you got what did you plead against quicken because you seems like you got a you know a perfectly good claim of the outset the question is did you plead it they make eighty thousand dollars reportedly the person tells them to say that they're making up to forty so they get a six hundred seventy two thousand dollars loan but the court is saying you know yet get with it you got a chance to amend right yes you did amend that is correct and the court practitioners are not used to being before the federal bench and because of that i was actually quite late to court and i had prepared the way i really wanted to so that that has a lot to do with why the but then didn't describe how the agreement was unfavorable in this context i mean that's what the court was saying and then that they related the causal relationship is that you know the only last mention was a default on the mortgage  but that the complaint didn't explain how quicken alleged fraud caused them to default so that it really is a plea we're stuck in pleading here are you part of it seems to be a fraud and we can not afford the quitting committed but if we take your allegations as true as you must it is when the extent that there's a submissive actually specific allegation there it seems that you really alleging departments that is true unfortunately unfortunately the the deluca is are now in a position where you know they're living in their home they've been there for many years and because of this alleged fraud you know they're not comfortable in their homes they don't know when a foreclosure proceeding might begin and there has been no exchange of discovery whatsoever this this case was also initially filed in bergen county new jersey and was removed to federal court i think that's an important issue to bring up because they were prepared for a state law claim and i did in new jersey consumer fraud act the course looking through the eyes of the average consumer now vigilant is they were running a an auto familiar with financing our real estate financing needs you can see that maybe you need to do with the financing but in terms of debt obligations amortization those kinds of things we're not talking about someone even though there's a high school education we're not talking about totally unsophisticated fraud act and i take a look at the the model jury charges the way i look at the new jersey c f a is that you're looking through the eyes of the average consumer not necessarily through the eyes of the plaintiff in the case and then once you do that and i knowledge remarks they are running a business so there is some high in sophistication there but i think we're going the wrong direction if we're conducting that type of analysis it's not so easy to figure out what the average consumer is and i guess that's going to be you know realize i case by case basis but i do argue that in this particular case  the level of sophistication that might have been analyzed for this ruling on a motion to dismiss was was not reasonable what in plain language what were the the what the city mortgage do wrong or loan servicer right your city mortgage was was initially i believe they were the root the originating lender on well now originating wonder so city citi mortgage was a service or and yeah they were trying to get them into you know suggesting that you need to apply to try to get a in effect what would come out as a result as a mo ication so what the big what did they do wrong i think the most powerful allegation with respect to that is being told and i believe this is an unconscionable business practice being told to default and  that would then kickstart your ability to apply for hamp or other and how well i mean put yourself in the city more each person's shoes you've got a couple before you that is as we would say right ain't no way they're going to be able to pay a mortgage six hundred seventy thousand dollars and in order to try to get a modification they get some stock of relief they're going to the fall sooner or later so the person is probably thinking you know what just happened the point now let's let's let's acknowledge what clearly is going to happen they can't afford this now maybe you know what they should have done was you know filed for bankruptcy the the plaintiffs didn't have an attorney did that when they were met with city mortgage for the day i believe they're ok so you know maybe the person just said you need to see an attorney like now but the person city mortgage didn't do that so what what did the city mores person do that was a violation of law of state law i think just making that statement of where you're you know being directed to default and understand it might be situations where that that might be a blessing in disguise to be be told that it's it might be you know having that cup of coffee you should have had it months ago but the problem is once you default these are and a lot of these individuals are going to the foreclosure issue there they're going paycheck to paycheck with respect to income so they're defaulting and then all of sudden disaster nominal you know from one month to another month so if you're being told default and even looking at this from a chapter thirteen perspective where you have a chance to get arrearages and then the payment plan that you're that you're supposed to pay back might be impossible with that's what happened here in the end up with them it is an interest of seventy thousand dollars is that right it quickly grew out of control twenty percent loan so in essence the homeowner would have a sense if it was six point seven and nine point something that's with respect to the interest interest rate but in terms of the overall