Ballenger et al v. National City Mortgage, Inc.

Filing 55

MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT 42 . The Court directs the Clerk to enter a separate judgment order. Signed by District Judge Irene M. Keeley on 8/26/2015. (kd)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA

MONICA F. BALLENGER and
JOHN L. BALLENGER,
Plaintiffs,
v.

CIVIL ACTION NO. 1:14CV81
(Judge Keeley)

NATIONAL CITY MORTGAGE, INC.,
now known as PNC Mortgage, Inc.,
Defendant.

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
Pending before the Court is the motion for summary judgment
(Dkt. No. 42) filed by the defendant, National City Mortgage, Inc.,
n/k/a PNC Mortgage, Inc. (“PNC”). For the reasons that follow, the
Court GRANTS IN PART and DENIES IN PART PNC’s motion for summary
judgment.
BACKGROUND
This case concerns a PNC mortgage loan obtained by the
plaintiffs, Monica and John Ballenger (“the Ballengers”), and
subsequent loan servicing by PNC.

The questions presented on

summary judgment include:
1)

Whether PNC breached the contract by force-placing flood
insurance;

2)

Whether PNC breached the contract by assessing improper
or excessive insurance charges;

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
3)

Whether

PNC

breached

the

contract

by

attempting

foreclosure after the Ballengers’ default;
4)

Whether PNC breached its implied duty of good faith and
fair dealing by engaging in bad faith loan modification;

5)

Whether PNC improperly misrepresented the amount owed by
the Ballengers;

6)

Whether PNC improperly engaged in unconscionable debt
collection; and,

7)
I.

Whether PNC refused the Ballengers’ payments.

Factual Background1
Monica and John Ballenger, along with their two children, have

lived in their home in Jefferson County, West Virginia, for over
fourteen years (Dkt. No. 1-1 at 4-5).

Their residence sits atop a

hill, twenty to thirty feet away from Bull Skin Run, an adjacent
creek (Dkt. No. 1-1 at 6; Dkt. No. 47-1 at 34).
A.

The 2007 and 2013 Loans

In 2007, the Ballengers obtained a mortgage refinance loan
from National City Mortgage, the predecessor of PNC (Dkt. No. 1-1

1

As it must, the Court construes the facts in the light most
favorable to the Ballengers, who are the non-movants. See Ussery
v. Manfield, 786 F.3d 332, 333 (4th Cir. 2015).
2

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MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
at 5; Dkt. No. 42-1 at 2).2

On November 6, 2007, PNC conducted a

standard flood zone hazard determination, concluding that the
Ballengers’ property was not located in a flood zone (Dkt. No. 1-1
at 5; Dkt. No. 47-4 at 1).

On December 4, 2007, the Ballengers

closed a mortgage loan providing for a principal balance of
$232,000 at 6.375% for 360 months, and a monthly payment, including
escrow amounts for taxes and insurance, of $1,641.15 (the “2007
loan”) (Dkt. No. 1-1 at 5; Dkt. No. 47-3 at 1).
In April of 2010, after the Federal Emergency Management
Agency (“FEMA”) updated its flood zone maps, PNC notified the
Ballengers that their home was now located in a high-risk flood
zone (Dkt. No. 1-1 at 5; Dkt. No. 47-5 at 1).

As a result, in May

of 2010, PNC force-placed flood hazard insurance, deducting an
annual premium of approximately $2,100 from the Ballengers’ escrow
account (Dkt. No. 47-6 at 1; Dkt. No. 47-17 at 1).
In late 2012, the Ballengers negotiated with PNC to refinance
the 2007 loan in order to take advantage of lower interest rates
and a supposedly lower monthly payment (Dkt. No. 1-1 at 6). During

2

PNC acquired National City effective December 31, 2008; the
Court will therefore refer to PNC for the remainder of its Opinion.
PNC, PNC Completes Acquisition of National City, Acquired Company
Information
(Dec.
31,
2008),
http://phx.corporate-ir.net/
phoenix.zhtml?c=107246&p=irol-acquired.
3

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MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
the refinancing process, in December of 2012, PNC informed the
Ballengers that they would need to obtain flood insurance from a
carrier of their choice, as the flood insurance PNC had forceplaced was no longer available (Dkt. No. 42-3 at 2; Dkt. No. 47-11
at 1).

On January 30, 2013, the Ballengers obtained a temporary

declaration of flood insurance through Allstate for an annual
premium of $598, which they paid in full up front (Dkt. No. 42-3 at
2; Dkt. No. 42-4 at 2; Dkt. No. 47-1 at 15; Dkt. No. 47-15 at 2).3
Following receipt of the flood insurance binder from Allstate,
PNC closed the Ballengers’ loan on February 5, 2013. That loan had
a starting balance of $221,200, an interest rate of 4.25%, and a
monthly payment, including insurance and taxes, of $1,355.59 (the
“2013 loan”) (Dkt. No. 42-2 at 3; Dkt. No. 47-15 at 1).
Despite

the

Ballengers’

understanding

that

Allstate

had

written an adequate policy, on April 19, 2013, and again on May 10,
2013,

PNC

advised

the

Ballengers

that

their

flood

insurance

coverage was insufficient (Dkt. No. 42-6 at 2; Dkt. No. 42-8 at 2;

3

Allstate issued the policy on January 30, 2013, using
tentative rates pending receipt of further information from the
Ballengers (Dkt. No. 42-5 at 2-4; Dkt. No. 47-14 at 1).
4

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MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
Dkt. No. 47-1 at 17).4

On May 7, 2013, Allstate determined that

the Ballengers had underpaid their flood insurance premium by
$5,503, following which PNC paid Allstate the difference from the
Ballengers’ escrow account (Dkt. No. 42-5; Dkt. No. 47-20).

PNC,

which had completed an initial escrow account disclosure statement
on February 5, 2013, revised the Ballengers’ escrow account to
accommodate the higher premium (Dkt. No. 47-18 at 1; Dkt. No. 43 at
7).

Beginning in October, 2013, the new annual premium caused the

Ballengers’ monthly mortgage payment to nearly double (Dkt. No. 1-1
at 8; Dkt. No. 43 at 3; Dkt. No. 42-15 at 2; Dkt. No. 47-21 at 1).
B.

Loss Mitigation Efforts

In March, 2013, John Ballenger injured his shoulder at work,
tearing his rotator cuff and labrum muscle (Dkt. No. 47-1 at 25;
Dkt.

No.

47-2

at

7).

His

employer

considered

his

injuries

repetitious, and therefore not covered by worker’s compensation
(Dkt. No. 47-2 at 7).

After undergoing surgery in mid-April, John

Ballenger was off work until late July or early August of 2013
(Dkt. No. 47-1 at 25).

4

PNC does not review the sufficiency of its clients’
insurance documents prior to closing (Dkt. No. 47-35 at 20).
5

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MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
The Ballengers began to fall behind in their mortgage payments
throughout the spring and summer of 2013, making their May, June,
and July payments late (Dkt. No. 42-7 at 4-8; Dkt. No. 42-9 at 2;
Dkt. No. 42-10 at 2).5

On August 2, 2013, PNC notified the

Ballengers that their mortgage payments were 60 days or more past
due

and

that

the

loan

was

in

default;

it

also

invited

the

Ballengers to apply for foreclosure alternatives (Dkt. No. 42-10 at
2; Dkt. No. 47-33).

