ORDER
On July 27, 2010, Plaintiff William Nolde filed an eleven-count Amended Complaint, alleging that Defendants convinced him to enter into a “loan for home repairs” that was actually “an outright sale of his house to Defendants, who then used his equity to funnel tens of thousands of dollars to themselves.” (Case No. 10-3128, Doc. No. 9 at 2.) On August 31, 2010, Defendant Joyce Sheed filed a Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6). (Id., Doc. No. 18.) On September 30, 2010, Defendant Residential Credit Solutions filed a Motion to Dismiss under Rules 12(b)(1), 12(b)(6), and 12(b)(7). (Case No. 10-687, Doc. No. 60.) On November 2, 2010, Defendant Associates Land Transfer, LLC filed a Motion to Dismiss under Rule 12(b)(6). (Id., Doc. No. 64.) Plaintiff responded to all three Motions, and Defendants filed Replies. (Case No. 10-3128, Doc. Nos. 20, 22; Case No. 10-687, Doc. Nos. 63, 72, 78, 84.) For the reasons that follow, I will deny Defendants’ Motions.
I. BACKGROUND
William Nolde alleges the following facts:
Plaintiff is the resident and former owner of a Philadelphia home at 6016 Keystone Street. In July of 2006, Joyce Sheed from “American Home Lending” called Plaintiff — who was then searching for a home repair loan — to offer him a $40,000 loan. Weeks later, Sheed informed Plaintiff that he qualified for a “buyback loan,” the terms of which her supervisor, Defendant Silver Buckman, would explain. In September of 2006, Buckman told Plaintiff that to receive the loan, he needed an investor to join him on the deed to his property. After one year, the loan would be refinanced, and the property returned to Plaintiff in his name only. (Doc. No. 9 at 7-8.)
On October 13, 2006, Plaintiff received a letter from Buckman stating that Esposito Appraisers would contact him about the “refinance” they had discussed. In November of 2006, Plaintiff paid Defendant Salvatore Esposito $300 to appraise his home. In March of 2007, Plaintiff received an agreement listing Defendants Cynthia and Vincent Foxworth (who, he later discovered, are Buckman’s parents) as investors. The “Lease Buyback Agreement” confirmed what Sheed and Buckman told him: that Plaintiff would receive a one-year loan, that his name would stay on the deed, and that his credit would be “repaired” by Defendant Fresh Start during the loan term. Plaintiff executed the Agreement. (Id. at 8-10.)
On June 29, 2007, Plaintiff, Buckman, and the Foxworths attended a “closing” at Defendant Associates Land Transfer’s offices. ALT was to serve as the settlemeni/title agent for the transaction, but Buckman actually conducted the closing. Knowing that Plaintiffs attorney was en route, Buckman convinced Plaintiff hurriedly to sign a large stack of documents, telling him that the documents incorporated the buyback loan terms she had previously discussed with him. Plaintiffs lawyer arrived after Plaintiff had already signed the documents and left ALT’s offices. Plaintiff was never given a copy of the closing documents by which he unknowingly authorized the sale of his home to the Foxworths, a $126,000 mortgage financed by Pinnacle Financial Corporation, and thousands of dollars in payments
Two weeks later, Buckman hand-delivered a $40,000 check to Plaintiff, which Plaintiff believed to be his home-repair loan. ALT wrote a second check to Plaintiff for $59,091.19 (the approximate balance of the home sale proceeds), but gave the check to Buckman, who, forging Plaintiffs endorsement, deposited the check into a bank account registered to herself and Fresh Start. “Buckman then paid her parents, the Foxworths, a kickback for serving as straw purchasers of the home.” Plaintiff did not learn of the second check until October of 2009. (Id. at 12-13.)
Defendants never made any payments on the Pinnacle mortgage, which “quickly went into default.” In April of 2009, “Pinnacle assigned the loan to Defendant BAC Home Loans Servicing, L.P.” On June 9, 2009, BAC assigned the mortgage to Defendant Residential Credit Solutions, foreclosed on the home, and scheduled a sheriffs sale. Plaintiff — who had previously owned his home free and clear of encumbrances — lost title to his house and “tens of thousands of dollars in home equity.” (Id. at 14.)
II. LEGAL STANDARDS
In deciding a motion to dismiss for lack of subject matter jurisdiction, the court must first determine whether the motion presents a “facial” or “factual” challenge to jurisdiction.
See Gould Electronics Inc. v. United States,
In evaluating a motion to dismiss for failure to join a party, the court must first decide if the absent party is necessary for the action — that is, whether (1) “the existing parties cannot obtain complete relief without [it]” or (2) the absent party “claims an interest relating to the subject of the action” and its absence “may harm [its] ability to protect an interest, or subject the current parties to a substantial risk of incurring ‘double, multiple or otherwise inconsistent obligations.’ ”
Markocki v. Old Republic Nat. Title Ins. Co.,
When deciding a motion
to
dismiss
for
failure to state a claim, the court must accept as true the plaintiffs well-pled factual allegations and make all reasonable inferences in his or her favor.
