Case 2:06-cv-02249-BBD-tmp Document 1 Filed 04/28/06 Page 1 of 20 PageID 3

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TENNESSEE
WESTERN DIVISION ______________________________________________________________________________

MAE JACKSON, individually, and on behalf of all others similarly situated,

Plaintiff,

v. NOVASTAR MORTGAGE,

CASE NO.: __________________ CLASS ACTION JURY DEMANDED

Defendant. ______________________________________________________________________________

COMPLAINT ______________________________________________________________________________

COMES NOW the Plaintiff, Mae Jackson by and through undersigned counsel, and in support of her claim for relief against Defendant, states the following:

NATURE OF THE CASE 1. This is a class action seeking redress for the racially discriminatory conduct of Defendant NovaStar Mortgage (“NovaStar”) in the offering and sale of residential mortgage loans to minority borrowers. Through aggressive and misleading marketing efforts, Defendant targets and locates minorities to sell them subprime residential mortgage loans, and in doing so, discriminates against them by engaging in predatory lending practices and charging them higher interest, including discriminatory “yield-spread premiums,” and greater fees and costs than Defendant otherwise charges similarly situated non-minority borrowers purchasing the same subprime residential mortgage loans. 2. Defendant Novastar has engaged in both intentional discrimination and disparate impact discrimination through its development and implementation of practices and procedures

