Edward Bloom v. JP Morgan Chase Bank NA

• Court: Court of Appeals for the Third Circuit
• Decided: August 26, 2022
• Docket: 21-2348
• Status: Unpublished

Opinion

NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

________________

No. 21-2348 ________________

EDWARD BLOOM, Appellant

v.

JP MORGAN CHASE BANK, N.A.; CHASE MORTGAGE HOLDINGS, INC.; CHASE HOME FINANCE, LLC; RUSHMORE LOAN MANAGEMENT SERVICES, LLC; U.S. BANK NATIONAL ASSOCIATION _____________

On Appeal from the United States District Court for the Western District of Pennsylvania (D.C. Civil No. 2-20-cv-01386) District Judge: Honorable William S. Stickman ________________

Argued: April 13, 2022

Before: AMBRO, JORDAN, and SCIRICA, Circuit Judges.

(Filed: August 26, 2022)

Ryan D. Very Leah M. Wilson [ARGUED] Very Law 500 Grant Street Suite 2900 Pittsburgh, PA 15219

Counsel for Appellant Stephen M. Hladik [ARGUED] Hladik Onorato & Federman 298 Wissahickon Avenue North Wales, PA 19454

Counsel for Appellees Rushmore Loan Management Services, LLC and U.S. Bank National Association

______________

OPINION* ________________

SCIRICA, Circuit Judge

Edward Bloom appeals the United States District Court’s dismissal of his

complaint for failing to state a plausible claim against Appellees, U.S. Bank National

Association (“U.S. Bank”) and Rushmore Loan Management Services, LLC

(“Rushmore”) (collectively the “U.S. Bank Defendants”), regarding a mortgage on a

property he owned. The District Court correctly held that most of the allegations in the

complaint predated the 2017 assignment of the mortgage to the U.S. Bank Defendants

and Bloom did not allege facts demonstrating the U.S. Bank Defendants should be liable

for any actions taken by prior holders of the mortgage. And the alleged actions taken by

the U.S. Bank Defendants do not plausibly support any of the claims in the complaint

against those defendants. Accordingly, we will affirm.

* This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not constitute binding precedent.

2 This case arises out of Appellant’s default on a note (the “Note”) and mortgage

(the “Mortgage”) executed in favor of JP Morgan Chase Bank in 2007. On May 18,

2017, the Note and Mortgage were assigned to U.S. Bank, in the care of its mortgage

servicer, Rushmore. This assignment was recorded in the Allegheny County Department

of Real Estate on September 1, 2017.

On August 21, 2020, Appellant filed a complaint in Pennsylvania state court

against the U.S. Bank Defendants as well as the banks that had controlled the Note and

Mortgage before their assignment to U.S. Bank in 2017 (the “Chase Defendants”). The

case was subsequently removed to the United States District Court for the Western

District of Pennsylvania.

The complaint largely focuses on an alleged oral modification of the written

Mortgage between Appellant and the Chase Defendants in 2012. Most of the specific

facts alleged in the complaint occurred between 2012 and 2016, when the Chase

Defendants held the mortgage.

On June 21, 2021, the District Court dismissed all counts against all defendants

under Fed. R. Civ. P. 12(b)(6). The District Court dismissed several counts against the

Chase Defendants as time barred under the applicable statute of limitations and the

remainder for improper pleading. The District Court dismissed all counts against the

U.S. Bank Defendants due to Appellant’s failure to state a plausible claim. In dismissing

the claims against the U.S. Bank Defendants, the District Court held that the material

3 allegations in the complaint predated the 2017 assignment of the Note and Mortgage to

the U.S. Bank Defendants and could not be tied to the U.S. Bank Defendants.

Appellant appeals the dismissal of the claims with respect to the U.S. Bank

Defendants only.1

We exercise plenary review over a district court’s dismissal of claims under

Rule 12(b)(6). Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). To survive a motion

to dismiss, a plaintiff must allege sufficient facts that, if accepted as true, state a plausible

claim for relief. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). We must accept all well-

pleaded factual allegations as true, but we are “not compelled to accept unsupported

conclusions and unwarranted inferences, or a legal conclusion couched as a factual

allegation.” Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir. 2007) (cleaned up).

