DAVIS et al v. DEUTSCHE BANK NATIONAL TRUST COMPANY et al

Filing 13

MEMORANDUM. SIGNED BY MAGISTRATE JUDGE HENRY S. PERKIN ON 9/19/17. 9/19/17 ENTERED AND COPIES E-MAILED.(er, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
____________________________________
:
DENISE M. DAVIS and
:
R. CRAIG DAVIS,
:
Plaintiffs,
:
:
v.
:
:
DEUTSCHE BANK NATIONAL TRUST :
COMPANY AS TRUSTEE,
:
HOMEWARD RESIDENTIAL, INC., and :
OCWEN LOAN SERVICING, LLC,
:
Defendants. :
____________________________________:

CIVIL ACTION
NO. 16-5382

MEMORANDUM
Henry S. Perkin, M.J.

September 19, 2017

This matter is before the Court on the Defendants’ Motion to Dismiss the entirety
of Plaintiffs’ Complaint pursuant to Fed. R. Civ. P. 12(b)(6). The Motion was filed on November
17, 2016, Plaintiffs’ Memorandum of Law in Opposition to Defendants’ Motion was filed on
December 1, 2016 and Defendants’ Reply Brief was filed on December 8, 2016. This Court has
subject matter jurisdiction pursuant to 28 U.S.C. § 1331. This case was originally assigned to the
docket of the Honorable Joseph F. Leeson. The parties consented to trial before the undersigned
pursuant to 28 U.S.C. § 636 and Judge Leeson approved the consent and ordered the case
transferred on January 4, 2017. See Dkt. No. 12. Having reviewed and considered the
contentions of the parties, the Court is prepared to rule on this matter.
I.

PROCEDURAL HISTORY.
Plaintiffs R. Craig Davis and Denise Davis (“Plaintiffs”) initiated this matter on

September 16, 2016 against Defendants Deutsche Bank National Trust (“Deutsche Bank”),

Homeward Residential, Inc. (“Homeward”), and Ocwen Loan Servicing, LLC (“Ocwen”)
(collectively, (“Defendants”) in the Court of Common Pleas of Lancaster County.1 On October
13, 2016, Defendants filed a Notice of Removal to this Court. In Counts I and III of the
Complaint, Plaintiffs allege claims for breach of contract against Deutsche Bank and Homeward.
In Counts II and IV of the Complaint, Plaintiffs allege claims for breach of contract against
Deutsche Bank and Ocwen. In Count V of the Complaint, Plaintiffs’ claim is against Ocwen and
Deutsche Bank for violations of the Real Estate Settlement Procedures Act. See 12 U.S.C. §
2605(e).
II.

FACTUAL BACKGROUND.
Taking the averments in the Complaint in the light most favorable to the Plaintiffs

as the non-moving party, the pertinent facts to this Court’s determination are as follows:
On January 6, 2006, Plaintiffs obtained a loan from American Home Bank in the

1

The state court complaint which was removed to this Court contains the following introductory

paragraphs:
This case is filed to present critical and necessary issues which should be before the Court
for the fair and balanced adjudication of the foreclosure matter currently pending entitled Deutsche
Bank Nation Trust as Trustee v. Davis, Lancaster County CCP #15-05856. The issues contained
herein are issues which were objected to in the above reference matter and ruled not allowed to be
presented in the foreclosure case to the narrow scope of an in rem foreclosure proceeding.
Plaintiff herein will move to consolidate this matter pursuant to Pennsylvania Rule of Civil
Procedure 213 with the foreclosure case as it presents common legal issues and defenses and arises
from the transaction with Defendants.
In this case, Plaintiffs claims against Defendants are several. First, Plaintiff’s goal is to
obtain a remedy for Defendant’s breach of contract. Through Defendant’s breach of contract in
the deficient servicing of Plaintiff’s home mortgage loan namely the failure to properly calculate
and demand required escrow Defendants manufactured a “default” on the mortgage which is the
subject of the proposed companion mortgage foreclosure case. Second, Plaintiff requests damages
for the failure of Ocwen’s to respond notices of error and correct errors, namely the escrow
account and collecting escrow in excess of the amount detailed in the Real Estate Settlement
Procedures Act. (RESPA”)
Dkt. No., pp. 1-2.