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regarding the financial incentives (including the yield-spread premiums), and other related policies directed towards its mortgage brokers which cause minorities to receive loans on worse terms and with higher fees and costs than similarly-situated non-minority borrowers.
3. As used in this Complaint, Aminority@ or Aminorities@ shall refer to all nonCaucasians and other minority racial groups protected under 42 U.S.C. '' 1981, 1982, and 3604, and 15 U.S.C. ' 1691. In addition, “residential mortgage loan” means a loan made for the purpose of purchasing, constructing, improving, repairing, or maintaining a dwelling, or a loan was secured by residential real estate.”
4. This action is brought by Plaintiff as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure on behalf of all minorities (hereinafter collectively referred to as the AClass@ or AClass Members@) who have entered into residential mortgage loan contracts that were financed or purchased by Defendant NovaStar based upon the common course of conduct described herein and who were harmed thereby.
5. Plaintiff seeks damages, including punitive damages, injunctive, declaratory and equitable relief, and other remedies for Defendant’s racially discriminatory conduct.
JURISDICTION AND VENUE 6. This action is brought pursuant to the provisions of the Civil Rights Act, 42 U.S.C. §§1981 and 1982, the Fair Housing Act, 42 U.S.C. §§3601 et seq. (the “FHA”), and the Equal Credit Opportunity Act, 15 U.S.C. §1691 et seq. (the “ECOA”). Jurisdiction is conferred upon this Court by 28 U.S.C. §1331. 7. Venue is proper in this district pursuant to 28 U.S.C. §1391(b) in that Plaintiff and the Defendant reside or do business in this district and/or a substantial part, if not all, of the events or omissions giving rise to the claim occurred in this district. Venue is also proper in this
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district pursuant to 18 U.S.C. §1965(a) in that all parties reside, are found, have an agent, and/or transact his/her/its affairs in this district.
PARTIES 8. Plaintiff, Mae Jackson (hereinafter “Ms. Jackson”) is an adult resident citizen of Memphis, Shelby County, Tennessee and currently resides at 930 Maury Street, Memphis, TN 38107. 9. Defendant, Novastar Mortgage, Inc. (hereinafter “Novastar”) is a corporation duly registered to transact business in Tennessee. Its principal place of business is 8140 Ward Parkway, Kansas City, MO 64114. Its registered agent for service of process in Tennessee is CT Corporation System, 530 Gay Street, Knoxville, TN 37902.
FACTS 10. Defendant NovaStar is a lending institution that engages in “subprime” lending. “Subprime” lending refers to the granting of loans to borrowers who do not qualify for the best or "prime" rates, generally because of credit problems or because of low income, and who often who could not obtain loans from traditional lenders such as banks. Lenders generally view subprime loans as having higher risk of non-payment or default than prime loans. In light of this perceived risk, many banks or other traditional financial institutions will not offer subprime loans, and those lenders that do offer such loans generally charge higher interest rates than the prevailing interest rate for prime loans. Despite the perceived higher risk of subprime loans, however, subprime loans are very profitable for those institutions making them. Upon information and belief, virtually all of Defendant NovaStar’s home loan portfolio consists of subprime loans.
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11. Defendant NovaStar’s primary, if not exclusive, method for making and selling subprime loans is through mortgage brokers. Defendant NovaStar relies upon these mortgage brokers to locate and sell subprime loans to consumers. While mortgage brokers act as the initial point of contact between the lender and the consumer, it is Defendant NovaStar that is actually causing and accepting the discriminatory terms and conditions under which a subprime loan will be granted to the consumer. The mortgage broker will work with the consumer to complete all the required steps for obtaining the loan, such as completing any forms, submitting documentation, and obtaining appraisals and the like. The mortgage broker will also complete the closing of the loan. Defendant NovaStar, however, dictates what steps will be required, what documents must be submitted, and what other qualifications the potential borrower must meet. Defendant NovaStar also sets the terms of conditions of the residential mortgage loan that will be granted.
12. Defendant NovaStar encourages mortgage brokers to sell subprime loans by offering mortgage brokers various financial incentives. One device Defendant NovaStar uses to encourage the sale of subprime loans is its agreement to share any “yield-spread premium” imposed on the subprime loan with the mortgage broker initiating the loan.
13. A “yield spread premium” is the difference between the interest rate the lender, in this case Defendant NovaStar, would be willing to accept for granting the loan and the interest rate actually charged to the borrower. Lenders often justify the imposition of a yield spread premium on the basis of the perceived increase risk involved with subprime loans. In actuality, the yield spread premium is simply a device by which Defendant NovaStar and participating mortgage brokers can increase their profits.
14. In addition, mortgage brokers take advantage of subprime residential mortgage loan borrowers by imposing hefty fees and costs on those loans that are in excess of the fees and
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costs they impose on prime residential mortgage loans. Defendant NovaStar is aware of theses practices and condones and encourages them.
15. Defendant Novastar has established practices and procedures related to the financial incentives paid to mortgage brokers, including yield spread premiums, and other related policies directed at its mortgage brokers as a means to discriminate against minorities. Defendant Novastar knows and intends that these procedures cause a disparate impact upon minority borrowers, like Plaintiff. Because of these practices and procedures, minority borrowers, including Plaintiff, receive worse terms and pay higher costs and fees than similarly situated non-minority subprime borrowers. Defendant Novastar has established these practices and procedures which encourage, condone and cause mortgage brokers to prey upon minority borrowers, believing that they are more likely to accept less favorable loan terms and conditions than non-minority borrowers.
16. As a result of Defendant Novastar’s practices and procedures, mortgage brokers doing business with Defendant NovaStar specifically market subprime residential loans to minorities and often use deceptive or high pressure tactics to foist these unfair and discriminatory subprime loans onto unsuspecting minority borrowers.
MAE JACKSON 17. Mae Jackson is a 61-year-old African-American woman with less than a high school diploma. 18. Ms. Jackson bought the residence located at 930 Maury Avenue, Memphis, TN 38107 in 1977. As of April 2003 Plaintiff was current on her mortgage payments for the residence located at 930 Maury Avenue, Memphis, TN 38107.
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19. Ms. Jackson heard advertisements on a gospel radio station in Memphis, Tennessee claiming that one could get “easy money,” have “cash in your pocket,” and “consolidate bills”.
20. Ms. Jackson was interested in consolidating credit card loans and contacted the company advertising in order to seek advice and help about getting loan consolidation.
21. Ms. Jackson had existing mortgages on the property located at 930 Maury Avenue, in the approximate amount of $35,000.00 for the first mortgage and approximately $14,000.00 for the second mortgage.
22. After contacting the radio advertiser, Ms. Jackson was solicited both in person and on the telephone.
23. One of these solicitors was Nina Townes, an employee of a mortgage broker, “Worldwide Mortgage Corporation.” Ms. Jackson explained to Nina Townes that she was only interested in consolidating her credit card bills.
24. Ms. Jackson was again contacted by “Worldwide Mortgage Corporation”, and informed that she had been “approved for a loan”, and was asked to come in for an appointment for the closing.
25. When Ms. Jackson went in for her appointment, she was not told the amount of the loan, the interest rate, or the closing costs.
26. Ms. Jackson did not realize she would have to pay new closing costs, have a new interest rate, pay a higher monthly payment, and have new terms in her loan.
27. Ms. Jackson did not receive a good faith estimate of closing costs as required by law prior to closing.
28. The closing was held on April 30, 2003 at the offices of Worldwide Mortgage Corporation.
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29. Only Janet (last name unknown at this time), an employee of Worldwide Mortgage, was present at the closing.
30. Equity Title and Escrow Company of Memphis, L.L.C. was listed as the settlement agent for the transaction. However, no one from that company participated or conducted the closing.
31. No notary public from Equity Title and Escrow Company of Memphis, L.L.C. was present to witness Ms. Jackson’s signature on any of the documents signed at closing.
32. Ms. Jackson did not receive copies of any documents indicating a notary’s signature and seal.
33. None of the documents presented to Ms. Jackson at the closing were explained to Ms. Jackson and she was simply instructed where to sign her name on the papers.
34. Although the closing documents bear the date of April 29, 2003, the closing was actually held on April 30, 2003. Ms Jackson dated several of the documents she signed, April 30, 2003.
35. The HUD-1 settlement sheet dated April 29, 2003, but executed April 30, 2003, indicates that Ms. Jackson’s First Mortgage to Fairbanks Capital in the amount of $34,128.90 was paid off; Ms. Jackson’s Second Mortgage to “ASC” in the amount of $14,884.64 was paid off; and settlement charges were $23,937.23. The total of Ms. Jackson’s new loan was $99,450.00.
36. The truth in lending statement signed by Ms. Jackson shows the annual percentage rate of her loan at 9.67%.
37. Ms. Jackson’s current loan has a pre-payment penalty for a period of five years. 38. As a portion of mortgage funds due to the borrower, Ms. Jackson received a check for $25,999.23. She did not receive these or any other funds at the time of closing. Because she
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did not want, or request, this additional money, having only desired to consolidate her credit card bills, she attempted to return the money to NovaStar. NovaStar informed her that she could not simply give the money back, but could apply the money as an additional principal payment to her loan. Ms. Jackson did this, but was assessed a substantial penalty pursuant to the Prepayment Penalty provision.
39. During the closing, Ms. Jackson signed a “Notice of Assignment, Sale or Transferring of Service Rights.” This document notified Ms. Jackson that her loan was being sold or transferred from Worldwide Mortgage Corporation to NovaStar Mortgage, Inc. Upon information and belief, Worldwide Mortgage Corporation is the agent of NovaStar Mortgage for the purpose of completing all the required steps for obtaining loans, such as completing any forms, submitting documentation, obtaining appraisals and the like. Further, upon information and belief, Worldwide Mortgage Corporation is the agent of NovaStar Mortgage for the purpose completing closing of the loans. Defendant NovaStar dictates what steps will be required, what documents must be submitted, and what other qualifications the potential borrower must meet. Defendant NovaStar also sets the terms of conditions of the residential mortgage loan that will be granted.
40. Upon information and belief, Worldwide Mortgage Corporation and NovaStar are parties to a “Correspondent Lending Agreement,” under which: NovaStar provides a line of credit to Worldwide Mortgage for the purpose of table funding loans originated by Worldwide Mortgage; NovaStar is obligated to purchase loans originated by Worldwide mortgage; and Worldwide Mortgage has full and complete access to NovaStar’s underwriting and other services.
41. Ms. Jackson’s loan with NovaStar is for thirty (30) years and will be paid off when Ms. Jackson is eighty-eight (88) years old.
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42. Ms. Jackson was never informed about the term of her loan. 43. The “Additional Disbursements Exhibit” to the HUD-1 settlement sheet indicates “Payoff” disbursements made to several entities. One of these entities is “Providian Financial” in the amount of $2,208.00. Upon information and belief, Ms. Jackson did not, however, have debt to “Providian Financial.” The check for $2,208.00, made out to “Providian Financial” was delivered to Ms. Jackson sometime after the closing. When Ms. Jackson attempted to return the check, advising NovaStar that she had no debt with Providian, she was told by NovaStar that she could not return the check and the money would not be credited to her loan balance. Accordingly, Ms. Jackson is still in possession of a $2,208.00 check that she cannot cash. These are funds (unusable by her) that she is currently paying interest on. 44. The HUD-1 settlement statement discloses that Worldwide Mortgage Corporation received a $3,550.00 loan origination fee. 45. The settlement charges far exceed the amount allowed under the Home Ownership Equity Protection Act. 46. Taxes and insurance are not escrowed as part of the mortgage loan with NovaStar. Although Ms. Jackson signed what purported to be a “Waiver of Escrow,” and an “Escrow Account Option Notice,” Ms. Jackson was never informed that her taxes and insurance would not be escrowed and included in her monthly payment. 47. Upon information and belief, neither NovaStar nor its agent Worldwide Mortgage Corporation practiced due diligence in reviewing the loan request or in considering repayment ability in making the credit decision. 48. Upon information and belief, NovaStar paid Worldwide Mortgage a yield spread premium for Ms. Jackson’s loan which is greater than the yield spread premiums for similarly situated non-minority loans.
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49. Upon information and belief, NovaStar, as the lender, caused the unfair and discriminatory manner in which the loan was made as well as the discriminatory interest rate and other features present in the loan. These features are predatory in nature and took advantage of Ms. Jackson’s lack of sophistication.
50. Upon information and belief, NovaStar currently owns the loan and is reaping the benefits of the high interest rate on the loan and would benefit from any refinancing for the next two years through a stiff prepayment penalty.
51. Upon information and belief, NovaStar has not taken any action to terminate or release the security interest in Ms. Jackson’s home.
52. NovaStar has used the same or similar tactics to ensnare unsophisticated African Americans and other minorities into exploitative and predatory loans. NovaStar’s tactics encompass the same or similar purposes, results, participants, victims, and methods of commission and are marked by distinctive characteristics.
53. As a result of Defendant’s discriminatory conduct as alleged above, Ms. Jackson received a loan on worse terms with higher costs and fees than similarly situated non-minority borrowers.
ACCRUAL, FRAUDULENT CONCEALMENT, CONTINUING VIOLATION AND EQUITABLE TOLLING 54. Plaintiff and Class Members did not know and could not reasonably have known that they would receive worse terms, higher costs and fees than non-minorities. Their claims did not accrue until shortly before the filing of this action. 55. Defendant Novastar’s discriminatory conduct was inherently self-concealing. Defendant Novastar knew that Plaintiff and Class Members could not determine the relationship between the terms, fees and costs of their loans to those available to non-minorities. Defendant
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Novastar knew that the terms, fees and costs provided to minorities, unbeknownst to them, were substantially worse than the loans provided to non-minorities.
