United States District Court for the District of Columbia
April 7, 2005.
GEORGETTE H. BYNUM, Plaintiff,
EQUITABLE MORTGAGE GROUP, et al., Defendants.
The opinion of the court was delivered by: SUZANNE CONLON, District Judge
MEMORANDUM OPINION AND ORDER
Georgette Bynum, a paralyzed, seventy-nine year old widow,
brings suit over the refinancing of her home mortgage. Bynum
contends she desired a $10,000 home improvement loan but was
induced to acquire a $75,000 loan that contained undisclosed
terms and exorbitant charges. Bynum asserts she did not receive
money for home repairs, and that she was unable to afford the
mortgage. Foreclosure proceedings were instituted against her.
Bynum sues Manufacturers and Traders Trust ("Manufacturers"),
holder and assignee of her mortgage, for violating the Truth in
Lending Act ("TILA"), 15 U.S.C. § 1601 et seq., the Home
Ownership and Equity Protection Act ("HOEPA"), codified as
amendments to TILA, the District of Columbia Interest and Usury
Statute, D.C. Code § 28-3301(f), the District of Columbia
Mortgage Lender and Broker Act ("MLBA"), D.C. Code § 26-1101 et
seq., the District of Columbia Consumer Protections Procedure
Act ("CPPA"), D.C. Code § 28-3901 et seq., and for rescission,
fraud and breach of contract. See 3rd Am. Compl. at Counts
I-VI, IX-X. Manufacturers asserts an equitable subrogation
counterclaim. Bynum sues Equitable Mortgage Group, Inc. ("Equitable"), her
mortgage broker, under the MLBA and CPPA, and for promissory
estoppel, breach of fiduciary duty and conversion, conspiracy to
convert and aiding and abetting conversion. See 3rd Am. Compl.
at Counts VII-XI. Finally, Bynum sues Dimarcus Waldo, proprietor
of Dutchmans Home Improvement Co., under the CPPA and for
conversion, conspiracy to convert and aiding/abetting conversion.
See 3rd Am. Compl. at Counts VII, X. Bynum seeks damages,
rescission and declaratory relief. Only two defendants
remain.*fn1 Before the court are Manufacturers' motions to
dismiss and for summary judgment, Equitable's motion for summary
judgment, and Bynum's motion for partial summary
A. Loan Application with Equitable
The following material facts are undisputed unless otherwise
noted.*fn3 Georgetta Bynum resides in Washington, D.C. In
1997, Bynum contacted Equitable, a licensed mortgage broker,
about refinancing her home mortgage. Bynam had previously
refinanced her mortgage on three occasions, and sought a fourth
refinancing to obtain $10,000 in cash for home improvements. On
November 18, 1997, Bynum signed several documents provided by
Equitable, including: (1) a loan application that reflected an
estimated total loan amount of $85,000 and a prospective interest
rate of 9.99%; (2) an agreement to obtain a loan commitment,
which identified Equitable as a mortgage broker, set forward the
brokerage agreement terms between Bynum and Equitable, estimated
an $8,000 broker fee due at closing, and declared Equitable did
not owe Bynum a fiduciary duty; and (3) a good faith estimate of
the costs and fees Bynum would face in connection with the loan.
See Equitable Exs. K, L-M. The documents Bynum signed and dated
November 18, 1997, are also signed and dated by Equitable
representative Kenneth Thompson. See id. The loan application
reflects it was obtained in a "face to face interview." See id.
at Ex. K. Thompson contends he met with Bynum at her home on
November 18, 1997, where he explained the documents to her,
explained Equitable's status as a broker who would help her find
a lender, and answered her questions. Thompson submits a detailed affidavit describing his meeting with Bynum. Equitable
Ex. B. At her deposition, Bynum did not recall meeting with
Thompson; her affidavit attests Thompson did not come to her
home. See Bynum Ex. A at ¶ 4; Ex. B at 11-12.
Bynum's refinancing loan application and background financial
information were submitted to Thompson's supervisor, Charles
Ruiz, and to First Government, a mortgage lender. First
Government agreed to offer Bynum a $75,000 refinancing loan at a
9.9% interest rate. Bynum initially qualified for and accepted a
10.5% interest rate, but First Government lowered the rate when
Equitable voluntarily surrendered a portion of its own
compensation to allow her the benefit of the reduced rate. As a
result, Equitable ultimately received a $5,475 fee instead of the
originally estimated $8,000 fee. After forwarding the materials
to First Government, Equitable had no further involvement in the
negotiation, structure and settlement of Bynum's loan.
B. Loan Settlement with First Government and Valley Title
Settlement of the refinancing loan occurred at Bynum's home on
February 28, 1998. Prior to settlement, First Government provided
Bynum with a finance agreement and loan commitment, which set
forth the $75,000 loan amount, term, interest rate and annual
percentage rate of Bynum's loan. Bynum signed and initialed each
document. Alan Friedman, a settlement agent with Valley Title
Company, reviewed First Government's loan documents with Bynum,
as well as the HUD-1 statement that Valley Title prepared
pursuant to First Government's instructions. Bynum signed the
documents Friedman presented including: (1) the HUD-1 statement
reflecting the final terms of the loan, including the amount,
term, interest rate and fees and charges; and (2) a letter to
Wilshire Credit regarding payoff of her prior mortgage loan.
Bynum executed a deed of trust securing repayment of the $75,000
loan by encumbering her property and a promissory note evidencing
the $75,000 loan made to her by First Government. At the conclusion
of settlement, Friedman signed a settlement agent affidavit
before a notary public attesting Bynum signed the refinancing
documents. Further, Friedman notarized Bynum's deed of trust. His
notary seal reflects he is a certified notary in "Baltimore
Bynum's home was given a $130,000 appraisal value. The February
28th settlement reflects insurance and property reserve charges.
Bynum did not receive a separate written statement indicating
that she could pay taxes and insurance directly, nor did she
receive a HOEPA early warning disclosure at least three days
before settlement. Bynum had previously executed a promissory
note in the principal amount of $62,000 payable to Crusader
Savings Bank, the repayment of which was secured by a deed of
trust encumbering the property. Accordingly, Bynum's loan from
First Government refinanced the loan secured by the Crusader deed
of trust. The proceeds of the loan executed by the First
Government deed of trust paid: (1) $53,417.24 to retire Bynum's
Crusader deed of trust; and (2) $3,680.81 to the District of
Columbia to fully pay delinquent real estate taxes.
C. Bynum Endorses Her Loan Check
Shortly following settlement, Bynum received a $9,162.55 check
from Valley Title dated March 5, 1998. The check was made payable
to Bynum and reflected the funds generated to her from the
refinancing. After receiving the check from Valley Title, a man
named Tim Byrd came to Bynum's home. Bynum had previously met
with Byrd on several occasions to discuss her desired home
improvements. Byrd told Bynum he worked for Equitable. Byrd
pressured Bynum to endorse the check and told her the repair work
would not begin unless she gave the check to him. He further
indicated the check would be placed in an escrow account. When
Bynum resisted Byrd's request, he purportedly telephoned his boss, who spoke with Bynum and
informed her the endorsed check was needed for her home repairs.
Bynum endorsed the check and gave it to Byrd. No repair work was
done to Bynum's home.
Bynum telephoned First Government, the Better Business Bureau,
her District of Columbia council member and Equitable regarding
Byrd's actions. Upon calling Equitable, Bynum spoke with Ruiz.
