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Phyliss Bebee v. Pennsylvania Human Relations

November 14, 2012

PHYLISS BEBEE, PETITIONER
v.
PENNSYLVANIA HUMAN RELATIONS COMMISSION, RESPONDENT



The opinion of the court was delivered by: Dan Pellegrini, President Judge

Submitted: October 19, 2012

BEFORE: HONORABLE DAN PELLEGRINI, President Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE JAMES GARDNER COLINS, Senior Judge

OPINION BY PRESIDENT JUDGE PELLEGRINI

Phyliss Bebee (Petitioner) petitions for review from an order of the Pennsylvania Human Relations Commission (Commission) dismissing her complaint which alleged that Bank of America, N.A. (Bank of America), violated Section 5(h)(8)(i) of the Pennsylvania Human Relations Act (Act),*fn1 because the complaint was untimely and failed to make specific allegations of discriminatory behavior. For the reasons that follow, we affirm the decision of the Commission.

In March 2007, Petitioner refinanced a mortgage with First Franklin Financial Corporation (First Franklin). Two months later, the loan was sold to Merrill Lynch First Franklin Mortgage Loan Trust (Merrill Lynch), after which, LaSalle Bank National Association became the trustee for Merrill Lynch. The mortgage was then assigned to Bank of America on February 24, 2009, who in turn reassigned the mortgage to U.S. Bank, N.A. (U.S. Bank) on April 9, 2009. On April 21, 2009, a foreclosure action was filed in the Montgomery County Court of Common Pleas based on Petitioner's failure to pay her mortgage.

On August 7, 2009, Petitioner initiated a complaint with the Commission against Bank of America. The claim alleged that she refinanced the mortgage to reduce monthly payments on a house left to her when her mother died. The complaint alleged that she borrowed $263,500 with an interest rate of 8.99 percent, which amount to monthly mortgage payments of $2,030.51, and that the loan has an adjustable rate rider and a balloon rider. The complaint also alleged that her monthly take-home pay at the time of refinancing was $1,900, and she did not realize, until the foreclosure action was commenced, that she received the mortgage based on a reported take-home pay of $5,000 per month. The complaint further alleged that her previous mortgage payment was $1,575 per month and she did not realize how much the payment would increase until after she signed the new mortgage. In Count 1 of the Complaint, Petitioner also alleged that she believed her "race and sex were factors in [her] discriminatory treatment because African Americans and women are disproportional targets of financial fraud." (Reproduced Record [R.R.], at 4c.) Count 2 alleged that Petitioner's age was also a factor for discrimination, as she was 54 and "the elderly are disproportionate targets of financial fraud." Id. Bank of America failed to respond to the complaint and there is no dispute over service.

After Bank of America failed to respond to the Complaint, on January 14, 2010, pursuant to 16 Pa. Code §42.33(c),*fn2 the Commission issued a Rule to Show Cause on Bank of America, ordering it to explain why its failure to respond should not result in a finding of probable cause and why judgment for Petitioner on the issue of liability should not be issued. Bank of America did not respond to the Rule to Show Cause, so on March 23, 2010, the Commission issued a finding of probable cause and entered judgment on the issue of liability. See 16 Pa. Code §42.33(d)(2), (4).*fn3 There is no dispute that Bank of America received that notice.

On September 21, 2011, Bank of America filed a motion seeking to rescind the finding of probable cause and dismiss the complaint on the grounds that

(1) it did not originate the loan or have any connection to the alleged discriminatory acts, (2) the complaint was not timely filed, and (3) the complaint was barred by res judicata because a class action settlement was approved in Federal District Court in California on May, 2009, to settle claims of race-based predatory lending practices by First Franklin. In that motion it did not set forth any reasons for its failure to timely answer the complaint or respond to the rule to show cause.

Based on those substantive allegations, by recommendation dated October 11, 2011, a hearing examiner recommended that the Commission dismiss the complaint because Petitioner failed to specifically show disparate treatment against a class of people and because Petitioner was alleging discriminatory lending practices which would have occurred when the loan was originated in 2007, long before Bank of America had any responsibility with regard to the loan. The hearing examiner also noted that, while the action may have been res judicata with regard to the race discrimination claim because of the Federal class action settlement, Petitioner also alleged sex- and age-based discrimination, which was not encompassed by the settlement. (R.R., at 195c.) The recommendation had no findings as to why Bank of America did not respond to the complaint. Based on the hearing examiner's recommendation, the Commission found that a public hearing would be futile and granted Bank of America's motion to dismiss. This appeal followed.*fn4

On appeal, Petitioner argues that the Commission erred in reversing its earlier order finding probable cause against Bank of America liable because it did not meet the standards for lifting of the probable cause finding and judgment of liability pursuant to 16 Pa. Code §42.33(d)(2), (4). She contends that to open the default judgment, Bank of America had to establish that it (1) promptly filed a petition to open the default judgment, (2) provided a reasonable excuse or explanation for failing to file a responsive pleading, and (3) pleaded a meritorious defense to the allegations. U.S. Bank N.A. v. Mallory, 982 A.2d 986 (Pa. Super. 2009). She contends that Bank of America's motion did not satisfy the first two prongs to open the "default judgment," and the Commission should not have rescinded its previous order finding probable cause or entering of judgment on liability.

The Commission and Bank of America contend that the standard for opening a default judgment does not apply. Instead, they argue that under 16 Pa. Code §42.76, the Commission has absolute discretion to rescind a finding of probable cause. That provision provides:

(a) The Commission may rescind a finding of probable cause, if the Commission determines that the finding is no longer appropriate.

(b) If a finding of probable cause is rescinded the case will thereafter proceed as if the finding had not been made, which may result in the case being closed under §42.61 (relating to dismissal of complaints). If the case is closed, the parties will be notified under §42.61(c), which includes, but is not limited to, the right of the complainant to file a timely ...


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