MEMORANDUM OPINION
JOY FLOWERS CONTI, Chief District Judge.
This is a putative class action for the recovery of damages caused by purportedly unlawful mortgage foreclosure lawsuits. Plaintiffs Neal and Amy Jo Hammill, on behalf of themselves and others similarly situated, allege that defendant Bank of America ("BOA") initiated a foreclosure suit against them in Pennsylvania state court without first sending them a proper foreclosure notice or giving them a chance to cure their loan deficiency in violation of the Pennsylvania Loan Interest and Protection Law, 41 Pa. Stat. Ann. § 101
For the reasons that follow, BOA's motion to dismiss will be granted and the complaint will be dismissed with prejudice.
I. BACKGROUND
The Hammills' claim arises from a note and mortgage that they executed on March 10, 2010, on residential property in North East, Pennsylvania. (ECF No. 3 ¶¶ 1-3, 7-8, 31.) The mortgage and note were assigned to the Federal National Mortgage Association ("Fannie Mae"), and were serviced on its behalf by BAC Home Loan Servicing, LP, which has since merged into BOA. (
Sometime within a year after the mortgage's execution, the Hammills defaulted on their loan, which prompted BOA to send them a pre-foreclosure notice on February 22, 2011. (ECF No. 3 ¶¶ 10-11.) At the time, the total amount past due on the mortgage loan was $12,602. (
On May 11, 2012, less than a month after BOA voluntarily dismissed the foreclosure action, the Hammills filed this lawsuit. They filed an amended complaint on May 22, 2012. Their fundamental grievance is that BOA violated Pennsylvania statutory and common law by failing to notify them, and others like them, that they had the right to cure their mortgage default with a cash payment, rather than one made by a check or money order.
The Pennsylvania Loan Interest and Protection Law, 41 Pa. Stat. Ann. § 101
The amended complaint asserts three counts: first, the Hammills seek, pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201(a), a ruling that all pre-foreclosure notices issued by BOA that fail to specify that a default can be cured with a cash payment violate Pennsylvania law; second, the Hammills assert a direct claim pursuant to Acts 6 and 91 based upon this same alleged defect in BOA's pre-foreclosure notices; and third, they allege that BOA, as the loan servicer, tortiously interfered with the Hammills' loan and mortgage contracts with Fannie Mae by sending deficient pre-foreclosure notices. The only damages the Hammills claim to have personally suffered as a result of BOA's alleged misconduct are the unspecified "attorney's fees and costs" that they incurred in defending against the foreclosure action in state court, and they seek to represent a Rule 23 class of "thousands" of other Pennsylvania residents who were forced to do the same. (ECF No. 3 ¶¶ 19, 23, 88(a).) The Hammills do not allege that they could or would have cured their mortgage default with cash had they been informed of that option.
II. STANDARD OF REVIEW
Federal Rule of Civil Procedure 12(b)(6) empowers a district court to dismiss a complaint if it fails to state a claim upon which relief can be granted. To survive a motion to dismiss, "a complaint must contain sufficient factual matter, accepted as true, `to state a claim to relief that is plausible on its face.'"
The analysis of the complaint's factual and legal sufficiency proceeds in three steps: first, "the court must take note of the elements a plaintiff must plead to state a claim;" second, "the court should identify allegations that, because they are no more than conclusions, are not entitled to the assumption of truth;" and third, "where there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief."
III. DISCUSSION
BOA argues: 1) the Hammills lack standing to obtain declaratory or injunctive relief; 2) the Hammills failed to state a claim under Act 6 or for tortious interference because they have not suffered actual damages; and 3) they failed to state a claim under Act 91 because that statute does not include a private right of action.
A. Failure to Plead Damages
To be sure, the Hammills do not allege that their home was sold at a sheriff's sale, that they are currently subject to a foreclosure judgment, or that they have paid any costs or fees to BOA to reinstate or modify their loan. The only harm they allege is that they were forced to pay a lawyer to defend the foreclosure lawsuit in state court. (ECF No. 3 ¶¶ 23, 38-44, 59, 95-96, 125.)
