Martino v. Everhome Mortgage
- Citation:
- No. 10-1247 -- Not Precedential
- Tag(s):
-
- Ruling:
- The district court held, and the Third Circuit affirmed, that Plaintiffs' complaint failed to state a claim for relief under FRCP 12(b)(6). The Third Circuit agreed that simply alleging discrepancies between documents from different sources, without more, did not "support an inference that EverHome violated the law." Moreover, Plaintiffs failed to realize that, because of their subsequent bankruptcy filings, the amount of the foreclosure judgment naturally increased over time as interest accrued and expenses were incurred.
The Third Circuit also rejected Plaintiffs' attempt to object to the attorneys' fees that were incurred after the mortgage default. Plaintiffs had erroneously relied on In re A & P Diversified Techns. Realty, Inc., 467 F.3d 337 (3d Cir. 2006). In that case, the borrower had defaulted on mortgage documents, foreclosure proceedings had commenced, and a bankruptcy petition was filed to stay the foreclosure proceedings. The lender moved for and was granted stay relief, and thereafter secured a judgment of foreclosure with fees and costs. That judgment was subsequently satisfied. When the lender then filed a claim in the bankruptcy court for additional attorneys' fees, the Third Circuit would not permit the fees. The Court held that the mortgage merged into the foreclosure judgment; therefore, New Jersey Court Rules governed the fees collectible by the lender, not the mortgage documents, and attorneys' fees were denied.
The Third Circuit distinguished that case, noting that, here, Plaintiffs filed their third bankruptcy proceeding two months after entry of final judgment of foreclosure but before the judgment was satisfied. The Third Circuit observed, "As a result of the bankruptcy, one would expect EverHome and [its attorney] to incur expenses that were not included in the foreclosure judgment." Accordingly, the Third Circuit affirmed the District Court's decision to dismiss the complaint and deny further amendments.
- Procedural context:
- Appeal from District Court's denial of motion to amend complaint.
- Facts:
- Plaintiffs were borrowers from EverHome Mortgage company. Beginning in 1996, Plaintiffs had defaulted on their mortgage agreement with EverHome. Plaintiffs had filed three separate Chapter 13 petitions in attempt to rehabilitate their debt, each to no avail. After the second of the three bankruptcy cases was dismissed, EverHome obtained in state court a judgment of foreclosure against Plaintiffs, which included fees, commissions, and expenses, along with interest to accrue thereafter. Two months after the entry of judgment, Plaintiffs filed their third bankruptcy petition.
When the third bankruptcy case was later dismissed, Plaintiffs requested from EverHome payoff statements relating to the underlying judgment amount. In their review of the payoff statements and other information relating to the judgment of foreclosure, Plaintiffs discovered various discrepancies among the documents provided, specifically with figures relating to attorneys' fees, interest, and other costs. Plaintiffs assumed wrongdoing by EverHomes and believed that they were overcharged attorneys' fees and other costs. Accordingly, Plaintiffs—joined by other similarly situated claimants—filed a class action lawsuit against EverHome (and its attorneys) for breach of contract and violations of New Jersey's Consumer Fraud and Truth in Lending Acts. Notably, Plaintiffs did not include facts in the complaint regarding their bankruptcy history.
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