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Johnson v. Investor Equities, L.L.C.

United States District Court, E.D. Louisiana

March 28, 2019

BETTY JOHNSON
v.
INVESTOR EQUITIES, L.L.C. ET AL

         SECTION: "S" (2)

          ORDER AND REASONS

          MARY ANN VIAL LEMMON UNITED STATES DISTRICT JUDGE

         IT IS HEREBY ORDERED that Graystar Mortgage, L.L.C.'s Motion to Dismiss (Rec. Doc. 23) is GRANTED in part, and the rescission claim against Graystar is dismissed;

         IT IS FURTHER ORDERED that Investor Equities' Motion for Summary Judgment on Plaintiff's Complaint (Rec. Doc. 24) is DENIED with respect to the question of prescription and DENIED as moot with respect to all other issues;

         IT IS FURTHER ORDERED that Investor Equities' Motion for Summary Judgment on its Counterclaim (Rec. Doc. 25) is DENIED as moot;

         IT IS FURTHER ORDERED that Betty Johnson's Motion for Time for Additional Discovery Under Federal Rule 56(d) (Rec. Doc. 33) is DENIED as moot.

         Before the court are the following motions: Greystar Mortgage, L.L.C.'s 12(c) Motion to Dismiss; Investor Equities' Motion for Summary Judgment on Plaintiff's Complaint; Investor Equities' Motion for Summary Judgment on its Counterclaim; and Betty Johnson's Motion for Time for Additional Discovery under Federal Rule 56(d). Following the Magistrate Judge's grant of leave for plaintiff to file her amended complaint (Rec. Doc. 55), counsel informed the court that Graystar Mortgage, L.L.C.'s ("Graystar's") Motion was still valid and pending, Investors Equities' motions were moot except with regard to whether plaintiff's claims were prescribed, and plaintiff's Rule 56(d) motion was moot.

         Accordingly, the court considers Graystar's motion to dismiss, and Investors Equities' summary judgment motions solely with respect to the prescription issue.

         BACKGROUND FACTS

         The following factual allegations relevant to the pending motions are taken from plaintiff's amended complaint. Plaintiff is an elderly homeowner living on social security income, who owns her principal dwelling at 4842 Strasbourg Street in New Orleans. Until the transactions that are the subject of this suit, she owned the home free and clear of any encumbrances.

         Plaintiff's complaint alleges that on or about February 2015, Johnson contacted Bruce Coffman at America's Mortgage Resource about a reverse mortgage. She was informed that repairs were needed to her residence to qualify for a reverse mortgage, and for a fee, Coffman arranged for financing with Michael Brown for the home improvements. Plaintiff entered into a consumer credit transaction with Brown secured by her primary residence. She signed two promissory notes to Brown totaling $27, 000.00, with interest only payments to begin on May 1, 2016. The notes were scheduled to mature on October 1, 2015. Johnson had the requested repairs performed over the course of 2015 and 2016, but did not receive a reverse mortgage.

         In August 2016, Johnson approached Coffman regarding the matured notes. Coffman then arranged financing with Investor Equities, an LLC for which Coffman is an officer and manager. On August 8, 2016, plaintiff entered into a consumer credit transaction with Investor Equities. She borrowed $60, 000.00 from Investor Equities, secured by a mortgage on her home, in a transaction that involved $24, 894.94 in settlement charges, including $11, 568.00 in loan fees and costs, paid to Investor Equities, which amounted to approximately 28% of the total loan amount. The twelve $600.00 interest only payments were prepaid as part of the settlement charges, as were homeowners and flood insurance. Her principal loan balance, previously $27, 675.00, was now $60, 000.00. Plaintiff did not receive any consumer counseling regarding the transaction. Investor Equities transferred its interest in plaintiff's mortgage to Graystar.

         In August of 2017, plaintiff's $60, 000.00 balloon payment became due, and she contacted Coffman. Again, Coffman arranged additional financing through Investor Equities, which took a new security interest in plaintiff's home. The loan proceeds were used in part to pay off the Graystar loan. In connection with the August 2017 transaction, plaintiff's total settlement charges were $13, 487.87, which included a payment to Investor Equities of $4200.00 in points and fees, approximately 6.2% of the total loan amount, as well as six prepaid interest payments of $750 per month, and homeowners and flood insurance. At the time she made the loan, the interest only payments were $750 per month, and plaintiff's income from social security was $677.00 per month. She did not receive consumer counseling regarding the transaction. Investor Equities transferred its interest in the mortgage to Michael Brown.

         In this lawsuit, Johnson seeks to rescind both the 2016 and 2017 transactions for violations of the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq., and the Home Ownership and Equity Protection Act ("HOEPA"), 15 U.S.C. § 1602(bb). She alleges that the original creditor, Investor Equities, was subject to the requirements of TILA and HOEPA, that material disclosures required under TILA and HOEPA were not provided to her in connection withe 2016 transaction, and that the terms of the 2016 transaction include provisions that violated HOEPA restrictions. With respect to Graystar, Johnson claims that she is entitled to rescission under TILA and HOEPA for the 2016 mortgage loan against Graystar as assignee, and for damages under HOEPA against Graystar as assignee.

         DISCUSSION

         I. Greystar's Rule 12(c) Motion to Dismiss

         Greystar seeks dismissal of plaintiffs claims under Rule 12(c) on three bases: (1) that Johnson's TILA and HOEPA claims are barred by a one-year statute of limitations; (2) that Greystar is not liable to Johnson under TILA as an assignee; and (3) that Johnson cannot state a rescission ...


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