Opinion
Civil 3:19-CV-0744
06-21-2023
BEATRIZ I. MALLORY, Plaintiff, v. WELLS FARGO BANK, N.A, Defendant.
Mariani Judge.
REPORT AND RECOMMENDATION
Martin C. Carlson United States Magistrate Judge.
I. Introduction
This case comes before us for consideration of a motion for summary judgment filed by the defendant, Wells Fargo Bank, N.A. (“Wells Fargo”). (Doc. 71). The plaintiff, Beatriz Mallory, initiated this action in the Court of Common Pleas of Wayne County in July of 2017, and the defendant ultimately removed the case to this court. (Doc. 1). The plaintiff's claims stem from what she alleges was a wrongful foreclosure action initiated by Wells Fargo more than a decade ago against property she owns in Wayne County. The operative complaint (Doc. 1-1) asserts claims under Pennsylvania's Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), 73 Pa. Cons. Stat. § 201-1 et seq., and the Truth in Lending Act (“TILA”), 15 U.S.C. § 1601 et seq., as well as claims for libel/slander, wrongful use of civil proceedings, abuse of process, and breach of contract under Pennsylvania law.
Wells Fargo has now moved for summary judgment, arguing that Mallory's claims are time-barred, fail under the gist of the action and economic loss doctrines, and fail on their merits. (Doc. 71). This motion has been fully briefed and is, therefore, ripe for resolution. (Docs. 72, 113-17, 119). After consideration, and for the following reasons, we will recommend that the court deny the motion as to the breach of contract claim but grant the motion with respect to the remainder of the plaintiff's claims.
We note that the plaintiff was initially represented by counsel in this case, and counsel withdrew her appearance in 2021. Thus, the case was stayed to allow the plaintiff an opportunity to either obtain new counsel or proceed pro se. (Doc. 107). Mallory ultimately opted to proceed pro se and was permitted to submit additional, supplemental documents regarding the instant motion. (Doc. 110).
The factual background of this Report and Recommendation is taken from the parties' submissions to the extent those submissions are consistent with the evidence. (Docs. 72, 73, 111-17, 119-20).
Beatriz Mallory purchased two properties in Wayne County in 1997-19B Hilltop Road (“19B Hilltop”) and 19D Hilltop Road (“19D Hilltop”). In December of 2001, Mallory obtained a mortgage from Wells Fargo Mortgage, Inc. for 19B Hilltop in the amount of $225,000.00. Subsequently in 2003, Mallory obtained a mortgage loan for 19D Hilltop from Washington Mutual Bank, FA, in the amount of $152,000.00. This mortgage for 19D Hilltop was assigned to Wells Fargo in April of 2007.
Wells Fargo initiated a foreclosure action against the 19D Hilltop property in August of 2010. For her part, Mallory contends that she was current on her loan and never missed a mortgage payment, but that Wells Fargo had tacked on additional charges to be placed into an escrow fund, even though Mallory paid her taxes and insurance separately and did not have an escrow fund for her mortgage. Thus, following the foreclosure action, Mallory filed her own suit in the Court of Common Pleas of Wayne County against Wells Fargo. In August of 2011, the parties entered a Stipulation before the Court, outlining the procedure by which Wells Fargo would cease foreclosure and modify the loans for 19B Hilltop and 19D Hilltop, and Mallory would not pursue her litigation against Wells Fargo.
The Stipulation entered on August 1, 2011 first provided that any taxes that were paid on the two properties by Wells Fargo would be reimbursed and would be added to the new mortgage. It further provided that Mallory would pay the outstanding insurance payments of $291.66 to Wells Fargo and furnish proof of insurance to Wells Fargo. The Stipulation called for a 30-day timeframe for documentation. Wells Fargo also agreed to pay Mallory's attorney fees, which at that time totaled $10,301.00.
The Stipulation then provided terms for modifying Mallory's loans. On this score, the Stipulation stated that any new mortgage on either property would be escrow-free, and that Wells Fargo would remove any escrow for taxes or insurance on both mortgages. Wells Fargo was further required to cease foreclosure and reinstate the loans on both properties without penalties or interest. The Stipulation set forth $94,806.90 as the principal to be reinstated for 19D Hilltop and stated that the parties would agree to the reinstatement amount for 19B Hilltop using the same determination method used to establish the figure for 19D Hilltop. Regarding the loans, the Stipulation provided that Wells Fargo “will make an absolute commitment to write a new 30 year, 3.75 escrow free, fee-free mortgage” for both properties. Counsel for Wells Fargo made clear during the reading of the stipulation that the term “absolute commitment” as used in the Stipulation meant that “all good faith efforts will be made but there is no absolute guarantee of a modification.” (Doc. 734, at 8). The Stipulation set forth the terms of the new mortgages as follows:
Number one, 19D Hill Top Road and 19B Hill Top Road will receive 30-year fixed mortgage rate at 3.75%
Next term, no escrow on either mortgage, no fees associated with either mortgage.
Next term, any agreed upon outstanding amounts paid by Wells Fargo, specifically taxes and insurance, will be rolled into the new mortgages' principles.(Id., at 5).
The Stipulation then provided for the procedure to be followed by Wells Fargo regarding these loan modifications. First, Mallory would submit an application under the Home Affordable Modification Program (“HAMP”) within 30 days of receipt of the application from Wells Fargo, and Wells Fargo would then have 60 days to submit the HAMP application to Fannie Mae and proceed with the mortgages on 19B and 19D Hilltop. If Mallory's application was not approved, Wells Fargo was to try and do a traditional modification through Freddie Mac for 19B Hilltop and an in-house modification for 19D Hilltop. If modification could not be made through this method, Wells Fargo would repurchase the loans and do the modifications inhouse. If these methods all failed, Wells Fargo was to reinstate the current mortgages without penalties and interest using the payoff figures as determined by the parties in the Stipulation.
