Opinion
CIVIL ACTION NO. 2:06-CV-03681-LDD.
December 28, 2006
CIVIL JUDGMENT
AND NOW, this 28th day of December 2006, in accordance with the provisions of Federal Rule of Civil Procedure 58, it is hereby ORDERED as follows:
1. Judgment is entered in favor of defendants Wells Fargo Home Mortgage, Inc., Premier Events, Inc., and H.E.M. Corporation and against plaintiff Paula Williams.
2. The Clerk of Court is directed to mark this action closed for statistical purposes.
ORDER
Presently before the Court is the motion for summary judgment filed by Defendant Wells Fargo Home Mortgage, Inc. ("Wells Fargo") (Doc. No. 9) and the response in opposition filed by Plaintiff Paula Williams (Doc. No. 12). For the reasons that follow, Defendant's motion is GRANTED.I. Factual and Procedural History
This case arises from a mortgage loan transaction and the ultimate foreclosure of Plaintiff's residence. The facts relevant to the disposition of this summary judgment motion are largely undisputed. The procedural history, on the other hand, involves numerous actions filed in this Court, the Court of Common Pleas for Philadelphia County, and in the United States Bankruptcy Court for the Eastern District of Pennsylvania.
In the fall of 2002, Plaintiff was approached at her residence by an agent of Defendant Target Home Remodeling who sought to perform home improvement work upon Plaintiff's home. On October 2, 2002, Plaintiff entered into a contract with Target for the performance of $25,995 in repairs. Target assured Plaintiff it would arrange financing. Defendant H.E.M. Corporation ("HEM") processed the loan application which was ultimately approved by the lender, Wells Fargo. The loan totaled $28,000 and closing took place on November 12, 2002 at Plaintiff's residence. As security, Wells Fargo received a note in the loan amount and a mortgage on Plaintiff's home. Def. Ex. J. Pursuant to the terms of the loan, Plaintiff was obligated to make monthly payments of $232.89 for the first 180 months with a final balloon payment of $22,697.47 due in December 2017. Id.
Plaintiff alleges that HEM was hired by Target and that she was unaware of HEM's role in the transaction.
The home repair contract was ultimately amended to reflect improvements in the amount of $13,820.83, and the application of the remainder of the loan to Plaintiff's preexisting and unrelated debt.
Plaintiff alleges that the home repairs performed by Target were defective. She further alleges that she made timely and complete payments on the loan until she was $20 short on a payment during the Spring of 2003 at which time Wells Fargo allegedly refused to accept future payments. On August 6, 2003 Wells Fargo instituted a foreclosure action on Plaintiff's home in the Court of Common Pleas for Philadelphia County. Def. Ex. B. After Plaintiff allegedly failed to respond to the complaint, a default judgment was entered and a sheriff's sale of the home was scheduled for January 6, 2004. On December 8, 2006 Plaintiff filed a Chapter 13 bankruptcy petition in the Bankruptcy Court for the Eastern District of Pennsylvania. (No. 03-37960). This petition was dismissed by the Bankruptcy Court on March 4, 2004.
Following the dismissal, the sheriff's sale was rescheduled for July 6, 2004. On July 2, Plaintiff filed another bankruptcy petition (No. 04-19247) which again stayed the sheriff's sale. In connection with this bankruptcy case, Plaintiff filed an adversary complaint against Wells Fargo, HEM and Target alleging violations of the Home Ownership and Equity Act ("HOEPA"); the Pennsylvania Home Improvement Finance Act ("HIFA"); the Pennsylvania Credit Services Act ("CSA"); the Pennsylvania Unfair Trade Practices and Consumer Protection Law ("UTPCPL"); and for breach of contract. (No. 05-00017).
73 Pa. S.C. § 500-101 et seq.
73 Pa. S.C. § 2181 et seq.
73 Pa. S.C. § 201-1 et seq.
Only Wells Fargo responded to this adversary complaint and a default judgment was entered against the other parties.