She explained that she had signed the check and given it to Byrd,
who told her he worked for Equitable. In fact, Byrd worked for
Dutchmans, a company entirely independent from and unconnected to
Equitable. Dutchmans leased a separate, partitioned office with
its own entrance in one of Equitable's suites for four months.
Ruiz told Bynum that Byrd did not work for Equitable, and Bynum
admitted Byrd had not presented her with a business card or any
paperwork evidencing a relationship with Equitable. Nevertheless,
Ruiz told Bynum he would try to locate Byrd to find out what
happened to her check and why the home repair work was not done.
Ruiz first spoke to Thompson, who did not know anything about
Bynum's home improvement work or her incident with Byrd. Ruiz
then contacted Dimarcus Waldo, Dutchmans' owner, who told Ruiz
that Byrd had cashed the check and disappeared. Ruiz forwarded
Waldo's explanation to Bynum. Equitable had no further contact
Equitable never employed Byrd. Dutchmans' bank records
subsequently established that Bynum's check was improperly
negotiated for deposit into Dutchmans' account, and was altered
by an unauthorized party to read "Dutchmans, For Deposit Only"
above Bynum's signature. Bynum acknowledges Dutchmans received
the check proceeds. D. Assignment of Bynum's Promissory Note and Deed of Trust
First Government subsequently assigned Bynum's promissory note
and deed of trust to ContiMortgage. ContiMortgage filed a
suggestion of bankruptcy and Manufacturers became the holder of
the February 28th promissory note and deed of trust.*fn4
Manufacturers was not involved in the application or closing of
Bynum's loan. Bynum ceased making payments on the loan after
February 5, 1999 and foreclosure proceedings were initiated.
Bynum sent a letter to ContiMortgage and First Government on
August 3, 1999, providing notice of her intent to rescind and
cancel the note and deed of trust.
I. Motion to Dismiss
On January 15, 2004, Manufacturers moved to dismiss Counts
I-VI, VIII of the complaint pursuant to Rule 12(b)(6).
Manufacturers answered Bynum's third amended complaint on
February 24, 2004. Manufacturers' summary judgment motion on
Counts IX-X was filed on March 17, 2004. "Where matters outside
the complaint are presented to the court in support of a motion
to dismiss under Fed.R.Civ.P. 12(b)(6), such motion shall be
treated as a motion for summary judgment and disposed of under
Fed.R.Civ.P. 56." Romero-Ostolaza v. Ridge, No. 03-1890,
2005 U.S. Dist. LEXIS 5189, *2 (D.D.C. 2005). When addressing a
motion to dismiss under Rule 12(b)(6), the court may not consider
facts outside the four corners of the complaint unless it treats
the motion to dismiss as a motion for summary judgment. See Fed.R.Civ.P. 12;
Currier v. Postmaster Gen., 304 F.3d 87, 88 (D.C. Cir. 2002).
Manufacturers' motion to dismiss and Bynum's response require
consideration of matters outside the complaint and will be
treated as a summary judgment motion.
II. Legal Standard
Summary judgment is appropriate when the moving papers and
affidavits show there is no genuine issue of material fact and
the movant is entitled to judgment as a matter of law. Fed.R.Civ.
P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
Once a moving party meets its burden, the non-movant must go
beyond the pleadings and set forth specific facts showing there
is a genuine issue for trial. Fed.R.Civ.P. 56(e); Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). A genuine
issue of material fact exists when "the evidence is such that a
reasonable jury could return a verdict for the nonmoving party."
Anderson, 477 U.S. at 248. The court considers the record as a
whole and draws all reasonable inferences in the light most
favorable to the opposing party, however the non-movant must
establish more than the existence of a mere scintilla of evidence
in support of its position. Fed.R.Civ.P. 56(c); Anderson,
477 U.S. at 252; Celotex, 477 U.S. at 325. The non-movant may
not rely solely on allegations or conclusory statements, and if
the non-movant's evidence is merely colorable or is not
significantly probative, summary judgment may be granted.
Anderson, 477 U.S. at 249-50; Greene v. Dalton, 164 F.3d 671,
675 (D.C. Cir. 1999).
III. Bynum's Substantive Claims Against Manufacturers
Manufacturers argues it is entitled to summary judgment on all
of Bynum's substantive HOEPA, TILA and state law claims because
Bynum accepted First Government's Rule 68 offer of judgment.
Manufacturers asserts it is a privy to First Government, the
alleged offending party, as assignee of Bynum's note and security
interest. Because Bynum has recovered for First Government's liability, Manufacturers contends Bynum may not
pursue claims against it as assignee. Manufacturers argues Bynum
has recovered for any of First Government's substantive
violations of law, and is not entitled to recover twice for the
same alleged wrongful conduct. Bynum contends an assignee of a
HOEPA loan is subject to liability for any claim that could be
asserted against the original lender, and that a Rule 68 judgment
accepted on behalf of one defendant does not resolve the claims
against all defendants. Bynum's claims must be rejected.
Generally, HOEPA subjects mortgage assignees to increased
liability for HOEPA loans. Cooper v. First Gov't Mortgage and
Investors Corp., 238 F.Supp.2d 50, 55-56 (D.D.C. 2002). Congress
enacted HOEPA to force the high cost mortgage market to police
itself, and made HOEPA loan assignees subject to "all claims and
defenses, whether under TILA or other law, that could be raised
against the original lender." Id. Ordinarily, a HOEPA loan
assignee's argument that it is not liable for the mistakes of the
assignor is without merit. See Cooper, 238 F.Supp.2d at 55-56;
see also In re Rodrigues, 278 B.R. 683, 688 (Bankr. R.I. 2002).
It is not clear, however, how a Rule 68 judgment against the
original lender affects assignee liability for the lender's
substantive violations of the Act.
Rule 68 provides:
At any time more than 10 days before the trial
begins, a party defending against a claim may serve
upon the adverse party an offer to allow judgment to
be taken against the defending party for the money or
properly or to the effect specified in the offer,
with costs then accrued.
Therefore, Bynum correctly notes that an accepted Rule 68 offer
of judgment constitutes a settlement between the parties making
and accepting the offer. See e.g., Marek v. Chesny, 473 U.S. 1,
5 (1985) (characterizing Rule 68 offer as pretrial settlement and
stating "the plain purpose of Rule 68 is to encourage settlement and avoid litigation"); Delta Airlines v.
August, 450 U.S. 346, 350 (Rule 68 pertains to settlement
offers). A Rule 68 judgment that does not dispose of all claims
and parties does not constitute a final judgment against all
claims and parties. See e.g., Acceptance Indem. Ins. Co. v.
Southeastern Forge, Inc., 209 F.R.D. 697, 699-700 (M.D. Ga.
2002) (reading Rule 68 in light of Rule 54(b) and holding
accepted Rule 68 offer not a final judgment against any party
that did not participate in the offer).
The fact that a Rule 68 judgment with one party does not
automatically bar claims against other parties is the reason
Bynum's claims against Equitable are not subject to dismissal
based on her acceptance of First Government's offer of judgment.
However, Bynum's claims against Manufacturers are exclusively
premised on its relationship as assignee and holder of First
Government's note. Bynum's acceptance of First Government's offer
of judgment was predicated on her understanding that First
Government did not hold her loan and was thus unable to provide
her with the rescission remedy. See Equitable Mem. Ex. U.
Therefore, First Government's offer of judgment did not resolve
Bynum's rescission claim. However, while Bynum's acceptance
further purported to reserve her other claims against
Manufacturers, her acceptance stated that the offer of judgment
is "a resolution of First Government's liability in this matter."
