Presidential Bank, Fsb v. 1733 27th Street Se LLC
271 F. Supp. 3d 163
D.D.C.2017Background
- Presidential Bank loaned money to six LLCs (owned/managed by Kevin Green) secured by DC rental properties; defendants defaulted and entered multiple loan modifications including a Global Modification and a 2015 Forbearance Agreement that gave the bank control over rental income via lockbox arrangements.
- Defendants allege Presidential used control over rent to block borrower access to funds, misapply payments, and ultimately force defaults and foreclosures; they also filed complaints with the OCC alleging race discrimination.
- Plaintiff sued in D.C. Superior Court alleging defendants converted rental income; defendants removed to federal court, answered, and asserted a nine-count counterclaim (Counts I–IX) including ECOA, FDCPA, fraud, breach of contract, agency/fiduciary/neglect theories, and alleged mismanagement/possible government fraud.
- Plaintiff moved to partially dismiss Counts I, II, III, V, VI, VII and IX; defendants initially failed to timely oppose but were granted leave to file late opposition; defendants conceded dismissal of the FDCPA claim.
- The Court applied Rule 12(b)(6) standards (Twombly/Iqbal) and granted dismissal in part: it dismissed the race- and income-based ECOA claims and Counts II, III, V, VI, VII and most of IX, while allowing the retaliation portion of the ECOA claim and leaving breach of contract (Count IV) and another claim (Count VIII) intact.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ECOA (Count I) claims are pled | Def. must show an adverse action; claims are conclusory and lack factual support for race or income discrimination | Banks discriminated by race and tenant-income, and retaliated after OCC complaints | Race- and income-based ECOA claims dismissed for conclusory pleading; retaliation claim survives (not decided on adverse-action definition) |
| Whether FDCPA (Count II) applies | Bank is not a "debt collector" under FDCPA | Defendants concede FDCPA claim | Count II dismissed (defendants conceded) |
| Whether fraud (Count III) is viable or is contract dubl. | Fraud arises from same facts as breach of the Forbearance Agreement and cannot be a tort dressed up | Fraud in the inducement argued in opposition but not alleged in the counterclaim | Count III dismissed for failure to plead fraud distinct from contract; leave to amend required to plead inducement properly |
| Whether agency/fiduciary/neg./embezzlement claims (Counts V, VI, VII, IX) are independent torts | These tort claims are duplicative of breach of contract (Count IV) and lack separate factual bases | Some aspects (e.g., alleged mismanagement of government funds) are distinct | Counts V, VI, VII dismissed as duplicative; Count IX largely dismissed as duplicative and facially deficient (government-fraud allegation too vague) |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (Rule 8 plausibility standard; legal conclusions insufficient)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plaintiffs must plead facts that raise claims above speculative level)
- Pioneer Inv. Servs. Co. v. Brunswick Assocs., 507 U.S. 380 (1993) (excusable neglect factors for late filings)
- Hildebrandt v. Vilsack, 102 F. Supp. 3d 318 (D.D.C. 2015) (ECOA discrimination does not require showing an adverse action under the subsection governing notice)
- Cohen v. Bd. of Trustees of the Univ. of the D.C., 819 F.3d 476 (D.C. Cir. 2016) (courts should hesitate to dismiss as conceded; factors for Rule 6(b) analysis referenced)