Matthews v. New Century Mortg. Corp.
| Decision Date | 08 February 2002 |
| Docket Number | No. 00-CV-1332.,00-CV-1332. |
| Parties | Hazel Jean MATTHEWS, et al., Plaintiffs, v. NEW CENTURY MORTGAGE CORP., et al., Defendants. |
| Court | U.S. District Court — Southern District of Ohio |
Joseph F. Murray, Murray Murphy Moul & Basil—2, Kimberly M. Skaggs, Equal Justice Foundation—2, Columbus, OH, for Hazel Jean Matthews, et al., Ruth D. Morgan, Marie I. Summerall, Plaintiffs.
Michael J. Garvin, Hahn, Loeser & Parks, Cleveland, OH, Sidney Williams, Hahn Loeser & Parks—2, Irving Barry Marks, Columbus, OH, for New Century Mortgage Corp., Central Mortgage Inc., Equibanc Mortgage Corporation, Defendants.
This matter is before the Court on the Defendant's Motion to Dismiss the Plaintiffs' Second Amended Complaint. Jurisdiction is proper under 28 U.S.C. § 1331. Based on the following analysis, the Court GRANTS the Defendant's Motion in part and DENIES the Defendant's Motion in part.
Plaintiff Ruth Morgan,1 then an 87-year-old single woman, was contacted in October 1997 by an employee of Century 21 Home Improvement and Incredible Exteriors, Inc. ("Century 21"). The Century 21 employee told Ms. Morgan that the siding on her home had to be replaced because it was dirty and not up to code. Approximately one week later, Ms. Morgan signed a contract with Century 21 for new siding costing $17,325 after assurances by a different Century 21 employee, Antonio Barrett, that Ms. Morgan could obtain a loan to finance her new siding. Mr. Barrett also indicated that the loan would finance other home repairs and a used car.
On November 7, 1997, Mike Lewis, an employee of Century Mortgage, Inc. ("Century Mortgage"), met with Ms. Morgan in her home regarding her loan, although Ms. Morgan had neither contacted Central Mortgage, nor sought Central Mortgage's services in any way. Mr. Lewis brought to the meeting papers for Ms. Morgan to sign regarding what she believed was an application for a home-improvement loan to cover the cost of her new siding. Ms. Morgan signed numerous papers, but did not receive copies of what she signed. At that meeting, Ms. Morgan was not informed of her right to cancel her loan application.
On November 24, 1997, Mr. Mark Hanna, then the manager of Southeast Equity Title Agency ("Southeast Equity"), met with Ms. Morgan and Mr. Barrett at Ms. Morgan's home so that she could sign closing papers for her loan. According to Ms. Morgan, she had no opportunity to review the loan documents before she signed them, nor did she receive copies of the loan documents for review either prior to or at closing. Nonetheless, she felt obligated to agree to the terms of the loan, as the siding had already been removed from her house.2 Ms. Morgan was not informed at this meeting of her three-day right to cancellation. Ms. Morgan's closing statement listed the Defendant, New Century Mortgage Corp. ("New Century"), as the lender of a $49,000 loan.
In December 1997, Ms. Morgan received, at her request, copies of the paperwork that Mr. Hanna had brought to her house. The copies, however, were not signed by Ms. Morgan. The paperwork included a "Notice of Right to Cancel" that was neither filled out nor signed. The documents did not include a Truth-in-Lending statement, a Loan Agreement Contract with the lender, employment verification forms, or Final Uniform Residential Loan Application.
Along with the paperwork, Southeast Equity sent a check payable to Ms. Morgan in the amount of $2345.07. Ms. Morgan cashed the check, and then gave it to Mr. Barrett, who had informed her that he would use the money to take care of her home repairs, other than the siding, and to buy her a used car. Ms. Morgan, however, has not had contact with Mr. Barrett since she gave him that money, and she never received either the promised home repairs or the used car.
In January 1998, Ms. Morgan began making monthly payments on the loan in the amount of $459.97. Shortly thereafter, Ms. Morgan received notice that the amount of her monthly payments would increase. Then, in December 1998 and January 1999, New Century returned Ms. Morgan's payment checks, stating that $459.97 did not represent the total amount due. In March 1999, New Century, through its trustee, U.S. Bank Trust National Association, filed a complaint against Ms. Morgan for foreclosure of her home.