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amount of $260,000. Compl., ¶ 21. Plaintiffs granted American Home Bank a mortgage as
security for repayment of the loan on their home located at 5 Thicket Lane, Lancaster, PA
17602.2 Id., ¶ 22. American Home Bank assigned the mortgage to Option One Mortgage
Corporation in 2006 which then assigned it to Deutsche Bank in 2015. Compl., Ex. A., p. 1. The
mortgage agreement provides that the lender may hire or appoint a loan servicer to collect loan
payments and administer the loan. Compl., ¶ 21. The mortgage is a federally qualified loan as
defined by the Real Estate Settlement Procedures Act (“RESPA”). Id., ¶ 23. Payments under the
loan were $1,858.18, and it is not apparent that an escrow account for payment of taxes and
insurance was established when the property was conveyed. Id., ¶¶ 24, 41.
The mortgage states that the “[b]orrower shall pay taxes, assessments, charges,
and fines and impositions attributable to the property which may attain priority over this security
Instrument.” Defs.’ Mot., Ex. 1, p. 3 § 4. In and around 2011, the Plaintiffs fell behind in
payment of the property taxes. Compl., ¶ 25. In July 2012, Plaintiffs paid delinquent taxes in the

2

Although the Plaintiffs do not state how Deutsche Bank became mortgagee of Plaintiffs’ mortgage
which was originally granted to American Home Bank, the Court notes that Exhibit A attached to the state court
complaint which was removed to this Court is a copy of the docket entries from the Lancaster County Prothonotary
for the case of Deutsche Bank National Trust Company v. Denise M. Davis, et al., Case No. CI-15-05856. The first
entry dated July 8, 2015, states the following:
Complaint in mortgage foreclosure filed by Sherri J. Braunstein, Esq. of Udren Law Offices, P.C.
Mortgage was executed to American Home Bank, N.A., a Pennsylvania corporation. Mortgage
was assigned to Option One Mortgage Corporation, a California corporation in Mortgage
Instrument No. 5609293 on 02/07/2006. Mortgage was assigned to Deutsche Bank National
Trust Company, as Trustee for Soundview Home Loan Trust 2006-OPT2, Asset-Backed
Certificates, Series 2006-OPT2 in Mortgage Instrument No. 6198166 on 03/31/2015.
Mortgage was recorded in Recorder of Deeds Office in Mortgage Instrument No. 5496043.
For property located at 5 Thicket Lane, Lancaster, PA 17602. Mortgage was executed on
02/02/2006.
Dkt. No. 1, Ex. A., p. 1 (emphasis added). Based on this information and for the purposes of this Motion, the Court
assumes that both the mortgage and note were assigned to Deutsche Bank, which is now the mortgagee of the subject
property.