Id. In exchange for her release of all claims and resolving
First Government's liability, Bynum received $3,600. Thereafter,
she dropped all claims against First Government.
An assignee merely steps into the shoes of the assignor. See
e.g., SEC v. Bilzerian, 378 F.3d 1100, 1108 (D.C. Cir. 2004).
Accordingly, an assignee's liability can be no greater than the
assignor's. While the Act provides an assignee is subject to any
claims that may be brought against the assignor, Bynum may no
longer bring her claims against the assignor she has obtained a judgment on those claims. Bynum makes no claim that Manufacturers
independently violated her rights under federal and state law.
Rather, all claims are based on First Government's actions, for
which she received full satisfaction. By maintaining her
substantive claims against Manufacturers, Bynum seeks a double
recovery for the lender's violations. Accordingly, Manufacturers'
summary judgment motion on Bynum's substantive HOEPA, TILA and
state law claims (except rescission) must be granted.
IV. Bynum's Rescission Claims Against Manufacturers
Bynum moves for summary judgment on her claims that she validly
rescinded the deed of trust under TILA, HOEPA and on account of
improper notarization. Specifically, Bynum alleges her mortgage
constitutes a high cost loan under HOEPA, 15 U.S.C. § 1602(aa).
Bynum contends she validly rescinded the deed of trust on August
9, 1999 under §§ 1635(a), (f), 1639(b)(1) and 1602(u) because
First Government failed to make required disclosures three or
more days prior to the transaction's completion in violation of §
1639(b)(1). Bynum further argues the rescission was valid under
TILA because First Government failed to accurately disclose and
characterize the loan's finance charges and amount financed under
§§ 1632(a), 1635. Accordingly, Bynum moves for summary judgment
on her rescission claim against Manufacturers as holder of the
promissory note and deed of trust. Finally, Bynum contends the
deed is invalid because it was illegally notarized under D.C.
Code §§ 42-401, 42-404. Specifically, Bynum contends Friedman's
notarial acts were improper because he was not certified by the
District of Columbia. Bynum contends the improper notarization
invalidates the February 29, 1998 conveyance.
Manufacturers contends Bynum's loan is not covered by HOEPA.
Further, Manufacturers asserts the TILA disclosures were proper
and Bynum's right to rescind expired three days after settlement. Manufacturers admits the notarization should have
been completed by a District of Columbia notary, but contends the
error should be considered an omission of acknowledgment under
D.C. Code §§ 42-403, 42-4-4(a)(1), not warranting voidance of the
deed. In the event the court finds Bynum properly rescinded the
deed or that the deed is invalid, Manufacturers seeks summary
judgment on its equitable mortgage counterclaim.
Congress enacted TILA to prevent consumers from being misled as
to financing costs and to assure a meaningful disclosure of
credit terms. See Cooper v. First Gov't Mort. and Investors
Corp., et al., 238 F. Supp. 2d 50, 54 (D.D.C. 2002). Faced with
increasing reports of abusive practices in home mortgage lending,
Congress amended TILA and enacted HOEPA to require greater
disclosures to borrowers involved in high cost loans and to stop
certain loan terms and practices.*fn5 Id. A consumer
credit transaction secured by the consumer's principal dwelling
is considered a high cost mortgage covered by HOEPA when points
and fees payable by the consumer at closing exceed 8% of the
total loan amount. 15 U.S.C. § 1602(aa). A high cost mortgage
under § 1602(aa) subjects the consumer to HOEPA protections and
requirements, including the provision of specific disclosures.
See id. at §§ 1639(a)-(b), 1641. The required disclosures must
be made not less than three business days prior to the
transaction's consummation. 15 U.S.C. § 1639(b)(1). If not
disclosed in a timely manner, the consumer acquires a statutory
right to rescind the transaction. 15 U.S.C. § 1635(a), (f). The
Act provides the right to rescind exists against the original
lender as well as any subsequent assignee. 15 U.S.C. § 1641(c). B. HOEPA Rescission Claim
Bynum contends her loan is covered by HOEPA and she did not
receive the required disclosures at least three days prior to the
transaction's consummation. Manufacturers does not dispute that
HOEPA disclosures were not timely provided, but disagrees that
the points and fees Bynum paid at closing exceeded 8% of the
total loan amount.
Manufacturers defines the total loan amount as the principal
amount of the loan, $75,000, and states the points and fees must
exceed 8% of $75,000, or $6,000, to be covered by HOEPA. This
argument has twice been rejected by the district court and is
contrary to the Act's official commentary. Instead, the total
loan amount is calculated by subtracting points and fees from the
amount financed. See 4/28/00 Order, Dkt. No. 39-1; 5/23/00
Order, Dkt. No. 52-1; Hays v. Bankers Trust Co. of California,
46 F.Supp.2d 490, 498 n. 14 (S.D.W. Va. 1999); 12 C.F.R. Pt. 226,
Supp. I, Official Staff Commentary, Comment 32(a)(1)(ii). The
HOEPA 8% trigger is then calculated by using the formula: (1)
principal amount of the loan total points and fees = total loan
amount; (2) total loan amount × .08 = HOEPA trigger amount.
Cooper, 238 F. Supp. 2d at 59-60.
Points and fees generally include: (1) all finance charges; (2)
compensation paid to mortgage brokers; and (3) costs listed in
15 U.S.C. § 1605 (e) "unless the charge is reasonable, the creditor
receives no direct or indirect compensation, and the charge is
paid to a third party unaffiliated with the creditor."
15 U.S.C. § 1602(aa)(4); 12 C.F.R. § 226.32(b)(1). Thus, "HOEPA points and
fees include finance charges imposed by creditors and third
parties, fees paid to mortgage brokers, and real estate fees
unless the real estate fees are reasonable and compensate neither
the creditor nor the creditor's affiliate." Cooper,
238 F.Supp.2d at 58. Bynum contends she was charged the following
points and fees that must be included in the HOEPA calculation: Broker Fee $5,475.00
Flood Cert. Reimburse to First Gov't $20.00
Hazard Insurance Reserve $218.76
Settlement Fee $395.00
Judgment Reports $64.00
Recordation Walk Through Affidavit $85.00
Total Points and Fees: $6,257.76
Both parties agree the $5,475 broker fee paid to Equitable
constitutes a point and fee for the loan under
15 U.S.C. § 1602(aa)(4)(b). Because the broker fee does not reach the 8%
trigger alone,*fn6 the court must consider whether any of
the other fees should be included and whether the fees, added to
the broker fee, reach the 8% threshold.
1. Recordation Affidavit
The settlement statement reflects Bynum was charged $85.00 for
a "Recordation Walk Through Affidavit." The charge appears on the
statement's section pertaining to "Government Recording and
Transfer Charges." Bynum contends the government does not charge
for recordation walk through affidavits and only fees actually
paid to government officials may be excepted from the total
points and fees under § 1605(d)(1) and 12 C.F.R. § 226.4(e)(1).
Further, Bynum argues the affidavit fee lists no payee and no
actual affidavit exists. However, Manufacturers does not assert
that the fee was paid to the District of Columbia. Rather,
Manufacturers provides an affidavit from two Valley Title
officers who attest the recordation walk through affidavit is a
document required by Valley Title. In addition, the officers
attest the fee was paid "to the person" who recorded the document in the office of the Recorder of Deeds. Resp. Ex. 1.
