Castro v. Loanpal, LLC

1

BRIDGET DE MOURA CASTRO & LUIZ DE MOURA CASTRO, by his next friend Helena Hilario, Plaintiffs, v. LOANPAL, LLC d/b/a GOODLEAP, PRIME ENERGY, LLC d/b/a PRIME ENERGY SOLAR, and 1^st LIGHT ENERGY INC., Defendants.

Civil Action No. 3:21-CV-1020 (CSH)

United States District Court, D. Connecticut

February 8, 2024

ORDER RE: DEFENDANTS' MOTIONS TO STAY PROCEEDINGS [DOC. 19, 23] AND RULING ON PLAINTIFFS' MOTION TO SUPPLEMENT RECORD [DOC. 60]

Charles S. Haight, Jr. Senior United States District Judge

I. INTRODUCTION

In its prior "Memorandum and Order Scheduling Preliminary Hearing" [Doc.41], the Court provided a detailed summary of the alleged facts in the case.^[1] Although familiarity with that Order is presumed, the Court briefly recounts the following facts, as set forth in the Complaint.

Plaintiff homeowners, Bridget de Moura Castro and Luiz de Moura Castro are a married couple who were each 80 years old at the commencement of this action. In their Complaint, they allege that in August of 2020, Defendants participated jointly in a fraudulent and unconscionable scheme to solicit, sell, and install solar panels on the roof of their home in Avon, Connecticut. Doc. 1, ¶¶ 1-10, 13.

Defendants Loanpal, LLC ("Loanpal"), Prime Energy, LLC ("Prime Energy"), and 1^st Light Energy, Inc. ("1^st Light") engage in the business of soliciting consumers "for the purchase of solar panels and/or [the] install[ation] [of] solar panels on consumers' homes."^[2] Id. ¶ 3. In soliciting consumers to enter "25-year loans and other contracts," Defendants' sales agents employ electronic tablets such as iPads. Id. Defendant Loanpal offers consumers loans to purchase the solar panels, id. ¶¶ 14-15; and Defendants Prime Energy and 1st Light install the panels as licensed home improvement contractors in Connecticut,^[3] id. ¶¶ 16-19. Plaintiffs allege that "Defendants carry on a symbiotic business relationship" in which "Prime solicits customers at their homes on behalf of and for the benefit of 1st Light and Loanpal, 1st Light sells and installs the solar panels, and Loanpal finances the transactions." Id. ¶¶ 20- 21. Consequently, "[a]ll Defendants rely and depend on each other to carry out this course of business." Id. ¶ 21.

Plaintiffs allege that in August of 2020, Bridget de Moura Castro was solicited in her Avon home by Mark Murphy, a salesman and agent acting on behalf of Defendants.^[4] Id. ¶¶ 22-23. Murphy allegedly informed Bridget that senior citizens "are given government benefits for 'free' solar panels" installed on their homes. Id. ¶ 24; Doc. 24-1 ("Certification of Bridget de Moura Castro"), ¶ 2. Based on this alleged "promise of free solar panels and significant savings," Bridget agreed to have the solar panels installed on her Avon home. Doc. 1, ¶¶ 13, 40-41. Bridget further alleges that Murphy never mentioned or requested authorization to provide a loan or perform a credit check on the de Moura Castros. Id. ¶¶ 25-28. Nonetheless, Defendants "surreptitiously and intentionally obtained and used Plaintiffs' consumer reports from the consumer reporting agencies" to create a "Loan Contract" for the purchase of solar panels. Id. ¶¶ 30-31. Furthermore, Defendants allegedly never provided the Plaintiffs with an opportunity to review paperwork or documents regarding purchase of the solar panels in either "paper or electronic" form. Id. ¶¶ 29, 46; Doc. 24-1, ¶ 3.

According to Plaintiffs, "Defendants eventually caused solar panels to be installed on Plaintiffs' home, even though no contract was provided to Plaintiffs or signed by Plaintiffs." Doc. 1, ¶ 46. Thereafter, in January 2021, Defendants sent Plaintiffs a letter, addressed to Luiz, stating that he had taken out a 25-year loan and "[w]e've tried calling a few times to review your terms and was [sic] unsuccessful."^[5] Id. ¶ 47. Bridget believed the letter was "a scam" and gave it to her daughter Cema Siegel to investigate. Id. ¶¶ 48-49. Siegel had been acting as her parents' power of attorney for financial matters. Id. ¶ 49. On February 18, 2021, Siegel received a copy of the Loan Contract and Purchase Contract for the first time. Id. ¶ 51. Plaintiffs have asserted that all of their signatures and initials on the contracts were "forgeries." Id. ¶ 54. Furthermore, the de Moura Castros' email address and phone number on the contracts were "incorrect." Id. ¶¶ 55-57.

