Court: District Court, D. Massachusetts; September 14, 2015; Federal District Court
Plaintiff Marie Lam, representing herself, filed a lawsuit against PNC Bank, National Association, related to the foreclosure of her home. PNC Bank moved for summary judgment on all of Lam's claims, which Lam opposed. The court conducted a hearing on the motion, and ultimately granted PNC's Motion for Summary Judgment on all counts.
Key facts include that Lam secured a loan of $242,585.00 from National City Mortgage Co. in 2001, which was later acquired by PNC. Following a loan modification in 2004, Lam faced financial difficulties and filed for Chapter 13 bankruptcy, later converting it to Chapter 7, from which she was discharged in March 2009. In May 2010, Lam entered into a repayment agreement with PNC, acknowledging an arrearage of $82,512.49, including legal fees. She subsequently contested the legal fees, claiming they were discharged in bankruptcy.
In August 2010, PNC denied her request for hardship assistance due to missed payments under the repayment plan. Lam rejected two offers to sell her property, which would have covered her loan balance, and later took the property off the market. PNC scheduled a foreclosure sale for May 9, 2012, which had not occurred by the time Lam filed a lawsuit against PNC in state court on May 8, 2012, later removing the case to federal court.
The legal standard for summary judgment requires that there be no genuine dispute as to any material fact, shifting the burden to the non-moving party to present specific facts indicating a genuine issue for trial.
The Court must evaluate the record favorably for the nonmoving party and draw reasonable inferences in their favor, while disregarding unsupported speculation and conclusory allegations. Summary judgment may be granted against a party that does not adequately demonstrate an essential element of their case. Although Lam is representing herself and her filings are interpreted liberally, she must still adhere to procedural and substantive laws.
Lam's Amended Complaint brings nine claims against PNC, including violations of Massachusetts General Laws and claims of misrepresentation, fraud, and breach of contract. PNC has moved for summary judgment on all counts, and Lam's response fails to address PNC's motion on a claim-by-claim basis, leading the Court to treat PNC’s motion as unopposed for those claims. However, the Court will examine whether PNC has met its burden for all claims before granting summary judgment.
For the Chapter 93A claims, Lam alleges PNC acted unfairly by not responding to her requests for payoff amounts, which caused her additional fees. To succeed, she must show that PNC's actions led to a significant loss and that the misconduct rises above mere contract violations to a level of commercial extortion. Lam's claim has evolved from alleging a lack of a payoff statement to asserting that PNC provided an inaccurate payoff statement. Additionally, she argues that PNC's cancellation of a Forbearance Plan and denial of a modified reinstatement were also unfair and deceptive actions. The Court will evaluate the merits of these claims.
Lam contests the accuracy of the $82,512.49 arrearages claimed by PNC as of April 21, 2010, arguing that her son and sister made payments on her behalf during 2006 and 2007. She has provided bank statements and a spreadsheet to support this claim. However, this evidence is insufficient to counter PNC's motion for summary judgment, as it does not prove that PNC failed to credit her account or that the arrearages were inaccurate. Additionally, Lam must demonstrate that PNC acted in bad faith to establish a violation under Chapter 93A, which she has not done, especially since she signed a repayment agreement acknowledging the amounts in question shortly before receiving the payoff statement.
Lam also alleges that PNC unfairly included attorney fees in the payoff letter, claiming these fees were discharged in her bankruptcy. However, even if her interpretation of bankruptcy law were correct, she has not provided evidence that PNC's inclusion of these fees was anything more than a mistake. Moreover, bankruptcy law allows secured creditors to pursue claims against collateral, meaning PNC’s actions were justified.
Lastly, Lam argues that PNC acted deceptively by denying her a reinstated modification in May 2012, despite her proposal including her husband’s income. Nevertheless, there is no evidence that PNC’s denial stemmed from unethical conduct, leading to the conclusion that this claim also fails. Consequently, PNC's motion for summary judgment is granted on all counts.
