The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
CHARLES L. WOTANIS and,
RENEE B. WOTANIS,
CIVIL ACTION NO. 3:19-CV-00588
Plaintiffs,
V. (JUDGE CAPUTO)
PNC BANK, N.A.,
Defendant.
MEMORANDUM
Presently before me is a Motion to Dismiss (Doc. 12) filed by the Defendant PNC
Bank, N.A. (“PNC”). PNC contends that the Plaintiffs Charles L. Wotanis and Renee B.
Wotanis (“Mr. and Mrs. Wotanis” or “Wotanis’s”) have failed to state a claim upon which
relief may be granted on two separate claims under the Real Estate Settlement Procedures
Act (“RESPA”). Because the Wotanis’s have adequately pled violations of RESPA in Count
| of their complaint but have failed to adequately plead violations in Count II, PNC’s Motion
to Dismiss will be granted in part and denied in part. The Plaintiffs will be given leave to
amend.
Il. Background
The facts from the Wotanis’s Complaint (Doc. 1), taken as true and viewed in the light
most favorable to Mr. and Mrs. Wotanis are as follows:
Charles L. and Renee B. Wotanis, husband and wife, are the owners of real property located
at 950 Taylor Avenue, Scranton, Pennsylvania, Lackawanna County (“the Property”). (Doc.
1 at ¶ 7). In May 2006, Mr. and Mrs. Wotanis entered into a real-estate secured Direct
Installment Loan with PNC for the Property in the amount of $153,694.00 at an interest rate
of 7.9%, to be paid in monthly installments of $1,463.86. (Id. at ¶ 9).
On December 9, 2012, Plaintiffs received a document from PNC which purported to
be a loan modification agreement, offering a reduced interest rate on the loan (4.19%) if
Plaintiffs paid a one hundred dollar loan modification processing fee. (Id. at ¶ 10). In
response, on January 18, 2013, Plaintiffs signed and submitted this loan modification offer
at their local PNC branch and further authorized PNC to debit one hundred dollars from their
PNC checking account to satisfy the modification processing fee. (Id. at ¶ 11).
In 2018, Mr. and Mrs. Wotanis noticed that they had nonetheless been paying the
initial 7.9% interest rate. (Id. at ¶ 12). On May 16, 2018, they notified PNC of this “error” and
requested more information about the servicing of their loan including what they referred to
as the “servicing notes.” (Id. at ¶ 12; Doc. 3 Ex. C). On June 22, 2018, PNC responded to
this letter stating that the loan modification offer was never properly accepted due to either
the bank never actually receiving the agreement, or, even if received, an omission of the
account number on the modification processing fee agreement. (Id. at ¶13; Doc. 3, Ex. D.).
In this same response, PNC provided Mr. and Mrs. Wotanis with various records of payment
history, but did not attach any “servicing notes” instead stating that they were “outside the
scope of what can be requested as, to the extent such information exists, it is confidential,
irrelevant, or privileged, and the request was overly broad and unduly burdensome.” (Id. at
¶15; Doc. 3, Ex. D).
Mr. and Mrs. Wotanis initiated this action on April 5, 2019, alleging two violations of
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RESPA, 12 U.S.C. § 2601 et seq: failure to adequately respond to a Notice of Error on
behalf of themselves (Count I); and failure to adequately respond to a Request for
Information on behalf of a larger class of those similarly harmed (Count II). (See generally
Doc.1). Mr. and Mrs. Wotanis named PNC as the lone Defendant. (Id. at ¶ 26). Plaintiffs
seek various forms of actual and statutory damage awards for themselves and, as to Count
II, for the class they purportedly represent plus costs. (Id. at ¶¶ 35-36, 44).
PNC filed its Motion to Dismiss on June 21, 2019, contending that the Wotanis’s fail
to state a claim upon which relief can be granted because their claims fall outside the scope
of the RESPA statute as they do not involve loan servicing, and, in any event, PNC
responded to the Wotanis’s request for information adequately. (See Docs. 12, 13). PNC
further contends that no claim has been stated because Mr. and Mrs. Wotanis failed to
adequately plead actual and statutory damages under the applicable statute such that they
are not entitled to relief. (See Doc. 12).
Both Parties have fully submitted briefs in support of their positions and the Motion
is ripe for review. (See Docs. 13, 17, 19).