Manufacturers therefore asserts the charge was a title-related
charge imposed by Valley Title, was not imposed by First
Government and was not paid directly or indirectly to First
Government. Manufacturers' evidence of the charge's validity is
vague and suspect. Nevertheless, for summary judgment purposes,
Bynum has failed to present undisputed evidence that the
affidavit charge was not bona fide or reasonable, or that the
charge was retained by First Government.
12 C.F.R. 226.32(b)(1)(iii); Cooper, 238 F.Supp.2d at 60-61. Accordingly,
the affidavit charge shall not be included in the points and fees
2. Flood Certification
Bynum contends she was charged $20 for a flood certification
that should be included in the points and fees category because
it was paid to First Government. Flood certificates are expressly
excluded from finance charges pursuant to § 1605(c)(5) (items
exempted include "flood hazard inspections conducted prior to
closing"), and the charge is clearly labeled as a reimbursement
to First Government. Manufacturers asserts the $20 fee was
advanced by First Government on Bynum's behalf and Bynum does not
dispute that the fee was a reimbursement. Flood certification
inspection fees are not included in the HOEPA points and fees
calculations when the fee is reasonable and when the fee is not
paid to the creditor. See 15 U.S.C. § 1605(e)(5);
12 C.F.R. §§ 226.4(c)(7)(iv), 226.32(b)(1)(iii). The flood certification
charge shall not be included in the points and fees calculation.
3. Hazard Insurance
Bynum contends the $218.76 charge for hazard insurance should
be included in points and fees. Although § 1605(e)(3) excludes
escrows for insurance from finance charges, Bynum argues the
charge was not bona fide or reasonable because it was illegal
under the MLBA, D.C. Code § 26-1115(b). Section 1115(b) prohibits a lender from requiring the escrow of
hazard insurance if the borrower has equity worth more than 20%
of the property's fair market value. Because the lender appraised
Bynum's home at $130,000, while lending her only $75,000, Bynum
asserts she possessed at least 42% equity and the lender could
not lawfully require an insurance escrow. Further, Bynum contends
she was not provided a separate required notice in writing that
she could pay her own hazard insurance directly. D.C. Code §
Manufacturers does not dispute that Bynum had more than 20%
equity in her home or that the required disclosure was not
provided. Further, Manufacturers provides no evidence regarding
the reasonableness of the fee in light of § 26-115's
prohibitions. Manufacturers argues, without legal or factual
support, that Bynum's hazard insurance was previously cancelled
and that state law prohibitions cannot be employed to include
insurance escrows within the HOEPA computations. These arguments
must be rejected. Manufacturers does not argue the MLBA did not
apply to First Government. Indeed, the MLBA clearly applies to
all licensed mortgage lenders. Moreover, Manufacturers does not
dispute § 26-115 was violated. Accordingly, the $218.76 fee,
imposed in violation of the MLBA, cannot be considered reasonable
and must be included in the points and fees calculation.
4. Settlement Closing Fee
Bynum contends the settlement closing fee of $395 is a finance
charge under 12 C.F.R. § 226.4(a)(2) because First Government
required the use of a settlement agent to close the loan.
Further, Bynum contends the fee is not excludable under § 1605(e)
or § 226.4(c)(7) because it was unreasonable and duplicative of
the $495 title examination fee. In support, Bynum presents an
affidavit from Richard Eisen, a settlement attorney, who attests
the closing fee appears duplicative, atypical and unreasonably high. However, as Manufacturers points
out, Eisen does not attest he examined any of the loan documents
to determine the amount of time required to close the transaction
and he states "each settlement agent characterizes the services
and charges differently and I have seen a large variety of
characterizations and amounts on settlement statements." Mot. at
Nevertheless, "[f]ees charged by a third party that conducts
the loan closing . . . are finance charges only if the
creditor; (i) requires the particular services for which the
consumer is charged; (ii) requires the imposition of the charge;
or (iii) retains a portion of the third-party charge, to the
extent of the portion retained." 12 C.F.R. § 226.4(a)(2)
(emphasis added). Bynum attaches a "Disclosure of Settlement
Attorney" form which indicates First Government required the loan
be closed by a First Government-approved title insurance company,
and that fees for settlement attendance were required.*fn7
Reply Ex. D. Therefore, the settlement closing fee is a finance
charge that must be included in the points and fees calculation.
5. Judgment Reports
Finally, Bynum contends the $64 she was charged for judgment
reports must be included in the points and fees calculation
because no such documents exist and the charge is unreasonable.
Manufacturers refers to the Valley Title officers' affidavit
attesting the charge was incurred by Valley Title as part of the
title examination process to determine whether any judgment liens encumbered Bynum's property. However, Bynum was charged $495 for
the title examination process at line 1103. While the affidavit
attests the charge was "in addition to the judgment report given
by the abstractor related to the Superior Court of the District
of Columbia," Bynum was already charged $185 for "abstract or
title search to Abstractor" on line 1102. Because a judgment
constitutes a lien on the property, any registered judgment would
have appeared during the title examination or abstractor search.
The judgment reports were thus duplicative, not bona fide and
unreasonable. The $64 fee must be included in the HOEPA points
and fees calculations.
6. HOEPA Calculations
The $218.76 hazard insurance fee, the $395 closing fee and the
$64 abstract, when added to the $5,475 broker fee, clearly
qualify Bynum's loan for HOEPA protection: ($75,000-($5,475
$218.76$395 $64)) × .08 = $5,507.88.*fn8 In this
calculation, 8% of the total loan amount equals $5,507.88, yet
Bynum paid $6,152.76 in total points and fees. Accordingly, the
loan is a high cost loan covered by HOEPA.
It is undisputed that Bynum did not receive required HOEPA
disclosures in a timely fashion. Due to First Government's
failure to provide the mandatory disclosures in the prescribed
time period, Bynum acquired a statutory right to rescind the deed
of trust within three years of the transaction's consummation.
15 U.S.C. § 1635(f). The February 28, 1998 loan between Bynum and
First Government is subject to the Home Ownership and Equity
Protection Act. C. TILA Rescission Claim
Bynum further contends she acquired a right to rescind the loan
under TILA because TILA requires lenders to disclose the amount
financed and finance charges conspicuously and accurately.
15 U.S.C. § 1632(a). The amount financed constitutes the amount of
credit provided to the borrower. 12 C.F.R. § 226.18(b). The
finance charge constitutes the cost charged to the borrower for
making the loan, including interest over the life of the loan and
up-front charges. Id. at § 226.4(a). Finance charges are
[T]he sum of all charges, payable directly or
indirectly by the person to whom credit is extended,
and imposed directly or indirectly by the creditor as
an incident to the extension of credit. The finance
charge shall not include fees and amounts imposed by
third party closing agents (including settlement
agents, attorneys, and escrow and title companies) if
the creditor does not require the imposition of the
charges or the services provided and does not retain
the charges. . . .
15 U.S.C. § 1605(a). Failure to disclose the proper finance
charge and amount financed constitutes a material violation that
entitles the borrower to rescind the loan within three years of
the transaction's consummation. See 15 U.S.C. § 1635(a), (f); §
1602(u). A single violation of TILA, even if technical, extends a
borrower's period of rescission. See Wiggins v. Avco Fin.
Servs., 62 F. Supp.2d 90, 94 (D.D.C. 1999). Generally, for
rescission purposes, disclosure of the finance charge shall be
treated as accurate if the amount disclosed does not vary from
the actual finance charge by more than one-half of one percent of
the total amount of credit extended. See
15 U.S.C. § 1602(f)(2)(a). If a borrower rescinds after initiation of
foreclosure proceedings, the disclosure of the finance charge
shall be treated as accurate if the amount disclosed does not
vary from the actual finance charge by more than $35.
