Scott v. Fairbanks Capital Corp.

Decision Date20 August 2003
Docket NumberNo. C-3-02-001.,C-3-02-001.
Citation284 F.Supp.2d 880
PartiesJames E. SCOTT, et al., Plaintiffs, v. FAIRBANKS CAPITAL CORP., Defendant.
CourtU.S. District Court — Southern District of Ohio

Gary Klein, Grant & Roddy, Boston, MA, Matthew Brownfield, Cincinnati, OH, for Plaintiffs.

Cynthia G. Swann, David M. Souders, Weiner Brodsky Sidman Kider PC, Washington, DC, Thomas Allen Knoth, Thompson Hine, Dayton, OH, for Defendant.

DECISION AND ENTRY SUSTAINING PLAINTIFFS' MOTION FOR A RULING ON THEIR MOTION TO FILE A FIRST AMENDED COMPLAINT (DOC. # 35-2); PLAINTIFFS' MOTION FOR LEAVE TO FILE FIRST AMENDED COMPLAINT (DOC. # 25) IS SUSTAINED; SAID AMENDED COMPLAINT IS TO BE FILED FORTHWITH; DEFENDANT'S MOTION FOR ORAL ARGUMENT ON THE MOTION FOR JUDGMENT ON THE PLEADINGS (DOC. # 29) IS OVERRULED AS MOOT; PLAINTIFFS' MOTION FOR LIMITED DISCOVERY, PURSUANT TO FED. R. CIV. P. 56(F) (DOC. # 35-1) IS SUSTAINED IN PART AND OVERRULED IN PART; PLAINTIFF IS GRANTED FORTY-FIVE (45) DAYS FROM DATE TO CONDUCT LIMITED DISCOVERY AS TO WHETHER THE AMOUNT OF ATTORNEY'S FEES COLLECTED BY DEFENDANT WAS REASONABLE AND WHETHER THEY WERE INCURRED IN ENFORCING THE TERMS OF THE MORTGAGE OR IN REINSTATEMENT; PLAINTIFFS' RESPONSE TO DEFENDANT'S SUPPLEMENTAL MOTION FOR SUMMARY JUDGMENT IS DUE TWENTY (20) DAYS FROM THE COMPLETION OF SAID DISCOVERY; THE COURT WILL DEFER RULING ON DEFENDANT'S SUPPLEMENTAL MOTION FOR SUMMARY JUDGMENT (DOC. # 34) UNTIL IT IS RIPE FOR DECISION

RICE, Chief Judge.

Plaintiffs James and Joan Scott ("Plaintiffs" or "the Scotts") have brought this putative class action, alleging that Defendant Fairbanks Capital Corporation ("Fairbanks") has violated the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692a et seq., and Ohio law by attempting to collect attorney's fees from them. On or about March 23, 1998, Plaintiffs borrowed $104,800 from the National Consumer Services Corporation by signing a note. The note was secured by a mortgage on the Scotts' residential real estate. Paragraph 6(E) of the note provides:

If Note Holder has required me to pay immediately in full as described above, the Note Holder will have the right to be paid back by me for all of its costs and expenses in enforcing this Note to the extent not prohibited by applicable law. Those expenses include reasonable attorney's fees, for example, if awarded by a court judgment.

Doc. # 1, Ex. A. In 1999, the Scotts defaulted on their loan.

On November 12, 1999, Fairbanks initiated a foreclosure action against the Scotts in the Montgomery County Court of Common Pleas. Soon thereafter, Plaintiffs and Fairbanks entered into a forbearance agreement.1 Under this agreement, the foreclosure action would continue, but no Sheriff's sale would occur, provided that Plaintiffs made the payments required by the agreement. On August 8, 2000, the state court entered judgment against Plaintiffs, stating that the sale of the residence would proceed if the Scotts did not pay the full amount due within three days of the date of that judgment. The judgment did not include an award for attorney's fees.

