Johnson v. Long Beach Mortgage Loan Trust 2001-4

451 F.Supp.2d 16

Viola JOHNSON, and Kevin R. McCarthy, Trustee for the Estate of Viola Johnson, Plaintiffs, v. LONG BEACH MORTGAGE LOAN TRUST 2001-4, et al., Defendants.

No. CIV.A 05-0644(CKK).

United States District Court, District of Columbia.

August 4, 2006.

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Thomas C. Willcox, Washington, DC, for Plaintiffs.

Catherine Anne Bledsoe, Gordon, Feinblatt, Rothman, Hoffberger & Hollander Litigation, Sedica Sawez, Gerald J. Gaeng, Rosenberg Martin Funk Greenberg LLP, Baltimore, MD, for Defendants.

MEMORANDUM OPINION

KOLLAR-KOTELLY, District Judge.

Plaintiff Viola Johnson, an elderly District of Columbia retiree, together with the trustee of her bankruptcy estate (collectively "Plaintiff'), bring the above-captioned action against a mortgage broker, two lenders, and several related entities who sold her two home loans, alleging inter alia that the companies took advantage of her age and lack of sophistication to charge excessive fees while failing to make mandatory disclosures under the Truth in Lending Act ("TILA"). Plaintiff seeks rescission of the loans, restitution, and damages under several legal theories. See Compl. ¶¶33-38 (Count I—Violations of the District of Columbia Consumer Protection Act) ("DCCPA"), ¶¶ 39-45 (Count II—Common Law Fraud), ¶¶ 46-52 (Count III—Unconscionability), ¶¶ 53-61 (Count IV—Violation of the Usury Statute), ¶¶ 62-69 (Count V—Violations of D.C. MLBA), ¶¶ 70-76 (Count VI—Breach of Fiduciary Duty), ¶¶ 77-82 (Count VII— Conspiracy), ¶¶ 83-87 (Count. VIII—Aiding & Abetting the Deception of Ms. Johnson), ¶¶ 88-93 (Count IX—Negligence) ¶¶ 94-103 (Count X—Negligent Supervision), ¶¶ 04-107 (Count XI—TILA Violations), ¶¶ 08-115 (Count XII—Declaratory Relief of a Valid Rescission Under TILA), ¶¶ 116-119 (Count XIII—Derivative Claims Against Washington Mutual). See infra at 23-24 (Table 1).

In response to Plaintiffs Complaint Defendants EquiCredit Corporation of Maryland and EquiCredit Corporation of the District of Columbia filed a[4] Motion to Dismiss, and Defendants Long Beach Mortgage Company, Long Beach Mortgage Loan Trust 2001-4, and Washington Mutual jointly filed a[8] Motion to Dismiss ( [4] and [8] are collectively referred to as "Defendants' Motions to Dismiss"), followed by Plaintiffs collective Opposition and Defendants' Replies. Upon consideration of the filings before the Court, the attached exhibits, the relevant case law, and the entire record herein, the Court shall grant Defendants' Motions to Dismiss with respect to Count IV and Count XI, grant-in-part and deny-in-part Defendants' Motions to Dismiss with respect to Counts XII and XIII, and deny Defendants' Motions to Dismiss with respect to the remaining Counts.¹ The Court further holds that it may exercise personal jurisdiction over Defendant Long Beach Mortgage Loan Trust 2001-4 ("the Trust"). The Court's disposition is summarized infra at 24-25 and 55-56 (Table 2).

