United States District Court, District of Columbia
Beverly A. BAKEIR, Plaintiff,
CAPITAL CITY MORTGAGE CORP., et al., Defendants.
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[Copyrighted Material Omitted]
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Beverly A. Bakeir, Washington, DC, pro se.
Richard Frank Boddie, Slocum & Boddie, P.C., Alexandria, VA, for Defendants.
REGGIE B. WALTON, District Judge.
When the trial of this case eventually commenced on January 9, 2012, the claims that remained were the following: Count I (a claim under the District of Columbia Consumer Protection Procedures Act (" Consumer Protections Act" ), D.C.Code § 28-3904 (2013)); Count II (a claim under the District of Columbia usury laws, D.C.Code § 28-3312 (2013)); Count III (Breach of Contract); Count IV (Fraud); Count V (Fraudulent Inducement); Count VI (Civil Conspiracy to Commit Fraud); Count XIII (Unjust Enrichment); and Count XIV (Intentional Infliction of Emotional Distress). A bench trial addressing these claims was conducted over the plaintiff's objection, and the presentation of the evidence concluded on January 12, 2012. The parties then submitted their proposed findings of fact and conclusions of law on May 23 and 25, 2012, and the plaintiff submitted a reply to the defendants' submission on June 13, 2012 (" Pl.'s Reply" ). What follows are the Court's factual findings and legal conclusions.
I. FACTUAL FINDINGS
The property that is the subject of the dispute in this case is a two unit condominium located at 509 O Street, N.W., and referred to by the parties as Units A and B. Plaintiff's Exhibit (" Pl.'s Ex." ) D-21 (Deed of Trust) at 2; Defendants' Exhibit (" Defs.' Ex." ) B (same) at 2. The plaintiff purchased Unit B from the Department of Veterans Affairs in 1998 and Unit A in 2000. Trial Transcript of January 9, 2012 (" Jan. 9 Trial Tr." ) at 13, ECF No. 67. The plaintiff's initial contact with the defendants occurred in 2000 when the plaintiff acquired a loan from Capital City Mortgage Corporation (" Capital City" ), which was secured by a second trust on Unit B, and used by the plaintiff to purchase Unit A from the Department of the Navy Federal Credit Union.
The dispute that brings this case before this Court arose from a second real estate loan obtained from Capital City by the plaintiff on August 6, 2004. See Pl.'s Ex. D-21 (Deed of Trust); Defs.' Ex. B (same). This second loan was in the amount of $220,000.00, Pl.'s Ex. D-21 at 1; Defs.' Ex. B at 1, and was used to pay off the two outstanding loans that encumbered the O Street property— $35,430.01 owed to Countrywide Home Loans, Inc. and $23,816.08 owed to Capital City— and settlement expenses related to the acquisition of the loan, Pl.'s Ex. D-16 (Settlement Statement) at 1-2; Defs.' Ex. I (same) at 1-2. The plaintiff testified that the remaining funds were to be used in her attempt to renovate the O Street property, see Pl.'s Exs. E-1, E-2; Defs.' Ex. F at 6.
After receiving a letter from the District of Columbia government ordering her to renovate her O Street property, Jan. 9. Trial Tr. at 16, the plaintiff contacted defendant Alan W. Nash, the president of Capital City, about securing the second loan from Capital City, Trial Transcript of January 11, 2012 (" Jan. 11 Trial Tr." ) at 55-56, ECF No. 68, on June 14, 2004, Jan. 9 Trial Tr. at 18. According to the plaintiff, she told defendant Nash that she needed $385,000.00 to renovate her O Street property, Jan. 9 Trial Tr. at 19, whereas, defendant Nash testified that he " believed" the plaintiff initially requested only $185,000.00, Jan. 11 Trial Tr. at 84. The parties agreed, however, that ultimately defendant Nash agreed to loan the plaintiff $220,000.00. Jan. 9 Trial Tr. at 24; Jan. 11 Trial Tr. at 85. But the plaintiff contends that defendant Nash told her at that time that once the $220,000.00 loan was expended she could apply for another loan to complete the renovations. Jan. 9. Trial Tr. at 24.
