Eva v. Midwest National Mortgage Banc, Inc.
| Decision Date | 15 February 2001 |
| Docket Number | No. 1:00CV1918.,1:00CV1918. |
| Parties | Priscilla EVA, et al., Plaintiffs, v. MIDWEST NATIONAL MORTGAGE BANC, INC., et al., Defendants. |
| Court | U.S. District Court — Northern District of Ohio |
David G. Oakley, Kramer & Associates, Cleveland, OH, Diane E. Citrino, Patricia A. Kidd, Fair Housing Law Clinic, Cleveland, OH, Jean Constantine-Davis, Nina F. Simon, AARP Foundation Lit., Washington, DC, for Priscilla Eva, Marylea Monroe, Grover Monroe, Robin Gainer, Sandra Folkman.
Carole O. Heyward, Metro. Strategy Group, Cleveland Heights, OH, for Metropolitan Strategy Group.
Leo M. Spellacy, Patricia A. Screen, Porter, Wright, Morris & Arthur, Cleveland, OH, Mark E. Elsener, Porter Wright Morris & Arthur LLP, Cincinnati, OH, for Midwest Nat. Mortgage Banc, Inc., Phillip R. Carson, Thomas Butzer, Robert Flynt, Clint Welsch, Gene Clabes, William Denight, Wesley Financial, Nick Mayer.
Charles W. Fonda, Michael B. Shagrin, Cleveland, OH, for Robert Flynt.
Darrell A. Clay, Kenneth A. Zirm, Mary B. Matheney, Walter & Haverfield, LLP, Cleveland, OH, William C. McIntyre, William C. McIntyre, P.A., Palm City, FL, for U.S. Mortgage Reduction, Inc.
This matter comes before the Court upon several motions to dismiss filed pursuant to Federal Rule of Civil Procedure ("Rule") 12(b)(6). More specifically, currently pending on this Court's docket are: (1) a Motion to Dismiss the Amended Complaint pursuant to Rule 12(b)(6) filed by Defendant U.S. Mortgage Reduction, Inc. ("USMR"), (Doc. # 32); (2) a Partial Motion to Dismiss the Amended Complaint pursuant to Rule 12(b)(6) filed by Defendants Midwest National Mortgage Banc, Inc. ("Midwest"), Phillip Carson, Thomas Butzer, Robert Flynt, Clint Welsh, Nick Mayer, and Wesley Financial ("Wesley"), (Doc. # 46); and (3) a Motion to Dismiss the Amended Complaint pursuant to Rule 12(b)(6) filed by Defendants Gene Clabes and William Denight, (Doc. # 46).
For the sake of clarity, the Court notes that it shall consider the Partial Motion to Dismiss the Amended Complaint filed by Defendants Midwest, Carson, Butzer, Flynt, Welsh, Mayer, and Wesley, in conjunction with the Motion to Dismiss filed by Defendants Clabes and Denight, as these parties are represented by the same counsel and the respective Motions are set forth in the same document. Except as otherwise indicated in this Memorandum Opinion and Order, the Court shall refer to Defendants Midwest, Carson, Butzer, Flynt, Welsh, Mayer, Wesley, Clabes, and Denight collectively as the "Midwest Defendants" and shall refer to the Motions in Document # 46 collectively as the "Motion to Dismiss filed by the Midwest Defendants." (Doc. # 46)
For the reasons set forth below, the Motions to Dismiss are granted in part and denied in part. In particular, the Midwest Defendants' Motion to Dismiss Plaintiffs' Racketeer Influenced and Corrupt Organizations Act ("RICO") claim in Count I is granted to the extent that Plaintiffs fail to state a claim against Defendants Clabes and Denight. Plaintiffs' RICO claim is hereby dismissed with respect to those Defendants. However, the remainder of the Motion to Dismiss Count I made by the Midwest Defendants is denied. Defendant USMR's Motion to Dismiss Count I is, likewise, denied.
With respect to the Fair Housing Act ("FHA") claims in Count II, Defendants' Motions to Dismiss are granted as to Plaintiffs' claims arising under 42 U.S.C. § 3604. Plaintiffs do not state a claim for relief with respect to that provision. Furthermore, the Motions to Dismiss Plaintiffs' claims arising under 42 U.S.C. § 3605 by Defendants Clabes and Denight, and Defendant USMR are denied.
As to Count III, the Midwest Defendants' Motion to Dismiss Plaintiffs' claim under Ohio Revised Code Chapter 4112.02(H)(1) is granted. In making this ruling, the Court notes that Plaintiffs' claims under § 4112.02(H)(3)and (5) and § 4112.021 remain pending against the Midwest Defendants, including Defendants Clabes and Denight. The Motion to Dismiss filed by Defendant USMR as to this Count is granted as to the claims arising under § 4112.02(H)(1), (5) and § 4112.021, but denied as to the claim arising under § 4112.02(H)(3).
The fraud claim in Count IV survives the Motions to Dismiss, except to the extent that Plaintiffs attempt to state a claim against Defendants Clabes and Denight. Because the Amended Complaint fails to comport with the pleading requirements in Rule 9(b) with respect to Defendants Clabes and Denight, the fraud claim against them is dismissed.