Table of Contents
Summary Tables: Counts, Disposition, and Dates ........................................... 23
Table 1: Plaintiffs Counts ............................................................... 23
Table 2: The Court's Disposition ......................................................... 24
Table 3: Important Dates ................................................................. 25
I: BACKGROUND ............................................................................ 25
II: LEGAL STANDARDS ...................................................................... 27
III: DISCUSSION .......................................................................... 27
     A. Defendant Long Beach Mortgage Loan Trust 2001-4's Motion to Dismiss
          for Lack of Personal Jurisdiction .............................................. 27
        1. Legal Standards for Exercise of Personal Jurisdiction ......................... 28
        2. Personal Jurisdiction Over Long Beach Mortgage Loan Trust 2001-4 .............. 29
           (a) The Trust's Contacts With the District of Columbia Related to the
                Controversy Sub Judice ................................................... 29
           (b) The Trust's First Contact: Holding a Security Interest in the Ms
                Johnson's Property ....................................................... 30
           (c) The Trust's Second Contact: Taking Assignment of Ms
                Johnson's Mortgage Note .................................................. 31
           (d) Discussion of Relevant Cases from Other Jurisdictions ..................... 32
     B. Plaintiffs Fraud and Negligent Supervision Claims Against Long Beach
          Mortgage Company ............................................................... 34
     C. Plaintiffs Unconscionability Claims .............................................. 35
        1. Plaintiffs Claim of Unconscionability Under D.C.Code § 28:2-302 .......... 35
        2. Plaintiffs Claim of Unconscionability Under the Common Law .................... 35
        3. Plaintiffs Claim of Unconscionability Under D.C.Code § 28-3904(r) ........ 37
     D. Statutes of Limitations .......................................................... 38
        1. TILA Claims ................................................................... 39
           (a) Civil liability under TILA ................................................ 39

           (b) Declaration of a Valid Rescission ......................................... 40
        2. Dates of Accrual of Plaintiffs D.C. Claims .................................... 41
           (a) Accrual of a Cause of Action Under the Discovery Rule ..................... 41
           (b) The Importance of Mortgage USA's Alleged Fiduciary Duty to
                 Ms. Johnson ............................................................. 44
           (c) Matters outside the pleadings ............................................. 46
        3. D.C. Claims—applicable statutes of limitations .......................... 47
           (a) Plaintiffs Usury Statute Claims ........................................... 47
           (b) Plaintiffs Other D.C. Claims .............................................. 48
           (c) The Intertwining Doctrine ................................................. 48
        4. Plaintiff's arguments for tolling applicable statutes of limitations .......... 49
           (a) Bankruptcy ................................................................ 50
           (b) Damages and Rescission in Recoupment Under TILA ........................... 50
           (c) Equitable Tolling ......................................................... 51
E. Plaintiffs Derivative Claims Pursuant to D.C.Code §§ 28-3808 and 28-3809
    and 16 C.F.R. § 433 ............................................................. 53
   1. Plaintiffs Derivative Claims Against Washington Mutual Pursuant to
        D.C.Code § 28-3808 .......................................................... 53
   2. Plaintiffs Derivative Claims Against Washington Mutual and Long
        Beach Mortgage Company Pursuant to D.C.Code § 28-3809 ....................... 54
   3. Plaintiffs Derivative Claims Against Washington Mutual and/or Long
        Beach Mortgage Loan Trust 2001-4 Pursuant to 16 C.F.R. § 433.2 .............. 54
Table 2: The Court's Disposition ......................................................... 55
IV: CONCLUSION ........................................................................... 56
                Summary Tables: Counts, Disposition, and Dates
                                  Table 1: Plaintiffs Counts
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                                                                                 Compl
Count Title Defendant(s) ¶¶
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I      Violations of the District of Columbia          All Defendants             33-38
       Consumer Protection Act, D.C.Code
       Sections 3901 et seq
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II     Common Law Fraud                                Mortgage USA,              39-45
                                                       Long Beach
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III    Unconscionability, D.C.Code Section             Mortgage USA,              46-52
       28:2-302                                        Long Beach,
                                                       Washington Mutual
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IV     Violation of the Usury Statute                  Moltgage USA,              53-61
                                                       EquiCredit, Long
                                                       Beach
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V      Violations of D.C. MLBA                         Mortgage USA               62-69
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VI     Breach of Fiduciary Duty                        Mortgage USA               70-76
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VII    Conspiracy                                      Mortgage USA,              77-82
                                                       Long Beach
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VIII   Aiding & Abetting the Deception of              Mortgage USA,              83-87
       Ms. Johnson                                     Long Beach

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