Godfrey v. Nationwide Vinyl Siding & Home Improvement, LLC

912 F.Supp.2d 1320

Demetric GODFREY, et al., Plaintiffs,

v.NATIONWIDE VINYL SIDING & HOME IMPROVEMENT, LLC, et al., Defendants.

Civil Action No. 12–0081–WS–B.

United States District Court,

S.D. Alabama,

Southern Division.

Dec. 14, 2012.

Kenneth J. Riemer, Mobile, AL, Earl P. Underwood, Jr., Fairhope, AL, for Plaintiffs.

Larry B. Childs, Waller Lansden Dortch & Davis, LLC, Christopher Allen Driskill, Birmingham, AL, for Defendants.

ORDER

WILLIAM H. STEELE, Chief Judge.

This matter comes before the Court on the Motion for Summary Judgment (doc. 22) filed by the sole remaining defendant, U.S. Bank, N.A. The Motion has been briefed and is now ripe for disposition.¹

I. Nature of the Case / Procedural Posture.

Plaintiffs, Demetric and Deborah Godfrey, originally brought this action against three defendants following a botched construction job to build an addition to their home. In particular, the contractor hired to perform the work took payment but did not complete the job, leaving plaintiffs with a substantial debt obligation for a construction project that was never finished. Two of the named defendants, Nationwide Vinyl Siding & Home Improvement, LLC (“Nationwide”) and First Choice Mortgage, LLC (“First Choice”), failed to appear or defend in these proceedings. A default judgment in the amount of $180,500 was entered in plaintiffs' favor and against Nationwide and First Choice back on February 1, 2012. ( See doc. 28, Exh. 2.) ² Plaintiffs are endeavoring to enforce that default judgment; however, in the meantime, they continue to pursue their claims in this litigation against the remaining defendant, U.S. Bank, N.A. (“U.S. Bank”).

The operative pleading asserts a laundry list of causes of action against U.S. Bank. In particular, plaintiffs allege that U.S. Bank was liable for Nationwide's breach of the construction agreement (Count One); that U.S. Bank was liable for Nationwide's negligence and wantonness in its dealings with the Godfreys (Counts Two and Three); that U.S. Bank was liable for Nationwide's negligent and wanton hiring, supervision and training (Counts Four and Five); that U.S. Bank violated the Truth in Lending Act, 15 U.S.C. §§ 1601et seq. (“TILA”) and the Home Ownership and Equity Protection Act of 1994 (“HOEPA”) ³ by not making required disclosures for a high-cost loan, thereby affording the Godfreys a statutory right to rescind the loan transaction as well as other remedies (Count Six); that U.S. Bank violated the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601 et seq. (“RESPA”) by failing to take appropriate action ( i.e., canceling the loan, providing requested information) in response to the Godfreys' Qualified Written Request (Count Seven); and that plaintiffs are entitled to injunctive and declaratory relief for those violations (Count Eight).

U.S. Bank has moved for summary judgment on all causes of action asserted against it in the Amended Complaint. The Godfreys acknowledge that Counts One through Five are properly dismissed at this time,⁴ but insist that triable issues remain as to Counts Six through Eight.

II. Relevant Facts.⁵

The record in the light most favorable to plaintiffs reveals the following facts: In the fall of 2008, the Godfreys entered into a contract with Nationwide, pursuant to which Nationwide promised to build an addition to the Godfreys' home. (Ms. Godfrey Dep., at 12–13.) The contract signed by Nationwide and the Godfreys on September 5, 2008, provided that the “project will consist of a two story addition to the existing structure as well as remodeling the existing premises.” (Ms. Godfrey Dep., Exh. 1, at 1.) Phase one of the project (which is the only portion of the job relevant to this dispute) contemplated “construction of a 984 sq ft, two story addition, 339 sq ft upstairs and 645 sq ft downstairs.” ( Id.) The contract identified the phase one contract price as $62,500, to include a $10,000 downpayment, with a remaining balance of $52,500 to be paid at closing. ( Id.)

Nothing in the contract specified that Nationwide was to install a heat pump at the Godfreys' property. Plaintiffs' evidence is that they never agreed to have Nationwide install a new heating and air-conditioning system as part of phase one. (Ms. Godfrey Dep., at 19.) Rather, plaintiffs' understanding was that Nationwide would be installing central air and heat as part of the second-phase remodeling project. ( Id. at 21, 23, 91.) ⁶ The record contains an unsigned document dated October 22, 2008 labeled “Central Air and Heat Installation,” reflecting that Nationwide would install a 2 1/2 ton York heat pump system (with ductwork) at the Godfreys' residence, and providing for a balance due of $4,800, to be paid at closing. (Ms. Godfrey Dep., at Exh. 2.) Plaintiffs' evidence, however, is that they never saw this document, and that they never came to any agreement with Nationwide for installation of a heating and air conditioning unit at their property during phase one. (Ms. Godfrey Dep., at 19–20.) ⁷

