In Cogswell v. CitiFinacial Mtg. Co. Inc., CitiFinancial Mortgage assigned its interest in a mortgage to two investors—doing business as “The Patrick Group”—but never delivered the original or a copy of the underlying note. When The Patrick Group tried to foreclose on the mortgage in Illinois state court, its action was dismissed because it could not produce the note. The Patrick Group was not successful on its appeal to state court.
The Patrick Group filed a breach-of-contract lawsuit against CitiFinancial in state court. The suit was removed to federal court, and the district court granted summary judgment in favor of CitiFinancial. The district court based its summary-judgment decision primarily on a determination that CitiFinancial never agreed to deliver the note as part of the parties’ agreement to transfer the mortgage. The Seventh Circuit, however, concluded that whether the parties agreed on this term is a question of fact, and The Patrick Group presented enough evidence from which a reasonable fact finder could conclude that it was a part of the parties’ agreement. Therefore, the Court remanded the matter back to the district court to resolve the open factual question on whether the parties' agreement required CitiFinancial to provide The Patrick Group with the note.
The Seventh Circuit also concluded that the district court’s alternative basis for summary judgment—that CitiFinancial’s alleged breach did not cause The Patrick Group’s damages—was also erroneous. Under the circumstances of the case, the Seventh Circuit held that the causation question should have been resolved in The Patrick Group’s favor as a matter of law; the state trial and appellate courts rejected The Patrick Group’s foreclosure action because without a copy of the note, it could not prove it was the holder of the debt the mortgage secured.
You can hear the oral argument at the Seventh Circuit here (mp3).