Filed: Dec. 13, 2018
Latest Update: Mar. 03, 2020
Summary: NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _ No. 17-3253 _ STEPHEN BUKOWSKI; VIRGINIA BUKOWSKI, Appellants v. WELLS FARGO BANK, N.A.; doing business as WELLS FARGO HOME MORTGAGE, A DIVISION OF; and BANK OF AMERICA, N.A. _ On Appeal from the United States District Court for the District of New Jersey (D.C. Civil No. 3-17-cv-00625) District Judge: Honorable Michael A. Shipp _ Submitted Under Third Circuit L.A.R. 34.1(a) July 20, 2018 _ Before: McKEE, VANASKIE, and RESTRE
Summary: NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _ No. 17-3253 _ STEPHEN BUKOWSKI; VIRGINIA BUKOWSKI, Appellants v. WELLS FARGO BANK, N.A.; doing business as WELLS FARGO HOME MORTGAGE, A DIVISION OF; and BANK OF AMERICA, N.A. _ On Appeal from the United States District Court for the District of New Jersey (D.C. Civil No. 3-17-cv-00625) District Judge: Honorable Michael A. Shipp _ Submitted Under Third Circuit L.A.R. 34.1(a) July 20, 2018 _ Before: McKEE, VANASKIE, and RESTREP..
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 17-3253
_____________
STEPHEN BUKOWSKI;
VIRGINIA BUKOWSKI,
Appellants
v.
WELLS FARGO BANK, N.A.;
doing business as WELLS FARGO HOME
MORTGAGE, A DIVISION OF; and
BANK OF AMERICA, N.A.
_____________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. Civil No. 3-17-cv-00625)
District Judge: Honorable Michael A. Shipp
______________
Submitted Under Third Circuit L.A.R. 34.1(a)
July 20, 2018
______________
Before: McKEE, VANASKIE, and RESTREPO, Circuit Judges
(Filed: December 13, 2018)
______________
OPINION ∗
______________
∗
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does
not constitute binding precedent.
VANASKIE, Circuit Judge.
Appellants Stephen and Virginia Bukowski filed suit against Appellees Wells
Fargo Bank, N.A. (“Wells Fargo”) and Bank of America, N.A. (“Bank of America”)
alleging that Appellees failed to abide by the terms of a loan modification agreement
entered into between the parties. The District Court granted Appellees’ motion to dismiss
on all grounds, prompting this timely appeal.
We agree with the District Court that the Bukowskis failed to adequately plead
damages with regard to their Real Estate Settlement Procedures Act (“RESPA”) claim.
We therefore will affirm the District Court’s dismissal of Count One. However, we agree
with the Bukowskis that the District Court erred in dismissing both their New Jersey
Consumer Fraud Act (“NJCFA”) claim and their breach of contract claim. Accordingly,
we will vacate the District Court’s judgment on Count Two and Count Four and remand
for proceedings consistent with this opinion. 1
I.
Appellants are residents of Clinton, New Jersey. On April 30, 2004, they entered
into a mortgage loan transaction with Wells Fargo in the amount of $446,000. The loan
was fully amortizing over thirty years and was secured by a mortgage lien on the
Bukowskis’ principal residence. Shortly after the loan was originated, Wells Fargo
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The Bukowskis voluntarily withdrew their claim under the Fair Debt Collections
Practices Act (Count Three). (See Appellants’ Br. 7.)
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transferred ownership of the note and mortgage to Bank of America. Wells Fargo,
however, continues to service the loan on Bank of America’s behalf.
The Bukowskis made timely mortgage payments until late 2014, when a serious
car accident and financial hardship caused them to fall behind on their payments. In
April 2015, the couple submitted an application to Wells Fargo for a loan modification
under the Home Affordable Modification Program (“HAMP”), a federal program that
incentivizes lenders to offer more favorable loan modifications to borrowers.
