Carr v. Home Tech Co., Inc.

• Decision Date: 06 March 2007
• Docket Number: No. 03-2569.,03-2569.
• Parties: Bobbie CARR, Plaintiff, v. HOME TECH CO, INC., et al., Defendants.
• Court: U.S. District Court — Western District of Tennessee

476 F.Supp.2d 859

Bobbie CARR, Plaintiff, v. HOME TECH CO, INC., et al., Defendants.

No. 03-2569.

United States District Court, W.D. Tennessee, Western Division.

March 6, 2007.

COPYRIGHT MATERIAL OMITTED

Sapna V. Raj, Webb A. Brewer, Memphis Area Legal Services, Inc., Memphis, TN, for Plaintiff.

Bruce E. Alexander, Mitchel H. Kider, Weiner Brodsky Sidman Kider, P.C., Washington, DC, Jennifer Shorb Hagerman Roscoe Porter Feild, Burch Porter & Johnson, Christopher S. Campbell, John L. Ryder, Harris Shelton Dunlap Cobb & Ryder, John S. Golwen, Kristen C. Wright, Mary Katherine Hovious, Bass Berry & Sims PLC, Virginia Patterson Bozeman, W. Timothy Hayes, Jr., The Hardison Law Firm, Memphis, TN, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART THE MOTION OF EQUITY TITLE AND ESCROW CO. OF MEMPHIS, LLC, AND STEVEN WINKEL TO DISMISS

DONALD, District Judge.

Before the Court is the motion (D.E.# 143) of Equity Title and Escrow Company of Memphis, LLC ("Equity Title") and Steven Winkel (collectively "Defendants") to dismiss the complaint of Plaintiff Bobbie Carr 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 as to them because Plaintiff has failed to state an actionable claim against them. This Court has jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1367. For the reasons stated herein, the Court grants in part and denies in part Defendants' motion to dismiss.

I. LEGAL STANDARD

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 her claims that would entitle her to relief. Meador v. Cabinet for Human Res., 902 F.2d 474, 475 (6th Cir.1990), cert. denied, 498 U.S. 867, 111 S.Ct. 182, 112 L.Ed.2d 145 (1990). If an allegation is capable of more than one inference, it must be construed in the plaintiff's favor. Sinay v. Lamson & Sessions Co., 948 F.2d 1037, 1039-40 (6th Cir.1991).

A district court may not grant a defendant's Fed.R.Civ.P. 12(b)(6) motion to dismiss based on its disbelief of the plaintiff's factual allegations. In Re Sofamor Danek Group, Inc., 123 F.3d 394 (6th Cir.1997), cert. denied, Murphy v. Sofamor Danek Group, 523 U.S. 1106, 118 S.Ct. 1675, 140 L.Ed.2d 813 (1998). It is not the court's function to weigh evidence or evaluate the credibility of witnesses. Miller v. Currie, 50 F.3d 373, 377 (6th Cir.1995). A court will not consider any disputed questions of fact at this stage. Barnes v. Winchell, 105 F.3d 1111, 1114 (6th Cir.1997). Rather, the court should accept all well-pleaded facts as true and not consider matters outside the pleadings. Hammond, 866 F.2d at 175.

The United States Supreme Court has held that "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); see also Neitzke, 490 U.S. at 326-27, 109 S.Ct. 1827; Lewis, 135 F.3d at 405 (6th Cir.1998). Thus, the standard to be applied when evaluating a motion to dismiss for failure to state a claim is very liberal in favor of the party opposing the motion. Westlake v. Lucas, 537 F.2d 857, 858 (6th Cir.1976). Even if the plaintiff's chances of success are remote or unlikely, a motion to dismiss should be denied. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974).