Lam alleges that PNC acted unfairly by canceling her Forbearance Plan after she failed to make the full first month's payment due on December 15, 2009. She claims that a PNC representative assured her that a partial payment would be acceptable, provided the balance was paid by January. Despite presenting evidence of a check for the balance dated December 26, 2009, the court finds that Lam does not meet her burden of proof. Notably, she received a modification in May 2010 and has not demonstrated that she would have been current on payments had the Forbearance Plan not been canceled. Additionally, she has not shown any damages since PNC has not foreclosed on her property. Therefore, PNC's motion is granted regarding this claim.
In her misrepresentation claim, Lam contends that PNC incorrectly presented the payoff figure for her property and misattributed her payments. The court interprets this as a negligent misrepresentation claim due to Lam's pro se status. To succeed, Lam must prove that PNC supplied false information in a business transaction that led to her pecuniary loss due to her reliance on that information. However, Lam fails to provide evidence that the payoff statement was inaccurate, as legal fees remained due post-bankruptcy. Even if there were inaccuracies, it was reasonable for PNC to rely on the signed repayment modification she had completed just days prior. Furthermore, Lam's claim of detrimental reliance is undermined by her own deposition, where she acknowledged receiving a payoff statement, contradicting her assertion that she could not obtain one. Thus, PNC's motion is also granted regarding the misrepresentation claim.
Lam's claim against PNC regarding the payoff statement's accuracy is deemed unreasonable, as she failed to pursue a sale of her property that could cover the loan, despite her belief that she deserved more from the surplus sale price. Consequently, PNC's motion to dismiss this count is granted. In her third claim, Lam alleges that PNC breached the covenant of good faith and fair dealing by providing false information, not applying payments to her mortgage, and failing to consider foreclosure alternatives after receiving her TAKP funds. Under Massachusetts law, every contract includes an implied covenant of good faith, which protects the contractual rights of both parties. Lam bears the burden of proving a lack of good faith, yet her claims about misleading information and payment attribution lack supporting evidence sufficient to overcome summary judgment. Additionally, her argument regarding PNC’s failure to explore foreclosure alternatives is barred by precedent from MacKenzie v. Flagstar Bank, where the First Circuit ruled that individual borrowers cannot enforce agreements between mortgage lenders and the government without clear intent to benefit them. Therefore, Lam's claims regarding the covenant of good faith fail.
The Court rejected the Bankruptcy and District Court's reasoning regarding the scope of the covenant, emphasizing that the specific contract governs this scope, which in the case of MacKenzie lacked foreclosure alternatives. Lam's contract with PNC similarly does not contain such provisions. The general covenant's purpose is to protect the mortgagor's interests during a power of sale, but since no foreclosure sale occurred, Lam's claims regarding this aspect are insufficient. Furthermore, any claim Lam may have against PNC under 12 U.S.C. 1701X of the National Housing Act is barred, as this statute does not provide a private right of action.
Regarding Lam's fraud claim, she alleges PNC knowingly provided false information about her payment status and foreclosure amount. Under Massachusetts law, fraud requires a knowingly false statement that induces reliance and leads to injury. Lam has not shown evidence that PNC acted with the requisite intent or that the payoff statement was false. Additionally, the evidence contradicts her assertion that PNC's actions prevented her from selling the property, as a sale would have satisfied the debt. Consequently, the motion is allowed for this claim.
For the breach of contract claim, Lam relies on PNC's alleged failure to comply with the National Housing Act and HAMP regulations, neither of which confer a private right of action or standing to Lam. Therefore, this claim is also dismissed.
In her unjust enrichment claim, Lam contends that PNC benefited from her uncredited mortgage payments and additional charges due to delays in providing her payoff figure. Under Massachusetts law, unjust enrichment requires proof of a conferred benefit, the defendant's knowledge of that benefit, and that retention of the benefit would be inequitable without compensation. The motion is allowed for this claim as well.
Lam's claims against PNC fail on multiple grounds. Firstly, there is no evidence that any payments were uncredited, and the prompt provision of the payoff statement negates her assertion of accruing additional interest and fees. Additionally, Lam's signed repayment agreement acknowledged the arrearages claimed by PNC, which weighs against her position. Consequently, the motion is allowed regarding this claim.
