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Siwoniku v. Federal National Mortgage Association

United States District Court, E.D. Pennsylvania

September 9, 2019

ABRAHAM A. SIWONIKU et al. Plaintiffs,


          C. DARNELL JONES, II J.

         Plaintiffs Abraham A. Siwoniku and Alero Smith-Kidd (“Plaintiffs”) bring this diversity action to remedy the alleged wrongful designation of their mortgage as defaulted. Their original Complaint set forth claims against Defendants Federal National Mortgage Association (“FNMA”) and Seterus, Inc. (“Seterus”) (collectively, the “Defendants”) for fraud, defamation, breach of contract, violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 Pa. C.S. 201-1 et seq., violations of the Truth in Lending Act, and violations of Sections 1692f and 1692g of the Fair Debt Collection Practices Act (the “FDCPA”), 15 U.S.C. § 1601 et seq. Defendants filed a Motion to Dismiss the Complaint (“First Motion to Dismiss”) for failure to state a claim in accordance with Rule 12(b)(6) of the Federal Rules of Civil Procedure. The Court granted the motion, in part, and dismissed each of those claims with leave to amend, which Plaintiffs did.

         Pending before the Court is Defendants' Motion to Dismiss the Amended Complaint (“Second Motion to Dismiss”), which sets forth claims for: (1) fraud; (2) negligence; (3) violations of §§1692f and 1692g of the FDCPA; and (4) breach of contract. After reviewing the Amended Complaint (ECF No. 26), Defendants' Second Motion to Dismiss (ECF No. 27), and Plaintiffs' Opposition thereto (“Plaintiffs' Opposition”) (ECF No. 28) the Court will grant Defendants' motion and dismiss the Amended Complaint with prejudice.


         The factual background and procedural history of this case was set forth in this Court's Memorandum discussing the First Motion to Dismiss (ECF No. 23). Rather than repeat that discussion, the Court incorporates the “Relevant Background” in its prior Memorandum here. Those facts were construed in a light most favorable to Plaintiffs.

         The Court will, however, set forth two new allegations from the Amended Complaint that bear on the Court's analysis. First, Plaintiffs now allege that although the mortgage at issue was assigned to Defendant FNMA, Defendant Seterus “became the ‘servicer' of said note/mortgage as the term is defined in 12 CFR § 1024.2, and was acting at all times as the agent, servant and representative of Defendant FNMA, in furtherance of their own interest and the interest of Defendant FNMA.” Am. Compl. at 2 (ECF No. 25). Second, Plaintiffs now allege that Defendants filed a motion for summary judgment in the foreclosure proceeding in the Court of Common Pleas of Montgomery County on the mortgage at issue. Am. Compl. at 3. Plaintiffs allege that the motion was denied and that the transcript of the hearing attached to the Amended Complaint demonstrates that “Defendant was unable to produce evidence that the Plaintiffs had defaulted on the mortgage and in fact had produced records that were missing pages.” Am. Compl. at 3. Plaintiffs use this to support their claim that “Defendants have been unable to account for or in any way justif[y] the allegation of a default or filing of a foreclosure action.” Am. Compl. at 3.


         The well-established standards of Rule 12(b)(6) govern this motion. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009).


         Defendants have challenged the sufficiency of each of Plaintiffs' claims. In the interest of clarity the Court will consider whether each count states a claim for relief in turn.

         A. Count One - Fraud

         The Court previously dismissed Plaintiffs' fraud count for failure to plead with the particularity required by Rule 9(b). Mem. Granting First Mot. Dismiss at 4 (ECF No. 23). The Amended Complaint contains the same general allegations found lacking in the original Complaint. Plaintiffs attempt to add particularity by including allegations about a hearing held on a motion for summary judgment in a foreclosure action on the mortgage at issue. Plaintiff pleads that Defendants were “unable to produce evidence that the Plaintiffs had defaulted on the mortgage” and could not justify deeming their mortgage defaulted or filing a foreclosure action.

         Defendants argue that this Count must be dismissed for three reasons. First, Plaintiffs have still failed to plead reasonable reliance on Defendants' alleged misrepresentation given their express denial of default or delinquency. Sec. Mot. Dismiss at 7. Second, any statements made at the hearing on the motion for summary judgment are judicially privileged and unable to be relied upon here. Sec. Mot. Dismiss at 8. Third, the gist of the action doctrine bars this claim because the alleged fraud arose out of a breach of the terms of the governing mortgage loan agreement - a contract. Sec. Mot. Dismiss at 8.

         The Court need not address each of Defendants' arguments because Plaintiffs have again failed to plead the elements of fraud with particularity. See Chase v. Creegan, 169 A.3d 1136 (Pa. Super. Ct. 2017). Plaintiffs fail to plead that they reasonably relied upon Defendants' alleged misrepresentation about their mortgage being in default. Plaintiffs also fail to plead Defendants knowingly or recklessly made false representations regarding the status of Plaintiffs' mortgage. Presumably, Plaintiffs included allegations about the hearing on the motion for summary judgment to address this prong of the fraud analysis. However, the portion of the transcript relied upon by Plaintiffs in the Amended Complaint does not have the import they believe. At that hearing the Court questioned Defendants about an electronically submitted exhibit to their motion for summary judgment that was missing a page. Am. Compl. at Ex. A, 8:14-20. In response, counsel attempted to submit a complete history in hardcopy, but the Court denied the request and, subsequently, the motion for summary judgment, finding there ...

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