15 U.S.C. § 1635(i)(2). Bynum asserts the only fee included in the finance charge was
the broker fee. Because the $85 recordation affidavit and $395
settlement fee were not included, the finance charge was never
accurately disclosed and was understated by more than $35.
Manufacturers contends § 1605(a) clearly states that charges
imposed by third parties and not retained by the lender are
excludable from the finance charge. Accordingly, Manufacturers
asserts the finance charge was accurately disclosed and Bynum's
right of rescission expired three business days after closing.
As previously discussed, there is a question of fact as to
whether the recordation affidavit was bona fide and reasonable,
and who retained the $85 fee. The recordation fee, for summary
judgment purposes, is not clearly a finance charge that was
improperly disclosed. However, the $395 settlement fee should
have been included in the finance charge. While § 1605(a)
provides finance charges do not include fees and amounts imposed
by third party closing agents, the exclusion only applies "if the
creditor does not require the imposition of the charges." In
general, fees charged by third party closing agents are finance
charges when the creditor requires the particular services for
which the consumer is charged. 12 C.F.R. § 226.4(a)(2)(i). As
evidenced by First Government's "Disclosure of Settlement
Attorney" form, First Government required the particular services
for which the $395 fee was imposed. Accordingly, the closing fee
should have been disclosed as a finance charge, and the total
finance charge was thus understand by at least $395. Bynum
acquired a statutory right to rescind the deed of trust within
three years of closing. 15 U.S.C. § 1635(f).
D. Improper Notarization
Finally, Bynum contends the deed is invalid because it was
illegally notarized under D.C. Code §§ 42-401, 42-404. Although
Friedman took Bynum's acknowledgment, witnessed her signature and
certified the deed in her home, Bynum argues notarial acts may
only be performed in the District of Columbia by a notary licensed in the District.
Friedman was not a certified notary public in the District of
Columbia, rather he was a notary public certified by the State of
Maryland. Bynum contends the improper and illegal notarization
invalidates the February 29, 1998 conveyance.
Bynum relies on a case from the Superior Court of the District
of Columbia that invalidated an absolute deed granting property
in the District when the deed was notarized by a notary public
from Maryland. In Jackson v. Byrd, No. 825-01 RP (D.C. Sup. Ct.
Aug. 25, 2003), the court determined the notary's failure to
obtain a license to notarize documents in the District of
Columbia invalidated the deed and did not merely constitute an
improper acknowledgment. The court reasoned, in part, that a
notary acts as a final gatekeeper against fraud and to protect
vulnerable citizens and the integrity of public records. Id. at
6. This court is not bound by the Superior Court's decision and
respectfully declines to adopt its reasoning.
Under District of Columbia law, a notarial act includes "taking
an acknowledgment, administering an oath or affirmation, taking a
verification upon oath or affirmation, witnessing or attesting a
signature, noting a protest of a negotiable instrument, or any
other similar act authorized by law." D.C. Code § 42-141(4).
Notarial acts pertain to witnessing and acknowledging that the
"person who appears before the officer and makes the
acknowledgment is the person whose true signature is on the
instrument." D.C. Code § 42-142(a). The Code further provides
The failures in the formal requisites of an instrument that may
be cured by this act are:
(1) An omission of an acknowledgment or a defective
or improper acknowledgment;
(2) A failure to attach a clerk's certificate;
(3) An omission of a notary seal or other seal; or
(4) An omission of an attestation. D.C. Code § 42-404. It is apparent that an improper notarization
affects the acknowledgment, but that the D.C. Code does not
mandate invalidation of a deed on account of an improper
Unlike Jackson, this case involves a deed of trust, not an
absolute deed. The District of Columbia distinguishes between
absolute deeds, and mortgages or deeds of trust. D.C. Code §
Mortgages and deeds of trust to secure debts,
conveying any estate in land, shall be executed and
may be acknowledged and recorded in the same manner
as absolute deeds; and they shall take effect both as
between the parties thereto and as to others, bona
fide purchasers and mortgagees and creditors, in the
same manner and under the same conditions as absolute
The statute's provision that a deed of trust "may be acknowledged
and recorded" in the same manner as absolute deeds implies that
the acknowledgment pertains to recordability of the instrument as
opposed to validity.
Finally, D.C. Code § 42-407 provides the recorder of deeds
shall not record an instrument if improperly acknowledged. There
is no dispute that the deed of trust was accepted for
recordation. The Jackson court's concern regarding fraud is not
implicated here. Bynum does not dispute that she executed the
deed. To hold that improper notarization renders the deed void
would encourage parties to obtain improper notarizations and
avoid responsibilities based on a technicality. Further, voiding
a deed based on an improper notarization would provide windfalls
to parties where security interests are invalidated, and would
create forfeitures for parties on account of a notary's failure
to perform duties properly. Bynum has failed to establish the
deed is invalid as a matter of law and summary judgment on the
claim of illegal notarization must be denied. All notarial acts
or omissions in the execution or recordation of the February 29, 1998 deed of
trust are cured by D.C. Code § 42-403.
Manufacturers' security interest in Bynum's home is subject to
rescission due to HOEPA and TILA violations. Bynum gave notice of
her intent to rescind within the three year statutory period.
Manufacturers contends dismissal of its security interest will
result in a forfeiture and will provide Bynum with a windfall.
Thus, Manufacturers seeks summary judgment on an equitable
Manufacturers argues the court should apply the equitable
subrogation doctrine to find the First Government deed of trust
constitutes a lien on the property "to the extent of $53,417.24
which was the amount paid to retire the indebtedness secured by
the Crusader deed of trust and $3,680.812 to pay delinquent real
estate taxes . . . together with interest thereon from the date
of such payments less any sums paid by the Plaintiff thereafter."
Manufacturers Mot. to Dismiss at 17. "[I]t is difficult to
imagine any situation in which the Plaintiff would be more
unjustly enriched than in this case by permitting the Plaintiff
to enjoy the benefit of the payment of the prior loan held by
Wilshire Credit in the amount of $53,417.25 and $3,680.81 in
delinquent real property taxes and, in turn, disavow the
indebtedness owed." Manufacturers Reply to MSJ at 17.
Manufacturers' motion for summary judgment on the equitable
subrogation counterclaim must be denied. Preliminarily, the
doctrine appears to apply when priority of competing liens is at
issue, as opposed to situations where no lien exists. See e.g.,
Eastern Sav. Bank, FSB v. Pappas, 829 A.2d 953 (D.C.App. 2003);
Restatement (Third) of Property, § 7.6 (equitable subrogation
exists to determine priority of liens). Nevertheless, the court
need not determine the applicability of the equitable subrogation doctrine because § 1635(b) of TILA governs
the return of money or property when a borrower exercises a right
to rescind under the Act.
Section 1635(b) provides:
Return of money or property following rescission.
When an obligor exercises his right to rescind under
subsection (a), he is not liable for any finance or
other charge, and any security interest given by the
obligor, including any such interest arising by
operation of law, becomes void upon such a
rescission. Within 20 days after receipt of a notice
of rescission, the creditor shall return to the
obligor any money or property given as carnest money,
downpayment, or otherwise, and shall take any action
necessary or appropriate to reflect the termination
of any security interest created under the
transaction. If the creditor has delivered any
property to the obligor, the obligor may retain
possession of it. Upon the performance of the
creditor's obligations under this section, the
obligor shall tender the property to the creditor,
except that if return of the property in kind would
be impracticable or inequitable, the obligor shall
tender its reasonable value. Tender shall be made at
the location of the property or at the residence of
the obligor, at the option of the obligor. If the
creditor does not take possession of the property
within 20 days after tender by the obligor, ownership
of the property vests in the obligor without
obligation on his part to pay for it. The procedures
prescribed by this subsection shall apply except when
otherwise ordered by a court.