On September 22, 2015, Wells Fargo sent the Bukowskis a three-month, trial
period plan (“TPP”) stating that the couple would qualify for a permanent HAMP
modification so long as they made three timely payments “and returned a certain
subordination agreement.” (App. 27.) Relevant here, the TPP did not include any
language indicating that the Bukowskis would be required to make deferred principal,
lump sum, or balloon payments at any point in the future. This was consistent with
HAMP guidelines, which prohibit such payments.
The Bukowskis satisfied the conditions contained in the TPP, prompting Wells
Fargo to send them permanent HAMP forms in January 2016. The permanent forms,
however, included language requiring the Bukowskis to make “an interest bearing lump
sum payment” of an estimated $152,819.03, in violation of HAMP. (Id. at 29.) The
Bukowskis proceeded to notify Wells Fargo of the error, but they were informed by
Wells Fargo “that Bank of America had an exception to the HAMP agreement,”
exempting it from certain portions of the HAMP guidelines. (Id. at 30.) On January 25,
2016, the Bukowskis responded with a letter objecting to Wells Fargo’s explanation and
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further requesting that Wells Fargo send them corrected documents that were compliant
with HAMP guidelines. Wells Fargo replied by informing the Bukowskis that it would
conduct an internal review regarding the Bukowskis’ objections. In the interim, the
couple continued to make TPP payments.
After months of futile correspondence, the Bukowskis, on September 19, 2016,
sent Wells Fargo two documents: a written request for information (“RFI”) and notice of
error (“NOE”). Wells Fargo did not respond. Instead, on November 7, 2016, it sent the
Bukowskis a Notice of Intention to Foreclose, which stated that Wells Fargo would take
possession of the Bukowskis’ home unless the couple made a delinquency payment of
$101,166.37. A week later, the Bukowskis submitted another RFI and NOE. Wells
Fargo then responded with a letter dated January 20, 2017, informing the Bukowskis that
the bank would not provide information about the relevant HAMP exemption or Wells
Fargo’s investor guidelines because both “are considered confidential, privileged, and/or
proprietary information of Wells Fargo.” (App. 128.) In addition, the letter expressed
that Wells Fargo would not rescind the provision requiring the Bukowskis to make a
lump sum payment of $152,819.03.
After receiving Wells Fargo’s letter, the Bukowskis filed a four-count complaint in
the United States District Court for the District of New Jersey. Their complaint alleged,
inter alia, breach of contract under New Jersey law and violations of the Real Estate
Settlement Procedures Act (“RESPA”), 12 U.S.C § 2601, et seq., as well as the New
Jersey Consumer Fraud Act (“NJCFA”), N.J.S.A. § 56:8-1, et seq. The District Court
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granted Wells Fargo’s motion to dismiss the complaint in its entirety without a hearing,
and this timely appeal followed.
II.
The District Court had jurisdiction under 28 U.S.C. § 1331 and 12 U.S.C. § 2614.
We have jurisdiction pursuant to 28 U.S.C. § 1291. Our review of a district court’s
dismissal of a complaint pursuant to Rule 12(b)(6) is plenary. McMullen v. Maple Shade
Twp., 643 F.3d 96, 98 (3d Cir. 2011). “The District Court’s judgment is proper only if,
accepting all factual allegations as true and construing the complaint in the light most
favorable to the plaintiff, we determine that the plaintiff is not entitled to relief under any
reasonable reading of the complaint.”
Id. (quoting McGovern v. City of Phila.,
554 F.3d
114, 115 (3d Cir. 2009)).
III.
The Bukowskis argue that the District Court erred in dismissing each of its three
claims. We will address each argument in turn.
A.
The Bukowskis first contend that the District Court erred in dismissing their
RESPA claim. Congress enacted RESPA in 1975 to provide consumers “with greater
and more timely information on the nature and costs of the settlement process. . . .” 12
U.S.C. § 2601(a). If a borrower submits a written RFI pursuant to RESPA’s Regulation
X, then the loan servicer must provide “a written response acknowledging receipt” of that
request within five days of receiving the request. 12 C.F.R. § 1024.36(c). Similarly, if a
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borrower submits a NOE letter, the loan servicer must issue a written response
acknowledging receipt within five days of receiving the letter. Id. § 1024.35(d).
