WULF v. BANK OF AMERICA, N.A. et al

Filing 44

ORDER THAT UPON CONSIDERATION OF DEFENDANTS' MOTION TO DISMISS (DOC. NO. 13), THE PLAINTIFF'S MEMORANDUM IN OPPOSITION, DEFENDANTS' REPLY THERETO, THE REPORT AND RECOMMENDATION OF MAGISTRATE JUDGE ELIZABETH T. HEY (DOC. NO. 29), THE DE FENDANTS' OBJECTIONS THERETO, AND PLAINTIFF'S RESPONSE TO THE DEFENDANTS' OBJECTIONS, AND AFTER ORAL ARGUMENT HELD ON 5/26/2011, IT IS HEREBY ORDERED THAT THE REPORT AND RECOMMENDATION IS APPROVED AND ADOPTED AS FOLLOW AS OUTLINED HEREIN. SIGNED BY HONORABLE MARY A. MCLAUGHLIN ON 6/27/2011. 6/28/2011 ENTERED AND COPIES E-MAILED. (ems)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
RICHARD M. WULF, JR.
v.
BANK OF AMERICA, N.A.,
et al.

:
:
:
:
:
:

CIVIL ACTION

NO. 10-5176

ORDER
AND NOW, this 27th day of June, 2011, upon
consideration of Defendants’ Motion to Dismiss (Docket No. 13),
the plaintiff’s memorandum in opposition, defendants’ reply
thereto, the Report and Recommendation of Magistrate Judge
Elizabeth T. Hey (Docket No. 29), the defendants’ objections
thereto, and plaintiff’s response to the defendants’ objections,
and after oral argument held on May 26, 2011, IT IS HEREBY
ORDERED that the Report and Recommendation is APPROVED and
ADOPTED as follows.
The defendants’ motion to dismiss is granted in part
and denied in part.

To the extent defendants seek dismissal of a

separate claim for breach of the covenant of good faith and fair
dealing (fourth claim for relief), the motion is granted.
However, rather than requiring amendment, the allegations in that
count are incorporated into the breach of contract count.
To the extent the defendants seek dismissal of the
plaintiff’s claims for violation of Pennsylvania’s Unfair Trade
Practice and Consumer Protection Law (“UTPCPL”) and fraud (second

and third claims of relief), the motion is granted and these
claims are dismissed because they are barred by the economic loss
doctrine.
The motion is denied with respect to the breach of
contract and TILA claims.

As the Court reads the language of the

mortgage agreement, the Court cannot say that the plaintiff
cannot recover on the breach of contract claim.

The title of the

section is “Fire, Flood and Other Hazard Insurance.”

The section

then goes on to discuss hazards, casualties and contingencies
including fire.

Arguably, this is separate from flood insurance

that is discussed in the sentence starting “[b]orrower shall also
insure all improvements on the Property, whether now in existence
or subsequently erected, against loss by floods to the extent
required by the Secretary.”
What is required by the Secretary is insurance “in an
amount at least equal to either the outstanding balance of the
mortgage, less estimated land costs, or the maximum amount of the
NFIP insurance available with respect to the property
improvements, whichever is less.”

The Court agrees with the

defendants that the outstanding principle balance of the loan is
the minimum, not maximum under the HUD regulations.

However, one

could interpret to the extent “required” by the Secretary to
refer to the minimum, which would be the outstanding balance of
the loan.

2

The Court was informed at oral argument that the
language at issue is from an FHA form that is required for all
FHA loans.

The Court was also told that FEMA recommends that

lenders require full replacement value when lending in a flood
plain area.

It does seem incongruous that a lender would not be

able to following FEMA’s recommendation in connection with an FHA
loan.

However, none of this was briefed by the parties and the

Court is reluctant to make any conclusive decision on this point.
Although the Court is skeptical of a TILA claim even if
there is a breach of contract claim, the Court will not dismiss
the TILA claim at this point.
The parties are hereby ordered to send a letter to the
Court on or before July 8, 2011, explaining to the Court how the
parties would like to proceed with the litigation at this point.
Do the parties want to move to the class certification stage or
do they want to submit cross-motions for summary judgment on the
breach of contract claim?

BY THE COURT:

/s/ Mary A. McLaughlin
MARY A. McLAUGHLIN, J.

3