Regarding the breach of good faith and reasonable diligence, Lam alleges PNC failed to provide an accurate payoff figure. However, the legal standard requires mortgagees to act in good faith only in the context of conducting a foreclosure sale. Since PNC has not exercised its power of sale, Lam's claim lacks legal merit, leading to the allowance of the motion for this count as well.
In her Chapter 183C claim, Lam contends that PNC issued unreasonably risky loans without proper assessment of her ability to repay. Chapter 183C governs high-cost home mortgages and mandates that lenders obtain counseling certification and assess the borrower's financial capacity. A loan can be deemed unenforceable if these provisions are not followed. Chapter 183C defines a high-cost home mortgage based on either a significantly higher interest rate compared to U.S. Treasury securities or excessive points and fees.
Lam failed to provide evidence that the interest rate on her loan was excessively high, such as a comparable Treasury rate, and the evidence suggests the rate was sufficiently low. The Court assumes, without deciding, that a potential Chapter 183C claim could arise from the original 2001 loan, the 2004 modification, and the 2010 repayment agreement. The loan modification agreement closed in May 2011, allowing Lam until May 2012 to file a Truth in Lending Act claim. The Court also tentatively considers a $10,277.95 charge for 'Attorney Fees and Costs' in the 2010 repayment agreement as 'points and fees' in assessing high-cost mortgage status, referencing conflicting case law. However, even with these considerations, Lam's claim fails because the total attorney fees do not exceed 5% of the principal loan amount of $242,585.00, which is $12,129.25, thus ruling out the loan as a 'high-cost home mortgage' under Chapter 183C.
Regarding Lam's Fair Debt Collection Practices Act (FDCPA) claim, she alleges that PNC failed to provide a timely payoff figure and improperly raised the payoff amount with additional fees. The FDCPA applies only to 'debt collectors,' and since PNC is collecting on a debt originated by its predecessor, National City, it does not qualify as a debt collector under the Act. Consequently, PNC is entitled to summary judgment on this claim as well.
In conclusion, the Court grants PNC's Motion for Summary Judgment on all claims in Lam's Complaint, entering judgment in favor of PNC and directing the Clerk to close the case. Lam's Amended Complaint also included National City Mortgage as a defendant, but since PNC succeeded National City by merger, PNC remains the sole defendant. Although Lam contested the absence of a foreclosure sale, she ultimately acknowledged that no actual sale occurred despite the presence of an auctioneer.
The last two theories of liability presented by Lam are procedurally barred because they were not raised until her opposition to PNC’s motion for summary judgment, as established in Calvi v. Knox County. Lam cannot introduce new theories of liability at this stage. Despite this, the Court addresses the merits of her claims, including allegations of unfair and deceptive practices under Mass. Gen. Laws ch. 93A. Lam's primary claim is that PNC violated this statute by failing to respond to her payoff requests, which allegedly led to excessive interest charges. To succeed, she must demonstrate that PNC's actions caused her a loss and that the misconduct amounted to more than a simple breach of contract.
Lam's focus has shifted from not receiving a payoff statement to claiming that PNC provided an inaccurate payoff statement. She also introduces additional claims regarding PNC’s cancellation of a Forbearance Plan and the denial of a reinstated modification application after including her husband’s income. The Court will evaluate these claims individually.
Regarding the inaccurate arrearages, Lam disputes the $82,512.49 amount claimed by PNC as owed, asserting that payments were made on her behalf by family members in 2006 and 2007. She has provided bank statements and a spreadsheet as evidence. However, this evidence, viewed favorably for Lam, is still deemed insufficient to counter PNC’s summary judgment motion.
Lam has shown that payments were made on her behalf to PNC, but the bank records do not indicate that PNC failed to credit her account or that the arrears were incorrect. There is no evidence that Lam met her payment obligations, and even if the payments were not credited, this alone does not support a Chapter 93A violation, which requires proof of PNC acting unethically or unscrupulously. Lam's acknowledgment of the amounts in a signed repayment agreement undermines her claims.
