United States District Court, D. Rhode Island
DAWARI DAN-HARRY, on behalf of himself and all others so similarly situated, Plaintiff,
PNC BANK, N.A., Defendant.
REPORT AND RECOMMENDATION
PATRICIA A. SULLIVAN, UNITED STATES MAGISTRATE JUDGE.
putative class action now rests on Plaintiff Dawari
Dan-Harry's only remaining claim - 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”).
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
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.
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.
¶ 5. On December 31, 2008, PNC acquired National City
Bank of Indiana and became the mortgagee. PNC SUF ¶ 3.
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
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.
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. 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.” 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
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 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