Therefore, according to § 1635(b), the security interest
becomes void upon rescission and a borrower is no longer liable
for any finance or other charges. Within 20 days of receiving
notice of rescission, the creditor is to return any money or
property and reflect termination of the security interest. When
the creditor has met these obligations, the borrower is to tender
the property. The sequence of rescission and tender must be
followed unless the court directs otherwise.*fn9
15 U.S.C. § 1635(b); see also 12 C.F.R. § 226.23 (tracks the
language of § 1635 and implements the statute). In Brown v. Nat'l Permanent Federal Sav. and Loan Assoc.,
683 F.2d 444, 447 (D.C. Cir. 1982), the borrower refinanced a
mortgage to obtain funds for home repair work. The balance due on
the original mortgage and money for the rehabilitation work was
paid out of the newly executed promissory note. The lender moved
to foreclose on the loan when the borrower stopped making
payments, and the borrower sought rescission under TILA. The
appellate court affirmed the district court's grant of summary
judgment to the borrower on her rescission claim. Further, the
district court correctly noted the statute does not require the
debtor to tender first; rather the creditor must tender before
the borrower's obligation arises. Id. at 447. However, the
district court erred by failing to recognize that the rescission
remedy remains subject to equitable considerations and that the
court possessed the equitable power to condition rescission upon
return of the loan proceeds. "The statute is clearly designed to
restore the parties as much as possible to the status quo
ante." Id. at 448 (citation omitted). "A court may condition
the granting of rescission upon plaintiff's repayment of the
principal amount of the loan to the creditor." Id. at 447,
quoting Etta v. Seaboard Enter., Inc., 674 F.2d 913 (D.C. Cir.
1982). The case was remanded to the district court for a
determination of whether the borrower received any benefit and
whether rescission should be conditioned on the borrower's return
of any benefit gained.*fn10
TILA's statutory rescission procedures do not alter the
equitable nature of the rescission remedy. See Brown,
683 F.2d at 447. Courts are free to exercise equitable discretion to
modify rescission procedures, and rescission under TILA may be
conditioned on the debtor's return of any money or property
received. Id.; see also Yamamoto, 329 F.3d at 1173 (affirming
dismissal of rescission claim when borrowers could not establish
their ability after being given sixty days to do so to tender
the proceeds of the loan if they prevailed); see also Velazquez
v. Home American Credit, Inc., 254 F.Supp.2d 1043, 1045-47 (N.D.
Ill. 2003) ("[a] scheme that requires the creditor to act first
by canceling its security interest without assurance that the
consumer will do her part risks leaving the creditor high and
dry, an unsecured creditor forced to rely on the consumer's good
graces and ability to tender . . . equity may require that we
order [the borrower] to return the money simultaneous with [the
lender's] release of its security interest").
The court may impose conditions on rescission that assure the
borrower meets her obligations once the creditor has performed
its obligations. Nevertheless, whether to alter the sequence of §
1635's procedures and whether to place conditions upon the
release of the security interest, requires case by case
consideration. See Brown, 683 F.2d at 447; Yamamoto,
329 F.3d at 1171. Factors to consider include the Act's underlying
legislative policy requiring full disclosure, the remedial penal
nature of the Act's remedies, the egregiousness of the TILA
violations, and the nature of benefits received. Id. Bynum contends the entire loan transaction and security
interest are void, but does not acknowledge the benefits she
received, or suggest a method for returning those
benefits.*fn11 There is no genuine dispute that the loan
executed by the First Government deed of trust paid $53,417.24 to
retire the indebtedness secured by the Crusader deed of trust and
$3,680.81 to the District of Columbia to pay delinquent real
estate taxes. It is possible Bynum simply contends it is
equitable to order an unconditional release of the security
interest and place Manufacturers in an unsecured position as to
the funds advanced on her behalf. However, neither party briefed
the implications of § 1635(b)'s return of property provisions.
The court is unaware of Bynum's ability or willingness to
structure a return of the $57,098.05 benefit less any finance
or other charges and any payments she made on the loan through
February 5, 1999 before the security interest will be released.
The court declines to order rescission of the security interest
without input from the parties as to how the rescission remedy
should be structured. Accordingly, on the court's own motion, the
parties shall brief 15 U.S.C. § 1635's application to Bynum's
rescission claim. In doing so, consideration should be given to
the cases and equitable circumstances discussed in this section.
A final note pertaining to rescission remedies is warranted.
The Act provides that a right to rescind against the original
lender also applies to any assignee. 15 U.S.C. § 1641(c).
Typically, a creditor's failure to respond to a rescission notice pursuant
to § 1635(b), constitutes a separate violation of the Act. Id.
at § 1635(g). However:
Although 15 U.S.C. § 1641(c) provides that a material
violation by a creditor creates a right to rescind
against the creditor's assignee, TILA's civil
liability provision only permits `creditors' to be
held liable for a monetary penalty or award of
attorney's fees for a TILA violation.
15 U.S.C. § 1640(a). Neither 15 U.S.C. § 1641(c) nor any other
violation of TILA provides for a statutory penalty or
award of attorney's fees against an assignee for
failure to respond to a valid rescission notice.
Kane v. Equity One, Inc., No. 03-3931, 2003 U.S. Dist. LEXIS
23810, *17-18 (E.D. Pa. Nov. 21, 2003). Therefore, Manufacturers
is not subject to liability for challenging Bynum's ground for
rescission and not responding to Bynum's rescission notice.
V. Bynum's Claims Against Equitable
Equitable moves for summary judgment on all claims. Bynum
failed to respond to Equitable's statement of undisputed facts as
required by local rules. See L.R. 7(h); 56.1 (opposition to
summary judgment "shall be accompanied by a separate concise
statement of genuine issues" of material fact). Equitable's
statement of facts is deemed admitted. See L.R. 56.1, 7(h) ("In
determining a motion for summary judgment the court may assume
that facts identified by the moving party in its statement of
material facts are deemed admitted, unless such a fact is
controverted in the statement of genuine issues filed in
opposition to the motion"); Twist v. Meese, 854 F.2d 1421, 1425
(D.C. Cir. 1988); Flowers v. Internal Revenue Serv.,
307 F.Supp.2d 60, 62 n. 1 (D.D.C. 2004). Bynum's admission of
Equitable's facts is not cured by her submission of a sworn
statement opposing summary judgment. Bynum's sworn statement is
conclusory, contains mere denials of the facts Equitable alleges
in support of summary judgment, and is insufficient to create a
genuine issue of material fact. See e.g., Harding v. Gray,
9 F.3d 150, 154 (D.C. Cir. 1993) ("mere unsubstantiated allegation . . . creates no `genuine issue
of fact' and will not withstand summary judgment"); Bryant v.
Brownlee, 265 F.Supp.2d 52, 68 (D.D.C. 2003) (conclusory
allegations in affidavit opposing summary judgment do not raise
genuine issue of material fact); Sage v. Broad. Publs.,
997 F.Supp. 49, 53 (D.D.C. 1998) ("mere denial of the facts alleged
in a properly supported motion for summary judgment is not enough
to meet the non-moving party's burden").