Act 6 provides that "[a]ny person affected by a violation of [the Act] shall have the substantive right to bring an action . . . for damages [incurred as a result] of such conduct or violation, together with costs including reasonable attorney's fees and other such relief to which such person may be entitled under law." 41 Pa. Stat. Ann. § 504. Regarding attorney's fees and costs, the Act contains three separate fee-shifting provisions: (1) section 406, which permits a mortgage lender to receive attorney's fees "[u]pon commencement of foreclosure or other legal action with respect to a residential mortgage"; (2) section 407, which allows "[a]ny debtor who prevails in any action to remove, suspend or enforce a judgment entered by confession . . . to recover reasonable attorney's fees and costs as determined by the court"; and (3) section 503, which provides that "[i]f a borrower or debtor, including but not limited to a residential mortgage debtor, prevails in an action arising under this act, he shall recover the aggregate amount of costs and expenses . . . together with a reasonable amount for attorney's fee." 41 Pa. Stat. Ann. §§ 406, 407(b), and 503(a). Sections 407 and 503, which permit borrowers as opposed to lenders to recover attorney's fees and costs, require that the borrower be the prevailing party in the mortgage foreclosure action.
Because the Hammills were not prevailing parties in their state foreclosure action, they cannot recover their attorney's fees and costs under Act 6. As the complaint sets forth, the Hammills' foreclosure action in state court was voluntarily dismissed, without prejudice, by BOA. Such unilateral, voluntary, and non-final action does not meet the "prevailing party" standard.
Furthermore, the Pennsylvania Supreme Court has recognized that, under
Without the ability to collect the attorney's fees they incurred in defending the foreclosure action, the Hammills, by their own admission, cannot as a matter of law make a showing that they suffered recoverable damages as a result of BOA's alleged conduct.
B. Declaratory Relief
Although the Hammills' failure to plead damages is fatal to their request for declaratory relief, their request for a ruling that "all notices utilized by the Defendant which do not expressly advise the mortgage debtor(s) of the opportunity to cure the default by the payment or tender of cash are violative of the law" (ECF No. 3 ¶ 124) is also not ripe for adjudication. To obtain declaratory relief under the Declaratory Judgment Act, the plaintiff must show the existence of "a case of actual controversy." 28 U.S.C. § 2201(a). This requirement derives from Article III of the Constitution, which limits the jurisdiction of the federal courts to cases and controversies that are "definite and concrete," thus precluding the review of disputes that are "of a hypothetical or abstract character".
Here, BOA voluntarily dismissed the foreclosure action against the Hammills on April 12, 2012, approximately six months after it was filed. BOA has not since sent the Hammills a subsequent pre-foreclosure notice, and it is not currently pursuing a foreclosure action against the Hammills in state court. Although the Hammills contend that BOA's voluntarily dismissal of the previous suit permits it to again pursue the action at any time, the declaratory relief the Hammills seek is premised upon: (1) their receiving the same allegedly deficient pre-foreclosure notice as they received previously; (2) their being deprived of the opportunity as a result of the notice to cure their loan deficiency in cash; and (3) their being forced to pay an attorney to defend against an as-yet unfiled state foreclosure action. Although not impossible, none of this has occurred or is in imminent danger of occurring.
Thus, given the facts set forth in the amended complaint, there is no adversity of interests between the parties and the declaratory ruling the Hammills seek will be of no utility to them until the previously enumerated contingencies occur. An entry of declaratory judgment based on this hypothetical chain of events would be "an opinion advising what the law would be" if BOA did something that it has not yet done, which Article III of the Constitution forbids.
C. Leave to Amend
Having previously granted the Hammills one opportunity to amend, and having now determined that the complaint as amended is legally deficient, the court is not obligated to grant the Hammills leave to amend their complaint a second time.
Although the complaint's failure to plead legally cognizable damages alone is dispositive, the court also notes that the Hammills failed to allege that there was a causal connection between the purported defect in BOA's pre-foreclosure notice and their payment of attorney's fees to defend against the foreclosure action.
IV. CONCLUSION
For the reasons stated above, BOA's motion to dismiss (ECF No. 21) will be granted with prejudice. An appropriate order will be entered.
Comment
User Comments