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Floyd v. PNC Mortgage

United States District Court, District of Columbia

October 24, 2016

PNC MORTGAGE, a division of PNC Bank, N.A., et al., Defendants.


          James E. Boasberg United States District Judge

         “Worm or beetle - drought or tempest - on a farmer's land may fall, / But for first-class ruination, trust a mortgage 'gainst them all.” Will Carleton may have written these words over a century ago to capture the plight of rural American farmers, but Plaintiff Anthony Floyd alleges that he can bear witness to their continued relevance for the urban real-estate investor of today. According to him, after the District of Columbia erroneously listed one of his residential properties as blighted, Defendants PNC Mortgage and The Bank of New York Trust Company improperly required inflated mortgage payments to cover the subsequent increase in property taxes. He then sued them, citing two federal statutes and a variety of state causes of action. Defendants now move for summary judgment on the ground, inter alia, that the federal laws Floyd invokes do not apply to his loan. As the Court agrees, it will grant Defendants' Motion as to his federal counts and refuse to exercise supplemental jurisdiction as to what is left.

         I. Background

         The Court need not enter the corn maze of this case as a few facts laid out in the light most favorable to Plaintiff will suffice. On April 14, 1988, Floyd purchased a single-family house located at 17 Rhode Island Avenue N.E., Washington, D.C. See ECF No. 10 (Amended Complaint), ¶ 6; ECF No. 37-4 (Deposition of Anthony Floyd) at 12. The Property was originally purchased as an owner-occupied residence. See Floyd Depo. at 12-14. In or around 1996, however, Floyd moved out and rented the Property to others thenceforth. Id. (confirming he might have lived at Property for some period, but not in the past 20 years).

         In 2004, Plaintiff refinanced the Property by securing a residential loan from National City Mortgage Company. See ECF No. 41-1, Exhs. 1 (Note), 2 (Deed of Trust). To effectuate that loan, he executed a Note and Deed of Trust on single-family residential forms. Id. All went well with the mortgage until the District of Columbia erroneously listed the Property as blighted in 2011 and, accordingly, began charging additional property taxes on it. See ECF No. 41-1, Exhs. 4-5. Defendants had, by this time, taken over the loan servicing and thus paid these additional taxes to the District. See ECF No. 41-2, Exh. 6. They then sought to recover these amounts from Plaintiff by increasing the escrow property-tax portion of his monthly mortgage payments to match the new tax rate. Id. Floyd, however, protested that he was not obligated to pay this new sum. See ECF No. 39 (Opposition) at 3-4. Defendants, nevertheless, continued to seek higher payments and eventually declared the mortgage in default. Id.; Floyd Depo. at 44.

         On October 15, 2014, Floyd filed this action in the Superior Court of the District of Columbia. See ECF No. 1 (Notice of Removal). After Defendants successfully removed the case to this Court, Floyd filed an Amended Complaint asserting six claims against them. See ECF No. 10. Counts I and II allege that they violated two federal laws - the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2601, et seq., and the Truth in Lending Act (TILA), 15 U.S.C. § 1601, et seq. See Am. Compl., ¶¶ 24-61. The remaining four counts allege various claims related to unfair or deceptive business practices in violation of District of Columbia laws. Id., ¶¶ 62-86. Discovery is now complete, and Defendants jointly move for summary judgment on all counts.

         II. Standard of Review

         Summary judgment may be granted if “the movant shows 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(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986); Holcomb v. Powell, 433 F.3d 889, 895 (D.C. Cir. 2006). A fact is “material” if it is capable of affecting the substantive outcome of the litigation. See Liberty Lobby, 477 U.S. at 248; Holcomb, 433 F.3d at 895. A dispute is “genuine” if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. See Scott v. Harris, 550 U.S. 372, 380 (2007); Liberty Lobby, 477 U.S. at 248; Holcomb, 433 F.3d at 895. “A party asserting that a fact cannot be or is genuinely disputed must support the assertion” by “citing to particular parts of materials in the record” or “showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.” Fed.R.Civ.P. 56(c)(1).

         When a motion for summary judgment is under consideration, “[t]he evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor.” Liberty Lobby, 477 U.S. at 255; see also Mastro v. PEPCO, 447 F.3d 843, 850 (D.C. Cir. 2006); Aka v. Wash. Hosp. Ctr., 156 F.3d 1284, 1288 (D.C. Cir. 1998) (en banc). The nonmoving party's opposition, however, must consist of more than mere unsupported allegations or denials and must be supported by affidavits, declarations, or other competent evidence, setting forth specific facts showing that there is a genuine issue for trial. See Fed.R.Civ.P. 56(e); Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). The nonmovant is required to provide evidence that would permit a reasonable jury to find in its favor. See Laningham v. Navy, 813 F.2d 1236, 1242 (D.C. Cir. 1987).

         III. Analysis

         The Court first takes up Floyd's two federal claims, granting summary judgment to Defendants on both. It next describes its reasons for not exercising supplemental jurisdiction over what remains.

         A. Federal Claims (RESPA and TILA)

         Both of Plaintiff's federal claims rely on statutes - RESPA and TILA - that Congress passed to protect consumers from abuse by creditors. Mourning v. Family Publications Serv., Inc., 411 U.S. 356, 361-68 (1973) (explaining history of TILA's passage to remedy problems with consumer credit); Johnson v. Wells Fargo Home Mortg., Inc., 635 F.3d 401, 417 (9th Cir. 2011) (explaining Congress passed RESPA “in 1974 to protect consumers from abusive practices in mortgage closings”). Neither of these statutes, accordingly, applies to loans taken out for commercial or business purposes. See 12 U.S.C. § 2606(a)(1) (RESPA) (exempting “credit transactions involving extensions of credit . . . primarily for business, commercial, or agricultural purposes”); 15 U.S.C. § 1603(1) (TILA) (same). In general, a loan is deemed to be for a business purpose when it is “extended to acquire, improve, or maintain rental property . . . that is not owner-occupied” - e.g., “a single-family house that will be rented to another person to live in.” 12 C.F.R. pt. 226, supp. I, cmt. 3(a)(4); accord Johnson, 635 F.3d at 417.

         The fundamental problem with Floyd's federal claims is thus readily apparent. On his 2004 mortgage forms, he explicitly indicated that he intended to use the Property for “investment” purposes. See ECF No. 37-8 (Application) at 1 (indicating “Property will be Investment, ” rather than “Primary Residence” or “Secondary Residence”). He then confirmed in his deposition in this case that he in fact has used the Property as a rental since refinancing it in 2004 and, indeed, for nearly a decade before doing so. See Floyd Depo. at 12-14. These two facts alone are fatal to his federal claims.

         Plaintiff acknowledges that these statutes do not apply to business loans. See Opp. At 7-8. He nevertheless seeks to avoid summary judgment by advancing two arguments, both of which are factually misleading. He first contends that there is a genuine issue of material fact as to whether he lived at the property within a year of acquiring the 2004 loan, see id., thus rendering it a consumer transaction under RESPA and TILA. To support this assertion, he points only to three pages of his deposition. Reproducing those pages in full tells quite a different tale:

A. [Responding to question of how long he has owned the Property . . .] Twenty? Let me think back. This is 2000 -
Q. This is 2016. So, say, from 1996, have you owned [the Property] since at least 1996?
A. Yes.
Q. What kind of property is ...

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