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Andrea Sloan, As Guardian and Conservator On Behalf of Mary Juergens v. Urban Title Services

March 18, 2011

ANDREA SLOAN, AS GUARDIAN AND CONSERVATOR ON BEHALF OF MARY JUERGENS, AN INCAPACITATED INDIVIDUAL, IN BOTH MARY JUERGENS' INDIVIDUAL CAPACITY AND AS THE SOLE MEMBER OF "1230 23RD STREET, LLC," PLAINTIFF/COUNTER-DEFENDANT,
v.
URBAN TITLE SERVICES, INC., ET AL., DEFENDANTS/COUNTER-PLAINTIFFS.



The opinion of the court was delivered by: Colleen Kollar-kotelly United States District Judge

MEMORANDUM OPINION

(March 18, 2011)

Mary Juergens ("Juergens") commenced this action on August 29, 2006, challenging the legality of two loans extended to her, each of which was secured on a condominium located at 1230 23rd Street, N.W., Apartment 505, Washington, D.C. 20037 (the "Condo"). Subsequently, Juergens was found to be an "incapacitated individual" and Andrea Sloan, who was appointed as Juergens' Guardian and Conservator, was substituted for Juergens as the Plaintiff/Counter-Defendant in this action.*fn1 Over the years, the claims and parties in this action have been successively winnowed down by orders of this Court and by the agreement of the parties. Today, the defendants include First Mountain Vernon Industrial Loan Association, Inc. ("FMVILA"), Dale E. Duncan ("Duncan"), Brickshire Settlements, LLC ("Brickshire"), and Arthur G. Bennett ("Bennett"). As is relevant to the instant motion, Duncan, who acted as FMVILA's agent in connection with the only loan transaction that remains at issue in this action, asserts a counterclaim (the "Counterclaim") based upon the allegedly false and misleading misrepresentations made by Counter-Defendant during the transaction at issue. Presently before the Court is Counter-Defendant's [174] Motion for Summary Judgment on the Issue of Dale Duncan's Counterclaim ("Motion for Summary Judgment"), which was previously resolved in part and held in abeyance in part pending further briefing by the parties. The parties have now had the opportunity to submit the supplemental briefing required by the Court. Based upon the parties' submissions, the relevant authorities, and the record as a whole, the Court shall GRANT the remainder of Counter-Defendant's [174] Motion for Summary Judgment.

I. BACKGROUND

The Court assumes familiarity with its prior opinions in this action, which set forth in detail the history of this case, and shall therefore only address the factual and procedural background necessary to address the discrete issues currently before the Court.

The only loan that remains at issue in this action was extended by or with the assistance of FMVILA, Brickshire, Duncan, and Bennett (the "Loan"). The heart of Counter-Defendant's lawsuit is her allegation that the Loan was intended to be, or should be construed as, a personal residential loan-not a commercial loan. See Sloan v. Urban Title Servs., Inc., 689 F. Supp. 2d 94, 100 (D.D.C. 2010). The relevant documents, taken at face value, characterize the Loan as a $250,000 commercial loan extended by FMVILA to 1220 23rd Street, LLC (the "LLC"), a limited liability corporation of which Counter-Defendant is the sole member. Id. Counter-Defendant nevertheless maintains that the Loan is, or should be construed as, a personal residential loan because (a) the documents relating to the Loan were fraudulently obtained by forgery and (b) the Loan is an illegal consumer residential loan disguised as a commercial loan in order to evade fair lending and disclosure requirements. See 4th Am. Compl., Docket No. [120], ¶¶ 89-92. Unsurprisingly, FMVILA, Brickshire, Duncan, and Bennett deny these allegations and assert that the Loan is a valid commercial loan extended to Counter-Defendant's LLC. See id. ¶¶ 94-96. By their account, they assisted Counter-Defendant, at her request, in establishing the LLC; the title to the Condo was transferred from Counter-Defendant to the LLC; and FMVILA extended a lawful commercial loan for $250,000, secured by the Condo, to the LLC. See id. ¶ 96. Therefore, as presented by the parties, the central question underlying this lawsuit is whether the Loan is or is not a legitimate commercial loan lawfully extended to the LLC.

In responding to the operative iteration of the Complaint in this action, Duncan asserted a two-count Counterclaim:

* Count I sounds in fraud, fraud in the inducement, misrepresentation, and negligent misrepresentation; and

* Count II sounds in abuse of process and malicious prosecution.

See Answer, Grounds of Defense, and Counterclaim to 4th Am. Compl. ("Counter-Pl.'s Counterclaim"), Docket No. [119], ¶¶ 25-48.

Duncan's Count I is rooted in allegations that Counter-Defendant made certain false and misleading statements in connection with securing the Loan. Id. ¶¶ 25-40. Simply by way of example, Duncan alleges that although Counter-Defendant advised him that the Condo was not her principal residence, she has since admitted the statement was not true at the time it was made. Id. ¶ 29. According to Duncan, Counter-Defendant intentionally, recklessly, and negligently misrepresented this and other material facts in securing the Loan and that he relied on those statements to his detriment in determining how to form the LLC and document the Loan. Id. ¶ 39. In connection with Count I, Duncan seeks the attorneys' fees and costs incurred in 3 connection with the present action. See Stmt. of Material Facts with Genuine Issues in Dispute in Regard to Def./Counterclaimant Dale E. Duncan's Opp'n to Pl.'s Mot. to Dismiss Counterclaims, Docket No. [201-1], ¶ 4.

On March 6, 2009, Counter-Defendant moved for summary judgment on both counts of Duncan's Counterclaim. See Pl./Counter-Def. Sloan's Mot. for Summ. J. on the Issue of Dale Duncan's Counterclaim, Docket No. [174]. Duncan filed a timely opposition. See Def. Dale Duncan's Opp'n to Pl.'s Mot. for Summ. J. to Dismiss Counterclaims, Docket No. [201]. Plaintiff filed a reply. See Pl. Sloan's Reply to Def. Duncan's Opp'n to Pl. Sloan's Mot. for Summ. J. on the Issue of Def. Duncan's Counterclaim ("Counter-Def.'s Mem."), Docket No. [213].

On February 12, 2010, this Court issued a Memorandum Opinion and Order addressing a series of motions and cross-motions raised by the parties, including Counter-Defendant's Motion for Summary Judgment on Duncan's Counterclaim. See generally Sloan v. Urban Title Servs., Inc., 689 F. Supp. 2d 94 (D.D.C. 2010). While the Court then granted Counter-Defendant's motion insofar as it sought dismissal of Count II of Duncan's Counterclaim-the claim for abuse of process and malicious prosecution-the Court did not reach a final decision on Counter-Defendant's motion as it pertained to Count I-the claim sounding in fraud, fraud in the inducement, misrepresentation, and negligent misrepresentation. See id. at 119-22.

The parties' briefing as to Count I left much to be desired. In her opening memorandum, Counter-Defendant misconstrued Duncan's claim as being premised on Counter-Defendant's decision to commence the present action and targeted her arguments accordingly. See Sloan, 689 F. Supp. 2d at 120. Alerted to the correct foundation of Count I by Duncan's opposition briefing, Counter-Defendant changed course and argued for the first time that Duncan's claim must fail because he suffered no damages in connection with the formation of the LLC and the preparation of the Loan documents. Id. at 120-21. Because the argument was raised for the first time in reply, the Court declined to consider the argument. Id. at 121. However, because the argument, if meritorious, would appear to be dispositive of Count I, the Court held the motion in abeyance as it pertains to Count I in order to provide Duncan with a meaningful opportunity to respond. Id. Specifically, ...


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