COTTOM v. SELENE FINANCE LP
2:25-cv-01903
E.D. Pa.Aug 14, 2025Background
- Plaintiffs, homeowners in Ambler, PA, faced foreclosure and submitted a loss mitigation application more than 37 days before a scheduled foreclosure sale.
- Defendants, Selene Finance LP (servicer) and U.S. Bank Trust National Association (trustee owner), rejected the application, stating it was not timely, based on an incorrect foreclosure sale date.
- Plaintiffs attempted several times to correct the issue with Defendants, who refused to reevaluate the application or halt the sale.
- Ultimately, Plaintiffs filed for bankruptcy and then sued Defendants, alleging negligence, fraud, violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL), Truth-in-Lending Act (TILA), and Real Estate Settlement Procedures Act (RESPA).
- Defendants moved to dismiss under Rule 12(b)(6) for failure to state a claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Negligence and Reckless Indifference | Defendants negligently misrepresented the foreclosure date, causing loss of mitigation opportunity. | Claims barred by gist of the action and economic loss doctrine; duties arise from contract. | Dismissal premature. Claims survive—factual issues on source of duty and damages remain. |
| Common Law Fraud | Defendants made material misrepresentations about servicing and loss mitigation eligibility. | No plausible fraud; lacked intent to deceive; insufficient details under Rule 9(b). | Dismissed. Complaint failed to allege fraud with particularity or intent. |
| PA Unfair Trade Practices and Consumer Protection Law (UTPCPL) | Fraudulent conduct violated broad “catchall” provision. | Complaint lacks specific statutory allegations or provision cited. | Dismissed. No specific claim pled; referencing statute insufficient. |
| Truth-in-Lending Act (TILA) | Failure to provide proper periodic statements; only brief reference to regulation. | No plausible or detailed TILA claim; not addressed substantively by Plaintiffs. | Dismissed. Insufficient factual allegations to support a TILA claim. |
| RESPA (Real Estate Settlement Procedures Act) | Defendants violated loss mitigation regulations and caused actual/emotional damages. | Application incomplete; no statutory damages; no actual damages causally linked. | Survives in part: Claims for actual damages (emotional distress, related counsel fees) survive; no statutory damages; no damages for bankruptcy filing. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard for civil complaints)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard on motions to dismiss)
- Bruno v. Erie Ins. Co., 106 A.3d 48 (Pa. 2014) (gist of the action doctrine; tort vs. contract)
- Dittman v. UPMC, 196 A.3d 1036 (Pa. 2018) (economic loss doctrine re: contractual vs. tort duty)
- Marion v. Bryn Mawr Tr. Co., 288 A.3d 76 (Pa. 2023) (elements of common law fraud under Pennsylvania law)
- City of Cambridge Ret. Sys. v. Altisource Asset Mgmt. Corp., 908 F.3d 872 (reviewing allegations on motion to dismiss)