II. Legal Standard
Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint, in
whole or in part, for failure to state a claim upon which relief can be granted. When
considering a Rule 12(b)(6) motion, the Court’s role is limited to determining if a plaintiff is
entitled to offer evidence in support of her claims. See Semerenko v. Cendant Corp., 223
F.3d 165, 173 (3d Cir. 2000). The Court does not consider whether a plaintiff will ultimately
prevail. Id. A defendant bears the burden of establishing that a plaintiff’s complaint fails to
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state a claim. See Gould Elecs. v. United States, 220 F.3d 169, 178 (3d Cir. 2000).
A pleading that states a claim for relief must contain “a short and plain statement of
the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The
statement required by Rule 8(a)(2) must “‘give the defendant fair notice of what the . . . claim
is and the grounds upon which it rests.’” Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per
curiam) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Detailed factual
allegations are not required. Twombly, 550 U.S. at 555. However, mere conclusory
statements will not do; “a complaint must do more than allege the plaintiff’s entitlement to
relief.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). Instead, a complaint
must “show” this entitlement by alleging sufficient facts. Id. While legal conclusions can
provide the framework of a complaint, they must be supported by factual allegations.
Ashcroft v. Iqbal, 556 U.S. 662, 664 (2009). As such, “[t]he touchstone of the pleading
standard is plausibility.” Bistrian v. Levi, 696 F.3d 352, 365 (3d Cir. 2012).
The inquiry at the motion to dismiss stage is “normally broken into three parts: (1)
identifying elements of the claim, (2) reviewing the complaint to strike conclusory allegations,
and then (3) looking at the well-pleaded components of the complaint and evaluating
whether all of the elements identified in part one of the inquiry are sufficiently alleged.”
Malleus v. George, 641 F.3d 560, 563 (3d Cir. 2011).
Dismissal is appropriate only if, accepting as true all the facts alleged in the complaint,
a plaintiff has not pleaded “enough facts to state a claim to relief that is plausible on its face,”
Twombly, 550 U.S. at 570, meaning enough factual allegations “‘to raise a reasonable
expectation that discovery will reveal evidence of’” each necessary element. Phillips v.
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County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (quoting Twombly, 550 U.S. at 556).
“The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than
a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678. “When
there are well-pleaded factual allegations, a court should assume their veracity and then
determine whether they plausibly give rise to an entitlement to relief.” Id.
In deciding a motion to dismiss, the Court should consider the allegations in the
complaint, exhibits attached to the complaint, and matters of public record. Mayer v.
Belichick, 650 F.3d 223, 230 (3d Cir. 2010) (citing Pension Benefit Guar. Corp. v. White
Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993)). The Court may also consider
“undisputedly authentic” documents when the plaintiff’s claims are based on the documents
and the defendant has attached copies of the documents to the motion to dismiss. Pension
Benefit Guar. Corp., 998 F.2d at 1196. The Court need not assume the plaintiff can prove
facts that were not alleged in the complaint, see City of Pittsburgh v. W. Penn Power Co.,
147 F.3d 256, 263 & n.13 (3d Cir. 1998), or credit a complaint’s “‘bald assertions’” or “‘legal
conclusions.’” Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997) (quoting
In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1429-30 (3d Cir. 1997)).
III. Discussion
PNC moves to dismiss both of the claims raised by Mr. and Mrs. Wotanis under
Federal Rule of Civil Procedure 12(b)(6) for failing to state plausible claims for relief
under RESPA.
RESPA was enacted as a consumer protection statute and it was designed to give
home-buyers access to more information about their home mortgages so that they may
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protect themselves from any fraudulent or deceptive practices by their mortgage loan
servicers. See Stefanowicz v. Sun Trust Mortgage, 2017 WL 1103183, at *6-7 (M.D. Pa.
2017), report and recommendation adopted, 2017 WL 1079163 (M.D. Pa. 2017); Wilson v.
Bank of America, 48 F.Supp.3d 787, 798-99 (E.D. Pa. 2014). While its primary purpose was
to protect home buyers from “‘material nondisclosures in settlement statements,’” RESPA,
by its terms, applies to “‘the ‘servicing’ of any ‘federally related mortgage loan.’” Stefanowicz,
2017 WL 1103183, at *6 (quoting Cortez v. Keystone Bank, Inc., 2000 WL 536666, at *10
(E.D. Pa. May 2, 2000)).
