PHH Mortgage Corp. told a Florida federal court Friday that it has settled a potential class suit accusing the company of improperly charging mortgage holders markups on its costs for third-party property inspections for defaulted loans.
PHH and lead plaintiff Kirk Culver told the court they had reached a settlement of Culver’s claims on an individual basis and are finalizing and executing the settlement and dismissal documents.
Details of the settlement are confidential, according to Culver’s attorney Zachary Ludens of Zebersky Payne Shaw Lewenz LLP, who said the deal means the end of the class claims with regard to this class representative.
“After completing discovery, we determined that the claims were not ripe for class certification,” he said. “We, therefore, turned our attention to resolving our individual client’s claim and damages, and we are very pleased that we were able to do so.”
Culver sued in 2020, claiming that after he defaulted on his loan in September 2012, PHH contracted with a third-party vendor that used a computerized system that generated property inspections every 20 to 30 days.
Each time there was an inspection, PHH added between $15 to $19.50 to Culver’s mortgage, even though the actual cost of inspection was, according to the suit, “much less than what was charged to plaintiff.”
Culver brought his suit on behalf of himself and any other mortgage borrowers who had allegedly suffered similar charges.
PHH sought to dismiss the suit for an array of reasons but last month, U.S. District Judge Paul G. Byron largely rejected them. The judge allowed Culver’s claims of breach of contract and violations to the Fair Debt Collection Practices Act, as well as allegations of violations of the Florida Consumer Collection Practices Act, to survive the mortgage lender’s bid for dismissal.
PHH had argued, among other things, that it does not qualify as a debt collector and therefore shouldn’t be subjected to the laws in question. But Judge Byron pointed to PHH’s mortgage statements, which include an amount due, reference a $72.22 late fee that “may be charged” and a clear statement noting that the letter is from a “debt collector attempting to collect a debt.”
“If the instant communication — which includes clear language identifying defendant as a debt collector attempting to collect a debt, a potential late fee of $72.22 and a total amount due — does not qualify as a debt collection communication, it is difficult to comprehend what would,” the judge said.
The judge did, however, find Culver’s constructive fraud claims to be barred by the independent tort doctrine.
An attorney for PHH did not immediately respond to a request for comment Friday.
Culver is represented by Jordan A. Shaw and Zachary D. Ludens of Zebersky Payne Shaw Lewenz LLP, J. Matthew Stephens of Methvin Terrell Yancey Stephens & Miller PC and Darren R. Newhart of Newhart Legal PA.
PHH is represented by Dale A. Evans Jr. of Locke Lord LLP.
The case is Culver v. PHH Mortgage Corp., case number 6:20-cv-02292, in the U.S. District Court for the Middle District of Florida.
–Editing by Stephen Berg.