See
Fed. R.Civ.P. 12(b)(6);
In re Rockefeller Ctr. Props., Inc.,
III. DISCUSSION
1. Subject matter jurisdiction
Defendant Residential Credit Solutions — named only in Plaintiffs RESPA and Quiet Title claims — argues that this Court lacks jurisdiction because, on June 21, 2007, the Bankruptcy Court granted Mr. Nolde’s motion to sell the Keystone Street property to the Foxworths. (Case No. 10-687, Doc. No. 60 at ¶ 37.) Plaintiff responds that he sold the property in bankruptcy, relying on Sheed and Buck-man’s “representations that he would continue to own his home.” (Doc. No. 63 at 2.) Plaintiff argues that the Bankruptcy Court does not have jurisdiction over the instant action, and that, in any event, this Court can hear the dispute.
Although Residential purports to raise a “facial [jurisdictional] challenge,” its attack is actually “factual”: it argues that a disposition in bankruptcy that Plaintiff never mentioned in his Amended Complaint deprives this Court of jurisdiction.
(See
Doc. No. 60 at ¶ 37);
Tulpehocken Spring Water, Inc.,
Plaintiffs RICO and RESPA claims arise under federal law, and his state law claims share “a common nucleus of operative fact” with those federal claims.
United Mine Workers of America v. Gibbs,
Although Plaintiff and Residential disagree over whether the Bankruptcy Court may adjudicate the instant dispute, its jurisdiction is not dispositive. Even if the instant action “arises in” or “relates to” the prior bankruptcy proceeding, this Court has concurrent jurisdiction.
See In re W.R. Grace & Co.,
2. Joinder of Parties
Residential next seeks dismissal for failure to join Pinnacle' — the originator of the mortgage that Residential holds, and so a “necessary and indispensable party” to the RESPA and quiet title claims. According to Residential, Plaintiff has effectively conceded Pinnacle’s indispensability by alleging that (1) Pinnacle is jointly and severally liable under RESPA, and (2) with respect to Plaintiffs quiet title claim, Pinnacle had constructive notice of Plaintiffs “continual and open possession of the property.” {Doc. No. 60 at ¶¶4.6-4.7.) I do not agree.
I can accord complete relief among the existing Parties with respect to both the RESPA and quiet title claims. Residential owns the mortgage, and Pinnacle — despite Plaintiffs open possession of his house — ■ has not yet “claim[ed] an interest” in the property. Fed.R.Civ.P. 19(a). Although Plaintiff alleges that Pinnacle is jointly and severally liable for violating RESPA, it chose to name Residential as a defendant instead.
Huber v. Taylor,
3. Statute of limitations
The conduct underlying Defendant Sheed’s alleged UTPCPL violation (Count IV) occurred, at the earliest, in 2006. Because UTPCPL carries a six-year statute of limitations and Plaintiff filed his Amended Complaint in 2010, the claim is timely.
See Gabriel v. O’Hara,
Defendants ALT and Residential argue that Plaintiffs RESPA claim (Count V) is time-barred. RESPA includes a one-year limitations period.
See
12 U.S.C. § 2614. Although the kickbacks and fee-splitting that underlie Plaintiffs RESPA claim allegedly occurred after the June 2007 closing, the Amended Complaint is unclear as to when the money changed hands. Plaintiff alleges that he “had no reason to suspect” that Defendants “were splitting fees related to a sale of his home” because Defendants “took numerous purposeful steps to conceal the nature of the transaction,” including issuing him a check for $40,000 (the agreed-upon “loan” amount), and “repeatedly making assertions to [him] about a ‘refinance’ that was in fact a sale.”
(Case No. 10-3128, Doc. No. 9 at 26.)
Plaintiff did not learn that ALT issued a second check to Buckman until October 2009.
(Id.)
Accordingly, I cannot, at this early stage, conclude that Plaintiffs RESPA claim is time-barred.
See Southern Cross Overseas Agencies, Inc. v. Wah Kwong Shipping Group Ltd.,
Finally, Defendants Sheed and ALT have moved to dismiss as untimely Plaintiffs claims of fraud, conversion, negligence, civil conspiracy, and concerted tortious conduct (Counts III, VI, and VIII-X). These claims have a two-year limitations period that begins to run on the date
It is difficult at this stage to determine the specific date of Plaintiffs injury. The purported misrepresentations began in July 2006 with Sheed’s phone call, Plaintiff unknowingly sold his home at the June 29, 2007 closing, ALT gave Plaintiffs second check to Buckman sometime later, and BAC foreclosed on the home and scheduled a sheriffs sale in July 2010.
