breach

Defenses to Foreclosure – Mitigation of Damages

Defenses to Foreclosure – Mitigation of Damages

Defenses to Foreclosure – Mitigation of Damages[1]

Whenever defending a foreclosure it is important to realize that the mortgage between the bank (“mortgagee”) and the borrower (“mortgagor”) is nothing more than a contract.  Under the common law of contracts mitigation of damages is required by the party who is seeking damages.  The requirement that the mortgagee seeking damages mitigate their damages ensures that the mortgagee “remains in the same position it would have been in had the contract not been breached, but at the least cost to the defaulting party.” [2]  The duty to mitigate requires that the injured party, in this example the mortgagee, take reasonable steps to mitigate their damages.[3]

While several courts in Ohio have analyzed and applied the mortgagee’s duty to mitigate damages when pursuing a foreclosure, some courts are still reluctant to impose a duty of mitigation on mortgagees when the mortgage contains language allowing the mortgagee to pursue full payment. [4]  However, in cases in which the duty to mitigate is not required the courts seem to misconstrue the duty to mitigate with whether or not a mortgagee is allowed to foreclose and pursue full payment. The duty to mitigate does not itself prevent the mortgagee from foreclosing and pursuing full payment; rather, it only “requires an injured party to make reasonable efforts… to limit the damages that result from the breach.”[5] Therefore, the mortgagee may still pursue full payment and foreclosure, but if there is an opportunity for the bank/mortgagee to recoup some of their losses, by say accepting a short-sale or working out a modification with the mortgagor, then the duty to mitigate damages requires them to do so or at least make a reasonable effort. When defending a foreclosure the mortgagor’s attorney should look into whether the mortgagee had an opportunity to mitigate their damages. The failure to mitigate damages is an affirmative defense, meaning that the mortgagor’s attorney must prove that the mortgagee failed to mitigate. [6]

[1] By: Timothy J. Cook, Of Counsel, Doucet & Associates Co., L.P.A.

[2] Aurora Loan Servs. L.L.C. v. Sansom-Jones, 2012-Ohio-5477, ¶ 25 (10th Dist.) (citing Frenchtown Square Partnership v. Lemstone, Inc., 2003–Ohio–3648, ¶ 12).

[3] Id.

[4] Fifth Third Mtge. Co. v. O’Neill, 2015-Ohio-3000, ¶ 44 (5th Dist.) appeal not allowed, 2016-Ohio-172, ¶ 44 (2016).

[5] UAP–Columbus JV326132 v. O. Valeria Stores, Inc., 2008–Ohio–588, ¶ 17 (10th Dist.).

[6] See Baird v. Crop Prod. Servs., 2012–Ohio–4022, ¶ 43 (12th Dist.).

 

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Doucet Sues Company That Helps the Elderly Sell Belongings

Doucet Sues Company That Helps the Elderly Sell Belongings

Doucet & Associates Co. LPA, a small law firm dedicated to helping consumers and those facing financial difficulty, filed a federal lawsuit against the company Caring Transitions for violations Ohio’s Consumer Sales Practices Act (CSPA), breach of contract, and fraudulent misrepresentation.

Caring Transitions manages senior relocation, downsizing and estate sales. The law firm’s client, a senior citizen, contracted with Caring Transitions to liquidate thousands of her belongings — including many valuable antiques – during a time of financial distress. The lawsuit alleges the company was to move the designated items from the property to its sales location, plus clean the property while the client was out of state caring for her disabled son.

The lawsuit alleges Caring Transitions violated Ohio’s Consumer Sales Practices Act (CSPA), which prohibits unfair and deceptive practices in consumer sales transactions, by claiming it had sold her possessions when it had not. The lawsuit alleges that the company told the client that she was entitled to only $276.80 after selling all her goods, which she estimates to be worth in the tens of thousands of dollars.The lawsuit also alleges the company failed to provide her a receipt of items allegedly sold and charged her thousands of dollars in moving and cleaning expenses.

Despite Caring Transitions representations it had sold all of her goods, the lawsuit alleges the client began to see her items listed for sale by the company online, and realized they had not been sold as claimed. The lawsuit alleges she tried to reclaim the unsold items and was told less than 10 were available for picking up.However, once she appeared at Caring Transitions showroom, she saw and retrieved 29 items. Meanwhile, her real estate agent informed her that her home was not cleaned as promised.

Because of lack of money generated from the sale of the client’s goods, she was unable to make her mortgage payments and her property entered foreclosure. The firm’s client is seeking relief of more than $75,000 for actual damages in addition to attorney’s fees and costs, plus punitive, emotional, economic and other damages.

Doucet & Associates is dedicated to fighting for the rights of consumers, protecting their interests and offering legal assistance to those who would otherwise be unable to afford it. If you need help with a company that is trying to take advantage of you or a loved one, call the firm today at (614) 944-5219.

 

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