In February of 2020, Westbrook Law PLLC filed a class action complaint against PNC Bank, captioned Polonowski v. PNC Bank, N.A. The complaint alleges that, contrary to specific requirements of the federal Truth in Lending Act (“TILA”), PNC Bank routinely fails to send consumers periodic loan statements if they are going through a bankruptcy, even if the consumers have reaffirmed their mortgage debts to PNC. The complaint alleges that this practice harms consumers by preventing them from receiving notice of interest rate changes, minimum payment amounts, remaining balance, and other critical information.
In May of 2020, PNC filed a motion to dismiss the complaint, arguing that PNC could not be liable for violating TILA because PNC would have “violated federal law” if it had provided periodic loan statements. PNC argued that the automatic stay provided in the bankruptcy code prohibited the sending of any loan statements, even after the plaintiffs’ loan had been reaffirmed and the plaintiffs’ remaining debts had been discharged. On behalf of the plaintiffs, Westbrook Law opposed the motion to dismiss.
The presiding district judge, Hon. Paul L. Maloney, referred PNC’s motion to the magistrate judge for a report and recommendation. The magistrate judge sided with PNC and recommended the court grant the motion to dismiss. The plaintiffs objected and requested that Judge Maloney conduct a fresh review of the motion.
Today, Judge Maloney issued the court’s opinion, rejecting the report and recommendation and denying PNC’s motion dismiss. The court emphasized that once a discharge order has entered in a bankruptcy case, the bankruptcy code does not prohibit the sending of statements regarding a reaffirmed debt. The court further found that the Real Estate Settlement Procedures Act (“RESPA”) could not be narrowed by its implementing regulations (“Regulation X”), and thus the plaintiffs’ secondary claim that PNC unlawfully failed to correct servicing errors brought to its attention was viable and could not be dismissed.
As a result of today’s decision, the case against PNC will move forward. Westbrook Law hopes to hold PNC accountable for habitual violations of TILA, obtain compensation for a class of consumers affected by these practices, and ultimately force PNC and other lenders to provide critical financial information to consumers.