PNC attempted to contact the Ballengers to

discuss their delinquent mortgage payments on August 8 and 22, 2013
(Dkt. No. 47-33 at 3-4).
On September 30, 2013, the Ballengers submitted an application
for payment assistance, explaining that a combination of higher
flood insurance premiums and John Ballenger’s workplace injury had
left them unable to pay their mortgage on time (Dkt. No. 42-22 at
2; Dkt. No. 47-34).

As part of that application, the Ballengers

disclosed their monthly income and expenses, household assets, and
hardship information (Dkt. No. 47-34).
On October 4, 2013, PNC denied the Ballengers’ request for
assistance because the 2013 loan did not originate on or before

5

The Ballengers admit that they failed to pay their mortgage
after July of 2013 (Dkt. No. 47-1 at 19, 33).
6

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MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
January 1, 2009 (Dkt. No. 42-12 at 2).

In that and many subsequent

letters, PNC invited the Ballengers to apply for other workout
options (Dkt. No. 42-12 at 2; Dkt. No. 47-35 at 15-16; Dkt. No. 4736).

In the following months, Monica Ballenger resubmitted the

workout packet “four to five times,” re-sending the same packet
every time after PNC denied the same (Dkt. No. 47-1 at 21).
Over six months after it first had invited them to apply, PNC
informed the Ballengers for the first time on January 29, 2014,
that their loan was ineligible for hardship assistance,(Dkt. No.
47-37 at 1).

This was despite the fact that PNC had been aware

from the beginning of its inability to offer loss mitigation for
loans less than 12 months old (Dkt. No. 47-35 at 13).6
C.

The Ballengers’ Offers to Make Payments

Throughout the process, whenever the Ballengers offered to
make partial payments toward their past due mortgage debt, PNC told
them that it did not accept partial payments (Dkt. No. 1-1 at 9;
Dkt. No. 42-14 at 3).

On October 25, 2013, the Ballengers called

PNC in an attempt to make the August, 2013, mortgage payment (Dkt.
No. 47-1 at 25; Dkt. No. 47-2 at 18).

6

During that call, a PNC

PNC’s internal notes indicate that the Ballengers’ requests
were denied on November 26, 2013, December 3, 2013, and January 17,
2014 (Dkt. No. 47-37).
7

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MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
representative informed the Ballengers that PNC would only accept
the total past due amount, which included payments for both August
and September of 2013 (Dkt. No. 47-1 at 25; Dkt. No. 47-2 at 18;
Dkt. No. 47-37 at 7). Based on that representation, the Ballengers
did not send in their August payment.

Id.

On December 4, 2013, the Ballengers sent a letter to PNC
offering to pay $1,500 immediately to mitigate their debt, and to
make their January 2014 payment on time (Dkt. No. 47-39).

The

Ballengers again wrote to PNC on December 23, 2013, seeking
assistance and offering to pay $1,000 immediately and the remaining
$9,455 owed at the back end of the loan (Dkt. No. 47-39).

PNC

never retracted its statement that it did not accept partial
payments.
D.

Letter of Map Amendment

After the Ballengers expressed concerns about their higher
monthly payment to PNC, loan officer Bonnie Deibler (“Deibler”)
advised them that they could survey their property and obtain a
letter of map amendment (“LOMA”) from FEMA indicating that their
dwelling fell outside of the high-risk flood zone (Dkt. No. 1-1 at
6-7).

As a consequence, in January, 2013, the Ballengers hired a

surveyor and learned that, although their dwelling was not located

8

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MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
in a high-risk flood zone, part of their land near the creek was so
located (Dkt. No. 1-1 at 6-7; Dkt. No. 47-22).
On October 28, 2013, the Ballengers obtained a LOMA remapping
the flood zone and excluding their home as high-risk (Dkt. No. 43
at 3; Dkt. No. 47-23 at 2).7
the

LOMA

(Dkt.

No.

1-1

at

That same day, they notified PNC of
10).

On

November

8,

2013,

PNC

acknowledged the LOMA, accepting that high-risk flood insurance was
no longer required.
E.

Id.; see also Dkt. No. 47-26.

Insurance Refund and Demand for Payments

After receiving the LOMA, in December, 2013, Allstate refunded
the insurance premium of $6,107 to PNC, which included $598 paid by
the Ballengers (Dkt. No. 1-1 at 10; Dkt. No. 47-20 at 1; Dkt. No.
47-27 at 1).

Despite the fully refunded flood insurance, PNC has

never returned the $598 paid by the Ballengers, and has continued
to charge the Ballengers a higher monthly premium that includes the
increased flood insurance (Dkt. No. 1-1 at 10; Dkt. No. 47-2 at
19).
Significantly, on January 14, 2014, PNC made a demand that the
Ballengers make mortgage payments for August, September, October,

7

The Ballengers’ LOMA was designated as a life of loan
determination (Dkt. No. 47-25 at 1).
9

BALLENGER V. NATIONAL CITY MORTGAGE

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MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
November, and December, 2013, including escrow amounts for the
fully refunded flood insurance (Dkt. No. 1-1 at 10; Dkt. No. 47-29
at 1).

Again, on February 14, 2014, PNC similarly demanded

payments for September, October, November, and December, 2013, and
January, 2014, including escrow payments for the fully refunded
flood insurance (Dkt. No. 1-1 at 10; Dkt. No. 47-30 at 1).
On March 17, 2014, PNC demanded payment of $10,434.28 (Dkt.
No. 1-1 at 10; Dkt. No. 47-32 at 1).

On March 18, 2014, a law firm

serving as trustee under the Ballengers’ deed of trust sent the
Ballengers a notice of foreclosure and continuing right to cure
default (Dkt. No. 47-31).

The notice (1) informed the Ballengers

that PNC had accelerated their mortgage and scheduled a foreclosure
sale on April 8, 2014; and (2) demanded payment of $17,513.30,
including $5,457,35 for the same escrow advance Allstate had fully
refunded in December, 2013 (Dkt. No. 1-1 at 11; Dkt. No. 47-31).
Attempting to get assistance with their loan, the Ballengers
filed a complaint with the West Virginia Attorney General’s Office
(Dkt. No. 47-1 at 24).

In January, 2014, they retained Mountain

State Justice as legal counsel.

Following that, on February 3,

2014,

that

the

Ballengers

requested

10

PNC

direct

any

further

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
communication regarding their mortgage to their attorney (Dkt. No.
47-1 at 26; Dkt. No. 47-35 at 10; Dkt. No. 47-38 at 1).
On March 12, 2014, PNC offered the Ballengers a trial plan to
avoid foreclosure that provided for monthly payments of $1,254.29
for 480 months at an interest rate of 4.6250% (Dkt. No. 42-13 at 2,
4).

The Ballengers declined the trial plan on April 17, 2014,

reminding PNC that they had retained an attorney (Dkt. No. 47-37 at
9).
II.

Procedural Background
On April 7, 2014, the Ballengers filed suit in the Circuit

Court of Harrison County, West Virginia (Dkt. No. 1 at 1).

On May

9, 2015, PNC removed the case to this Court, invoking its diversity
jurisdiction.8

Id. at 1, 3.

