Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Wells Fargo Bank, N.A v. Yung

United States District Court, E.D. Pennsylvania

June 11, 2018

WELLS FARGO BANK, N.A., Plaintiff,
v.
CHUN CHIN YUNG, et al., Defendants.

          MEMORANDUM

          EDUARDO C. ROBRENO, J.

         This is a breach of contract action brought by Plaintiff Wells Fargo Bank, N.A. (“Wells Fargo”), the trustee for the holders of a commercial mortgage loan, against Defendants Chun Chin Yung (“Yung”) and Chao Hong Weng (“Weng,” and together with Yung, “Defendants”), the borrowers. Wells Fargo alleges that Defendants breached their obligation to pay the loan and are now in default under the terms of the agreement. Following the close of discovery, Wells Fargo filed a motion for summary judgment, which Defendants oppose.

         For the reasons that follow, the Court will grant in part and deny in part Wells Fargo’s motion for summary judgment. The Court will grant Wells Fargo’s motion with respect to liability, and award damages consisting of the principal, interest, and certain fees, charges, and costs. However, the Court will deny Wells Fargo’s motion to the extent it seeks additional damages, including four disputed fees.

         I. FACTUAL BACKGROUND[1]

         On June 30, 2006, Yung and Weng obtained a commercial mortgage loan from Column Financial, Inc. (“the Original Lender”), with a principal amount of $2,725,000.00 (“the Loan”) and a fixed interest rate of 6.73% per annum. See Promissory Note at 1, Compl. Ex. A, ECF No. 1-1. The Loan was secured by a mortgage on a property located at 700-742 Adams Avenue, Philadelphia, Pennsylvania (“the Mortgage”). See Open-End Mortgage, Security Agreement, and Assignment of Leases and Rents, Compl. Ex. B, ECF No. 1-2.

         The promissory note for the loan (“the Note”) provided that Defendants were responsible for making monthly payments of $17,638.09 for a ten-year period from August 11, 2006 until July II, 2016 (“the Maturity Date”). See Note § 1.01. The Note further stated that, on the Maturity Date, the outstanding principal balance, along with the accrued but unpaid interest, would be due and payable in full. See Id. Although the loan had a ten-year term, the monthly payment amounts were calculated based upon a thirty-year term. Therefore, under the terms of the Note, a very large payment would be due on the Maturity Date.

         Under the Note, a default occurs when, among other things, Defendants fail to make a monthly payment on or before the monthly payment due date, or fail to pay the outstanding amount due on the Maturity Date. See Note § 1.04; see also Mortgage § 2.1. The failure to pay on time also results in a late charge of five percent (5.0%) of the overdue payment amount, an additional four percent (4.0%) interest on the outstanding principal balance, and costs of collection, such as attorney’s fees. See Note § 1.04.

         On the closing date, Defendants signed the Note, the Mortgage, and various other documents related to the Loan (“the Loan Documents”). The Note contains an integration clause, which states that “[t]his Note and the other Loan Documents contain the entire agreements between the parties hereto relating to the subject matter hereof and thereof and all prior agreements relative hereto and thereto which are not contained herein or therein are terminated.” See Note § 2.08.

         At his deposition, Yung testified that he personally signed the Note, and no one else explained or reviewed the loan documents on his behalf. See Tr. of Dep. of Chun Chin Yung (“Yung Dep.”), 38:10-14, 39:3-5, Oct. 25, 2017, Pl.’s Mot. Summ. J. Ex. C, ECF No. 20-4. Yung also stated that there was nothing in particular that he did not understand at the time of signing. See Id. at 39:6-13.

         Regarding default, Yung testified that he construed the terms of the Note as an obligation to pay the monthly bill on time, and that his understanding was that a default would only occur if he made late payments on the monthly bill. See Id. at 49:7-24. He also testified that he did not understand the consequences of not paying the remainder of the loan on the Maturity Date. Id. at 50:16-20.

         Yung testified that he understood that he had signed a ten-year fixed loan. See Id. at 44:2-4. However, he also testified that someone, who he believes is a realtor, told him that it could later change to a thirty-year term. Id. at 44:24-45:6. Yung admits that he signed the Note without any modifications to the language for the original ten-year term. Id. at 47:1-3. However, according to Yung, he assumed that if he had been paying on time, the bank would refinance the loan to a thirty-year term at the Maturity Date. Id. at 53:11-20. Yung also testified that he did not ask to negotiate the terms of the Note because he believed that the terms were fixed for every client. Id. at 62:1-4. He did not share his assumption regarding the potential change to a thirty-year term before he signed the Loan Documents. Id. at 53:21-24.

         In her deposition, Weng also confirmed that she personally signed the Note. See Tr. of Dep. of Chao Hong Weng (“Weng Dep.”) at 7:22-24, Oct. 25, 2017, Pl.’s Mot. Summ. J. Ex. D, ECF No. 20-4. In addition, Weng also stated that she understood why she was signing the Note and that she and Yung were the borrowers. See Id. at 9:5-16.

         Following the execution of the loan documents, the Original Lender sold the loan to Credit Suisse First Boston Mortgage Securities Corp. (“Credit Suisse”) to be securitized into a commercial mortgage-backed security: Credit Suisse First Boston Mortgage Securities Corporation Commercial Mortgage Pass-Through Certificates, Series 2006-C5 (“CSFB 2006-C5”). See Pl.’s Mot. Summ. J. Ex. F, ECF No. 20-4 (“Note Allonge”); see also Tr. of Dep. of Aaron Guillotte (“Guillotte Dep.”) 22:5-7; 22:19-22, Oct. 27, 2017, Pl.’s Mot. Summ. J. Ex. G, ECF No. 20-4. Wells Fargo is the trustee for the holders of CSFB 2006-C5 certificates. See Id. 23:1.

         According to Yung, approximately six months prior to the Maturity Date, he requested a modification extending the ten-year term to thirty years. See Yung Dep. at 69:14-22. However, Wells Fargo did not agree to the modification. See Id. at 75:11-17.

         On July 11, 2016, the Maturity Date for the Note, Yung failed to pay the remaining outstanding loan balance. See id. at 77:2-5. Wells Fargo did not accept Yung’s offer to continue making regular payments after the Maturity Date, and as a result, Defendants have not made any payments since that date. Id. at 77:6-15.

         II. PROCEDURAL HISTORY

         Wells Fargo filed this action on April 24, 2017, bringing one breach of contract claim against Defendants. See Compl., ECF No. 1. Wells Fargo alleges that Defendants breached and defaulted on their contractual obligations under the Note by failing to pay in full the outstanding principal balance of the Note on the Maturity Date. See Id. ¶ 28. Wells Fargo asks that judgment be entered in its favor and against Defendants in the amount of $2,757,390.68, together with additional and accruing interest, fees, charges, and costs recoverable under the Loan Documents. See Id. at 7.

         On October 31, 2017, following the close of discovery, Wells Fargo filed a motion for summary judgment. ECF No. 20. Defendants filed a response in opposition to the motion on November 14, 2017. ECF No. 21. The motion is now ripe for disposition.

         III. ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.