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amount of $5,599.54. Id., ¶ 26. Homeward, the loan servicer at the time, also paid the delinquent
taxes. Id., ¶ 28. Plaintiffs notified Homeward that the taxes were paid and Homeward received a
refund for the duplicate tax payment from the taxing authority. Id., ¶¶ 29, 30. Homeward then
began an escrow analysis. Id., ¶ 31. Shortly after the tax refund payment to Homeward,
Defendant Ocwen became the Plaintiffs’ mortgage loan servicer, replacing Homeward. Id., ¶ 36.
As the new mortgage servicer, Ocwen required a tax escrow. Id., ¶ 40. Prior to
this time, Plaintiffs did not escrow their taxes. Id., ¶ 41. Ocwen demanded a new monthly
payment of $2,424.71, which is $566.53 more than the Plaintiffs’ monthly payment when
Homeward serviced the mortgage. Id., ¶¶ 46, 47. Plaintiffs continued to make monthly
payments of $1,858.18 despite Ocwen’s demand for a new monthly payment of $2,424.71. Id.,
¶¶ 46, 60. Upon notification of the change in payment demand, Plaintiffs wrote to Ocwen on
several occasions, requesting that Ocwen review its escrow analysis, which Plaintiffs perceived
to be erroneous and double the required amount of taxes. Id., ¶¶ 44, 48. The Plaintiffs wrote to
Ocwen on July 21 and August 21, 2013, and Plaintiffs’ counsel wrote to Ocwen on August 14,
2014, placing Ocwen on notice of an error regarding the escrow account. Id., ¶¶ 49, 54. Over
two weeks after Ocwen received the August 14, 2014 correspondence from the Plaintiffs’
counsel, Ocwen responded by sending Plaintiffs’ counsel an escrow statement. Id., ¶¶ 55, 56. On
August 28, 2014, Plaintiffs’ counsel again wrote to Ocwen, placing Ocwen on notice of an error
concerning the escrow account. Id., ¶ 57. Ocwen did not respond to that letter. Id., ¶ 58. Ocwen
then sued the Plaintiffs in foreclosure on July 8, 2015 in the Court of Common Pleas of Lancaster
County. Compl., ¶ 61; Ex. A., p. 1.

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III.

STANDARD OF REVIEW.
On a motion to dismiss for failure to state a claim, courts accept all factual

allegations as true, construe the complaint in the light most favorable to the plaintiff, and
determine whether, under any reasonable reading of the complaint the plaintiff may be entitled to
relief. Phillips v. County of Allegheny, 515 F.3d 224 (3d Cir. 2008). “While a complaint attacked
by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff’s
obligation to provide grounds for his entitlement to relief requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell
Atlantic Corp. v. Twombly, 550 U.S. 554 (2007)(citation omitted).
In order to survive a motion to dismiss, a complaint “must contain sufficient
factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v.
Iqbal, 556 U.S. 662 (2009). A claim has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged. Id. at 668. “Only a complaint that states a plausible claim for relief survives
a motion to dismiss.” Id. at 679. When facing a motion to dismiss for failure to state a claim,
district courts are directed to conduct a three-part analysis. Connelly v. Lance Constr. Corp., 809
F.2d 780, 787 (3d Cir. Jan. 11, 2016). First, it must “tak[e] note of the elements [the] plaintiff
must plead to state a claim.” Iqbal, 556 U.S. at 675. Second, it should identify allegations that,
“because they are no more than conclusions, are not entitled to the assumption of truth.” Id. at
679. See also Burtch v. Milberg Factors, Inc., 662 F.3d 212, 224 (3d Cir. 2011) (“Mere
restatements of the elements of a claim are not entitled to the assumption of truth.” (Citation and
editorial marks omitted)). Finally, “[When] there are well-pleaded factual allegations, [the] court
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should assume their veracity and then determine whether they plausibly give rise to an
entitlement to relief.” Iqbal, 566 U.S. at 679.
IV.

DISCUSSION.3
A.

Breach of Contract - Homeward and Deutsche Bank (Counts I and III)
In Count I of the Complaint, Plaintiffs claim that the mortgagee, Deutsche Bank,

and the first mortgage loan servicer, Homeward, breached the mortgage contract under
Pennsylvania law. In Count III of the Complaint, Plaintiffs allege the following:
74. The mortgage contract between Plaintiff and Deutsche contains limitations on
the amount of funds that can be requested to be held in escrow. Exhibit I
75. Lender and their servicer may not request funds in excess of the amount
permitted under the Real Estate Settlement Procedures Act. 12 USC 2609(a)
76. This limitation is no more than the amount of yearly taxes, insurance, flood
insurance and other detailed charges. Exhibit I
77. Deutsche, through Homeward, demanded escrow in excess of the amounts as
allowed by the contract, namely an amount in excess of the property taxes.
78. This demand increased the monthly payment and breached the contract.

