Ford v. New Century Mortg. Corp.

• Decision Date: 22 June 2011
• Docket Number: Case No. 1:10 CV 01130.
• Citation: 797 F.Supp.2d 862
• Parties: Leigh–Anne FORD, individually an as class representative, Plaintiff, v. NEW CENTURY MORTGAGE CORPORATION, et al, Defendants.
• Court: U.S. District Court — Northern District of Ohio

797 F.Supp.2d 862

Leigh–Anne FORD, individually an as class representative, Plaintiff,

v.NEW CENTURY MORTGAGE CORPORATION, et al, Defendants.

Case No. 1:10 CV 01130.

United States District Court,N.D. Ohio,Eastern Division.

June 22, 2011.

Gary Cook, Cleveland, OH, for Plaintiff.

Max W. Thomas, Reem Shalodi, Frances F. Goins Ulmer & Berne, Cleveland, OH, for Defendants.

MEMORANDUM OPINION AND ORDER

LESLEY WELLS, District Judge.

Before the Court is a motion for judgment on the pleadings filed by the defendant Geauga Savings Bank (“Geauga Savings”). The plaintiff Leigh–Anne Ford has responded, and Geauga Savings has replied. For the following reasons, the Court will grant the motion.

I. Background

The plaintiff's class action complaint against defendants New Century Mortgage Corporation (“New Century”) and Geauga Savings Bank was removed from Cuyahoga Court of Common Pleas on 19 May 2010. The plaintiff alleges violations of the Truth in Lending Act (“TILA”), 15 U.S.C. § 1602(f) and the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2601, et seq. (Doc. 1–2, hereinafter “Compl.,” Counts 1–3, 7). She further alleges claims of negligent and intentional misrepresentation; breach of contract; and fraudulent misrepresentation. (Compl. Counts 4–6). Geauga Savings filed an answer and counter-claims on 18 June 2010. (Doc. 5, hereinafter, “Ans.”). Geauga Savings filed a motion for judgment on the pleadings on 29 July 2010. (Doc. 8). A response and a reply followed on 28 September and 15 October 2010, respectively. (Doc. 10; Doc. 11).

The following factual allegations are derived from the pleadings and the documents attached thereto. Ms. Ford alleges, and the defendant admits, that Geauga Savings originated and serviced loans for her. (Compl. ¶ 12; Ans. ¶¶ 3,12). The complaint does not identify the particular loans at issue, but Geauga Savings states that there are four loans, which Ms. Ford does not dispute. (Ans. ¶ 3). The first loan, in the amount of $37,700, was extended to Ms. Ford on 5 January 2007 for the purchase of property located at 12914 Hlavin Avenue, Cleveland, Ohio (“the Hlavin Property”). (Ans. ¶ 3; Doc. 5–1, “Adjustable Rate Note”; Doc. 5–2, “Mortgage Agreement”). With respect to this loan, Geauga Savings states that Ms. Ford represented that the Hlavin Property was to be her primary residence. (Doc. 5–3, “Uniform Residential Loan Application,” p. 2). Geauga Savings contends that Ms. Ford never intended nor did she ever reside at the Hlavin Property. (Ans. ¶ 3).

Geauga Savings states that the second loan, a line of credit in the amount of $13,300, was extended to Ms. Ford on 8 May 2007 for improvements to the Hlavin Property. (Ans. ¶ 3; Doc. 5–4, Home Equity Line Agreement; Doc. 5–5, Open End Mortgage Deed). Geauga Savings states that a condition of this agreement was that the Hlavin Property be Ms. Ford's primary residence. (Ans. ¶ 3). Ms. Ford concedes that the purpose of the first two loans was the purchase of a secondary residence. (Doc. 10 at 4).

Geauga Savings further states that it extended a third loan to Ms. Ford, this time a construction loan, in the amount of $57,000 on 14 May 2007. (Ans. ¶ 3; Doc. 5–7, Adjustable Rate Note dated 14 May 2007; Doc. 5–8, Mortgage Agreement dated 14 May 2007). The fourth loan was a construction loan for another property located at 9212 Columbia Avenue, Cleveland, Ohio, in the amount of $60,000. (Ans. ¶ 3; Doc. 5–9; Doc. 5–10).

Ms. Ford alleges that in the course of originating and servicing her loans, the defendants, individually and collectively, engaged in unlawful, deceptive, and unconscionable practices, which are described as follows. (Compl. ¶ 69). The defendants failed to promptly post Ms. Ford's timely payments and assessed her unwarranted late charges. (Compl. ¶ 70). The defendants charged more than one late fee for a single delinquency and otherwise “pyramided” late charges. (Compl. ¶ 71). The defendants posted Ms. Ford's payments as partial payments to “suspense accounts.” (Compl. ¶ 72). Ms. Ford was charged fees called “corporate advances.” (Compl. ¶ 73). The defendants charged or attempted to charge Ms. Ford illegal fees as a condition to reinstatement of her purportedly defaulted mortgage. (Compl. ¶ 74). The defendants, in some cases, force-placed insurance on the plaintiff, which was either unnecessary or purchased at exorbitant premiums. (Compl. ¶ 75). The defendants charged interest on sums they claimed to have advanced on behalf of Ms. Ford. (Compl. ¶ 76). The defendants engaged in abusive debt collection practices. (Compl. ¶ 77). The defendants were deceptive when they included a deed in lieu of foreclosure within the loan modification package they presented to Ms. Ford. (Compl. ¶ 78).