In Count One of their complaint, the Ballengers allege that
PNC breached the contract in the following ways:

(1) by obtaining

an unnecessary flood insurance policy and requiring the Ballengers
to pay the more expensive premium; (2) by assessing improper,
excessive

insurance

charges;

(3)

attempts

to

payments

or

make

8

by

refusing

mitigate

the

Ballengers’

their

increasing

The Ballengers served PNC through the West Virginia
Secretary of State’s office on April 10, 2014 (Dkt. No. 1 at 2).
11

BALLENGER V. NATIONAL CITY MORTGAGE

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MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
indebtedness; (4) by allowing the Ballengers to accrue indebtedness
and

failing

to

perform

hardship

review

in

good

faith

after

repeatedly inviting the Ballengers to apply; (5) by impairing the
Ballengers’ right to reinstate by conditioning it upon payment of
improper, excessive insurance charges that had been fully refunded
by

Allstate;

and,

(6)

by

electing,

in

bad

faith,

to

pursue

foreclosure after breaching the contract, assessing and demanding
improper charges, and impairing the Ballengers’ right to reinstate
(Dkt. No. 1-1 at 13).
In

Count

Two,

the

Ballengers

assert

that

PNC

(1)

used

fraudulent, deceptive, or misleading representations to collect or
obtain personal information, in violation of W. Va. Code § 46A-2127; and (2) used unfair or unconscionable means in an effort to
collect a debt, in violation of W. Va. Code § 46A-2-128.
14.

Id. at

Finally, the Ballengers allege in Count Three that PNC

violated W. Va. Code § 46A-2-115 by refusing to accept partial
payments.

Id.

They request maximum civil penalties per violation

pursuant to W. Va. Code §§ 46A-5-101(1) and 106, actual damages,
and attorneys’ fees and costs.

Id. at 14-15.

On May 15, 2015, PNC moved for summary judgment, arguing that
the Ballengers’ breach of contract claim fails as a matter of law

12

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MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
because (1) PNC did not force-place high-risk flood insurance; (2)
PNC was not obligated by the Real Estate Settlement Procedures Act
of 1974, 12 U.S.C. § 2609(c) (2012) (“RESPA”) to recalculate the
Ballengers’

escrow

account

after

receiving

the

refund

from

Allstate; (3) the contract expressly permitted foreclosure; (4) PNC
engaged in good faith loan modification, including offering a trial
modification, which the Ballengers ignored; (5) PNC did not refuse
any payment sent by the Ballengers; and, (6) the Ballengers’ right
to

reinstate

was

never

conditioned

on

insurance charges (Dkt. No. 43 at 1-2).
Ballengers’

claims

under

the

West

improper

or

excessive

PNC contends that the

Virginia

Consumer

Credit

Protection Act, W. Va. Code § 46A-2-101 et seq. (“WVCCPA”) also
fail because it only attempted to collect money due on the note,
rather than the insurance premium, and because it never refused any
payment.

Id. at 2.

On June 5, 2015, the Ballengers opposed PNC’s motion for
summary judgment, contending that they had set forth triable issues
of fact as to each claim (Dkt. No. 47 at 1).

As to Count One, the

Ballengers argue that questions of material fact exist as to
whether PNC breached the contract by (1) improperly purchasing
excessive flood insurance and refusing to refund immediately their

13

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1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
insurance payments, (2) refusing to accept the Ballengers’ payments
toward their account, and (3) exercising its discretion in bad
faith.

Id. at 1-2.

As to Counts Two and Three, the Ballengers

argue that they have provided evidence demonstrating that PNC
violated the WVCCPA by instructing the Ballengers to apply for loan
assistance when none was available, refusing their payments, and
attempting to collect flood insurance premiums when none were owed.
Id. at 2.
On June 19, 2015, PNC replied, arguing that the two central
allegations in the Ballengers’ complaint–that PNC force-placed
flood insurance and improperly increased the insurance premium–are
“demonstrably

and

indisputably

false,”

thereby

necessitating

summary judgment in its favor (Dkt. No. 54 at 1-2).
On June 5, 2015, the Ballengers filed objections pursuant to
Fed. R. Civ. P. 56(c)(2), in which they argued that the Court
should not consider an exhibit to PNC’s motion for summary judgment
because it was unsworn and unauthenticated (Dkt. No. 48).

PNC

opposed the objection, contending that the Court should consider
its exhibit because PNC can present it in a form admissible in
evidence (Dkt. No. 53).

The matter is now fully briefed and ripe

for disposition.

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MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
STANDARD OF REVIEW
Summary
documents,

judgment

is

electronically

declarations,

stipulations

appropriate
stored
.

.

where

the

information,
.,

admissions,

“depositions,
affidavits

or

interrogatory

answers, or other materials” show that “there is no genuine dispute
as to any material fact and the movant is entitled to judgment as
a matter of law.”

Fed R. Civ. P. 56(c)(1)(A), (a).

When ruling on

a motion for summary judgment, the Court reviews all the evidence
“in the light most favorable” to the nonmoving party.

Walker v.

Mod-U-Kraf Homes, LLC, 775 F.3d 202, 207 (4th Cir. 2014).

The

Court must avoid weighing the evidence or determining the truth and
limit its inquiry solely to a determination of whether genuine
issues of triable fact exist. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 249 (1986).
The moving party bears the initial burden of informing the
Court

of

the

basis

for

the

motion

nonexistence of genuine issues of fact.
477 U.S. 317, 323 (1986).

and

of

establishing

the

Celotex Corp. v. Catrett,

Once the moving party has made the

necessary showing, the nonmoving party “must set forth specific
facts showing that there is a genuine issue for trial.”

Anderson,

477 U.S. at 256 (internal quotation marks and citation omitted).

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MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
The “mere existence of a scintilla of evidence” favoring the
nonmoving party will not prevent the entry of summary judgment; the
evidence

must

be

such

that

a

rational

reasonably find for the nonmoving party.

trier

of

fact

could

Id. at 248–52.

DISCUSSION
I.

Rule 56(c) Objection
The Ballengers have objected to Exhibit E of PNC’s motion for

summary judgment, which is comprised of a series of letters from
Allstate

informing

the

Ballengers

that

they

had

submitted

insufficient information to obtain an accurate flood insurance
quote, requesting supplemental information, and notifying them of
their increased premium (Dkt. No. 42-5).

The Ballengers contend

that Exhibit E, obtained from third-party Allstate, “constitute[s]
inadmissible hearsay” because it has not been authenticated (Dkt.
No. 48 at 2).

PNC contends that, under the current iteration of

Fed. R. Civ. P. 56, it need only show that Exhibit E could be
presented in an admissible form (Dkt. No. 53 at 2).

PNC avers that

it is able to authenticate the documents through an Allstate
custodian, thereby satisfying the provisions of Fed. R. Evid.
803(6). Id. According to PNC, the Ballengers should have produced

16

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MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
the documents in Exhibit E themselves, thereby abrogating the need
for PNC to obtain the documents from Allstate.

Id. at 4.

Pursuant to Fed. R. Civ. P. 56(c)(2), any party may object to
material cited on summary judgment that “cannot be presented in a
form that would be admissible in evidence.”

See Humphreys &

Partners Architects, L.P. v. Lessard Design, Inc., 790 F.3d 532, n.
4 (4th Cir. 2015) (noting that the 2010 Amendments to the Federal
Rules of Civil Procedure eliminated the requirement that documents
submitted in support of summary judgment must be authenticated).
The proponent of evidence bears the burden of establishing that the
objected-to material is admissible as presented, or to explain the
anticipated admissible form. Deakins v. Pack, 957 F. Supp. 2d 703,
752 (S.D.W. Va. July 12, 2013) (internal quotations omitted).
Fed. R. Evid. 803 provides certain exceptions to the rule
against hearsay, including an exception for records of a regularly
conducted business activity.

Fed. R. Evid. 803(6).