According to the affidavit of Mr. Harry Henderson, a Loan Service Representative for Fairbanks, Mr. Scott contacted Fairbanks on August 23, 2000, requesting information about reinstating the mortgage loan. Mr. Henderson indicated that a payment of $12,297.46, which included attorney's fees, was required to reinstate the loan. On August 25, 2000, the Scotts sent a certified check for that amount to Fairbanks. On September 8, 2000, the state court judgment was vacated.

On April 30, 2001, the Scotts received correspondence from Fairbanks which stated they owed Defendant "foreclosure and attorney's fees," totaling $4878.00. On January 3, 2002, the Scotts sold their home. The payoff statement they received from Fairbanks included various charges, including unpaid late fees, unpaid NSF charges, funds advanced on borrower's behalf, property inspection fee, and interest on advances.

On January 2, 2002, Plaintiffs initiated the instant litigation against Fairbanks, alleging that Defendant has violated the FDCPA and Ohio law. According to Plaintiffs, under Miller v. Kyle, 85 Ohio St. 186, 97 N.E. 372 (1911), a provision in a mortgage contract requiring one party to pay the other's attorney's fees, in the event of a default, is unenforceable under Ohio law. In their Complaint, Plaintiffs alleged that, despite this prohibition, Fairbanks has repeatedly insisted that they pay attorney's fees incurred in connection with the foreclosure action against them, occasioned as a result of Plaintiffs' nonpayment of the above note. Plaintiffs asserted that Defendant has violated a number of provisions of the FDCPA by attempting to collect attorney's fees from them. Plaintiffs also set forth claims under Ohio law for breach of contract, intentional misrepresentation and unjust enrichment, all of which arise out of Defendant's efforts to collect attorney's fees.

Plaintiffs have sought leave to file a First Amended Complaint (Doc. # 25), expanding their claims against Fairbanks to include allegations that Defendant required them to pay "padded charges," i.e., additional fees for, inter alia, funds advanced on borrower's behalf, property inspection fees, unpaid other fees, and unpaid NSP charges. The Scotts allege in their proposed Amended Complaint that Fairbanks sought to collect these fees in the context of their loan reinstatement and their loan payoff.

In response to Plaintiffs' action, Defendant filed a Motion for Judgment on the Pleadings or, in the Alternative, for Summary Judgment (Doc. # 13), which the Court treated as a one for summary judgment. In its Motion, Defendant had argued that it received a judgment of foreclosure from the Montgomery County Court of Common Pleas, which was vacated when the Scotts entered into a reinstatement agreement with Fairbanks. Defendant represented that the reinstatement agreement obligated Plaintiffs to become current on their payments under the note and to pay the expenses incurred in the foreclosure action. On February 29 2003, the Court overruled Defendant's Motion, observing that Defendant had failed to substantiate its assertions with evidence, as that term is used in Rule 56 (Doc. # 33). In particular, the Court noted that Defendant had not supplied a copy of the reinstatement agreement or even an affidavit describing that document (id. at p. 6). This Court also addressed the issue of whether a provision in the reinstatement agreement, requiring Plaintiffs to pay attorney's fees, can be enforced under Ohio law. The Court indicated that the holding of Miller may be inapplicable in light of Defendant's argument that Plaintiffs' liability for attorney's fees flowed from the reinstatement agreement rather than from the note itself. Believing that this litigation could be resolved through the submission of an additional motion for summary judgment, the Court directed Defendant to file a renewed (and properly supported) motion for summary judgment within twenty days from that date.

