James Dehart v. Homeq Servicing Corporation
679 F. App'x 184
| 3rd Cir. | 2017Background
- James and Judy DeHart obtained a mortgage in 1999; HomEq serviced the loan and Wachovia (later Wells Fargo) owned the note; payments included taxes/insurance.
- The DeHarts missed payments intermittently, faced two foreclosure suits (default judgments entered after no responses), and twice filed Chapter 13 petitions that were dismissed after reinstating the loan.
- In 2007 HomEq sought a writ of execution based on the 2004 default judgment; the DeHarts did not respond and their home was sold at sheriff sale.
- The state court later set aside the sale with HomEq’s consent; the DeHarts then sued Wachovia/Wells Fargo, HomEq, Milstead & Associates, Barclays, and individuals in state court; defendants removed to federal district court.
- District Court dismissed most claims, awarded breach-of-contract damages (attorney’s fees to set aside the sale) of $9,000 to the DeHarts, and entered various discovery orders and sanctions.
- DeHarts appealed, challenging UTPCPL dismissal, limitation on fee recovery, dismissal of implied covenant and IIED claims, discovery rulings, and other orders.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Dismissal of UTPCPL catchall claim | DeHarts urged the catchall no longer requires common-law fraud elements | Defendants argued Pennsylvania requires proof of common-law fraud (including justifiable reliance) and ascertainable loss | Affirmed dismissal: Pennsylvania requires common-law fraud and ascertainable loss; complaint failed to plead justifiable reliance or loss |
| Breach of implied covenant of good faith and punitive damages | DeHarts alleged sale despite current payments and denial of opportunity to defend showed bad faith; sought punitive damages | Defendants said conduct did not rise to bad faith; punitive damages not available for breach of contract | Judgment for defendants: conduct not actionable bad faith; punitive damages unavailable in contract claim |
| Recoverable attorneys’ fees for breach of contract | DeHarts sought fees for this litigation broadly, including fees to reopen bankruptcy | Defendants said fees are not recoverable absent statute, contract, or exception; only fees directly linked to setting aside the sale are natural damages | Affirmed: general litigation fees dismissed; fees limited to those incurred to set aside the improper sheriff sale; bankruptcy-related fees not recoverable |
| Intentional infliction of emotional distress (IIED) | DeHarts argued expert proof requirement for severe distress was too strict given outrageous conduct | Defendants said plaintiffs failed to provide objective proof of severe emotional distress as required | Affirmed summary judgment for defendants: DeHarts failed to provide required objective evidence of severe emotional distress |
| Discovery rulings and sanctions | DeHarts claimed limits on interrogatories, discovery period, and sanctions impaired ability to obtain evidence | Defendants supported court’s management as within discretion and appropriate under the rules | Affirmed: district court did not abuse discretion; interrogatories limited, extension reasonable, sanctions proper for deficient responses |
Key Cases Cited
- Yocca v. Pittsburgh Steelers Sports, Inc., 854 A.2d 425 (Pa. 2004) (UTPCPL catchall requires common-law fraud elements including justifiable reliance)
- Hunt v. U.S. Tobacco Co., 538 F.3d 217 (3d Cir. 2008) (discussing UTPCPL reliance requirement under Pennsylvania law)
- Ferrer v. Trs. of Univ. of Pa., 825 A.2d 591 (Pa. 2002) (rule on foreseeability and recoverable contract damages)
- Kazatsky v. King David Mem’l Park, Inc., 527 A.2d 988 (Pa. 1987) (requiring objective proof of severe emotional distress for IIED recovery)
- Nicholas v. Pa. State Univ., 227 F.3d 133 (3d Cir. 2000) (punitive damages not recoverable in a breach-of-contract claim)
- Burton v. Teleflex, Inc., 707 F.3d 417 (3d Cir. 2013) (standards for reviewing a summary judgment grant)