Court Opinion

ID: 179842
Source: CourtListenerOpinion
Date Created: 2010-11-24 17:46:57+00
Date Added: 2024-06-11T09:05:43.504017
License: Public Domain

NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT
                                 _____________

                                      No. 09-1843
                                     _____________

                                  EDWARD MURPHY;
                                  SANDRA MURPHY,
                                         Appellants
                                        v.

                 FEDERAL DEPOSIT INSURANCE CORPORATION,
                 (RECEIVER FOR WASHINGTON MUTUAL BANK);
                               WELLS FARGO
                               _____________

                       Appeal from the United States District Court
                         for the Eastern District of Pennsylvania
                             (D.C. Civil No. 2-07-cv-04417)
                        District Judge: Honorable J. Curtis Joyner
                                     _____________

                         Submitted Under Third Circuit LAR 34.1(a)
                                    November 4, 2010

                Before: SCIRICA, RENDELL and ROTH, Circuit Judges

                           (Opinion Filed: November 24, 2010)
                                    _____________

                               OPINION OF THE COURT
                                   _____________

RENDELL, Circuit Judge.

       Plaintiffs Edward and Sandra Murphy appeal the United States District Court for

the Eastern District of Pennsylvania’s grant of defendant Wells Fargo’s Motion to

Dismiss their complaint and the District Court’s denial of plaintiffs’ Motion for Partial
Reconsideration and for Leave to File an Amended Complaint. Because the District

Court’s disposition of both motions was proper, we will affirm.

       The District Court had diversity jurisdiction under 28 U.S.C. § 1332 and federal

question jurisdiction under 28 U.S.C. § 1331. We exercise jurisdiction over the District

Court’s final order under 28 U.S.C. § 1291.

       Because we write only for the benefit of the parties, we include only the essential

facts. Plaintiffs initiated this action solely against Washington Mutual Home Loans, Inc.

(“WaMu”) 1 alleging multiple types of wrongdoing arising out of the origination and

servicing of a residential mortgage loan they entered into with non-party Gateway

Funding Diversified Mortgage Services, L.P. (“Gateway Funding”). The mortgage loan

was subsequently assigned to WaMu. WaMu commenced a foreclosure action in May,

2006 after plaintiffs defaulted on their mortgage payments. Plaintiffs allegedly sent a

check to reinstate their mortgage on June 27, 2006, and WaMu thereafter dismissed the

foreclosure action. Plaintiffs alleged that WaMu then sent them conflicting statements,

each demanding a different amount of payment and stating a different due date for that

payment.

       Three months after filing a complaint against WaMu, plaintiffs filed an amended

complaint against Wells Fargo Bank, N.A. (“Wells Fargo”), a later assignee of the

mortgage loan. The amended complaint asserted sixteen causes of action against Wells

Fargo on the basis of assignee liability. The Murphys alleged that their mortgage loan

   1
    Since September 25, 2008, WaMu has been in the receivership of the Federal
Deposit Insurance Corporation (“FDIC”). The FDIC is the named defendant in this case.
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was assigned to Wells Fargo at some point after the events described above and that,

consequently, Wells Fargo became liable as a matter of law for Gateway Funding and

WaMu’s wrongs. At no point did plaintiffs allege that Wells Fargo independently

committed any misdeeds.

       In granting Wells Fargo’s Motion to Dismiss plaintiffs’ complaint, the District

Court explained that plaintiffs’ mortgage loan was assigned to Wells Fargo after the

events surrounding plaintiffs’ allegations against WaMu occurred. Thus, the District

Court concluded that plaintiffs had not alleged any facts that supported the sixteen causes

of action they asserted against Wells Fargo. Following the District Court’s dismissal of

the Murphys’ complaint, they filed a Motion for Partial Reconsideration and for Leave to

File an Amended Complaint. In denying this motion, the District Court noted that

plaintiffs had done nothing more than re-assert the same arguments the Court had already

rejected and that the amendments plaintiffs sought would not give them valid claims on

which relief could be granted.

