


In reversing the summary judgment for defendant on the plaintiffs' RESPA claim, the court held that the district court erred in concluding that defendant was entitled to the protection of the RESPA safe harbor provision in 12 U.S.C. section 2605(f)(4) as defendant did not argue, and nothing in the record shows, that defendant "notified the person concerned of the error," as required to invoke the protection, and on this basis alone, defendant was not eligible for protection in the RESPA safe harbor.  The court also reversed the summary judgment for defendant on plaintiffs' breach of contract claim as a reasonable trier of fact could find that plaintiffs' failure to remit their October 2004 payment in a timely manner was excused due to the lenders' earlier breaches and errors and the resulting confusion surrounding their account.  However, the court affirmed the trial court's dismissal of plaintiffs' negligence claims as plaintiffs have made no showing of a fiduciary relationship between the parties.  Lastly, although the district court did not address the question of damages, plaintiffs have raised  disputed issues of material fact that bar summary judgment on this basis.

Related Link:

• Read the Seventh Circuit's Full Decision in Catalan v. GMAC Mortgage Corp., 09-2182