Pennsylvania’s discovery rule “tolls the running of the applicable statute of limitations until the point where the complaining party knows or reasonably should know that he has been injured” by another.
Crouse v. Cyclops Industries,
Once again, Defendants have not, at this early stage, shown that Plaintiffs tort claims are time-barred.
See Cooper v. Sirota,
4. Stating a claim
Defendant Sheed argues that Plaintiff has failed to state RICO claims (Counts I and II). Defendant ALT argues that Plaintiff has failed to state fraud (Count III), UTPCPL (Count IV), and negligence (Count V) claims. Defendant Residential argues that Plaintiff has failed to state RESPA (Count V) and quiet title (Count XI) claims. I do not agree.
a. RICO (Counts I and II)
In Count I, Plaintiff alleges that four Defendants — not including Sheed (who nonetheless moves to dismiss it)— violated 18 U.S.C. § 1962(c), which makes it “unlawful for any person ... associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate,
Here, Plaintiff alleges that Buck-man, Fresh Start, Salvatore Esposito, and American One formed an “association-in-fact” with a “common purpose ... to defraud financially distressed homeowners.” (Doc. No. 9 at 15.) Plaintiff alleges that the enterprise “acquired at least 13 separate deeds in its scheme.” (Id.) The enterprise’s activities affected interstate commerce because its members are from New Jersey, they conspired to defraud Pennsylvania homeowners, and they “used a series of state and national mortgage companies to fund the scheme.” (Id. at 16.)
Plaintiff alleges predicate acts of mail and wire fraud from 2006 to 2010 based on the enterprise’s interstate phone calls to solicit loans from Plaintiff and at least twelve other victims, its transmission of loan statements via interstate faxes, and its wiring of proceeds from the sales of the victims’ homes. Plaintiff details how the enterprise allegedly defrauded him (through mail and wire communications) into believing that he was securing a home improvement loan when he actually was relinquishing title to his home: Beginning in July 2006, Sheed and Buckman contacted Plaintiff by telephone—using information that they found on the Internet—to offer Plaintiff a “buyback loan.” Buckman explained that to obtain the loan, Plaintiff would need to add an “investor” to his deed, and that after one year, the loan would be refinanced and Plaintiffs property would be returned to him in his name only. In October 2006, Buckman sent Plaintiff a letter to confirm the “refinancing” agreement they had discussed. In June 2007, Buckman called Plaintiff to tell him he had to attend a “closing” where Plaintiff ultimately signed away title and equity in his home. (Doc. No. 9 at 7-11.)
In these circumstances, it is apparent that Plaintiff has stated a claim under 18 U.S.C. § 1962(c).
Defendant Sheed also seeks dismissal of Count II, in which Plaintiff alleges that Sheed and seven others conspired to violate 18 U.S.C. § 1962(c), in violation of § 1962(d).
(Doc. No. 9 at 20.)
To state a claim for RICO conspiracy, a plaintiff must allege that “Defendant intended ‘to further an endeavor which, if completed, would satisfy all of the elements of a substantive criminal offense.’ ”
See Contawe v. Crescent Heights of Am., Inc.,
No. 04-CV-2304,
Here, Plaintiff alleges that Sheed was “one of the front persons for the con
Plaintiff thus has stated a claim for RICO conspiracy against Defendant Sheed.
b. UTPCPL (Count IV) and tort claims
Defendant ALT argues that the Economic Loss Doctrine bars Plaintiffs UTPCPL and tort claims because they arise “directly out of his contractual claims” with Defendants other than ALT, and Plaintiff has alleged “strictly economic damages.” (Doc. No. 78 at 13.) Plaintiff responds that the gravamen of this case is fraud, and that any contracts mentioned in the Amended Complaint were merely “tools of a much larger fraud.” Plaintiff argues that he has alleged “more than economic damages, in that [he] lost title to, and the right to freely live in, his home.” (Id. at 15.)
The Economic Loss Doctrine is intended to prohibit a plaintiff from “recovering in tort economic losses to which [his] entitlement flows only from a contract.”
Duquesne Light Co. v. Westinghouse Elec. Corp.,
Here, Plaintiff alleges that he was a victim of a criminal conspiracy to defraud him and others out of title to their homes and to steal their home equity. He never had a contract with ALT, so a breach of contract claim will afford him no remedy.
See M & M Stone Co. v. Pa, Dep’t of Envt’l Protection,
07-CV-4784,
ALT next argues that Plaintiff fails to state a claim under UTPCPL because he does not allege one of the twenty-one “unfair or deceptive practices” listed in
To state a UTPCPL claim, Plaintiff must allege common-law fraud: “(1) a misrepresentation, (2) material to the transaction, (3) made falsely, (4) with the intent of misleading another to rely on it, (5) justifiable reliance ..., and (6) injury ... proximately caused by the reliance.”
