BofA and Deutsche Bank Foreclosure Class Action Lawsuit Reinstated

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On Tuesday, the Third Circuit panel partially reinstated a foreclosure class action lawsuit filed against certain units of Bank of America NA and Deutsche Bank AG alleging that plaintiffs were improperly charged attorney’s fees during foreclosure proceedings. The panel ruled that the claims for plaintiffs’ statutory damages had legal standing, even if they did not pay the fees.

The Bank of America and Deutsche Bank foreclosure class action lawsuit was originally filed by Gene W. Salvati, a Pennsylvania homeowner, whose mortgage was provided by Deutsche Bank and serviced by Bank of America. Salvati alleges that McCabe Weisberg & Conway PC, a law firm that represents Deutsche Bank, made illegal attorney’s fees charges during collection proceedings involving Pennsylvania homeowners. These homeowners had loans assigned to Deutsche Bank as a trustee but the loans were serviced by Bank of America.

Salvati filed the Deutsche Bank and Bank of America foreclosure class action lawsuit in April 2011 after he allegedly defaulted on his Deutsche Bank home mortgage and was sent notices of pre-foreclosure and foreclosure.

According to the class action lawsuit, “The lawsuit alleged that the foreclosure complaint filed against Salvati by Deutsche Bank contained charges for certain items, such as attorneys’ fees and items labeled ‘Escrow Advance’ and ‘Corporate Advance,’ that Salvati asserts lacked supporting documentation or explanations of when and how the costs were incurred.”

Last month, the foreclosure class action lawsuit was tossed out of the lower courts by a Pennsylvania federal judge who ruled that Salvati’s claims were “disingenuous” because he had not paid the allegedly illegal attorney’s fees.

However, Circuit Judge D. Brooks revived the class action lawsuit against Bank of America and Deutsche Bank when it was discovered that the lower courts had ignored Salvati and other Class Members rights to collect statutory damages even if no actual damages were suffered by the plaintiffs .

These homeowners’ rights are outlined in Fair Debt Collection Practice Act, which states, “a consumer may recover statutory damages [under the FDCPA] if the debt collector violates the FDCPA even if the consumer suffered no actual damages.”

In addition to restoring Salvati’s claim to damages, the Circuit panel also restored two other counts brought against Deutsche Bank because of alleged violations of and possible mortgage lender remedy under Pennsylvania Loan Interest and Protection Law.

The foreclosure class action lawsuit states:

“Accordingly, we will affirm the District Court’s dismissal of Salvati’s claims in Counts I and II with respect to Bank of America and McCabe. However, because the District Court dismissed Counts I and II on the basis that Salvati had not paid any of the allegedly unlawful fees or charges without discussing §§ 503and 504, we will reverse and remand as to Counts I and II with respect to Deutsche Bank only.”

While the panel reinstated Counts I, II, and IV of Salvati’s foreclosure class action lawsuit, the other four counts were dismissed. The circuit panel found that Salvatti’s claim to loss, based on increased principal amount on his mortgage because he had not paid the fees, was insufficient and was not made in the principal class action claim, but rather in a later filed appellate brief.

The foreclosure class action lawsuit seeks to represent Salvati, his (now deceased) co-plaintiff Olivia Jones, and a class of both former and current Pennsylvania homeowners who were harmed by Deutsche Bank’s foreclosure practices.

The Gene W. Salvati  and the Class are represented by Michael P. Malakoff and Olivia J. Ryan of Michael P. Malakoff PC.

The Bank of America and Deutsche Bank AG Foreclosure Class Action Lawsuit is Gene Salvati v. Deutsche Bank National Trust Co. et al., Case No. 13-1972, in the U.S. Court of Appeals for the Third Circuit.