The proponent

may introduce a “record of an act, event, condition, opinion, or
diagnosis” so long as (1) the record was made at or near the time
of the event, by or from information transmitted by someone with
knowledge; (2) the record was kept in the course of a regularly
conducted business activity; (3) making such a record was a regular

17

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MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
practice of that activity; (4) these conditions are shown by the
testimony of a custodian or other qualified witness; and, (5) “the
opponent does not show that the source of information or the method
or

circumstances

trustworthiness.”

of

preparation

Fed. R. Evid. 803(6).

indicate

a

lack

of

See Lorraine v. Markel

Amer. Ins. Co., 241 F.R.D. 534, 552 (D. Md. 2007) (explaining that
the authenticity analysis for business records pursuant to Fed. R.
Evid. 902(11) has merged into the hearsay analysis).
Here, PNC has met its burden of establishing that Exhibit E
could be admissible into evidence.

PNC subpoenaed Allstate, which

then produced the documents contained in Exhibit E (Dkt. No. 53-1).
PNC contends that it is able to produce a witness or custodian from
Allstate to authenticate the records in Exhibit E (Dkt. No. 53 at
2). Those documents, which include letters Allstate sent to one of
its agencies and the Ballengers, certainly qualify as records kept
in the ordinary course of the insurance business, where making such
records was regular practice.

Fed. R. Evid. 803(6).

Given PNC’s

representation that it could produce a witness from Allstate to
testify to the elements of Rule 803(6), the Court FINDS that the
material in Exhibit E could be presented in admissible form, and
therefore OVERRULES the Ballengers’ objection.

18

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
II.

Count One:

Breach of Contract

In Count One, the Ballengers allege that PNC breached the deed
of trust in the following ways: (1) obtaining an unnecessary flood
insurance policy and requiring the Ballengers to pay an excessive
insurance premium; (2) assessing improper, excessive insurance
charges; (3) refusing the Ballengers’ attempts to make payments;
(4) allowing the Ballengers’ indebtedness to unnecessarily accrue;
(5) impairing the Ballengers’ right to reinstate; and, (6) electing
in bad faith to pursue foreclosure after breaching the contract
(Dkt. No. 1-1 at 13).
A deed of trust “conveys title to real property in trust as
security until the grantor repays the loan.” Arnold v. Palmer, 686
S.E.2d 725, 733 (W. Va. 2009).

Deeds of trust are subject to

general contract interpretation principles.

Id.

A plaintiff may

bring a breach of contract claim for a violation of a specific
claim in the deed of trust.

See Mullins v. GMAC Mortg., LLC, No.

1:09CV704, 2011 WL 1298777, at *2 (S.D.W. Va. Mar. 31, 2011).

In

West Virginia, the elements of a breach of contract claim include:
(1) a contract between the parties; (2) the breach, or failure to
comply with, a term in the contract; and, (3) damages flowing from

19

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
the breach.

Id.

The Court will analyze each of these elements in

turn.
A.

Flood Insurance Policy

The Ballengers first allege that PNC breached the contract by
obtaining an unnecessary flood insurance policy and requiring them
to pay an excessive insurance premium (Dkt. No. 1-1 at 13).

PNC

contends that the Ballengers undisputably obtained their own flood
insurance policy (Dkt. No. 43 at 7).
Paragraph 5 of the deed of trust provides that the Ballengers
must maintain property insurance, including flood insurance, “in
the amounts . . . and for the periods that Lender requires.”
No. 42-2 at 6).

(Dkt.

The Ballengers have the right to choose their own

insurance carrier, subject to PNC’s approval, but if they fail to
do so, PNC “may obtain insurance coverage, at [its] option and [the
Ballengers’] expense.”

Id.

Any insurance payments disbursed by

PNC “shall become additional debt” of the Ballengers.

Id.

The

Ballengers’ monthly mortgage payments include escrow “premiums for
any and all insurance,” including flood insurance.

Id. at 5.

After carefully reviewing the record, there is no genuine
dispute as to whether PNC force-placed flood insurance for the 2013

20

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
loan.9

On November 22, 2012, FEMA informed the Ballengers that

their residence was located in a special flood hazard area, thus
necessitating the purchase of flood insurance (Dkt. No. 42-3 at 2).
PNC then informed the Ballengers in December, 2012, that they would
need to obtain flood insurance from a carrier of their choosing
(Dkt. No. 42-3 at 2; Dkt. No. 47-11 at 1).
On January 30, 2013, the Ballengers obtained a temporary
declaration of flood insurance through Allstate (Dkt. No. 42-3 at
2; Dkt. No. 42-4 at 2; Dkt. No. 47-1 at 15; Dkt. No. 47-15 at 2).
Allstate issued the policy using tentative rates pending receipt of
further information from the Ballengers (Dkt. No. 42-5 at 2-4; Dkt.
No. 47-14 at 1).

Allstate subsequently determined that the

Ballengers had underpaid their flood insurance premium by $5,503,
following

which

PNC

paid

Allstate

the

difference

from

Ballengers’ escrow account (Dkt. No. 42-5; Dkt. No. 47-20).

the
PNC,

which had completed an initial escrow account disclosure statement
on February 5, 2013, revised the Ballengers’ escrow account to
accommodate the higher premium (Dkt. No. 47-18 at 1; Dkt. No. 43 at

9

PNC had previously force-placed flood insurance on the 2007
loan in May 2010; as a result of the 2013 refinancing, however, the
Ballengers were obligated to purchase their own flood insurance
policy (Dkt. No. 47-6 at 1; Dkt. No. 47-17 at 1; Dkt. No. 42-3 at
2; Dkt. No. 47-11 at 1).
21

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
7). The new annual premium caused the Ballengers’ monthly mortgage
payment to nearly double beginning in October, 2013 (Dkt. No. 43 at
3; Dkt. No. 42-15 at 2; Dkt. No. 47-21 at 1).
The Ballengers’ assertion that PNC purchased a more expensive
policy

without

providing

sufficient

notice

is

completely

unsupported by the record (Dkt. No. 47 at 14-15). To the contrary,
the evidence of record confirms that the Ballengers purchased the
flood policy from Allstate, that Allstate determined the Ballengers
had underpaid their flood insurance premium, and that Allstate then
assessed PNC the difference. After PNC paid Allstate the increased
premium, it deducted that premium from the Ballengers’ escrow
account, and adjusted their monthly payments accordingly.
The Ballengers have failed to state a breach of contract claim
under West Virginia law.

See Mullins, 2011 WL 1298777, at *2

(requiring breach as an element of a breach of contract claim).
The Court therefore GRANTS PNC’s motion for summary judgment as to
the Ballengers’ claim in Count One that PNC breached its contract
by obtaining an unnecessary flood insurance policy and requiring
them to pay an excessive insurance premium.

22

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
B.

Improper and Excessive Insurance Charges

Count One also alleges that PNC breached the contract by
assessing

improper,

excessive

insurance

charges,

even

after

Allstate had refunded PNC the flood insurance premium (Dkt. No. 1-1
at 13).

PNC argues that, under RESPA and the terms of the deed of

trust, it was not required to conduct another escrow account
analysis until August of 2014 (Dkt. No. 43 at 8-9). The Ballengers
contend that, as of January 6, 2014, PNC admitted that it did not
maintain an escrow account for flood insurance, rendering RESPA
inapplicable (Dkt. No. 47 at 17).

They contend that PNC was

required to refund them all the premiums paid pursuant to the
National Flood Insurance Reform Act of 1994 (“NFIRA”), 42 U.S.C. §
4011, et seq. (Dkt. No. 47 at 15-16).
The deed of trust provides that PNC must provide, without
charge, “an annual accounting of the [escrow] Funds as required by
RESPA”

(Dkt. No. 42-2 at 6).