Further, Ms. Ford signed a waiver to her right to jury trial, which she maintains is invalid, having been obtained through the defendants' deceptive practices. (Compl. ¶ 79). The defendants subjected Ms. Ford to numerous harassing contacts. (Compl. ¶ 79). The defendants failed to promptly verify amounts due, failed to resolve disputes, and failed to make required disclosures in connection with their debt collection activities. (Compl. ¶ 80).

II. Standard of Review

A motion for judgment on the pleadings may be made “[a]fter the pleadings are closed but within such time as not to delay the trial.” Fed.R.Civ.P. 12(c). A motion for judgment on the pleadings is reviewed under the same standard applicable to a motion to dismiss under Rule 12(b)(6). Tucker v. Middleburg–Legacy Place, 539 F.3d 545, 549 (6th Cir.2008). “A motion to dismiss for failure to state a claim is a test of the plaintiff's cause of action as stated in the complaint, not a challenge to the plaintiff's factual allegations.” Golden v. City of Columbus, 404 F.3d 950, 958–59 (6th Cir.2005). The Court must construe the complaint in the light most favorable to the non-moving party, accept all factual allegations as true, and make reasonable inferences in favor of the non-moving party. Total Benefits Planning Agency, Inc. v. Anthem Blue Cross & Blue Shield, 552 F.3d 430, 434 (6th Cir.2008); Murphy v. Sofamor Danek Gp., Inc., 123 F.3d 394, 400 (6th Cir.1997). The Court is not required, however, to accept as true mere legal conclusions unsupported by factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)).

The Rule 12(b)(6) standard requires more than the bare assertion of legal conclusions to survive a motion to dismiss. Allard v. Weitzman, 991 F.2d 1236, 1240 (6th Cir.1993). The complaint must “ ‘give the defendant fair notice of what the claim is, and the grounds upon which it rests.’ ” Nader v. Blackwell, 545 F.3d 459, 470 (6th Cir.2008) (quoting Erickson v. Pardus, 551 U.S. 89, 127 S.Ct. 2197, 2200, 167 L.Ed.2d 1081 (2007)). While a complaint need not contain “detailed factual allegations,” its “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 544, 127 S.Ct. at 1964. A complaint that suggests “the mere possibility of misconduct” is insufficient; rather, the complaint must state “a plausible claim for relief.” Iqbal, 129 S.Ct. at 1950 (citing Twombly, 550 U.S at 556, 127 S.Ct. 1955).

III. DiscussionA. Truth in Lending Act (Count 1)

In Count One of her complaint, Ms. Ford alleges that the defendants violated TILA by failing to provide required disclosures and notices related to her loans, thereby giving her the right to rescind. Geauga Savings maintains that she is not entitled to rescission because none of the loans involve a security interest in her principal dwelling.

A consumer's right to unilaterally rescind under TILA applies only to credit transactions “in which a security interest ... is or will be retained or acquired in any property which is used as the principal dwelling of the person to whom credit is extended.” 15 U.S.C. § 1635(a) (emphasis added). See also Beach v. Ocwen Federal Bank, 523 U.S. 410, 411, 118 S.Ct. 1408, 140 L.Ed.2d 566 (1998) (“when a loan made in a consumer credit transaction is secured by the borrower's principal dwelling, the borrower may rescind the loan agreement if the lender fails to deliver certain forms or to disclose important terms accurately”).

The complaint states that each of the loans at issue are “transactions in which a security interest was taken in the Representative Plaintiff's principal residence.” (Doc. 1–2, ¶ 86). Although the Court must accept all well-pleaded factual allegations in the complaint as true, it “may disregard allegations contradicted by facts established by exhibits and attached to the pleading.” Girgis v. Countrywide Home Loans, Inc., 733 F.Supp.2d 835, 843 (N.D.Ohio,2010) (quoting HMS Property Mgmt. Group Inc. v. Miller, 69 F.3d 537 (Table), 1995 WL 641308 at *3 (6th Cir. Oct. 31, 1995)). Id. Further, deliberate factual assertions made in the parties' briefs may be considered binding judicial admissions. United States v. Burns, 109 Fed.Appx. 52, 58 (6th Cir.2004) (citations omitted).

Despite the allegation in the complaint, review of the available materials reveals that none of the loan transactions presently at issue relate to a security interest in Ms. Ford's principal dwelling. First, in her opposition, she admits that “[t]he parties' understanding with respect to the First and Second Loans ... indicates that the purpose for each of the subject loans was the purchase of a secondary residence.” Because this statement is deliberate and clear, the Court will hold her to it. See Commercial Money Ctr., Inc. v. Ill. Union Ins. Co., 508 F.3d 327, 336 (6th Cir.2007). Further, the loan documents attached to the pleadings reveal, and Ms. Ford concedes, that the second two loans were secured for business purposes. (Doc. 10, p. 4; Docs. 5–7. 5–8, 5–9, 5–10). Therefore, because the loan transactions do not relate to a...