Beard v. Worldwide Mortgage Corp.

Decision Date03 February 2005
Docket NumberNo. 04-2183-D/An.,04-2183-D/An.
Citation354 F.Supp.2d 789
PartiesCharlesetta BEARD, Plaintiff, v. WORLDWIDE MORTGAGE CORPORATION, et al., Defendants.
CourtU.S. District Court — Western District of Tennessee

Margaret R. Barr-Myers, Esq., Webb A. Brewer, Esq., Sapna V. Raj, Susan L. Ratner, Memphis Area Legal Services, Inc., Memphis, TN, for Plaintiff.

John S. Golwen, Esq., Ashley Swain Old, Husch & Eppenberger, LLC, Memphis, TN, for Defendants.

S. Thomas Anderson, Jackson, TN, pro se.


DONALD, District Judge.

Before the Court is the motion of Equity Title and Escrow Company of Memphis, LLC ("Equity Title") and Steven Winkel ("Winkel") (collectively "Defendants") to dismiss the complaint of Charlesetta Beard ("Plaintiff") pursuant to Fed.R.Civ.P. 12(b)(6). Plaintiff asserts that Defendants violated 1) the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961, et seq.; 2) the Fair Housing Act ("FHA"), 42 U.S.C. § 3601, et seq.; 3) the Truth-in-Lending Act ("TILA"), 15 U.S.C. § 1601, et seq.; 4) the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2601, et seq.; 5) the Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. § 1691, et seq.; and 6) the Tennessee Consumer Protection Act ("TCPA"), Tenn.Code Ann. § 47-18-101, et seq. Plaintiff additionally asserts state law claims for fraud, conversion, negligent misrepresentation, breach of fiduciary duty, breach of contract, conspiracy, and unconscionability. Defendants contend that the complaint should be dismissed because Plaintiff failed to sufficiently plead claims for violations of RICO, fraud, and conspiracy, and otherwise failed to state a claim upon which relief may be granted. This Court has jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1367. For the following reasons, the Court grants in part and denies in part Defendants' motion to dismiss.


Plaintiff, an African-American woman, asserts that Equity Title and Winkel, in conjunction with the remaining defendants in this case, engaged in conduct which constituted predatory lending practices and a predatory lending scheme. Plaintiff contends that all of the defendants acted in concert to lure unsuspecting and unsophisticated African-American homeowners into exploitative mortgage loans to purportedly consolidate debt and/or finance home repairs or home improvement work.1

In support of her claims, Plaintiff asserts, inter alia, that she bought a house in August 1993 for $73,900. Compl. ¶ 21. Plaintiff paid a down payment of approximately $30,000 for the house, with a remaining balance on the mortgage of $44,500. Id. Plaintiff remained current on her mortgage payments until March 2003. Id. ¶ 22.

In or about December 2002, Plaintiff heard an advertisement on radio station WBBP, 1480 AM, from Worldwide Mortgage Corporation ("Worldwide") claiming that individuals could get "easy money," have "cash in [their] pocket[s] for Christmas," consolidate bills, and have home improvement work done on their homes. Id. ¶ 23. At that time, Plaintiff was in arrears two payments on her car loan. Id. ¶ 24. After hearing the advertisement, Plaintiff contacted Worldwide in order to get a loan to help her catch up with her car payments. Id. ¶ 25.

When Plaintiff called Worldwide, the woman who answered the telephone asked Plaintiff for her social security number and verified employment information. Id. ¶ 27. In or about January 2003, Worldwide informed Plaintiff that she had been "approved for a loan," and Plaintiff was given an appointment to meet with someone at Worldwide. Id. ¶ 29. When Plaintiff went to the appointment, Worldwide did not tell Plaintiff the amount of the loan, the interest rate, closing costs, any of the terms of the loan or that the loan was a refinance of her existing mortgage. Id. ¶ 30.

Later, Elnora Harris ("Harris") from Worldwide contacted Plaintiff, told her that she could save a lot of money by refinancing, and asked Plaintiff whether she needed any home improvement. Id. ¶¶ 32, 34. Plaintiff mentioned that she had considered installing vinyl siding. Id. ¶ 34. Plaintiff thought that by "refinancing" her mortgage loan she would, in essence, be serviced by another lender, not that she would have to pay new closing costs, have a new interest rate, pay a higher monthly payment, and have new terms on her loan. Id. Harris additionally told Plaintiff that Worldwide offered a product that would permit her to make mortgage payments biweekly, a payment schedule that would reduce the term of her loan to 21 years. Plaintiff, however, only had 20 years left on her mortgage loan. Id. ¶ 35. Worldwide conducted the closing on March 18, 2003, at its offices. Id. ¶ 41. Plaintiff did not receive a good-faith estimate of closing costs as required by law prior to the closing or at anytime thereafter. Id. ¶ 40.