56. Defendant Novastar has not released or provided information about its discrimination against Plaintiff and Class Members and has actively and fraudulently concealed its discriminatory practices.
57. As a result of the foregoing, Plaintiff and Class Members in the exercise of due diligence could not have reasonably discovered the discriminatory practices and did not do so until just recently. For the reasons alleged above, the members of the Class still do not know that they have been and continue to be injured by Defendant Novastar’s discriminatory conduct.
58. Defendant Novastar’s discriminatory conduct is continuing in nature, and it has committed discriminatory acts throughout the limitations period.
59. There is a substantial nexus between the acts of discrimination occurring within the limitation periods prior to filing suit and the acts of discrimination before that time. The acts involve the same type of discrimination and are recurring, not isolated, events.
60. Defendant Novastar specifically misled Plaintiff and Class Members into believing that the terms, fees and costs offered were fair, reasonable, and the same as offered to non-minorities, and took steps to conceal its fraudulent and unfair conduct.
61. The statute of limitations applicable to any claims which Plaintiff or other Class Members have brought or could bring as a result of the unlawful and fraudulent concealment and course of conduct described herein has been tolled as a result of Defendant Novastar’s fraudulent concealment. In addition, Plaintiff and the Class did not and could not have discovered their causes of action until the time alleged below, thereby tolling any applicable statute of limitations.
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CLASS ACTION ALLEGATIONS 62. This action is brought by Plaintiff as a class action pursuant to Rule 23(a) and Rule 23(b)(2) and/or Rule 23(b)(3) of the Federal Rules of Civil Procedure on behalf of all minorities (hereinafter collectively referred to as the AClass@ or AClass Members@) who entered into residential mortgage loan contracts that were financed or purchased by Defendant NovaStar; and were harmed by Defendant NovaStar’s discriminatory conduct. 63. The Class is believed to comprise many thousands of mortgage applicants in the United States, the joinder of whom is impracticable, and for whose claims class treatment will provide substantial benefit to both the parties and the court system. A well-defined commonality of interest in the questions of law and fact involved affects Plaintiff and proposed Class Members. Common questions of law and fact predominate over any questions that may affect Class Members individually. The common questions include:
a. Whether Defendant discriminated against Class Members by charging them higher interest, fees, and other costs for home mortgage loans than Defendant charges similarly situated non-minority borrowers;
b. Whether Defendant’s intent in its discriminatory policies and practices was racially motivated;
c. Whether Defendant can articulate a legitimate non-discriminatory reason for its practices and procedures which are discriminatory;
d. Whether Defendant’s practices and procedures regarding financial incentives paid to mortgage brokers, including yield spread premiums, and other related policies have a disparate impact on minority borrowers;
e. Whether Defendant has any business justification for these practices and procedures which cause a disparate impact upon minorities;
f. Whether there is a less discriminatory alternative to these practices and procedures;
g. Whether Defendant devised and deployed a scheme or common course of conduct which acted to deceive Plaintiff and Class Members;
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h. Whether Plaintiff and Class Members are entitled to specific performance, injunctive relief and/or other equitable relief against Defendant;
i. Whether Plaintiff and Class Members have sustained damages and the proper measure of those damages.
64. Plaintiff's claims are typical of the claims of the proposed Class, and Plaintiff will fairly and adequately represent and protect the interests of the proposed Class. Plaintiff does not have any interests antagonistic to those of the Class. Plaintiff has retained competent and experienced counsel in the prosecution of this type of litigation.
65. Defendant has acted and refused to act on grounds generally applicable to the Class by engaging in the same discriminatory conduct with respect to all Class Members, thereby making injunctive or declaratory relief applicable with respect to the Class as a whole. Class Members primarily seek injunctive relief.
66. A class action also is superior to other available methods for the fair and efficient adjudication of this controversy, because Class Members number in the thousands and individual joinder is impracticable. The expense and burden of individual litigation would make it impracticable or impossible for proposed Class Members to prosecute their claims individually. Trial of Plaintiff's and Class Members= claims is manageable, and economies of time, effort, and expense will be fostered and uniformity of decisions will be insured.
67. Most individual Class Members have little ability to prosecute an individual action due to the complexity of the issues involved in this litigation and the significant costs attendant to litigation on this scale compared to the significant, but small damages suffered by individual Class Members.
68. Unless a class is certified, Defendant will continue to engage in predatory and discriminatory lending practices to the detriment of minority borrowers. Unless a class-wide
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injunction is issued, Defendant will continue to commit violations against minority home mortgage loan applicants.
COUNT I RACIAL DISCRIMINATION B 42 U.S.C. ' 1981 69. Plaintiff repeats, realleges, and incorporates the allegations contained in paragraphs 1 through 68 above as if fully set forth herein. 70. Defendant intentionally discriminated against Plaintiff and Class Members by offering residential mortgage loans on less favorable conditions by charging higher fees, costs, interest, and yield spread premiums for residential mortgage loans than the fees, costs, interest and premiums charged to similarly situated Caucasian borrowers. 71. By charging higher fees, costs, interest and yield spread premiums on residential mortgage loans, Defendant unlawfully discriminated against Plaintiff and Class Members in (I) formation of contracts, (ii) making, performance, modification, and termination of contracts, (iii) the enjoyment of all benefits, privileges, terms and conditions of the contractual relationship, and/or (iv) conduct that interferes with the right to establish and enforce contract obligations. 72. Defendant=s actions violate 42 U.S.C. '1981, as well as the rights of Plaintiff and the Class under the Fifth, Thirteenth, and Fourteenth Amendments to the Constitution of the United States. 73. Plaintiff and Class Members who are entitled to injunctive and declaratory relief and damages or make whole equitable relief as a result of Defendant’s discriminatory conduct. 74. At no time has Defendant undertaken corrective action to ameliorate its racially discriminatory practices. Defendant continues to reap the profits of its discriminatory practices and continues to discriminate. Defendant=s conduct as alleged herein was intentional, willful, wanton, reckless, malicious, outrageous or otherwise aggravated beyond mere negligence.
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Defendant has acted with malice and reckless indifference to the federally protected rights of Plaintiff and Class Members. As a result, Plaintiff and Class Members are entitled to punitive damages.
COUNT II RACE DISCRIMINATION B 42 U.S.C. '1982 75. Plaintiff repeats, realleges, and incorporates the allegations contained in paragraphs 1 through 74 above as if fully set forth herein. 76. Section 42 U.S.C. '1982 provides that all citizens of the United States “shall have the same right, in every State and Territory, as is enjoyed by White citizens thereof to inherit, purchase, lease, sell, hold, and convey real and personal property.” 77. Defendant has discriminated against Plaintiff and the Class with respect to the residential mortgage loans Defendant sold to them by charging Plaintiff and the Class higher interest, including yield spread premiums, and greater fees and costs on residential mortgage loans, than Defendant has charged similarly situated Caucasian borrowers for the same loans. As a result of Defendant’s conduct, Plaintiff and the Class have not had the same right as Caucasians to inherit, purchase, sell, hold and convey real property. Defendant has thereby violated 42 U.S.C. '1982. 78. Defendant’s violation of 42 U.S.C. '1982 was intentional and malicious. 79. As a proximate result of Defendant’s violation of 42 U.S.C. '1982, Plaintiff and Class Members have been injured and are entitled to injunctive and declaratory relief and damages or make whole equitable relief. In addition, Defendant’s conduct as alleged herein was intentional, willful, wanton, reckless, malicious, outrageous or otherwise aggravated beyond mere negligence. Defendant acted with malice and reckless indifference to the federally
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protected rights of Plaintiff and Class Members. As a result, Plaintiff and Class members are entitled to punitive damages.
COUNT III VIOLATION OF THE FAIR HOUSING ACT
42 U.S.C. '3601 – 3619 80. Plaintiff repeats and realleges the allegations in paragraphs 1 through 79 above as if fully set forth herein. 81. Mortgage lending and the providing of residential mortgage loans is a “residential real estate-related transaction” within the meaning of the FHA. 42 U.S.C. '3605(b). 82. Through imposing higher interest, including yield spread premiums, and greater fees and costs on residential mortgage loans to Plaintiff and Class Members, Defendant has discriminated against Plaintiff=s and Class Members= ability to participate in real estate-related transactions and in the terms and conditions of such transactions in violation of the FHA. 42 U.S.C. '3605(a). 83. In addition, Defendant’s practices and procedures regarding its financial incentives and other related policies directed towards its mortgage brokers had a disparate impact upon Plaintiff and Class Members. 84. As a proximate result of Defendant’s violation of 42 U.S.C. '3605, Plaintiff and Class Members have been injured and are entitled to injunctive and declaratory relief and damages or make whole equitable relief. In addition, Defendant’s conduct as alleged herein was intentional, willful, wanton, reckless, malicious, outrageous or otherwise aggravated beyond mere negligence. Defendant acted with malice and reckless indifference to the federally protected rights of Plaintiff and Class Members. As a result, Plaintiff and Class members are entitled to punitive damages.
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85. Moreover, Defendant continues to discriminate in violation of the FHA against Class Members every time Defendant provides a residential mortgage loan as described herein. If not enjoined from such violation by the Court, Defendant will continue to engage in conduct that disregards the rights of Plaintiff and Class Members and cause Plaintiff and Class Members irreparable injury for which there is no adequate remedy at law. 42 U.S.C. '3613(c).
86. Plaintiff and Class Members ask this Court to declare the rights of the parties herein regarding Defendant’s obligation to participate in credit transactions without discriminating against applicants for credit on the basis of the applicants= race.
COUNT IV VIOLATION OF THE EQUAL CREDIT OPPORTUNITY ACT
15 U.S.C. ' 1691 - 1691f 87. Plaintiff repeats and realleges the allegations contained in paragraphs 1 through 86 above as if fully set forth herein. 88. Defendant engages in credit transactions through its offering, granting, and purchasing of residential mortgage loans. 89. Through imposing higher interest, including yield spread premiums, and greater fees and costs on residential mortgage loans to Plaintiff and Class Members, Defendant has discriminated against Plaintiff and Class Members with respect to a credit transaction on the basis of race in violation of the ECOA. 15 U.S.C. '1691(a). 90. In addition, Defendant’s practices and procedures regarding its financial incentives and other related policies directed towards its mortgage brokers has a disparate impact upon Plaintiff and Class Members with respect to a credit transaction on the basis of race in violation of the ECOA. 15 U.S.C. '1691(a).
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91. As a proximate result of Defendant’s violation of 15 U.S.C. '1691, Plaintiff and Class Members have been injured and are entitled to injunctive and declaratory relief and damages or make whole equitable relief. In addition, Defendant’s conduct as alleged herein was intentional, willful, wanton, reckless, malicious, outrageous or otherwise aggravated beyond mere negligence. Defendant acted with malice and reckless indifference to the federally protected rights of Plaintiff and Class Members. As a result, Plaintiff and Class members are entitled to punitive damages.
92. Moreover, Defendant continues to discriminate in violation of the ECOA against Class Members every time Defendant provides a residential mortgage loan as described herein. If not enjoined from such violation by the Court, Defendant will continue to engage in conduct that disregards the rights of Plaintiff and Class Members and cause Plaintiff and Class Members irreparable injury for which there is no adequate remedy at law. 15 U.S.C. '1691(e).
93. Plaintiff and Class Members ask this Court to declare the rights of the parties herein regarding Defendant’s obligation to participate in credit transactions without discriminating against applicants for credit on the basis of the applicants= race.
JURY DEMAND 94. Plaintiff, on behalf of herself and all others similarly situated, hereby demands trial by jury.
REQUESTS FOR RELIEF WHEREFORE PREMISES CONSIDERED, Plaintiff requests the following relief: (1) An order determining that the action is a proper class action pursuant to Rule 23 of the Federal Rules of Civil Procedure;
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(2) A Judgment awarding Plaintiff and Class Members costs and disbursements incurred in connection with this action, including reasonable attorneys' fees, expert witness fees and other costs;
(3) A Judgment granting extraordinary equitable and/or injunctive relief as permitted by law or equity, including rescission, restitution, reformation, attaching, impounding or imposing a constructive trust upon, or otherwise restricting, the proceeds of Defendant’s illgotten funds to ensure that Plaintiff and Class Members have an effective remedy;
(4) A Judgment awarding punitive damages to Plaintiff and Class Members; (5) A Judgment granting declaratory and injunctive relief and all relief that flows from such injunctive and declaratory relief; and (6) A Judgment or other Order granting such other and further relief as the Court deems just and proper including, but not limited to, recessionary relief and reformation. DATED: April 28, 2006.
GLASSMAN, EDWARDS WADE & WYATT, P.C.
BY:___s/ B. J. Wade_________________________ B. J. WADE (#5182) 26 North Second Street Memphis, TN 38103 (901) 527-4673 – phone (901) 527-0940 – fax
Attorney for Plaintiff and the Class
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OF COUNSEL: Christa Collins J. Andrew Meyer JAMES, HOYER, NEWCOMER
& SMILJANICH, P.A. 4830 West Kennedy Boulevard, Suite 550 Tampa, FL 33609-2589 (813) 286-4100 – phone (813) 286-4174 – fax Wendy Harrison Andrew Friedman BONNETT, FAIRBOURN, FRIEDMAN
& BALINT, P.C. 2901 North Central Avenue, Suite 1000 Phoenix, AZ 85012 (602) 274-1100 – phone (602) 274-1199 – fax
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 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TENNESSEE
WESTERN DIVISION ______________________________________________________________________________