In her credit application for the loan titled " Credit Application for Business, Commercial, or Investment Purposes" dated June 17, 2004, the plaintiff represented that " [t]he purpose of the loan [was] to obtain financing to renovate the property" and to " pa[y] off at settlement" the two
existing " first trust balances on [the property]." Defs.' Ex. F at 5. The plaintiff also stated on the application that she did not " plan to reside in the ... property after settlement." Id. at 6. This same representation about the intended use of the property was made by the plaintiff when she applied for the first loan she acquired from Capital City in 1999. Defs.' Ex. O at 4, 5. And of even greater significance of the plaintiff's intentions, she represented in her 2000 bankruptcy proceedings that the O Street property was " investment property," that she " plan[ned] to fully renovate this property for additional income," and that she anticipated receiving " monthly income" totaling $1,848.00 from the property after the two units were renovated. Defs.' Ex. T at 3 (Amended Disclosure Statement in Bankruptcy No. 00-0556); see also Jan. 11 Trial Tr. at 71-72 (defendant Nash testified that the plaintiff never told him she intended to reside in the property, and if she had, the loan would not have been approved because Capital City did not make residential loans). Nonetheless, the plaintiff testified during the trial that she intended to occupy one of the two property units and sell the other unit, and that she told defendant Nash that she intended to live in one of the units. Jan. 9. Trial Tr. at 21. Despite the plaintiff's testimony, the Court finds that the documentary evidence undermines the plaintiff's credibility on this point.
The parties were originally scheduled to settle on the second Capital City loan on July 7, 2004, Pl.'s Ex. E-1 at 1, and then on July 29, 2004, Pl.'s Ex. E-2 at 1. Settlement on the loan, however, did not occur until August 6, 2004. Defs.' Ex. I at 1. On both of the two earlier occasions, the plaintiff had a bankruptcy case pending in this Court's Bankruptcy Court that had been filed in 2002, Bankruptcy Case No. 02-01809. Trial Transcript of January 12, 2012 (" Jan. 12 Trial Tr." ) at 6, ECF No. 69; see also Trial Transcript of January 10, 2012, Morning Session (" Jan. 10 Trial Tr. I" ) at 59. Defendant Nash contends that the settlement had been delayed because he refused to proceed with the settlement until the bankruptcy case was dismissed. Jan. 12 Trial Tr. at 5-6. The plaintiff, on the other hand, denies that her pending bankruptcy case had anything to do with the delay in going to settlement. Id. at 15; but see Jan. 10 Trial Tr. I at 39 (plaintiff suggests that she did dismiss her bankruptcy case because defendant Nash refused to close on the loan if she did not dismiss the case). However, the timing of the plaintiff's voluntary dismissal, which was filed on August 5, 2004, Pl.'s Exs. F-1, F-2, one day before the settlement actually occurred, supports defendant Nash's testimony concerning the reason for the dismissal.
According to the plaintiff, she told defendant Nash that the $220,000.00 loan he had agreed to make would be insufficient to fully renovate the property, Jan. 9 Trial Tr. at 24, that " at least, about $385,000" was needed to complete the renovations, Jan. 12 Trial Tr. at 22, and that Nash said " well, once [the plaintiff] d[rew] down and use[d] up the entire 220, that he would make [her] a new loan," id.
Like the 2001 loan, see Defs.' Ex. C at 1; Defs.' Ex. D at 1, the 2004 loan was payable within one year, Defs.' Ex. A at 1; Defs.' Ex. B at 1. Specifically, because the first payment was not due until October 1, 2004, the principal and all accrued interest was due in full on or before September 1, 2005. Defs.' Ex. A at 1; Defs.' Ex. B at 1. The interest payable during the one-year period was 12% per annum, but increased to 24% per annum, at the option of the defendants, in the event payments were not made in accordance with the terms of the note. Defs.' Ex. A at 1, 3. The loan was also an " ‘ interest only’ loan," which
therefore required that the plaintiff pay only the accrued interest during the one year term of the loan. Id. at 1.
At the settlement on the loan, the parties also entered into a " Construction Draw Agreement," which was " an addendum to the deed of trust note." Defs.' Ex. H. The terms of the agreement provided for an initial draw of $120,000.00. Id. Deducted from the initial draw were payments of the two outstanding loans on the property and the fees associated with the settlement, see Defs.' Ex. I at 1, 2, resulting in the plaintiff's actual receipt at the settlement of only $38,788.64, Defs.' Ex. I (Settlement Statement) at 1; Jan. 9 Trial Tr. at 28-29.
