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Clark v. EMC Mortgage Corp.

January 29, 2009


The opinion of the court was delivered by: Rufe, J.


Through an Amended Complaint,*fn1 Plaintiff mortgagors Roberta L. Clark, Joann Clark, and Regina Coughlin ("Plaintiffs") allege that Defendant EMC Mortgage Corporation ("EMC" or "Defendant"), which services their mortgage, has committed various acts in violation of the federal Fair Debt Collection Practices Act ("FDCPA") (Count I),*fn2 the Pennsylvania Unfair Trade Practices and Consumer Protection Law ("UTPCPL")*fn3 and common law regarding consumer fraud (Count II), and the Pennsylvania common law of Intentional Misrepresentation (Count III). Presently before the Court is Defendant's Motion to Dismiss Counts II and III of the Amended Complaint, for unfair trade practices and consumer fraud, and intentional misrepresentation, respectively.*fn4 For the reasons that follow, the Motion will be granted in part and denied in part.


Plaintiffs are the mortgagors of a mortgage covering their home in Warrington, Pennsylvania.*fn5 The mortgage is serviced by Defendant, a corporation in the business of obtaining, marketing and servicing mortgages throughout the United States.

The Court begins by noting that Plaintiffs have been parties in interest to at least two prior legal actions involving the mortgage. Previously, Plaintiffs lapsed in making their monthly payment to EMC's predecessor-in-interest on the mortgage, Norwest Bank of Minnesota, N.A. ("Norwest"). As a consequence, in 2000, Norwest filed a complaint in mortgage foreclosure against Plaintiffs in the Court of Common Pleas of Bucks County, Pennsylvania.*fn6 A default judgment was entered against Plaintiffs in the action on January 12, 2001.

Subsequently, in 2003, Plaintiffs were class plaintiffs in a class action brought against EMC Mortgage Corporation, Defendant herein, which by then held Plaintiffs' mortgage Note.*fn7 The action was settled on a class-wide basis in 2005. As an aspect of the settlement, Plaintiffs and Defendant entered into a Loan Modification Agreement ("Modification Agreement"), through which class plaintiffs fully released all claims against EMC in exchange for an adjustment in their mortgage payment obligations.*fn8 In particular, the Modification Agreement requires Plaintiffs to make a monthly principal and interest payment of $684.30 for 329 months ("Mortgage Payment"), in addition to monthly property tax, insurance and other escrow amounts (collectively, "Escrow"), beginning in February, 2006. Plaintiffs allege that they have made all mortgage and escrow payments as required by the Modification Agreement since February, 2006,*fn9 and through February, 2008, after which their remitted mortgage payments were rejected and returned by EMC.*fn10

Plaintiffs received written notice from an EMC representative dated February 8, 2008, referring explicitly to their mortgage and stating the following:

Dear Mortgagor(s):

Do you want to avoid foreclosure?....

Do you want to sell your house, but owe more than it is worth?

If you answered "yes" to any of these questions, you need to contact EMC Mortgage immediately at [telephone number]. We may have a program to assist you, but the only way we can help is if you call now. The longer you wait, the worse your situation becomes. Foreclosure is serious, and unless you act quickly, you may lose your home and your credit....

Sincerely, EMC Loan Workout Department*fn11

Upon receipt of the February 8, 2008 letter, Plaintiff Robert L. Clark immediately contacted EMC via telephone. He explained to an unidentified EMC representative that he had fully complied with his payment obligations under the Modification Agreement. Defendant's representative told Clark that EMC had no record of the Modification Agreement, and no record of receiving Plaintiffs' payments pursuant to it. Meanwhile, the records of the Bucks County Recorder of Deeds show that EMC filed the Modification Agreement with the Recorder after its formation. Plaintiffs made "repetitive pleas" to EMC during February, 2008, to acknowledge the Modification Agreement and payments made thereunder, but to no avail.*fn12 EMC has not acknowledged receiving Plaintiffs' payments made since 2006.

On February 22, 2008, EMC filed a praecipe in the Court of Common Pleas of Bucks County to list Plaintiffs' home for sheriff's sale, in prosecution of the judgment entered in the 2001 mortgage foreclosure action. Upon the praecipe, the Sheriff of Bucks County listed Plaintiffs' home for a sheriff's sale scheduled for June 12, 2008. On March 17, 2008, counsel for EMC allegedly demanded that Plaintiffs pay a sum of $165,229.65 by April 1, 2008 or face continued foreclosure. This figure allegedly includes legal costs and fees related to the sheriff's sale as well as the sheriff's commission of two percent. After attempts to convince EMC of the existence of the Modification Agreement and the fact of Plaintiffs' compliance with it ...

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