II. FACTUAL ALLEGATIONS¹

Plaintiff Bobbie Carr, an African American woman, sixty-seven years old at the time her complaint was filed, asserts that Equity Title and Steven Winkel, together with the remaining defendants in this case, engaged in predatory lending practices as part of a scheme in which the defendants acted in concert to lure unsuspecting and unsophisticated African-American home-owners into exploitative mortgage loans for the purposes of consolidating debt and/or financing home repairs or home improvements.²

In January 2002, Ms. Carr contacted Home Tech Services Co. ("Home Tech") to inquire about repairs to her kitchen. (Second Am. Compl. ¶ 17.) Home Tech advised her to contact Memphis Financial Services, Inc. ("MFS") to obtain a loan for the repairs. Id. On February 13, 2002, Ms. Carr met with Sandra Wells, a Memphis Financial Services representative, to discuss the loan. Id. ¶ 19. During the meeting, Ms. Carr informed Ms. Wells that she could afford monthly payments of $400. Id. ¶ 21. Also during this exchange, Ms. Wells persuaded Ms. Carr to enroll in a service provided by Economic Advantages Corporation ("EA") which would deduct payments from her account biweekly instead of monthly. Id. ¶ 20.

After the meeting, a Home Tech salesman told Ms. Carr that Home Tech could complete the repairs for $5,000. On February 20, 2002, Ms. Wells called to inform Ms. Carr that the loan papers had been completed and that she should come to Home Tech to complete the closing. When Ms. Carr arrived for the closing later that day, a Home Tech representative, Nina Townes, attempted to conceal the information on Plaintiff's loan papers and simply told Ms. Carr where to sign, repeating "sign here, and sign here." Id. ¶ 25. Ms. Carr did not feel comfortable with the process and refused to complete the closing. Id. After Ms. Carr left, Ms. Wells called and convinced her to return to Home Tech to complete the process. Id. ¶ 26. This time, Ms. Wells distracted Ms. Carr with conversation and again stated "sign here, sign here" without explaining the documents. Id. At no time during the closing did Ms. Carr receive disclosure of any credit terms or a good faith estimate of closing costs. Nor did Ms. Carr receive any copies of her notice of right to rescind. Id. ¶ 36. Ms. Carr was left with the understanding that once she signed the papers she could not rescind the transaction. Id. ¶ 40.

Ms. Carr began the loan process to fund kitchen repairs for her home estimated at $5,000. However, after credit card consolidations suggested by Ms. Wells and closing costs were added, Ms. Carr's promissory note totaled $51,000. Memphis Financial Services agreed to use funds from the loan to pay insurance, property taxes, and Plaintiffs credit card bills. However, Ms. Carr's credit card bills were not paid off. Id. ¶ 28. Moreover, although Ms. Carr informed Home Tech that she could only afford monthly payments of $400, when the loan was finalized Memphis Financial Services disclosed that her payments would be $507 while the Federal Truth in Lending Disclosure Sheet stated that her monthly payments were only $447.18. Furthermore, after closing Ms. Wells informed Ms. Carr that because of the fees and payments to creditors, there would not be enough money to complete repairs to her home.

In addition to failing to provide funds for the repairs, there were multiple procedural irregularities in Ms. Carr's loan transaction. For instance, the Settlement Statement Plaintiff received was not signed by any representative of her settlement agent, Equity Title. Moreover, although the Deed of Trust states it was notarized by Stephen Winkel, none of the closing documents were notarized in Ms. Carr's presence and she never met Mr. Winkel. Id. ¶¶ 33, 34. Furthermore, Ms. Carr alleges that the listed appraiser, Gregg Drew did not conduct a proper appraisal, but simply agreed with Memphis Financial Services on a value to be attached to her property. Id. ¶ 54. Ms. Carr also alleges that the primary lender, NovaStar, did not practice due diligence in reviewing the loan request or considering ability to repay. Id. ¶¶ 46, 53.

On August 1, 2003, Ms. Carr filed the instant predatory lending action against Equity Title, Mr. Winkel, and other participants in her loan transaction including Home Tech and Memphis Financial Services. On July 8, 2004, Equity Title and Mr. Winkel, who is one of the principle owners and operators of Equity Title, filed this joint motion to dismiss Ms. Carr's complaint.

III. ANALYSIS

Defendants assert generally that the claims against them should be dismissed because they had no involvement in the wrongdoing alleged in the complaint. Defendants offer specific arguments to support the dismissal of each claim. The Court will address each claim individually.³

A. RICO Claims

In this Court's February 7, 2006 order in the present case (D.E.# 422) on the motion to dismiss ...