The servicing of any mortgage loan includes any inquiries by the borrower into the
application and management of payments towards principal and interest. Cortez, 2000 WL
536666, at *10. More specifically, the statute defines servicing as “receiving any scheduled
periodic payments from a borrower pursuant to the terms of any loan . . . and making
payment of principal and interest . . . as may be required pursuant to the terms of the loan.”
12 USC s 2605(i)(3). Importantly, while requests for loan modifications are not considered
inquiries into the application of payments, and are therefore not servicing inquiries, Schepisi
v. Santander, 2019 WL 699959, at *3 (D.N.J. 2019), requests into the application of
payments for a believed modification can be considered servicing inquiries because they
relate to the actual management of current payments. See Cortez, 2000 WL 536666, at *10
(finding that inquiries into the application of payments to a borrower’s account involved the
servicing of a loan for the purposes of RESPA). Grembowiec v. Select Portfolio Servicing,
Inc. further held that inquiries regarding loan modifications can be valid servicing inquiries
to the extent the Plaintiff shows contradictory explanations or actions taken by the servicer
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with regard to a modification. 2019 WL 3183588, at *5, n.6 (D.N.J. 2019).
Moreover, to seek information from a servicer under RESPA, a borrower first must
send the servicer a Qualified Written Request (“QWR”). Stefanowicz, 2017 WL 1103183,
at *7. A QWR is “a written correspondence, other than notice on a payment coupon or other
payment medium supplied by the servicer that—(i) includes, or otherwise enables the
servicer to identify the name and account of the borrower; and (ii) includes a statement of
the reasons for the belief of the borrower, to the extent applicable, that the account is in error
or provides sufficient detail to the servicer regarding other information sought by the
borrower.” 12 U.S.C. § 2605(e). Following the subsequent adoption of 12 C.F.R. § 1024
(“Regulation X”), this definition of QWRs was broadened and now specifically includes
Notices of Error and Requests for Information. Wilson, 48 F.Supp3d at 799-800; see also
12 C.F.R. §§ 1024.35, 1024.36; Bret Binder v. Weststar Mortgage, Inc., 2016 WL 3762710,
at *5 (E.D.Pa. 2016) (speaking about Regulation X, “the regulations implementing RESPA
set out guidance for how mortgage servicers must comply with requests from borrowers to
resolve errors with their accounts.”). The response obligations by servicers for these types
of requests was also heightened and now include the conducting of a reasonable
investigation before a response and, in the response itself, elucidation of all of the reasons
why any errors exist or why any information may be unavailable. Id. Servicers could also,
upon receipt of a Notice of Error, simply correct the mistake and let the consumer know the
error has been remedied. Id. at 800.
More specifically, Notices of Error entail a borrower notifying their servicer about a
potential discrepancy on their account, for which the servicer must either remedy, or, after
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a reasonable investigation, inform the borrower about the lack of error or remedy with an
accompanying explanation. Id. at 800-01. Requests for Information more simply entail a
request for relevant information about the borrower’s loan, which must be provided, if readily
available, or must be provided, after a reasonable investigation. Id. at 805-06.
For either type of request, the servicer need not respond if the request is overbroad
or implicates “confidential, proprietary, or privileged information.” 12 C.F.R. §§1024.35(e)(4),
(g)(ii); 12 C.F.R. §§1024.36(f)(ii), (f)(iv). This exception however, only applies to requests
which the servicer “reasonably determines to meet any of the enumerated exceptions.”
Wilson, 48 F.Supp. 3d at 806. As such, in Wilson, “servicing logs,” which may be readily
accessible and which are not necessarily overbroad, were found to be outside the scope of
the enumerated exceptions. Id.
For an otherwise standard request, the loan servicer has 30 days to respond, or
otherwise face damages in “an amount equal to the sum of—(A) any actual damages to the
borrower as a result of the failure; and (B) any additional damages, as the court may allow,
in the case of a pattern or practice of noncompliance with the requirements of [RESPA], in
an amount not to exceed $2000.” Stefanowicz, 2017 WL 1103183, at *7 (quoting Andress
v. Nationstar Mortg., LLC, 2016 WL 75085, at *3 (E.D. Pa. Jan. 7, 2016)). Therefore, to
properly recover, the Plaintiffs must “allege that the breach resulted in actual damages.”