Importantly, if an escrow account

contains surplus funds, PNC “shall account” to the borrower for the
excess funds in accordance with RESPA; in contrast, if an account
contains a shortage or deficiency of funds, PNC “shall notify” the
borrower, as required by RESPA, and the borrower must pay PNC the
necessary amount to make up the shortage.

23

Id.

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
In connection with a federally related mortgage loan, RESPA
requires a lender to provide an escrow account statement “not less
than once for each 12-month period.” 12 U.S.C. § 2609(c)(2)(A)-(B)
(2012).

Notably, a lender “may conduct an escrow account analysis

at other times during the escrow computation year.”
3500.17(f)(1)(ii) (2009).10

24 C.F.R. §

Particularly, if a lender advances

funds to pay a disbursement from the escrow account, it must
conduct an escrow account analysis to determine the extent of the
deficiency before seeking repayment from the borrower.

Id.

If,

during the life of the escrow account, a lender determines that a
shortage or deficiency exists, it may require the borrower to pay
additional deposits to make up the shortage or eliminate the
deficiency.

24

3500.17(f)(4)(ii).

C.F.R.

§

3500.17(c)(1)(ii);

24

C.F.R.

§

A lender is exempt from the annual escrow

account statement requirement if, at the time the lender conducts

10

Effective June 16, 2014, the Department of Housing and Urban
Development removed its regulations under RESPA.
Removal of
Regulations Transferred to the Consumer Financial Protection
Bureau, 79 Fed. Reg. 34224-01 (June 16, 2014).
The Consumer
Financial Protection Bureau is now responsible for administering
RESPA, including issuing applicable regulations. Id. Insofar as
the events in this case occurred before June 16, 2014, the Court
will use the version of the regulations in effect at that time.
24

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
the escrow account analysis, the borrower is more than 30 days
overdue.

24 C.F.R. § 3500.17(i)(2).

Pursuant to NFIRA, a lender may force-place flood insurance,
at the borrower’s expense, if the borrower fails to obtain flood
insurance on any improved real estate within a special flood hazard
zone.

42 U.S.C. § 4012a(e)(1)-(2)(2014).

flood

insurance

coverage,

the

lender

If a borrower obtains

must,

within

30

days,

terminate force-placed insurance and refund all premiums paid by
the borrower.

42 U.S.C. § 4012a(e)(3).

A lender must accept an

insurance policy declarations page as confirmation of existing
flood coverage. 42 U.S.C. § 4012a(e)(4). If the borrower provides
the lender with a letter stating that the subject property is not
in a special flood hazard area, the lender has no obligation to
require

the

purchase

4012a(e)(5)(B).

of

flood

insurance.

42

U.S.C.

§

The provisions of RESPA apply to escrow accounts

established pursuant to NFIRA.

42 U.S.C. § 4012a(d)(3).

NFIRA is inapplicable to the case at bar for several reasons.
First, the provisions of NFIRA cited by the Ballengers apply to
lender-placed flood insurance.

42 U.S.C. § 4012a(e).

The Court,

however, has already concluded that PNC did not force-place flood
insurance

in

connection

with
25

the

Ballengers’

2013

loan.

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
Furthermore, the Ballengers’ argument that RESPA is inapplicable
lacks

merit;

RESPA

squarely

applies

to

the

maintained by PNC (Dkt. No. 42-2 at 3, 5-6).11

escrow

account

See 12 U.S.C. §

2609(c).
The record establishes that, at the time it originated the
loan, on February 5, 2013, PNC completed an initial escrow account
disclosure statement (Dkt. No. 47-18 at 1).

After Allstate

notified PNC of the Ballengers’ increased flood insurance premium,
PNC adjusted the Ballengers’ escrow account on August 19, 2013, in
order to accommodate the higher premium (Dkt. No. 42-5 at 5; Dkt.
No. 42-15 at 2).
The Ballengers obtained a LOMA excluding their home from the
high-risk flood zone on October 28, 2013, and they informed PNC of
the change (Dkt. No. 47-23 at 2).

On November 8, 2013, PNC

acknowledged receipt of the LOMA and the fact that high-risk flood
insurance was no longer required.

Id.; see also Dkt. No. 47-26.

On November 8, 2013, it informed the Ballengers that it would
conduct an escrow analysis to adjust their monthly payment and
11

The Ballengers argue that the definition of force-placed
insurance under RESPA does not include hazard insurance required by
the Flood Disaster Protection Act of 1973, thereby rendering RESPA
inapplicable (Dkt. No. 47 at 5, n. 1).
See 12 C.F.R. §
1024.37(a)(2)(i) (2014).
26

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
refund any funds collected for the flood insurance premium (Dkt.
No. 47-26). In December, 2013, Allstate refunded PNC the insurance
premium of $6,107, which included $598 paid by the Ballengers (Dkt.
No. 47-20 at 1; Dkt. No. 47-27 at 1).

PNC, however, never returned

the $598 to the Ballengers (Dkt. No. 47-2 at 19).
On January 14, 2014, PNC demanded that the Ballengers make
payments for August through December, 2013, in an amount that
included escrow payments for the fully refunded flood insurance
(Dkt. No. 1-1 at 10; Dkt. No. 47-29 at 1).

On February 14, 2014,

PNC again demanded payments for September through December, 2013,
as well as January, 2014, including escrow payments for the fully
refunded flood insurance (Dkt. No. 1-1 at 10; Dkt. No. 47-30 at 1).
On March 17, 2014, PNC demanded payment of $10,434.28 (Dkt. No. 1-1
at 10; Dkt. No. 47-32 at 1).

On March 18, 2014, a law firm serving

as trustee under the Ballengers’ deed of trust sent them a notice
demanding payment of $17,513.30, including $5,457,35 for escrow
advances that were fully refunded by Allstate (Dkt. No. 47-31).
These facts establish a genuine dispute of material fact as to
(1) whether PNC breached the contract by refusing to conduct an
escrow account analysis after receiving the refund from Allstate
when it promised to do one in its November 8, 2013, letter; and,
27

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
(2) whether PNC breached the contract by continuing to bill the
Ballengers for the refunded escrow amount, even after acknowledging
that it would return any funds collected for the premium.
Although the four corners of RESPA do not obligate PNC to
conduct an escrow account analysis after it receives a flood
insurance premium refund, the deed of trust does obligate it to
account to the Ballengers for any excess funds in the escrow
account (Dkt. No. 42-2 at 6).

Additionally, after it received the

LOMA, PNC represented to the Ballengers on November 8, 2013, that
it would conduct an escrow analysis to adjust their monthly
payment, something it subsequently failed to do (Dkt. No. 47-26 at
1).
That PNC continued to bill the Ballengers at a higher rate,
including the fully refunded escrow advance, for months after it
received a refund from Allstate, is troubling.

Even if RESPA did

not require PNC to conduct an escrow account analysis until August,
2014, it surely never gave PNC license to continue billing the
Ballengers for amounts they clearly did not owe.

The Court

therefore DENIES PNC’s motion for summary judgment as to the
Ballengers’ claim that it breached the contract by assessing
improper insurance charges.
28

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
C.

The Ballengers’ Attempts to Make Payments

The Ballengers allege that PNC breached the contract or the
implied covenant of good faith and fair dealing by refusing their
attempts to make payments or otherwise mitigate their increasing
indebtedness (Dkt. No. 1-1 at 13).

PNC argues that the Ballengers

“have not produced any evidence that they submitted any payments
that were refused by PNC,” but, rather, “admit they never submitted
any payments . . . .”