A. Conversion Claims (Count VII)
Equitable moves for summary judgment on Count VII. Bynum
contends Equitable converted, conspired to convert, and aided and
abetted conversion of the $9,162.00 proceeds from the loan. The
elements of conversion are: (1) the unlawful exercise, (2) of
ownership, dominion, or control, (3) of another's personal
property, (4) in denial or repudiation of that person's property
rights. See Equity Group v. Painewebber Inc., 839 F.Supp. 930,
933 (D.D.C. 1993). Bynum has not satisfied these elements and
does not produce any evidence establishing Equitable's
involvement in the alleged conversion of the check and its
proceeds. Indeed, Bynum admits that Byrd took her check and that
Waldo and Dutchmans received the proceeds. See e.g., Bynum Ex.
B at 39-41. Her conversion claim against Equitable fails.
Bynum's conspiracy and aiding and abetting claims also fail.
Preliminarily, the district court has previously hold that the
District of Columbia does not recognize independent causes of
action for civil conspiracy or aiding and abetting. See
02/25/03 Order, Dkt. No. 63-1 at 9. Even if these claims were
available, Bynum has produced no evidence of an agreement between
Equitable and Dutchmans or Waldo. The elements of civil
conspiracy are: (1) an agreement between two or more persons, (2)
to participate in an unlawful act or a lawful act in an unlawful
manner, (3) injury caused by a party to the agreement's actions, (4) pursuant to and in
furtherance of the common scheme. See Griva v. Davison,
637 A.2d 830, 848 (D.C. 1994). Bynum argues a conspiracy may be
inferred based on several assumptions lacking record support. For
example, there is no evidence that Equitable sent Byrd to her
home. Viewing the facts in her favor, the undisputed evidence
simply does not support Bynum's claims. Bynum asserts Byrd told
her he worked with Equitable, but admits Byrd did not tell her
his boss' name, nor did she know who was called when he
telephoned his "boss" from her home. See Bynum Ex. B at 36,
88-91. Rather, the undisputed evidence reflects: (1) Equitable
was not aware of Bynum's experience with Byrd until she
telephoned Ruiz; (2) Equitable did not know of Bynum's contacts
or negotiations with Dutchmans and Byrd regarding home
improvements (Bynum admits Bryd visited her home two or three
times see Bynum Ex. B at 92-93); and (3) Byrd was never an
Equitable employee. Bynum fails to present evidence raising a
genuine issue of material fact regarding her conversion claims.
Equitable's summary judgment motion on Count VII must be granted.
B. Promissory Estoppel (Count VIII)
Equitable moves for summary judgment on Count VIII. Bynum
contends: (1) Equitable promised to provide her with home
improvements and financing for the improvements; (2) she relied
on Equitable's promises; (3) Equitable did not make any repairs
and sent a representative of an "unlicensed, unregistered,
unbonded, sole proprietorship which coerced [her] to sign over
loan proceeds to an escrow account and then made no repairs;" and
(4) after she called Equitable for help, Equitable promised to
send the contractor out to perform the promised work but no such
work occurred. See 3rd Am. Compl. Count VIII. A party may not assert a promissory estoppel claim where there
is an enforceable contract. See e.g., Bldg. Servs. Co. v.
Amtrak, 305 F.Supp.2d 85, 95-96 (D.D.C. 2004) ("District of
Columbia law presupposes that an express, enforceable contract is
absent when the doctrine of promissory estoppel is applied").
Because Bynum and Equitable entered into a valid brokerage
agreement, the doctrine of promissory estoppel does not apply.
Even if promissory estoppel were applied, Bynum fails to
establish the requisite elements: (1) a promise; (2) reasonable
reliance on the promise; (3) injury due to detrimental reliance;
and (4) enforcement would be in the public interest and would
prevent injustice. Id. at 95; see also District of Columbia v.
McGregor Prop., Inc., 479 A.2d 1270, 1273 (D.C. 1984).
Critically, Bynum provides no evidence that Equitable promised to
obtain home improvements for her, or to send a contractor to
perform home improvement work. Bynum contends "she relied on
Equitable's promise to perform home repairs when they sent Byrd
out to her home." Resp. at 16. However, the premise for Bynum's
promissory estoppel claim, that Equitable sent Byrd to her home,
is totally unsupported. Bynum fails to present evidence raising a
genuine issue of material fact regarding her promissory estoppel
claim. Equitable's summary judgment motion on Count VIII must be
C.D.C. Mortgage Lender and Broker Act (Count IX)
Equitable moves for summary judgment on Count IX. Bynum
contends Equitable failed to provide her with certain disclosures
at least three days prior to the loan settlement as required by
D.C. Code § 26-1113. Preliminarily, Bynum signed a written loan
commitment that contained an agreed and accepted date of February
25, 1998. The loan commitment was therefore received three days
before closing. Moreover, § 26-1113(a)(1) provides that a licensee defined in
§ 26-1101(8) to include mortgage brokers and lenders shall
provide the borrower with a financing agreement executed by the
lender. Section 26-1113(b)(1) provides the financing agreement
executed by the lender shall be delivered to the borrower at
least 72 hours before settlement. However, "a borrower aggrieved
by any violation of this section shall be entitled to bring a
civil suit . . . against the lender." D.C. Code § 26-1113(b)(3)
(emphasis added). Accordingly, § 26-1113 does not provide a
private cause of action against mortgage brokers.
Bynum's argument that § 26-1118(e) permits her to bring an
action against brokers for violations of § 26-1113 must fail.
Section 26-1118 delineates the actions the Superintendent of the
Office of Banking and Financial Institutions may pursue to
suspend, revoke and enforce violations of the statute, but
provides individuals are not precluded from bringing actions to
recover for violations. Section 26-1118 does not affect §
26-1113(b)(3)'s express provision of a cause of action against
only lenders. A basic rule of statutory construction, expression
unius est exclusion alterius, provides that "when a legislature
makes express mention of one thing, the exclusion of other is
implied." McCray v. McGee, 504 A.2d 1128, 1130 (D.C. 1986);
see also Indep. Ins. Agents of America, Inc. v. Hawke,
211 F.3d 638, 643-44 (D.C. Cir. 2000) ("all words in a statute are to be
assigned meaning . . . nothing therein is to be construed as
surplusage"). The court must presume the District of Columbia
intentionally chose to provide a remedy only against lenders.
Bynum also contends Equitable violated D.C. Code §
26-1114(a)(8) because it received compensation in the form of a
$5,475 brokerage fee prior to delivery of the financing
agreement. Again, Bynum signed a written loan commitment that
contained an agreed and accepted date of February 25, 1998
three days before the loan closed. In any event, Bynum's claim
must fail because she presents no evidence reflecting when Equitable received its
fee. Therefore, she has not established Equitable received
compensation prior to provision of the three day notice.
Equitable's summary judgment motion on Count IX must be granted.
D.D.C. Consumer Protections Procedure Act (Count X)
Equitable moves for summary judgment on Count X. Bynum contends
Equitable violated the CPPA, D.C. Code § 28-3901 et seq. "The
Consumer Protection Procedures Act is a comprehensive statute
with an extensive regulatory framework designed to remedy all
improper trade practices." Osbourne v. Capital City Mortgage
Corp., 727 A.2d 322, 325 (D.C. 1999) (quotations omitted); see
also 02/25/03 Order, Dkt. No. 63-1 at 7. The CPPA applies to
home mortgage finance transactions. DeBerry v. First Gov't
Mortgage and Investors Corp., 743 A.2d 699, 703 (D.C. 1999).