If a loan servicer fails to abide by its borrower inquiry obligations, RESPA allows
a plaintiff to recover two types of damages. First, the borrower may recover actual
damages if he or she proves that (1) the loan servicer violated a particular RESPA
requirement and (2) actual damages were sustained “as a result of the failure.” 12 U.S.C.
§ 2605(f)(1)(A). See also Renfroe v. Nationstar Mortg., LLC, 822 F.3d 1241, 1246 (11th
Cir. 2016) (citing Turner v. Beneficial Corp.,
242 F.3d 1023, 1028 (11th Cir.2001) (en
banc) (noting that “there must be a ‘causal link’ between the alleged [RESPA] violation
and the damages”). Second, a borrower may seek statutory damages up to $2,000 if the
damages are based on “a pattern or practice of noncompliance. . . .” 12 U.S.C. §
2605(f)(1)(B).
Here, the Bukowskis alleged a RESPA violation against Wells Fargo for failing to
timely or properly respond to their RFIs and NOEs. The District Court, however,
dismissed the claim on the ground that they “fail[ed] to allege specific damages as a
result of the alleged RESPA violations and [did] not identify a causal link between the
alleged violations and alleged damages.” (App. 9 (citing Oliver v. Bank of Am. N.A., No.
13-4888, 2014 WL 562943, at *3 (D.N.J. Nov. 15, 2012).). We agree. Even assuming,
arguendo, that Wells Fargo violated RESPA by failing to respond to the Bukowskis’
written submissions, the Bukowskis’ complaint fails to plead facts sufficient to recover
either actual or statutory damages. Specifically, after itemizing Wells Fargo’s alleged
RESPA violations, the Bukowskis’ complaint summarily requests damages as follows:
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WHEREFORE, the plaintiffs demand judgment against Wells
Fargo as follows:
a. Awarding specific performance in the form of a permanent
loan modification;
b. Awarding actual damages;
c. Awarding statutory damages. . . .
(App. 38.)
Such conclusory language is insufficient to survive dismissal. With regard to
actual damages, the Bukowskis do not articulate any facts linking Wells Fargo’s alleged
RESPA violations to damages suffered “as a result” of those failures. 12 U.S.C. §
2605(f)(1)(A). Similarly, the Bukowskis do not proffer a basis for concluding that Wells
Fargo engaged in “a pattern or practice of noncompliance” so as to recover statutory
damages. Id. § 2605(f)(1)(B). Absent allegations linking Wells Fargo’s conduct to
economic harm—whether in the form of actual or statutory damages—the Bukowskis’
RESPA claim cannot stand. We therefore will affirm the District Court’s dismissal of
their RESPA claim.
B.
We turn now to the Bukowskis’ NJCFA claim. The District Court dismissed the
Bukowskis’ NJCFA claim on the ground that it was “improperly intertwined with
allegations of violations of HAMP rules.” (App. 10 (citing Slimm v. Bank of Am. Corp.,
No. 12-5846, 2013 WL 1867035, at *10 (D.N.J. May 2, 2013).).
As the District Court correctly recognized, HAMP does not provide a private right
of action. See Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 559 n.4 (7th Cir. 2012)
(“HAMP does not create a private federal right of action for borrowers against
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servicers.”). That HAMP does not provide a private cause of action, however, does not
mean that it precludes state law claims altogether. As the Seventh Circuit explained in
Wigod, “[t]he absence of a private right of action from a federal statute provides no
reason to dismiss a claim under a state law just because it refers to or incorporates some
element of the federal law.” 673 F.3d at 581. New Jersey courts, in turn, have
“adopt[ed] the Seventh Circuit’s Wigod position that HAMP does not preclude state-law
based claims.” Smith v. Citimortgage, Inc., No. CV 15-7629 (JLL),
2015 WL 12734793,
at *4 (D.N.J. Dec. 22, 2015) (citing, inter alia, Aiello v. OceanFirst Bank, No. C-82-13,
2015 WL 7261740, at *3-4 (N.J. Super. Ct. App. Div. Nov. 18, 2015)). Indeed, the
District Court recognized this very principle in a prior decision, where it permitted the
plaintiffs to proceed with their HAMP-oriented NJCFA claim because HAMP in no way
“precludes state law causes of action.” Giordano v. Saxon Mortg. Servs., Inc., No.
