Smith v. Jenkins

Decision Date16 June 2009
Docket NumberCivil Action No. 07-CV-12067-RGS.
Citation626 F.Supp.2d 155
PartiesRobert SMITH and Maria Dasilva v. Dwight JENKINS, Cherry Jenkins, Dorea Smith, Robert E. Kelley, Rkelley-Law, P.C., Louis G. Bertucci, EB Real Estate Group, Inc., Dorchester Real Estate, Inc., New England Merchants Corp., Union Capital Mortgage Business Trust, Mid City Mortgage, LLC, Fremont Investment & Loan, and Meritage Mortgage Corporation.
CourtU.S. District Court — District of Massachusetts

Jeffrey S. Baker, Baker & Associates, Jonathan D. Plaut, Chardon Law Offices, Boston, MA, for Plaintiffs.

Mary Alys Azzarito, Joel D. Hillygus, Joseph A. King, Murphy & Riley P.C., Alexandria E. Baez, John R. Bauer, Peter J. Moser, Amie R. Pelletier, Robinson & Cole LLP, Anthony R. Brighton, Douglas A. Robertson, Martin, Magnuson, McCarthy and Kenney, Jay S. Gregory, Thomas K. McCraw, Jr., Leclair Ryan, P.C., J. Patrick Kennedy, Daniel A. Leonardo, Bulkley Richardson & Gelinas LLP, Boston, MA, Geoffrey A. Domenico, Piscitelli, Domenico & Murphy, LLP, North Easton, MA, Christopher J. Fein, Fein Law Office, Braintree, MA, Michael J. Markoff, Falmouth, MA, James F. McLaughlin McLaughlin, McLaughlin & McLaughlin, Brockton, MA, for Defendants.

Donn A. Randall, Bulkley Richardson & Gelinas LLP, Boston, MA.


RICHARD G. STEARNS, District Judge.

This action arises out of an alleged real estate mortgage scheme perpetrated on plaintiffs Robert Smith and Maria Dasilva by the above-captioned defendants.1 Eight of the defendants (in seven pending motions) have moved to dismiss various claims.2 The court heard oral argument on November 14, 2008.

Smith's Allegations

Smith, who until recently resided at the New England Shelter for Homeless Veterans in Boston, suffers from schizophrenia, post-traumatic stress disorder, depression, and mild mental retardation. He graduated from high school in 1978 as a special needs student. His reading comprehension and writing skills are well below the proficiency levels of an average adult. In January of 2005, Smith was working as a trash collector for Waste Management Corporation (WMC) in the Fields Corner neighborhood of Dorchester. He was approached by Laurice Taylor, who told him that she worked in an EB Real Estate Group (RE/MAX) office on Dorchester Avenue. Taylor informed Smith that RE/ MAX was sponsoring a special real estate investment program and asked Smith if he would like to join. When Smith said that he had no money to invest, Taylor responded that he needed neither money nor real estate experience to participate. Taylor told Smith that he could rely on RE/ MAX's expertise and would not be required to make any personal decisions. Taylor gave Smith a business card and asked him to call.

Several days later, Smith called Taylor. She arranged a meeting at her office. There she told Smith that if he agreed to become part of the RE/MAX program, he would receive $10,000 for each investment made on his behalf. She reassured Smith that "RE/MAX would take care of everything." Taylor also told Smith that RE/ MAX worked regularly with veterans.

Taylor asked Smith to provide copies of his latest W-2 statement and two recent pay stubs. Smith complied, and several days later, RE/MAX informed him that he had qualified for the program. RE/MAX told Smith that it would select investments for him, each of which would be of a year's duration. Smith was promised that he would make $10,000 per investment. According to Smith, "everyone" in the RE/ MAX office encouraged him to get involved.3

In February of 2005, Taylor gave Smith directions to the Law Offices of Robert E. Kelley (Law Offices) in Braintree. Smith made an appointment on February 7, 2005. He was met at the Law Offices by defendant Louis Bertucci, who told Smith that he was the lawyer in charge of the paperwork for Smith's initial investment.4 Smith believed that Bertucci was his lawyer. Taylor was also present, along with defendant Dwight Jenkins and an unidentified real estate broker from Dorchester Real Estate, Inc. (Century 21). Taylor and Jenkins told Smith that Jenkins was experienced in real estate matters, and that he would work with RE/MAX in managing Smith's investment. Taylor and Jenkins assured Smith that they would watch out for his interests.

