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COOPER v. FIRST GOVERNMENT MORTGAGE AND INVESTORS CORP.
United States District Court, District of Columbia
July 9, 2002
BETTY COOPER ET AL., PLAINTIFFS,
FIRST GOVERNMENT MORTGAGE AND INVESTORS CORPORATION ET AL., DEFENDANTS.
The opinion of the court was delivered by: Ricardo M. Urbina, United States District Judge.
DENYING DEFENDANT SOODAK'S MOTION TO DISMISS
This case involves plaintiffs suing various mortgage brokers,
assignees, and settlement agents alleging predatory and fraudulent
lending tactics in violation of the District of Columbia Consumer
Protection Procedures Act ("CPPA"), D.C. Code § 28-3901 et seq., the
District of Columbia Mortgage Lender and Broker Act ("MLBA"), D.C. Code
§ 26-1101 et seq. (formerly § 26-1001), the Federal Truth in
Lending Act ("TILA"), 15 U.S.C. § 1601 et seq., and the corollary
D.C. statute, D.C. Code § 28-3301. This lending fraud matter is
before the court on defendant Darren Soodak's motion to dismiss for
failure to state a claim on which relief can be granted pursuant to
Federal Rule of Civil Procedure 12(b)(6). Mr. Soodak argues that the
CPPA cannot apply to him in his individual capacity. For the reasons
that follow, the court denies the motion to dismiss because the
plaintiffs have properly stated a claim against Mr. Soodak.
The plaintiffs bring this suit alleging that defendants Darren Soodak,
Equitable Mortgage Group, and First Government Mortgage and Investors
Corporation violated the CPPA, MLBA, and TILA. Compl. ¶¶ 6,
112-44(k). Specifically, the plaintiffs claim that Mr. Soodak: (1)
charged excessive fees and other costs and imposed onerous and unfair
terms; (2) misrepresented benefits, interest rates, monthly payments,
closing costs, and terms of the mortgage loans; (3) provided conflicting
copies of loan documents; and (4) failed to disclose all required
information. Id. ¶¶ 113-44(k). The complaint further alleges that Mr.
Soodak directly violated the CPPA when he brokered mortgage loans "with
[the] knowledge that there was no reasonable probability that the
plaintiffs would be able to repay the loans." Id. ¶ 112(a). The
plaintiffs also plead that Mr. Soodak "[t]ook advantage of plaintiffs'
inability to protect their own interest by reason of their age,
infirmities, illiteracy, inability to understand the language of the
agreement and lack of sophistication." Id. ¶ 113(b). Mr. Soodak moves
the court to dismiss the plaintiffs' complaint pursuant to Rule
A. Legal Standard For Motion To Dismiss
For a complaint to survive a Rule 12(b)(6) motion to dismiss, it need
only provide a short and plain statement of the claim and the grounds on
which it rests. FED. R. CIV. P. 8(a)(2); Conley v. Gibson, 355 U.S. 41,
47 (1957). A motion to dismiss under Rule 12(b)(6) tests whether the
plaintiff has properly stated a claim, not whether the plaintiff will
prevail on the merits. FED. R. CIV. P. 12(b)(6); Scheuer v. Rhodes,
416 U.S. 232,
236 (1974). The plaintiffs need not plead the elements of
a prima-facie case in the complaint. Sparrow v. United Air Lines, Inc.,
216 F.3d 1111, 1114 (D.C. Cir. 2000); see also Swierkiewicz v. Sorema
N.A., 122 S.Ct. 992, 999 (2002) (holding that a plaintiff in an
employment-discrimination case need not establish her prima-facie case in
the complaint). Thus, the court may dismiss a complaint for failure to
state a claim only if it is clear that no relief could be granted under
any set of facts that could be proved consistent with the allegations.
Hishon v. King & Spalding, 467 U.S. 69, 73 (1984); Atchinson v. District
of Columbia, 73 F.3d 418, 422 (D.C. Cir. 1996). In deciding such a
motion, the court must accept all the complaint's well-pled factual
allegations as true and draw all reasonable inferences in the nonmovant's
favor. Scheuer, 416 U.S. at 236.
B. The CPPA
The CPPA provides consumers with a private cause of action against
merchants who make or enforce unconsionable leases or sales provisions.
D.C. Code §§ 28-3901, 23-3904(r); Slaby v. Fairbridge, 3 F. Supp.2d 22,
27 (D.D.C. 1998). The CPPA defines its terms comprehensively so that it
can provide a remedy for all improper trade practices. DeBerry v. First
Gov't Mortgage and Investors Corp., 743 A.2d 699, 700 (D.C. 1999).
Specifically, the CPPA prohibits any person from making or enforcing
provisions of contracts for sales or leases which would "mislead,
deceive, or damage" consumers. D.C. Code §§ 23-3904, 23-3904(r).
The term "person," as defined by the CPPA, encompasses "individual[s],
firm[s], corporation[s], partnership[s], cooperative[s], association[s],
. . . [and] any other organization, legal entity or group of individuals
however organized. . . ." D.C. Code § 23-3901(a)(1). This general
definition has been further limited to only include persons involved in
"consumer-merchant relationships." Howard v. Riggs Nat'l Bank,
432 A.2d 701, 709 (D.C. 1981). Accordingly, a person who supplies
consumer goods or services may be held liable under the CPPA. Id.
