On March 30, 2017, Judge Karas of the Southern District of New York dismissed multiple claims in a putative nationwide class action challenging default servicing activities. In the case, Tardibuono-Quigley v. HSBC Mortgage Corp., the plaintiff sued her lender (HSBC) and mortgage servicer (PHH) to contest charges she claimed were wrongly assessed to her. Tardibuono-Quigley v. HSBC Mortgage Corp., 2017 WL 1216925 (S.D.N.Y. Mar. 30, 2017). The Court dismissed all claims against PHH, but permitted one state statutory claim and one contract claim to continue against HSBC.
After the plaintiff defaulted on her monthly payment obligations, PHH began ordering property inspections and periodic broker price opinions (BPOs) as permitted by her security agreement. The plaintiff alleged that PHH and HSBC colluded to charge her for these services when they were not needed, misled her by presenting monthly mortgage statements that omitted material information and by presenting a security agreement that mislead her as to when charges would be levied, breached the security agreement, and were unjustly enriched through collection of the allegedly unnecessary fees.
HSBC and PHH filed separate motions to dismiss. The court first dismissed the plaintiff’s RICO claims as to both defendants. It held that the substantive RICO claim was deficient for failure to allege actionable predicate acts of mail or wire fraud: the plaintiff alleged no misrepresentation in any monthly statements she received, and her contention that property inspection and BPO services were not needed amounted only to a breach of contract claim, not one for fraud. Because plaintiff’s substantive RICO claim failed, the court dismissed her RICO conspiracy claim along with it.
With respect to the plaintiff’s cause of action for deceptive conduct under New York General Business Law § 349, the court held that no claim was stated as to allegedly misleading monthly statements, concluding as a matter of law that no reasonable consumer would be misled by the monthly statements (which separately described the property inspections as “AUTO PPTY INSPEC” and the BPOs as “Assessed Expense – BPO COST”). The court allowed the plaintiff’s claim that the security agreement was misleading to continue against HSBC, but dismissed the claim against PHH because it was not a party to the agreement.
The court found that the plaintiff stated a cognizable claim against HSBC for ordering property inspections and BPOs that were not necessary, but again dismissed the claim against PHH because it was not a party to the contract. Finally, because it concluded that a written contract governed the dispute, the court dismissed the plaintiff’s unjust enrichment claim against both HSBC and PHH.