Following the entry of this Stipulation, which the Wayne County court adopted in its August 1, 2011 order, what then ensued was a tedious sand protracted back-and-forth effort between Mallory and representatives from Wells Fargo to modify Mallory's loans. At the outset, it is undisputed that in December of 2011, Wells Fargo sent a check to Mallory's counsel in the amount of $10,301.00, thus satisfying the attorney's fees component of the agreement. As to the efforts to modify the loans, the parties have starkly contrasting views regarding how this effort played out. On this score, according to Wells Fargo, it attempted to guide Mallory through the HAMP process by first sending her an application and requesting that it receive the necessary documentation by September 12, 2011. Wells Fargo contends that the application was deficient, that after Mallory was notified, she and her husband sent the documentation in a piecemeal fashion, and that because of the delay in receiving the documents, by December 5, 2011, the first application was unable to be processed. The plaintiff then submitted a new HAMP application by February 15, 2012, and this application was ultimately denied because Mallory's monthly housing expense was not less than or equal to 31% of her gross income. Mallory was notified of the denial by a Wells Fargo representative on April 19, 2012.
Wells Fargo then attempted to do a traditional non-HAMP review through Fannie Mae, and Mallory submitted the necessary documentation and application on May 2, 2012. However, traditional loan modifications through Fannie Mae required an escrow account. Thus, Wells Fargo went ahead and repurchased the 2001 loan on May 17, 2013, and the 2003 loan on May 21, 2013. Roughly one year later, Wells Fargo approved Mallory for loan modifications of each loan. However, each of these loans provided that the monthly payment “includ[ed] amounts necessary for escrow.” (Doc. 71-18, Ex. H, at 2; Doc. 71-19, Ex. G, at 2). Thus, according to Mallory, she rejected these modifications because they were not in accordance with the Stipulation and court order, which required the loans to be escrow-free.
Thus, Wells Fargo sent a Loan Modification Agreement to Mallory on July 21, 2015, but this agreement again provided that a sum of money go into an escrow account. (See Doc. 71-20, Ex. I, at 3). Two more Loan Modification Agreements were sent to Mallory in January of 2016, neither of which included a sum to be placed into escrow. (See Doc. 71-21, Ex. J; Doc. 71-22, Ex. K). However, Mallory continued to reject the modification agreements, contending that the terms were not in accordance with the Stipulation. Wells Fargo's counsel again reached out to Mallory in August of 2016 to try and work out an agreement that complied with the 2011 Stipulation and forwarded a draft loan agreement on September 26, 2016. (See Doc. 71-7, Ex. 5, at 12-13). Mallory again objected to the agreement, this time arguing that it was a “modification” rather than a “new mortgage” and objecting to provisions calling for escrow and lender-placed insurance. (Id., at 13-14). Ultimately, in August of 2017, Wells Fargo informed Mallory that she was being removed from the modification process because she had not signed the Loan Modification Agreement. (Doc. 71-23).
Mallory initially filed suit in the Court of Common Pleas of Wayne County in July of 2017, and after filing several amended complaints, filed her Fourth Amended Complaint, which is the operative complaint and which the defendant removed to this court in May of 2019. (Doc. 1-2). Subsequently, Mallory filed a Petition for Contempt to Compel Enforcement of Stipulation in her state court cases which had since been closed, and Wells Fargo removed that litigation to federal court and requested the case be consolidated with the instant breach of contract action, which was granted. (Docs. 14, 39).
Wells Fargo then filed the instant motion for summary judgment. (Doc. 71). In its motion, Wells Fargo asserts that the Stipulation is not a valid and enforceable contract, and that any breach of contract claim is barred by the statute of limitations; that Mallory's UTPCPL, libel/slander, wrongful use of civil proceedings, and abuse of process claims are barred by the economic loss and gist of the action doctrines and are further barred by the statute of limitations; and that as a whole, the plaintiff's claims fail as a matter of law. For her part, the plaintiff asserts that Wells Fargo breached the Stipulation when it failed to obtain new mortgages for her in accordance with the Stipulation; that it violated the UTPCPL when it made misrepresentations that she relied on; that Wells Fargo violated TILA when it failed to make certain disclosures regarding the loans; that Wells Fargo committed libel/slander by posting notices of foreclosure on her property and by reporting the foreclosure to credit bureaus; and that the foreclosures instituted against the properties were instituted in bad faith and not for the purpose which they are intended.
This motion is fully briefed and is ripe for resolution. (Docs. 72, 113-17, 119). After consideration, we agree with the defendant that the gist of the action doctrine bar the plaintiff's UTPCPL claim, and that the plaintiff's TILA and common law tort claims fail as a matter of law. Accordingly, we will recommend that these claims be dismissed. However, we conclude that there are genuine issues of material fact with respect to the plaintiff's breach of contract claim arising out of the Stipulation. Therefore, we will recommend that the motion for summary judgment be denied with respect to the breach of contract claim.
III. Discussion
A. Motion for Summary Judgment - Standard of Review
The defendant has moved for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure, which provides that the court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). Through summary adjudication, a court is empowered to dispose of those claims that do not present a “genuine dispute as to any material fact,” Fed.R.Civ.P. 56(a), and for which a trial would be “an empty and unnecessary formality.” Univac Dental Co. v. Dentsply Int'l, Inc., 702 F.Supp.2d 465, 468 (M.D. Pa. 2010). The substantive law identifies which facts are material, and “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute about a material fact is genuine only if there is a sufficient evidentiary basis that would allow a reasonable fact finder to return a verdict for the non-moving party. Id., at 248-49.
