LACY v. WILSHIRE CREDIT CORPORATION

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LACY v. WILSHIRE CREDIT CORPORATION

CLARENCE DEAN LACY, Plaintiff,
v.
WILSHIRE CREDIT CORPORATION, Defendant.

Civil Action No. H-08-3389.

United States District Court, S.D. Texas, Houston Division.

May 19, 2009.

MEMORANDUM AND ORDER

NANCY F. ATLAS, District Judge.

This case is before the Court on the Motion for Summary Judgment (“Motion”) [Doc. # 16] filed by Defendant Wilshire Credit Corporation (“Wilshire”).^{[ 1 ]} Plaintiff Clarence Dean Lacy filed a Response [Doc. # 18] in opposition to Defendant’s Motion. Defendant neither filed a Reply nor requested additional time to do so. Having reviewed the full record and applied governing legal authorities, the Court denies Defendant’s Motion.

I. BACKGROUND

Plaintiff purchased a tract of property in College Station, Texas, in 1993. In connection with the purchase, Plaintiff executed a promissory note and deed of trust. Eventually, the servicing of the loan was transferred to Defendant.

Plaintiff fell behind on his loan payments during a family emergency. After the emergency was resolved, Plaintiff contacted Wilshire to ask how much he needed to pay to bring the note current. Plaintiff alleges, supported by his own affidavit, that Wilshire’s employee told him that the note was current. See Plaintiff’s Affidavit, Exh. A to Response, ¶ 6. At that point, Plaintiff believed that his father had made the payments on his behalf during the period of emergency. See id. Defendant claims, supported by its evidence, that its employee told Plaintiff that the loan was on hold and that there was “no tad (total amount due)” and told him to call again the following week. See Affidavit of Danny Tye, Exh. A to Defendant’s Motion, ¶ 9.

Plaintiff alleges that in October 2007, he discovered that a Non-Judicial Foreclosure Sale was held for his property in August 2007. The property was sold for $81,541.17. Plaintiff asserts that he would have brought the loan current had he known that it was delinquent and would, thereby, have avoided the foreclosure and sale.

On September 30, 2008, Plaintiff filed this lawsuit in Texas state court alleging negligent misrepresentation and fraud by Wilshire. On November 12, 2008, Defendant filed a timely Notice of Removal, removing the lawsuit to this Court. The Court conducted the initial pretrial and scheduling conference on January 26, 2009, establishing October 26, 2009, as the deadline for the parties to complete discovery. On April 9, 2009, Defendant filed its Motion for Summary Judgment. Defendant argues that the summary judgment evidence establishes conclusively that Wilshire never represented to Plaintiff that the loan was current and that there was no fraud. The Motion is now ripe for decision.

II. STANDARD FOR SUMMARY JUDGMENT

Summary judgment is proper only if the pleadings, depositions, answers to interrogatories, and admissions on file, together with any affidavits filed in support of the motion, show that there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c). The moving party bears the burden of demonstrating that there is no evidence to support the nonmoving party’s case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986); Nat’l Union Fire Ins. Co. v. Puget Plastics Corp., 532 F.3d 398, 401 (5th Cir. 2008). If the moving party meets this initial burden, the burden shifts to the nonmovant to set forth specific facts showing the existence of a genuine issue for trial. See Hines v. Henson, 293 F. App’x 261, 262 (5th Cir. 2008) (citing Pegram v. Honeywell, Inc., 361 F.3d 272, 278 (5th Cir. 2004)). The Court construes all facts and considers all evidence in the light most favorable to the nonmoving party. Nat’l Union, 532 F.3d at 401.

III. ANALYSIS

Plaintiff asserts claims against Wilshire for negligent misrepresentation and fraud, and Wilshire seeks summary judgment on each of these claims.

“Negligent misrepresentation requires proof that: (1) the defendant in the course of his business or a transaction in which he had an interest; (2) supplied false information for the guidance of others; (3) without exercising reasonable care or competence in communicating the information; (4) the plaintiff justifiably relied on the information; (5) proximately causing the plaintiff’s injury.” Kastner v. Jenkens & Gilchrist, P.C., 231 S.W.3d 571, 577 (Tex. App. — Dallas 2007, no pet.); see also In Re Stonebridge Techs., Inc., 430 F.3d 260, 267 n.4 (5th Cir. 2005). Plaintiff has presented evidence that Wilshire in the course of its business misrepresented to Plaintiff that his loan was current, that Plaintiff justifiably relied on that information in not making additional payments at that time, and that Plaintiff was injured as a result of the misrepresentation because his property was sold at foreclosure. See Plaintiff’s Affidavit, ¶¶ 6-8, 11. Plaintiff’s evidence raises a genuine issue of material fact precluding summary judgment on the negligent misrepresentation claim.