(Dkt. No. 43 at 12).

The Ballengers contend

that PNC refused to accept their payments in derogation of the deed
of trust (Dkt. No. 47 at 18).
By its terms, the deed of trust provides the Ballengers with
the right to pay principal, interest, and escrow payments when due
(Dkt. No. 42-2 at 4).

Nevertheless, under the deed of trust, PNC

retains the right to “return any payment or partial payment if the
payment or partial payments are insufficient to bring the Loan
current.”

Id. at 5.

By accepting any payment insufficient to

bring the loan current, PNC does not waive its right to refuse such
payments in the future.

Id.

Nor is PNC obligated to apply

insufficient payments at the time it accepts them; rather, it can
hold the funds until the borrower brings the loan current.

29

Id.

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
West Virginia law implies a covenant of good faith and fair
dealing in every contract for the purpose of evaluating a party’s
performance of that contract.

Staats v. BAC Home Loans Servicing,

LP, No. 3:10CV68, 2011 WL 12451606, at *5 (N.D.W. Va. June 7, 2011)
(Bailey, J.)(citing Knapp v. Amer. Gen. Fin., Inc., 111 F.Supp. 2d
758, 767 (S.D.W. Va. 2005)).

This covenant, however, does not

grant contracting parties rights inconsistent with those expressly
set forth in the contract. Id. (quoting Barn-Chestnut, Inc. v. CFM
Dev. Corp., 457 S.E.2d 502, 509 (W. Va. 1995) (internal quotations
omitted)). West Virginia does not recognize a stand-alone cause of
action for breach of the covenant of good faith and fair dealing;
rather, “this claim will live or die by the [express] breach of
contract claim. . . .” Id. (quoting Clendenen v. Wells Fargo Bank,
N.A., No. 2:09CV557, 2009 WL 4263506, at *5 (S.D.W. Va. Nov. 24,
2009)).
On October 25, 2013, the Ballengers attempted to make their
August mortgage payment (Dkt. No. 47-1 at 25; Dkt. No. 47-2 at 18).
During that call, PNC informed the Ballengers that it would only
accept the total past due amount–both August and September of
2013–as payment (Dkt. No. 47-1 at 25; Dkt. No. 47-2 at 18; Dkt. No.

30

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
47-37 at 7).12 Based on that representation, the Ballengers did not
send in their August payment (Dkt. No. 47-2 at 18).

On December 4,

2013, the Ballengers sent PNC a letter offering to pay $1,500
immediately to mitigate their debt, and to make their January 2014
payment on time (Dkt. No. 47-39).

On December 23, 2013, the

Ballengers sent a letter to PNC offering to pay $1,000 immediately
and the remaining $9,455 owed at the back end of the loan (Dkt. No.
47-39).

PNC never retracted its statement that it did not accept

partial payments.
Although PNC’s practice of prohibiting partial payments is
objectionable, the same does not breach the contract.

Under the

express terms of the deed of trust, PNC may refuse to accept
payments that fail to bring the loan current (Dkt. No. 42-2 at 5).
Had

the

Ballengers

sent

in

such

a

payment,

PNC

was

not

contractually obligated to apply it to their account until they
brought the loan current.

Id.

The Ballengers do not present–and

the Court cannot find–any law supporting the proposition that such
contractual language is unconscionable or otherwise unenforceable.
To the contrary, see Spoor v. PHH Mortg. Corp., No. 5:10CV42, 2011
12

PNC’s internal customer service notes reflect that a
borrower called to see if he could make payments and was advised
that PNC did not accept partial payments (Dkt. No. 47-37 at 7).
31

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
WL

883666,

at

*4-5

(N.D.W.

Va.

Mar.

11,

2011)

(Stamp,

J.)

(dismissing the plaintiff’s breach of contract claim after the
defendant directed her to not make any partial payments).

Any

claim based on the implied covenant of good faith and fair dealing
likewise fails, as it must “live or die” by the express breach of
contract claim.

See Staats, 2011 WL 12451606, at *5 (internal

quotations omitted).

The Court therefore GRANTS PNC’s motion for

summary judgment as to the Ballengers’ claim that PNC breached the
contract by refusing to accept payments.13
D.

Foreclosure Alternative Review

The Ballengers allege that PNC breached the contract by
allowing

their

indebtedness

to

unnecessarily

accrue,

and

interfering with their right to receive the benefit of the contract
by

“refusing

offers

to

pay,

then

failing,

in

bad

faith,

to

appropriately conduct review for foreclosure alternatives after
repeatedly inviting [them] to apply for the same.”
at 13).

(Dkt. No. 1-1

PNC argues that it had no duty to execute a loan

modification or pursue loss mitigation options, as the deed of

13

This holding in no way affects the Ballengers’ claim in
Count Three of their complaint that PNC violated the WVCCPA by
refusing to accept such payments, see infra.
32

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
trust gave it an express, absolute right to foreclose on the
property if the Ballengers defaulted (Dkt. No. 43 at 10).
Pursuant to the terms of the deed of trust, the lender must
give the borrower notice of any breach before accelerating the
mortgage (Dkt. No. 42-2 at 12).

If the borrower does not cure the

default by the specified date, the lender may accelerate the
mortgage, requiring “immediate payment in full of all sums . . .
without further demand.” Id.

The lender also may invoke its power

of sale, and “any other remedies” permitted by law.

Id.

In West

Virginia, a lender is not obligated to pursue remedies not set
forth in the deed of trust in an attempt to cure default before
pursuing foreclosure. Lucas v. Fairbanks Capital Corp., 618 S.E.2d
488, 498-99 (W. Va. 2005).
On August 2, 2013, PNC notified the Ballengers that their
mortgage payments were 60 days or more past due, and, consequently,
their loan was in default; it also invited the Ballengers to apply
for foreclosure alternatives (Dkt. No. 42-10 at 2; Dkt. No. 47-33).
On September 30, 2013, the Ballengers submitted an application for
payment assistance (Dkt. No. 42-22 at 2; Dkt. No. 47-34).

On

October 4, 2013, PNC denied the Ballengers’ request for assistance
because the 2013 loan had not originated on or before January 1,
33

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
2009 (Dkt. No. 42-12 at 2).

In that, and in many subsequent

letters, PNC invited the Ballengers to apply for other workout
options (Dkt. No. 42-12 at 2; Dkt. No. 47-35 at 15-16; Dkt. No. 4736).

In the following months, Monica Ballenger resubmitted the

workout packet “four to five times,” “taking the same packet every
time and re-sending it” after PNC denied the same (Dkt. No. 47-1 at
21).

The first time PNC informed the Ballengers that their loan

was completely ineligible for hardship assistance was on January
29, 2014, more than six months after first inviting them to apply
(Dkt. No. 47-37 at 1).

According to the Ballengers, PNC was aware

from the beginning that it was unable to offer loss mitigation for
loans less than 12 months old (Dkt. No. 47-35 at 13).

PNC later

offered the Ballengers a trial modification plan on March 12, 2014
(Dkt. No. 42-13 at 2, 4), which the Ballengers declined on April
17, 2014 (Dkt. No. 47-37 at 9).
In accordance with the terms of the deed of trust, PNC
notified the Ballengers that they were in default on August 2,
2013.