Defendant Nash testified that the funds the plaintiff received at the settlement were " basically[ ] Ms. Bakeir's first draw on the property," and that " [i]t was money that was supposed to be spent by her to improve the property and probably do the plans, if she hadn't done them already." Jan. 11 Trial Tr. at 66. Despite this testimony, it is not appropriate to characterize the funds the plaintiff received at the settlement as a construction draw, as the Construction Draw Agreement states that such funds were to " be disbursed pursuant to the attached draw schedule," Defs.' Ex. H at 1, and defendant Nash acknowledged that no such schedule accompanied the agreement because the defendants' " draw schedules were put together after closing," Jan. 11 Trial Tr. at 65. According to Nash, construction draw agreements were not prepared before settlement because sometimes, for various reasons, loans are not consummated and so borrowers did not want to pay for the preparation of draw agreements before a loan was finalized. Id. at 65-66. And in the current situation, defendant Nash testified that a construction draw agreement was not prepared prior to the settlement because the plaintiff " did not provide [the defendants] with a set of plans sufficient for building the project." Id. at 65. According to Nash, no such plans were ever provided by the plaintiff. Id. at 68-69. While Ms. Bakeir testified that she gave defendant Nash renovation plans for the property in 2004, she acknowledged that the plans she would have given him were merely drafts that she personally prepared. Jan. 10 Trial Tr. I at 65-66. She further testified that it was probably not until sometime in January or February 2005, id. at 70, when she gave defendant Nash plans prepared by architect William Washington, id. at 93-94; see also id. at 93 (identifying Washington as an architect), id. at 94 (plaintiff's acknowledgement that final plans were not completed until February 2005), or someone retained by Washington, id. at 67-70. Ms. Bakeir also testified that she had the plans that she had given defendant Nash at her home at the time of the trial, id. at 65, but no such plans were ever offered as evidence by her. The Court must therefore side with defendant Nash on the issue of whether he was provided a copy of plans for the O Street property renovations.
There are other points of interest concerning the settlement of the 2004 loan. First, the defendants did not require that an appraisal be conducted prior to approving the loan. Jan. 11 Trial Tr. at 114-15; see also Jan. 9 Trial Tr. at 26. According to defendant Nash, an appraisal was not conducted because an appraisal had been conducted before the 2000 loan was approved, Jan. 11 Trial Tr. at 58-59, 114-15, and because he relied on the plaintiff's representations concerning the value of the property, id. at 115-16. Moreover, although defendant Nash testified that he drove by the property before the 2004 loan was approved, he admitted that he did not inspect the interior of the property at that time. Id. at 123.
Second, defendant Nash testified that he could not recall whether he had acquired the plaintiff's credit reports, id. at 113, acknowledged that the Housing and Urban Development (" HUD" ) settlement statement did not reflect that a fee had been charged for a credit report, id., and relied on the plaintiff's uncorroborated representations on her loan application as to her income, id. at 114. The Court finds that these circumstances establish that a credit report was not obtained before the parties settled on the 2004 loan.
These seeming irregularities must be viewed through the lens of the parties' level of sophistication in assessing whether their respective backgrounds impact how the Court should construe the parties' actions. On the one hand, defendant Nash testified that he had been involved in the real estate business for approximately forty-five years, and more specifically had extensive experience in the construction loan arena. Id. at 59-60. On the other hand, Ms. Bakeir testified that she has worked in the real estate business since 1985. Jan. 9 Trial Tr. at 58. Initially, she was a mortgage loan processor, with the responsibility of " gather[ing] all mortgage documents to make sure that ... all of the necessary documents are there in order for the underwriter to ... approve the loan." Id. She then became an underwriter for banks, which required her, among other things, to evaluate potential borrowers' credit and real estate appraisal reports. Id. at 58-59. The plaintiff also testified that she was a mortgage broker for several banks and a mortgage loan company, id. at 58, and that she was " fairly active as a mortgage broker" in 2003 and 2004, Jan. 10 Trial Tr. I at 49. Moreover, Ms. Bakeir testified that before she purchased the property that is the subject of this case, she had owned " two or three other properties" which ...