Pending before the Court is Defendant's Supplemental Motion for Summary Judgment (Doc. # 34). Also pending is Plaintiffs' Motion for Leave to File a First Amended Complaint (Doc. # 25); their Motion Seeking a Ruling on their Pending Motion to Amend (Doc. # 35-2); their Motion for Limited Discovery, pursuant to Fed.R.Civ.P. 56(f) (Doc. # 35-1), filed in response to Defendant's Supplemental Motion for Summary Judgment; and Defendant's Motion for Oral Argument on its Motion for Judgment on the Pleadings or, in the alternative, for Summary Judgment (Doc. # 29). On February 28, 2003, the Court ruled upon Defendant's Motion for Judgment on the Pleadings (Doc. # 33). Defendant's Motion for Oral Argument on that Motion (Doc. # 29) is, accordingly, OVERRULED as MOOT. Turning to the remaining motions, the Court will begin with Plaintiffs' Motion For Leave to File a First Amended Complaint,2 following which it will address Plaintiffs' Motion for Rule 56(f) Discovery. For the reasons assigned, Plaintiffs' Motion for Leave to File a First Amended Complaint is SUSTAINED. Plaintiffs' Motion for Rule 56(f) discovery is SUSTAINED in PART and OVERRULED in PART. The Court will defer ruling on Defendant's Supplemental Motion for Summary Judgment until it is ripe for determination.

I. Plaintiffs' Motion to For Leave to File First Amended Complaint (Doc. # 25)

Plaintiffs have sought leave to file a First Amended Complaint, which joins another representative plaintiff, Ms. Deborah Kline Ellis ("Kline"),3 and adds allegations of additional wrongful charges imposed by Fairbanks, i.e., the "padded charges," which were allegedly sought in connection with the loan reinstatement and the loan payoff. Leave to file an amended complaint "shall be freely given when justice requires." Fed.R.Civ.P. 15(a); Foman v. Davis, 371 U.S. 178, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962). Two factors that must be considered in determining whether to grant such leave are whether the amendment would be prejudicial to the other party and whether the amendment would be a futile gesture.

Defendant has opposed Plaintiffs' Motion, asserting a myriad of bases for denying Plaintiffs' request to file the proposed Amended Complaint. First, Defendant argues that some of the claims are barred by the statute of limitations. Second, it asserts that joinder of the newly-named Plaintiff is inappropriate, because the factual circumstances giving rise to her claims are fundamentally different than the Scotts' claims. Third, Defendant argues that Plaintiffs' new claims are too vague and conclusory and, thus, fail to meet the pleading requirements of Rule 8. Fourth, Defendant argues that its charges were permitted under the contracts. Fifth, Fairbanks contends that Plaintiffs have waived and released their claims. Sixth, it asserts that Plaintiffs' claims are barred by the voluntary payment doctrine. The...

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  • Ratcliff v. Moore
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    • U.S. District Court — Southern District of Ohio
    • April 24, 2009
    ...to determining whether a particular factual situation constitutes a single transaction and occurrence. Scott v. Fairbanks Capital Corp., 284 F.Supp.2d 880, 888 (S.D.Ohio 2003). The terms "transaction or occurrence" are given broad and liberal interpretation. Lasa Per L'Industria Del Marmo S......
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    ...1st Dist., 1995) (additional quotation omitted)). Ohio's version of the same doctrine was summarized in Scott v. Fairbanks Capital Corp., 284 F.Supp.2d 880, 894 (S.D. Ohio 2003).As articulated by the Ohio Supreme Court: "In the absence of fraud, duress, compulsion or mistake of fact, money,......
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    ...App. 2000). However, the voluntary payment doctrine does not have the effect of precluding FDCPA claims. Scott v. Fairbanks Capital Corp., 284 F. Supp. 2d 880, 895 (S.D. Ohio 2003). "The FDCPA is a federal law and accordingly state law defenses are not relevant here." Hamid v. Stock & Grime......
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1 books & journal articles
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    • University of Nebraska - Lincoln Nebraska Law Review No. 40, 2022
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    ...Servs., Inc., 598 F.2d 1357, 1364 (5th Cir. 1979) (see supra notes 127-31 and accompanying text); Scott v. Fairbanks Capital Corp, 284 F. Supp. 2d 880, 889 (S.D. Ohio 2003) (involving relation back of amendment); Annis v. Dewey County Bank, 335 F. Supp. 133, 137-38 (D.S.D. 1971). Courts tha......

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