Coleman v. Commonwealth Land Title Ins. Co.,
Plaintiff alleges that Defendants “represented the transaction ... as having characteristics, uses and benefits that it did not have” — one of the enumerated “unfair and deceptive acts.” (Doc. No. 9 at 24); see 73 P.S. § 201-2(4)(v). He also alleges that Defendants “engaged in fraudulent and deceptive conduct” that “created a likelihood of confusion or misunderstanding” and caused him “ascertainable loss” in the form of a “lien encumbering his home, as well as the loss of title to his home.” (Doc. No. 9 at 24.) He alleges that ALT “served as the settlement and title agent for the transaction,” hosted the closing, and accepted fees “for closing the loan,” even though Buckman actually conducted the closing. (Doc. No. 9 at 10); see 73 P.S. § 201 — 2(4)(ii) (listing as one of the “unfair or deceptive acts or practices” “causing likelihood of confusion or of misunderstanding as to the source, sponsorship, approval or certification of goods or services”). Plaintiff also alleges that ALT prepared two checks: one for $40,000 which was given to Plaintiff, and another for nearly $60,000 which ALT gave to Buckman who kept it, and that this check-splitting “scheme” was part of a “pattern” of “home theft.” (Doc. No. 9 at 13.)
I find that Plaintiff adequately has stated a claim under UTPCPL.
See Coleman,
c. RESPA (Count V) and Quiet Title (Count XI)
Defendant Residential argues that Plaintiff — as the seller of his property — “is not a protected party under RESPA.” (Doc. No. 60 at ¶44-) Plaintiff responds that § 2607 applies equally to sellers of real property. (Doc. No. 63 at 8.) Plaintiff is correct.
The language of RE SPA’s anti-kickback and fee-splitting provisions does not limit the statute’s application to home buyers.
See
12 U.S.C. § 2607(a) (2006) (“No person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding ... that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person.”); § 2607(b) (“No person shall give and no person shall accept any portion, split, or percentage of any charge made or received for the rendering of a real estate settlement service in connection with a transaction involving a federally related mortgage loan other than for services actually performed.”); § 2607(d)(2)
(“Any person or persons
who violate the prohibitions or limitations of this section shall be jointly and severally liable
to the person or persons charged
for the settlement service involved in the violation ....”) (emphasis added). Accordingly, the courts have not limited the statute’s application to buyers.
Kahrer v. Ameriquest Mortg. Co.,
Accordingly, I will deny Residential’s Motion to Dismiss Plaintiffs RESPA claim.
Residential next argues that Plaintiffs quiet title claim cannot stand in the face of Plaintiffs “admission” (i.e., Plaintiffs motion to sell the Keystone Street property in Bankruptcy Court) that the Foxworths own the property. (Doc. No. 60.) Plaintiff responds that he is not disputing that he sold his home; he is asking me to void that sale because of the underlying fraud. (Doc. No. 63 at 14.)
Pennsylvania law allows a plaintiff to bring an action “to determine any right, lien, title or interest in the land” where an ejectment action will not lie. Pa. R. Civ. P. 1061(b)(2). “Whether or not the property was fraudulently conveyed ... is an issue intrinsically intertwined with the determination of who is the rightful owner of the property.”
In re Kovalchick,
Accordingly, I will deny Residential’s Motion to Dismiss Plaintiffs quiet title claim.
5. Third Party Complaint
ALT asks for leave to file a Third-Party Complaint within fourteen days of the issuance of this Order. Plaintiff does not object to this request. Accordingly, I will allow ALT to file a Third-Party Complaint.
IV. CONCLUSION
AND NOW, this 13th day of April, 2011, it is hereby ORDERED as follows:
1) Defendant Joyce Sheed’s Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6) {Case No. 10-3128, Doc. No. 18) is DENIED with prejudice as to Counts I, II, and IV, and DENIED without prejudice as to Counts III, VI, IX, and X.
2) Defendant Residential Credit Solutions’ Motion to Dismiss {Case No. 10-687, Doc. No. 60) is DENIED without prejudice insofar as Residential argues that Count V is time-barred. Residential’s Motion {Doc. No. 60) is otherwise DENIED with prejudice.
3) Defendant Associates Land Transfer, LLC’s Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6) {Doc. No. 61) is DENIED without prejudice insofar as ALT argues that Counts III, VI, V, VIII, IX, and X are time-barred. ALT’s Motion {Doc. No. 61) is otherwise DENIED with prejudice.
4) Defendants Sheed, Residential, and ALT shall, by April 22, 2011, file Answers to Plaintiffs Amended Complaint. Defendant ALT may file a Third Party Complaint no later than April 27, 2011.
IT IS SO ORDERED.