WILLIE MAE JACKSON, on behalf of )

herself and all others similarly situated, )

)

Plaintiff,

)

)

v.

)

)

NOVASTAR MORTGAGE, INC.,

)

)

Defendant.

)

Case No. 06-2249

ORDER GRANTING DEFENDANT’S MOTION FOR RECONSIDERATION AND
MEMORANDUM OPINION AND ORDER DENYING DEFENDANT’S MOTION TO DISMISS
______________________________________________________________________________ On August 15, 2007, the defendant, Novastar Mortgage, Inc., (“Novastar” or “Defendant”),
filed a motion to dismiss the complaint. (D.E. #6). In that complaint, the plaintiff, Ms. Willie Mae Jackson (“Ms. Jackson” or “Plaintiff”), asserts that the defendant engaged in and continues to engage in racially discriminatory conduct by targeting minority borrowers via radio advertisements on gospel radio stations with predominantly African-American listeners. Specifically, Ms. Jackson alleges that Novastar offered and continues to offer minority subprime borrowers loans that include higher terms, costs, and interest rates than similarly situated non-minority borrowers in violation of the Civil Rights Act of 1991, 42 U.S.C. §§ 1981 and 1982, the Fair Housing Act, 42 U.S.C. § 3605, and the Equal Credit Opportunity Act, 15 U.S.C. § 1691. Novastar seeks to dismiss Ms. Jackson’s complaint on several bases: (1) lack of standing to bring her claim; (2) failure to join Worldwide Mortgage Corporation(“Worldwide”) as a party pursuant to Fed. R. Civ. P. 19; (3) her complaint
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is barred by her prior bankruptcy; (4) her complaint is barred by the applicable statutes of limitation; (5) failure to plead her claims under Rule 8 of the Federal Rules of Civil Procedure; and (6) her complaint is barred by the voluntary payment doctrine.
On September 27, 2007, this Court issued an order denying the defendant’s motion to dismiss. (D.E. #33.) In this Order, the Court stated that it would subsequently issue a full memorandum explaining the Court’s findings. Before the Court issued its Memorandum, the defendant submitted a motion to reconsider (D.E. #35), asserting that the Court based its prior order denying its motion to dismiss on the “no set of facts” standard found in Conley v. Gibson, 355 U.S. 41, 45-46 (1957), which the Supreme Court recently overruled in Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955, 1969 (2007). Although Novastar is correct in its statement of the appropriate legal standard, this Court denied the motion to reconsider, finding that it was not supported by good cause. (D.E. #38.) This Court will now set forth in this memorandum opinion its rationale for denying Defendant’s motions. I. FACTUAL ALLEGATIONS1
The plaintiff, Ms. Willie Mae Jackson, is a sixty-one-year-old African-American woman who never completed her high school education. Ms. Jackson heard advertisements on a local gospel radio station whose listeners are predominantly African-American. These advertisements claimed that people could call and “consolidate bills,” have “cash in your pocket,” and get “easy money.” Ms. Jackson contacted the phone number announced in the advertisement and was solicited both by telephone and in person by mortgage brokers with Worldwide. Ms. Jackson explained to the representative that she was only interested in obtaining a loan to consolidate her credit card bills.
1For present purposes only, the facts indicated in the complaint, motions, and evidence submitted to the Court are construed as true.
2

Subsequently, Ms. Jackson was contacted by a Worldwide representative who stated that she had been approved for the loan and that she should come in for a closing appointment. The mortgage broker never informed Ms. Jackson about the total amount of the loan, the interest rate, or the closing costs. At the closing on April 30, 2003, Ms. Jackson was simply instructed to sign the documents. No one explained the terms of the loan to Ms. Jackson. At the closing Ms. Jackson signed a Notice of Assignment, Sale or Transferring of Service Rights. The document informed Ms. Jackson that her loan was being sold or transferred to Novastar. The promissory note that Ms. Jackson signed with Worldwide at the closing indicated a payment address of P.O. Box 808911, Kansas City, MO 64184-8911, which is actually the address for Novastar, not Worldwide.
Prior to signing the present loan, Ms. Jackson owed approximately $49,000.00 in two mortgages on her home—the first to Fairbanks Capital for approximately $35,000.00, and the second to ASC in the amount of $14,000.00. The total of Ms. Jackson’s new loan, however, was $99,450.00. Although this amount covered the two home mortgages and $23,937.23 in other settlement charges, Ms. Jackson subsequently received an unrequested disbursement in the amount of $25,999.23.
Upon informing Novastar that she never asked for these additional funds, Ms. Jackson was informed that, pursuant to her mortgage terms, she could not simply return the funds. Instead, Ms. Jackson was told that she would have to submit the excess funds as an additional principal payment. Ms. Jackson returned the funds to Novastar, but she incurred substantial penalties under the loan’s pre-payment penalty provision. Afterwards, Ms. Jackson received another check payable to Providian Financial (“Providian”) in the amount of $2,208.00. When Ms. Jackson attempted to return this check, explaining to Novastar that she did not have debt with Providian, Novastar advised
3

her that, because Providian was listed on the “additional disbursements exhibit” of the original loan, she could not return the check to Novastar and the funds would not be credited to her loan balance. As Ms. Jackson later discovered, the terms of her loan with Novastar included a 9.67% interest rate on a thirty-year loan with a pre-payment penalty period of five years. Under this payment plan, Ms. Jackson will pay off her loan when she is eighty-eight years of age.
In her complaint, Ms. Jackson alleges that Novastar engaged and continues to engage in racially discriminatory conduct by targeting undereducated minorities and providing subprime loans to them with interest rates and terms dissimilar to those provided to similarly situated non-minority borrowers. Ms. Jackson argues that Novastar was the primary actor throughout the loan process and that Worldwide operated as Novastar’s agent in this regard. Ms. Jackson further alleges that Novastar used a technique called interest-rate steering, a process of setting rates based on the perceived financial sophistication of the borrower rather than the risk of extending the loan, to achieve its alleged discriminatory goals. Ms. Jackson also alleges that Novastar and its brokers sought high yield-spread premiums, which is the difference between the interest rate the lender would accept for the loan and the interest rate that the borrower is actually charged. It is Ms. Jackson’s position that the lucrative financial incentives in yield-spread premiums encourage lenders and brokers to target financially disadvantaged and unsophisticated minorities and bind them to loans with higher interest rates than similarly situated non-minority borrowers. Further, Ms. Jackson asserts that she had no knowledge of Novastar’s alleged discriminatory conduct until immediately prior to bringing her claim.
II. LEGAL STANDARD
4