Hutchinson v. Del. Sav. Bank FSB, 410 F. Supp. 2d 374, 383 (D.N.J. 2006). This means
“‘specific evidence to establish a causal link between the financing institution’s violation and
their injuries.’” Stefanowicz v. Sun Trust Mortgage, 2018 WL 1385976, at *6 (M.D. Pa. 2018)
(quoting Jenkins v. BAC Home Loan Servicing, LP, 822 F. Supp. 2d 1369 (M.D. Ga. 2011)),
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report and recommendation adopted, 2018 WL 1384643 (M.D. Pa. 2018). Beyond actual
damages, RESPA also allows for additional statutory damages if the Defendant engaged in
“a pattern or practice of noncompliance” with the requirements of the RESPA statute. 12
U.S.C. §§ 2605(f)(1)(B), 2(B). For a pattern or practice, “‘almost as a matter of definition, a
single failure to respond to a Qualified Witten Request does not state a claim for a ‘pattern
or practice’ of doing so.’” Straker v. Deutsche Bank Nat. Trust, 2012 WL 7829989, at *12
(M.D. Pa. 2012) (quoting Garcia v. Wachovia Mortg. Corp., 676 F. Supp.2d 895, 909 (C.D.
Cal. 2009)), report and recommendation adopted, 2013 WL 1314021 (M.D. Pa. 2013).
Straker goes further to say that “the failure to respond to one qualified written request . . . as
a matter of law does not amount to a ‘pattern or practice’ which will support a claim for
statutory damages.” Id.
Therefore, a RESPA claim turns on: (1) submitting a QWR, which can be a Notice of
Error or Request for Information; (2) not receiving a timely or adequate response by a loan
servicer; and (3) damages. See Stefanowicz, 2018 WL 1385976 at *6.
A. RESPA Notice of Error Violation
PNC claims that the Wotanis’s inquiry regarding their loan does not constitute a QWR
because it was not a servicing request and instead only pertained to a requested loan
modification. (Doc. 12; Doc. 13 at 6-10). Mr. and Mrs. Wotanis’s Complaint plausibly
alleges, however, that the request they sent to PNC involved the servicing of their loan.
(Doc. 1 at ¶¶24-26). Specifically, the Plaintiffs allege that they were told by their local PNC
branch that they successfully submitted their modification application and they proceeded
to pay PNC money believed to be satisfying this modified loan which would have had the
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same monthly payment as their unmodified loan. (Id. at ¶¶10-12; see also Doc 3. Ex. C).
The Defendant’s contention that this was simply a request for a modification, (Doc.
12; Doc. 13 at 6-10), then fails because the Plaintiffs inquiry to PNC, as in Cortez, concerned
payments on principal and interest believed to be pursuant to a loan modification. 2000 WL
536666, at *10. That they requested information about the status of these payments as they
applied to their loan is further evidence of the fact that the request allegedly applied to
servicing and not a requested modification. This is different than simply, as PNC suggests,
requesting a modification as Mr and Mrs. Wotanis allege: (1) that the modification already
existed; (2) that they were assured twice that their modification went through; and (3) that
they just wanted their account properly credited. (See Doc 3. Ex. C.). Taking these
allegations of the complaint as true then, the Wotanis’s were not requesting a modification,
but were rather, trying to enforce it and, as in Grembowiec, trying to resolve the
contradictions between how their payments were realistically being applied and what they
were told at their local PNC branch. (Id.); see also Grembowiec, 2019 WL 3183588, at *5.
The Defendant then contends that if the request was in fact a valid QWR, the
Plaintiffs claims still fail due to PNC’s adequate response, (See Doc. 3 Ex. D; Doc. 13 ¶¶ 10-
12), and, alternatively, due to the Plaintiffs failure to adequately plead damages. (Doc. 12;
Doc. 13 ¶¶ 12-15). In their complaint, the Plaintiffs allege that once receiving their Notice
of Error, PNC simply denied that a loan modification existed and further failed to attach the
requested loan servicing notes. (Doc.1 ¶13, 33; see also Doc 3. Ex. D). The Plaintiffs go
on to allege that the Defendant took no further action to respond or investigate the inquiry
than to simply say the application was not processed due to a modification processing fee
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issue and/or a failure to actually receive the application. (Id.). The Plaintiffs then allege that,
if PNC conducted a reasonable investigation according to the requirements of Regulation
X, it would have discovered the completed modification agreement. (Doc. 1 ¶ 33).
