CHRISTOPHER KEMEZIS; STEPHANIE KEMEZIS, individually and as husband and wife v. JAMES MATTHEWS, JR., doing business as Keegan Mortgage Corp.

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
No. 08-4844
CHRISTOPHER KEMEZIS; STEPHANIE KEMEZIS,
individually and as husband and wife,
Appellants
v.
JAMES MATTHEWS, JR., doing business as Keegan
Mortgage Corp.; KEEGAN
MORTGAGE CORPORATION;
LITTON LOAN SERVICES, doing business as Litton GP, LLC;
FREMONT INVESTMENT & LOAN COMPANY, a/k/a
Fremont Investment & Loan
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 2-07-cv-05086)
District Judge: Honorable Michael M. Baylson
Submitted Under Third Circuit LAR 34.1(a)
September 17, 2010
Before: SLOVITER, BARRY and SMITH, Circuit Judges
(Filed September 20, 2010 )
OPINION

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SLOVITER, Circuit Judge.
The District Court dismissed Christopher and Stephanie Kemezis’ Second
Amended Complaint (the “Complaint”) with prejudice for failure to state a claim upon
which relief can be granted. See Fed. R. Civ. P. 12(b)(6). The Kemezises appeal only
dismissal of their claim under the catchall provision of the Pennsylvania Unfair Trade
Practices and Consumer Protection Law (“UTPCPL”), 73 Pa. Cons. Stat. § 201-2(xxi)
(defining “unfair or deceptive acts or practices” in part as “[e]ngaging in any other
fraudulent or deceptive conduct which creates a likelihood of confusion or of
misunderstanding”).
I.
Background
The Kemezises took out a loan secured by a mortgage held by Fremont Investment
& Loan Co. on a property they purchased with the proceeds of the loan (the “Property”).
James Matthews, Jr. brokered the transaction on behalf of Keegan Mortgage Corp. After
a few years, the Kemezises decided to sell the Property in order to purchase a new one.
In the Complaint, the Kemezises allege that the day before that sale was to be
closed, they discovered for the first time that their mortgage documents contained a
penalty for prepayment. They allege that this prepayment penalty must have been
“buried” in the loan and mortgage documents or otherwise concealed from them. App. at
18a ¶ 28. According to the Complaint, the Kemezises then contacted Matthews, who

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allegedly “stated that he did not know about the prepayment penalty,” App. at 18a ¶ 31,
and that “the prepayment penalty must have been placed in the loan when he left the room
during the closing,” App. at 18a ¶ 32. In the end, however, the Kemezises paid the
prepayment penalty “due to the fact they did not want to lose their deposit [on the new
property] or breach” their agreement of sale. App. at 18a ¶ 33.
The Kemezises further allege that they had been surreptitiously charged a yield
spread premium (“YSP”) in connection with their purchase of the Property. “A YSP is a
payment by a lender to a broker that compensates the broker for originating a loan with an
‘above-par’ interest rate. The ‘par rate’ is the interest rate at which the lender will fund
100% of the loan with no premiums or discounts.” Nat’l Ass’n of Mortg. Brokers, Inc. v.
Donovan, 641 F. Supp. 2d 8, 10 (D.D.C. 2009). Based on these and other allegations, the
Kemezises filed an eighteen-count complaint against Matthews, Keegan Mortgage Corp.,
and Fremont Investment & Loan Co. in federal district court based on a wide range of
state and federal laws.
The District Court dismissed most of the federal claims without prejudice, and
dismissed the remainder of the federal claims with prejudice. After holding that the
Kemezises failed to adequately plead diversity jurisdiction, the District Court declined to
exercise supplemental jurisdiction over the state law claims, and dismissed them all
without prejudice. The Kemezises subsequently amended their complaint.
Thereafter, the District Court requested that the Kemezises supplement the record

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The District Court had jurisdiction under both 28 U.S.C.1
§§ 1331 and 1332. This court has jurisdiction under 28 U.S.C. §
1291. Our review of the District Court’s dismissal under Rule
12(b)(6) is plenary. Howard Hess Dental Labs. Inc. v. Dentsply
Int’l., Inc., 602 F.3d 237, 246 (3d Cir. 2010).
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with copies of their loan documentation. After reviewing those documents, the District
Court dismissed the entire Complaint, this time with prejudice. As relevant here, the
District Court reasoned that the UTPCPL claim – the only claim that the Kemezises
challenge on appeal – failed because the allegations were not pled with the particularity
required for claims of fraud under Federal Rule of Civil Procedure 9(b).
II.
Discussion1
The Kemezises argue that the District Court erred in applying the Rule 9(b)
pleading standards for fraud claims to their UTPCPL claim, and that the claim should
have survived a motion to dismiss under any standard. There is some disagreement in the
Pennsylvania courts, and in district courts in this circuit, about whether the Pennsylvania
Legislature’s 1996 addition of the language “deceptive conduct” to the catchall provision
of the UTPCPL, 73 Pa. Cons. Stat. § 201-2(xxi), was intended to relieve those plaintiffs
who made claims under that provision of the burden of proving all the elements of a
common law fraud claim. See Hunt v. U.S. Tobacco Co., 538 F.3d 217, 225 (3d Cir.