At the closing, four women, including Harris, were in the room with Plaintiff. Id. ¶ 42. During the closing, no one mentioned that Plaintiff had a right to cancel,2 and Plaintiff does not believe that she was provided a copy of a Notice of the Right to Cancel as required by federal law. Id. ¶ 50. Plaintiff thinks that she signed the Statement of Non-Cancellation of Right of Rescission at the closing, along with the Notice of Right to Cancel, but it is undated. Id. ¶ 51. Additionally, Plaintiff believes that she signed the loan application at the closing, but the one given to her is not dated. Id. ¶ 53.

During the closing, Plaintiff asked to meet the attorney who was conducting the closing. Someone told Plaintiff that the attorney could not be there and that the documents that she signed would be couriered to the attorney. Id. ¶ 43. Equity Title is listed as the settlement agent for the transaction. To Plaintiff's knowledge, no one from Equity Title participated in or conducted the closing. Id. ¶ 44. Likewise, to Plaintiff's knowledge no notary public from Equity Title was present to witness her sign any of the documents at the closing. Id. ¶ 45. On March 18, 2003, Winkel notarized the Deed of Trust, which bears Plaintiff's signature; however, Plaintiff has never met Winkel. Id. ¶ 47.

Plaintiff believes that $7,800, apparently intended to be used for home improvements to her home, was released immediately to Worldwide, prior to any work being done on Plaintiff's house.3 Id. ¶ 52. The HUD-1 settlement statement, however, dated March 18, 2003, does not show the disbursement of $7,800 to Worldwide.4 Id. ¶ 62. The HUD-1 statement further indicates that Plaintiff's existing mortgage with Bank of America in the sum of $39,171.92 was paid off and that Plaintiff received a new loan in the amount of $72,000. Id. ¶ 54. Plaintiff's unsecured loans with Arcadia for $6,329, Providian for $2,908, Sears for $440, Capital One for $435, and WFFNB for $225 were consolidated into the new mortgage loan. Id. ¶ 59. At the closing, Plaintiff received a stack of checks made out to various creditors and to Plaintiff herself. Id. ¶ 70. Plaintiff received three checks totaling $6,651.00; however, the HUD-1 statement shows that she received $15,742.94. Id. ¶ 60. The HUD-1 statement also shows that Worldwide received a $3,600 loan origination fee. Id. ¶ 61.

Equity Title received a document preparation fee of $195, a settlement fee of $195, an abstract title search fee of $210, notary fees of $10 and courier fees of $40. Id. ¶ 65. Additionally, the Loan Disbursement Statement reflects that $390 was paid to Equity Title for attorney fees, although this is not listed on the HUD-1 statement. Id. ¶ 66. Plaintiff asserts that the fees paid to Worldwide, EA, and Equity Title were not bona fide or reasonable. Id. ¶ 69.

Plaintiff believes that no one from Worldwide actually came to her home for the purpose of appraising it prior to approving Plaintiff for the loan. Id. ¶ 28. Likewise, neither Worldwide nor any other defendant provided Plaintiff with a good-faith estimate of closing costs as required by law prior to closing, or at any time thereafter. Id. ¶ 40. Moreover, Plaintiff did not understand until March 2004 that she had in fact refinanced her mortgage loan. Id. ¶ 26. On March 3, 2004, Plaintiff rescinded the consumer credit loan and "cancelled the home improvement contract" by sending Worldwide, EA, and PCFS notices. Id. ¶ 88. On March 18, 2004, Plaintiff filed the instant action asserting that the defendants' actions constituted predatory lending practices which resulted in violations of federal and state law. Plaintiff seeks monetary and equitable relief from the defendants, including Equity Title and Winkel.


Federal Rule of Civil Procedure 12(b)(6) enables a defendant to file a motion to dismiss for a plaintiff's failure to state a claim upon which relief can be granted. Motions to dismiss under Fed.R.Civ.P. 12(b)(6) are designed to test "whether a cognizable claim has been pleaded in the complaint." Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 436 (6th Cir.1988). Dismissal under Fed.R.Civ.P. 12(b)(6) is appropriate when no set of facts exists which would entitle the plaintiff to recover. Hammond v. Baldwin, 866 F.2d 172, 175 (6th Cir.1989). Essentially, it allows the court to dismiss meritless cases which would otherwise waste judicial resources and result in unnecessary discovery. See, e.g., Neitzke v. Williams, 490 U.S. 319, 326-27, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989).

In reviewing a defendant's Rule 12(b)(6) motion to dismiss, a district court should construe the complaint in the light most favorable to the plaintiff and determine whether the plaintiff undoubtedly can prove no set of facts in support of his claims that would entitle him to relief....

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