Case Background
Plaintiff Sun West originated and serviced reverse mortgages. First Mariner transferred servicing rights in March 2011. Plaintiff sued First Mariner in 2015. The parties executed a Settlement Agreement on May 16, 2017. Howard Bank later merged with FNB. Defendant FNB became First Mariner’s successor. The Settlement bound successors. It required repurchase or indemnity for specified loans after purchaser demands. It also provided fee-shifting for enforcement actions.
Cause
Fannie Mae flagged two loans for defects. First, the Hastings Loan carried an incorrect legal description and utility access issues. Fannie Mae set a January 3, 2022 deadline. Plaintiff noticed Defendant under the Settlement on January 12, 2022. Howard Bank, then Defendant’s predecessor, agreed to repurchase. Extensions followed. However, no repurchase occurred. Plaintiff repurchased the Hastings Loan on March 16, 2022. Second, Fannie Mae demanded repurchase of the Barner Loan on December 16, 2021. Title defects and lien position issues prevented foreclosure. Plaintiff noticed Defendant and obtained an extension. Plaintiff short-sold the collateral. Yet obligations to Fannie Mae remained.
Injury
Plaintiff faced immediate cash outlay on the Hastings repurchase. Plaintiff also carried the Barner deficiency exposure. Operational time diverted to extensions, notices, and liquidation steps. These efforts strained resources and delayed routine work. Moreover, uncertainty affected cash planning. Plaintiff alleged Defendant’s delays frustrated the Settlement’s purpose.
Damages
Plaintiff claimed at least $572,102.03 as of filing. This figure included $414,019.55 on the Hastings Loan payoff. It also included $158,082.48 on the Barner Loan payoff figure. Plaintiff sought continuing interest, attorneys’ fees, and costs under the Settlement. Plaintiff also requested pre- and post-judgment interest. Plaintiff sought specific performance requiring repurchase obligations.
Key Arguments and Proceedings
Legal Representation
Plaintiff(s): Sun West Mortgage Company, Inc.
Counsel for Plaintiff: Padideh Zargari | Scott E. Gizer | Stephen Y. Ma
Experts for Plaintiff: H. Marc Helm
Defendant(s): First National Bank of Pennsylvania, as successor to Howard Bank, as successor to First Mariner Bank
Counsel for Defendants: Meredith A. Storm | Michael E. Blumenfeld | Ryan E. Cosgrove
Claims
Count 1 – Breach of Contract (against Defendant FNB): Plaintiff alleged a valid Settlement Agreement. Plaintiff performed required conditions. Defendant failed to repurchase or indemnify on the Hastings and Barner Loans. Plaintiff claimed damages, interest, fees, and specific performance.
Count 2 – Breach of Implied Covenant (against Defendant FNB): Plaintiff alleged Defendant delayed repurchase in bad faith. Defendant’s conduct deprived Plaintiff of expected benefits. Plaintiff sought damages, interest, and attorneys’ fees under the Settlement.
Defense
The Defendant, First National Bank of Pennsylvania, issued a general denial of most of Plaintiff’s allegations, admitting only limited facts such as the existence of the Assignment Agreement and Settlement Agreement. It contended that the agreements speak for themselves and rejected any mischaracterization of their terms. The Bank consistently claimed lack of knowledge for several allegations and denied liability for Plaintiff’s asserted breaches. It also challenged the Complaint’s sufficiency, arguing that many allegations were legal conclusions not requiring a response.
In its affirmative defenses, the Bank raised multiple bars to recovery. These included the statute of limitations, laches, waiver, estoppel, unclean hands, settlement and release, setoff, failure to mitigate, accord and satisfaction, failure of consideration, and contributory negligence. It also argued that the Complaint did not state a claim for punitive or exemplary damages and that such relief would violate constitutional protections. Additionally, the Bank reserved its right to adopt other defenses raised by co-defendants and to amend or supplement its defenses as discovery progresses.
Settlement
The Court entered judgment after a bench trial in the dispute between Sun West Mortgage Company, Inc. and First National Bank of Pennsylvania. It ruled in favor of Sun West on its breach of settlement agreement claim concerning the Hastings Loan, awarding $511,918.55 plus pre- and post-judgment interest, while finding for the Bank on claims relating to the Barner Loan. The Court also held that the prevailing party may recover attorneys’ fees and costs under the Settlement Agreement, with the exact amount to be determined later.
Court Documents
Court documents are available for purchase upon request at jurimatic@exlitem.com