The moving party has the initial burden of identifying evidence that it believes shows an absence of a genuine issue of material fact. Conoshenti v. Pub. Serv. Elec. & Gas Co., 364 F.3d 135, 145-46 (3d Cir. 2004). Once the moving party has shown that there is an absence of evidence to support the non-moving party's claims, “the non-moving party must rebut the motion with facts in the record and cannot rest solely on assertions made in the pleadings, legal memoranda, or oral argument.” Berckeley Inv. Group. Ltd. v. Colkitt, 455 F.3d 195, 201 (3d Cir. 2006), accord Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). If the non-moving party “fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden at trial,” summary judgment is appropriate. Celotex, 477 U.S. at 322. Summary judgment is also appropriate if the non-moving party provides merely colorable, conclusory, or speculative evidence. Anderson, 477 U.S. at 249. There must be more than a scintilla of evidence supporting the non-moving party and more than some metaphysical doubt as to the material facts. Id., at 252; see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). In making this determination, the Court must “consider all evidence in the light most favorable to the party opposing the motion.” A.W. v. Jersey City Pub. Schs., 486 F.3d 791, 794 (3d Cir. 2007).
Moreover, a party who seeks to resist a summary judgment motion by citing to disputed material issues of fact must show by competent evidence that such factual disputes exist. Further, “only evidence which is admissible at trial may be considered in ruling on a motion for summary judgment.” Countryside Oil Co., Inc. v. Travelers Ins. Co., 928 F.Supp. 474, 482 (D.N.J. 1995). Similarly, it is well-settled that: “[o]ne cannot create an issue of fact merely by . . . denying averments . . . without producing any supporting evidence of the denials.” Thimons v. PNC Bank, NA, 254 Fed.Appx. 896, 899 (3d Cir. 2007) (citation omitted). Thus, “[w]hen a motion for summary judgment is made and supported . . ., an adverse party may not rest upon mere allegations or denial.” Fireman's Ins. Co. of Newark New Jersey v. DuFresne, 676 F.2d 965, 968 (3d Cir. 1982); see Sunshine Books, Ltd. v. Temple University, 697 F.2d 90, 96 (3d Cir. 1982). “[A] mere denial is insufficient to raise a disputed issue of fact, and an unsubstantiated doubt as to the veracity of the opposing affidavit is also not sufficient.” Lockhart v. Hoenstine, 411 F.2d 455, 458 (3d Cir. 1969). Furthermore, “a party resisting a [Rule 56] motion cannot expect to rely merely upon bare assertions, conclusory allegations or suspicions.” Gans v. Mundy, 762 F.2d 338, 341 (3d Cir. 1985) (citing Ness v. Marshall, 660 F.2d 517, 519 (3d Cir. 1981)).
Finally, it is emphatically not the province of the court to weigh evidence or assess credibility when passing upon a motion for summary judgment. Rather, in adjudicating the motion, the court must view the evidence presented in the light most favorable to the opposing party, Anderson, 477 U.S. at 255, and draw all reasonable inferences in the light most favorable to the non-moving party. Big Apple BMW, Inc. v. BMW of North America, Inc., 974 F.2d 1358, 1363 (3d Cir. 1992). Where the non-moving party's evidence contradicts the movant's, then the non-movant's must be taken as true. Id. Additionally, the court is not to decide whether the evidence unquestionably favors one side or the other, or to make credibility determinations, but instead must decide whether a fair-minded jury could return a verdict for the plaintiff on the evidence presented. Anderson, 477 U.S. at 252; see also Big Apple BMW, 974 F.2d at 1363. In reaching this determination, the Third Circuit has instructed that:
To raise a genuine issue of material fact . . . the opponent need not match, item for item, each piece of evidence proffered by the movant. In practical terms, if the opponent has exceeded the “mere scintilla” threshold and has offered a genuine issue of material fact, then the court cannot credit the movant's version of events against the opponent, even if the quantity of the movant's evidence far outweighs that of its opponent. It thus remains the province of the fact finder to ascertain the believability and weight of the evidence.Id. In contrast, “[w]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (internal quotation marks omitted); NAACP v. North Hudson Reg'l Fire & Rescue, 665 F.3d 464, 476 (3d Cir. 2011).
B. This Motion for Summary Judgment Should be Granted in Part and Denied in Part.
As we have noted, the plaintiff asserts claims under Pennsylvania's UTPCPL, the TILA, and state tort law, as well as a breach of contract claim against Wells Fargo. However, after consideration, we conclude that the plaintiff's claims, with the exception of the breach of contract claim, fail as a matter of law. Accordingly, we will recommend that the motion be denied as to the breach of contract claim but granted as to the remainder of the plaintiff's claims.
1. The Motion Should be Denied as to the Plaintiff's Breach of Contract Claim.
Wells Fargo contends that the plaintiff's breach of contract claim fails because the Stipulation is not an enforceable agreement, the claim is barred by the four-year statute of limitations, and the claim fails because the plaintiff has not shown that she is entitled to damages. After consideration, and viewing the evidence in a light most favorable to Mallory, we conclude that it reasonable fact finder could conclude that a valid, enforceable agreement existed between the parties and further, this claim is not time-barred. Additionally, while we note that the plaintiff may encounter hurdles proving her damages at trial, in our view she should be permitted to present evidence regarding her contractual damages at trial. Accordingly, we will recommend that the motion be denied as to this claim.