A. Motion to Dismiss A defendant may bring a motion to dismiss for failure to state a claim under Fed. R. Civ. P. 12(b)(6). This motion only tests whether the plaintiff has pleaded a cognizable claim. Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 436 (6th Cir. 1988). Essentially, it allows the court to dismiss, on the basis of a dispositive issue of law, meritless cases which would otherwise waste judicial resources and result in unnecessary discovery. See, e.g., Nietzke v. Williams, 490 U.S. 319, 326-27 (1989). To determine whether a motion to dismiss should be granted, the court must examine the complaint. The complaint must contain“a short and plain statement of the claim showing that the pleader is entitled to relief, Fed. R. Civ. P. 8(a)(2), and it must provide the defendant with fair notice of what the plaintiff’s claim is and the grounds upon which it rests. Conley v. Gibson, 355 U.S. 41, 47 (1957); Westlake v. Lucas, 537 F.2d 857, 858 (6th Cir. 1976). While a complaint need not present detailed factual allegations, to be cognizable it must provide more than labels and conclusions, and a formulaic recitation of a cause of action’s elements will not do. Twombly, 127 S.Ct. at 1959; see also Scheid, 859 F.2d at 436-37. A complaint must have a factual foundation, and the mere possibility that a plaintiff might later establish some set of undisclosed facts to support recovery is insufficient to survive a 12(b)(6) challenge. Twombly, 127 S.Ct. at 1968. In reviewing the complaint, the court must accept as true all factual allegations in the complaint and construe them in the light most favorable to the plaintiff. Nietzke, 490 U.S. at 326-27 (“Rule 12(b)(6) does not countenance dismissals based on a judge's disbelief of a complaint's factual allegations.”); Windsor v. The Tennessean, 719 F.2d 155, 158 (6th Cir. 1983). Where there are conflicting interpretations of the facts, they must be construed in the plaintiff’s favor. Sinay v.
5

Lamson & Sessions Co., 948 F.2d 1037, 1039-40 (6th Cir. 1991). However, only well-pleaded facts must be taken as true, and the court need not accept legal conclusions or unwarranted factual inferences. Lewis v. ACB Bus. Servs., Inc.,135 F.3d 389, 405-06 (6th Cir. 1998). When a complaint does adequately state a claim, it may not be dismissed based on the court’s “assessment that the plaintiff will fail to find evidentiary support for his allegations or prove his claim to the satisfaction of the factfinder.” Twombly, 127 S.Ct. at 1969.
B. Motion to Reconsider This Court may revise a previous order under Rule 54(b) of the Federal Rules of Civil Procedure, which provides as follows: [A]ny order or other form of decision, however designated, which adjudicates fewer than all of the claims . . . shall not terminate the action . . . and the order or other form of decision is subject to revision at any time before the entry of judgment adjudicating all the claims and the rights and liabilities of all the parties. Id. In reviewing a motion for revision under Rule 54(b), courts generally apply the same standards applicable to a Rule 59(e) motion for reconsideration, which is only granted for one of three reasons: (1) to correct a clear error of law; (2) to account for newly discovered evidence or a change in controlling law; or (3) to prevent manifest injustice. Gencorp, Inc. v. Am. Int=l Underwiters, 178 F.3d 804, 834 (6th Cir. 1999); Al-Sadoon v. FISI*Madison Fin. Corp., 188 F. Supp. 2d 899, 901-02 (M.D. Tenn. 2002). In that the Court did not apply the prevailing standard for analysis, the Court grants the motion for reconsideration to correct an error of law. III. ANALYSIS A. Standing First, Defendant asserts that Plaintiff lacks standing because Novastar did not cause her injury. In order to have proper standing, the Sixth Circuit does not require direct contact between
6

a plaintiff and a defendant. Smith v. City of Cleveland Heights, 760 F.2d 720, 721 (6th Cir. 1985). Rather, all that is required is that the plaintiff’s “injuries fairly can be traced to the challenged action.” Valley Forge Christian Coll. v. Am. United for Separ. of Church & State, Inc., 454 U.S. 464, 472 (1982).
Here, Ms. Jackson alleges that Worldwide operated as Novastar’s agent for purposes of obtaining mortgages for the latter and that Novastar is the “unseen hand” orchestrating the discriminatory conduct. On the other hand, Novastar alleges that Worldwide’s conduct is not traceable to Novastar because Worldwide is merely an independent contractor. To support this assertion, Novastar points to the language of its Correspondent Agreement with Worldwide, in which the parties state that Worldwide is an independent contractor who shall determine the method, details, and means of performing all services described in the agreement.
The parties’ characterization in an agreement is not dispositive of the existence of an agency relationship. Restatement (Third) of Agency § 1.02. The determination of an agency relationship, rather, is found “after an assessment of the facts of the relationship.” Id. at cmt. a. At the closing, Ms. Jackson was informed by Worldwide that her loan was being transferred to Novastar. Further, Ms. Jackson was directed to send payments to a specific address listed in the promissory note, which is a payment address listed on Novastar’s website. Therefore, it is difficult for Novastar to argue that it acquired the loan one month subsequent to the closing when Ms. Jackson was required to send payments to Novastar from the very beginning. Thus, it is possible that under these facts an agency relationship could be found to exist despite the parties’ agreement to the contrary. Because Ms. Jackson’s pleading in this regard is sufficient to satisfy the “facially plausible” standard set forth in Twombly, the Court declines to dismiss Ms. Jackson’s claim on this basis.
7

B. Failure to Join Under Fed. R. Civ. P. 19(a)
Next, Novastar argues that Ms. Jackson’s complaint should be dismissed for failure to join
Worldwide pursuant to Rule 19(a).2 Novastar asserts that such a failure may result in an
unsatisfactory recovery or mixed results if Ms. Jackson’s claim were brought before the bankruptcy
court pursuant to Worldwide’s bankruptcy. It is settled law, however, that a party’s status as a joint
tortfeasor does not make that person necessary or indispensable. PaineWebber, Inc. v. Cohen, 276
F.3d 197, 204-05 (6th Cir. 2001); see also Temple v. Synthes Corp., 498 U.S. 5, 7-8 (1990) (per
curiam) (“[I]t is not necessary for all joint tortfeasors to be named as defendants in a single
lawsuit.”). Ms. Jackson alleges that Novastar directed Worldwide’s actions during the formation
and closing of the mortgage. Ms. Jackson further alleges that Novastar’s actions of both targeting
minority subprime borrowers via radio advertisements on predominantly African-American radio
stations and utilizing interest-rate steering and yield-spread premiums are discriminatory in nature
and, therefore, that Novastar is the tortfeasor. Accordingly, Plaintiff’s allegations are sufficient to
survive a motion to dismiss for improper joinder.
2 Rule 19(a) of the Federal Rules of Civil Procedure reads as follows: Persons to be Joined if Feasible. A person who is subject to service of process and whose joinder will not deprive the court of jurisdiction over the subject matter of the action shall be joined as a party in the action if (1) in the person's absence complete relief cannot be accorded among those already parties, or (2) the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person's absence may (I) as a practical matter impair or impede the person's ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of the claimed interest. If the person has not been so joined, the court shall order that the person be made a party. If the person should join as a plaintiff but refuses to do so, the person may be made a defendant, or, in a proper case, an involuntary plaintiff. If the joined party objects to venue and joinder of that party would render the venue of the action improper, that party shall be dismissed from the action.
Fed. R. Civ. P. 19(a).
8

C. Plaintiff’s Bankruptcy Next, Novastar asserts that Ms. Jackson’s claim is barred by res judicata and judicial estoppel because she did not disclose any potential claim against Novastar in her Chapter 7 bankruptcy petition on July 26, 2004. Plaintiff claims that these doctrines are inapplicable in this matter because she did not know nor should she have known of her discrimination claims against Novastar when she filed her bankruptcy petition. This Court has previously addressed whether these doctrines bar a plaintiff from subsequent claims and found that they did not apply to a plaintiff who did not know of her claims at the time of filing bankruptcy. Willingham v. Novastar Mortgage, Inc., No. 04-2391 at 9-10 (W.D.Tenn. Feb. 7, 2006) (Chapter 13 bankruptcy). 1. Judicial Estoppel Under the doctrine of judicial estoppel, the Court may impose an equitable remedy that precludes a party from asserting a position contrary to one that the party asserted under oath in a prior proceeding, where the court adopted the contrary position. Teledyne Indus., Inc. v. NRLB, 911 F.2d 1214, 1217 (6t Cir. 1990). The Sixth Circuit has additionally stated that judicial estoppel is not compulsory and should be “applied with caution to avoid impinging on the truth-seeking function of the court, because the doctrine precludes a contradictory position without examining the truth of either statement.” Eubanks v. CBSK Fin. Group, Inc., 385 F.3d 894, 899 (6t Cir. 2004) (internal citations omitted). In the present case, as in Willingham, Ms. Jackson did not list any claim against Novastar in her bankruptcy petition. Furthermore, in her pleadings in this case, which this Court accepts as true for purposes of this motion, Ms. Jackson claims that she did not know of any claims against Novastar until after her bankruptcy petition. These facts alone convince this Court that the equitable
9

remedy of judicial estoppel should not apply to Ms. Jackson. Furthermore, Plaintiff has less than a high school education and is not expected to have
understood that a civil action may be an asset. This Court has previously determined that “an unsophisticated debtor may not fully understand what information is being requested . . . .” Carr v. Home Tech Services Co., No. 03-2569, 2005 WL 2699209, at *3 (W.D.Tenn. Oct. 12, 2005). This Court has likewise held that claims which “may not be recognizable to lay persons” should not be barred by the application of judicial estoppel. Thus, in addition to accepting Ms. Jackson’s assertion that she did not know of the claims at the time of her bankruptcy petition, this Court finds that, even if she had known of unsavory practices, a lay plaintiff is not held to such a stringent standard as to recognize that such claims must be included in a bankruptcy petition. This is particularly true under the Sixth Circuit’s requirement that a court should consider mistake, inadvertence, and the absence of bad faith in determining when judicial estoppel should apply. Browning v. Levy, 283 F.3d 761, 775 (6th Cir. 2002); see also Eubanks, 385 F.3d at 895. Therefore, this Court declines to dismiss Ms. Jackson’s claims on the basis of judicial estoppel.
2. Res Judicata Additionally, Novastar contends that Plaintiff’s claims are barred by res judicata because she cannot relitigate issues that were raised or could have been raised in previous proceedings. Plaintiff responds that, because she had no knowledge of the claims against Novastar, claim preclusion should not apply to her case. Under this doctrine, if the later litigation arises from the same cause of action, then the judgment bars litigation not only of every matter which was actually offered but also of every claim which might have been presented. Baltimore S.S. Co. v. Phillips, 274 U.S. 316, 319 (1927).
10

