Face-to-face meeting wasn’t required prior to foreclosure

A homeowner who claimed the bank was required to hold a face-to-face meeting before foreclosing on her home had her suit dismissed. The meeting requirement applies only if the bank has a branch within 200 miles of the property, and the homeowner conceded there was no bank branch within 200 miles at the time of the foreclosure.

Background

Kelly Zahratka sued defendants, alleging they wrongfully foreclosed on her home. Count Three alleged that under the Fair Housing Act regulations, defendant U.S. Bank National Association was required to provide plaintiff with a face-to-face hearing before foreclosing on her home, “because U.S. Bank knew it had an office within 200 miles of the home.” Count Four further alleged that defendant Trustee Services of Virginia LLC breached its fiduciary duty to Zahratka when it allowed the foreclosure despite being informed by Zahratka that U.S. Bank had not complied with this requirement and conducted a face-to-face hearing.

Both defendants moved against these claims, asserting that U.S. Bank had no branch within 200 miles of plaintiff at the time of the foreclosure and relying upon exhibits previously filed with the court. Trustee Services also noted that the District Court for the Western District of Virginia found that, as of Dec. 18, 2018, U.S. Bank did not have a branch office in Virginia. On Dec. 21, 2020, Plaintiff responded to both motions, acknowledging that there are grounds to dismiss Counts Three and Four of her complaint, as “there was no branch office of U.S. Bank on the date of the foreclosure of Zahratka’s home.”

Report and recommendation

A face-to-face meeting is not required if the mortgaged property “is not within 200 miles of the mortgagee, its servicer, or a branch office of either.” Plaintiff now acknowledges that U.S. Bank did not have an applicable branch office at the time of foreclosure. Thus, plaintiff cannot allege in good faith the fact necessary to support this claim—namely, that U.S. Bank’s McLean location existed in 2016. Accordingly, the court recommends the granting of U.S. Bank’s motion for judgment on the pleadings and dismiss Count Three with prejudice.

The claim against Trustee Services for a breach of  fiduciary duty is based on Trustee Services proceeding with the foreclosure sale despite the fact that U.S. Bank had  not complied with all preconditions of the sale, specifically, U.S. Bank’s alleged failure to conduct a face-to-face meeting. Because, as the parties have acknowledged, plaintiff’s amended complaint fails to state a claim for breach of contract regarding U.S. Bank’s requirement  to conduct a face-to-face meeting, this related claim fails for the same reasons. Therefore, the court should grant Trustee Services’ motion for summary judgment and dismiss Count Four with prejudice. As these are the only claims remaining in the amended complaint, the court should likewise dismiss the case with prejudice.

District court order

The court adopts in full the findings and recommendations set forth in the magistrate judge’s thorough and well-reasoned report and recommendation. The court grants defendant Trustee Services motion for summary judgment and defendant U.S. Bank’s motion for judgment on the pleadings. Counts Three and Four of plaintiff’s amended complaint are therefore dismissed with prejudice. Because there are no remaining counts in the complaint, the case is dismissed with prejudice.

Defendants’ motions granted.

Zahratka v. U.S. Bank NA, Case No. 2:20-cv-208, Jan. 8, 2021. EDVA at Norfolk (Smith). VLW 021-3-053. 16 pp.