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NJ Court Revives Homeowner’s Suit with PennyMac Over Late Sandy Check

Nicholas Stratton
“Their decision recognizes the spirit of the Consumer Fraud Act and reflects the intent of the Legislature to protect consumers from unscrupulous business practices,” Stratton said.

NJ Court Revives Homeowner’s Suit Over Late Sandy Check

–Editing by Brian Baresch.

Law360, New York (July 16, 2015, 6:28 PM ET) —  A New Jersey appeals court revived a homeowner’s claims that PennyMac Corp. took too long to pay for damage caused by Superstorm Sandy, ruling Thursday that the mortgage lender can’t escape liability even though it paid up before it received his complaint.

The court sided with Medhat Abbas, finding that he suffered an ascertainable loss under the state’s Consumer Fraud Act when he was forced to spend $9,000 of his own money on repairs because PennyMac waited nearly seven months to release his funds.

“The evidence shows defendant failed to forward the insurance proceeds to plaintiff in a timely fashion, without having a good-faith basis for such a prolonged delay,” the court said.

Abbas’ North Bergen home was damaged during the storm in October 2012, and insurance appraisers assessed the damage at $12,277, according to the opinion.

The insurers sent a check in that amount to PennyMac, which owned Abbas’ promissory note and mortgage, the court said.

Abbas claimed that PennyMac repeatedly ignored his requests for the money and that he had to pay contractors out of his own pocket for repair work, the court said.

He sued PennyMac on May 10, 2013, and received a check from PennyMac 10 days later that was dated May 14, according to the court. Records from a process server showed that PennyMac didn’t get Abbas’ complaint until June 4.

Abbas returned the check on June 13, treating it as a rejected settlement offer.

PennyMac moved for summary judgment in January 2014, which a trial judge granted on the grounds that Abbas couldn’t show that he had suffered any loss.

On Thursday, the appeals court said the $12,277 became Abbas’ ascertainable loss as soon as PennyMac wrongly withheld it.

“Under the circumstances presented here, defendant cannot escape liability by releasing the insurance proceeds at a time when plaintiff had already assumed the burden of financing the cost of rebuilding his home,” the opinion said. “Here, defendant was not entitled to summary judgment because plaintiff’s evidence showed an ascertainable loss at the time he filed his complaint.”

Nicholas Stratton of Denbeaux & Denbeaux, an attorney for Abbas, said the ruling was a good one for consumers.

“Their decision recognizes the spirit of the Consumer Fraud Act and reflects the intent of the Legislature to protect consumers from unscrupulous business practices,” Stratton said.

Representatives for PennyMac didn’t immediately respond to requests for comment on Thursday.

Abbas is represented by Nicholas A. Stratton and Joshua W. Denbeaux of Denbeaux & Denbeaux.

PennyMac is represented by Kevin C. Rakowski of Blank Rome LLP and Louis A. Greenfield.

The case is Medhat Abbas v. PennyMac Corp., case no. A-3466-13T2, in the Superior Court of the State of New Jersey, Appellate Division.

–Editing by Brian Baresch.

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Formed in 1989, Denbeaux & Denbeaux is a law firm dedicated to providing top level legal representation to its clients. The partners, Marcia Denbeaux and Joshua Denbeaux, as well as senior and associate attorneys, represent individuals and businesses in New Jersey State and Federal Courts.