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Appellees Matthews and Keegan Mortgage Corp. argue2
that this court’s opinion in Tran v. Metro. Life Ins. Co., 408 F.3d
130, 140-41 (3d Cir. 2005), held conclusively that Rule 9(b)
applies to UTPCPL catchall claims. Tran does not mention Rule
9(b), and so, presumably, that argument rests generally on
statements such as that “a distinction between fraud and non-fraud
claims under the UTPCPL cannot be made . . . .” Id. at 140.
However, the Tran case itself did not involve the catchall
provision. Moreover, the Pennsylvania Superior Court case upon
which Tran most heavily relied, Toy v. Metro. Life Ins. Co., 863
A.2d 1 (Pa. Super. Ct. 2004), concerned claims under the pre-1996
version of the UTPCPL catchall clause. As such, on appeal in the
Toy case the Pennsylvania Supreme Court expressly declined to
address what impact, if any, the 1996 changes to the language
UTPCPL catchall had on claims made under that provision. See
Toy v. Metro. Life Ins. Co., 928 A.2d 186, 203 n.20 (Pa. 2007).
Therefore, although the Appellees may be correct that the UTPCPL
catchall requires proof of all the elements of fraud and/or that Rule
9(b) otherwise applies to UTPCPL catchall claims, we are
unwilling to rely on Tran for that point of law. In any event, we
note there is a tension between the Kemezises’ argument that Rule
9(b) does not apply to their catchall claim, and their subsequent
assertion that the Complaint “sounds in fraud in the inducement.”
Appellants’ Br. at 18.
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2008); see also id. at 225 n.15 (discussing cases). We need not resolve that question, or2
decide whether plaintiffs must in any event plead UTPCPL catchall claims with the
particularity specified in Rule 9(b), because the Kemezises have failed to allege a
plausible claim for relief even under the more lenient standards of Rule 8. See Ashcroft v.
Iqbal, 129 S. Ct. 1937, 1949 (2009) (“To survive a motion to dismiss, a complaint must
contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible
on its face.” (quotation and citation omitted)).

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The Kemezises make no argument that the District Court3
erred in requesting or reviewing these documents.
Given this lack of specificity, it is also unclear how any4
deceptive statements might survive Pennsylvania’s Parol Evidence
Rule. See Yocca, 854 A.2d at 501-02.
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As this court recognized in Hunt, the Pennsylvania Supreme Court held in Yocca v.
Pittsburgh Steelers Sports, Inc., 854 A.2d 425, 438 (Pa. 2004), that the private-plaintiff
standing provision of the UTPCPL, 73 Pa. Cons. Stat. § 201-9.2, requires plaintiffs to
prove justifiable reliance even in cases involving the post-1996 catchall provision. See
Hunt, 538 F.3d at 223-24. Therefore, in order to adequately plead their claim the
Kemezises must at least allege facts from which plausible inferences of deceptive conduct
and justifiable reliance thereon can be drawn. See id. at 224-27. The Complaint does not
contain sufficient allegations regarding either element.
The Kemezises do not challenge the authenticity of the loan documents they
provided to the court. Those documents include a “Prepayment Rider” so named in large,
bold letters, and a U.S. Department of Housing and Urban Development Settlement
Statement that lists a YSP payment, both of which were signed by the Kemezises. It was3
therefore incumbent upon the Kemezises to provide some plausible explanation of what,
if anything, the defendants had done or said, and upon which the Kemezises could have
justifiably relied. The Complaint, however, contains little more than conclusory and
generalized assertions that misrepresentations and conscious omissions were made.4
The Kemezises also argue that the District Court erred in not sua sponte providing

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This court employs an alternate rule in civil rights cases5
under which “district courts must offer amendment-irrespective of
whether it is requested-when dismissing a case for failure to state
a claim unless doing so would be inequitable or futile.” Fletcher-
Harlee, 482 F.3d at 251. The Kemezises, however, have offered
no argument why cases under the UTPCPL should be considered
anything but “ordinary civil litigation.” Id. at 253. We recognize
that the Hunt court remanded to the district court to decide whether
the plaintiff in that case should be permitted to amend under the
“inequitable or futile” standard, see Hunt, 538 F.3d at 228
(quotation omitted), but the Hunt opinion did not mention Fletcher-
Harlee and there is no reason to believe that the defendants in that
case made arguments concerning the standards set therein. In
contrast, the defendants here squarely argue that Fletcher-Harlee
is dispositive, while the Kemezises have provided no reason for
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them the opportunity to amend the Complaint again. Their position is that because the
District Court’s first dismissal turned on the merits of the federal claims and a lack of
diversity jurisdiction, they were not placed on notice of potential defects in the Complaint
regarding their state law claims. Therefore, they argue, the District Court was required to
provide them opportunity to amend again.
The Kemezises did not move the District Court for permission to amend their
Complaint during pendency of the motions to dismiss. Nor did they move to amend the
Complaint via motion under either Federal Rule of Civil Procedure 59(e) or 60(b). “[I]n
ordinary civil litigation it is hardly error for a district court to enter final judgment after
granting a Rule 12(b)(6) motion to dismiss when the plaintiff has not properly” made
such a motion. Fletcher-Harlee Corp. v. Pote Concrete Contractors, Inc., 482 F.3d 247,
253 (3d Cir. 2007); see id. (recognizing that a plaintiff has time after dismissal with5

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this court to hold otherwise.
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prejudice to move to amend the complaint under 59(e), and that Rule 60(b) gives a
plaintiff a year in which to move to amend for good cause). Under the circumstances
here, “the Court did not err in dismissing the case with prejudice, as it had no duty here
even to consider allowing a right to amend.” Id.
Additionally, the Kemezises have failed to either offer to this court a draft
amended complaint or to otherwise explain what facts they would allege to rehabilitate
their UTPCPL claim. This also precludes the relief they request. See Fletcher-Harlee,
482 F.3d at 252 (recognizing that “we have held that a failure to submit a draft amended
complaint is fatal to a request for leave to amend”). Nor do we give credence to the
Kemezises’ claim that they were “caught unaware by the Court’s entry of judgment, as
[they] had notice of [the defendants’] motion[s] and every opportunity to amend [their]
complaint beforehand.” Id. at 253.
III.
Conclusion
For the reasons set forth above, we will affirm the judgment of the District Court.

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