Regarding legal fees, Lam argues that PNC unfairly included attorneys' fees in her payoff statement despite her bankruptcy discharging these fees. However, even if her interpretation of bankruptcy law were correct, she has not provided evidence that PNC's inclusion of these fees was anything but a mistake, which does not establish liability under Chapter 93A. Additionally, bankruptcy does not eliminate a creditor's in rem rights, allowing PNC to pursue claims related to the collateral. Therefore, the inclusion of legal fees was justified.
Lam also contends that PNC acted unfairly by not granting her a reinstated modification in May 2012, despite her husband's income. However, there is no evidence that PNC's denial was due to unethical conduct, failing to support her claim. Lastly, Lam claims PNC acted deceptively when it canceled a Forbearance Plan due to her failure to make a timely payment. Overall, PNC’s Motion for Summary Judgment is granted on all counts presented by Lam.
Lam claims that a PNC official assured her that a partial payment would suffice if the remaining balance was paid by the following January. She provided a check dated December 26, 2009, as evidence of this payment. The court assumes the conversation and Lam's understanding were accurate but concludes that she does not meet her burden of proof for several reasons. Despite the alleged cancellation of previous obligations, Lam received a modification in May 2010 and failed to demonstrate that she would have been current on her payments had the cancellation occurred. Her inability to make payments under the 2010 modification plan further supports this. Additionally, PNC has not foreclosed on her house, which complicates her claims of damages.
In her misrepresentation claim, Lam argues that PNC provided false information regarding the payoff figure and payment allocations. The court interprets this as a negligent misrepresentation claim due to Lam representing herself. To succeed, Lam must prove that PNC, in a business capacity, supplied false information leading to her financial loss due to her reliance on that information while lacking reasonable care. However, she has not demonstrated that the payoff statement contained inaccuracies, as her legal fees were not discharged in bankruptcy. Furthermore, PNC's presumption of the amounts was reasonable since Lam had recently signed a modification agreeing to those figures. Finally, Lam fails to establish justifiable reliance; her assertion that she took her house off the market due to an inability to obtain a payoff figure is contradicted by her acknowledgment of having received a payoff statement, albeit one she disagreed with.
Lam's claim regarding the inaccuracy of a payoff statement was found unreasonable, as she did not proceed with the sale of her property despite having sufficient funds to pay off the loan, even at PNC's higher amount. Consequently, PNC's motion regarding this claim was granted. In her third claim, Lam alleged that PNC breached the covenant of good faith and fair dealing by providing false information, failing to attribute payments to her mortgage, and not offering foreclosure prevention counseling as required by federal law. Under Massachusetts law, all contracts imply a covenant of good faith and fair dealing, which mandates that neither party should act in a way that undermines the other party's contractual benefits. Lam failed to demonstrate that PNC acted in bad faith or provided incorrect information, as she did not present sufficient evidence to overcome summary judgment. Furthermore, her assertion that PNC's failure to consider foreclosure alternatives constituted a breach was barred by precedent from the First Circuit. In MacKenzie v. Flagstar Bank, the court held that individual borrowers are not third-party beneficiaries of agreements between mortgage lenders and the government, thus precluding borrowers from suing to enforce such agreements unless explicitly stated.
Lam, as a borrower under a government agreement, falls under the scope of MacKenzie, which negates her liability theory due to the absence of separate intent. The court rejected prior rulings from the Bankruptcy and District Courts that suggested a general duty exists, asserting that the specific contract governs the covenant's scope, and since MacKenzie lacked foreclosure alternatives, the same applies to Lam's contract with PNC. Consequently, the general covenant aimed at protecting the mortgagor's interests does not apply, as no foreclosure sale has occurred.
Lam's potential claim against PNC under 12 U.S.C. 1701X of the National Housing Act is barred by First Circuit law, which denies a private right of action per Falzarano v. United States. Thus, PNC's motion is granted regarding this count.
In her fraud claim, Lam alleges PNC knowingly provided false information regarding payments and foreclosure amounts, failing to provide timely figures for property sale. Under Massachusetts law, fraud requires a knowingly false statement that induces reliance and results in injury. Lam has not demonstrated PNC's requisite state of mind or that the payoff statement was false, as her evidence only shows she made payments to PNC without confirming they were credited. Furthermore, Lam's assertion that PNC defrauded her to prevent a sale is contradicted by the fact that a sale would have fully satisfied her debt. Thus, the motion is granted for this claim as well.