In order to state a claim for breach of contract in Pennsylvania, Mallory must prove three elements: “(1) the existence of a contract, including its essential terms, (2) a breach of the contract, and (3) resultant damages.” Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v, Law Firm of Malone Middleman, P.C., 137 A.3d 1257 (Pa. 2016). Here, Wells Fargo contends that Mallory cannot show that the Stipulation was an enforceable agreement because the essential terms of the Stipulation were ambiguous, in that Mallory understood the Stipulation to provide “new mortgages” while Wells Fargo understood the Stipulation to provide “loan modifications.” Wells Fargo further argues that the agreement to pay Mallory's attorney fees was ambiguous because the Stipulation set forth the amount as $10,301.00, which it paid, and Mallory believed the agreement was to pay her continuing legal fees.
On this score, “a contract is ambiguous only when the contract (or terms thereof) are susceptible of two different interpretations or more than one meaning.” In re Combustion Engineering, Inc., 366 F.Supp.2d 224, 230-31 (D. Del. 2005) (citing Mellon Bank, N.A. v. Aetna Business Credit, Inc., 619 F.2d 1001, 1011 (3d Cir. 1980). In our view, these differing views do not lead us to conclude that this agreement was so ambiguous as to render it legally unenforceable. Rather, the evidence shows that both Mallory and Wells Fargo understood the Stipulation to provide for revised mortgage terms for Mallory's properties at 19B Hilltop and 19D Hilltop.
In the instant case, while the Stipulation contains the term “new mortgages,” the Stipulation further provides that “Wells Fargo will do everything in their power to get modification.” (Doc. 73-4, at 5) (emphasis added). The Stipulation further provided that “[i]f Fannie Mae or Freddie Mac will not modify the loans ....Wells Fargo will repurchase the loans and do the loan modifications through Wells Fargo.” (Id.) (emphasis added). Thereafter, over the next five years, Wells Fargo provided Mallory with several “Loan Modification Agreements,” which Mallory objected to because they contained a provision for an escrow fund in violation of the Stipulation's provision that the terms be escrow-free.
Given this course of conduct by Wells Fargo, we cannot conclude as a matter of law that the terms of this Stipulation were so ambiguous as to render the agreement unenforceable. Rather, it is sufficiently clear that Wells Fargo understood its obligation to provide Mallory with a loan modification. The fact that Mallory objected to the final Loan Modification Agreement on the basis that it was not a “new mortgage,” in our view, does not obfuscate the unambiguous obligation by Wells Fargo to provide Mallory with loan modifications. Rather, the sole question in dispute is whether these proposed modifications satisfied the requirements of the parties' agreement and stipulation. In this regard, the parties' have sharply contrasting opinions but that sharp contrast does not render the agreement as a whole fatally ambiguous.
We reach a similar conclusion regarding Wells Fargo's contentions that the terms regarding the principal amount of each mortgage and the attorney's fees were too ambiguous to be legally enforceable. At the outset, the principal figure for the 19D Hilltop property was explicitly set forth in the Stipulation as $94,806.90. There is nothing ambiguous about this term of the agreement. The Stipulation then provided that the parties would agree to a principal amount for 19B Hilltop, and that “[t]he determination for that figure will be exactly how the determination for the figure on 19D was established.” (Doc. 73-4, at 5). Wells Fargo contends that this provision amounts to “an agreement to agree,” and is therefore unenforceable as a matter of law. See Highland Sewer and Water Auth. v. Forest Hills Municipal Auth., 797 A.2d 385, 390 (Pa. Commw. Ct. 2002). We disagree. Rather, in our view, this term of the Stipulation clearly provides that the parties have established a method or formula to determine the dollar amount of the loan, as evidenced by the dollar amount of the 19D Hilltop loan, and mandates that the principal amount for the 19B Hilltop loan will be calculated using that same method or formula. Accordingly, we cannot conclude that this term is so ambiguous that it renders the Stipulation unenforceable.
Finally, the defendant contends that the attorney's fees provision in the Stipulation is ambiguous. At some level this ais a curious argument by Wells Fargo since this term of the agreement seems both clearly, and clearly satisfied by the defendant. On this score, Wells Fargo argues that the Stipulation provided that Wells Fargo would pay the plaintiff's attorney's fees totaling $10,301 as of the date of the Stipulation. Wells Fargo, in fact, paid these fees. While Mallory testified that she believed this term to mean that Wells Fargo would continue to pay her legal fees, we do not read the Stipulation as providing for such an ongoing continuous payment. Rather, the Stipulation clearly and unambiguously provides that Wells Fargo was to pay the $10,301 in attorney's fees. Further, it is undisputed that Wells Fargo paid this sum to the plaintiff's attorney not once, but twice, totaling $20,602. Accordingly, we conclude that the attorney's fees provision of the Stipulation is unambiguous.
Therefore, we conclude that a valid contract existed between the parties, and that a trier of fact could conclude that Wells Fargo breached the contract when it failed to provide a loan modification in accordance with the Stipulation. However, to the extent the plaintiff's breach of contract claim contemplates a breach due to the failure to pay attorney's fees, this claim would fail as a matter of law since Wells Fargo did, in fact, pay the plaintiff's attorney's fees of $10,301 according to the Stipulation. Thus, any such claim should be dismissed.