Despite her prior efforts, Ms. Morgan did not learn the actual terms of the loan she had obtained from New Century until it filed for foreclosure. Thus, she learned that the loan that she had believed was intended only to finance her home repairs for $17,325.00 was actually for the refinancing of her home for $49,000.00. It was also at this time that she learned for the first time that her occupation had been listed as "quilt-maker" on the loan application forms, and that a business card stating that Ms. Morgan was a quilt-maker with American Quilts was a part of her mortgage file. In actuality, Ms. Morgan was never involved in a quilt-making business, nor did she have business cards to that effect. Finally, Ms. Morgan learned that her monthly income had been stated as $1500.00 on the loan application form, with quilt-making as her source of income, when, in actuality, her total monthly income was $713.00 in social security benefits.
The Plaintiffs allege, based on the foregoing facts, that Ms. Morgan relied on the Defendant's representations that she was receiving a home improvement loan that would result in lower monthly bill payments when, in fact, she paid high rates and fees for a loan that depleted the equity she had in her home. They contend that, as a result of the foreclosure proceedings, Ms. Morgan suffered extreme emotional and physical distress.
Some time during the summer of 1998, Plaintiff Hazel Jean Matthews, then a 69-year-old single woman, received a solicitation letter from Central Mortgage regarding loans for which she may be eligible. In response to the letter, Ms. Matthews called Central Mortgage about the possibility of obtaining a home improvement loan. Some time in August or September 1998, Mike Martinelli, a Century Mortgage employee, came to Ms. Matthews' home to speak to her about a loan. During this meeting, Ms. Matthews informed Mr. Martinelli that her monthly income consisted of approximately $2300.00 in social security and pension benefits. Ms. Matthews signed a loan application, but did not receive copies of what she signed at that time. On September 15, 1998, Ms. Matthews signed closing papers for her loan, but did not receive copies of the documents prior to closing, nor does she recall receiving such copies at the time of closing. The papers listed New Century as the lender of a $102,000.00 loan.
Soon thereafter, Ms. Matthews began making monthly payments of $891.36 on her loan. By August 2000, Ms. Matthews monthly payments increased to $1516.75. Around that time, Ms. Matthews learned for the first time, despite earlier efforts, the actual terms of her loan with New Century. She also learned that her occupation had been listed on her loan application as the owner of a business named "Crafts and Stuff," and that a business card so stating was part of her mortgage file. In actuality, Ms. Matthews has never been involved in, either as owner or employee, a craft business. Ms. Matthews learned, additionally, that her monthly income had been listed on her loan application as $5400.00.
The Plaintiffs assert that Ms. Matthews relied on the Defendant's representations that she was receiving a home improvement loan that would result in lower monthly bill payments when, in fact, she paid high rates and fees for a loan that depleted the equity she had in her home. The financial burden of her loan has allegedly caused Ms. Matthews physical harm and extreme emotional distress.
In September 1998, Plaintiff Marie I. Summerall, then a 62-year-old single woman, was approached about making some improvements to her home. Shortly thereafter, Sam Walsh, an employee of Equibanc Mortgage Corp., contacted Ms. Summerall about financing her home improvements. Ms. Summerall informed Mr. Walsh that her total monthly income was approximately $1000.00, consisting of social security benefits and money earned by babysitting for friends and family. Mr. Walsh completed a loan application for Ms. Summerall, which she then signed. Ms Summerall did not receive copies of the papers she signed.
On October 23, 1998, Ms. Summerall signed closing papers on her loan. Ms. Summerall did not receive copies of the loan documents prior to closing, nor does she recall receiving such documents at the time of closing. Thus, Ms. Summerall had no opportunity to review the loan documents. Ms. Summerall was also never informed of her three-day right to cancellation. The loan documents listed New Century as the lender of a $50,250.00 loan.
Ms. Summerall began making monthly payments of $440.61 on her loan, though they subsequently increased to approximately $550.00. The Plaintiffs assert that some time later, despite Ms. Summerall's previous due diligence, she learned the actual terms of her loan. She also learned that her occupation had been listed on her loan application as the owner of a business named "Marie's In-Home Child Care," and that her monthly income was listed as $1500.00. In actuality, although Ms. Summerall has engaged in informal babysitting, she has never been involved in a formal day care business.
The Plaintiffs allege that Ms. Summerall relied on the Defendant's representations that she was receiving a home improvement loan that would result in lower monthly bill payments when, in fact, she paid high rates and fees for a loan that depleted the equity she had in her home. The Plaintiffs also claim that Ms. Summerall was led to believe that she was entering into a loan with a...
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