Morilus v. Countrywide Home Loans, Inc.

• Decision Date: 22 December 2008
• Docket Number: Civil Action No. 07-900.
• Parties: Choisimene MORILUS, et al., Plaintiffs v. COUNTRYWIDE HOME LOANS, INC., et al., Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

Page 292

651 F.Supp.2d 292

Choisimene MORILUS, et al., Plaintiffs v. COUNTRYWIDE HOME LOANS, INC., et al., Defendants.

Civil Action No. 07-900.

United States District Court, E.D. Pennsylvania.

December 22, 2008.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Matthew B. Weisberg, Rebecca Steiger, Prochniak & Weisberg P.C., Morton, PA, for Plaintiffs.

Martin C. Bryce, Jr., Steven J. Snyder, Marc Jacob Weinstein, Ballard Spahr Andrews and Ingersoll, L.L.P., Matthew J. Norris, Gollatz, Griffin & Ewing, P.C., Philadelphia, PA, for Defendants.

Sunset Mortgage Co., L.P., Whitehall, PA, pro se.

Avonwood Capital Corp., Whitehall, PA, pro se.

Pierucci, Inc., Whitehall, PA, pro se.

James Porter, Jr., Whitehall, PA, pro se.

MEMORANDUM

STENGEL, Judge.

This lawsuit involves allegations of unfair practices in the procurement of a residential mortgage. The plaintiffs—Choisimene Morilus, Christopher Celian, and Filonise Celian—have brought multiple federal and state claims alleging that the defendants¹ engaged in negligent and/or deceptive mortgage lending practices.

Defendant Countrywide has moved for summary judgment on all counts and for its counterclaims for fraud and civil conspiracy. Upon consideration of the parties' memoranda and other filings, I will grant the motion as to all counts against Countrywide and its fraud counterclaim, and deny the motion as to the civil conspiracy counterclaim.

I. Background facts

On January 28, 2005, plaintiff Choisimene Morilus executed a home mortgage for $212,000 for a $238,000 property located in Whitehall, Pennsylvania (the Property). (See Am. Compl. ¶ 10 (Document #43).) Ms. Morilus does not read or speak English. (Pls.' Opp'n Mem. at 8 (Document # 83).) Plaintiffs Christopher and Filonise Celian are husband and wife and reside at the Property; they were not signatories to the agreement. (Id.) The Celians had initially tried to secure their own mortgage but their poor credit prevented them from getting favorable terms. (Id.) Their broker, Mr. Alkhal, asked if someone else could sign the application for them. (Id.) On Mr. Alkhal's suggestion, the Celians asked Ms. Morilus to sign on their behalf. The Celians would not be leasing the Property nor would they be receiving it as a gift; instead, they would live there as if it were their own and make the mortgage payments. (Id.) Mr. Alkhal and Sunset were aware of this arrangement. (Id.)

To facilitate the loan, Mr. Alkhal, in conjunction with the other defendants, allegedly misrepresented Ms. Morilus' assets. (Id. at 9.) The appraisal price of the Property was inflated, which forced the Celians to enter into a second mortgage with the sellers to cover the shortfall. (Id.) On the day of the closing, Mr. Alkhal met with Ms. Morilus and Mr. Celian. Mr. Celian translated for Ms. Morilus. The plaintiffs contend that Mr. Alkhal made only a cursory explanation of the documents' contents. (Pls.' Resp. to Def.'s Statement of Material Facts ¶ 29.)

After the closing, many of the payments were late; Countrywide did not foreclose. (Id. ¶ 42.) Finally, due in part to the financial hardships the Celians were facing, Ms. Morilus sold the Property in April 2006 for $250,000. The plaintiffs initially filed suit in the Court of Common Pleas of Philadelphia County, Pennsylvania, on January 29, 2007. The case was removed to federal court on March 5, 2007. An amended complaint as to Countrywide was filed on September 21, 2007. The complaint included eleven counts: (I) Negligence; (II) Truth in Lending Act (TILA); (III) Home Ownership and Equity Protection Act (HOEPA); (IV) Real Estate Settlement Procedures Act (RESPA); (V) Equal Credit Opportunity Act (ECOA); (VI) Fraud; (VII) Breach of contract; (VIII) Pennsylvania Fair Credit Extension Uniformity Act (Pa.FCEUA); (IX) Pennsylvania Unfair Trade Practices and Consumer Protection Law (Pa.UTPCPL); (X) Pennsylvania Credit Services Act (Pa. CSA); and (XI) Punitive damages. It states that the "[d]efendants² conspired to unfairly and deceptively induce [them] to execute loan documents . . . premised upon a falsely inflated appraisal price" to qualify them for a loan with monthly payments they could not afford. (Am. Compl. ¶ 17.)