We further conclude that the plaintiff's breach of contract claim is not barred by the statute of limitations. In Pennsylvania, an action for breach of contract must be brought within four years. 42 Pa. Cons. Stat. § 5525. “The statute of limitations for a breach of contract begins to run at the time the action accrues. Under Pennsylvania law, a cause of action in contract accrues at the time of breach.” Colonial Assur. Co. v. Mercantile & Gen. Reinsurance Co., 297 F.Supp.2d 764, 770 (E.D. Pa. 2003), affd sub nom. Colonial Assur. v. Mercantile & Gen. Reinsurance Co., 130 Fed.Appx. 607 (3d Cir. 2005). While this limitations period may be extended based upon a continuing wrong theory, a plaintiff must make an exacting showing to avail herself of this ground for tolling the statute of limitations. For example, it is well settled that the “continuing conduct of [a] defendant will not stop the ticking of the limitations clock [once] plaintiff obtained requisite information [to state a cause of action]. On discovering an injury and its cause, a claimant must choose to sue or forego that remedy.” Barnes v. American Tobacco Co., 161 F.3d 127, 154 (3d Cir. 1998) (quoting Kichline v. Consolidated Rail Corp., 800 F.2d 356, 360 (3d Cir. 1986)). See also Lake v. Arnold, 232 F.3d 360, 266-68 (3d Cir. 2000). Instead:
The continuing violations doctrine is an “equitable exception to the timely filing requirement.” West v. Philadelphia Elec. Co., 45 F.3d 744, 754 (3d Cir. 1995). Thus, “when a defendant's conduct is part of a continuing practice, an action is timely so long as the last act evidencing the continuing practice falls within the limitations period; in such an instance, the court will grant relief for the earlier related acts that would otherwise be time barred.” Brenner v. Local 514, United Bhd. Of Carpenters and Joiners of Am., 927 F.2d 1283, 1295 (3d Cir. 1991). In
order to benefit from the doctrine, a plaintiff must establish that the defendant's conduct is “more than the occurrence of isolated or sporadic acts.” West, 45 F.3d at 755 (quotation omitted). Regarding this inquiry, we have recognized that courts should consider at least three factors: (1) subject matter-whether the violations constitute the same type of [conduct], tending to connect them in a continuing violation; (2) frequency-whether the acts are recurring or more in the nature of isolated incidents; and (3) degree of permanence-whether the act had a degree of permanence which should trigger the plaintiff's awareness of and duty to assert his/her rights and whether the consequences of the act would continue even in the absence of a continuing intent to [engage in the alleged wrongful conduct]. See id. at 755 n. 9 (citing Berry v. Board of Supervisors of Louisiana State Univ., 715 F.2d 971, 981 (5th Cir. 1983)). The consideration of “degree of permanence” is the most important of the factors. See Berry, 715 F.2d at 981.Cowell v. Palmer Township., 263 F.3d 286, 292 (3d Cir. 2001).
The defendant contends that the plaintiff's breach of contract claim is time-barred because the Stipulation called for the modifications to be made within 60 days, and thus, the plaintiff's claim would have accrued on September 30, 2011. At the outset, we disagree with the defendant's narrow view of the contractual obligations set forth in the Stipulation. Indeed, the Stipulation provided for the defendant to start the process of obtaining loan modifications via the procedure set forth in the Stipulation within 60 days. However, the Stipulation provided for several avenues by which Wells Fargo could attempt to obtain loan modification should one avenue fail. Accordingly, we cannot conclude that any breach would have occurred on September 30, 2011, as a matter of law.
Further, the plaintiff has provided evidence showing a continuing wrong theory would justify the tolling of any statute of limitations. On this score, the first step of the process for obtaining loan modifications failed by March 26, 2012, when her HAMP application was denied. Wells Fargo then attempted the traditional modification route through Fanny Mae and Freddie Mac prior to purchasing the loans itself and doing an in-house modification. What then ensued in the following three years was an ongoing, back-and-forth process between Wells Fargo and Mallory regarding her loan modification, with the final Loan Modification Agreement being sent to Mallory on September 19, 2016, which the plaintiff rejected as noncompliant with the Stipulation on October 3, 2016.
Thus, we conclude that the considerations for a continuing wrong theory tolling the statute of limitations are met in this case. First, the conduct of Wells Fargo over the 5 years of back-and-forth was substantively the same, in that Wells Fargo continued to send Loan Modification Agreements to Mallory that appeared to be noncompliant with the terms of the Stipulation, causing Mallory to reject them. Second, given the continuous back-and-forth between the parties over the span of 5 years, we cannot conclude that the acts were isolated incidents but rather appeared to be a continuing course of conduct. Finally, we cannot conclude that any one of these Loan Modification Agreements had a degree of permanence such that Mallory should have been aware of a duty to assert her rights. Rather, the only pieces of evidence in the record, in our view, that would have such a degree of permanence were the June 2016 and August 2017 letters informing Mallory that she was being removed from the loan modification process. Accordingly, we conclude that Mallory's claim, which was initially filed in July of 2017, is not time-barred.
Lastly, the defendant argues that even if Mallory's claim is not time-barred, she has not shown that she is entitled to damages. Indeed, damages are an essential element of a breach of contract claim. However, courts have held that
“Under Pennsylvania law if a party is able to prove breach of contract but can show no damages flowing from the breach, the party is entitled to recover nominal damages.” Haywood v. Univ. of Pittsburgh, 976 F.Supp.2d 606, 645 (W.D. Pa. 2013) (citing Thorsen v. Iron and Glass Bank, 328 Pa.Super. 135, 476 A.2d 928, 931 (1984)). Consequently, “ ‘[a] grant of summary judgment on the sole basis of absence of provable damages ... is generally improper.' ” Norfolk Southern Ry. Co. v. Pittsburgh & West Virginia R.R., No. 11-1588, 2014 WL 2808907, at *19 (W.D. Pa. June 19, 2014) (quoting Thorsen, 476 A.2d at 931); see Zeno v. Ford Motor Co., Inc., 480 F.Supp.2d 825, 834 (W.D. Pa. 2007) (“In light of the law of Pennsylvania allowing nominal damages for a breach of contract, summary judgment cannot be granted for failure to show damages.”).Ins. Co. of Greater New York v. Fire Fighter Sales & Service Co., 120 F.Supp.3d 449, 461 (W.D. Pa. 2015).