Before turning to the specific claims asserted in the complaint, we consider two

contentions Appellant makes regarding what he claims were errors made by the District

Court. First, Appellant claims the District Court erred in holding the U.S. Bank

Defendants did not act as agents of the Chase Defendants with respect to the Mortgage

and Note. But we agree with the District Court’s conclusion that the complaint does not

allege facts sufficient to demonstrate an agency relationship between the Chase

Defendants and the U.S. Bank Defendants.

1 Appellant notes that he has settled his claims against the Chase Defendants.

4 An agency relationship, in which an agent will be held to have authority to act for

the principal, is only created in specific circumstances: when there is “(1) express

authority, (2) implied authority, (3) apparent authority, and/or (4) authority by estoppel.”

Walton v. Johnson, 66 A.3d 782, 786 (Pa. Super. Ct. 2013). In his complaint, Appellant

does not allege any express or implied authority granted to the U.S. Bank Defendants to

act for the Chase Defendants, any apparent authority for the U.S. Bank Defendants to act

for the Chase Defendants, or any reason why the Chase Defendants should be estopped

from denying an agency relationship existed. Indeed, Appellant raised the agency theory

for the first time in his briefing to the District Court.

But even if Appellant’s agency theory had been properly pleaded, it would not be

relevant to his claims against the U.S. Bank Defendants at issue in this appeal. Appellant

does not claim the alleged principal (the Chase Defendants) should be held liable for the

actions of an alleged agent (the U.S. Bank Defendants). See, e.g., Restatement (Third) of

Agency § 6.01 (2006) (“When an agent acting with actual or apparent authority makes a

contract on behalf of a disclosed principal, (1) the principal and the third party are parties

to the contract; and (2) the agent is not a party to the contract unless the agent and third

party agree otherwise.”). Rather, Appellant suggests the inverse, that the alleged agent

(the U.S. Bank Defendants) should be held liable for the actions of the alleged principal

(the pre-2017 actions by the Chase Defendants). Appellant cites no authority, and we are

aware of none, for this backward application of agency law.

Second, Appellant contends the District Court erred in holding that the U.S. Bank

Defendants are in possession of the Note. Specifically, Appellant contends the U.S. Bank

5 Defendants are not “in possession of the Note and therefore do not have the rights of

enforcement on that Note.” Appellant’s Br. 10. But this argument is not supported by

the facts alleged in the complaint. The complaint alleges the Note and Mortgage were

assigned to the U.S. Bank Defendants in 2017 and that this assignment was recorded.

Appellant cites no allegations in the complaint, and we have found none, suggesting the

U.S. Bank Defendants are not in possession of the Note.

Moreover, Appellant never explains why the U.S. Bank Defendants’ right to

enforce the Note is relevant to the claims asserted in the complaint. While the U.S. Bank

Defendants’ right to enforce the Note might be relevant as a defense in a foreclosure

action, see, e.g., Bayview Loan Servicing LLC v. Wicker, 163 A.3d 1039, 1044–47 (Pa.

Super. Ct. 2017), Appellant never explains its relevance for the causes of action asserted

in the complaint.

Turning to the claims asserted in the complaint, we agree with the District Court

that Appellant failed to plead any plausible claim against the U.S. Bank Defendants. The

bulk of the allegedly illegal conduct described in the complaint occurred before 2017 and

involved the Chase Defendants, not the U.S. Bank Defendants. The complaint’s

conclusory assertions that “Defendants’ actions have been ongoing,” App. 33 ¶ 135; 34

¶ 132; 35 ¶ 145; 36 ¶ 151; 38 ¶ 160; 40 ¶ 189; see also App. 39 ¶ 169 (“Defendants’

actions and breaches have been ongoing.”), do not explain for which specific actions the

U.S. Bank Defendants are responsible and why those actions plausibly entitle Appellant

to relief against those defendants.

