United States District Court, S.D. West Virginia, Charleston
T. COPENHAVER, JR., SENIOR UNITED STATES DISTRICT JUDGE
are a motion for summary judgment, filed May 8, 2019 by
defendants Wilmington Savings Fund Society, FSB
(“Wilmington”), and FCI Lender Services, Inc.
(“FCI”), and the Motion for Leave to File Amended
Answer to Amended Complaint, filed May 30, 2019 by Wilmington
and FCI. Wilmington acquired the mortgage loan in issue in
2017. FCI services the loan.
2003, the husband of the plaintiff, Barbara Ortiz
(“Ortiz”), owed approximately $88, 000 in real
estate debt and about $15, 000 on a judgment lien that
constituted a second lien on the same real estate. Amended
Compl. ¶ 8. Late that year, Ortiz decided to refinance
both debts, along with an unspecified amount of unsecured
debt, in an “overarching, refinancing debt” (the
“Loan”) with Fremont Investment & Loan
Company (“Fremont”). Plaintiff sought the Loan
“primarily to enable negotiation of a settlement of the
second judgment lien” of approximately $15, 000.
Id. ¶ 9. ECF No. 14 at 2 (citing Amended Compl.
entered into the Loan on January 26, 2004, which amounted to
$115, 545, pursuant to an adjustable rate note
(“Note”) secured by a deed of trust in the same
real estate (“Deed of Trust”). See Note,
ECF No. 5-1; Deed of Trust, ECF No. 5-2; Ex. 1, Ortiz Dep.
50:1-4, 59:15-23. Under the terms of the Note and Deed of
Trust, plaintiff owed regular monthly payments. See,
e.g., Note § 3, ECF No. 5-1; Deed of Trust §
1, ECF No. 5-2.
claims she was subjected to the practice of “predatory
lending” and was exploited by Fremont and Dana Capital
Group Inc. (“Dana Capital”), the Loan broker, and
wrongly persuaded into entering into an “unaffordable
refinancing secured by [her] home.” Amended Compl. 1.
Plaintiff claims to have requested a “fixed rate”
loan, which, according to her, “was accurately depicted
on the loan application.” Id. ¶ 22.
However, the Loan she entered into was an adjustable rate
loan which provided that plaintiff's interest rate would
not decrease below 8.99 percent, but could increase to as
much as 15.99 percent. Id. ¶ 36. Plaintiff paid
monthly installments on her Loan for fourteen years that
varied in amounts from month to month. ECF No. 33, Ex. 1,
Ortiz Dep. 62:18-63:18; 103:5-12, attached as ex. 1.
further alleges that the settlement statement allocated $8,
000 to pay off the judgment lien of $15, 000, and Fremont and
Dana Capital prepared a closing document titled
“Creditors to be paid off, ” listing $8, 000 as
an amount required to be paid off. Id. ¶ 42.
Dana Capital negotiated a settlement with the judgment
creditor to pay $8, 000 in exchange for a release of the
judgment lien. Id. ¶ 43. She asserts that the
judgment lien was not paid with the Loan proceeds until
January 2006, but instead held in a trust account for those
two years. Id. ¶¶ 44-45. Plaintiff also
alleges that the failure to furnish the $8, 000 to the
judgment creditor caused the judgment lien to take primary
lien status over the Fremont home loan. Id. ¶
result of the aforementioned events, the judgment creditor
began collecting on the debt in May 2004. Id. ¶
47. In April 2005, the judgment creditor sought to utilize
what had become its primary lien status to foreclose on
plaintiff's property. Id. ¶ 48. Plaintiff
quickly retained an attorney, at a cost of $2, 000.00, to
negotiate the payoff of the judgment lien for the original
amount of the judgment. Id. ¶ 48. Plaintiff
paid $7, 262.02 of the settlement in August 2005 to the
judgment creditor; however, “defendant continued to
refuse to release the remaining $8, 000.00 to pay off the
judgment lien.” Id. ¶ 49. The judgment
creditor brought suit against plaintiff and lender in January
2006, and lender “finally relented and released the $8,
000.00 to the judgment creditor.” Id. ¶
thirteen years later on May 31, 2017, Wilmington became the
owner of the Note, Deed of Trust, and Ortiz's debt
through a series of assignments. Id. ¶ 5;
Countercl. ¶ 5-7; Assignments of Deed of Trust, ECF Nos.
5-4 to 5-5. Although Ortiz owed regular monthly payments
under the Note and Deed of Trust, she failed to furnish some
of them timely. ECF No. 32 at Aff. of Ron McMahan;
Countercl., Ex. A, B. According to the defendants, “it
has been approximately sixteen months since Plaintiff last
made a full, timely payment” - since May 18, 2017. ECF
No. 13 at Aff. of Ron McMahan ¶ 9. She has been in
default on the Loan since at least December 11, 2017.
Id. at Aff. of Ron McMahan ¶ 10. As a result,
she breached the terms of the Note and Deed of Trust,
triggering the Loan's acceleration and the lender's
option to exercise its power of sale. Countercl., Ex. 2 at
15; Deed of Trust § 22, ECF No. 5-2.
December 14, 2017, Wilmington served notice to execute a
foreclosure sale of the property. See, e.g., Aff. of
Ron McMahan ¶ 11, ECF No. 13-1; Demand, ECF No. 13-8.
Thereafter on April 9, 2018, Ortiz instituted a lawsuit in
Fayette County Circuit Court, alleging various contractual
defenses of unconscionability and fraud and affirmative
claims of fraud and excessive late fees. See Amended
Compl. The claims “were variously pleaded against
Wilmington [holder] as well as Defendants FCI (servicer) and
Dana Capital Group, Inc. (broker).” ECF No. 33 (citing
complaint consists of six counts:
Count I, Contract Defense - Unconscionable Broker Agreement
(as to Broker Dana Capital only);
Count II, Fraud as a Contract Defense - Loan Agreement (Loan
Count III, Unconscionability as a Contract Defense to the
Loan Agreement (Loan Servicer/Holder);
Count IV, Fraud as a Contract Defense and for Damages (as to
all defendants); and
Count VI, Excessive Late Fees (Loan Servicer/Lender). The
court notes that Count V has been voluntarily dismissed by
Wilmington and FCI removed the action to this court on July
9, 2018, and Wilmington brought counterclaims of breach of
contract and declaratory judgment, seeking to exercise its
power of sale. See Countercl. Wilmington moved for
summary judgment on the counterclaim which sought
foreclosure. The motion is denied by order entered
and FCI now seek summary judgment on the claims made against
them, asserting that Counts II, III, and IV are time barred,
and that plaintiff has failed to create a genuine issue of
material fact ...