In this case, Mallory contends that she suffered damages due to the defendant's breach, in that she was unable to complete renovations at the property, as well as sell or rent her property, due to the threat of foreclosure by Wells Fargo despite the Stipulation. Indeed, although the Stipulation provided that Wells Fargo was to cease foreclosure and prohibited future foreclosures while the loan modification process was ongoing, Mallory received a foreclosure notice as late as May of 2018. Accordingly, while Mallory may encounter a hurdle proving these damages at a trial, at this stage of the litigation and considering that Pennsylvania law allows for nominal damages for breach of contract actions, we recommend that summary judgment be denied as to the plaintiff's breach of contract claim.
We note for the plaintiff that while she alleges she suffered emotional harm due to the alleged breach by Wells Fargo, “[i]t is hornbook law that ‘emotional distress is generally not compensable in a contract.'” Cummings v. Premier Rehab Keller, P.L.L.C., 142 S.Ct. 1562, 1571 (2022) (quoting D. Laycock & R. Hasen, Modern American Remedies 216 (5th ed. 2019)).
2. The Motion Should be Granted with respect to the Remainder of the Plaintiff's Claims.
In addition to her breach of contract claim, Mallory also asserts claims under TILA, the UTPCPL, as well as common law and statutory tort claims of libel/slander, wrongful use of civil proceedings, and abuse of process. The defendant contends that Mallory's TILA claim fails because loan modifications do not require the disclosures that the plaintiff asserts Wells Fargo failed to provide her with. It further asserts that the plaintiff's tort claims are barred by the gist of the action and economic loss doctrines, and that these claims fail as a matter of law. After consideration, we agree and will recommend that the remainder of the plaintiff's claims be dismissed.
a. The Plaintiff's TILA Claim Fails as a Matter of Law.
Mallory asserts a claim under the Truth in Lending Act (“TILA”), 15 U.S.C. § 1601 et seq., contending that Wells Fargo failed to act in a transparent fashion and issue her new mortgages and disclosures in accordance with the Stipulation. Specifically, she points to a loan modification offer made by Wells Fargo in 2016 that did not contain additional disclosures. However, as we will discuss, the loan modifications made in the instant case are not required to submit additional disclosures under TILA, and therefore, the plaintiff's claim fails as a matter of law.
The purpose of TILA is “to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit, and to protect the consumer against inaccurate and unfair credit billing and credit card practices.” 15 U.S.C. § 1601. Thus, TILA requires that certain disclosures “be made before the consummation (the point at which legal obligations attach) of the underlying credit agreement, as well as at certain other specified times.” Rossman v. Fleet Bank (R.I.) Nat. Ass'n, 280 F.3d 384, 389 (3d Cir. 2002). Moreover, as a general matter, “events subsequent to a consumer loan transaction do not affect the validity of the initial disclosures or require the creditor to make further disclosures.” In re Sheppard, 299 B.R. 753, 760 (E.D. Pa. 2003) (citing 15 U.S.C. § 1634).
There are, however, specific and defined circumstances under which further disclosures are mandated. Id. In accordance with “Regulation Z,” which was enacted by the Federal Reserve Board to help carry out the purpose of TILA, the following events require subsequent disclosures: refinancings, assumptions, and variable rate adjustments. See 12 C.F.R. § 226.20. With respect to refinancings, the Regulation states that modifications to an existing loan do not qualify as refinancing requiring additional disclosures. On this score, the Regulation provides:
The following shall not be treated as a refinancing:
(1) A renewal of a single payment obligation with no change in the original terms.
(2) A reduction in the annual percentage rate with a corresponding change in the payment schedule.
(3) An agreement involving a court proceeding.
(4) A change in the payment schedule or a change in collateral requirements as a result of the consumer's default or delinquency, unless the rate is increased, or the new amount financed exceeds the unpaid balance plus earned finance charge and premiums for continuation of insurance of the types described in § 226.4(d).
(5) The renewal of optional insurance purchased by the consumer and added to an existing transaction, if disclosures relating to the initial purchase were provided as required by this subpart.§ 226.20(a). Significantly, courts in this circuit have found this Regulation to be sufficiently clear: “In any form, the new obligation must completely replace the prior one.” In re Sheppard, 299 B.R. at 763 (quoting Official Staff Interpretation to 12 C.F.R. § 266.20(a) (12 C.F.R. Pt. 226, Supp. I)).
Here, the undisputed facts show that the agreement between Wells Fargo and Mallory required Wells Fargo initially to modify Mallory's existing loans and mortgages. Specifically, the January 8 and January 16, 2016 Loan Modification Agreements, for example, provided: “It is important to note that your original documents are being modified and are not being refinanced into a new loan.” (Doc. 71-21, Ex. J; Doc. 71-22, Ex. K) (emphasis added). On this score, courts in this circuit have held that modifications such as the ones offered in this case do not qualify as a “refinancing” requiring additional disclosures, and thus, the failure to make additional disclosures does not violate TILA. See e.g., In re Sheppard, 299 B.R. at 763-64; In re Ross, 338 B.R. 266, 272 (E.D. Pa. 2006); Rankin v. Saldutti, LLC, 2020 WL 256433, at *7 (E.D. Pa. Jan. 17, 2020); Gochin v. Markowitz, 2018 WL 4361574, at *4 n.3 (E.D. Pa. Sept. 13, 2018); Slimm v. Bank of America Corp., 2013 WL 1867035, at *18 n. 33 (D.N.J. May 2, 2013).
