agent and argue that Option One gave directions about how the transaction was to be closed. The instructions add nothing to plaintiff's proof.
Plaintiffs do not address the attorney's fee charge separately, nor do they identify any distinct evidence to show that it should have been included in the finance charge.
Note that, in order to defeat plaintiffs' extended right of rescission, defendants need only show that the Disclosure Statement was accurate to within approximately $ 455 of the actual finance charge. See 15 U.S.C. § 1649(a)(3)(B) (incorporating the accuracy test of § 1605(f)(2), which in this case means that the disclosure must have been accurate to within one half of one percent of the loan principal). Plaintiffs' argument is that the Disclosure Statement was $ 540 less than what TILA required. Their argument for an extended right of rescission thus would fail if any of the three disputed charges were lawfully excluded.
Plaintiffs have failed to show the existence of a material factual dispute sufficient to defeat Option One's motion for summary judgment on counts one and five.
3) Violation of the District of Columbia usury statute
In count fifteen, plaintiffs allege that both Option One and 1st American violated the District of Columbia usury statute, D.C. Code § 28-3301(e)(2), by charging eight "points" for the loan (two points in favor of Option One, and six points in favor of 1st American). Summary judgment must be granted in favor of 1st American -- which acted as a broker rather than a lender -- because the usury statute by its terms applies only to "lender[s]."
D.C. Code § 28-3301(e)(2).
Summary judgment will also be granted in favor of Option One. The statute specifically allows a lender to charge more than the statutory maximum of one point where the additional points are paid "to a lender for the sole purpose of qualifying for and obtaining a loan ... at a lower rate of interest than would otherwise have been offered." Id. Option One asserts that the two points were consideration for a lower interest rate. Plaintiffs complain that there is no evidence that they were informed of the reason for this fee, nor that they agreed to it, but they have presented no evidence to dispute the Settlement Statement, which plaintiffs signed and which evidences plaintiffs' acknowledgment that this was a "loan discount" fee. See Option One Mot. for Summ. Judg., Exh. 21; see also Opp. to Mot. for Summ. Judg., p. 37.
B. The alleged promise to refinance
1) Liability of 1st American for the alleged fraud
Plaintiffs allege that 1st American falsely promised to refinance the Option One mortgage to induce them to enter a loan that 1st American knew they could not repay. Plaintiffs state this general claim in seven variations: violation of the District of Columbia Consumer Procedures Protection Act (count 6), fraud (count 7), constructive fraud (count 8), negligent misrepresentation (count 9), innocent misrepresentation (count 10), unconscionability (count 13), and intentional infliction of emotional distress (count 14). As discussed above, see note 3 supra, plaintiffs and 1st American have presented conflicting evidence regarding the income falsification and other elements of these counts. There exist genuine disputes of material fact, and 1st American's motion for summary judgment as to counts 6, 7, 8, 9, 10, 13 and 14 must be denied.
2) Option One's liability for the alleged fraud
Plaintiffs also seek to hold Option One liable for 1st American's alleged fraud on the theory that 1st American was acting as Option One's agent.
Plaintiffs argue that Option One and 1st American had an ongoing business relationship, that Option One relied upon 1st American for verification of loan applications, and that the Youngs had no say in the allocation of the commission as between 1st American and Option One. Opp. to Mot. for Summ. Judg., at 15-16. Those arguments are unavailing, however, in the absence of any record evidence -- or even a clear allegation -- that Option One exercised control over 1st American. See Henderson v. Charles E. Smith Management, Inc., 567 A.2d 59, 62 (D.C. 1989). Option One's motion for summary judgment on counts 6, 7, 8, 9, 10, 13 and 14 must therefore be granted.
C. The foreclosure
Plaintiffs bring three counts relating to the foreclosure: count two (violation of District of Columbia Code § 45-715(b)); count three (wrongful foreclosure); and count four (breach of fiduciary duty). Summary judgment will be granted on all of them, each for a different reason.
1) Failure to give adequate notice
Count two alleges that defendants failed to provide sufficient notice of the foreclosure to satisfy D.C. Code § 45-715(b). Plaintiffs argue, first, that the notice of foreclosure sent by Cohn and Goldberg violated the statute by noticing the sale for six days prior to the date it actually occurred; and second, that defendants conducted the sale knowing that plaintiffs had not received actual notice. No court has ever recognized an independent cause of action under § 45-715(b). The appropriate avenue to assert a violation of this section is a claim of wrongful foreclosure, in which a party can attack a foreclosure -- once it has been completed -- as contrary to law. In any event, however, neither of plaintiff's arguments has merit.
The D.C. notice statute does not require that the sale be held on the exact day for which the sale is noticed, but only requires that notice be sent "at least 30 days in advance of said sale." D.C. Code § 45-715(b). The Deed of Trust expressly gave the trustees the power to "postpone sale ... by public announcement at the time and place of any previously scheduled sale." See Deed of Trust, P 21, Exh. 2 to Cohn and Goldberg Opp. to Mot. for Summ. Judg. (signed by both plaintiffs, with each page initialed by both plaintiffs). The statute was not violated by postponing the foreclosure sale until six days after the date for which it was originally scheduled.