Lam's breach of contract claim relies on PNC's alleged non-compliance with the National Housing Act and HAMP regulations. However, since neither statute grants a private right of action, and Lam lacks standing regarding HAMP, PNC's motion is also granted here.
In her unjust enrichment claim, Lam argues PNC was unjustly enriched by her uncredited mortgage payments and additional fees. Massachusetts law requires proof of a benefit conferred upon the defendant by the plaintiff, which Lam has not substantiated.
The legal document outlines several claims made by Lam against PNC. For the unjust enrichment claim, Lam fails to demonstrate the necessary elements: no evidence of uncredited payments, the prompt receipt of a payoff statement undermines claims of accruing additional fees, and Lam signed a repayment agreement acknowledging the owed arrears as correct. Consequently, the motion to dismiss this count is granted.
Lam's seventh claim alleges a breach of the duty of good faith and fair dealing by PNC for not providing the correct payoff figure. The law requires mortgagees to act in good faith and exercise reasonable diligence, particularly during foreclosure sales. However, since PNC has not exercised the power of sale, the claim is legally insufficient, leading to the motion's approval on this count as well.
In her eighth claim, Lam argues that PNC engaged in unfair and unconscionable lending practices under Massachusetts General Laws chapter 183C, particularly regarding high-cost home mortgages. This statute requires lenders to obtain counseling certification from a qualified nonprofit organization before issuing such loans. The implications of Lam's claims suggest potential violations of lending regulations and the need for compliance with statutory requirements.
Lenders are required to have a reasonable belief that borrowers can make scheduled payments based on various financial factors, excluding the equity in the home securing the loan. Non-compliance with these provisions can lead to a loan being deemed unenforceable. A “high-cost home mortgage loan” is defined as one secured by the borrower’s principal dwelling, excluding reverse mortgages, and meeting either of two conditions: (1) the interest rate is at least eight percentage points higher than the yield on comparable U.S. Treasury securities, or (2) total points and fees exceed the greater of 5% of the loan amount or $400. The borrower, Lam, has not provided evidence to substantiate a claim that the interest rate was excessively high, and the evidence supports that the rate was low. Regarding points and fees, the court tentatively assumes that claims may arise from the original loan, a 2004 modification, and a 2010 repayment agreement, with the 2011 closing date for the modification setting a deadline for claims under the Truth in Lending Act (TILA). The court also considers whether attorney fees counted as points and fees but concludes that the total fees charged did not exceed the threshold for the loan to be classified as “high-cost.” Consequently, Chapter 183C does not apply, and the motion to dismiss this count is granted.
For Lam's Fair Debt Collection Practices Act (FDCPA) claim, she alleges that PNC violated the Act by failing to provide timely payoff figures and improperly adjusting the payoff amount. However, the FDCPA applies only to debt collectors, and since PNC is not classified as a debt collector—due to its involvement in originating the debt—PNC is entitled to summary judgment on this claim.
Creditors collecting on their own accounts are not subject to the Fair Debt Collection Practices Act (FDCPA). PNC, having merged with National City, is deemed a creditor rather than a debt collector in relation to the debt originally created by National City. Consequently, the court granted PNC's Motion for Summary Judgment, dismissing all claims in Lam's Complaint. PNC is the sole defendant following its succession of National City Mortgage by merger. Although Lam disputed the absence of a foreclosure sale, she later conceded that no actual sale occurred. Several of Lam's legal theories were dismissed as procedurally barred since they were not presented until her opposition to the motion for summary judgment. The court addressed these theories nonetheless. Any violation of the relevant statute would also breach Massachusetts General Laws Chapter 93A. The interest rates involved in the loan were specified, with an introductory rate of 5.5% and an adjusted rate calculated based on a specific Current Index. The court found no evidence suggesting the adjusted rate exceeded permissible limits. The analysis utilized the smallest principal balance to assess the minimum necessary fees for classifying the loan as a high-cost mortgage.