On June 28, 2005, the Honorable Diane Sigmund, Chief Bankruptcy Judge, conducted a hearing on Wells Fargo's motion for summary judgment challenging Plaintiff's adversary complaint. No final rulings were issued during this hearing. Two days later, Judge Sigmund conducted a confirmation hearing in the bankruptcy case. Because Plaintiff failed to appear and because Plaintiff's counsel could not articulate how the bankruptcy plan could be confirmed absent the HIFA claim against Wells Fargo, Judge Sigmund dismissed the bankruptcy case and the adversary complaint. No final order was issued with respect to the merits of any of the claims presented in the action. Following the dismissal of the bankruptcy case, the property was again re-listed for sheriff's sale.
On October 4, 2005, Williams filed a petition to open judgment in the foreclosure action. This petition was denied without prejudice as a result of Williams' failure to attach a verified copy of her proposed answer to the complaint.
Previously, on September 23, 2005, Plaintiff filed a civil action against the Defendants in the Court of Common Pleas for Philadelphia County (September Term 2005, No. 2670) alleging violations of HIFA, UTPCPL and CSA. Def. Ex. F. Following Plaintiff's failure to appear at a court-ordered arbitration on May 23, 2006, a non pros judgment was entered.
On January 9, 2006, Plaintiff filed a second petition in the Court of Common Pleas to open the original default judgment entered in the foreclosure action. This petition, like the previous one, was denied without prejudice as a result of Plaintiff's failure to attach a verified copy of her proposed answer to the foreclosure complaint.
On April 4, 2006 Plaintiff filed a third bankruptcy petition, which again operated to stay an imminent sheriff's sale. Def. Ex. G. Wells Fargo's motion for relief from the automatic stay was granted on August 16, 2006 after Plaintiff failed to appear at the hearing, and the case was converted to Chapter 7 on August 24, 2006. Id. at docket entries 27, 38.
Thereafter, Wells Fargo obtained re-listing of the property for sheriff's sale. In response, on October 5, 2006, Plaintiff filed a third petition in Common Pleas Court to seeking to open the default judgment. In this petition, which is currently pending, Plaintiff included a verified answer in which she asserts counterclaims alleging violations of HIFA, UTPCPL and breach of contract.
Finally, on August 22, 2006 Plaintiff filed the instant complaint asserting violations of the Truth in Lending Act ("TILA") against Wells Fargo (Count I) and the CSA against HEM (Count II), as well as a breach of contract claim against Wells Fargo and Target in which Plaintiff alleges Wells Fargo violated HIFA (Count III). Plaintiff, it is apparent, seeks to simultaneously litigate many of the same claims in state and federal court.
15 U.S.C. § 1601 et seq.
Wells Fargo moves for summary judgment in this court on multiple grounds. Wells Fargo initially asserts that Plaintiff is precluded from bringing this action as a result of the doctrine of res judicata. Defendant alleges that the default judgment in the foreclosure action, the dismissal of the bankruptcy petition and adversary complaint, and the non pros judgment in Plaintiff's state court action all preclude Plaintiff from bringing this case. Because this Court finds that the non pros judgment in Plaintiff's state suit precludes Plaintiff from prevailing in this action, Wells Fargo's summary judgment motion will be granted. As a result, it is unnecessary to address Defendant's alternate arguments.
Wells Fargo also contends that Count 1 of the complaint, which alleges violations of the Truth in Lending Act ("TILA") is barred by the statute of limitations. Next, Wells Fargo contends that all disclosures required by TILA, 15 U.S.C. § 1605(a), were made and were materially accurate. Wells Fargo also argues that because the loan transaction did not include points and fees in excess of 8%, it was not required to make further disclosures pursuant to the HOEPA. See 12 C.F.R. § 226.32(a)(1)(ii). Finally, Wells Fargo argues that Plaintiff cannot prevail on her HIFA claim because HIFA does not provide a private right of action. Wells Fargo further argues the absence of a substantive HIFA claim because Wells Fargo was unaware that the loan was intended to finance a home improvement contract.
II. Legal Standard
In considering a motion for summary judgment, the Court must determine whether "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); Arnold Pontiac-GMC, Inc. v. General Motors Corp., 786 F.2d 564, 568 (3d Cir. 1986). Only facts that may affect the outcome of a case are "material."Anderson, 477 U.S. 248. All reasonable inferences from the record are drawn in favor of the non-movant. See id. at 256.
