BAYVIEW LOAN SERVICING, LLC, Appellee v. RODGER LINDSAY, Appellant
I join the majority opinion in full, and write separately to express my view regarding when a party can be considered to have “prevailed” for purposes of fee-shifting pursuant to Section 503(a) of the Loan Interest and Protection Law (Act 6). Section 503(a) of Act 6 provides:
If a borrower or debtor, including but not limited to a residential mortgage debtor, prevails in an action arising under this act, he shall recover the aggregate amount of costs and expenses determined by the court to have been reasonably incurred on his behalf in connection with the prosecution of such action, together with a reasonable amount for attorney's fee.
41 P.S. § 503(a). While I agree with the majority opinion that an affirmative defense is not an “action” for purposes of an award of attorneys' fees under Act 6, it is also important to note under the procedural posture of this case, appellant/debtor, Rodger Lindsay, should not be considered to have prevailed in order to be eligible to collect any costs, expenses or fees.
Appellee, Bayview Loan Servicing, LLC (“Bayview”) commenced a mortgage foreclosure action against Lindsay, to which Lindsay filed an answer and new matter, alleging Bayview failed to provide the requisite pre-foreclosure notice required under section 403(a) of Act 6.1 After the trial court denied Bayview's motion for summary judgment, Bayview voluntarily discontinued the mortgage foreclosure action, without prejudice. Immediately thereafter, Bayview resumed foreclosure efforts as the default on the mortgage had not been resolved. See Appellee's Brief at 5-6.
Lindsay claims because Bayview discontinued the original mortgage foreclosure action — regardless of the fact that such discontinuance was without prejudice — he “prevailed” for Section 503(a) purposes because he sought dismissal of the action, and the action was, in fact, dismissed. Appellant's Brief at 25. Lindsay submits because he “successfully defended the underlying foreclosure action” he achieved his desired result and is thus a prevailing party entitled to costs, expenses and fees. Id. at 25-26. Lindsay's argument oversimplifies the procedural posture of his case in particular and mortgage foreclosure litigation in general, and in my view, we should address his error.
I recognize a judicial determination on the merits of a case is not required in order to decide a party has prevailed. See, e.g., Solebury Twp. v. Dep't of Envtl. Prot., 928 A.2d 990, 1004 (Pa. 2007) (rejecting as untenable party's argument that formal judgment was required to find party prevailed); Upper Gwynedd Towamencin Mun. Auth. v. Dep't of Envtl. Prot., 9 A.3d 255, 264 (Pa. Cmwlth) (“party need not obtain a formal final judgment or consent decree in the underlying litigation”). However, we have also observed when analyzing whether a party has “prevailed” for purposes of receiving statutory attorneys' fees, for example, there must be some analysis of whether the party seeking fees made a substantial contribution to the resolution of the matter, and has achieved some degree of success on the merits. See Solebury Twp., 928 A.2d at 1005 (interpreting attorneys' fee provision of Clean Streams Law). Utilizing the standard articulated in Solebury, I cannot discern from the record any contribution by Lindsay to resolution of the foreclosure litigation, let alone a “substantial” one, nor has Lindsay realized success on the merits. Accordingly, Lindsay (and other debtors like him) should not be considered as having “prevailed” under Section 503(a) of Act 6.
The operative element that precludes a holding Lindsay prevailed here is the fact that the lender strategically acted to dismiss the action, without prejudice, and with the express intention of immediately reinstating its foreclosure action. It is crystal clear this strategic decision by Bayview was not “success on the merits” in favor of Lindsay, as it represents the exact opposite of the relief he sought. Indeed, finding a debtor “prevailed” under these circumstances would likely have detrimental consequences for everyone involved in mortgage foreclosure proceedings. It is not unusual in such actions for a lender to voluntarily discontinue litigation for the purpose of reaching a settlement or resolution without judicial intervention. If debtors in such situations are “prevailing parties” entitled to costs, expenses and fees, there may be a chilling effect on legitimate and salutary efforts to resolve such matters outside of formal litigation, which should instead be encouraged.
1. Section 403(a) requires:Before any residential mortgage lender may accelerate the maturity of any residential mortgage obligation, commence any legal action including mortgage foreclosure to recover under such obligation, or take possession of any security of the residential mortgage debtor for such residential mortgage obligation, such person shall give the residential mortgage debtor notice of such intention at least thirty days in advance as provided in this section.41 P.S. § 403(a).