3

“In deciding a Rule 12(b)(6) motion, a court must consider only the complaint, exhibits attached to
the complaint, matters of public record, as well as undisputedly authentic documents if the complainant’s claims are
based upon these documents.” Davis v. Wells Fargo, 824 F.3d 333, 341 (3d Cir. 2016)(quoting Mayer v. Belichick,
605 F.3d 223, 230 (3d Cir. 2010)). Plaintiffs attach to the Complaint the second page of the mortgage contract at
Exhibit I. The Defendants, on the other hand, attach the entire mortgage contract to their Motion to Dismiss and
argue that this Court may consider the entire mortgage agreement without converting the instant motion into one for
summary judgment. See Br. In Supp. Mot. to Dismiss, p. 2 n.1 and Ex. 1.
Because the Plaintiffs have undisputed actual notice of all the information in the Defendants’
motion and the Plaintiffs have relied upon this information in framing the Complaint, this Court is able to view the
entire mortgage contract on review of this motion to dismiss. Pension Benefit Guaranty Corp. v. White Consolid.
Indust., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993)(citing Cortec Indus., Inc. v. Sum Holding, L.P., 949 F.2d 42, 48
(2d Cir. 1991), cert denied, 503 U.S. 960 (1992)). See also Jacobs v. Halper, 116 F.Supp.3d 469, 473 n.1 (E.D. Pa.
2015)(quoting In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997)(entire catalogue
attached as exhibit to motion to dismiss considered where same catalogue was attached in part as exhibits to
amended complaint and relied upon by plaintiff).

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79. As a direct and proximate cause of the actions of Homeward as agent for
Deutsche Bank, Deutsche breached their contract.
80. As a direct and proximate result of the actions of the Defendants Deutsche and
Homeward Plaintiff has been damaged.
81. This illegal demand has created a false “default” resulting in a wrongful
foreclosure.
Compl., pp. 9-10 ¶¶ 74-81. In order to bring a claim for breach of contract under Pennsylvania
law, the plaintiff must plead the existence of a contract, a breach of that contract, and damages as
the result of that breach. Zokaites Contr., Inc. v. Trant Corp., 968 A.2d 1282, 1287 (Pa. Super.
2009). In this case, neither Plaintiffs nor Defendants dispute that a contract existed, but
Defendants claim that they did not breach the mortgage and Plaintiffs did not suffer any
damages. Defendants correctly contend that the mortgage permits the mortgagee to require an
escrow for taxes and reasonable estimates of future expenditures. The Defendants also contend
that the law requires an escrow analysis to be completed before an escrow account is established
and Homeward followed this requirement.
In response, Plaintiffs contend that Homeward’s alleged failure to properly service
the loan resulted in damages to them. The Defendants state that it appears that the Plaintiffs’
claim for breach of contract against Deutsche Bank and Homeward may be based on
Homeward’s completion of an escrow analysis prior to the loan servicing transfer to Ocwen. The
Plaintiffs neither counter this contention nor clarify how Homeward failed to properly service the
mortgage.
A plain reading of the mortgage contract permits the loan servicer to create an
escrow account. The mortgage contract states, in pertinent part, that:

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[l]ender may, at any time, collect and hold funds in an amount not to exceed the
maximum amount a lender for a federally related mortgage loan may require for
borrowers escrow account . . . Lender may estimate the amount of Funds due on the
basis of current data and reasonable estimates of expenditures of future Escrow Items
or otherwise in accordance with applicable law.
Defs.’ Mot. to Dismiss, Ex. 1 at § 2. This language allows a loan servicer to create an escrow
account and collect funds for that escrow account. Homeward must complete an escrow account
analysis under federal law because the “servicer must conduct an escrow account analysis to
determine the amount the borrower must deposit into the escrow account.” 12 C.F.R. §
1024.17(c)(ii)(2). Since the mortgage allows the loan servicer to create an escrow account and
by law an escrow account analysis must be conducted before an account is established,
Homeward did not breach the contract when it performed an escrow account analysis.
Defendants argue that Count III should be dismissed because the Complaint is
devoid of facts suggesting that Homeward demanded an improper amount of escrow. The
sequence of events as stated in the Complaint indicates that this alleged improper escrow demand
occurred after the servicing rights were transferred from Homeward to Ocwen. Compl., ¶¶ 3647. The applicable facts in the Complaint as applied to Homeward are:
31. [Homeward], on behalf of Deutsche, in violation of the contract began an
escrow analysis,
32. [Homeward] was placed on notice of an escrow problem but failed to address
and correct this problem.
33. Deutsche, through the actions of their agent [Homeward], breached their
contract to Plaintiff by failing to properly service the loan contract.
34. Defendant continued to pay their mortgage payment, including principal and
interest.
35. Subsequently, [Plaintiffs’] mortgage payments were rejected by [Homeward],
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which then created the default upon which this mortgage foreclosure action is
based.
Compl., pp. 5-6, ¶¶ 31-35. Plaintiffs fail to allege a problem with the escrow as to Homeward,
how Homeward was notified of a problem or how Homeward failed to correct the alleged escrow
problem. Taking all of the Plaintiffs’ allegations in Counts I and III of the Complaint as true and
in a light most favorable to them, Plaintiffs fail to state a claim upon which relief can be granted
for breach of contract as to Homeward and Deutsche Bank. According to the Third Circuit, “if a
complaint is subject to a Rule 12(b)(6) dismissal, a district court must permit a curative
amendment unless such an amendment would be inequitable or futile.” Jones v. ABN AMRO
Mortg. Grp., Inc., 551 F. Supp.2d 400, 411 (E.D. Pa. 2008), aff’d, 606 F.3d 119 (3d Cir.
2010)(quoting Phillips v. County of Allegheny, 515 F.3d 224, 245 (3d Cir. 2008) (citing Alston
v. Parker, 363 F.3d 229, 235 (3d Cir. 2004))). Accordingly, the Motion to Dismiss Counts I and
III is granted with an opportunity for Plaintiffs to amend their Complaint.
B.

Breach of Contract Against Deutsche Bank and Ocwen (Counts II and IV)
Counts II and IV of Plaintiffs’ Complaint allege breach of contract against the

second mortgage servicer, Ocwen, and Deutsche Bank, the Note Holder. Count II contains the
allegation that “Ocwen, on behalf of Deutsche, failed to properly service the mortgage loan.”
Compl., p. 9 ¶ 69. In Count IV of the Complaint, Plaintiffs allege the following:
83. The mortgage contract between Plaintiff and Deutsche contains limitations on
the amount of funds that can be requested to be held in escrow. Exhibit I
84. Lender and their servicer may not request funds in excess of the amount
permitted under the Real Estate Settlement Procedures Act. 12 USC 2609(a)
85. This limitation is no more than the amount of yearly taxes, insurance, flood
insurance and other detailed charges. Exhibit I
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86. Deutsche, through Ocwen, demanded escrow in excess of the amounts as
allowed by the contract, namely an amount in excess of the property taxes.
87. This demand increased the monthly payment and breached the contract.
88. As a direct and proximate cause of the actions of Ocwen as agent for Deutsche
Bank, Deutsche breached their contract.
89. As a direct and proximate result of the actions of the Defendants, Deutsche
and Ocwen, Plaintiff has been damaged.
90. This illegal demand has created a false “default” resulting in a wrongful
foreclosure.
Compl., pp. 10-11 ¶¶ 83-90. Defendants move to dismiss the claims in Count II as vague and
duplicative of the claims in Count IV and move to dismiss the claims in Count IV as meritless.
The Defendants allege that the mortgage does not impose any hard cap on the
amount that may be escrowed and allows the mortgagee to estimate funds based on current data
and reasonable estimates. They cite federal regulations that allow for the “life of the escrow
account the servicer may charge the borrower a monthly sum equal to one-twelfth of the total
(1/12) of the total annual escrow payments which the servicer reasonably anticipates paying from
the account.” 12 C.F.R. § 1024.17(c)(ii). The mortgagee can also require a “cushion no greater
than one-sixth (1/6) of the estimated total annual payments.” Id.
While it is true that under 12 C.F.R. §1024.17(c)(ii) the mortgage servicer is
allowed to charge more on an escrow account as a cushion, a question remains whether the
amount charged in this case was excessive. The Plaintiffs contend that the escrow amount
charged by Ocwen was excessive because they contend that it was more than allowed by the
mortgage contract, namely an excess of the property taxes. Compl., ¶ 86. Neither the Plaintiffs
nor Defendants state the actual amount of taxes levied on the Plaintiffs’ property. Plaintiffs paid
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$1,858.18 monthly and then were charged an additional $566.53 monthly. The annual property
tax amount is critical to determining if the additional $566.53 monthly escrow amount is
excessive and breaches the mortgage contract.
Plaintiffs attach to the Complaint a 2012 school tax bill for $5292.96.4 Compl.,
Exs. C, D. In performing the escrow account analysis, the mortgage servicer could reasonably
anticipate charging Plaintiffs in 2012 on a monthly basis the equivalent of one-twelfth of
$5292.96, or $441.08. See 12 C.F.R. § 1024.17(c)(ii). In addition, the mortgage servicer would
be permitted to charge Plaintiffs a maximum of one-sixth of $5292.96, or $882.16. Id. These
figures do not include escrow of annual municipal and county taxes. Plaintiffs were charged an
additional $566.63 per month for escrow by Ocwen. Because this amount is within the minimum
amount of $441.08 and the maximum amount of $882.16 of possible escrow just for school taxes
in calendar year 2012, the billed escrow amount of $566.63 does not appear in excess of the
amounts allowed by the mortgage which the mortgage servicer could reasonably escrow.5 Thus,
Defendants’ Motion to Dismiss must be granted as to Count IV of the Complaint and leave to
amend will not be granted because it appears that the billed escrow amount charged Plaintiffs by
Ocwen, as stated in the Complaint, was a permissible amount, even without consideration of the
municipal and county taxes.6
With respect to Count II of the Complaint, Defendants contend that this Count is

