In a recent decision, the United States Court of Appeals for the Second Circuit affirmed a district court’s ruling that a defendant lender and its property preservation company did not owe the plaintiff homeowner a duty to act to prevent theft or damage to his property. The case is Malick v. JP Morgan Chase Bank, N.A., et al., No. 16-2291, 2019 WL 2291 (2d Cir. Dec. 11, 2019).
In 2007, plaintiff-appellant Abu Hashem W.Q. Malick obtained a home mortgage loan on his property, and a few months later, he defaulted on his loan. After the default, Malick was incarcerated. Subsequently, the lender hired a property preservation company to monitor the property. The company observed that the property suffered from a lack of winterization, neglect, theft, and vandalism. After Malick was released from prison in 2012, he sued the lender and the property preservation company for conversion, negligence, and violations of the Connecticut Unfair Trade Practices Act (“CUTPA”). Malick argued that the defendants owed a duty to him to prevent theft and damage to the property.
The Second Circuit affirmed the lower court’s ruling that the lender never converted Malick’s property. The Court also found that Malick’s negligence claim failed because he did not establish that the defendants owed any duty to him to act to prevent theft or damage to the property. Instead, the mortgage expressly placed a duty on the plaintiff homeowner to maintain the property, stating “[w]hether or not Borrower is residing in the Property, Borrower shall maintain the Property in order to prevent the Property from deteriorating or decreasing in value due to its condition.” Further, the mortgage provided that “although the Lender may take action [to protect, secure, and repair the Property, Lender does not have to do so and is not under any duty or obligation to do so.”
Finally, the Court agreed with the district court that the actions taken by the property preservation company and the lender did not constitute CUPTA violations. Both defendants sent notices and made visits to the property after Malick had defaulted. Malick claimed that these actions constituted unfair and deceptive practices and that, as a result, he suffered emotional harm. The Court found that the defendants’ actions “cannot reasonably be said to be ‘abusive, harassing, fraudulent, deceptive, or misleading, since the Mortgage Deed explicitly authorized them.” The Court also rejected Malick’s alleged emotional damages, determining that emotional harm is not enough to establish a loss under CUPTA.