As for plaintiffs' argument that defendants should not have conducted the sale knowing that plaintiffs had not received actual notice, it is well settled that actual notice of a foreclosure sale is not required if the statutory requirements are adhered to. See, e.g., S&G Investment, Inc. v. Home Fed. Sav. & Loan Ass'n, 164 U.S. App. D.C. 263, 505 F.2d 370, 376 (D.C.Cir. 1974). The statute was satisfied by sending the notice of foreclosure sale to plaintiffs' last known address by certified mail, return receipt requested, and delivering a copy of the notice to the Mayor at least 30 days prior to the scheduled sale.
2) Wrongful foreclosure
Defendants' motion for summary judgment on this count will be granted for two reasons. First, defendants did not violate § 45-715(b), so any foreclosure that occurred was not wrongful. Second, as defendants point out, a claim of wrongful foreclosure is premature at this point because defendants Cohn and Goldberg have not yet transferred title to plaintiffs' home, so there is not yet a foreclosure to set aside.
3) Breach of fiduciary duty
Cohn and Goldberg move for summary judgment on the ground that they cannot be liable merely for acting as fiduciaries to both the grantor and the beneficiary of a deed of trust. They argue that this dual role of the trustee under a deed of trust is sanctioned by long tradition and does not in itself create a breach of fiduciary obligations. Plaintiffs respond to that argument with specific allegations of misconduct. They allege that the trustees acted as attorneys for Option One rather than fiduciaries of both parties; that they proceeded with the sale knowing that the foreclosure notice violated D.C. law; that they went ahead knowing that the sale had not been adequately advertised; and that their actions with respect to plaintiffs were adversarial. The evidence upon which plaintiffs rely for those allegations fails to demonstrate the existence of a disputed issue of material fact, and defendants' motion for summary judgment must be granted.
To support the allegation that Cohn and Goldberg acted as attorneys for Option One rather than as trustees, plaintiffs offer the deposition testimony of Stephen Goldberg and Laura Hadley. Neither deponent said anything that could be reasonably construed to support plaintiffs' position: Mr. Goldberg made it clear that he was acting as a trustee rather than as a representative of Option One,
and Ms. Hadley merely referred to Cohn and Goldberg as the "attorney[s] who ... handle foreclosure processes for us."
The allegation that "the Trustees discovered that the foreclosure notice violated D.C. law," but nonetheless went ahead with the foreclosure sale because "Option One ... commanded the trustees to proceed...," Opp. to Mot. for Summ. Judg., at 20, is unsupported in the record. The deposition testimony cited by plaintiffs does not show that the Trustees "discovered that the foreclosure notice violated D.C. law," but instead shows that plaintiffs' counsel contacted the trustees and alleged that the notice violated the law. See Cohn dep. at 17-18, Exh. 22 to Strache Decl. As for the claim that Option One "commanded" the trustees to foreclose, the evidence now of record shows that the trustees asked Option One to investigate the claims of plaintiffs' attorney and then conducted the sale after being advised that the statute had been satisfied. See id. at 18-19; see also Hadley dep. at 31-33, Exh. 19 to Strache Decl. The complaint made by plaintiffs' attorney to Cohn, moreover, was that plaintiffs had not received actual notice -- an allegation that Cohn and Goldberg knew did not amount to a violation of District of Columbia law. See Cohn dep. at 17; see also Part C(1), supra.
The allegation that the trustees allowed the sale to stand after "learning that the sale had not been adequately advertised in violation of their own policies" is also unsupported. All Mr. Goldberg "learned" was that the plaintiffs alleged inappropriate advertisement, see Goldberg dep. at 80-81, Exh. 16 to Strache Decl.
The allegation that the trustees "acted in an adversarial manner towards the Youngs," Opp. to Mot. for Summ. Judg., at 21, lacks legal substance. The only reasonable conclusion that can be drawn from the evidence now of record is that Mr. Goldberg proceeded with the sale after examining both the law and the facts to determine that the notice was sufficient under District of Columbia law. See, e.g., Letter from Stephen Goldberg to Vivian Strache, Exh. 34 to Strache Decl.
Plaintiffs have failed to demonstrate the existence of any genuinely disputed issue of material fact regarding count four.
For the foregoing reasons, an order accompanying this memorandum denies plaintiffs' motion for summary judgment, grants Option One's motion for summary judgment, grants Cohn and Goldberg's motion for summary judgment, and partially grants 1st American's motion for summary judgment.
United States District Judge
Date: January 15, 1998
Upon consideration of plaintiffs' motion for partial summary judgment, the motions for summary judgment of each defendant, the oppositions thereto, and for the reasons stated in the accompanying memorandum, it is this 15th day of January, 1998,
ORDERED that the plaintiffs' motion for partial summary judgment [# 46] is DENIED; it is
FURTHER ORDERED that defendant Option One Mortgage Company's motion for summary judgment [# 45], and defendants Cohn and Goldberg's motion for summary judgment [# 48] are GRANTED; and it is
FURTHER ORDERED that defendant 1st American Financial Services' motion for summary judgment [# 47] is DENIED as to counts 6, 7, 8, 9, 10, 13 and 14, and GRANTED as to the remaining counts.
United States District Judge