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Dan-Harry v. PNC Bank, N.A.

United States District Court, D. Rhode Island

October 17, 2018

DAWARI DAN-HARRY, on behalf of himself and all others so similarly situated, Plaintiff,
PNC BANK, N.A., Defendant.



         This putative class action now rests on Plaintiff Dawari Dan-Harry's only remaining claim[1] - that Defendant PNC Bank, National Association, (“PNC”) breached the mortgage contract between Plaintiff and PNC by failing to comply with a regulation, 24 C.F.R. § 203.604, which requires that a mortgagee must arrange a face-to-face meeting with the mortgagor within three months after default, or, as relevant in this case, make a “reasonable effort” to arrange such a meeting. 24 C.F.R. § 203.604(b, d). The regulation was promulgated by the United States Department of Housing and Urban Development (“HUD”) and was incorporated into Plaintiff's contractual relationship with PNC because the mortgage was insured by the Federal Housing Authority (“FHA”).

         PNC has moved for summary judgment, arguing that Plaintiff's proffer fails to establish any material issue of disputed fact to overcome PNC's evidence that it made the requisite “reasonable effort” to arrange a face-to-face meeting by mailing a certified letter inviting Plaintiff to a face-to-face meeting and by setting up one trip to see Plaintiff at the mortgaged property. ECF No. 28. PNC also contends that the undisputed facts - Plaintiff's admitted lack of equity in the mortgaged property and inability to make payments at the time of default, combined with five years of default before foreclosure and six years of living in the mortgaged property without paying the mortgage or anything for use and occupancy - support judgment as a matter of law because Plaintiff has failed to show that the lack of a face-to-face meeting caused his claimed damages.

         The motion has been referred to me for report and recommendation. 28 U.S.C. § 636(b)(1)(B). For the reasons that follow, I recommend that the motion be granted based on the absence of a trial-worthy factual dispute affecting PNC's evidence, which establishes full compliance with the “reasonable effort” requirement in 24 C.F.R. § 203.604(d). I also recommend that the motion be granted because Plaintiff has failed to present evidence sufficient to establish that PNC's alleged breach caused his claimed damages.

         I. BACKGROUND[2]

         On December 5, 2005, Plaintiff obtained a mortgage loan from PNC's predecessor, National City Bank of Indiana, to purchase a home at 84 Corinth Street in Providence (“the mortgaged property”). PNC SUF ¶ 1. In conjunction with that loan, Plaintiff executed a mortgage agreement and promissory note in the amount of $203, 000. PNC SUF ¶ 2. Paragraph 9(d) of the mortgage incorporated by reference certain HUD regulations; it states as follows:

Regulations of HUD Secretary. In many circumstances regulations issued by the Secretary will limit Lender's rights, in the case of payment defaults, to require immediate payment in full and foreclose if not paid. This Security Instrument does not authorize acceleration or foreclosure if not permitted by regulations of the Secretary.

         PNC SUF ¶ 5. On December 31, 2008, PNC acquired National City Bank of Indiana and became the mortgagee. PNC SUF ¶ 3.

         Plaintiff failed to make a payment on the note when due in January 2012 and again in February 2012, resulting in his being in default under the mortgage. PNC SUF ¶ 4. In that circumstance, the applicable HUD regulation requires that, within three months, the mortgagee must either have a face-to-face meeting with the mortgagor or make a reasonable effort to arrange one. The regulation states in relevant part as follows:

(b) The mortgagee must have a face-to-face interview with the mortgagor, or make a reasonable effort to arrange such a meeting, before three full monthly installments due on the mortgage are unpaid. . . .
(d) A reasonable effort to arrange a face-to-face meeting with the mortgagor shall consist at a minimum of one letter sent to the mortgagor certified by the Postal Service as having been dispatched. Such a reasonable effort to arrange a face-to-face meeting shall also include at least one trip to see the mortgagor at the mortgaged property[.]

24 C.F.R. § 203.604 (emphasis added). PNC has proffered two declarations signed by individuals familiar with the relevant procedures setting out its “regularly conducted business activity” of timely sending a certified letter and of using an experienced entity, J.M. Adjustment Services (“J.M.”), to make a timely trip to the mortgaged property, both as efforts to arrange the face-to-face meeting; these declarations aver that both requirements were accomplished in this case. Sexton Decl. ¶¶ 5, 8, 11, 12; Kojadulian Decl. ¶¶ 7, 8, 10, 14, 16, 17.

         Authenticated as a business record by the declaration of PNC's Vice President Jean Sexton, PNC's Loan Activity Archive for the relevant period reflects that on February 27, 2012, a certified letter was sent to Plaintiff via the United States Postal Service (“USPS”). PNC SUF ¶ 7; Sexton Decl. ¶¶ 7-12 & Ex. 2.[3] A copy of the letter with the USPS certification tracking number and bar code is appended to the Sexton declaration, which authenticates it as a business record and avers that PNC's records reflect that it was sent. Sexton Decl. ¶¶ 9-12 & Ex. 1. The letter invites Plaintiff to participate in a face-to-face meeting to discuss his mortgage and advises him that a representative from J.M. “will be coming to your home . . . in order to discuss solutions that may be available to you to bring your account current.”[4] Sexton Decl. ¶ 10 & Ex. 1. PNC's business records also reflect that this attempt to reach Plaintiff was not made in isolation. Rather, between July 12, 2011, and March 30, 2012, PNC made repeated attempts to reach Plaintiff by telephone and its representatives actually spoke to “borrower” from time to time, both before and after the certified letter was sent. Sexton Decl. ¶ 7 & Ex. 2. During the window for the face-to-face meeting (January through March 2012), PNC's Loan Activity Archive reflects at least twenty attempts to reach Plaintiff by phone. Id.

         Plaintiff meets PNC's proffer that a letter was sent certified by USPS advising Plaintiff of the face-to-face meeting with his sworn denial that he received the letter or that he was ever told of his right to have a face-to-face meeting. Dan-Harry Aff. ¶¶ 8, 10-11. He also relies on the declaration of his attorney, to which is appended a document represented to be a copy of the “tracking search results” that appeared when the USPS tracking number on the face-to-face meeting letter was entered by an unknown person[5] on an undisclosed date into a USPS website portal; this document states “Label Created, not yet in system.” Dion Decl. ¶ 3 & Ex. 1. The Dion declaration does not describe USPS procedures with respect to tracking of an item mailed over six years ago or what this “tracking search result” might mean. PNC's attorney counters the declaration of Plaintiff's attorney with his own representation that accessing the same USPS website portal to view the “FAQ” that are referenced on the face of the USPS document relied on by Plaintiff establishes that “letters can only be currently tracked with the program for 120 days.” ECF ...

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