DeBerry v. First Government Mortg. and Investors Corp.
| Citation | 335 U.S. App. D.C. 173,170 F.3d 1105 |
| Decision Date | 26 March 1999 |
| Docket Number | No. 97-7211,97-7211 |
| Parties | Lillie May DeBERRY, Appellant, v. FIRST GOVERNMENT MORTGAGE AND INVESTORS CORPORATION, Appellee. |
| Court | United States Courts of Appeals. United States Court of Appeals (District of Columbia) |
Appeal from the United States District Court for the District of Columbia (No. 96cv00708).
Mark L. Hessel argued the cause for appellant. With him on the briefs was Mark L. Leemon.
Nathan I. Finkelstein argued the cause for appellee. With him on the brief was Laurie B. Horvitz.
Before: WALD, TATEL and GARLAND, Circuit Judges.
Opinion for the Court filed by Circuit Judge WALD.
Lillie May DeBerry appeals the order and judgment of the district court granting summary judgment to First Government Mortgage and Investors Corporation ("First Government"). Ms. DeBerry brought an action alleging that First Government had violated the District of Columbia Consumer Protection Procedures Act ("CPPA"), D.C.Code § 28-3904(r), by financing and refinancing her home with four mortgage loans containing unconscionable terms or provisions. 1 The district court granted summary judgment to First Government based solely on its finding that D.C.Code § 28-3904(r) did not apply to real estate mortgage finance transactions. Ms. DeBerry contests this finding, arguing that D.C.Code § 28-3904(r) does in fact apply to these transactions. Although neither of the parties requested certification of this issue of statutory interpretation to the District of Columbia Court of Appeals, see D.C.Code § 11-723, because of its importance to local commerce and because there is no decision by the highest court in the District of Columbia precisely on point, we have decided to certify it to that court. Ms. DeBerry also challenges the district court's dismissal--as barred by the statute of limitations--of two of her claims based on loans made in 1991 and 1992. We agree that such dismissal was improper and reinstate these two claims contingent on a positive response by the District of Columbia Court of Appeals to the question certified here. Ms. DeBerry also challenges the grant of summary judgment to First Government with respect to her claim for common law infliction of emotional distress. Again, we agree with Ms. DeBerry that this grant was improper and accordingly reinstate the claim. Lastly, Ms. DeBerry argues that the district court improperly denied as moot her motion for attorneys' fees ordered by a magistrate judge to compensate Ms. DeBerry for the necessity of filing a motion to compel discovery. We agree that the district court erred in failing to rule on the question of attorneys' fees before disposing of the case and accordingly remand for further consideration.
Ms. DeBerry inherited her home in 1981. In April of 1991, she borrowed $10,000 from First Government, secured by a deed of trust on her home. In August of 1992, First Government refinanced the debt on Ms. DeBerry's home, loaning her $16,500. On April 13, 1995, Ms. DeBerry again refinanced her home by borrowing $21,000 from First Government. On April 27, 1995, Ms. DeBerry borrowed $27,500 from another lender, Bankers First Mortgage Company, Inc. ("Bankers First"). 2 On May 31, 1995, Ms. DeBerry entered into still another loan transaction with Bankers First for $39,000. In December of 1995, First Government made a final loan to Ms. DeBerry for $45,000.
On April 15, 1996, Ms. DeBerry filed this action against First Government. 3 Ms. DeBerry alleged that in financing the four loans, First Government had violated the Consumer Protection Procedures Act, D.C.Code §§ 28-3901 to -3909. Specifically, Ms. DeBerry alleged a violation of D.C.Code § 28-3904(r)(1) and § 28-3904(r)(5). D.C.Code § 28-3904is entitled "Unlawful trade practices." D.C.Code § 28-3904(r)(1) and § 28-3904(r)(5) provide that it is a violation of the chapter to
(r) make or enforce unconscionable terms or provisions of sales or leases; in applying this subsection, consideration shall be given to the following, and other factors:
(1) knowledge by the person at the time credit sales are consummated that there was no reasonable probability of payment in full of the obligation by the consumer;
. . . . .
(5) that the person has knowingly taken advantage of the inability of the consumer reasonably to protect his interests by reasons of age, physical or mental infirmities, ignorance, illiteracy, or inability to understand the language of the agreement....
