United States District Court, E.D. Pennsylvania
JOHN F. BRASCH et al., Plaintiffs,
WELLS FARGO BANK, N.A. et al., Defendants.
E.K. PRATTER UNITED STATES DISTRICT JUDGE.
lending institution loans on the basis of an allegedly
fraudulent home appraisal, can the borrowers establish
justifiable reliance even when they did not know the value of
the appraisal? Plaintiffs John and Marie Brasch believe so,
suing Wells Fargo for “inducing” them, on the
basis of an inflated home appraisal, to take out loans they
cannot repay. However, the Brasches never saw the allegedly
fraudulent appraisal, and actually knew the real value of
their home was substantially lower than the loans they took
prove their fraud claims, the Brasches must show justifiable
reliance on the allegedly fraudulent or deceptive conduct.
Because the Court finds that justifiable reliance cannot be
demonstrated absent knowledge of the fraudulent appraisal,
the Brasches' claims fail as a matter of law.
Accordingly, summary judgment is granted in favor of Wells
Fargo issued and approved a home equity secured line of
credit with a value of up to $250, 000 for the Brasches in
2005 and a 30-year mortgage of $252, 697.50 in 2006. During
this process, Wells Fargo appraised the Brasches' home as
having a value of $380, 000, which the Brasches claim
overvalued their $227, 000 home by $153, 000. The Brasches
were never told of the valuation. At the time, Mr. Brasch
(the spouse who actually took out the loan) believed his home
was worth somewhere in the range of $200, 000.
wake of the 2008 housing market collapse, Congress enacted
the Home Affordable Refinance Program (HARP) to help
borrowers at high risk of defaulting on a mortgage. In 2014,
Wells Fargo advertised on the internet for HARP refinancing.
Mr. Brasch answered the advertisement and was approved for
lower-interest refinance based upon the 2006 appraisal of his
home. Mr. Brasch still did not know the value of Wells
years after the HARP loan, and 11 years after the initial
mortgages, the Brasches sued Wells Fargo, claiming that Wells
Fargo fraudulently misrepresented the market value of the
Brasches' home. The Brasches claim $150, 000 in damages,
alleging that Wells Fargo's use of an incorrect appraisal
and property report constituted fraudulent misrepresentation
of their property's market value. The Brasches contend
that Wells Fargo used this value to induce the Brasches to
over-borrow and accuse Wells Fargo of engaging in equity
stripping. Equity stripping involves lending unnecessarily
large amounts of money, which makes it difficult for the
homeowners to refinance or sell their home to pay off the
loans. Despite this claim, all parties agree that the
Brasches have timely made payments on these loans and Wells
Fargo distributed the proceeds of the 2005 and 2006 loans.
shall grant a motion for summary judgment “if the
movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a
matter of law.” Fed.R.Civ.P. 56(a). An issue is
“genuine” if there is a sufficient evidentiary
basis on which a reasonable jury could return a verdict for
the non-moving party. Kaucher v. Cty. of
Bucks, 455 F.3d 418, 423 (3d Cir. 2006) (citing
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986)). A factual dispute is “material” if it
might affect the outcome of the case under governing law.
Id. (citing Anderson, 477 U.S. at 248).
Under Rule 56, the Court must view the evidence presented on
the motion in the light most favorable to the non-moving
party. See Anderson, 477 U.S. at 255. However,
“[u]nsupported assertions, conclusory allegations, or
mere suspicions are insufficient to overcome a motion for
summary judgment.” Betts v. New Castle Youth Dev.
Ctr., 621 F.3d 249, 252 (3d Cir. 2010).
movant bears the initial responsibility for informing the
Court of the basis for the motion for summary judgment and
identifying those portions of the record that demonstrate the
absence of a genuine issue of material fact. Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986). Where the
non-moving party bears the burden of proof on a particular
issue, the moving party's initial burden can be met
simply by “pointing out to the district court that
there is an absence of evidence to support the nonmoving
party's case.” Id. at 325. After the
moving party has met the initial burden, the non-moving party
must set forth specific facts showing that there is a
genuinely disputed factual issue for trial by “citing
to particular parts of materials in the record, including
depositions, documents, electronically stored information,
affidavits or declarations, stipulations . . ., admissions,
interrogatory answers, or other materials” or by
“showing that the materials cited do not establish the
absence or presence of a genuine dispute.” Fed.R.Civ.P.
judgment is appropriate if the non-moving party fails to
rebut by making a factual showing “sufficient to
establish the existence of an element essential to that
party's case, and on which that party will bear the
burden of proof at trial.” Celotex, 477 U.S.
Brasches' claims arise under the Pennsylvania Unfair
Trade Practices and Consumer Protection Law (UTPCPL), which
generally prohibits fraudulent conduct. Wells Fargo's
motion for summary judgment offers two relevant arguments in
favor of granting summary judgment on the Brasches'
UTPCPL claims. First, the lender claims that the statute of
limitations for the alleged fraud of 2005 and 2006 has run
because the Brasches filed suit in July 2017. Second, the
lender argues that the Brasches are unable to prove
justifiable reliance as required for a UTPCPL
claim. Because the Court agrees with both
arguments, Wells Fargo's motion for summary judgment is
granted with respect to the UTPCPL claims.
the initial complaint was devoid of any mention of federal
law, the Braches alleged in their response to Wells
Fargo's motion that Wells Fargo violated the Home
Ownership and Equity Protection Act (HOEPA). See 15
U.S.C. § 1639. HOEPA was enacted to protect against
predatory lenders by requiring disclosure of certain consumer
credit terms and prohibiting various misleading practices.
See 15 U.S.C. §§ 1601(a), 1639. Wells
Fargo argues that HOEPA does not apply to the loans at issue,
and that the ...