Hanlin v. Ohio Builders and Remodelers, Inc.

• Decision Date: 28 March 2001
• Docket Number: No. 2:00-CV-179.,2:00-CV-179.
• Citation: 196 F.Supp.2d 572
• Parties: Martin L. HANLIN, et al., Plaintiffs, v. OHIO BUILDERS AND REMODELERS, INC., et al., Defendants.
• Court: U.S. District Court — Southern District of Ohio

196 F.Supp.2d 572

Martin L. HANLIN, et al., Plaintiffs, v. OHIO BUILDERS AND REMODELERS, INC., et al., Defendants.

No. 2:00-CV-179.

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

March 28, 2001.

Robert C. Johns, Southeastern Ohio Legal Services-2, Steubenville, OH, Gary Michael Smith, Graham McClelland Ransbottom-2, Dover, OH, for Plaintiffs.

Yale R. Levy, Pope & Levy Co. L.P.A., Westerville, OH, Gregory S. Pope, Skrobot Pope Levy & Fisher LLP-2, Columbus, OH, David A. Wallace, Zeiger, Dreher & Carpenter, Columbus, OH, David K. Stein, Stein Chapin & Associates LLC-2, Columbus, OH, Thomas Robert McGrath McGrath & Breitfeller, Columbus, OH, for Defendants.

OPINION AND ORDER

SARGUS, District Judge.

This matter is before the Court for consideration of the Motions to Dismiss filed by Defendants Equicredit Corporation (Doc. # 11) and BR Financial (Doc. # 14). For the reasons that follow, Defendant Equicredit's motion is granted in part and denied in part and, Defendant BR Financial's motion is granted in part and denied in part.

I.

Plaintiffs Martin and Shirley Hanlin bring this action challenging the terms and conditions of credit extended to them in connection with home repair work. The Defendants in this action are: Ohio Builders and Remodelers ["Ohio Builders"], Equicredit Corporation, BR Financial and Express Financial Services. Plaintiffs' claims are brought pursuant to the Truth in Lending Act, 15 U.S.C. § 1601, et seq. and the Ohio Consumer Sales Practices Act, R.C. Chapter 1345. Plaintiffs also assert claims for common law fraud, breach of contract, breach of fiduciary duty and negligence. In addition, Plaintiffs assert that the Defendants violated the Equal Credit Opportunity Act, 15 U.S.C. § 1691, et seq.; the Ohio Retail Installment Sales Act, R.C. § 1317; and engaged in corrupt practices as defined by O.R.C. § 2923.31. The Court entertains this action pursuant to 28 U.S.C. §§ 1331, 1367.

Plaintiffs, both of whom suffer from disabilities and who receive supplemental security income¹, entered into a contract with Defendant Ohio Builders for the installation of a new bathroom, storm windows, doors and other improvements to their Steubenville, Ohio home. The Plaintiffs informed Defendant Ohio Builders that they could pay $150.00 per month toward the repair work, which totaled $17,000.00. (Complaint at ¶ 6). Accordingly, the contract, executed on February 17, 1999, provided for 360 payments of $150 per month at a 9.75% interest rate. (Id. at ¶ 7). Although a notice of cancellation was attached to the contract, it was not executed. (Id. at ¶ 16). On February 18, 1999, a residential loan application was completed pursuant to a telephone call with Plaintiffs by one Vicki Bartoli of Defendant BR Financial. (See Exhibit B attached to Complaint). Defendant Ohio Builders completed the repair work in March 1999. (Complaint at ¶ 9). Plaintiffs allege, however, that the work was deficient in several respects². Plaintiffs further allege that the deficient work was never repaired. (Id. at ¶ 12).

Sometime after March 1999, Plaintiffs received a telephone call from "a Columbus office" informing them that a woman would be visiting their home to execute additional paperwork in order that the construction company could be paid. (Id. at ¶ 13). Plaintiffs had already made payments of $150.00 for March and April 1999. On April 9, 1999, one Candi Cole visited Plaintiffs' home; Plaintiffs completed paperwork which, unbeknownst to them or allegedly to Ms. Cole, resulted in a mortgage totaling $24,650.00 at an interest rate of 15.6% and a total credit line of $81,212.12. (Id. at ¶¶ 13; 21). Ms. Cole did not explain the papers to Plaintiffs, who apparently have inferior reading and writing skills. (Id. at ¶ 16). The mortgage included $1,972.00 in broker's fees, although the Plaintiffs allege that they were never notified of the need for a broker. (Id. at ¶ 20). Plaintiffs also claim that they never received notification of changes in the applicable interest rate; specifically, from 9.75% to 12.75%, 10.6%, 13.65% and, finally to 15.7999%. (Complaint at ¶ 24). Plaintiffs further claim that an Authorization for Release of Information was not signed until April 9, 1999. (Id. at ¶ 19).