Although the movant has the initial burden of demonstrating the absence of genuine issues of material fact, the non-movant must then establish the existence of each element on which it bears the burden of proof. See J.F. Feeser, Inc. v. Serv-A-Portion, Inc., 909 F.2d 1524, 1531 (3d Cir. 1990) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)), cert. denied, 499 U.S. 921 (1991). A plaintiff cannot avert summary judgment with speculation or by resting on the allegations in his pleadings, but rather must present competent evidence from which a jury could reasonably find in his favor. Anderson, 477 U.S. at 248;Ridgewood Bd. of Educ. v. N.E. for M.E., 172 F.3d 238, 252 (3d Cir. 1999); Williams v. Borough of West Chester, 891 F.2d 458, 460 (3d Cir. 1989); Woods v. Bentsen, 889 F. Supp. 179, 184 (E.D. Pa. 1995).
III. Analysis
Pursuant to the doctrine of res judicata, "[a]ny final valid judgment on the merits by a court of competent jurisdiction precludes any future suit between the parties or their privies on the same cause of action." R/S Financial Corp. V. Kovalchick, 552 Pa. 584, 588 (1999); see also Balent v. City of Wilkes-Barre, 542 Pa. 555, 563 (1995). Res judicata applies equally to those claims that were actually pled as well as those that could have been litigated because they were part of the same cause of action.Allen v. McCurry, 449 U.S. 90, 94 (1980); R/S Financial Corp., 522 Pa. at 588. In order to determine whether two suits are based on the same cause of action, the Court will consider the similarity of the underlying events, not the specific legal theories involved. Lubrizol Corp. v. Exxon Corp., 929 F.2d 960, 963 (3d Cir. 1991); Davis v. United States Steel Supply, 688 F.2d 166, 171 (3d Cir. 1992). The Court will consider "whether the acts complained of were the same, whether the material facts in each suit were the same and whether the witnesses and documentation required to prove such allegations were the same." Tyler v. O'Neill, 52 F.Supp.2d 471, 475 (E.D. Pa. 1999) (citing United States v. Athlone Industries, Inc., 746 F.2d 977, 984 (3d Cir. 1984).
In Plaintiff's September 23, 2005 Court of Common Pleas complaint, she assets the same HIFA and UTPCPL claims against Wells Fargo and Target which are raised in the instant complaint, as well as an identical CSA claim against HEM. In her Common Pleas complaint, Plaintiff also asserts a breach of contract claim against Target for the allegedly negligent home repairs. Her state court complaint does not include a TILA claim.
In order to determine whether the non pros judgment will have a res judicata effect, the Court must determine whether the claims brought in the present action were actually asserted in the prior case or whether the claims are part of the same cause of action such that they should have been raised in the previous action.Allen, 449 U.S. at 94; R/S Financial Corp., 522 Pa. at 588. The second inquiry is whether the non pros judgment represents a final judgment on the merits. Both inquiries are answered in the affirmative.
Plaintiff's HIFA, UTPCPL and CSA claims were all clearly asserted in the state court action and res judicata will apply if a final judgment was rendered on the merits. Though Plaintiff's TILA claim was not previously asserted, it certainly could have been. Nothing prevents Plaintiff from bringing a TILA suit in state court in conjunction with her state law claims. Furthermore, because the TILA claim is dependant on the same nucleus of fact (the mortgage transaction), the same witnesses and the same documentary evidence as the claims previously asserted in state court, it is clear these claims are part of the same cause of action. See Tyler, 52 F.Supp.2d at 475. Though not stated in the context of the res judicata doctrine, the factual interrelatedness of HIFA and TILA claims has been recognized by courts in this district. See Wile v. Green Tree Servicing, LLC, 2004 WL 2644390, at *2 (E.D. Pa. Nov. 22, 2004) (stating with respect to a similar mortgage loan transaction to finance home repairs, "it would seem that the TILA and the HIFA both provide Wile with a claim against the creditor of the mortgage."). A simple reading of Plaintiff's federal complaint also confirms that the TILA and other claims are dependant on the same facts, witnesses and documents.
The fundamental purpose behind the res judicata doctrine is to avoid the burden of re-litigating an issue and to maintain judicial economy by resolving disputes in a single action. R/S Financial Corp., 552 Pa. at 588. Under the facts of this case, the bifurcation of the TILA count from the HIFA, UTPCPL and CSA claims runs counter to that purpose. As such, the Court finds that Plaintiff's TILA claim should have been asserted in state court along with the other, related, claims.
