United States District Court, E.D. Pennsylvania
EDUARDO C. ROBRENO, J.
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.
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.
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.
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.
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 §
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.
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
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.
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
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.
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.
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
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.
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.
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