Plaintiffs further allege that although Defendant BR Financial, the mortgage broker, requested an interest rate of 13.65%, Defendant Equicredit caused Plaintiffs to sign a mortgage for 15.7999%. (Id. at ¶ 25). Plaintiffs further allege that although the loan application made in February 1999 indicates a 12.75% fixed interest rate (See Exhibit B attached to Complaint), the good faith estimate, made in March 1999, indicates an interest rate of 10.6%. (See Exhibit C, Id.). Plaintiffs allege that they did not receive the good faith estimate until April 9, 1999, the date of Ms. Cole's visit. (Complaint at ¶ 27).

Following Ms. Cole's visit, Plaintiffs continued to make payments of $150.00 per month. All payments, except those made in March, April and August 1999, were returned. (Complaint at ¶ 28). Upon the return of payments, Plaintiffs contacted Defendant Equicredit which advised Plaintiffs that they were to pay $285.26 per month. (Id. at ¶ 30). Plaintiffs claim that they are currently receiving threats of foreclosure on their home. (Id. at ¶ 29). Plaintiffs filed the instant action on February 17, 2000. Defendants Equicredit and BR Financial move to dismiss all of the claims asserted against them.

II.

A motion to dismiss for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6) "should not be granted unless it appears beyond a doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). All well-pleaded allegations must be taken as true and be construed most favorably toward the non-movant. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974); Mayer v. Mylod, 988 F.2d 635, 637 (6th Cir.1993). While a court may not grant a Rule 12(b)(6) motion based on disbelief of a complaint's factual allegations, Lawler v. Marshall, 898 F.2d 1196, 1199 (6th Cir. 1990), the court "need not accept as true legal conclusions or unwarranted factual inferences." Morgan v. Church's Fried Chicken, 829 F.2d 10, 12 (6th Cir.1987). Consequently, a complaint will not be dismissed pursuant to Rule 12(b)(6) unless there is no law to support the claims made, the facts alleged are insufficient to state a claim, or there is an insurmountable bar on the face of the complaint.

III.

A. Defendant Equicredit's Motion to Dismiss

Defendant Equicredit seeks dismissal of each of the twelve claims for relief asserted against it. The Court will consider the merits of each of the claims, in turn.

1. Violation of the Ohio Home Solicitation Sales Act

Defendant contends that Plaintiffs fail to state a claim for violation of the Ohio Home Solicitation Sales Act ["HSSA"], R.C. §§ 1345.21-1345.28. Pursuant to the HSSA, a buyer of consumer goods and services covered by the Act has the absolute right to cancel the sale until midnight of the third business day after the day on which the buyer signs an agreement or offer to purchase. R.C. § 1345.22. The HSSA further requires that every home solicitation sale be evidenced by a written agreement or offer to purchase, signed by the buyer, which agreement must provide notice of the buyer's right to cancellation. R.C. § 1345.23. Failure to comply with the provisions of the HSSA constitutes a deceptive practice in violation of R.C. § 1345.02. R.C. § 1345.28.

A "home solicitation sale" is defined as follows:

[A] sale of consumer goods or services in which the seller or a person acting for the seller engages in a personal solicitation of the sale at a residence of the buyer, including solicitations in response to or following an invitation by the buyer, and the buyer's agreement or offer to purchase is there given to the seller or a person acting for the seller, or in which the buyer's agreement or offer to purchase is made at a place other than the seller's place of business.

R.C. § 1345.21(A). Certain transactions are specifically excluded from the statute's reach; in particular, those in which the buyer is accorded a right of recission by 15 U.S.C. § 1635, the Truth in Lending Act ["TILA"], or regulations adopted pursuant thereto. R.C. § 1345.21(A)(7). "Consumer goods or services" are defined as "goods or services purchased, leased, or rented primarily for personal, family, or household purposes, including courses or instruction or training regardless of the purpose for which they are taken." R.C. § 1345.21(E).

Defendant Equicredit contends that it cannot be held liable under the HSSA because the transaction entered into between Plaintiffs and Ohio Builders was subject to a right of recission under 15 U.S.C. § 1635³. This Court agrees.

Defendant further points out that the complaint fails to allege that the Defendant is vicariously liable to Plaintiffs. In response, Plaintiffs assert that they indeed seek to impose derivative liability on Equicredit for the acts of Defendant Ohio Builders.⁴ Despite Plaintiffs' assertion the Court concludes that there is no basis upon which to hold Equicredit derivatively liable under the HSSA. Plaintiffs assert, in conclusory fashion, that liability arises pursuant to common and statutory law. The Court finds no authority under the HSSA upon which to premise derivative liability. Furthermore, Plaintiffs fail to articulate any common law basis for such liability. In sum, the Court concludes that Plaintiffs could prove no set of facts that would entitle them to relief under the HSSA against Defendant Equicredit.

2. Violation of the Consumer Sales Practices Act

Plaintiffs also seek to hold Defendant Equicredit liable under the Ohio Consumer Sales Practices Act ["CSPA"], R.C. § 1345.01 - § 1345.13. Defendant asserts that the CSPA is inapplicable to...