C. The Court Denies Defendant Soodak's Motion To Dismiss
The defendant argues that the plaintiffs have not pled facts sufficient
to establish a connection between the wrongful acts the plaintiffs allege
in the complaint and the specific personal conduct of Mr. Soodak. Def.'s
Mot. to Dismiss at 3. The court disagrees. First, to resolve Mr.
Soodak's motion to dismiss for failure to state a claim on which relief
could be granted, the court limits itself to the relevant law and the
facts alleged in the complaint. Second, based on the clear language set
forth in the CPPA, Mr. Soodak may be personally liable. D.C. Code §
1. The Court Does Not Consider Defendant Soodak's
Unsupported Factual Assertions
Mr. Soodak argues that he is not liable under the CPPA because the
complaint fails to plead facts that are sufficiently specific. Def.'s
Mot. to Dismiss at 3. In advancing this argument, Mr. Soodak refers to
many facts outside the pleadings. Rule 12(b) requires, however, that "if
matters outside of the pleadings are presented to and not excluded by the
court, the motion shall be treated as one for summary judgment. . . ."
FED. R. CIV. P. 12(b). The transformation of a motion to dismiss into a
motion for summary judgment is not automatic. Garita Hotel Lt. P'ship,
E.T.C. v. Ponce Fed. Bank, F.S.B., 958 F.2d 15, 18-19 (1st Cir. 1992);
Jane Lyons Advertising, Inc. v. Cook, 1998 WL 164775 (D.D.C. 1998).
Rather, the court has the ability to
choose to ignore supplementary
materials and simply address the motion as a motion to dismiss under Rule
12(b)(6). Id. When matters outside of the pleadings are central to a
plaintiff's claim, referred to in the complaint, and attached to the
motion papers, the court may consider the documents without converting
the motion to one for summary judgment. Vanover v. Hantman,
77 F. Supp.2d 91, 98 (D.D.C. 1999).
The defendant has not only failed to attach the relevant documents to
his motion, but he has also continuously referred to numerous matters
outside the pleadings without giving any record citation. Def.'s Mot. to
Dismiss at 3, 6. More importantly, "the issue is not whether a plaintiff
will ultimately prevail but whether the claimant is entitled to offer
evidence to support the claims." ACLU Found. of S. California v. Barr,
952 F.2d 457, 467 (D.C. Cir. 1992) (en banc) (quoting Scheuer, 416 U.S.
at 236) (emphasis added).
This court therefore need only determine whether the complaint has
properly stated a claim, not whether the plaintiff will succeed on the
merits. See FED. R. CIV. P. 12(b)(6); Scheuer, 416 U.S. at 236. Mr.
Soodak's references are improper due to the lack of citations and the use
of factual arguments that are irrelevant to a motion to dismiss. See
Vanover, 77 F. Supp.2d at 98. Accordingly, the court disregards all
unsupported factual statements presented by the defendant and, thus,
limits its analysis to the relevant law and the facts alleged in the
2. Defendant Soodak May Be Liable Under the CPPA
in His Individual Capacity
Mr. Soodak argues that liability under the CPPA is limited to those
individuals who have significantly participated in a tortious act.
Def.'s Mot. to Dismiss at 3. The CPPA, in contrast, very clearly states
that an "individual" may be held liable for creating an unconscionable
loan. D.C. Code § 28-3901(a)(1). In addition, under D.C. law,
corporate officers may be held personally liable for torts in which they
have some "meaningful participation." Lawlor v. District of Columbia,
758 A.2d 964, 977 (D.C. 2000). Corporate officers may be liable for acts
that a corporate officer commits, participates in, or inspires in the
name of the corporation. Vuitch v. Furr, 482 A.2d 811, 821 (D.C. 1984).
The complaint alleges that Mr. Soodak violated the CPPA by charging
excessive fees, imposing unfair loan terms, misrepresenting the terms of
the loan agreements, and failing to disclose all required information.
Compl. ¶¶ 113-44(k). Since the CPPA does create individual
liability, the plaintiffs have stated a claim on which relief may be
granted. FED. R. CIV. P. 12(b)(6). Although they have not proven Mr.
Soodak's involvement in the alleged violations, the plaintiffs are
entitled to offer evidence at a later time to support these claims.
Barr, 952 F.2d at 467. Consequently, the court denies Mr. Soodak's
motion to dismiss.
Finally, Mr. Soodak also asks the court to strike the plaintiffs' Home
Ownership and Equity Protection Act related theory. Def.'s Mot. to
Dismiss at 4 (referring to Compl. ¶ 107(d)). Because Mr. Soodak
cites to no legal authorities in support of his argument, the court
denies his request to strike this theory from the complaint.
For all these reasons, the court denies defendant Soodak's motion to
order directing the parties in a manner consistent with this
Memorandum Opinion is separately and contemporaneously issued this ___
day of July 2002.
ORDER DENYING DEFENDANT SOODAK'S MOTION TO DISMISS
For the reasons stated in this court's Memorandum Opinion separately
and contemporaneously issued this ___ day of July 2002, it is ORDERED
that defendant Soodak's motion to dismiss is DENIED.
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