IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
December 1, 2009
ANTHONY DOBSON AND JESSICA DOBSON, PLAINTIFFS
COMMONWEALTH FUNDING GROUP, INC., MATT GISLER, AND EQUIFIRST CORPORATION, DEFENDANTS
The opinion of the court was delivered by: Judge Conner
Plaintiffs Anthony and Jessica Dobson (collectively "plaintiffs") bring this action alleging unfair and deceptive business practices in relation to their purchase of a home in Portage, Pennsylvania. Defendants have filed two motions for summary judgment pursuant to Federal Rule of Civil Procedure 56. (See Docs. 41, 45.) For the reasons that follow, both motions will be granted.
I. Statement of Facts
The material facts underlying this matter are almost wholly undisputed.*fn1 In the spring of 2006, plaintiffs retained the services of defendants Commonwealth Funding Group, Incorporated ("CFG") and Matt Gisler ("Gisler") in order to assist them in financing the purchase of a new home. (Doc. 42 ¶ 5; Doc. 57 at 2 ¶ 5.) CFG is a mortgage brokerage licensed by the Pennsylvania Department of Banking. (Doc. 46 ¶ 5; Doc. 57 at 10 ¶ 5.) At the time in question, Gisler was branch manager of CFG's office in Johnstown, Pennsylvania. (Doc. 46 ¶ 6; Doc. 57 at 10 ¶ 6.)
Shortly after they retained his services, Gisler collected plaintiffs' credit information and set about soliciting potential creditors. (See Doc. 46 ¶¶ 11-15; Doc. 57 at 11 ¶¶ 11-15.) Three lenders in particular were contacted-Homecoming Financial, Decision One, and defendant Equifirst Corporation ("Equifirst"). (Doc. 48, Ex. A at 23-24.) Each company offered similar financing options based upon plaintiffs' credit history:*fn2 (1) a "fixed rate" option featuring an unchanging interest rate over a thirty-year term, or (2) an "adjustable rate" option requiring a comparatively lower interest rate for the loan's first two years, followed by a twenty-eight year term in which the rate on the note would be subject to periodic adjustment. (See Doc. 42 ¶¶ 38-39; Doc. 46 ¶ 17; Doc. 48, Ex. A at 23-24; Doc. 57 at 4 ¶¶ 38-39; id. at 12 ¶ 17.) Gisler selected Equifirst to fund the loan. (Doc. 46 ¶ 18; Doc. 57 at 12 ¶ 18.)
Over the next several weeks, Gisler spoke with plaintiffs on over twenty occasions.*fn3 (Doc. 42 ¶ 36; Doc. 46 ¶ 9; Doc. 57 at 4 ¶ 36; id. at 11 ¶ 9.) He specifically explained the two financing options offered by Equifirst, and he discussed the ramifications of the couple's credit history. (See Doc. 42 ¶ 38; Doc. 46 ¶ 24; Doc. 57 at 4 ¶ 38; id. at 12 ¶ 24.) Although plaintiffs initially told Gisler that they would prefer to obtain a fixed rate mortgage, (see Doc. 46 ¶ 23; Doc. 48, Ex. A at 14-15; Doc. 57 at 12 ¶ 23), Gisler testified that over time the adjustable rate option became more attractive to them. He explained:
GISLER: [W]hen we first talked, she [Jessica] was very adamant about a fixed-rate loan. . . .
QUESTION: Did that at some point change?
QUESTION: When did that change?
GISLER: We had a conversation several weeks into the loan process. . . . And we were going over the numbers and the payments. And at that point, she-we had discussed about her credit score at the time. . . . And so I said, here's your rate at a fixed rate for 30 years, here's your payment. Here's an option. And I said, I know . . . you wanted a fixed [rate], but here's your option. There are two-there is the 2/28, and that's fixed for two years and then adjustable. The payment is slightly lower than on the fixed rate. She then relayed to me that she wasn't planning on staying in the home-or keeping that loan, excuse me, for an extended amount of time, more than two years. So that's where the conversation went as far as, well, why would I pay the higher rate for two years if I'm just going to plan on refinancing after I get my credit back to where it should be. (Doc. 48, Ex. A at 14-16.) According to Gisler, the Dobsons intended to improve their credit score over the two years following their purchase, and to refinance the loan once their score was sufficiently enhanced. (Doc. 48, Ex. A at 16, 60.) Plaintiffs baldly deny that they made any such representations, (see Doc. 57 at 12 ¶ 27), but they admit that they voluntarily selected the adjustable rate mortgage option offered by Equifirst, (see Doc. 50, Ex. F ¶ 16*fn4 ). Gisler thereafter submitted a loan application on plaintiffs' behalf for an adjustable rate mortgage in the amount of $87,000. (Doc. 46 ¶ 21; Doc. 57 at 10 ¶ 4.)
