Glover ex rel. Former v. Udren Law Offices, P.C.

92 A.3d 24

2014 PA Super 82

Mary E. GLOVER, Individually and on Behalf of Other Similarly Situated Former and Current Homeowners in Pennsylvania, Appellant

v.UDREN LAW OFFICES, P.C., A New Jersey Debt Collector, Appellee.

Edella Johnson (a/k/a Edella Robinson, a/k/a Edella Robinson Johnson), Eric Johnson, Individually and on Behalf of Other Similarly Situated Former and Current Homeowners in Pennsylvania, Appellants

v.Phelan Hallinan & Schmieg, LLP, Appellee.

Superior Court of Pennsylvania.

Argued Jan. 10, 2013.

Filed April 23, 2014.

Reargument Denied June 23, 2014.

Michael P. Malakoff, Pittsburgh, for appellants.

Jonathan J. Bart, Philadelphia, for appellees.

BEFORE: DONOHUE ^*, SHOGAN and WECHT, JJ.

OPINION BY DONOHUE, J.:

In these appeals, Mary E. Glover, individually and on behalf of a similarly situated class (“Glover”), and Ed Ella and Eric Johnson, individually and on behalf of a similarly situated class (“the Johnsons”), appeal from the orders of court sustaining preliminary objections filed by Udren Law Offices, P.C. (“Udren”) and Phelan Hallinan & Schmieg, LLP (“Phelan”) and dismissing the appellants' complaints with prejudice. We affirm.

At the outset, we explain our decision to address these appeals together. The claims raised by Glover and Johnson are based on similar facts, raise claims alleging the same violations of the same laws, and name the law firm that acted as foreclosure counsel for their mortgagee as defendants. Furthermore, and more to the point, the Johnsons agreed in the trial court that this Court's resolution of the issues raised in Glover's case would control the outcome of their case. See Trial Court Order, 7/ 16/ 12 (sustaining Phelan's preliminary objections, dismissing the Johnsons'complaint and stating that “parties agree that Glover v. Udren [ ] governs this litigation.”); Trial Court Order, 9/4/12 (“[B]oth parties agree that this case is governed by my [m]emorandum and [o]rder dated June 13, 2012 entered in Glover v. [ Udren ] ... The Glover ruling is on appeal.”). For these reasons, we have elected to address these appeal together and we address only the claims raised by Glover. ¹

We begin with a summary of the relevant factual history, as set forth by the trial court:

On August 2, 2002, [Glover] entered into a mortgage transaction with Washington Mutual Bank (‘WaMu’). On August 18, 2005, [Glover's] mortgage was in default and she was told she owed $551.08. On December 1, 2005, [Glover] and WaMu entered into a forbearance agreement. The agreement stated that on ‘April 1, 2006, we will reevaluate your application for assistance. If you do not have evidence of full time employment at that time, we will have to deny your application[.]’ On March 14, 2006, WaMu denied a loan workout.

On April 10, 2006[,] [Udren], as counsel for WaMu filed a Complaint in Mortgage Foreclosure. The foreclosure complaint in paragraph [six] asked for ‘Court Costs (anticipated, excluding Sheriff's Sale costs)’ of $280.00 and ‘Attorneys Fees (anticipated and actual to 5% of principal)’ in the amount of $1,250.00.

On June 7, 2006, WaMu ‘flip-flopped’ and offered [Glover] a Loan Modification Agreement under which, beginning August 1, 2006, [Glover] would begin to again make payments but in an increased amount. [According to the allegations pled in Glover's complaint, in the June 7, 2006 letter, WaMu added $2,237.73 to Glover's principal balance and charged her $806.45 for delinquent interest and $1,431.19 for ‘escrow advance/set up.’ WaMu also indicated that Glover owed $3,696 for ‘foreclosure fees and costs, and demanded payment of the foreclosure fees and costs. Glover did not remit this amount, but began making payments to WaMu.]

The loan was transferred to Wells Fargo on December 1, 2006. On January 4, 2008, [Glover] and Wells Fargo entered into a loan modification/restructure and ‘it was mutually agreed that a contribution of $1,492.39 would be required, which will be applied toward the delinquency.’

This Loan Modification Agreement states that the unpaid principal balance as of February 4, 2008 is $9,508.36 and the modified principal balance is $12,152.02.... [Glover] made payments in accordance with the loan modification agreement.

Trial Court Opinion, 6/13/12, at 1–3 (citation to Glover's complaint omitted).