Pursuant to binding Third Circuit authority, res judicata applies to the non pros judgment entered by the Court of Common Pleas. "Congress has directed federal courts to look principally to state law in deciding what effect to give state court judgments." Lance v. Dennis, ___ U.S. ___ 126 S.Ct. 1198, 1202 (2006) (citing 28 U.S.C. § 1738); see also Turner v. Crawford Square Apartments III, L.P., 449 F.3d 542, 548 (3d Cir. 2006). Under Pennsylvania Rule of Civil Procedure 3051, after a non pros judgment has been entered, the same issues cannot be re-litigated unless and until the parties successfully petition the Pennsylvania courts to open the non pros judgment. See Schuykill Navy v. Langbord, 728 A.2d 964 (Pa. Super 1999); Gates v. Servicemaster Commercial Service, 631 A.2d 677, 679 (Pa.Super. 1993).
Under Rule 3051, the petitioning party must show that 1) the petition was timely, 2) there is a reasonable explanation or legitimate excuse for the inactivity or delay, and 3) there is meritorious cause of action.
In Kuhnle v. Prudential Securities, Inc. the Third Circuit addressed procedural circumstances in which a non pros judgment was entered against the plaintiff in state court, and the plaintiff thereafter filed a nearly identical action in federal court. 439 F.3d 187 (3d Cir. 2006). After considering Pennsylvania law on non pros judgments, and after noting the congressional mandate that federal courts must turn to state law to determine the preclusive effects of state court judgments, the Third Circuit held that the non pros judgment precluded the plaintiff from filing a similar action in federal court. Id. at 190. Quoting the district court, the Third Circuit stated that Pennsylvania law does not allow a litigant "to do an end run around a judgment of non pros simply by filing another complaint." Id. at 189.
Plaintiff alleges that the non pros judgment is not preclusive because the separate action was filed in a different forum. Pl. Resp. at 11-12. This argument was considered and unequivocally rejected by the Kuhnle Court. Id. at 191. ("It would be pointless to allow a litigant to sidestep a judgment of non pros — and Rule 3051 — by simply filing in another jurisdiction."). Citing Pennsylvania case law, Plaintiff also argues that non pros judgments are not final judgments because they can be vacated under the provisions of Rule 3051. Pl. Resp. at 11. While this is indeed true, Kuhnle makes clear that preclusion law prevents Plaintiff from using the federal courts to avoid Rule 3051. Kuhnle, 439 F.3d at 191. In summary, Kuhnle applies to the facts of this case; the non pros judgment precludes Plaintiff from bringing the instant action.
The Court is aware that the procedural posture of this case is not identical to that of Kuhnle. Specifically, the Kuhnle court found it relevant that the non pros judgment was entered by the judge rather than the prothonotary and that the court issued a written order refusing to open the non pros judgment. Although the factual circumstances differ slightly, the Third Circuit's admonition against side stepping adverse state court judgments is clear. Kuhnle, 439 F.3d at 191. So, too, is the Supreme Court's instruction that federal courts must accord state court judgments the same preclusive effect they would receive in the court rendering the judgment. Lance, 126 S.Ct. at 1202. Finally, though not present in Kuhnle, Plaintiff's penchant for instituting litigation and failing to proceed to judgment is certainly relevant to the question of whether this Court should permit an apparent attempt to circumvene Pennsylvania Rule of Civil Procedure 3051.
Accordingly, this 28th day of December 2006, it is ORDERED that Defendant's motion for summary judgment (Doc. No. 9) is GRANTED. This entire action is DISMISSED. The Clerk of Court is directed to close this matter for statistical purposes.
Though Defendants Target and HEM have not been served with the instant complaint and therefore have not filed a motion for summary judgment, the Court will dismiss those counts filed against Target and HEM because they, too, are barred by res judicata. Target and HEM were named defendants in Plaintiff's state court action that resulted in a judgment of non pros. See Def. Ex. F. Therefore, just as Plaintiff cannot use the federal courts to avoid Rule 3051 with respect to claims brought against Wells Fargo, she cannot avoid Rule 3051 with respect to her claims asserted against Target and HEM. See Kuhnle, 439 F.3d at 189.