       We exercise plenary review over a District Court’s grant of a 12(b)(6) Motion to

Dismiss. See McGovern v. City of Philadelphia, 554 F.3d 114, 115 (3d Cir. 2009). The

District Court’s judgment “is proper only if, accepting all factual allegations as true and

construing the complaint in the light most favorable to the plaintiff, we determine that the

plaintiff is not entitled to relief under any reasonable reading of the complaint.” Id. We

review a denial of a motion for leave to amend for abuse of discretion. Where

amendment would be futile, meaning that the complaint, “as amended, would fail to state

a claim upon which relief could be granted,” the District Court does not abuse its

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discretion in denying leave to amend. In re Burlington Coat Factory Sec. Litig., 114 F.3d

1410, 1434 (3d Cir. 1997). See also Grayson v. Mayview State Hosp., 293 F.3d 103, 108

(3d Cir. 2002).

       Only plaintiffs’ claim against Wells Fargo under the Pennsylvania Unfair Trade

Practices and Consumer Protection Law (“UTPCPL”), 73 Pa. Stat. Ann. § 211, remains. 2

Plaintiffs make two arguments on appeal. First, with regard to their UTPCPL claim, they

argue that the District Court erred in dismissing their amended complaint for lack of

specificity. Second, they assert that the District Court abused its discretion when it

refused to grant their request to file an amended complaint based on its conclusion that

amendment would be futile. They argue that amendment would not be futile because,

pursuant to the Federal Trade Commission’s Rule Concerning the Preservation of

Consumers’ Claims and Defenses (the “FTC Holder Rule”), assignee holders of

mortgages are subject to the same liability as the lenders with whom their loans

originated.

       Plaintiffs’ claims lack merit; the District Court did not err in dismissing their

complaint and did not abuse it discretion in denying their request for leave to amend.

The UTPCPL, the sole legal basis on which plaintiffs appeal, does not impose liability on

assignees. See Williams v. Nat’l Sch. of Health Tech., Inc., 836 F. Supp. 273, 283 (E.D.

Pa. 1993) (noting that the UTPCPL “does not impose liability on parties who have not

themselves committed wrongdoing.”); Roche v. Sparkle City Realty, No. 08-2518, 2009

   2
     The District Court granted plaintiffs’ request to discontinue without prejudice their
claims against WaMu/FDIC, so only plaintiffs’ claims against Wells Fargo remain.
                                             4
WL 1674417, at *4 (E.D. Pa. June 12, 2009) (“[N]umerous courts have found that loan

assignees cannot be held liable under the UTPCPL without allegations that they

specifically committed wrongdoing.”).

       Plaintiffs’ reliance on the FTC Holder Rule is also misplaced. First, the Rule,

which requires that certain language be included in “consumer credit contracts,” does not

apply to mortgage loans. 16 C.F.R. § 433.2 (2005); In re Woodsbey, 375 B.R. 145, 150

(Bankr. W.D. Pa. 2007)); Johnson v. Long Beach Mortgage Trust, 2001-04, 451 F. Supp.

2d 16, 55 (D.D.C. 2006). Second, even if notice had mistakenly been included in the

plaintiffs’ mortgage note pursuant to the FTC Holder Rule, the Truth in Lending Act’s

(“TILA”) assignee liability provisions would trump the Rule and preclude Wells Fargo

from incurring liability for the wrongs of others. Ramadan v. Chase Manhattan Corp.,

229 F.3d 194, 200-03 (3d Cir. 2000). Without the FTC Holder Rule, plaintiffs have no

UTPCPL claim, and any amendment to their complaint would be futile because plaintiffs

could never allege that their loan was not subject to TILA.

      For the foregoing reasons, we will affirm the District Court’s grant of defendant’s

Motion to Dismiss and denial of plaintiffs’ Motion for Partial Reconsideration and for

Leave to File an Amended Complaint.

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