Opinion
Civil Action No. 03-5452.
October 13, 2004
MEMORANDUM
This is an action by Maurice L. Clark ("Clark") against U.S. Bank National Association ("U.S. Bank") and Ameriquest Mortgage Company ("Ameriquest") (collectively "the Defendants") for alleged violation of the Truth-in-Lending Act ("TILA") Count I, Fraud Count II, violation of the Pennsylvania Uniform Trade Practices and Consumer Protection Law ("UDAP") Count III and Breach of Fiduciary Duty Count IV.
In addition to monetary relief, Plaintiff also sought a Preliminary Injunction to prevent the Sheriff Sale of his real estate located at 235 North Hills Avenue, Glenside, PA. On June 10, 2004, a hearing was held on the Motion for Preliminary Injunction. On June 18, 2004 we issued a Memorandum containing findings of fact and legal discussion denying the Preliminary Injunction.
The trial of this case was set for September 20, 2004. On that date counsel for the Plaintiff stated that he had no additional testimony to offer and that he would let his case stand on the testimony and exhibits offered at the Preliminary Injunction hearing and the five exhibits offered at the trial. N.T. 2. He introduced five additional documents at trial marked P-43, 44, 46, 47, 55 and 56. He thereafter rested his case.
Because Plaintiff offered no additional testimony at the trial and the exhibits that were introduced had no effect on the findings of fact this Court made as a result of the Preliminary Injunction hearing, I will not restate those findings but incorporate them by reference in this Memorandum as ATTACHMENT A.
ADDITIONAL FINDINGS OF FACT
1. On or about March 28, 2002, Plaintiff was provided with a Notice Regarding Hazard Insurance Requirements. This was one of several documents Plaintiff received prior to the closing of the loan. (Joint Pretrial Statement (hereinafter "JPS"), uncontested fact no. 16).
2. The Notice Regarding Hazard Insurance Requirements provides in part:
As a condition of receiving or maintaining a loan with the lender shown above, you will be required to provide proof of hazard insurance . . .
Warning: If you do not provide us with evidence of the insurance coverage as required by your agreement with us, we may purchase insurance at your expense to protect our interests in your collateral. (Exhibit D-9).
3. The loan proceeds paid off Plaintiff's prior mortgage with Calmco, Inc. in the amount of $65,429.23. (JPS, uncontested fact no. 28).
4. The loan proceeds also paid off Plaintiff's delinquent taxes. (JPS, uncontested fact no. 29).
5. Plaintiff also received cash in excess of $3,200 from the loan proceeds. (JPS, uncontested fact no. 30).
COUNT I OF THE AMENDED COMPLAINT
6. Following the preliminary injunction hearing, this Court found that Plaintiff did receive a clear and specific statement in writing disclosing the cost of insurance in compliance with 15 U.S.C. § 1605(c); 12 C.F.R. § 226.4(d)(2). Attachment A, p. 8. This finding was also supported by the testimony of Jennifer McGovern, a Senior Loan Coordinator at Ameriquest called as a defense witness at trial. See, N.T. 7-16-9-20-04.7. This Court also found that Ameriquest appropriately disclosed to Plaintiff that he had a choice of insurers and therefore was in compliance with TILA. Attachment A, p. 9. This finding was also supported by the testimony of Jennifer McGovern, a Senior Loan Coordinator at Ameriquest called as a defense witness at trial. See, N.T. 7-16-9-20-04.
8. Plaintiff did not present any evidence at trial to establish that Defendants failed to clearly disclose the cost of insurance to Plaintiff.
9. Plaintiff did not present any evidence at trial to establish that Defendants failed to clearly disclose to Plaintiff that he had a choice of insurers.
10. Defendants did not violate the Truth In Lending Act, 15 U.S.C. § 1601, et seq.
11. Judgment is entered in favor of Defendants U.S. Bank and Ameriquest and against Plaintiff on Count I of the Amended Complaint.
COUNT II OF THE AMENDED COMPLAINT
12. Following the Preliminary Injunction hearing, this Court found that Plaintiff had not produced sufficient evidence to show that the statements made by Defendants or George Thomas were false with knowledge of their falsity or recklessness toward their truth or falsity. Attachment A, p. 14.
13. This Court also found that Plaintiff did not justifiably rely on any of the alleged representations. Attachment A, p. 15.
14. Plaintiff did not present any evidence at trial to establish that the statements made by Defendants or George Thomas were false with knowledge of their falsity or recklessness towards their truth or falsity.
15. Plaintiff did not present any evidence at trial to establish that he justifiably relied upon any of the alleged statements made by Defendants or George Thomas.
16. Defendants U.S. Bank and Ameriquest did not commit fraud in connection with Plaintiff's mortgage transaction.
17. Judgment is entered in favor of Defendants U.S. Bank and Ameriquest and against Plaintiff on Count II of the Amended Complaint.
COUNT III OF THE AMENDED COMPLAINT
18. Following the Preliminary Injunction hearing, this Court found that the increase in Plaintiff's loan payment from $600 to $791.71 did not constitute deceptive conduct under UDAP's catch-all provision. 73 Pa. C.S.A. § 201-2(4)(xxi). Attachment A, p. 12.