After that, PNC repeatedly reviewed the Ballengers’ account

for foreclosure alternatives, but never promised them that they
would receive a loan modification; it merely represented that it
would consider them. To the extent the Ballengers are arguing that
34

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
PNC had some duty to consider them for loan modification in good
faith, PNC was not required to do so by West Virginia law unless a
provision of the deed of trust so provided. Spoor, 2011 WL 883666,
at *6 (finding that, absent an applicable provision in the deed of
trust, lenders are not required to consider a loan modification in
good faith).
Because PNC had no duty under the deed of trust to consider
the Ballengers for loan modification, the Court GRANTS PNC’s motion
for summary judgment as to the Ballengers’ claim that it breached
the

contract

by

failing

to

appropriately

conduct

foreclosure

review.
E.

Right to Reinstate

The Ballengers contend that PNC impaired their contractual
right to reinstate by conditioning that right “upon payment of
improper and excessive insurance charges that had been fully
refunded” (Dkt. No. 1-1 at 13).

PNC failed to squarely address

this contention in its motion for summary judgment (Dkt. No. 43 at
11).

Nonetheless, the Ballengers argue that PNC impaired their

right to reinstate by “prolonging a futile loss mitigation process
for over six months, all the while refusing [their] attempts to
make payments toward the accruing arrears.”
35

(Dkt. No. 47 at 19).

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
The deed of trust provides that, in its notice of default, the
lender must notify the borrower of the right to reinstate after
acceleration (Dkt. No. 42-2 at 12).

The deed of trust does not

otherwise define the “right to reinstate.”

See Dkt. No. 42-2.

PNC’s August 2, 2013, letter advised the Ballengers that they could
reinstate their loan by paying “the total amount you owe, in a lump
sum payment and by a specific date.”

(Dkt. No. 42-10 at 6).

As discussed earlier, the Ballengers attempted to make partial
payments toward their arrears; they concede, however, that they
were unable to pay the entire past due amount at once.

Throughout

this time, PNC continued to charge them not only for principal and
interest on their mortgage, but also for the fully refunded flood
insurance.

Taking all reasonable inferences in the Ballengers’

favor, they have created a genuine factual dispute regarding
whether

PNC’s

reinstate.

actions

impaired

their

contractual

right

to

See Petty v. Countrywide Home Loans, Inc., No. 3:12-

6677, 2013 WL 1837932, at *10 (S.D.W. Va. May 1, 2013) (denying a
motion to dismiss when the plaintiff alleged that the defendant
breached the deed of trust by interfering with his right to
reinstate the loan and by refusing to accept payments).

The Court

therefore DENIES PNC’s motion for summary judgment as to the
36

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
Ballengers’ claim that PNC impaired their contractual right to
reinstate by conditioning that right upon payment of fully refunded
insurance charges.
F.

Bad Faith

The Ballengers allege that PNC elected in bad faith to pursue
foreclosure

“after

breaching

express

provisions

including

prohibiting payments, assessing and demanding improper charges, and
impairing [their] right to reinstate in violation of the parties’
agreement.”

(Dkt. No. 1-1 at 13).

PNC contends that, pursuant to

the deed of trust, it has an absolute right to foreclose upon
default (Dkt. No. 43 at 9-10).
Pursuant to the terms of the deed of trust, after giving
appropriate notice to the borrower, the lender, at its option, “may
require immediate payment in full of all sums secured by this
Security Instrument without further demand and may invoke the power
of sale . . . .” (Dkt. No. 42-2 at 12).

Insofar as PNC could not

have breached the contract by pursuing foreclosure, a remedy
explicitly permitted by the contract, the Ballengers have failed to
allege a viable bad faith claim premised upon the same.
Staats, 2011 WL 12451606, at *5.

See

The Court therefore GRANTS PNC’s

37

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
motion for summary judgment as to the Ballengers’ claim that it
elected to pursue foreclosure in bad faith.
III.

Count Two: Misrepresentations and Unconscionable Conduct
In Count Two, the Ballengers allege that PNC violated the

WVCCPA

by

(1)

using

fraudulent,

deceptive,

or

misleading

representations to obtain information about the Ballengers; and,
(2) using unfair or unconscionable means in efforts to collect a
debt (Dkt. No. 1-1 at 14).

PNC argues that the Ballengers’ WVCCPA

claims fail “for all the reasons discussed herein with respect to
Plaintiffs [sic] breach of contract claims.”

(Dkt. No. 43 at 13).

The Ballengers contend that a question of material fact exists as
to whether (1) PNC’s misrepresentations amounted to unlawful debt
collection under the WVCCPA, and (2) PNC engaged in unconscionable
means to attempt to collect a debt (Dkt. No. 47 at 21).
A.

Fraudulent, Deceptive, or Misleading Representations

Pursuant to W. Va. Code § 46A-2-127, a debt collector is
prohibited from using “any fraudulent, deceptive or misleading
misrepresentation or means” in order to “collect or attempt to
collect claims or to obtain information concerning consumers.”
Va. Code § 46A-2-127.

W.

Although § 46A-2-127 applies generally, the

Act also enumerates specific conduct deemed violative, including
38

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
any false representation that the debt collector “has in his
possession . . . something of value for the consumer that is made
to solicit or discover information about the consumer.”
Code § 46A-2-127(b).

W. Va.

The Act also prohibits any representation

that a consumer’s existing obligation may be increased by charges
or fees when, in fact, no such charges or fees may be legally added
to the existing obligation.

W. Va. Code § 46A-2-127(g).

The Ballengers allege that PNC violated § 46A-2-127(b) by
representing that loss mitigation was available when it was not,
thereby

obtaining

information

about

the

unnecessary loss mitigation applications.
127(b).

Ballengers

through

W. Va. Code § 46A-2-

On September 30, 2013, the Ballengers submitted an

application

for

payment

assistance

to

PNC;

as

part

of

that

application, they disclosed their monthly income and expenses,
household assets, and hardship information (Dkt. No. 47-34).

On

October 4, 2013, PNC denied the Ballengers’ request for assistance
because the 2013 loan did not originate on or before January 1,
2009 (Dkt. No. 42-12 at 2).

In that and many subsequent letters,

PNC invited the Ballengers to apply for other workout options (Dkt.
No. 42-12 at 2; Dkt. No. 47-35 at 15-16; Dkt. No. 47-36).

In the

following months, Monica Ballenger resubmitted the workout packet
39

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
“four to five times,” “taking the same packet every time and resending it” after PNC denied the same (Dkt. No. 47-1 at 21).

The

first

was

time

PNC

informed

the

Ballengers

that

their

loan

completely ineligible for hardship assistance, however, was on
January 29, 2014, over six months after it first invited them to
apply (Dkt. No. 47-37 at 1).
Viewed in the light most favorable to the Ballengers, the
facts support the inference that PNC, although always aware of its
inability to offer loss mitigation for loans less than 12 months
old, nevertheless falsely represented to the Ballengers that loss
mitigation options were available in order to obtain information
about them (Dkt. No. 47-35 at 13).

W. Va. Code § 46A-2-127(b); see

Ranson v. Bank of Amer., N.A., No. 3:12-5616, 2013 WL 1077093, at
*9 (S.D.W. Va. Mar. 14, 2013)(finding that the plaintiff pleaded a
sufficient
defendant

claim

under

misrepresented

the

WVCCPA

that

when

loan

he

alleged

modification

that

options

the
were

available in order to obtain information).
Similarly, PNC told the Ballengers that their debt would be
increased

without

accounting

for

the

payments.

W. Va. Code § 46A-2-127(g).

fully

refunded

escrow

See Patrick v. PHH Mortg.

