Newland v. Aurora Loan Services, LLC
806 F. Supp. 2d 65
D.D.C.2011Background
- Omar K. Newland sued eight defendants (Aurora Loan, MERS, Lehman, Multi-Fund, First Ohio, Atlantic Law Group, Avion Johnson, Tim Boyle) allegedly coordinating a fraudulent mortgage loan in 2007.
- Newland contracted with Multi-Fund (broker) and Johnson to obtain 100% financing, with a 9.2% rate initially promised and later adjusted to 9.3% then 9.8% under lender pressure, with a 1% origination fee reduced to 0.5%.
- Closing occurred on February 9, 2007 after disclosures, the HUD, and Truth-in-Lending documents were provided; a prepayment-penalty provision was first disclosed only at or near closing.
- Lehman Brothers financed the loan via MERS/First Ohio; an incentive portion (yield spread premium) was paid to the broker and not fully disclosed to Newland.
- Newland defaulted by April 2009, the foreclosure occurred May 4, 2010, and Newland filed suit in Superior Court May 3, 2010; Aurora/MERS removed, seeking dismissal on statute grounds.
- The court granted dismissal on statute-of-limitations grounds, holding claims accrued by February 9, 2007 and filed May 4, 2010, outside the three-year window.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether claims are time-barred by statute of limitations | Newland argues for tolling via discovery rule. | Aurora/MERS and First Ohio contend three-year limit applies and claims accrued by 2/9/2007. | Yes; all claims time-barred |
| Whether the discovery rule tolls accrual for fraud and CP Act claims | Discovery rule tolls until fraud/common scheme discovered. | Discovery rule does not extend beyond accrual; plaintiff should have known by closing. | Discovery rule does not save timely filing; claims accrual by 2/9/2007 |
| Whether fiduciary-duty and negligence claims are time-barred | Fiduciary and negligence claims should be tolled by discovery/ongoing concealment. | All discovery happened by closing; accrual and limitations run from then. | All claims barred; accrual by 2/9/2007 |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (facial plausibility pleading standard)
- Best v. Kelly, 39 F.3d 328 (D.C. Cir. 1994) (sua sponte dismissal when relief impossible)
- Miller v. Pacific Shore Funding, 224 F. Supp. 2d 977 (D. Md. 2002) (closing date accrual for consumer credit claims)
- Johnson v. Long Beach Mortg. Loan Trust 2001-4, 451 F. Supp. 2d 16 (D.D.C. 2006) (accrual and limitations in closed-end consumer loans)