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February 18, 1986

ANDREW F. LAWSON, Plaintiff,


The opinion of the court was delivered by: GASCH

This case arises from a series of loan transactions that resulted in the foreclosure sale of plaintiff's home. The complaint asserts claims for fraud and misrepresentation, legal malpractice, and violation of the D.C. Consumer Protection Procedures Act, the Truth-in-Lending Act ("TILA"), and the Racketeer Influenced and Corrupt Organizations Act ("RICO"). Currently before the Court is a motion of defendant Family Federal Savings and Loan to dismiss the four claims against it. For the reasons stated below, the Court grants the motion only as to the TILA claim.


 Plaintiff purchased property known as 122 33rd Street, N.E., in August, 1958, and as of 1976 he owned the property free of all encumbrances. Eventually, however, plaintiff needed a loan to repay creditors, and he responded to a newspaper advertisement placed by defendant Nationwide Mortgage Corp. ("Nationwide"). The next day, a Nationwide broker came to plaintiff's home, where plaintiff allegedly informed him that he needed $6,000 to pay overdue bills. A loan was approved and settlement of the transaction ("transaction #1") occurred on December 10, 1980.

 At the settlement, plaintiff allegedly was shown the loan documents for the first time. The promissory note, drafted by Nationwide, was for $7,600 and stated that the loan proceeds would be used for business purposes. The note called for monthly interest-only payments and a year-end balloon payment. Plaintiff says that while he did not fully understand these documents, he signed them in reliance upon representations that, inter alia, he would eventually receive long-term financing. The complaint also asserts that plaintiff received only $3,900 in proceeds from the loan and that the effective interest rate of 35 percent was not disclosed to plaintiff.

 Plaintiff later approached Nationwide to arrange for the long-term financing allegedly promised him, but Nationwide refused. Thereafter, defendant Augustine Barquin, who identified himself as a Nationwide broker, offered to arrange a long-term loan for plaintiff through Family Federal. The resulting transaction ("transaction #2") was a loan for $25,000 that was settled on September 15, 1981. Plaintiff again was presented with loan documents for the first time at settlement and was purportedly advised that the loan would not be approved unless he signed an affidavit that the loan was for a business purpose.

 The terms and conditions of transaction #2 allegedly were not explained to plaintiff. Plaintiff signed the documents in reliance upon representations that he would receive long-term financing and because the balloon payment on transaction #1 had come due. Plaintiff received only $4,620.33 in proceeds from transaction #2. In addition, Barquin allegedly told plaintiff that transaction #2 was with Family Federal, even though the lender named on settlement papers was Nationwide. Nationwide later told plaintiff that the loan had been sold to Family Federal.

 In the final transaction ("transaction #3"), plaintiff allegedly was told that he would receive refinancing of the transaction #2 loan. At the December 2, 1982 settlement, plaintiff signed documents, allegedly without being informed of their legal effect, that deeded the property at 122 33rd Street, N.E. to Barquin and his wife. Although the loan from transaction #2 was repaid, plaintiff never received any other proceeds from transaction #3. The Barquins, on the other hand, received a loan secured by the 122 33rd Street property. They eventually defaulted, and the property was sold at foreclosure sale on February 12, 1985. This action was filed on September 13, 1985.


 A. Count One

 Plaintiff's first claim is that Family Federal is liable for the misrepresentations of Nationwide and Barquin because those defendants acted under actual or apparent authority from Family Federal during transaction #2. Family Federal contends that this claim is barred by the statute of limitations.

 In the District of Columbia, there is a three-year statute of limitations for fraud claims, and that period begins to run from the time the fraud or misrepresentation "either is discovered or reasonably should have been discovered." King v. Kitchen Magic, Inc., 391 A.2d 1184, 1186 (D.C. App. 1978). Family Federal argues that the statute should run from September 15, 1981, the date of settlement, because plaintiff should have discovered any fraud at that point.

 The Court disagrees. Plaintiff may be able to show that he reasonably was unaware of the long-term financing misrepresentation, for example, until December 2, 1982, or plaintiff may be able to successfully invoke the doctrine of "fraudulent concealment." See William J. Davis, Inc. v. Young, 412 A.2d 1187, 1191 (D.C. App. 1980). Plaintiff's contentions thus present factual questions which are not properly decided on a motion to dismiss. See Richards v. Mileski, 213 U.S. App. D.C. 220, 662 F.2d 65, 67, 70-71 (D.C. Cir. 1981). Since plaintiff could conceivably prove a set of facts supporting his claim ...

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