Bertucci placed a stack of documents in front of Smith and told him to sign. Bertucci said that he had personally prepared the documents and that they were in order. Bertucci did not read or explain the documents to Smith. According to Smith, it was obvious to everyone present that he did not understand the contents of the documents. Nonetheless, he was led by Bertucci, Taylor, Jenkins, and the Century 21 agent to believe that he was making a good, investment and that they would "take care of everything." After Smith signed the documents, he was told that he would receive $10,000 in a few days time.

The documents that Smith had signed were real estate closing documents, promissory notes, and mortgage agreements obligating him to the purchase of a residence in Dighton, Massachusetts. Smith had unknowingly borrowed $411,964.24 secured by two mortgages issued by defendant Fremont Investment and Loan (Fremont). Defendants earned thousands of dollars in fees from the transaction, including $42,000 borrowed to pay a "contract release" fee to Jenkins.

The mortgages were issued to Smith pursuant to an application prepared and submitted to Fremont by defendant New England Merchants Corporation (NEMC). In late January of 2005, RE/MAX and Jenkins had forwarded Smith's W-2 form and pay stubs to NEMC. The application contained numerous false statements, among them: (1) that the application had been completed in a face-to-face interview; (2) that Smith's monthly income was $7,500 (or $90,000 per year); (3) that Smith had two separate bank accounts totaling $18,500; (4) that Smith had completed fourteen years of school; (5) that he had rented his current residence for five years; (6) that he had been employed by WMC for four and one-half years; (7) that he had a net worth of $397,037; and finally, (8) that he intended to occupy the Dighton property as his primary residence.

On February 22, 2005, Smith was summoned to the RE/MAX office to collect the $10,000 payment. There he was told to sign an additional document. Unbeknownst to Smith, the document was a power of attorney giving Jenkins complete control of the Dighton property. Several days later, Smith was contacted by RE/ MAX and offered the opportunity to participate in a second investment. Smith agreed and was instructed to return to the Law Offices. He did so on February 28, 2005. An Ivana Foley from Century 21 was present. She informed Smith that she would be working with Jenkins and RE/ MAX in managing the new investment. Bertucci again presided at the closing, advising Smith that he was representing Smith's interests in the transaction and that he had personally verified the accuracy of the documents Smith was to sign. Bertucci did not explain the documents to Smith, and discouraged him from reading them.

Upon signing the second set of documents, Smith had unknowingly borrowed $437,198.13 secured by two mortgages from defendant Meritage Mortgage Corporation (Meritage) for the purchase of a residence on West Cottage Street in Boston. Jenkins received a $41,500 "contract release" fee. Century 21 received a broker's commission of $18,950. Smith's financial documents had been forwarded by RE/MAX to defendant Union Capital Mortgage Business Trust (Union Capital), who completed the loan application. This application also contained numerous false statements: (1) that it had been prepared during a face-to-face interview with Smith; (2) that Smith had completed sixteen years of school; (3) that he had rented his current home for the past two years; (4) that he had spent twenty years at his job; (5) that he had an income of $8,516 per month, or $102,912 per year; (6) that he intended to occupy the Boston property as his primary residence; and finally (7) the Dighton mortgages were not listed in the application as among Smith's liabilities.

Several months after the closings, Smith began receiving phone calls from banks regarding missing mortgage payments. In addition, tenants called to complain that their utility bills had not been paid.5 RE/ MAX, Jenkins, and Taylor assured Smith that they would take care of the matter. However, the calls persisted. Eventually, the Dighton and Boston properties went to foreclosure. Smith is now liable for over $800,000 in borrowed debt, and his credit has been ruined. Smith, as a result, suffers from depression, stomach problems, and high blood pressure.

Dasilva's Allegations

In November of 2004, Jenkins approached Dasilva, who was then employed as a security guard. Jenkins asked Dasilva if she would be interested in making money by investing in real estate. Jenkins informed Dasilva that he was in the business of identifying prospective investors with good personal credit who could purchase residential properties in their own name. Jenkins told Dasilva that she would receive $20,000 for each property she bought—$10,000 upon the purchase, and $10,000 upon the eventual sale. Jenkins explained that he would select choice properties for Dasilva to buy and would also arrange the financing. Jenkins assured Dasilva that after the purchases, he would take responsibility for collecting rents, paying the mortgages, and performing maintenance and repairs. He would also handle the sale of the properties. Jenkins told Dasilva that she could trust him because of his real estate experience. He also stated that he and his lawyer would be present at the closing to ensure that all documents were in order.

In late November or early December of 2004, Jenkins...

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