4

This bill indicates that Homeward was the mortgage servicer in 2012. See Compl., Ex. C.

5

The Court cannot discern from the Complaint, the Motion to Dismiss or any other briefing whether
the escrow charged was for school taxes or also for county and municipal taxes.
6

Plaintiffs allege that the escrow amount was twice the allowable escrow amount. According to the
information provided with respect to only school taxes, this escrow amount would likely be substantially less than an
overall amount of the total property taxes, i.e. school, municipal and county taxes, assessed on Plaintiffs’ property.

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duplicative of Plaintiffs’ allegations in Count IV and it is vague and does not actually state in
what way Ocwen or Deutsche Bank actually breached the contract. Mot. to Dismiss at 5. In
Count II, Plaintiffs allege that, “Ocwen, on behalf of Deutsche, failed to properly service the
loan.” Compl., ¶ 69. The Plaintiffs in their Response to the Defendants’ Motion do not counter
the argument that Count II is duplicative of Count IV, they merely restate that they believe the
contract was breached and that damages resulted. The Response cites only paragraphs in the
Complaint stating the mortgage was not properly serviced and as a result, a breach of contract
existed. Compl., ¶¶ 69-70.
In Brown & Brown, Inc. v. Cola, 745 F. Supp. 2d 588, 626 (E.D. Pa. 2010), the
concept that the court has the authority to dismiss duplicative counts in a complaint was
recognized. The Brown complaint contained two counts alleging unfair competition, one citing
state unfair competition law and the other setting forth a barebones allegation of unfair
competition. Id. at 626. The Court held that one claim was dismissed in its entirety since the two
claims were substantially identical and one count was duplicative of the other. Id. at 626-627. In
the present case, Count II is a barebones allegation of breach of contract while Count IV gives a
more substantive allegation of breach of contract. As set forth above, Count IV will be dismissed
without leave to amend the Complaint as to this claim. With respect to Count II, however, if
Plaintiffs are able to sufficiently plead additional facts to support a general claim for breach of
contract, the Defendants’ Motion to Dismiss with regard to this claim will be
granted with an opportunity for Plaintiffs to amend the Complaint as to Count II.

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C.

