Lapensohn v. Hudson City Sav. Bank
| Decision Date | 21 April 2021 |
| Docket Number | CIVIL ACTION NO. 19-4576-KSM |
| Parties | HOWARD C. LAPENSOHN, et al., Plaintiffs, v. HUDSON CITY SAVINGS BANK, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
This case is one of many similar cases brought by Plaintiffs' counsel, Attorney Joshua Thomas. In each case, a mortgagor bank foreclosed on the plaintiff's home after many months, and in some cases, years, of nonpayment.1 When the plaintiff's challenges to foreclosure failed in state court, Mr. Thomas filed a federal case on the relevant homeowner's behalf, asking the district court to reconsider the issues already decided in the state action. As Mr. Thomas should well know from those previous cases, and as will be restated here, federal court is not a forum to relitigate issues decided by a state court.
Mr. Thomas filed this case on behalf of Plaintiffs Howard C. Lapensohn and Jill Abrams Lapensohn against Defendant M&T Bank, as successor-by-merger to Hudson City Savings Bank, and Defendant M&T Bank Corp.2 (Doc. Nos. 1, 23.) They assert claims for breach ofcontract, unjust enrichment, violations of Pennsylvania's Unfair Trade Practices and Consumer Protection Law ("UTPCPL"), violations of the regulations under the Real Estate Settlement Procedures Act ("RESPA"), and common law negligence. (Doc. No. 23 at pp. 19-25.) Defendants have moved to dismiss all claims brought against them. (See Doc. Nos. 24-25.) For the reasons that follow, we grant Defendants' motions and dismiss the complaint.
The statement of facts in the amended complaint is not in chronological order and is riddled with inconsistencies and gaps of information. However, taking the allegations in the amended complaint as true, and where necessary, relying on documents from the underlying foreclosure action,3 the relevant facts are as follows.
On January 1, 2009, the Lapensohns began living in a newly constructed home at 1106 Robin Road in Gladwyne, Pennsylvania. (Doc. No. 23 at p. 3 ¶ 1.4) In the spring of 2009, only a few months after the Lapensohns moved into the home, they "became aware of construction defects." (Id. at p. 4 ¶ 9.) By February 2012, they had learned that the property was "structurally deficient" and subject "to ongoing significant resultant damage." (Id. at p. 4 ¶ 9.) And by July 2014, a preliminary construction defect report estimated the preliminary cost of repairs on the home would total more than $1.4 million. (Id. at p. 6 ¶¶ 30-31.)
When the Lapensohns moved into the home on Robin Road, it appraised for $2.45 million and was subject to construction financing from Independent Mortgage Company. (Id. at p. 3 ¶ 3.) Not long after moving in, they applied for permanent financing with Hudson City Savings Bank, but one week before the closing on the permanent mortgage, Hudson City, "without explanation," reduced the initial appraisal from $2.45 million to $2.25 million. (Id. at p. 3 ¶ 4.) This change left the Lapensohns with insufficient funds to pay the construction lender in full or to pay the balance owed the builder. (Id. p. 3 ¶ 7.)
In March 2009, Hudson City and the Lapensohns executed a note and mortgage which reflected a loan in principal of $1,237,500. (Id. at p. 4 ¶ 15; Hudson City Sav. Bank v. Lapensohn, Case No. 2014-27824, Complaint at ¶ 5 (Montgomery Cty. Ct. Comm. Pl.) [hereinafter Foreclosure Complaint].) The note provided for monthly interest payments from its inception to April 30, 2014, after which the loan would amortize based on a 30-year schedule, and the Lapensohns would begin paying a combination of interest and principal. (Doc. No. 23 at p. 4 ¶ 15.)
Hudson City and the Lapensohns entered into two loan modifications, one in 2010 and one in 2011. (Id. at p. 4 ¶ 11; Foreclosure Complaint at ¶¶ 7-8, Ex. C, Ex. D.) Both modifications called for an interest rate reduction, and the second modification changed the amortization terms so that the previous April 30, 2014 start date moved to September 1, 2015. (Doc. No. 23 at p. 4 ¶¶ 13, 16; but see Foreclosure Complaint at Ex. D ("The new monthly payment for interest will be $4,382.81 effective: 12/01/2011 until 9/01/2018 at which amortization will commence.").) Despite this second modification, in April or May of 2014,Hudson City began invoicing principal as well as interest, and the Lapensohns' mortgage payments increased from $4,300 to $7,000 per month. (Doc. No. 23 at p. 4 ¶¶ 17-19.)
In the spring of 2014, the Lapensohns were also "heavily into construction defect and insurance coverage litigation over the property and were contractually out of pocket in excess of $10,000 per month in legal and expert witness fees as well as costs of emergency repairs that the builder refused to perform." (Id. at p. 5 ¶ 27.) Because they could not afford to pay both those fees and the increased mortgage payments, the Lapensohns "fell behind" on the mortgage beginning June 1, 2014. (Id. at p. 5 ¶ 28; see also Foreclosure Complaint at Ex. F (Notice of Mortgage Default).) They claim that they "attempt[ed] multiple time[s] to enter into discussions with the Defendants regarding the global situation." (Doc. No. 23 at p. 5 ¶ 28.)