19. This Court also found that Plaintiff presented insufficient evidence to support a claim that Ameriquest or its employee George Thomas knowingly had Plaintiff sign a loan application containing false information. Attachment A, p. 12.
20. This Court found that, "Clark had not presented sufficient evidence to demonstrate that Ameriquest was deceptive under UDAP in relation to the mortgage transaction at issue." Attachment A, p. 13.
21. Plaintiff did not present any additional or different evidence at trial to establish that Defendants engaged in deceptive or fraudulent conduct in violation of UDAP.
22. Judgment is entered in favor of Defendants U.S. Bank and Ameriquest and against Plaintiff on Count III of the Amended Complaint.
COUNT IV OF THE AMENDED COMPLAINT
23. To establish a claim for a breach of fiduciary duty, a Plaintiff must show that a fiduciary relationship exists in that, "one person has reposed a special confidence in another to the extent that the parties do not deal with each other on equal terms, either because of an overmastering dominance on one side or weakness, dependence or justifiable trust, on the other."Destefano and Associates, Inc. v. Cohen, 2002 WL 1472340 *3 (Pa.Com.Pl.) quoting Commonwealth Department of Transportation v. E-Z Parks, Inc., 153 Pa.Cmmwlth 258, 268, 620 A.2d. 712, 717 (1993).
24. Pennsylvania courts have held on many occasions that a lender is not a fiduciary of a borrower absent special circumstances. Grace v. Moll, 285 Pa. 353, 355, 132 A.171 (1926); Federal Land Building of Baltimore v. Fetner, 269 Pa.Super 455, 461, 410 A.2d 344, 348 (1979), cert. denied, 446 U.S. 918100 S.Ct. 1853, 64 L.Ed.2d. 273 (1980). A fiduciary relationship may exist between a lender and a borrower if the lender gains substantial control over the borrower's business affairs. Blue Line Coal Company, Inc. v. Equibank, 683 F.Supp. 493, 496 (E.D.Pa. 1988). "Control over the borrower is demonstrated when there is evidence that the lender was involved in the actual day-to-day management and operations of the borrower or that the lender had the ability to compel the borrower to engage in unusual transactions. Blue Line Coal Company, supra at 496.
25. Plaintiff waived his claim for breach of fiduciary duty by failing to raise the issue in the Joint Pretrial Statement.
26. Plaintiff did not present any evidence at trial to establish that Plaintiff reposed a special confidence in Defendants to the extent that there was overmastering dominance on one side or weakness, dependence or justifiable trust on the other.
27. Plaintiff did not present any evidence at trial to establish that special circumstances existed creating a fiduciary relationship between Plaintiff and Defendants.
28. Judgment is entered in favor of Defendants and against Plaintiff on Count IV of the Amended Complaint.
DISCUSSION
As has been stated, at trial Plaintiff's counsel announced that he had no additional testimony to present. The defense then called as its only witness Jennifer McGovern. Ms. McGovern testified as to the procedures followed by Ameriquest in making a loan. She stated that a package of loan documents was sent to the customer and that the customer would be given seven days to decide whether he wanted to keep or cancel the loan. N.T. 9-9-20-04. At trial Ms. McGovern identified the package of documents sent to the Plaintiff. N.T. 10-9-20-04. This package contained two notices with reference to the requirement that hazard insurance had to be obtained for the mortgaged property. N.T. 11-9-20-04.
Ms. McGovern testified that it is not a policy of Ameriquest to require the borrower to obtain hazard insurance through a particular agency. N.T. 11-9-20-04. If the borrower does not have a place to obtain the required insurance, Ameriquest provides an option for that, but it does not require that the insurance be obtained through Ameriquest. N.T. 11-12-9-20-04.
In this case Clark requested that the Sidney Rosen Insurance Agency provide the insurance policy. N.T. 13-9-20-04. According to Ms. McGovern Ameriquest uses the Sidney Rosen Agency because he offered reasonable rates and prompt service. N.T. 13-9-20-04. Ameriquest does not get a fee from the Sidney Rosen Insurance Agency nor is it affiliated with that Agency. N.T. 13-9-20-04.
The defense introduced P-12 which was signed by Mr. Clark stating the requirement that he obtain hazard insurance. N.T. 14-9-20-04. Also introduced was document P-18 which advised the Plaintiff that he had the right to select his own insurance company, this also was signed by the Plaintiff. N.T. 15-9-20-04. If Mr. Clark had indicated that he wanted his own insurance carrier at any time prior to closing, Ameriquest would have cancelled the Sidney Rosen Policy. N.T. 15-9-20-04. Defendants also introduced at trial Exhibit P-8 which lists all of the disbursements of the loan and fees paid including the payment to Sidney Rosen for the hazard insurance in the sum of $585.00. N.T. 16-9-20-04.
I found Ms. McGovern's testimony to be credible and supported by the documents that were introduced.
I therefore enter the following Order.