Under Texas law, the elements of a fraud cause of action are: (1) a material representation was made; (2) it was false when made; (3) the speaker either knew it was false, or made it without knowledge of its truth; (4) the speaker made it with the intent that it should be acted upon; (5) the party acted in reliance; and (6) the party was injured as a result. Herrmann Holdings Ltd. v. Lucent Techs. Inc., 302 F.3d 552, 563 n.3 (5th 2002) (citing Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41, 47 (Tex. 1998)). Plaintiff has presented evidence that Wilshire represented to him that his loan was current, that the representation was incorrect, that the Wilshire employee who made the representation either knew it was incorrect or did not know whether it was correct, that the Wilshire employee knew that Plaintiff would act on the information he provided, and that Plaintiff in fact relied on the information by not making additional payments on the loan at that time. See Plaintiff’s Affidavit, ¶¶ 6-8, 11. Plaintiff has also presented evidence that he was injured as a result of his reliance on the misrepresentation because the property was sold at foreclosure. Plaintiff’s evidence raises a genuine issue of material fact as to the fraud claim. As a result, summary judgment is inappropriate and must be denied.

IV. CONCLUSION AND ORDER

Plaintiff has presented evidence that raises a genuine issue of material fact as to his fraud and negligent misrepresentation claims. Accordingly, it is hereby

ORDERED that Defendant’s Motion for Summary Judgment [Doc. # 16] is DENIED. It is further

ORDERED that Plaintiff’s Motion to Strike Defendant’s Summary Judgment Evidence [Doc. # 19] and Motion for Continuance [Doc. # 20] are DENIED AS MOOT.

1. Also pending are Plaintiff’s Motion to Strike Defendant’s Summary Judgment Evidence [Doc. # 19] and Motion for Continuance [Doc. # 20] seeking additional time to respond to Defendant’s Motion for Summary Judgment. Defendant filed a Response [Doc. # 21] opposing Plaintiff’s Motion for a Continuance. Because the Court has not considered any evidence that is not properly considered for summary judgment purposes, and because Plaintiff filed a full and timely response to Defendant’s Motion for Summary Judgment, each of Plaintiff’s motions are denied as moot.

 

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Wilshire being sued in California Eastern District Court

Saldate, Jr. v. Wilshire Credit Corporation et al

Plaintiff:	George A. Saldate, Jr.
Defendant:	Wilshire Credit Corporation, WMC Mortgage Corporation, Quality Loan Service Corporation, Mortgage Electronic Registration Systems, Inc., Wells Fargo Bank, N.A., Valley Wide Home Loans, Craig H. Barton and Norfilia Garza
Case Number:	1:2009at00936
Filed:	December 1, 2009
Court:	California Eastern District Court
Office:	Fresno Office [ Court Info ]
County:	Fresno
Nature of Suit:	Contract – Negotiable Instrument
Cause:	15:1601 Truth in Lending
Jurisdiction:	Federal Question
Jury Demanded By:	Plaintiff

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Fremont sued over its lending practices

Fremont sued over its lending practices.

Lawsuits on the State Level – OHIO

http://www.wcpn.org/WCPN/news/28517/

Ohio Attorney General Richard Cordray is suing a second mortgage loan servicer, claiming it used unfair and deceptive practices against borrowers seeking help with their home loans. ideastream®’s Mhari Saito reports.

Charmaine Putka started calling her loan servicer, Texas-based American Home Mortgage Servicing about a year ago. That’s when her husband’s multiple sclerosis worsened and he had to quit his job. She was hoping the loan servicer would cut her 9.4% interest rate so they could keep their Broadview Heights house. Putka says her calls got her nowhere.

Charmaine Putka: They didn’t help at all. They said if I can’t make the payments to just stop. And then they could foreclose.

Ohio Attorney General Richard Cordray’s suit – filed in Cuyahoga County Common Pleas Court – alleges that American Home Mortgage Servicing violated the state’s Consumer Sales Practices Act by failing to offer timely or affordable help to borrowers in trouble.  When the company did offer help, the suit alleges, it charged excessive fees. This is the state Attorney General’s second such suit against a loan servicer. Cordray says there could be more.

Richard Cordray: If loan servicers are not willing to modify loans on reasonable terms and keep people in their homes, we will pursue them through all legal means.

In response, American Home Mortgage Servicing on Thursday filed suit against the state Attorney General’s office – but in Franklin County.  It says the state’s allegations are “entirely without merit” and is asking the Court of Common Pleas to find its practices compliant with Ohio law. 