On June 9, 2008, Glover commenced this action in state court against WaMu, Wells Fargo, and Udren. She alleged violations of the Loan Interest and Protection Act (“Act 6”),²41 P.S. § 101 et seq.; the UniformTrade Practices and Consumer Protection Law (“UTPCPL”), 73 P.S. § 201–1, et seq.; the Fair Credit Extension Uniformity Act (“FCEUA”), 73 P.S. § 2270.1, et seq.; and the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692, et seq. The case was removed to the Western District of Pennsylvania, where the parties agreed to the dismissal of Glover's claims under Act 6 and the UTPCPL without prejudice to her right to pursue them in state court.

On August 31, 2011, Glover raised these statutory claims in a complaint filed in the Court of Common Pleas of Allegheny County. Specifically, Counts I–IV of the complaint alleged violation of section 406 of Act 6 and Counts V–IX alleged violations of the UTPCPL. See Complaint, 8/31/11, at 17–27. Udren filed preliminary objections in response thereto, demurring as to each count raised in the complaint. Preliminary Objections, 10/21/11, at 3–9. The trial court heard argument on Udren's preliminary objections on February 2, 2012 and on June 13, 2012, it sustained the preliminary objections and dismissed Glover's complaint with prejudice.³

With that background, we turn our attention to the issues raised on appeal: ⁴

1. Did [Glover] (a homeowner) plead viable claims against [Udren] (a debt collector), under Act 6?

2. Did [Glover] plead viable claims against [Udren] under the UTPCPL?

Glover's Brief at 2. Although not explicit in Glover's statement of questions, we are mindful that she is challenging the trial court's ruling on Udren's preliminary objections. When reviewing a challenge to an order sustaining preliminary objections, we recognize that

[t]he impetus of our inquiry is to determine the legal sufficiency of the complaint and whether the pleading would permit recovery if ultimately proven. This Court will reverse the trial court's decision regarding preliminary objections only where there has been an error of law or abuse of discretion. When sustaining the trial court's ruling will result in the denial of claim or a dismissal of suit, preliminary objections will be sustained only where the case i[s] free and clear of doubt.... Thus, the question presented by the demurrer is whether, on the facts averred, the law says with certainty that no recovery is possible. Where a doubt exists as to whether a demurrer should be sustained, this doubt should be resolved in favor of overruling it.

Weiley v. Albert Einstein Med. Ctr., 51 A.3d 202, 208–09 (Pa.Super.2012) (citations omitted).

Glover's initial claim is that the trial court erred as a matter of law in concluding that no cause of action may lie against Udren for a violation of 41 P.S. § 406, infra, which controls attorney's fees under Act 6. Glover's Brief at 8. An issue challenging the interpretation of a statute presents a question of law, for which our standard of review is de novo and our scope of review is plenary. Renna v. Schadt, 64 A.3d 658, 664 (Pa.Super.2013).

Glover argues that Udren, as foreclosure counsel, violated section 406 by collecting certain costs and fees prohibited by that provision.⁵ Glover's Brief at 8–11. The premise of this claim is that Udren, acting in its capacity as the attorney for the mortgagee, violated section 406 by collecting fees in excess of those allowed under Act 6, and therefore, Glover is entitled to treble damages as provided by section 502, infra, which provides remedies for violation of the Act.

We begin with the relevant statutory language. Article IV of Act 6 contains the statute's protective provisions. As noted above, it is undisputed that Glover pled claims alleging violations of only one of these protective provisions, section 406, which provides as follows:

§ 406. Attorney's fees payable

With regard to residential mortgages, no residential mortgage lender shall contract for or receive attorney's fees from a residential mortgage debtor except as follows:

(1) Reasonable fees for services included in actual settlement costs.

(2) Upon commencement of foreclosure or other legal action with respect to a residential mortgage, attorney's fees which are reasonable and actually incurred by the residential mortgage lender may be charged to the residential mortgage debtor.

(3) Prior to commencement of foreclosure or other legal action attorneys' fees which are reasonable and actually incurred not in excess of fifty dollars ($50) provided that no attorneys' fees may be charged for legal expenses incurred prior to or during the thirty-day notice period provided in section 403 of this act.

41 P.S. § 406 (emphasis added). Article V contains the remedies and penalties granted by Act 6, and section 502 provides a remedy for the imposition of excessive rates and fees:

§ 502. Usury and excess charges recoverable

A person who has paid a rate of interest for the loan or use of money at a rate in excess of that provided for by this act or otherwise by law or has paid charges prohibited or in excess of those allowed by this act or otherwise by law may recover triple the amount of such excess interest or charges in a suit at law against the person who has collected such excess interest or charges: Provided, That no action to recover such excess shall be sustained in any court of this Commonwealth unless the same shall have been commenced within four years from and after the time of such payment. Recovery of triple the amount of such excess interest or charges, but not the actual amount of such excess interest or charges, shall be limited to a four-year...