6 There are few factual allegations in the complaint specifically regarding the U.S.

Bank Defendants. Appellant includes cursory allegations that Appellant “received

multiple phone correspondences from Rushmore,” which were “in direct violation of

state and federal law.” App. 30 ¶¶ 109–11. The only count asserted in the complaint

referencing these phone correspondences is Count III, asserting a violation of

Pennsylvania’s Fair Credit Extension Uniformity Act (the “FCEUA”). See App. 34

¶¶ 137–41. But taken in the light most favorable to Appellant, the facts alleged in the

complaint related to these phone contacts do not plausibly establish a violation of the

FCEUA. “As a private action under Section 201–9.2 of the [Unfair Trade Practices and

Consumer Protection Law], FCEUA claims therefore must plead that a plaintiff suffered

an ascertainable loss as a result of a defendant’s prohibited action.” Kern v. Lehigh

Valley Hosp., Inc., 108 A.3d 1281, 1290 (Pa. Super. Ct. 2015); see also Kaymark v. Bank

of Am., N.A., 783 F.3d 168, 182 (3d Cir. 2015) (“Kaymark failed to allege ascertainable

loss because he cannot point to actual damages as a result of the disputed fees listed in

the Foreclosure Complaint.”), abrogated on other grounds by Obduskey v. McCarthy &

Holthus LLP, 139 S. Ct. 1029 (2019). The complaint contains no allegations regarding

any loss Appellant may have suffered as a result of these allegedly prohibited phone

contacts. Accordingly, since the complaint fails to allege any ascertainable loss resulting

from the U.S. Bank Defendants’ actions, Count III does not assert any plausible claim for

relief against those defendants.

The remaining counts also fail to allege sufficient facts related to the U.S. Bank

Defendants’ actions to support any plausible claim against those defendants. For

7 example, Count IV alleges violations of the Fair Debt Collection Practices Act and the

FCEUA against all the defendants. Paragraph 1492 in the complaint sets out the alleged

actions by the defendants that supposedly support these claims: the “sending of periodic

mortgage statements which reference the imposition of a 7.875% interest rate from April

1, 2011 through August 1, 2014,” which were allegedly “false, deceptive and misleading

representations in connection with the collection of Plaintiff’s debt which misrepresented

the character, amount, and legal status of Plaintiff’s debt.” App. 36 ¶ 149. But the only

mortgage statement cited in the complaint allegedly stating this incorrect interest rate is

the August 1, 2014, Account Statement sent by Chase, not the U.S. Bank Defendants.

The complaint does not allege the U.S. Bank Defendants sent any mortgage statements

that misstated the interest rate imposed on the Mortgage for any period, and, as discussed

above, Appellant cannot rely on an agency theory to hold the U.S. Bank Defendants

liable for the Chase Defendants’ actions.

As another example, Count V cites the following as evidence of an alleged

violation of the Unfair Trade Practices and Consumer Protection Law: the imposition of a

7.875% interest rate from April 1, 2011, through August 1, 2014; a March 31, 2012

verbal agreement; an August 26, 2014 increase to Appellant’s principal balance; the

return of Appellant’s October 20, 2014 payment; an October 27, 2014 threat to foreclose;

and a July 8, 2016 Notice of Account Correction. All these allegations predate the

assignment of the Note and Mortgage to the U.S. Bank Defendants and do not plausibly

2 Paragraph 150 is identical to paragraph 149.

8 support a claim under the Unfair Trade Practices and Consumer Protection Law against

those defendants.

Though Appellant contends the complaint should survive the U.S. Bank

Defendants’ motion to dismiss, he does not specify which counts he thinks are supported

by the allegations in the complaint. Indeed, we do not think the allegations in the

complaint plausibly support any of the claims against the U.S. Bank Defendants.

Finally, Appellant contends the District Court erred by closing the docket without

first granting Appellant leave to amend the complaint. But Appellant never sought leave

from the District Court to amend the complaint and raises this issue for the first time on

appeal. “[I]n ordinary civil litigation it is hardly error for a district court to enter final

judgment after granting a Rule 12(b)(6) motion to dismiss when the plaintiff has not

properly requested leave to amend its complaint.” Fletcher-Harlee Corp. v. Pote

Concrete Contractors, Inc., 482 F.3d 247, 253 (3d Cir. 2007).

Because Appellant failed to state a plausible claim for relief against the U.S. Bank

Defendants, we will affirm the District Court’s dismissal of his complaint.