Similarly, the Motions to Dismiss are denied to the extent that they seek dismissal of the claim of unconscionability in Count V; the claim of conversion against Defendant Wesley in Count VI; and the claim of civil conspiracy in Count X, except as the civil conspiracy claim applies to Defendants Clabes and Denight.
As to Count XI, the Motions to Dismiss are denied, except to the extent that Plaintiffs attempt to assert PCA claims against Defendants Clabes and Denight. Count XI is dismissed as it relates to those Defendants.
Finally, the Motions to Dismiss Plaintiffs' public policy claim in Count XII are granted as to all Defendants. Count XII is thereby dismissed in its entirety.
On July 27, 2000, Plaintiffs Priscilla Eva, Marylea Monroe, Grover Monroe and Metropolitan Strategy Group filed an eleven-count Complaint in this Court pursuant to its federal question jurisdiction. (Doc. # 1) On October 17, 2000, Plaintiffs filed a twelve-count Amended Complaint which, inter alia, added Plaintiffs Sandra Folkman and Robin Gainer. (Doc. # 17) In the Amended Complaint, Plaintiffs allege that Defendants engaged in a pattern or practice of predatory and sexually discriminatory lending directed at female borrowers for residential loans in the Cleveland, Ohio metropolitan area. Id. at ¶ 1. Plaintiffs contend that Defendants' conduct consists of, but is not limited to, the following:
! targeting property owners with substantial equity in their property and/or the ability to make a substantial payment at closing;
! misrepresenting loan terms and inflating home appraisals;
! establishing impossible repayment terms;
! inducing borrowers to obtain loans that Defendants know or should know that borrowers will be unable to repay; and
! charging undisclosed and/or improper fees.
Id. at ¶ 2. Plaintiffs state that Defendants effectively "lock the borrower in an unaffordable loan that includes equity stripping features such as inflated home appraisals which allows [sic] Defendants to deceive secondary market purchasers and extract even more money for themselves." Id. at ¶ 4. Plaintiffs further allege that Defendants charged improper fees in the nature of "kickbacks" for valueless services. Id.
Count I of the Amended Complaint alleges that Defendants violated RICO, 18 U.S.C. §§ 1962(c)-(d) and 1964(c), by engaging in a pattern of racketeering activity. Id. at ¶¶ 101-121. Count II claims that Defendants violated the FHA, 42 U.S.C. § 3601 et seq., by making housing unavailable based upon sex, and discriminating in the provision of services and financial assistance based upon the same. Id. at ¶¶ 122-124. Count III asserts a violation of rights based upon gender pursuant to Chapter 4112 of the Ohio Revised Code. Id. at ¶¶ 125-128. Count IV claims that Defendants committed fraud by inducing the individual Plaintiffs to enter into the loan agreements and related transactions. Id. at ¶¶ 129-137. Count V states that "[t]he loan agreements and related documents are unconscionable and should be null and void from their inception." Id. at ¶ 146. Alternatively, Count V asks this Court to strike the unconscionable terms and charges from the agreements, refunding sums when appropriate. Id. at ¶ 147. Count VI is for the common law tort of conversion, brought only against Defendant Wesley. Id. at ¶¶ 148-154. Count VII asserts a cause of action under the Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. § 1691, claiming that Defendants discriminated in the availability and terms and conditions of credit based upon sex. Id. at ¶¶ 155-156. Count VIII contends that Defendants Midwest and/or Wesley violated the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2602(1), when they "accepted a split portion or percentage of the payments in the amount of $995.00 (Eva and Monroe) and $795 (Folkman), and $1590 (Gainer) in connection with federally related mortgage loans, for something other than goods or facilities actually provided or services actually performed...." Id. at ¶ 160. Count IX asserts that Defendant Midwest violated the Truth-in-Lending Act ("TILA"), 15 U.S.C. § 1639, by, inter alia, failing to provide the proper disclosures. Id. at ¶¶ 163-170. Count X sets forth a claim of civil conspiracy against Defendants. Id. at ¶¶ 171-174. Count XI alleges that Defendants "conspired to commit and committed multiple acts of corrupt activity including wire fraud, mail fraud and conversion." Id. at ¶ 176. Count XII of the Amended Complaint asserts that Defendants' actions violate the public policy of the State of Ohio and the United States.1 Id. at ¶¶ 186-187.
Counts I through XII of the Amended Complaint are brought by Plaintiffs Priscilla Eva, Marylea Monroe, Sandra Folkman, and Robin Gainer. Grover Monroe joins in all Counts, with the exception of Count VII. Metropolitan joins only in Counts II, III, and XII. On November 1, 2000, Defendant USMR filed a Motion to Dismiss the Amended Complaint pursuant to Rule 12(b)(6). (Doc. # 32) On November 22, 2000, the Midwest Defendants filed the Motion to Dismiss the Amended Complaint pursuant to the same Rule. (Doc. # 46) The respective Motions to Dismiss filed by USMR and the Midwest Defendants are currently before the Court for disposition.
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