Opinion
CIVIL CASE NO. 2:09cv03 [Lead case consolidating 2:09cv04; 2:09cv06; 2:09cv07; 2:09cv08; 2:09cv09; 2:09cv10; 2:09cv11; 2:09cv12; 2:09cv13; 2:09cv14 2:09cv15].
November 16, 2010
ORDER
THIS MATTER is before the Court on the Defendants' Motion for Partial Summary Judgment [Doc. 116], Unopposed Motion to Place Case on Jury Docket [Doc. 149] and Motion for Leave to Take Additional Discovery [Doc. 150].
PROCEDURAL HISTORY
On October 6, 2010, the Court granted in part and denied in part the Plaintiff's motion for summary judgment. [Doc. 151]. In that decision, the procedural and factual history of the action were recounted in detail and will not be repeated here. Suntrust was granted summary judgment as to its claims for deficiency judgments against each Defendant with the exception of Defendant Natalie Boutros.
That Order erroneously stated that no motion for summary judgment as to the fraud claim was pending. [Doc. 151 at 10 n. 8]. The motion that was addressed in that Order did not include the fraud claims, but the motion that is addressed herein does include the fraud claims.
Suntrust has pending claims for fraud against each Defendant based on allegedly false representations of monthly income contained within non-verification loan application documents. Prior to the ruling on the Plaintiff's motion for summary judgment, the Defendants moved for partial summary judgment as to the fraud claims. The ruling on the Plaintiff's motion for summary judgment leaves only the fraud claims and the defense of failure to mitigate in connection with Defendant Boutros remaining for trial.
SUMMARY JUDGMENT STANDARD OF REVIEW
Under the Federal Rules of Civil Procedure, summary judgment shall be awarded "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, . . . show there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). As the Supreme Court has observed, "this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact."Bouchat v. Baltimore Ravens Football Club, Inc., 346 F.3d 514, 519 (4th Cir. 2003), certiorari denied 541 U.S. 1042, 124 S.Ct. 2171, 158 L.Ed.2d 732 (2004) (emphasis in original).
A genuine issue of fact exists if a reasonable jury considering the evidence could return a verdict for the nonmoving party. Shaw v. Stroud, 13 F.3d 791, 798 (4th Cir. 1994), certiorari denied 513 U.S. 814, 115 S.Ct. 68, 130 L.Ed.2d 24 (1994), citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). "Regardless of whether he may ultimately be responsible for proof and persuasion, the party seeking summary judgment bears an initial burden of demonstrating the absence of a genuine issue of material fact." Bouchat, 346 F.3d at 522, citing Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). If this showing is made, the burden then shifts to the non-moving party who must convince the Court that a triable issue does exist. Id.
Nonetheless, in considering the facts for the purposes of a summary judgment motion, the Court will view the pleadings and material presented in the light most favorable to the nonmoving party. Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
DISCUSSION OF MOTION FOR SUMMARY JUDGMENT
An actionable claim for fraud must include the following elements: (1) a false representation or a concealment of a material fact which is (2) reasonably calculated to deceive, (3) made with the intent to deceive, (4) which does in fact deceive, and (5) results in damage to the injured party. A plaintiff's reliance on alleged false representations by the defendant must be reasonable. Where a plaintiff fails to make any independent investigation, or if a plaintiff is informed of the true [state of facts], reliance is not reasonable. "The reasonableness of a party's reliance is a question for the jury, unless the facts are so clear that they support only one conclusion."
. . .
Even where a plaintiff's reliance is unreasonable,
in close cases, [defendants] [who] intentionally and falsely represent [] material facts so as to induce a party to action "should not be permitted to say in effect, `You ought not to have trusted me. If you had not been so gullible, ignorant, or negligent, I could not have deceived you.'"Willen v. Hewson, 174 N.C.App. 714, 718-19, 622 S.E.2d 187 (2005), review denied 360 N.C. 491, 631 S.E.2d 520 (2006), quoting State Properties, LLC v. Ray, 155 N.C.App. 65, 72, 574 S.E.2d 180 (2002), review denied 356 N.C. 694, 577 S.E.2d 889 (2003) and Phelps-Dickson Builders v. Amerimann, 172 N.C.App. 427, 438-39, 617 S.E.2d 664 (2005) (denying summary judgment on fraud claim).
