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Bernstein v. Keaveney Legal Group

United States District Court, E.D. Pennsylvania

May 17, 2017

CHRISTINE BERNSTEIN, Plaintiff,
v.
KEAVENEY LEGAL GROUP, JAMES P. KEAVENEY, ESQUIRE, and JOSHUA THOMAS, ESQUIRE, Defendants.

          MEMORANDUM

          DuBois, J.

         I. INTRODUCTION

         This is a legal malpractice and fraud case. The case arises out of plaintiff Christine Bernstein's interactions with Keaveney Legal Group (“KLG”), which provided plaintiff with legal assistance relating to a foreclosure action. Plaintiff asserts claims against defendants KLG, James P. Keaveney, Esquire, and Joshua Thomas, Esquire, based on violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), common law fraud, and violations of the federal Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”); and claims against James P. Keaveney, Esquire, and Joshua Thomas, Esquire, for legal malpractice. Presently before the Court is Defendants, Keaveney Legal Group, James P. Keaveney, Esquire, and Joshua Thomas Esquire's Motion to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(6).

         For the reasons that follow, the Court grants in part and denies in part defendants' Motion to Dismiss.

         II. BACKGROUND

         The relevant facts as alleged in plaintiff's Amended Complaint are as follows.[1] A foreclosure action relating to plaintiff's home was filed on January 17, 2014. Am. Compl. ¶ 30. Plaintiff learned of KLG's foreclosure services by way of an advertisement on the internet sometime in early January of 2014. Am. Compl. ¶ 22. On January 7, 2014, plaintiff met with Antonio Romero, “a salesperson from the KLG” who was “an agent of the Defendants, ” at an office in Philadelphia. Am. Compl. ¶¶ 23-24. Romero “showed Plaintiff a video describing the difficulty for a homeowner to secure a loan modification on their own” and “informed Plaintiff that attorneys were the only ones that could communicate with the bank at [that] point.” Am. Compl. ¶¶ 26, 30. Romero also “indicated that the KLG would be able to secure a loan modification for Plaintiff, ” and stated that “some people receive a loan modification as quickly as two months.” Am. Compl. ¶¶ 28, 31. Plaintiff “believed [it] was a fact, that she could not obtain a loan modification without the assistance of a law firm”-indeed, “Romero had Plaintiff convinced that if she did not retain the services of the KLG she would lose her home to foreclosure.” Am. Compl. ¶¶ 27, 32.

         Plaintiff ultimately entered into a “Representation Agreement on Foreclosure Defense” under which plaintiff agreed to an initial payment of $1, 500 and a monthly fee of $695, to be billed automatically “until the conclusion of the case.” Am. Compl. ¶¶ 34, 35, 37. All of these payments were nonrefundable. Am. Compl. ¶ 36. Plaintiff paid KLG a total of $8, 195 in legal fees. Am. Compl. ¶ 38.

         “Plaintiff immediately provided to Defendants the requested documents required to submit an application for loan modification.” Am. Compl. ¶ 39. Defendant Thomas entered his appearance in plaintiff's foreclosure action on February 27, 2014, and filed an Answer to the Foreclosure Complaint on March 14, 2014. Am. Compl. ¶¶ 45-46. Santander, plaintiff's foreclosure servicer, filed a Motion for Summary Judgment against plaintiff on October 24, 2014. Am. Compl. ¶¶ 51. The court granted the Motion for Summary Judgment on December 9, 2014, and Santander filed a Praecipe to Enter Judgment on December 26, 2014. Am. Compl. ¶¶ 55-56. Defendants did not inform plaintiff that the Motion for Summary Judgment had been filed, that the court had granted the Motion, or that the Praecipe to Enter Judgment had been filed. Am. Compl. ¶¶ 51, 55-56.

         Meanwhile, on December 15, 2014, defendants informed plaintiff that they “finally submitted” her application for a loan modification to the servicer. Am. Compl. ¶ 54. On December 27, 2014, plaintiff received a “surprise” notice of sheriff's sale of her home. Am. Compl. ¶ 57. Plaintiff then contacted Santander to inquire about the status of her loan modification application. Am. Compl. ¶ 59. Santander told plaintiff that its only contact with defendants regarding plaintiff's loan was a notification from defendants informing Santander that defendants were representing plaintiff. Am. Compl. ¶¶ 59-60. Defendants had never submitted to Santander a loan modification application on plaintiff's behalf. Am. Compl. ¶¶ 59-60.

         On her own, plaintiff submitted a loan modification application to Santander, which was acknowledged on January 2, 2015, and granted on February 27, 2015. Am. Compl. ¶¶ 58, 61. Plaintiff sold her home in April 2015 because of the fees that had accrued on her mortgage, and because she took a job in Massachusetts. Am. Compl. ¶ 62. Plaintiff sold the home for “a significantly lower price” than she would have obtained if it were not in foreclosure. Am. Compl. ¶ 63.

         Plaintiff filed her original Complaint on October 16, 2016. Defendants filed a Motion to Dismiss the Complaint on December 30, 2016, and plaintiff filed an Amended Complaint on January 20, 2017. Defendants filed a Motion to Dismiss the Amended Complaint on February 21, 2017; plaintiffs filed a Response in Opposition to the Motion to Dismiss on March 31, 2017; and on April 14, 2017, defendants filed a Reply in Support of the Motion to Dismiss.

         For the reasons set forth below, the Court grants in part and denies in part defendants' Motion.

         III. DISCUSSION

         A. Applicable Law

         Rule 12(b)(6) of the Federal Rules of Civil Procedure permits a party to respond to a pleading by filing a motion to dismiss for “failure to state a claim upon which relief can be granted.” To survive a motion to dismiss, the complaint must allege facts that “‘raise a right to relief above the speculative level.'” Victaulic Co. v. Tieman, 499 F.3d 227, 234 (3d Cir. 2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). A complaint must contain “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). A district court first identifies those factual allegations that constitute nothing more than “legal conclusions” or “naked assertions.” Twombly, 550 U.S. at 555, 557. Such allegations are “not entitled to the assumption of truth” and must be disregarded. Iqbal, 556 U.S. at 679. The court then assesses “the ‘nub' of the plaintiff['s] complaint-the well-pleaded, nonconclusory factual allegation[s]”-to determine whether it states a plausible claim for relief. Id.

         B. Count I: Pennsylvania's Unfair Trade Practices and Consumer Protection Law

         Count I of the Amended Complaint alleges that all defendants violated the UTPCPL by making various false and misleading statements in their advertising and communications with plaintiff. Defendants argue that attorneys are exempt from UTPCPL liability when they are engaged in the practice of law. The Court agrees; however, because plaintiff has pointed to non-attorney actions that can be imputed to KLG, the Court grants in part and denies in part defendants' Motion as to Count I.

         The Supreme Court of Pennsylvania has exclusive authority to regulate the practice of law in Pennsylvania, and has held that attorneys cannot be liable under the UTPCPL when “Pennsylvania's Rules of Professional Conduct and Rules of Disciplinary Enforcement exclusively address the conduct complained of.” Beyers v. Richmond, 937 A.2d 1082, 1092 (Pa. 2007). Plaintiff concedes that Beyers precludes liability for “actions by the Attorney Defendants [which] constitute violations of the Pennsylvania Rules of Professional [Conduct].” Resp. at 10. Following Beyers, the Court concludes that plaintiff cannot recover under Count I based on any allegations of attorney conduct which is exclusively governed by the Pennsylvania Rules of Professional Conduct and Rules of Disciplinary Enforcement. The Court therefore ...


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