On May 9, 2008, Countrywide filed the pending Motion for Summary Judgment. (Def.'s Mem. for Summ. J. (Document # 75).) The plaintiffs responded on June 23, 2008. (Pls.' Opp'n Mem. (Document # 83).) The response withdrew Counts III (HOEPA), V (ECOA), VIII (Pa.FCEUA), and X (Pa.CSA).

II. Standard of review

Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c). An issue is "genuine" when a reasonable jury could return a verdict for the non-moving party based on the evidence in the record. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A factual dispute is "material" when it could affect the outcome of the case under the governing law. Id.

A party seeking summary judgment initially bears responsibility for informing the court of the basis for its motion and identifying those portions of the record that it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where the non-moving party bears the burden of proof on a particular issue at trial, the moving party's initial Celotex burden can be met simply by demonstrating "to the district court that there is an absence of evidence to support the non-moving party's case." Celotex, 477 U.S. at 325, 106 S.Ct. 2548. After the moving party has met its initial burden, "the adverse party's response, by affidavits or otherwise as provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." FED. R. CIV. P. 56(e). Summary judgment is therefore appropriate when the non-moving party fails to rebut by making a factual showing that is "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. at 322, 106 S.Ct. 2548.

Under Rule 56 of the Federal Rules of Civil Procedure, the court must view the evidence in the record in the light most favorable to the non-moving party and draw all reasonable inferences in favor of that party. Anderson, 477 U.S. at 255, 106 S.Ct. 2505. The court must decide not whether the evidence unmistakably favors one side or the other, but whether a fairminded jury could return a verdict for the plaintiff on the evidence presented. Id. at 252, 106 S.Ct. 2505. If the non-moving party has produced more than a "mere scintilla of evidence" demonstrating a genuine issue of material fact, then the court may not credit the moving party's version of events against the opponent, even if the quantity of the moving party's evidence far outweighs that of its opponent. Big Apple BMW, Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir.1992).

III. Discussion

A. The Celians' Standing

A preliminary issue is whether the Celians have standing. This is a close question, but I find that they do. Standing is a fundamental justiciability principle determining "whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues." Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975). It combines constitutional and prudential limitations on the exercise of judicial power. Id. The "irreducible constitutional minimum of standing" has three elements:

First, the plaintiff must have suffered an "injury in fact"—an invasion of a legally protected interest which is (a) concrete and particularized, and (b) "actual or imminent, not `conjectural' or `hypothetical.'" Second, there must be a causal connection between the injury and the conduct complained of—the injury has to be "fairly . . . trace[able] to the challenged action of the defendant, and not . . . th[e] result [of] the independent action of some third party not before the court." Third, it must be "likely," as opposed to merely "speculative," that the injury will be "redressed by a favorable decision."

Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (citations omitted). In addition to the constitutional limitations, the Supreme Court has recognized several prudential limitations, separate and distinct from Article III's requirements. These prudential standing requirements are "judicially selfimposed limits on the exercise of federal jurisdiction." Elk Grove Unified Sch. Dist. v. Newdow, 542 U.S. 1, 11, 124 S.Ct. 2301, 159 L.Ed.2d 98 (2004). The Court has described the prudential standing requirements as "[(1)] the general prohibition on a litigant's raising another person's legal rights, [(2)] the rule barring adjudication of generalized grievances more appropriately addressed in the representative branches, and [(3)] the requirement that a plaintiff's complaint fall within the zone of interests protected by the law invoked." Id.

Countrywide's argument is three-fold. First, the Celians have suffered no cognizable injury. (See Def.'s Mem. for Summ. J. at 7.) They simply made payments to live in the home, which Countrywide would have the court recharacterize as a benefit. Countrywide also points out that the plaintiffs produced no evidence showing that Countrywide had "demanded payments from them, threatened to foreclose upon [the] mortgage . . . or indicated in any way that it would issue negative credit reports identifying them." (See id. at 9.) Second, even assuming that the Celians did suffer an injury, it was not causally connected to Countrywide's conduct and cannot be redressed by any finding that Countrywide breached its obligations to...