Unfortunately, the Godfreys' home's heating system became a stumbling block to the loan financing process. The September 5 contract specified that the Godfreys would seek financing for phase one of the project through mortgage broker First Choice. (Ms. Godfrey Dep., Exh. 1.) Plaintiffs' contact at First Choice was Charlotte Duncan. (Ms. Godfrey Dep., at 13–14.) Plaintiffs completed a loan application for First Choice. ( Id. at 28.) Thereafter, First Choice lined up U.S. Bank as a potential lender to fund the transaction, pursuant to a Broker Lending Agreement between First Choice and U.S. Bank. (Duncan Dep., at 64, 87; Simon Aff. (doc. 22, Exh. 1), ¶ 3.) ⁸ The relationship between First Choice and U.S. Bank was strictly arm's length; indeed, record evidence shows that U.S. Bank was one of multiple lenders with which First Choice worked, and that U.S. Bank did not control the business operations of First Choice or Nationwide. (Duncan Dep., at 86–88; Simon Aff., ¶¶ 6, 9.) ⁹ At any rate, when First Choice initially approached U.S. Bank about the Godfreys' loan application, U.S. Bank declined the loan because the proffered collateral ( i.e., the Godfreys' house) was not acceptable to U.S. Bank without “an affixed system to be able to properly heat the residence.” (Simon Dep., at 55.)

In late September or early October, Charlotte Duncan called Ms. Godfrey and explained to her “that in order for the finances to go through that they had to install a heating and air conditioner because whoever the finance company was that they did not like ... the window units and they did not like the way the appraiser had wrote the heat up.” (Ms. Godfrey Dep., at 21, 23.) The Godfreys understood that “in order for us to obtain the loan from whoever the vendor was that was going to loan us the money, ... they had to go in and put in central air and heating.” ( Id.) Ms. Godfrey balked that they did not have the money to pay for such a job and that, besides, central air and heat were part of the phase-two remodeling plan, not the phase-one addition plan. ( Id.) Ms. Duncan assured Ms. Godfrey that she “didn't have to worry about it because they [meaning Nationwide] were going to pay for it.” ( Id. at 21–22.) Following this conversation, a Nationwide representative (Steve Cooper) notified Ms. Godfrey that Nationwide was “making the arrangements for someone to come out and install central air and heat.” ( Id. at 22.) What Nationwide actually installed at the Godfreys' residence was not central air and heat, but a heat pump, much to Ms. Godfrey's dismay. ( Id. at 22–23)

Whatever failings she may have had in communicating with the Godfreys, Charlotte Duncan of First Choice notified U.S. Bank of the heat pump arrangements via facsimile transmission dated October 23, 2008, and re-transmission dated October 27, 2008. (Ms. Godfrey Dep., at Exh. 2.) ¹⁰ That fax indicated that Nationwide was installing a heat pump and duct work at the Godfreys' home for a total cost of $4,800, to be paid at closing. ( Id.) There is no dispute that, as of late October 2008, U.S. Bank understood such an arrangement to be in place (even if the Godfreys did not). Indeed, U.S. Bank must have been aware of and satisfied with this heat pump installation, given that it ultimately approved and funded the Godfreys' loan (which it had previously declined, deeming the collateral inadequate for lack of an affixed heating system).

The Godfreys closed on the loan with U.S. Bank on November 10, 2008. The closing agent was a company called Refi, Inc., which is not a party to this dispute, is not affiliated in any way with U.S. Bank, and was not controlled by U.S. Bank in administering the closing. (Stewart Aff. (doc. 22, Exh. 2), ¶¶ 3–6; Simon Aff., ¶¶ 11–14.) On the date of the closing, Mr. Godfrey signed an Adjust able Rate Note in which he promised to repay U.S. Bank the principal sum of $61,200. (Ms. Godrey Dep., at Exh. 13.) The Godfreys received and signed a Truth–in–Lending Disclosure Statement identifying the lender as U.S. Bank, the borrowers as the Godfreys, and enumerating certain finance charges and fees. ( Id. at Exh. 19.) In particular, the Disclosure Statement itemized prepaid finance charges in the amount of $1,719.74 (including a broker fee of $612.00 paid to First Choice), plus a yield spread premium of $1,224.00 paid outside closing by U.S. Bank to First Choice, and other fees (appraisal, doc prep, title insurance, and recording) totaling $904.80. ( Id.) Nothing in that Disclosure Statement referenced a heat pump, much less a $4,800 payment to First Choice, Nationwide or anyone else.

At the November 10 closing, the Godfreys also received and signed a HUD–1 Settlement Statement. (Stewart Aff. (doc. 22, Exh. 2), at ¶ 7 & Exh. A.) That Settlement Statement accounted for every penny of the $61,200 the Godfreys were borrowing from U.S. Bank. Of particular relevance to this lawsuit are lines 1306 and 1307. The former lists a payment...