Therefore, despite PNC’s response, taking all the allegations in the pleadings as true, the
Plaintiffs assert a plausible claim that PNC’s letter was not complete nor the product of a
reasonable investigation and that, despite the letter, PNC never corrected the alleged error
with the account.
The Plaintiffs further point out that they handed in their application to their local PNC
branch and double checked with the branch that it was properly submitted before sending
their QWR, occurrences which were never explained by PNC but which could be the product
of a reasonable investigation. (See Doc. 3 Ex. C). Even to the extent that the Defendant
claims that the servicing notes or other documents were confidential or personal to PNC,
requests for servicing notes have been found to be outside this exception and may have
served to resolve the Wotanis’s issues. See Wilson, 48 F.Supp. 3d at 806.
Finally, for their first claim, the Plaintiffs plausibly allege actual damages resulting from
the failure by the Defendant to investigate or rectify the alleged errors under RESPA. (Doc.
1 ¶ 35). Specifically, the Plaintiffs claim heightened interest costs on the loan and less
equity in the Property due to the underapplication of their payments to the principal balance.
(Id.). While the Defendant contends that the Plaintiffs fail to allege that PNC actually caused
them damages, (Doc. 12; Doc. 13 ¶¶ 12-15), the Plaintiffs clearly allege that their damages
are the direct result of PNC’s failure to honor the loan modification and failure to respond to
their Notice of Error with regards to the same. See Stefanowicz, 2018 WL 1385976, at *6.
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B. RESPA Request for Information Violation
The Defendant finally contends that Mr. and Mrs. Wotanis fail to adequately plead
statutory damages for their Request for Information violation. (Doc. 12; Doc. 13 ¶¶ 12-15).
For this claim, the Plaintiffs, on behalf of a larger afflicted class, allege that the Defendant
failed to adequately respond to their Request for Information and failed to conduct the
reasonable search potentially necessary to respond to the same request, in violation of
RESPA. (Doc. 1 ¶¶ 38-42). The Plaintiffs further claim that this was done as part of a policy
or practice of the Defendant. (Id. at ¶ 42). To this end, the Plaintiffs claim no actual
damages under the statute, but instead claim only statutory damages pursuant to PNC’s
alleged “policy or practice” of failing to properly handle Requests for Information. (Id.).
Further, the Plaintiffs fail to allege any other instance of PNC failing to respond or investigate
a request other than their lone personal experience with PNC. (See generally Doc. 1; Doc.
3). The Plaintiffs instead allege that PNC’s response to their letter is representative of a
larger boilerplate response to these requests, which indicates a larger policy or practice at
work. (Doc. 1 ¶ 41).
I agree with the Court’s decision in Straker v. Deutsche Bank Nat. Trust, 2012 WL
7829989, at *12, which states that a single instance of a failure to respond does not, by the
very definition of the terms, establish a pattern or policy necessary for claiming statutory
damages under RESPA. This says nothing about the reasonableness of the initial request
for all servicing notes, which, in line with Wilson, was adequately pled as a reasonable
request under RESPA. Wilson, 48 F.Supp. 3d at 806.
Plaintiffs will be given leave to amend to their complaint pursuant to Federal Rule of
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Civil Procedure 15(a)(2), which states that the Court “should freely give leave when justice
so requires.” Fed.R.Civ.P. 15(a)(2). Absent a finding of “‘undue delay, bad faith or dilatory
motive on the part of the movant, repeated failure to cure deficiencies by amendments
previously allowed, undue prejudice to opposing party, [or] futility of amendment,’ it is an
abuse of discretion to deny leave to amend.” Williams v. Exeter Tp., 2012 WL 1038757, at
*5 (M.D. Pa. 2012) (quoting Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222
(1962). As the Plaintiffs have not previously been granted leave to amend and have not had
an opportunity to clarify their claim, it would be an abuse of discretion to deny leave to
amend.
IV. Conclusion
For the reasons explained above, the Motion will be GRANTED in part and DENIED
in part.
An appropriate order follows.
August 28, 2019 /s/ A. Richard Caputo
Date A. Richard Caputo
United States District Judge
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