Violation of the Real Estate Settlement Procedures Act Against Ocwen
(Count V)
In Count V of the Complaint, the Plaintiffs allege that Ocwen violated 12 U.S.C.

§ 2605(e) of the Real Estate Settlement and Procedures Act (“RESPA”) by failing to respond to
their qualified written requests for information, causing Plaintiffs to suffer damages. Defendants
move to dismiss these claims on the basis that the Plaintiffs do not adequately plead a causal link
between any alleged violation of RESPA and Plaintiffs’ damages. The essential pleading
requirements for a RESPA claim are: (1) the submission of a qualified written request by a
borrower to a loan servicer for information relating to the servicing of the loan, (2) a failure by
the loan servicer to timely respond, and (3) damages. Hawk v. Carrington Mortg. Servs., LLC,
2016 U.S. Dist. LEXIS 87532, at *12 (M.D. Pa. June 29, 2016). Each of these elements will be
discussed in turn.
First, the borrower must submit a qualified written request to the loan servicer. A
qualified written request must be a written correspondence, other than notice on a payment
coupon or other payment medium. 12 U.S.C. § 2605(e)(1)(B). The written request must include
the identity, name and account number of the borrower. 12 U.S.C. § 2605(e)(1)(B)(i). The
written request must also include a statement of the reasons why the borrower believes the
account is in error. 12 U.S.C. § 2605(e)(1)(B)(ii). In this case, the Plaintiffs and Plaintiffs’
counsel sent four letters to Ocwen pertaining to a perceived error. In the exhibits attached to the
Complaint, the letters state the Plaintiffs’ name, account number, and a statement of the
perceived error. Compl., Exs. F and H. The Defendants do not challenge that these letters were
qualified written statements. Therefore, it appears that the first requirement for a RESPA claim is

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met.
The second RESPA element is that the loan servicer failed to timely respond to
the written request for information from the borrower. The loan servicer must, within five days
of receipt of a written request for information, send an acknowledgement of receipt of the written
request. 12 U.S.C. § 2605(e)(1)(A). Within thirty days, the loan servicer must conduct an
investigation and send back written notice why it believes the account is correct or that the
account was appropriately corrected. 12 U.S.C. § 2605(e)(2), et seq. In this case, Plaintiffs allege
that Ocwen did not respond to Plaintiffs’ counsel’s written request until almost two weeks after it
was sent. Then, Plaintiffs allege that Ocwen responded only with a letter containing details of the
escrow account, and the response did not include a reason why the escrow account was correct.
Plaintiffs also allege that a subsequent letter from Plaintiffs went unanswered. Compl., Exs. G
and H. Defendants, again, do not contest these allegations. Therefore, it appears that the second
requirement for a RESPA claim has been met.
Finally, there is the issue of damages. RESPA permits individual borrowers to sue
loan servicers for damages in certain specifically defined circumstances, stating that:
(f) Damages and costs
Whoever fails to comply with any provision of this section shall be liable to the
borrower for each such failure in the following amounts:
(1) Individuals
In the case of any action by an individual, an amount equal to the sum of (A) any actual damages to the borrower as a result of the failure;
and
(B) any additional damages, as the court may allow, in the case of a
pattern or practice of noncompliance with the requirements of this
section, in an amount not to exceed $1,000.
12 U.S.C. § 2605(f). In order to claim damages under RESPA, merely alleging damages is not