The parties do not dispute that the loans at issue were non-verification loans; that is, the loan applicants were not required to provide proof of the income reported in the application. [Doc. 141, at 2; Doc. 148, at 2]. Nor do they dispute that the income reported was a material fact. [Id.]. The Defendants argue, however, that they did not make a false representation because it was a bank employee who inserted the false income figures in the loan applications for them. This overlooks the fact that each of the Defendants signed, certified and submitted a Uniform Residential Loan Application (URLA) and a Borrower's Certification Authorization, FannieMae Form 1097 which contained the false income figures. [Doc. 146, at ¶¶ 7, 11, 12].
Next, the Defendants claim that the bank could not have reasonably relied on the income figures because they were supplied by a bank employee instead of the Defendants. Again, this overlooks the fact that each Defendant signed a certification of income. It is therefore a question for the jury as to whether the bank relied on such income information and whether that reliance was reasonable because "the facts are [not] so clear that they support only one conclusion." Willen, 174 N.C.App. at 718-19.
Indeed, there may be a jury question as to whether the bank employee colluded with each Defendant to perpetrate a fraud on the bank. See, e.g., Ward v. Durham Life Ins. Co., 325 N.C. 202, 381 S.E.2d 698 (1989).
The Defendants also claim there was a duty on the part of SunTrust to have made an independent investigation into the actual income of the Defendants. In other words, Defendants claim that although these were non-verification loans the bank had a duty to verify the income. The failure of the bank to do so, they argue, shows that there could have been no reasonable reliance on the income figures. The Court's review of the record, shows that the parties are in disagreement as to (1) whether any such investigation was allowed in connection with a non-verification loan; i.e., whether such a duty existed; and (2) the extent of the investigation which was performed. [Doc. 141, at 18-21]. These are issues for jury resolution as is the issue of whether the Plaintiff reasonably relied thereon. Id.
The Defendants do not cite any statutory or substantive law requiring the bank to make such an investigation in connection with a no income verification or non-verification loan application. The Plaintiff has provided evidence that requiring proof of income would have transformed the loan into a different type of loan, one not desired by the Defendants. [Doc. 141, at 16].
The Court therefore finds that summary judgment is inappropriate.
MOTION FOR JURY TRIAL
It does not appear that the Defendants made a timely demand that this matter be tried before a jury in accord with Rule 38 of the Federal Rules of Civil Procedure. Plaintiff has never requested a jury. The Defendants' "Unopposed Motion to Place Case on Jury Docket" [Doc. 149], however, specifically states that the Defendant request for a jury is unopposed and that defense counsel has been consulted and has expressed no opposition. This matter will, therefore, be tried before a jury during the January 2011 term.
MOTION FOR ADDITIONAL DISCOVERY
Based on the information contained within this motion, it appears that the parties have agreed to additional discovery which the Court expects has now been completed. The motion therefore appears to be moot. To the extent that it is not, the Court will not become involved in discovery disputes at this stage of the litigation since all discovery deadlines have passed. To the extent that Defendants seek any further extension of the discovery deadline, the same will be denied.
ORDER
IT IS, THEREFORE, ORDERED that the Defendants' Motion for Partial Summary Judgment [Doc. 116] is hereby DENIED. IT IS FURTHER ORDERED that the Defendants' Unopposed Motion to Place Case on Jury Docket [Doc. 149] is hereby GRANTED. IT IS FURTHER ORDERED that the Defendants' Motion for Leave to Take Additional Discovery [Doc. 150] is hereby DENIED.
Signed: November 16, 2010