The company says it services over 17,000 loans across Ohio and has modified nearly 2500.

Shady Wilshire Credit Corporation

Fremont Investment & Loan was the originator for my loan in January 2006 in Maryland.  Wilshire Credit Corp. rather quickly became our mortgage servicer – just months after our closing.  Fremont was determined by the FDIC to be a predatory lender that engaged in fraudulent practices.  The FDIC imposed a “cease & desist” on its business just 3 months after we signed the papers.  A part of the “cease & desist” was a requirement to restructure the loans that intentionally set up homeowners to foreclose on their homes.  Wilshire Credit Corporation and Fremont Investment & Loan failed to do so for our loan. 

I was not informed of this “cease & desist” order and Wilshire foreclosed on our home in January 2009.  As soon as Wilshire began “servicing” our loan, our monthly payments increased by nearly $400 (not related to the ARM increase) claiming our escrow accoount was not properly calculated initially and increased taxes.  We could not afford the increase and I lost my job. Wilshire was unwilling to restructure our loan.

Attorney General Martha Coakley filed a lawsuit against Fremont on behalf of the citizens of Massachusetts and won a $10 million settlement with Fremont that included consumer compensation on June 9, 2009

Wilshire should be held liable for “servicing” a loan on behalf of a fraudulent banks like Fremont Investment & Loan.  Predatory lending banks hide behind servicers like Wilshire to rob U.S. citizens of their homes. Originators hire mortgage servicers like Wilshire to engage in its illegal predatory lending practices.  The servicing companies have to create ways to generate fees so it can make money off the homeowner. Research the practice of your originator to understand why you were transferred to Wilshire.

Since Wilshire stole our home, I requested the note on our home and they don’t seem to have it. Many of these servicing companies don’t even really own your home and yet they foreclose on your home.

It appears suing on the state level is more advantegous than the federal level.  Please file an online complaint against Wilshire with your state Attorney General.  If you’re in Maryland, please let me know.

Was Fremont Investment & Loan your originator?  This bank has already been proven to be an illegal predatory lender by the FDIC.  I’m filing complaints in Maryland against Fremont and Wilshire.

Dear Attorney General of Maryland

Attorney General Gansler:

My husband and I are victims of predatory lending from Fremont Investment & Loan.  We are residents of the state of Maryland.  We closed on our home in Bowie, Maryland on December 21, 2006.  The originating lender was Fremont Investment & Loan (“Fremont”) and transferred to Wilshire Credit Corporation, the mortgage servicing company.   Our home was foreclosed in January 2009 leaving my family homeless.  We now live with family in a basement based on Fremont’s predatory lending practices. 

I found out that by March 7, 2007, just 3 months after closing on our home, the FDIC issued a “Cease and Desist” order against Fremont Investment & Loan.

According to FDIC’s press release, “The cease and desist was implemented based Fremont’s lending practices, including:  “engaging in unsatisfactory lending practices” and “marketing and extending adjustable-rate mortgage (“ARM”) products to subprime borrowers in an unsafe and unsound manner that greatly increases the risk that borrowers will default on the loans or otherwise cause losses to the Bank, including ARM products with one or more of the following characteristics: …. qualifying borrowers for loans with low initial payments based on an introductory or ‘start’ rate that will expire after an initial period, without an adequate analysis of the borrower’s ability to repay the debt at the fully-indexed rate.”

The Attorney General for Massachusetts stood up for her citizens of Massachusetts to protect them from Fremont.  The Attorney General’s Office sued Fremont to stop foreclosures in Massachusetts and demand a settlement.  Attorney General Martha Coakley’s Office entered into a $10 million settlement with Fremont Investment & Loan and its parent Fremont General Corporation (“Fremont”) to resolve the Commonwealth’s lawsuit against the California-based lender.  Fremont agreed to pay the settlement including $8 million in consumer relief.  Why was this not done in Maryland? 

Fremont also extended their predatory lending practices right here in Maryland to families like mine.    What has our Attorney General done to protect hard working citizens from Fremont’s predatory lending practices?   

I’m now a single parent of two children who is underemployed and cannot get a job due to bad credit for seven years due to Fremont’s predatory lending practices.

I’m confident we are not the only victims of Fremont in the State of Maryland.  Please stand up for hard working Maryland citizens by suing Fremont and its Mortgage Servicers.  Please advise where we can work and/or live.   The FDIC implemented a “Cease & Desist.”  The Attorney General of Massachusetts successfully sued Fremont.  Why can’t Maryland?

I look forward to your prompt response.

                                                                                                            Sincerely,