loans that were offered there was an eighty percent and then a twenty percent loan that when i look at this it's clearly a way to deceptively provide a down payment now i have no reason to believe since there's been no discovery exchanged that quick homeowner didn't have a downpayment oh well it doesn't matter give him a twenty percent line of credit given what he lost given the twenty percent where they're going to be perceived as having the equity that all banks wa sils comes in gross on behalf of the appellee citi mortgage brokers this is not a typical mortgage fraud case citi mortgage made the plaintiffs three separate permanent modification offers out of the hand program all of which the plaintiffs rejected as too expensive or not affordable nevertheless despite city mortgages good faith in offering them permanent loan modifications the plaintiffs then sued citi mortgage plaintiffs in their fraud and consumer fraud act claims they base them on to two factual allegations one of which is that citi mortgage told the plaintiffs to default in order to be qualified for  hamp program requires that the plaintiffs submit a hardship affidavit in which they must affirm under oath that they are either in default or about to go into the fall so your honor i would submit that that is not a misrepresentation but in fact is consistent with what the ham program requires in addition to the pleading level the the allegation was that cit concluded that they were but but but but how so he supported support is there for that and any other court there's trial court support throughout the country your honor for the for the enron theory of preemption which means that because congress did not expressly provide a remedy with an end run and run theory re fraud or and run theory re other claims i believe all claims are honor that the trial court cases throughout the country do not concluded that preemption applied we believe that this court can find an alternative reason so long as there's reason was correct was that obstacle preemption apply syria or honor and that's because i thought i thought your argument in your brief was that conflict preemption applies to state law claims if they require more than the loan modification a procedure that's correct your honor so you're now saying something different than that aren't you well no it is that is the obstacle preemption prong of conflict preemption in our argument is that if state law requires lenders to go further then he amp requires then there is a conflict between state law and federal what's the concept what's the conflict well the conflict is that lenders will  lenders are incentivized to participate in hamp being paid a thousand dollars per loan modification and they will conceivably withdraw from participating in the ham program if let if they have to worry about fifty different state laws potentially ensnaring them in lawsuits throughout the country they want certainty of complying with they have a program and being sure that they're not going to be sued under the new jersey consumer fraud act or any consumer fraud act throughout the country but and but then your brief seems to say no you are any time that a state law claim require provision requires more than is required under him that's a conflict preemption that's correct or we don't think what i think your brief said but you said something different just a moment ago and you know i can't stand for your honor and rely upon why get because it it concluded differently than than judge kessler so we think the case is factually you know sit in any event argument here your honor is that the obstacle preemption pronk of conflict preemption applies because the plaintiffs here are saying cit mortgage you need to go beyond what hair requires you need to give us a quote favorable loan modification and quote and our position is your honor we complied with him we offered them three separate permanent loan modifications that that state law claim is this preempted i mean how so what would your honor what i get i go back to the pleading and what they're saying here is you offered us you offer complied with him you offered us three permanent loan modifications but you didn't you need to offer us a better permanent loan modification and in connection with negotiating the permanent loan modifications you need me speak to ten different representative and if state law requires a server a mortgage loan servicer to go beyond what hamp requires and they concede that citi mortgage complied with him and we submit that that would be a conflict preemption because if we are in the hamper rubric and we comply with hamp we can't then have to worry about complying with state law which they argue requires us to do more than what hamper acquire that the person say you have an option of the full thing they need to certify either they're in default or about to go into default and that's through a form forty five i was at a little different than saying you you should default and w your reason you're there is because there's a fear very much there about their on the verge of going in the fall like any minute but doesn't require that you should default it just says that you should the idea is the go to them before you to fall isn't it either i'm in trouble or i've lost my job whatever it might be and i need to work something out here that's correct your honor but obviously there needs to be either a default or an impending default in order to be considered for a hamp modification lenders aren't going to be soliciting their consumers for modifications unless there's some indication that that that is in the record on the breach of the implied covenant if you knew that they