On June 28, 2006, plaintiffs closed on the purchase of their home. (Doc. 46 ¶ 7; Doc. 57 at 10 ¶ 7.) Neither Gisler or any representative from Equifirst was present at the closing; rather, plaintiffs hired a third party, Anchor Realty Services ("Anchor"), to perform the necessary settlement services. (See Doc. 42 ¶¶ 13-14; Doc. 57 at 3 ¶ 13-14.) Prior to executing the adjustable rate mortgage note, an Anchor employee confirmed plaintiffs' understanding that they were receiving an adjustable rate mortgage. (See Doc. 46 ¶ 67; Doc. 57 at 15 ¶ 67.) In addition, plaintiffs signed numerous documents that visibly indicated that their loan was of the adjustable rate variety.*fn5 (See Doc. 42 ¶¶ 7-8, 17-18, 21; Doc. 46 ¶¶ 50-51, 57; Doc. 57 at 2-3 ¶¶ 7-8, 17-18, 21; id. at 14 ¶¶ 50-51, 57.) Plaintiffs acknowledge that they reviewed each of the documents that they signed and had an opportunity to pose questions if they so desired. (Doc. 42 ¶ 88; Doc. 57 at 9 ¶ 88.) Plaintiffs concede, however, that they asked few if any questions and voluntarily executed all documents required of them to close the purchase. (See Doc. 42 ¶ 88; Doc. 57 at 9 ¶ 88.)
At some point subsequent to the closing date, plaintiffs grew unhappy with the terms of their adjustable rate mortgage and commenced the instant litigation.
Plaintiffs' complaint contains twenty-six counts, six of which state a cause of action arising under federal law. (See Doc. 23.) The crux of these allegations is that plaintiffs were seeking a fixed rate mortgage but were somehow tricked into executing a mortgage with an adjustable rate. (See Doc. 57 at 19-21.) In plaintiffs telling, they "were never advised that they were in fact receiving an adjustable rate mortgage." (Id. at 23.) Twenty-four of the twenty-six counts were voluntarily waived during discovery, leaving only two claims for the court's disposition. (See id. at 22.) The first of these asserts a federal cause of action against Equifirst for purported violations of the Equal Credit Opportunity Act, 15 U.S.C. § 1691; the second alleges violations under the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 PA. STAT. ANN. §§ 201-1 to -9.3. On September 2, 2008, defendants moved for summary judgment on both claims. (See Docs. 41, 45.) The motions have been fully briefed and are ripe for disposition.
II. Standard of Review
Through summary adjudication the court may dispose of those claims that do not present a "genuine issue as to any material fact" and for which a jury trial would be an empty and unnecessary formality. See FED. R. CIV. P. 56(c). The burden of proof is upon the nonmoving party to come forth with "affirmative evidence, beyond the allegations of the pleadings," in support of its right to relief. Pappas v. City of Lebanon, 331 F. Supp. 2d 311, 315 (M.D. Pa. 2004); FED. R. CIV. P. 56(e); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). This evidence must be adequate, as a matter of law, to sustain a judgment in favor of the non-movant on the claims. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250-57 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-89 (1986); see also FED. R. CIV. P. 56(c), (e). Only if this threshold is met may the cause of action proceed. Pappas, 331 F. Supp. 2d at 315.
The sole federal question pending before the court concerns Equifirst's alleged violation of the Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. § 1691. The ECOA requires that "[w]ithin thirty days . . . after receipt of a completed application for credit, a creditor shall notify the applicant of its action on the application." § 1691(d)(1). Federal regulations envisage three potential actions a creditor may take in response to a completed credit application: (1) an approval, (2) a counteroffer, or (3) an "adverse action." 12 C.F.R. § 202.9.*fn6 Under the ECOA, a "counteroffer" is defined as an offer to extend credit "in a different amount, or on other terms" than those requested by the applicant. 12 C.F.R. § 202.2(c)(1)(i); see also Ricciardi v. Ameriquest Mortgage Co., 164 F. App'x 221, 224 (3d Cir. 2006); Siffel v. NFM, Inc., Civ. A. No. 07-cv-05152-JF, 2009 WL 1783523, at *2 (E.D. Pa. June 23, 2009).
