Wulf v. Bank of America, N.A.
2011 U.S. Dist. LEXIS 69146
E.D. Pa.2011Background
- Mortgage originated July 28, 2009 with Fulton Bank for $108,007; property in a Special Flood Hazard Area requiring flood insurance.
- Plaintiff signed a Flood Hazards Notice stating minimum flood coverage options (outstanding balance, NFIP max, or full replacement cost).
- Mortgage incorporated HUD/FHA flood-insurance requirements; Plaintiff obtained $110,000 flood coverage at origination.
- Bank of America purchased the loan in September 2009 and later demanded increased flood coverage in July 2010, with force-placed insurance if not complied.
- August 27, 2010 Plaintiff obtained additional flood coverage; September 21, 2010 Defendants issued a Force Placement Notice charging the extra premium to Plaintiff.
- October 1, 2010 Plaintiff filed suit alleging TILA, UTPCPL, fraudulent misrepresentation, breach of contract, and breach of covenant of good faith and fair dealing; Defendants moved to dismiss (Rule 12(b)(6)).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Ambiguity of flood-insurance obligation under mortgage | Wulf argues flood insurance is limited to the loan balance. | BOA/HUD requirements allow lenders to set minimums within regulatory limits. | Ambiguity exists; breach-of-contract claim may survive. |
| Whether breach of the covenant of good faith and fair dealing is independent or duplicative | Claim goes beyond contract, not merely a restatement. | Claim duplicative of contract claim. | Separate claim dismissed; incorporated into breach-of-contract claim. |
| Whether UTPCPL and fraud claims are barred by the economic loss doctrine | Fraud/UTPCPL arise independently of contract. | Claims arise from contract; economic loss doctrine bars them. | Barred by economic loss doctrine. |
| Whether TILA claim survives or is time-barred and exempt from disclosure rules | Defendants misrepresented flood-insurance requirements and altered terms; disclosures required. | Flood insurance costs may be exempt; initial disclosures may suffice; potential timeliness issue. | TILA claim survives to the extent it concerns post-consummation changes; court finds timeliness and merits. |
Key Cases Cited
- Werwinski v. Ford Motor Co., 286 F.3d 661 (3d Cir. 2002) (economic loss doctrine framework; fraud exceptions limited)
- Sarsfield v. Citimortgage, Inc., 707 F.Supp.2d 546 (W.D. Pa. 2010) (tort claims intertwined with mortgage contract analysis)
- Reilly Foam Corp. v. Rubbermaid Corp., 206 F.Supp.2d 643 (E.D. Pa. 2002) (fraud claims intertwined with contract claims; economic loss concerns)
- In re Fowler, 425 B.R. 157 (E.D. Pa. 2010) (bankruptcy context; post-Twombly plausibility standards applied to pleadings)
- LSI Title Agency, Inc. v. Evaluation Services, Inc., 951 A.2d 384 (Pa. Super. Ct. 2008) (no independent breach of good faith when underlying facts mirror contract)