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enough. Hawk, 2016 U.S. Dist. LEXIS 87532, at *12-13. The Plaintiff must allege that the
breach resulted in actual damages. Jones v. Select Portfolio Servicing, Inc., 2008 U.S. Dist.
LEXIS 33284, at *27 (E.D. Pa. Apr. 22, 2008). See Hutchinson v. Del. Sav. Bank FSB, 410 F.
Supp. 2d 374, 383 (D.N.J. 2006). The plaintiff must also establish a causal link between the
alleged violations and the alleged damages. Jones, 2008 U.S. Dist. LEXIS 33284, at *28.
Likewise, the borrower has the responsibility to present specific evidence to establish a causal
link between the financing institution’s violation and the borrower’s injuries. Straker v. Deutsche
Bank Nat’l Trust, 2012 U.S. Dist. LEXIS 187379, at *31 (M.D. Pa. Apr. 26, 2012).
For statutory damages for non-compliance of RESPA, the plaintiff must establish
a pattern of practice or practice of non-compliance of § 2605. Gorbaty v. Wells Fargo Bank,
N.A., 2012 U.S. Dist. LEXIS 55284, at *19 (E.D.N.Y. 2012). That is, the plaintiff must show
that the alleged violations were the standard or routine way of operating for the allegedly noncompliant loan servicer. McLean v. GMAC Mortg. Corp., 595 F. Supp. 2d 1360, 1365 (S.D. Fla.
2009). Regarding their claim for statutory damages under RESPA, the Plaintiffs contend that
Ocwen’s actions are in “non-compliance with the RESPA” and these actions are “systemic and
indicate[] a pattern of noncompliance.” Compl., ¶ 103. No specific facts in the Complaint
support Plaintiffs’ contention that Ocwen engaged in a pattern or practice of violating RESPA.
Importantly, the Complaint contains no allegations that Ocwen violated RESPA as to any other
unnamed party. The Plaintiffs only offer their four letters to Ocwen in support of their statutory
damages claim and only provide evidence that Ocwen did not respond to two of the four letters.
This is insufficient to prove a pattern or practice of violations of RESPA on Ocwen’s part. See
Gorbaty, 2012 U.S. Dist. LEXIS 55284, at *19 (mere failure to respond to two letters is not
15

sufficient to establish a pattern or practice). Thus, Plaintiffs’ claim for statutory damages
pursuant to alleged RESPA violations must be dismissed. See 12 U.S.C. § 2605(f)(1)(B).
With respect to actual damages, Plaintiffs allege that they suffered “actual
damages including but not limited to anxiety, worry, distress, . . . and enhanced damages.”
Compl., ¶ 104. The Defendants argue that the Plaintiffs cannot show actual damages due to their
failure to establish a causal link between the alleged RESPA violations and any actual damages.
Plaintiffs claim that the causal link is shown from paragraphs 92 through 101 of the Complaint.
Those paragraphs, however, contain only averments that the Plaintiffs sent Ocwen qualified
written requests for information. “Actual damages encompass compensation for any pecuniary
loss including such things as time spent away from employment while preparing correspondence
to the loan servicer, and expenses for preparing, photocopying and obtaining certified copies of
correspondence.” Wilson v. Bank of Am., N.A., 48 F. Supp. 3d 787, 799 (E.D. Pa.
2014)(quoting Cortez v. Keystone Bank, Inc., No. Civ.A. 98–2457, 2000 WL 536666, at *12
(E.D. Pa. May 2, 2000)).
The Defendants contend that there is no connection between the Plaintiffs’
allegations of RESPA violations by Ocwen and actual damages that Plaintiffs may have suffered
therefore the claim for violations of RESPA should be dismissed as a matter of law, citing Hawk
v. Carrington Mortg. Servs., LLC, Civ. A. No. 3:14-1044, 2016 WL 4414844, *12 (M.D. Pa.
June 23, 2016), for the statement that “[w]hen a plaintiff fails to plead or prove a direct causal
connection between the RESPA violation and some specific and identifiable damages, the loan
servicer is entitled to judgment as a matter of law.” The procedural posture of the Hawk case and
the court’s statement was at the summary judgment stage. At this earlier stage in the instant
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litigation, the Motion will be granted but the Plaintiffs may amend their Complaint as to this
claim, setting forth a more specific damages claim providing a causal connection between
Ocwen’s actions and Plaintiffs’ damages.
V.

CONCLUSION.
For the reasons set forth above, Defendants’ Motion to Dismiss will be granted.

With respect to the claims in Counts I, II, III and V, Plaintiffs are given leave to amend the
Complaint within fourteen (14) days of this date. With respect to the claims in Count IV, the
Motion is granted and no leave shall be granted to amend.
An appropriate Order follows.

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