The instant plaintiffs contend that Equifirst failed to provide proper notification of a counteroffer.*fn7 (See Doc. 23 ¶ 55.) Specifically, plaintiffs argue that they requested a fixed term mortgage, but were instead offered an adjustable rate mortgage at the June 28, 2006 closing. (See Doc. 57 at 23-24.) According to plaintiffs, "[h]ad [they] been aware of the adjustable rate, they would have rejected" the loan. (Id. at 24.) These assertions are belied by the summary judgment record, however, which indicates that plaintiffs initially conveyed to Gisler their preference to obtain a fixed rate loan; that Gisler explained the advantages and drawbacks of both the fixed rate and adjustable rate options available through Equifirst; and that plaintiffs voluntarily opted to submit an application for an $87,000 loan with an adjustable rate.*fn8 (Doc. 42 ¶¶ 7-9, 18-21; Doc. 46 ¶¶ 23-24; Doc. 50, Ex. F ¶ 16; Doc. 57 at 2-3 ¶¶ 7-9, 18-19, 21; id. at 12 ¶¶ 23-24.) Plaintiffs thereafter were approved for and received an $87,000 adjustable rate mortgage on the closing date. Thus, plaintiffs applied for the loan that they eventually received; there is simply no evidence of a "counteroffer" present in the record.
In spite of this evidence, plaintiffs seem to suggest that they "applied" for credit by initially conveying to Gisler their desire to obtain a fixed rate mortgage. Even if the court assumes that plaintiffs' initial preference constitutes a "completed application for credit"-a proposition of dubious legal cogency, and one plaintiffs make no serious attempt to support-there is no evidence to suggest that Equifirst provided improper notification of its adjustable rate "counteroffer." The ECOA requires notice of a counteroffer within thirty days of a credit-seeker's completed application. § 1691(d)(1). If the closing date falls within this thirty-day window, the ECOA does not require that notice of a counteroffer be provided prior to the date of closing. See Ricciardi, 164 F. App'x at 224; Soslau v. PHH Mortgage Corp., Civ. A. No. 06-1422, 2008 WL 2805606, at *4 (E.D. Pa. July 18, 2008); Miller v. Shore Fin. Servs., Inc., Civ. No. 03-40210, 2006 WL 2828584, at *3 (E.D. Mich. Sept. 29, 2006). It is undisputed that plaintiffs were fully aware that they were obtaining an adjustable rate mortgage at the time of closing.*fn9 (See Doc. 42 ¶¶ 7-8, 17-18, 21; Doc. 46 ¶¶ 50-51, 57, 67; Doc. 57 at 2-3 ¶¶ 7-8, 17-18, 21; id. at 14-15 ¶¶ 50-51, 57, 67.) Plaintiffs nonetheless accepted the terms of this adjustable rate loan by signing the necessary closing documents. Consequently, whether or not Equifirst's loan is characterized as a "counteroffer," it was knowingly and voluntarily executed by plaintiffs in full compliance with the ECOA; summary judgment is therefore appropriate.
Plaintiffs' remaining claim arises under the Pennsylvania Unfair Trade Practices and Consumer Protection Law ("UTPCPL"), 73 PA. STAT. ANN. §§ 201-1 to -9.3. Plaintiffs request that the court assume supplemental jurisdiction over this state law claim, an avenue across which it declines to tread. As explained above, summary judgment is appropriate with respect to plaintiffs' lone federal claim; to retain federal jurisdiction over what would be purely an issue of state law does not serve the interests of judicial economy, convenience, fairness to the instant parties, or comity, see Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 n.7 (1988) (stating that "in the usual case in which all federal-law claims are eliminated before trial, the balance of factors to be considered under the pendent jurisdiction doctrine-judicial economy, convenience, fairness, and comity-will point toward declining to exercise jurisdiction over the remaining state-law claims"); see also Annulli v. Panikkar, 200 F.3d 189, 202 (3d Cir. 1999). Disposition of this cause of action is more suitable to a state forum.
For the foregoing reasons, defendants are entitled to summary judgment on plaintiffs' remaining claims. The allegation that Equifirst violated the ECOA is unsupported by the factual record, which demonstrates plaintiffs' voluntary pursuit and acquisition of an adjustable rate mortgage to purchase their new home. Plaintiffs' remaining cause of action under the UTPCPL implicates only state law and is thus more befitting of resolution in a Pennsylvania tribunal.
An appropriate order follows.
AND NOW, this 1st day of December, 2009, upon consideration of defendants' motions (Docs. 41, 45) for summary judgment, and for the reasons set forth in the accompanying memorandum, it is hereby ORDERED that:
1. The motions (Docs. 41, 45) for summary judgment are GRANTED. See FED. R. CIV. P. 56(c).
2. The Clerk of Court is directed to enter JUDGMENT in favor of defendants and against plaintiffs on all claims.
3. The Clerk of Court is directed to CLOSE this case.
CHRISTOPHER C. CONNER United States District Judge