However, the same issue precluding a finding as to judicial estoppel has been held to bar a finding as to res judicata because the analysis depends upon “at what point, prior, during, or after the bankruptcy proceedings” did the plaintiff know of the claims. SAS Institute, Inc. v. Practicing Smarter, Inc., No. 1:03CV01063, 2006 WL 1888565, at *4 n.1 (M.D.N.C. July 6, 2006). Once again, this Court must take as true that Plaintiff did not know of claims against Novastar upon the filing of her bankruptcy petition. Thus, this Court finds that res judicata should not preclude Ms. Jackson’s claims and denies to dismiss them on this basis.
D. Applicable Statute of Limitation Next, Novastar argues that Ms. Jackson’s claim accrued on or around April 30, 2003—the closing date of the loan—and that the claim is barred by the applicable statute of limitations. The statute of limitations period begins to run once an action has accrued. Lindsey v. Allstate Ins. Co., 34 F. Supp. 2d 636, 643 (W.D. Tenn. 1999). In discrimination cases, an action does not accrue until the plaintiff knew or had reason to know that the defendant’s actions were discriminatory. Tolbert v. State of Ohio Dep’t of Transp., 172 F.3d 934, 939 (6th Cir. 1999). In the present case, Ms. Jackson alleges in her complaint that she did not know, nor did she have reason to know, of Novastar’s alleged discriminatory conduct until immediately prior to bringing her claim. Ms. Jackson states that she had no prior knowledge that Novastar engaged in a scheme of targeting undereducated minorities or in offering loans to minorities on terms dissimilar to similarly situated subprime borrowers. Further, Ms. Jackson asserts that she did not know until that time that Novastar engaged in interest-rate steering or that it offered brokers incentives for high yield spread premiums. A continuing violation occurs when the defendant maintains a “continuing overarching
11

policy of discrimination” and such actions continue into the limitations period. Bell v. Ohio State Univ., 351 F.3d 240, 247 (6th Cir. 2003). It is Ms. Jackson’s position that this claim, which includes all others “similarly situated,” involves the continued alleged targeting and exploitation of minorities pursuant to Novastar’s lending policies. Therefore, Ms. Jackson contends that each new loan and each loan payment paid by an affected minority borrower constitutes a continuing violation. A motion to dismiss is decided on the sufficiency of the pleadings only. Because Ms. Jackson’s pleadings are sufficient to survive the facially plausible standard, the Court declines to dismiss Ms. Jackson’s claim on this basis.
E. Rule 8 Pleading It is well-established that claims for discrimination need only survive the pleading requirements of Rule 8(a) of the Federal Rules of Civil Procedure. Swierkiewicz v. Sorema N.A., 534 U.S. 506, 511 (2002). In particular, Rule 8(a) requires that the party provide (1) a short and plain statement of the grounds upon which the court's jurisdiction depends, unless the court already has jurisdiction and the claim needs no new grounds of jurisdiction to support it; (2) a short and plain statement of the claim showing that the pleader is entitled to relief; and (3) a demand for judgment for the relief the pleader seeks. Fed. R. Civ. P. 8(a). Although Novastar is correct in stating that the Supreme Court has recently rejected the “no set of facts” doctrine established in Conley, the Court in Twombly also stated that “the Court is not requiring heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face.” Twombly, 127 S. Ct. at 1974. Further, the Court in Twombly stated that “[a]sking for plausible grounds does not impose a probability requirement at the pleading stage; it simply calls for enough fact to raise a reasonable expectation that discovery will reveal evidence”on the issue before the court. Id. at
12

1965 (emphasis added). Only in narrow circumstances must a party plead with particularity. See Fed. R. Civ. P. 9(a)-(h). As set forth herein, Ms. Jackson has plead facts sufficient to survive the Defendant’s motion to dismiss.
1. Racial Discrimination Under 42 U.S.C. § § 1981 & 1982 Under Section 1981, “[a]ll persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other.” 42 U.S.C. § 1981(a). Section 1982 states that “[a]ll citizens of the United States shall have the same right, in every State and Territory, as is enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold, and convey real and personal property.” 42 U.S.C. § 1982. Under the facts before the court, Ms. Jackson has plausibly stated her claim and has raised a reasonable expectation that evidence of the alleged discriminatory conduct may be found during discovery. According to Ms. Jackson’s complaint, Novastar intentionally discriminated and continues to discriminate against minority subprime borrowers by offering loans on less favorable conditions than offered to similarly situated non-minority borrowers. Further she alleges that Novastar accomplishes this by targeting minority borrowers via radio advertisements on gospel radio stations whose listeners are predominantly African-American. Additionally, Ms. Jackson alleges that Novastar discriminated and continues to discriminate against these targeted minority sub-prime borrowers by offering lucrative yield-spread premiums to mortgage brokers. She alleges that this practice encourages brokers to seek the highest interest rate possible, to charge excessive fees and
13

closing costs, and to bind minority borrowers to interest rates higher than similarly situated nonminority borrowers. Ms. Jackson alleges that the terms of her agreement illustrate Novastar’s practices: (1) a 9.67% interest rate with a five-year pre-payment penalty; (2) Novastar’s failure to explain terms; (3) Novastar’s instructions to sign without disclosure of terms; (4) Novastar’s refusal to accept her return of overpayment without applying as principal payment subject to penalties; and (5) Novastar’s subsequent refusal to accept return of payment to Providian.
Twombly only requires that the pleading is plausible on its face, not that the allegations therein are probable. Twombly, 127 S. Ct. at 1974, 1965. As stated previously, when a complaint does adequately state a claim, it may not be dismissed based on the court’s assessment that the plaintiff will fail to find evidentiary support for her allegations or prove her claim to the satisfaction of the factfinder. Twombly, 127 S. Ct. at 1969. Because Ms. Jackson has satisfied the facially plausible standard of Twombly and is not required to plead with particularly, the allegations in Ms. Jackson’s complaint are sufficient to survive Novastar’s motion to dismiss on these grounds.
2. Violation of Fair Housing Act § 3605 Under Section 3605 of the Fair Housing Act, it shall be unlawful for any person or other entity whose business includes engaging in residential real estate transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race. 42 U.S.C. § 3605. In her complaint, Ms. Jackson alleges that Novastar engaged and continues to engage in discriminatory conduct in violation of Section 3605. Ms. Jackson alleges that Novastar, as a home mortgage lender, has discriminated and continues to discriminate against minority subprime borrowers by targeting them via directed advertisements in such venues as gospel radio stations, offering “easy money” and “cash in your pocket,” and utilizes interest-rate steering
14

and yield-spread premium incentives in an attempt to take advantage of such borrowers and bind them to terms with higher costs, fees, and interest rates than similarly situated non-minority subprime borrowers. In light of Ms. Jackson’s allegations and the facts of the present case, the Court holds that Ms. Jackson has met the facially plausible standard of Twombly. Accordingly, this Court declines to dismiss Ms. Jackson’s claim on this basis.
3. Violation of Equal Credit Opportunity Act § 1691(a) Under the Equal Credit Opportunity Act, it shall be unlawful for any creditor to discriminate against any applicant with respect to any aspect of a credit transaction on the basis of race, color, or national origin. 15 U.S.C. § 1691(a). This prohibition is not limited to the final transaction, but rather, it applies to any aspect of the transaction. See id. In addition, a creditor includes any assignee of an original creditor who participates in the decision to extend, renew, or continue credit. Id. at §1691a(e). Assignees may be liable even if they have influenced individual credit decisions. 68 F.R. 13144 at 13145. Under the facts of the present case, it is clear that Ms. Jackson’s pleadings are sufficient to survive a facially plausible analysis in this regard. It is undisputed that Novastar acquired the mortgage as an assignee pursuant to Worldwide’s transfer of the loan. Ms. Jackson argues that Novastar’s alleged discriminatory conduct was an influential factor in the decision to extend credit to her because Novastar targeted minority sub-prime borrowers via advertisements, engaged in interest-rate steering and yield-spread premium incentives that disparately affected minority borrowers over non-minority borrowers, and extended credit to minority borrowers on terms higher than similarly situated non-minority subprime borrowers. Accordingly, the Court declines to dismiss Ms. Jackson’s complaint on this basis.
15