Corp., 937 F.Supp. 2d 773, 785 (N.D.W. Va. 2013) (denying defendant
40

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
lender’s motion to dismiss after the plaintiff alleged that it
sought collection of past due amounts that were no longer due).
Even though it had received a full refund of the insurance premium
from Allstate, PNC sought to collect a higher monthly premium from
the Ballengers that included the flood insurance.
therefore

have

created

a

genuine

dispute

as

The Ballengers
to

whether

PNC

represented to them that their obligation would be increased by the
improper escrow charges.
B.

Unfair or Unconscionable Means

Pursuant to W. Va. Code § 46A-2-128, a debt collector is
prohibited from using unfair or unconscionable means to collect or
attempt

to

collect

a

debt.

Notwithstanding

the

general

applicability of W. Va. Code § 46A-2-128, a debt collector is
specifically prohibited from communicating with a consumer more
than 72 hours after the debt collector receives written notice that
the consumer is represented by an attorney regarding the subject
debt.

W. Va. Code § 46A-2-128(e).

To be effective, such notice

must state the attorney’s name, address, and telephone number, and
be sent to the debt collector’s registered agent.

Id.

If the debt

collector is not registered with the West Virginia Secretary of

41

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
State, the notice must be sent to its principal place of business.
Id.
In January, 2014, the Ballengers retained Mountain State
Justice as counsel, and on January 31, 2014, requested that PNC
direct any further communication to their counsel (Dkt. No. 47-38
at 1).

That notice, which was mailed to PNC’s address in Dayton,

Ohio, included counsel’s name, address, and phone number, and was
marked as received by “Customer Service Research” on February 3,
2014.

Id.
Despite this notice, on March 12, 2014, PNC directly offered

the Ballengers a trial plan to avoid foreclosure that provided for
monthly payments of $1,254.29 for 480 months at an interest rate of
4.6250% (Dkt. No. 42-13 at 2, 4).

The Ballengers declined the

trial plan on April 17, 2014, reminding PNC that it needed to
communicate with their attorney (Dkt. No. 47-37 at 9).
The Ballengers have met their burden of creating a genuine
dispute

as

to

whether

PNC

violated

§

46A-2-128(e).

It

is

undisputed that the Ballengers sent PNC a letter advising them to
speak with their attorney, who would be handling their case from
that point on, and provided PNC with the name, address, and phone
number of the attorney, as required by statute.
42

Although the

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
record is murky as to whether service at PNC’s Dayton, Ohio,
address was proper under W. Va. Code § 46A-2-128(e), dismissal is
inappropriate at this juncture because such fact is in dispute.
The Court therefore DENIES PNC’s motion for summary judgment as to
Count Two.
IV.

Count Three: Refusal of Payments
In Count Three, the Ballengers allege that PNC violated the

WVCCPA

by

occasions.”14

refusing
(Dkt.

to
No.

accept
1-1

at

their
14).

payments
PNC

“on

argues

multiple
that

the

Ballengers’ claim fails as a matter of law because they never
attempted to make payments (Dkt. No. 43 at 2, 13).

The Ballengers

contend they have stated a viable claim under the WVCCPA by
establishing that PNC instructed them not to make payments to their
account (Dkt. No. 47 at 22-23).
Pursuant to W. Va. Code § 46A-2-115(c), a lender must credit
all payments arising out of a consumer loan transaction upon

14

Although the factual allegations underlying Counts One and
Three are similar, a borrower may bring both a common law breach of
contract claim and a claim under the WVCCPA. See Bailey v. Branch
Banking & Trust Co., No. 3:10-0969, 2011 WL 2517253, at *2-3
(S.D.W. Va. June 23, 2011); Wince v. Easterbrooke Cellular Corp.,
681 F.Supp. 2d 668, 693 (N.D.W. Va. 2010) (Bailey, J.); W. Va. Code
§ 46A-2-101(e)(3).
43

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
receipt

against

payments

due.

“[A]llegations

that

a

lender

instructed a borrower to not make payments or that a lender
returned payments to a borrower would constitute a plausible claim
under § 46A-2-115(c).”

McNeely v. Wells Fargo Bank, N.A., No.

2:13CV25114, 2014 WL 7005598, at *8 (S.D.W. Va. Dec. 10, 2014).
See

also

Petty,

2013

WL

1837932,

at

*13

(finding

that

the

plaintiffs sufficiently alleged a WVCCPA claim by establishing that
the defendant told them not to make any additional payments).
Viewed in the light most favorable to the Ballengers, the
facts reflect that PNC representatives advised the Ballengers that
they would not accept partial payments, thus leading the Ballengers
to withhold any payments at all (Dkt. No. 42-14 at 3; Dkt. No. 4737 at 7).

On October 25, 2013, the Ballengers called PNC in an

attempt to make their August mortgage payment (Dkt. No. 47-1 at 25;
Dkt. No. 47-2 at 18).

During that call, a PNC representative

informed them that PNC would only accept the total past due amount
for both August and September, 2013, as a payment (Dkt. No. 47-1 at
25; Dkt. No. 47-2 at 18; Dkt. No. 47-37 at 7).

Based on that

representation, the Ballengers did not send in their August payment
(Dkt. No. 47-2 at 18 (“Q: Okay.
in?

Any partial payment in?

And, sir, did you send any payment
A: What was the use?
44

Q: Is that a

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
‘no,’ sir?

A: No.

You’re right, we didn’t.

Because they weren’t

going to take it no way.”)).
On December 4, 2013, the Ballengers sent PNC a letter offering
to mitigate their debt by paying $1,500 immediately, and also to
make their January 2014 payment on time (Dkt. No. 47-39).

On

December 23, 2013, the Ballengers wrote to PNC seeking assistance,
and offering to pay $1,000 immediately, with the remaining $9,455
to be paid at the back end of the loan (Dkt. No. 47-39).

PNC never

retracted its statement that it did not accept partial payments.
A genuine dispute therefore exists as to whether PNC told the
Ballengers not to make partial payments toward their account, thus
rendering summary judgment inappropriate as to Count Three.

The

Court therefore DENIES PNC’s motion for summary judgment as to
Count Three.
SUMMARY OF THE COURT’S RULINGS
For the reasons discussed, the Court:
1.

OVERRULES the Ballengers’ Rule 56(c) objections;

2.

GRANTS IN PART PNC’s motion for summary judgment as to
Count One and DISMISSES WITH PREJUDICE the following
claims:

45

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
C

that PNC breached the contract by obtaining an
unnecessary flood insurance policy and requiring
the

Ballengers

to

pay

an

excessive

insurance

premium;
C

that

PNC

breached

the

contract

by

refusing to

accept payments;
C

that

PNC

breached

the

contract

by

failing to

appropriately conduct foreclosure review; and,
C

that

PNC

elected

to

pursue

foreclosure

in bad

faith.
3.

DENIES IN PART PNC’s motion for summary judgment as to
the following claims in Count One:
C

that

PNC

breached

the

contract

by

assessing

excessive, improper insurance charges; and,
C

that

PNC

impaired

the

contractual

right

to

reinstate by conditioning that right upon payment
of fully refunded insurance charges.
4.

DENIES PNC’s motion for summary judgment as to Counts Two
and Three.

It is so ORDERED.

46

BALLENGER V. NATIONAL CITY MORTGAGE

1:14CV81

MEMORANDUM OPINION AND ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT [DKT. NO. 42]
The Court directs the Clerk to transmit copies of this Order
to counsel of record and to enter a separate judgment order.
DATED:

August 26, 2015.

/s/ Irene M. Keeley
IRENE M. KEELEY
UNITED STATES DISTRICT JUDGE

47