Ms. DeBerry claims that for each of these loans, she was charged a large percentage of the amount borrowed in points and other fees. For example, with respect to the 1991 loan, Ms. DeBerry claims that she was charged $2,540 to borrow $10,000. Ms. DeBerry alleges that the loans made by First Government were unconscionable in that they constituted a pattern and practice of reverse redlining which she defines as "a predatory lending practice of making high cost loans to unsophisticated homeowners who have little money but do have substantial equity in their homes." Appellant's Br. at 3.
On July 1, 1996, First Government filed a motion to dismiss. After hearing arguments on the motion, the district court dismissed Ms. DeBerry's claims relating to the loans made by First Government in 1991 and 1992 because the loans were made more than three years before she filed her complaint and, hence, were barred by the relevant statute of limitations. The court declined to dismiss the rest of the case.
On July 9, 1997, the court assigned discovery matters to a magistrate judge. On July 31, 1997, Ms. DeBerry filed a motion to compel discovery and to grant sanctions. After a hearing on September 5, 1997, the magistrate judge issued an order directing First Government to respond to certain discovery requests and to pay attorneys' fees and expenses associated with Ms. DeBerry's motion to compel. On September 23, 1997, First Government filed objections to the magistrate's order. Ms. DeBerry opposed the objections and subsequently filed a motion to set attorneys' fees.
On October 29, 1997, the district court held a hearing on a summary judgment motion filed by First Government. The court thereafter issued an order granting summary judgment to First Government with respect to Ms. DeBerry's claim under the CPPA and dismissing all other pending motions as moot. The court also granted summary judgment to First Government with respect to Ms. DeBerry's claim for common law infliction of emotional distress, finding that the claim was dependent on the CPPA claims.
The district court's decision to grant summary judgment with respect to Ms. DeBerry's CPPA claims was based solely on its finding that the CPPA did not apply to real estate mortgage finance transactions, which in turn relied heavily on a decision by the District of Columbia Court of Appeals, Owens v. Curtis, 432 A.2d 737 (D.C.1981), where the court held that the CPPA did not apply to the sale of real estate. The district court found that Owens controlled this case and reasoned that if the CPPA did not apply to the sale of real estate, a fortiori it did not apply to real estate mortgage finance transactions. In granting summary judgment, the district court made clear that the sole and exclusive basis for its ruling was that the CPPA did not apply and that otherwise there were a number of disputed facts deserving of a trial. 4
The issue of whether D.C.Code § 28-3904(r) applies to mortgage finance transactions has not been the subject of a ruling by the District of Columbia Court of Appeals, to whom we would ordinarily look for guidance on its construction. See Schleier v. Kaiser Found. Health Plan of the Mid-Atlantic States, Inc., 876 F.2d 174, 180 (D.C.Cir.1989) (per curiam). That court has, however, applied without comment another subsection of D.C.Code § 28-3904, (e), to a mortgage finance transaction and in the same case rejected a claim under D.C.Code § 28-3904(r) on the sole ground that the facts in the case did not support the claim (or, in other words, not because D.C.Code § 28-3904(r) did not apply). See Osbourne v. Capital City Mortgage Corp., 667 A.2d 1321, 1330 & 1331 n. 13 (D.C.1995). However, First Government argues that while real estate mortgage finance transactions may be covered under D.C.Code § 28-3904(e), which provides that it is an unlawful trade practice to "misrepresent as to a material fact which has a tendency to mislead," they are not covered under D.C.Code § 28-3904(r), which provides that it is an unlawful trade practice to "make or enforce unconscionable terms or provisions of sales or leases...." First Government makes this argument on the basis of the "sales or leases" language which appears in D.C.Code § 28-3904(r). Specifically, First Government argues that one cannot sell or lease a mortgage finance and, accordingly, that such transactions are not contemplated under D.C.Code § 28-3904(r).
To assess the quality of this argument, we look to the text and structure of the CPPA as a whole. The CPPA is, as the District of Columbia Court of Appeals has noted, "to say the least, an ambitious piece of legislation which seeks to prohibit a long list of 'unlawful trade practices.' " Howard v. Riggs National Bank, 432 A.2d 701, 708 (D.C.1981). Two sections of the CPPA, in particular, are relevant to our inquiry. The first is entitled "Definitions and purposes." D.C.Code § 28-3901. This section indicates that it applies to the entire CPPA, see D.C.Code § 28-3901(a), and provides, inter alia, the following. A "trade practice" is defined as "any act which does or would create, alter, repair, furnish, make available, provide information about, or, directly or indirectly, solicit or offer for or effectuate a sale, lease or transfer, of consumer goods or services." D.C.Code § 28-3901(a)(6). "Goods and services" is defined as "any and all parts of the economic output...
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