Bynum contends Equitable violated the CPPA, D.C. Code § 28-3904
1. Misrepresented it would create a $10,000 home
improvement and refinance loan without stating it was
not the lender, but the broker which would charge a
large fee for referring the loan, or that the loan
would include amounts other than the $10,000 and the
previous mortgage, such as other debts and real
2. Included amounts in the loan without her consent,
including debts she of which she was unaware, real
estate taxes and settlement fees that were not bona
fide or reasonable;
3. Misrepresented that it would obtain an actual home
improvement contractor for her but instead sent her a
contractor that was unlicensed and that had been sued
repeatedly for stealing money from individuals;
4. Failed to provide her with her notice of right to
cancel the home improvement contract and home
solicitation sales as required by law;
5. Failed to provide the promised home improvements;
6. Received compensation for services prior to
completion of work, prior to delivery of required
consumer disclosures and without being licensed as a
home improvement contractor;
7. Made and enforced unconscionable contracts; and
8. Failed to provide a financing agreement containing
the terms of the loan at least seventy-two hours
before settlement of the loan. The record is devoid of evidence supporting Bynum's
assertions and summary judgment must be granted.
A claim for fraudulent or intentional misrepresentation under
the CPPA "requires the same burden of proof as does a common law
claim for such misrepresentation the clear and convincing
standard." See 02/25/03 Order, Dkt. No. 63-1 at 7, quoting
Osbourne v. Capital City Mortgage Corp., 727 A.2d 322, 325 (D.C.
1999). Bynum fails to present clear and convincing evidence that
Equitable engaged in the purported misrepresentations. There is
no evidence that Equitable represented itself as a lender,
instead of a broker, that it failed to tell her she would be
charged a brokerage fee, that it told her she would receive
$10,000, that it promised to obtain a home improvement contractor
or that it sent one to her home. Thompson attests he went to
Bynum's home, gathered information for Bynum's loan application,
and explained that Equitable, as a broker, would submit Bynum's
loan application materials to a potential lender. Equitable Ex.
B. At her deposition, Bynum did not recollect meeting with
Thompson, but she now attests that Thompson never came to her
home. See Bynum Ex. A at ¶ 4; Ex. B at 11-12. Regardless, Bynum
signed a brokerage agreement reflecting Equitable's status as a
broker and its entitlement to fees from loan proceeds. See
Equitable Ex. L.
There is no evidence Equitable had any role in the preparation
of the actual loan or the fees and debts paid from loan proceeds.
As a broker, Equitable assisted Bynum in preparing a loan
application. The negotiation, structuring and settlement of the
loan involved Bynum, First Government and Valley Title. Because
Equitable was not the alleged home improvement contractor, it
cannot be held liable for the purported failure to provide her
with a "notice of right to cancel the home improvement contract
and home solicitation sales," or the alleged receipt of
compensation for services "prior to completion of work, prior to delivery of
required consumer disclosures and without being licensed as a
home improvement contractor."
Finally, there is no evidence that Equitable made or enforced
an unconscionable agreement. The only contract Bynum entered into
with Equitable was the brokerage agreement entitled "Agreement to
Obtain Loan Commitment." Bynum has produced no evidence that the
commitment was unreasonably favorable to Equitable. See Urban
Inv. v. Branham, 464 A.2d 93, 99 (D.C. 1993). Indeed, Equitable
received a $5,475 fee, less than the $8,000 Bynum agreed to in
the agreement, by obtaining a reduction in the interest rate on
her loan from First Government and waiving a portion of its
compensation. While Bynum's affidavit from Richard Eisen opines
as to the reasonableness of some closing fees, it does not
question the reasonableness of the broker fee. Bynum's arguments
opposing summary judgment on her CPPA claims are unsupported and
fail to raise a genuine issue of material fact. Equitable's
summary judgment motion on Count X must be granted.
E. Breach of Fiduciary Duty (Count XI)
Equitable moves for summary judgment on Count XI. Bynum
contends Equitable, as a mortgage broker, owed her a fiduciary
duty and that it breached that duty. Bynum must establish the
existence of a fiduciary duty and a breach of that duty. See
Vicki Bagley Realty, Inc. v. Laufer, 482 A.2d 359, 363 (D.C.
1984); see also 02/25/03 Order, Dkt. No. 63-1 at 8. On February
25, 2003, the district court granted Valley Title's summary
judgment motion and held no breach of fiduciary duty claim
existed because Bynum signed an acknowledgment that Valley Title
did not have "any fiduciary obligations for or toward her." See
02/25/03 Order, Dkt. No. 63-1 at 8. On November 18, 1997, Bynum
signed a similar acknowledgment in her brokerage agreement with
Equitable: It is agreed that this Agreement is solely a
contractual agreement and does not create any type of
agency relationship, fiduciary responsibility or
other trust relationship between the parties hereto.
Mot. Ex. L. at ¶ 6. Accordingly, Bynum's fiduciary duty claim
Bynum does not deny signing the disclaimer, but she argues a
fiduciary duty should be imposed because of Equitable's position
as a broker, her position as a severely ill borrower, and because
she was not given a copy of the document she signed. Bynum's
arguments miss the mark. First, even if Equitable's position as a
broker could arguably create a fiduciary relationship, Bynum
acknowledged that no fiduciary relationship existed. Second,
while it is undisputed that Bynum is paralyzed, she presents no
evidence to support her insinuation that an illness prevented her
from understanding the documents she signed. Finally, Bynum cites
no authority for the proposition that her waiver is invalidated
because she did not retain a copy of the document.
Even if a fiduciary duty arguably existed, Bynum fails to
establish a breach of that duty. While she contends Equitable
only sent her loan application to one lender, sent an unlicensed
home improvement contractor to her home, and failed to help her
when no repairs were performed, her claims are factually
unsupported. Nor does she provide legal support that the
purported actions constitute a breach of a fiduciary duty. The
undisputed evidence reflects that Ruiz attempted to help locate
Byrd after Bynum telephoned. Bynum fails to present evidence
raising a genuine issue of material fact regarding her breach of
fiduciary duty claim. Equitable's summary judgment motion on
Count XI must be granted.
Bynum's summary judgment motion is granted in part. The court
grants Bynum's request for declaratory relief and declares the
February 28, 1998 loan between Bynum and First Government is subject to the Home Ownership and Equity Protection Act. On
the court's own motion, the parties shall brief
15 U.S.C. § 1635's application to Bynum's rescission claim. In doing so,
consideration shall be given to the cases and equitable
circumstances discussed in this memorandum opinion. Counsel for
Bynum and Manufacturers shall meet and confer by April 15, 2005
regarding a mutually agreeable rescission plan. If an agreement
is reached, a joint proposed judgment order shall be submitted to
the court by April 22, 2005. If no agreement is reached, Bynum's
brief shall be filed no later than April 22, 2005. Manufacturers
shall respond by May 2, 2005. Courtesy copies of all filings
shall be sent directly to the assigned judge. The briefs shall
not exceed 15 pages, including proposed judgment orders.
All notarial acts or omissions in the execution or recordation
of the February 29, 1998 deed of trust are cured by D.C. Code §
42-403. Manufacturers' summary judgment motion on its
counterclaim is denied, and its summary judgment motion on Counts
I-II, IV-VI, IX-X of the Third Amended Complaint is granted.
Equitable's summary judgment motion is granted.