were making eighty thousand dollars why isn't why isn't a breach of good faith fair dealing preview to all this way and not offer them waterfall process there's an analysis that a mortgage servicer is required to go through they ran that they ran the calculations and they offered the lukas three separate permanent loan modifications the calculations that were concluded based on the calculations we complied we offered them three permanent loan modifications i don't believe we were required to do anything more than that is curious how that  loan modifications they say they were making eighty thousand dollars at the time the loans were originated by by quicken so that fact is missing thank you mr hurd you have a few minutes situation in the context here what has been led by the plaintiffs in their amended complaint is that they were in financial distress and i say that with emphasis because it was restarted three times in the amended complaint the pla  during the closing on of the transit of the loan transaction husband and wife plaintiffs were in separate rooms at plaintiff's place of business now that's what i understand  practice unconscionable practice that's been alleged and really what did you know what are you alleging that they allege that they claim for the first time on appeal that well initially if you read the complain and in the proceedings in the trial court the discussion was about fraud state court fraud common law fraud now the terms perhaps the terms unconscionable commercial practice had been stated somewhere but that isn't w about it at the motion hearing in the motion papers for the rule twelve motion it wasn't the emphasis was not in unconscionable commercial practice but really take that as it is what's at play here in order for there to be an unconscionable commercial practice what has to be a lack of good faith a lack of honesty in fact and a lack of observance of fair dealing and that's the  times three that let's say it's two forty and that'll get you a loan for the type this house that you want what kind of claim would you have if that were true well we started someone in our brief and there was a discussion about that lower court now conceding this if in my example the person the employee suggests to them that you should you can triple this and get this kind of loan it would sound as if the employees being at least on a loan application making a representation is under some pretty clear language that we're doing this at worst we're representing to you these are truthful assertions and that's what the loan application does mean these are the kind of things that got for example countrywide in you know deep imaging i mean that they were doing you know maybe maybe slightly worse the ninja loans no income jobs or no assets but here you are inflating the income and that is that is clear so when a borrower goes and signs an application for a loan and we've cited law on the briefs in this matter this is a representation of the borrower they're making that state no i don't believe that that would constitute the basis for the claim here but i think we need to focus though on the notion that there needs to be a causal not just nexus between an unconscionable  but more importantly for in the bigger picture it doesn't exist the plaintiffs here the loan that they received here paid off five hundred ninety three thousand dollars to the seventeen thousand dollars for american express thirty seventeen thousand dollars to another credit card sixteen some thousand dollars to the state for texas so not only is there not ascertainable loss if anything this loan  taking that if perhaps an employee of a lender said hey let's get together we're going to figure out a way to misstate all the facts here and get you a loan which i'm going sort of are often a tangent not even if that occurred you you are as i just had to brief knowing you know we ended up with mr hart pretty much where we ended up where we're at one point with you what how were they harmed what is the causal relation between the action house and not being able to say in that home becomes a definite probability it will happen but when they got the lowish away where they are and i would not say initially  allegation is that this loan was used as a debt debt consolidation tool so in effect if they would not have cause consolidated all their debts they could have they could have followed  seven bankruptcy to get rid of all their unsecured debt but that is another issue that's that's that's really in the in the complaint and that's not an option now and iran is the only other point i would make i find it interesting that today when the homeowner does apply for have already house five haitian very quickly the lender will ask you to sign or execute a forty five or sixty form which with a couple weeks will get that lender confirmation of what the individual makes so even if it were just an error you know let through they get in that there's no good because then you're arguing that making the fraud  will ultimately if if these homeowners and other homeowners in the same situation aren't extend the credit and aren't being put in the home to begin with you know that's i think another way of looking at this giving this you're being given this opportunity this american dream you know here's here's a here's a mortgage go buy a house and you're in this home that your career you're creating a home over years and you're used to it if you were given that opportunity  in the first place then you're not losing it you know but here you are being given this opportunity through this reckless lending you're in the home and then now it's i mean it is twenty twenty hindsight fortunately