We agree with the courts in this circuit that have held that TILA does not require additional disclosures to be made regarding a loan modification. In the instant case, it is undisputed that Wells Fargo provided loan modifications, rather than new mortgages, to Mallory, which did not require additional disclosures. Accordingly, we conclude that Mallory's TILA claim fails as a matter of law and should be dismissed.
b. The Plaintiff's UTPCPL Claim is barred by the Gist of the Action Doctrine.
The defendant further argues that Mallory's claim under the UTPCPL is barred by the gist of the action doctrine because Mallory's claims arise solely out of the alleged breach of contract. After consideration, we agree, and we will recommend that this claim be dismissed.
Under Pennsylvania law, the gist of the action doctrine precludes plaintiffs from “recasting ordinary breach of contract claims into tort claims.” eToll Inc. v. Elias/Savion Advertising, Inc., 811 A.2d 10, 14 (Pa. Super. Ct. 2002); Williams v. Hilton Group PLC, 93 Fed.Appx. 384, 385-86 (3d Cir. 2004). While a contractual relationship, standing alone, does not bar a party from bringing a tort claim, “[t]he doctrine ... forecloses a party's pursuit of a tort action for the mere breach of contractual duties, ‘without any separate or independent event giving rise to the tort.'” Brown & Brown, Inc. v. Cola, 745 F.Supp.2d 588, 619 (E.D. Pa. 2010) (citations omitted). The important difference, however, “is that [tort actions] lie from the breach of duties imposed as a matter of social policy.” Redevelopment Auth. v. Int'l Ins. Co., 685 A.2d 581, 590 (Pa. Super. Ct. 1996). “Whether the gist of the action doctrine applies in any particular setting is a question of law.” PPG Industries, Inc. v. Generon IGS, Inc., 760 F.Supp.2d 520, 528 (W.D. Pa. 2011) (citations omitted).
Here, we conclude that the plaintiff's claims all stem from duties and obligations owed to her by nature of the Stipulation with Wells Fargo. Indeed, Mallory relies on the Stipulation as the basis for her UTPCPL claim, asserting that Wells Fargo violated the UTPCPL when it engaged in alleged “unfair and/or deceptive acts which caused confusion and misunderstanding of the Plaintiff, Beatriz I Mallory's, options to alleviate the stress of her home mortgage loans and the new loan agreements, pursuant to the parties' Court Order/Agreement/Contract of August 1, 2011[.]” (Doc. 1-2, ¶ 168) (emphasis added). She further alleges that Wells Fargo “fail[ed] to fulfill all the obligations under the Court Order/Agreement/Contract of August 1, 2011” (Id., ¶ 171(q)). On these facts, as averred by Mallory, it is well settled that:
If the facts of a particular claim establish that the duty breached is one created by the parties by the terms of their contract-i.e., a specific promise to do something that a party would not ordinarily have been obligated to do but for the existence of the contract-then the claim is to be viewed as one for breach of contract.Earl v. NVR, Inc., 990 F.3d 310, 315 (3d Cir. 2021) (quoting Bruno v. Erie Ins. Co., 106 A.3d 48, 68 (Pa. 2014)).
Accordingly, we cannot conclude that Wells Fargo's responsibilities towards the plaintiff arose out of a broader societal duty sounding in tort under the UTPCL. In our view, the complaint clearly sets forth facts which assert that Wells Fargo's alleged breach arose by the terms of the agreement between the parties. Thus, this UTPCPL claim is barred by the gist of the action doctrine.
c. The Plaintiff's Remaining Tort Claims Fail as a Matter of Law.
Mallory has also asserted claims for libel/slander, wrongful use of civil proceedings, and abuse of process against Wells Fargo. For its part, Wells Fargo contends that these claims fail as a matter of law. After consideration, we conclude that the plaintiff has not shown a genuine issue of material fact with respect to these claims, and accordingly, we will recommend that they be dismissed.
Because we conclude that these claims fail on their merits, we decline to address the defendant's arguments regarding the gist of the action and economic loss doctrines with respect to these claims.
Mallory's claim for libel/slander alleges that Wells Fargo reported falsely to credit bureaus, which negatively affected her credit and, in turn, affected job opportunities for her. She further asserts that Wells Fargo posted notices on her property, which she claims defamed her character to her neighbors and the public.
Under Pennsylvania law, “[d]efamation, of which libel, slander, and invasion of privacy are methods, is the tort of detracting from a person's reputation, or injuring a person's character, fame, or reputation, by false and malicious statements.” Mzamane v. Winfrey, 693 F.Supp.2d 442, 476 (E.D. Pa. 2010) (quoting Joseph v. Scranton Times L.P., 959 A.2d 322, 334 (Pa. Super. Ct. 2008) (internal quotations omitted)). To prevail on a defamation claim, the plaintiff must prove:
(1) The defamatory nature of the communication.
(2) Its publication by the defendant.
(3) Its application to the plaintiff.
(4) The understanding by the recipient of its defamatory meaning.
(5) The understanding by the recipient of it as intended to be applied to the plaintiff.
(6) Special harm resulting to the plaintiff from its publication.
(7) Abuse of a conditionally privileged occasion.42. Pa. Cons. Stat. § 8343(a). With respect to the harm element, “[i]t is not enough that the victim of the [statements] ... be embarrassed or annoyed, he must have suffered the kind of harm which has grievously fractured his standing in the community of respectable society.” Tucker v. Phila. Daily News, 848 A.2d 113, 124 (Pa. 2004).