F. Voluntary Payment Next, Novastar argues that Ms. Jackson’s complaint should be dismissed pursuant to the voluntary payment doctrine because Ms. Jackson accepted the terms of the loan and paid the associated fees and costs. The voluntary payment doctrine bars recovery where a party makes a voluntary payment with knowledge of all relevant facts and then sues to recover that payment regardless of any initial legal liability. Pratt v. Smart Corp., 968 S.W.2d 868, 872 (Tenn. Ct. App. 1998). The doctrine is inapplicable, however, when the defendant is alleged to have violated a statutorily defined public policy. Id. Under the facts before the Court, Novastar’s argument fails for two reasons. First, as Ms. Jackson alleges in her complaint, it is unclear whether Ms. Jackson had knowledge of all relevant facts. It is altogether plausible that Ms. Jackson would have considered any alleged inequality in loan terms between minority and non-minority borrowers as materially relevant to her decision to secure a loan. Second, the voluntary payment doctrine cannot stand in the present circumstances because Ms. Jackson alleges that Novastar engaged and continues to engage in racial discrimination against minority borrowers in its mortgages. This Court finds that such actions would be a clear a violation of the statutorily defined public policy against racial discrimination that pervades Sections 1981 and 1982. Accordingly, the Court declines to dismiss Ms. Jackson’s complaint on this basis. IV. CONCLUSION Because of the error of law in the original order, the Court grants Defendant’s Motion for Reconsideration. (D.E. #38). After a further review of the case under the Twombly standard, and for the reasons set forth herein, the Court denies Defendant’s Motion to Dismiss. (D.E. #33).
16

IT IS SO ORDERED this 20th day of December, 2007. s/ Bernice Bouie Donald BERNICE BOUIE DONALD UNITED STATES DISTRICT JUDGE
17

 
 Case 2:06-cv-02249-BBD-tmp Document 33 Filed 09/27/07 Page 1 of 2 PageID 519

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF TENNESSEE

WESTERN DIVISION

______________________________________________________________________________

)

WILLIE MAE JACKSON, on behalf of )

herself and all others similarly situated, )

)

Plaintiff,

)

)

v.

)

Case No. 06-2249

)

NOVASTAR MORTGAGE, INC.,

)

)

Defendant.

)

)

)

ORDER DENYING DEFENDANT’S MOTION TO DISMISS ______________________________________________________________________________

Before the Court is the Defendant’s motion to dismiss (D.E. #6) the complaint of Willie

Mae Jackson (D.E. #1) pursuant to Fed. R. Civ. P. 12(b)(6). Dismissal under Fed. R. Civ. P.

12(b)(6) is appropriate when no set of facts exists which would entitle the plaintiff to recover.

Hammond v. Baldwin, 866 F.2d 172, 175 (6th Cir. 1989). In reviewing a defendant’s Rule

12(b)(6) motion to dismiss, a district court should construe the complaint in the light most

favorable to the plaintiff and determine whether the plaintiff undoubtedly can prove no set of

facts in support of her claims that would entitle her to relief. Meador v. Cabinet for Human Res.,

902 F.2d 474, 475 (6th Cir. 1990), cert. denied, 498 U.S. 867 (1990). If an allegation is capable

of more than one inference, it must be construed in the plaintiff’s favor. Sinay v. Lamson &

Sessions Co., 948 F.2d 1037, 1039-40 (6th Cir. 1991).

Upon careful review of the Plaintiff’s complaint, the parties’ responses, and the entirety

of the record, the Court finds that the defendant’s motion is not well grounded and DENIES

dismissal of the Plaintiff’s claim. A full memorandum opinion explaining the Court’s findings

Case 2:06-cv-02249-BBD-tmp Document 33 Filed 09/27/07 Page 2 of 2 PageID 520
shall follow within twenty (20) days of this Order. IT IS SO ORDERED this 27th day of September, 2007. s/Bernice Bouie Donald BERNICE BOUIE DONALD UNITED STATES DISTRICT COURT JUDGE

 
 Case 2:06-cv-02249-BBD-tmp Document 58 Filed 08/06/08 Page 1 of 1 PageID 740

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF TENNESSEE
WESTERN DIVISION

MAE JACKSON,

Pl

aintiff,

vs.

No.

NOVASTAR MORTGAGE, INC.,

Defendant.

06-2249 D/P

ORDER GRANTING MOTION TO CERTIFY ORDER FOR INTERLOCUTORY APPEAL

This matter comes before the Court upon NovaStar Mortgage, Inc.’s (“NovaStar”)

Motion and Memorandum in Support to Certify Order for Interlocutory Appeal.

Upon due consideration of the Motion before the Court, it appears that NovaStar’s

Motion should be granted.

IT IS THEREFORE, ORDERED, ADJUDGED, AND DECREED that:

1. The Motion of NovaStar is granted to permit interlocutory appeal; and

2. The Order of December 20, 2007, denying NovaStar’s Motion to Dismiss, is

hereby modified and certified for immediate interlocutory appeal to the Sixth

Circuit, in accordance with 28 U.S.C. §1292(b).

IT IS SO ORDERED this 6th day of August 2008.

BERNIC UNITED

s/Bernice Bouie Donald E BOUIE DONALD STATES DISTRICT COURT JUDGE

 
 Case 2:06-cv-02249-BBD-tmp Document 61 Filed 10/27/08 Page 1 of 3 PageID 742

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

Leonard Green Clerk

100 EAST FIFTH STREET. ROOM 540 POTTER STEWART U.S. COURTHOUSE
CINCINNATI, OHIO 45202-3988

''(') i'-·
/ \; '" Tel. (5I3)~64-7000 www.ca6.-usdmiits.gov

08 OCT 27 AM /0: 2/

Mr. Andrew S. Friedman Bonnet, Fairboume, Friedman & Balint 2901 N. Central Avenue
Suite \000 Phoenix, AZ 850[2-0000

'I). Filed: October 24, 20~Tjruu.n,;V~"·_\T,Oj,NI/.'S'"IT,MREWrI'C,JTPIr.CDlO~UfIT

Ms. Jennifer Shorb Hagennan Burch, Porter & Johnson 130 N. Court Avenue Memphis. TN 38103

Mr. 1. Andrew Meyer James, Hoyer, Newcomber & Smiljanich 4830 W, Kennedy Boulevard
Suite 550 Tampa, FL 33609-0000

Mr, B. J. Wade Glassman, Edwards, Wade & Wyatt 26 N. Second Street
Memphis, TN 38103

Re: Case No. 08-511, Novastar Mortgage, Inc. Originating Case No. : 06-02249

Dear Counsel, The Court issued the enclosed Order today in this case. Sincerely yours,

s/Julie Brock Case Manager Direct Dial No, 513-564-7036
Fax No.5 13-564-7094

cc: Mr. Thomas M. Gould Enclosure No mandate to issue
1

Case 2:06-cv-02249-BBD-tmp Document 61 Filed 10/27/08 Page 2 of 3 PageID 743 No. 08-0511

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

In re: NOVASTAR MORTGAGE, INC.,

)

)

Petitioner.

)

)

)

FILED
Oct 24, 2008 LEONARD GREEN, Cieri<

Before: KEITH, COLE, and COOK, Circuit Judges.

The defendant petitions for leave to appeal the denial of its motion to dismiss in this action alleging racial discrimination in the offering and sale of residential mortgages and asserting claims under the Fair Housing Act and Equal Credit Opportunities Act. The district court certified its order under 28 U.S.C. § 1292(b) on August 6, 2008. The plaintiff opposes the petition for leave to appea\. On September 12,2008, an involuntary bankruptcy was filed against the petitioner in the United States Bankruptcy Court for the District of Delaware.
To obtain permission to appeal the petitioner must show that: (1) the question involved is a question of law; (2) the question is controlling; (3) there is substantial ground for difference of
opinion respecting the correctness ofthe district court's decision; and (4) an immediate appeal may materially advance the ultimate termination of the litigation. 28 U.S.C. § 1292(b); In re City of
Memphis, 293 F.3d 345, 350 (6th Cir. 2002); Cardwell v. Chesapeake & Ohio Ry. Co., 504 F.2d444, 446 (6th CiL 1974). "Review under § 1292(b) is granted sparingly and only in exceptional cases." In re City ofMemphis, 293 F.3d at 350; see Kraus v. Bd. ofCounty Rd. Comm 'rs for Kent County, 364 F.2d 919, 922 (6th Cir. 1966).
The filing of the involuntary bankruptcy petition against the petitioner operates as a stay of "the commencement or continuation ... of a judicial, administrative, or other action or proceeding
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Case 2:06-cv-02249-BBD-tmp Document 61 Filed 10/27/08 Page 3 of 3 PageID 744 No. 08-0511 - 2-
against the debtor." II U.S.C. § 362(a). The automatic stay bars the plaintiff from pursuing her action in district court against the petitioner. The automatic stay also bars the petitioner forpufsuing an interlocutory appeal ofthe district court's order because to determine ifan appeal is '''against the debtor,' the court examines the posture ofthe case as it existed in the district court." See In re Delta Air Lines, 310 F.3d 953, 956 (6th Cir. 2002); Cathey v. Johns-Manville Sales Corp., 711 F.2d 60, 62 (6th Cir. 1983) (holding that "whether a case is subjectto the automatic stay must be determined at its inception").
Under the circumstances, the petition for leave to appeal is DENIED. ENTERED BY ORDER OF THE COURT
Leonard Green Clerk
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 Case 2:06-cv-02249-BBD-tmp Document 62 Filed 12/23/08 Page 1 of 2 PageID 745

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TENNESSEE
WESTERN DIVISION

MAE JACKSON, Plaintiff,
v. NOVASTAR MORTGAGE, INC.,
Defendant.