After the Lapensohns entered default, Hudson City brought a collection action against them, and in response, the Lapensohns requested a forbearance agreement that would put them back to interest-only payments for 12 months and a meeting with a senior bank officer to review and discuss their situation. (Id. at p. 5 ¶ 29.) Hudson City denied both requests, explaining that they had no way of entering into a forbearance agreement and there was no point in meeting with a bank official because there was nothing to discuss. (Id. at p. 6 ¶ 32.) Hudson City did, however, encourage the Lapensohns to apply for one of their formal loan modification programs. (Id. at p. 6 ¶ 34.) The Lapensohns suggest that this encouragement was done in bad faith because Hudson City knew that they "did not qualify for the [modification programs] because the property value had dropped so low in relation to the mortgage." (Id. at p. 6 ¶¶ 34-35.) They assert that Hudson City was "doing nothing but wasting time" and often made them resubmit the same paperwork multiple times. (Id. at p. 7 ¶ 38-39, 41, 43.) Despite not qualifying for the loan modification programs, the Lapensohns "dealt with" applications for those programs from May2014 through September 2017 and submitted, often multiple times, all the documents that the bank requested. (Id. at p. 7 ¶¶ 40-41, 43.)
On October 14, 2014, Hudson City filed a foreclosure action in the Montgomery County Court of Common Pleas, which sought an "in rem judgment against [the Lapensohns] for foreclosure and sale" of the Robin Road home for the balance of principal, unpaid interest, and fees — $1,267,379.64. (Foreclosure Complaint at p. 8; Doc. No. 23 at p. 7 ¶ 44.) While that litigation was pending, Hudson City sent engineers and appraisers to inspect the home. The Lapensohns allege that the bank's "unlicensed purported engineer" incorrectly found that less than $100,000 in repairs were needed on the home, and the bank's appraiser issued an appraisal that was "highly overrated." (Doc. No. 23 at p. 8 ¶¶ 50-51 ().)
Hudson City moved for summary judgment on the grounds that the Lapensohns' answer and new matter admitted the existence and amount of the mortgage, that they were in default for failing to make timely mortgage payments as of June 1, 2014, and that Hudson City provided the necessary pre-foreclosure notices. (See Hudson City Sav. Bank v. Lapensohn, Case No. 2014-27824, Doc. No. 10 at p. 7 [hereinafter Motion for Summ. Jmt.].) On April 2, 2015, the state court granted Hudson City's motion as unopposed; entered judgment in rem in favor of Hudson City in the amount of $1,270,518.20 with interest, advances, attorney's fees, and costs; and dismissed with prejudice the Lapensohns' affirmative defenses. (Doc. No. 23 at p. 7 ¶ 46; see also Hudson City Sav. Bank v. Lapensohn, Case No. 2014-27824, Doc. No. 11 .) The prothonotary then issued a writ of execution, directing the sheriff of Montgomery County, Pennsylvania, to levy upon and sell the Robin Road home to satisfy theforeclosure judgment. (See Hudson City Sav. Bank v. Lapensohn, Case No. 2014-27824, Doc. No. 13 [hereinafter Writ of Execution].)
In December 2015, Hudson City Savings Bank merged into M&T Bank, with M&T Bank remaining as the surviving entity. (Doc. No. 23 at p. 2 ¶ 7; see also Doc. No. 25-5 at § 1.8 (Agreement and Plan of Merger)5.) M&T Bank is a wholly owned subsidiary of M&T Bank Corporation. (Doc. No. 23 at p. 2 ¶ 7; see also Doc. No. 25-5 at § 1.8.) Having prevailed in the foreclosure action, M&T Bank scheduled a sheriff's sale of the Robin Road home. In January 2016, M&T Bank and the Lapensohns each sent another appraiser to the home, both of whom valued the house at "salvage and the land." (Doc. No. 23 at p. 10 ¶ 68.) Although the two appraisals (Id. at p. 10 ¶ 69.)
After continuing the sheriff's sale multiple times, M&T Bank informed the Lapensohns that it planned to sell the home on March 8, 2016. (Id. at p. 10 ¶ 70.) However, on the morning of the sale, "Mr. Lapensohn filed a bankruptcy [action] . . . to cancel the sale." (Id. at p. 10 ¶ 71.) The bankruptcy proceeding was dismissed a few months later, on September 11, 2016 (id.), and the sheriff's sale was relisted for October 31, 2017 (id. at p. 11 ¶ 80). In the meantime, M&T Bank lowered the Lapensohns' monthly mortgage payment back to around $4,300, again "without explanation." (Id. at p. 5 ¶ 22.)
An hour before the October sheriff's sale, the state court granted the Lapensohns' pro se petition to...
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