In the instant case, we conclude that Mallory's claim fails as a matter of law because she has not shown that she has suffered any harm from Wells Fargo's reporting and postings. Indeed, while Mallory baldly asserts that Wells Fargo reported the foreclosures to credit bureaus, and as a result she lost employment opportunities, she stated in her deposition that as of December 1, 2020, she did not know what her credit score was and had not checked it since at least August of 2011. (Doc. 71-3, at 40-41). Indeed, she stated herself: “I have no idea what my credit looked like at that time or even now.” (Id., at 41). Rather, she stated that she had not applied for any credit since August 2011 because she was under the “assumption” that her “credit was bad.” (Id., at 42). She further testified that she lost out on employment opportunities, but that she did not know and was not informed if she did not receive the job due to her credit rating. (Doc. 71-8, at 8-9). Mallory also stated that she had not attempted to purchase any properties since 2011. (Id., at 9). Accordingly, Mallory's speculative assumptions regarding the harm done by Wells Fargo's credit reporting are just that-speculative. Thus, we cannot conclude that Mallory has shown that she suffered harm as a result of the credit reporting.
Nor can she show that she suffered harm as a result of Wells Fargo posting inspections and notices at her property. In fact, in her deposition, she stated that she did not know if Wells Fargo ever posted any notices at the property. (Id., at 12). She further testified that her neighbors did not know about the issues with Wells Fargo. (Id.) Accordingly, we conclude that the plaintiff has not shown the requisite harm to establish a genuine issue of material fact with respect to her libel/slander claim, and this claim should be dismissed.
Finally, Mallory also asserts claims for wrongful use of civil proceedings and abuse of process, asserting that Wells Fargo is abusing and manipulating the Stipulation to intimidate and harm her. A claim for wrongful use of civil proceedings, also known as the Dragonetti Act, requires a plaintiff to show that the defendant (1) initiated civil proceedings against her; (2) the proceeding was terminated in the plaintiff's favor; (3) the defendant did not have probable cause to initiate the proceeding; (4) the proceeding was brought for a purpose other than adjudicating the claim; and (5) the plaintiff suffered damages. See Kit v. Mitchell, 771 A.2d 814, 819 (Pa. Super. Ct. 2001).
Curiously, the plaintiff, in her opposition, appears to be basing this claim on the filing of the instant action, contending that Wells Fargo “provoked this litigation as a result of its abusive behavior against Plaintiff and its contemptuous noncompliance with the Court Order.” (Doc. 117, at 20). To the extent Mallory is basing her claim on her filing of this action against Wells Fargo, the plaintiff misunderstands the first element of such a claim, which requires Wells Fargo to have initiated proceedings against her. Thus, any claim based on the plaintiff's filing of this instant lawsuit would fail as a matter of law.
Moreover, to the extent Mallory asserts this claim based on Wells Fargo's foreclosure action brought against her which resulted in the August 2011 Stipulation, she has presented no evidence that the foreclosure action was initiated with a malicious motive or for any other reason than to lawfully foreclose on the property and collect a debt. Additionally, Mallory cannot show that the action was terminated in her favor because “a termination of proceedings pursuant to an agreement of compromise is not ‘termination in favor of the person against whom they are brought' for purposes of actions premised on wrongful use of civil proceedings.” Abdul-Rahman v. Chase Home Finance Co., LLC, 2014 WL 3408564, at *4 (E.D. Pa. July 11, 2014) (quoting Georgiana v. United Mine Workers of Am., Int'l Union by Trumpka, 572 A.2d 232, 234, 235 (Pa. Super. Ct. 1990)).
We reach a similar conclusion with respect to the plaintiff's abuse of process claim. A claim for abuse of process in Pennsylvania essentially asserts that the defendant used the “legal process as a tactical weapon to coerce the desired result that is not the legitimate object of the process.” Harris v. Brill, 844 A.2d 567, 572 (Pa. Super. Ct. 2004). Under Pennsylvania law, a plaintiff must prove three elements in order to maintain a claim for abuse of process: “(1) the defendant used a legal process against the plaintiff, (2) that action was primarily to accomplish a purpose for which the process was not designed, and (3) harm was caused to the plaintiff.” Walters v. Belleville Commons, 2009 WL 3030581, at *2 (M.D. Pa. Sept. 17, 2009) (citing Harris, 844 A.2d at 572).
On this score, as we explained with respect to the plaintiff's wrongful use of civil proceedings claim, there is no evidence in the record to suggest that Wells Fargo initiated the foreclosure action for a purpose other than foreclosing on the property to collect a debt in default. While the plaintiff contends that Wells Fargo utilized the legal process to harass and intimidate her, there is simply no evidence in the record that Wells Fargo acted for any other purpose than lawfully foreclosing on the plaintiff's properties. Accordingly, we conclude that these claims for wrongful use of civil proceedings and abuse of process fail as a matter of law and should be dismissed.
IV. Recommendation
For the foregoing reasons, IT IS RECOMMENDED THAT the defendant's motion for summary judgment (Doc. 71) be GRANTED as to the UTPCPL, TILA, Libel/Slander, Wrongful Use of Civil Proceedings, and Abuse of Process claims but DENIED as to the breach of contract claim.
The parties are further placed on notice that pursuant to Local Rule 72.3:
Any party may object to a magistrate judge's proposed findings, recommendations or report addressing a motion or matter described in 28 U.S.C. § 636 (b)(1)(B) or making a recommendation for the disposition of a prisoner case or a habeas corpus petition within fourteen (14) days after being served with a copy thereof. Such party shall file with the clerk of court, and serve on the magistrate judge and all parties, written objections which shall specifically identify the portions of the proposed findings, recommendations or report to which objection is made and the basis for such objections. The briefing requirements set forth in Local Rule 72.2 shall apply. A judge shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made and may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge. The judge, however, need conduct a new hearing only in his or her discretion or where required by law, and may consider the record developed before the magistrate judge, making his or her own determination on the basis of that record. The judge may also receive further evidence, recall 34 witnesses or recommit the matter to the magistrate judge with instructions.