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Marshall Williams v. Emc Mortgage Corporation Inc.; et al

May 3, 2013


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


This case is brought by the plaintiff against three defendants: EMC Mortgage Corporation, Inc. ("EMC"), Kondaur Capital Corporation ("Kondaur"), and JP Morgan Chase & Co. ("JP Morgan").

The plaintiff's home was foreclosed on and eventually sold at a sheriff's sale, and the plaintiff alleges various claims against the defendants related to that process and the treatment of his mortgage. Specifically, the plaintiff alleges:

(1) Violation of the Truth in Lending Act;

(2) Violation of the Fair Debt Collection Practices Act;

(3) Violation of the Fair Credit Reporting Act;

(4) Fraud and Constructive Fraud;

(5) Violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law;

(6) Breach of Contract and Unjust Enrichment; and

(7) Corporate Negligence.

Each defendant has filed a motion to dismiss the complaint in its entirety for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure. The Court will grant the motions and dismiss the breach of contract claim without prejudice and dismiss all of the other claims with prejudice.

I. Procedural History

The plaintiff filed his initial complaint on March 7,

2012. That complaint only named EMC and Kondaur as defendants. Both those defendants filed motions to dismiss, and then on August 29, 2012, the plaintiff filed his first amended complaint. The Court accepted the first amended complaint and denied the two motions to dismiss as moot. (Docket No. 16).

The first amended complaint added JP Morgan as a third defendant to the action. All three defendants filed separate motions to dismiss the first amended complaint.

The plaintiff then moved to file a second amended complaint. (Docket No. 28). The Court held an on the record telephone conference to discuss the matter with the parties and concluded that it would not be necessary to dismiss as moot all of the pending motions to dismiss.

Instead, the Court issued an order denying the plaintiff's motion for leave to file a second amended complaint, but stating that it would consider the allegations made in the second amended complaint in assessing the pending motions to dismiss. (Docket No. 31).

That order also gave the parties the opportunity to file supplemental briefing on the Fair Credit Reporting Act issue, which both sides have done.

The Court held oral argument on the motions to dismiss on April 16, 2013. On April 22, 2013, the plaintiff voluntary dismissed his intentional infliction of emotional distress claim. (Docket No. 46).

II. Facts as Alleged in the First Amended Complaint ("FAC")*fn1 On or about January 16, 1998, the plaintiff and Saxton

Mortgage Company entered into a contract involving a credit transaction whereby plaintiff pledged as collateral 5447 Wyndale Avenue, a residence in Philadelphia, in exchange for a loan in the amount of $75,000. FAC ¶ 6.

EMC was assigned defendant's loan on July 15, 2004.

FAC ¶ 7. On May 11, 2010, EMC assigned the security instrument and note to JP Morgan, who transferred the security instrument on the same day to Kondaur for an amount not less than the outstanding principal amount plus accrued and unpaid interest. FAC ¶ 7.

In 2008, EMC wrongfully declared that the plaintiff was in default because he did not have hazard insurance on the property. FAC ¶ 9. EMC placed insurance on the property at a very high premium and added that premium to the plaintiff's principal balance. FAC ¶ 10. Although the plaintiff provided a proof of insurance, EMC brought a foreclosure action in the Philadelphia Court of Common Pleas. FAC ¶ 11. At a final pre-trial conference, EMC and the plaintiff in principle agreed to resolve the litigation with a deal whereby EMC would reinstate the plaintiff's loan under a new re-payment plan. FAC ¶¶ 11-14.

EMC then refused to provide a copy of the new paperwork re-instating the loan and showing the new payment plan as agreed. FAC ¶ 15. The plaintiff tried to show up for the previously agreed upon trial date, but found that EMC had informed the Court that the trial had been cancelled. FAC ¶ 16.

The plaintiff tried to make payments under the terms of the previous mortgage, but those payments were not accepted by EMC. FAC ¶¶ 17-22. EMC then declared the mortgage in default and filed a foreclosure action against the property on February 2, 2010, in the Philadelphia County Court of Common Pleas. FAC ¶ 25.

Since on or about June 2010, Kondaur has sent representatives, in person and by letter, to harass the plaintiff about leaving the property. FAC ¶ 31. Kondaur denied the plaintiff a loan modification. FAC ¶ 40. A sheriff sale was held on September 11, 2012. FAC ¶ 44.

The mortgage contract contains an arbitration rider that states that controversies arising from or related to the loan evidenced by the Note shall be resolved by binding arbitration and not by court action. FAC ΒΆΒΆ 53-54. The plaintiff requested that the parties proceed to ...

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