CIV.A. 12-7937 (MAS),
2014 WL 4897190, at *4 (D.N.J. Sept. 30, 2014) (quoting Lia v.
Wells Fargo Bank, No. 14–0752(WJM),
2014 WL 2739348, at *2 (D.N.J. June 17,
2014)).
Here, the Bukowskis’ complaint does not allege a stand-alone HAMP violation;
instead, it alleges that Wells Fargo violated the NJCFA by making material
misrepresentations, which in turn led the couple to believe that their permanent
modification would be HAMP-compliant. (See App. 42.) The Bukowskis’ allegations in
this regard are similar to those asserted in Wigod. There, the Seventh Circuit explained
that the plaintiff’s state-law fraud claims “[did] not allege that Wells Fargo engaged in
unfair or deceptive business practices by violating HAMP guidelines.” Wigod, 673 F.3d
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at 585. Rather, the plaintiff contended that “Wells Fargo’s misrepresentation and
omission of material facts misled [the plaintiff] to believe she would receive a permanent
modification under HAMP and that it implemented its HAMP compliance procedures in
a way designed to thwart borrowers’ legitimate expectations.”
Id. Such allegations, the
court held, were actionable under an Illinois’ consumer fraud statute.
Id. at 585–86.
The same conclusion is warranted here. The Bukowskis do not allege that Wells
Fargo engaged in deceptive business practices by violating HAMP guidelines; rather,
they maintain that they were misled by Wells Fargo’s representations concerning their
eligibility for a permanent HAMP modification, and that those representations violated
the NJCFA. Because such a claim is permissible under the NJCFA, the District Court
erred in dismissing the Bukowskis’ NJCFA claim.
C.
The Bukowskis’ final claim was for breach of contract. To state a claim for
breach of contract under New Jersey law, a plaintiff must “allege (1) a contract between
the parties; (2) a breach of that contract; (3) damages flowing therefrom; and (4) that the
party stating the claim performed its own contractual obligations.” Frederico v. Home
Depot, 507 F.3d 188, 203 (3d Cir. 2007) (citing Video Pipeline, Inc. v. Buena Vista Home
Entertainment, Inc.,
210 F. Supp. 2d 552, 561 (D.N.J. 2002)). In dismissing the
Bukowskis’ breach of contract claim, the District Court characterized the permanent
HAMP modification, rather than the TPP, as the governing contract. This was error.
In their complaint, the Bukowskis allege that Wells Fargo offered them a
permanent HAMP modification “in accordance with the terms of the trial modification
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and the HAMP guidelines.” (App. 44.) It is well established in our Circuit and
elsewhere that TPPs operate as valid contracts. See Giordano, No. CIV.A. 12-7937
(MAS), 2014 WL 4897190, at *6 (“Courts analyzing similar TPPs and allegations have
held the TPP is an enforceable contract.”) (collecting cases); see also George v. Urban
Settlement Servs.,
833 F.3d 1242, 1260 (10th Cir. 2016) (“[W]e conclude that the
language in [the defendant’s] TPP documents clearly and unambiguously promises to
provide permanent HAMP loan modifications to borrowers who comply with the terms of
their TPPs.”).
Here, the Bukowskis allege that Wells Fargo issued them a TPP that promised to
offer a permanent HAMP modification that complied with HAMP’s guidelines. After
receiving the Bukowskis’ timely payments, Wells Fargo issued them a HAMP
modification that allegedly contravened HAMP’s guidelines. These allegations are
sufficient to state a plausible breach of contract claim.
IV.
For the reasons set forth above, we will affirm the District Court’s dismissal of
Appellants’ RESPA claim, but will vacate the District Court’s order dismissing
Appellants’ NJCFA and breach of contract claims and remand this matter for further
proceedings consistent with this opinion.
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