Avila v. CitiMortgage, Inc.

Dist. Ct. erred in dismissing for failure to state cause of action plaintiff’s breach of contract action alleging that defendant breached its mortgage agreement with him by using payout from his homeowner’s insurance policy to pay down his loan rather than use payout to repair plaintiff’s damaged home that was subject to said mortgage. While Dist. Ct. found that plaintiff was barred from pursuing his contract claim because he had materially defaulted on his own contractual obligations by missing several mortgage payments prior to defendant’s purported breach, Ct. of Appeals found that plaintiff had viable contract claim, where mortgage required that defendant apply insurance proceeds to restoration of home if it was economically feasible to do so, and defendant never indicated that repairing plaintiff’s home was economically infeasible. Fact that defendant had missed certain mortgage payments did not require different result since remedy provision in mortgage agreement for missed payments did not include application of insurance proceeds to loan balance. Moreover, result is same even if defendant could have accelerated plaintiff’s loan in response to missed mortgage payments.