As a result of Defendants' alleged fraudulent conduct, Plaintiffs' home is "burdened with ineffective solar panels" - installed on a roof that is "completely shaded by trees" and thus "unfit for solar." Id. ¶ 65. In addition, Plaintiffs have "suffered mental and emotional distress, worry, and aggravation" due to being "duped into contracts" for the ineffective panels and "subjected to wrongful demands for payment pursuant to [the] forgeries" of their names, initials, and contact information. Id. ¶ 66.

Plaintiffs commenced this action in July of 2021. In their Complaint, as self-described "elderly consumers," Plaintiffs seek "damages and other relief" arising out of the allegedly fraudulent transaction in August 2020 with Defendants for the sale and installation of solar panels, along with an accompanying loan agreement. Id. ¶¶ 1-6, 40-41. In particular, Plaintiffs bring federal claims against all Defendants pursuant to the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681, et seq., and the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601, et seq. In addition, invoking the Court to exercise supplemental jurisdiction under 28 U.S.C. § 1367(a), Plaintiffs bring state law claims pursuant to Connecticut's Unfair Trade Practices Act ("CUTPA"), Conn. Gen. Stat. § 42-110g, et seq., Connecticut's elder exploitation statute, Conn. Gen. Stat. § 17b-462, -450, and Connecticut's common law regarding "fraudulent concealment" as to the solar panel transaction (i.e., failure to disclose, and/or prevention of discovery of, facts regarding the hidden agreements with Plaintiffs' forged signatures).

In their prayer for relief, Plaintiffs seek, inter alia, compensatory ("actual and statutory") damages; punitive damages; declaratory judgment that the contract documents are void; return or destruction of Plaintiffs' confidential consumer report; removal of the solar panels and repair for damage to Plaintiffs' property; and attorney's fees and costs. Doc. 1, at 20 ("Prayer for Relief").

II. PENDING MOTIONS TO STAY PROCEEDINGS

Defendants Loanpal and 1^st Light have each filed a motion to stay this litigation to allow arbitration to proceed under the Federal Arbitration Act, 9 U.S.C. §§ 1-16 ("FAA"). See Doc. 19 & 23. Under that statute, in any action "brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court . . ., upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement ...." 9 U.S.C. § 3.

Loanpal asserts that Plaintiffs agreed to arbitrate pursuant to an arbitration provision contained in the "Loan Contract" [Doc. 1-1]. Doc. 19, at 1. Loanpal alleges it entered that contract with Plaintiffs "to permit [the solar panel] improvements to be made on their residence." Id. at 2. The alleged loan agreement, filed at Doc. 1-1 with the Court, contains the following "comprehensive" arbitration provision:

All claims and disputes arising out of or related to this Agreement (hereafter, "Dispute(s)") shall be resolved by binding arbitration on an individual basis. The arbitrator shall also decide any issues relating to the making, validity, enforcement or scope of this arbitration agreement, arbitrability, defenses to arbitration including unconscionability, or the validity of the jury trial, class action or representative action waivers (collectively, "arbitrability issues").... The Federal Arbitration Act (9 U.S.C. §§ 1-16) (the "FAA") shall govern this agreement to arbitrate including all arbitrability issues.

Doc. 1-1, ¶ 15. See also Doc. 19, at 2.

Similarly, 1^st Light moves to "stay [this Court's] proceedings to allow for arbitration" under the FAA. Doc. 23, at 1. 1st Light asserts that Plaintiffs have brought "various claims related to the installation of a solar energy system on a residential property" and those claims "arise out of a written contract," the Purchase Contract, entitled "Contract for PV Solar Power System" from 1^st Light Energy, Inc., and "attach[ed ] to Plaintiffs' Complaint as Exhibit B" [Doc. 1-2]. Doc. 23, at 1. Defendant 1^st Light bases its motion on the following "Arbitration" provision, as set forth in that document:

Other than breach due to the Customer's interference with the Rebate or default of payment by the Customer . . ., any other dispute between the parties shall be decided in accordance with the latest rules and procedures as set forth by the American Arbitration Association. Parties hereby agree that any dispute or differences arising out of or in connection with this Agreement shall be determined by the appointment of a single arbitrator to be agreed between the parties. Parties further agree that the decision made by the appointed arbitrator shall be final and binding, and each party shall be responsible for its own cost and expenses related to arbitration.

Doc. 23, at 2 (quoting Doc. 1-2, at 5).

As the Court mentioned in its prior "Memorandum and Order" [Doc. 41], pursuant to the FAA, "if an action is brought in federal court 'upon any issue referable to arbitration under an agreement in writing for such arbitration,' the court, once satisfied that the issue in the action is covered by the arbitration...