CASE No. 06-2249

ORDER ADMINISTRATIVELY CLOSING CASE

It appears to the court that an involuntarybankruptcy was filed against Defendant Novastar Mortgage, Inc., in the United States Bankruptcy Court for the District of Delaware on September 12, 2008. Pursuant to 11 U.S.C. § 362(a), a filing of involuntary bankruptcy operates as a stay of “the commencement or continuation . . . of a judicial, administrative, or other action or proceeding against the debtor.” This court, therefore, will administratively close the above-captioned case pursuant to its inherent powers as it appears th at no further case administration is permitted until Defendant’s involuntary bankruptcy is resolved.
It is expressl y emphasized that an order adm inistratively closing a case is purely an administrative device for the convenience of the court and in no way affects the substantive and/or procedural rig hts o f th e p arties in in terest to proceed b efore th is co urt at a later d ate. T o administratively close a case merely means to close a case for statistical purposes in the office of the District Court Clerk and the Administrative Office of the United States Courts.
It also is expressly emphasized that an administratively closed case can be easily reopened by a simple order of the court without the necessity of a reopening filingfee should the case require

Case 2:06-cv-02249-BBD-tmp Document 62 Filed 12/23/08 Page 2 of 2 PageID 746
further administration. Upon its reopening, the case then becomes, ipso facto, a statistically active case and resumes the same status it had before the administrative closing without prejudice to the rights of any party in interest. Accordingly,
IT IS ORDERED AND NOTICE IS HEREBY GIVEN THAT: 1. The Court Clerk is directed, consistent with the foregoing, to administratively close this case in his records without prejudice to the substantive and/or proce dural rights of any party in interest to m ove at a later t ime t o reopen the case for good cause, including the entry of any stipulation or order, or for any other purpose required to obtain a fi nal determination of pending litigation. 2. In the event a party in interest f iles a m otion at a later tim e seeking to reopen this administratively closed case, no reopening filing fee shall be required. 3. PARTIES ARE OBLIGATED TO M OVE TO REOPEN THIS CASE UPON DEFENDANT’S EMERGENCE FROM BANKRUPTCY. IT IS SO ORDERED this 23rd day of December, 2008.
s/ Bernice B. Donald BERNICE B. DONALD UNITED STATES DISTRICT JUDGE
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 Case: 2:06-cv-2249 As of: 09/20/2012 04:31 PM CDT 1 of 8
U.S. District Court Western District of Tennessee (Memphis) CIVIL DOCKET FOR CASE #: 2:06−cv−02249−BBD−tmp

CLOSED

Jackson v. Novastar Mortgage, Inc. Assigned to: Judge Bernice B. Donald Referred to: Magistrate Judge Tu M. Pham Cause: 42:405 Fair Housing Act
Plaintiff
Mae Jackson individually and on behalf of all others similarly situated

Date Filed: 04/28/2006 Date Terminated: 12/23/2008 Jury Demand: Plaintiff Nature of Suit: 443 Civil Rights: Accomodations Jurisdiction: Federal Question
represented by Andrew S. Friedman BONNETT FAIRBORN FRIEDMAN &BALINT, PC 2901 N. Central Ave. Ste. 1000 Phoenix, AZ 85012 602−274−1100 Fax: 602−274−1199 Email: afriedman@bffb.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
B. J. Wade SKOUTERIS &MCGEE, PLLC 50 N. Front Street, Suite 920 Memphis, TN 38103 901−526−2254 Fax: 901−523−2232 Email: bwade@skouterismagee.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
J. Andrew Meyer JAMES HOYER NEWCOMER &SMILJANICH PA 4830 West Kennedy Blvd Suite 550 Tampa, FL 33609−2589 813−286−4100 Fax: 813−286−4174 Email: ameyer@jameshoyer.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
Wendy J Harrison BONNETT FAIRBOURN FRIEDMAN &BALINT P.C. 2901 N. Central Avenue Suite 1100 Phoenix, AZ 85012 602−274−1100 Fax: 602−274−1199 Email: wharrison@bffb.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
Thomas E. Clary , III GLASSMAN EDWARDS WYATT TUTTLE &COX, P.C. 26 N. Second Street Memphis, TN 38103

Case: 2:06-cv-2249 As of: 09/20/2012 04:31 PM CDT 2 of 8
901−527−4673 Fax: 901−521−0940 Email: tclary@gewwlaw.com ATTORNEY TO BE NOTICED

V. Defendant Novastar Mortgage, Inc.
Counter Claimant Novastar Mortgage, Inc.

represented by Bruce E. Alexander WEINER BRODSKY SIDMAN KIDER, P.C. 1300 19th Street, N.W. 5th floor Washington, DC 20036−1609 202−628−2000 Email: Alexander@wbsk.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
Mitchel H. Kider WEINER BRODSKY SIDMAN KIDER, P.C. 1300 19th Street, N.W. 5th floor Washington, DC 20036−1609 LEAD ATTORNEY ATTORNEY TO BE NOTICED
R. Porter Feild BURCH PORTER &JOHNSON 130 N. Court Avenue Memphis, TN 38103 901−524−5126 Fax: 901−524−5024 Email: pfeild@bpjlaw.com LEAD ATTORNEY ATTORNEY TO BE NOTICED
represented by Bruce E. Alexander (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Mitchel H. Kider (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
R. Porter Feild (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

V.
Counter Defendant
Mae Jackson individually and on behalf of all others similarly situated

represented by Andrew S. Friedman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

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B. J. Wade (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
J. Andrew Meyer (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Wendy J Harrison (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED
Thomas E. Clary , III (See above for address) ATTORNEY TO BE NOTICED

Date Filed 04/28/2006 05/01/2006 06/13/2006 06/19/2006 06/30/2006
07/05/2006
07/07/2006
08/15/2006
08/21/2006

# Docket Text
1 COMPLAINT against Novastar Mortgage, Inc. (Filing fee $ 350.00) , filed by Mae Jackson. (Attachments: # 1 Civil Cover Sheet)(cas) (Entered: 05/01/2006)
Case initiation fee of $350.00 received. Receipt number M101247 (cas) (Entered: 05/02/2006)
Summons Issued as to Novastar Mortgage, Inc.. (cas) (Entered: 06/22/2006)
2 SUMMONS Returned Executed by Mae Jackson. Novastar Mortgage, Inc. served on 6/15/2006, answer due 7/5/2006. (Wade, B.) (Entered: 06/19/2006)
3 MOTION for Extension of Time to File Motion to Dismiss and for Leave to Exceed the Limit of Twenty Pages by Novastar Mortgage, Inc.. (Attachments: # 1 Memorandum in Support of Motion for Extension of Time to File Motion to Dismiss and for Leave to Exceed the Limit of Twenty Pages# 2 Certificate of Consultation)(Alexander, Bruce) (Entered: 06/30/2006)
4 COURTESY NOTICE: Pursuant to Rule 5 of the Federal Rules of Civil Procedure, document 3 MOTION for Extension of Time to File Motion to Dismiss and for Leave to Exceed the Limit of Twenty Pages filed by Novastar Mortgage, Inc., has been filed. For future reference, please note all signatures must reflect s/ atty name.. Filer is not required to resubmit document. (jml, ) (Entered: 07/05/2006)
5 ORDER Granting 3 Motion for Extension of Time to File Motion to Dismiss and for Leave to Exceed the Limit of 20 pages. NovaStar may file its motion to dismiss plaintiffs' complaint on or before 8/15/06. NovaStar's Memo in Spt may exceed 20 pages, but may not exceed 25 pages. Signed by Judge Tu M. Pham on 7/7/06. (Pham, Tu) (Entered: 07/07/2006)
6 MOTION to Dismiss Plaintiff's Complaint [proposed order submitted] by Novastar Mortgage, Inc.. (Attachments: # 1 Memorandum in Support of Motion to Dismiss# 2 Exhibit 1 to Memorandum − Uniform Residential Loan Application# 3 Exhibit 2 to Memorandum − Voluntary Petition# 4 Exhibit 3 to Memorandum − Note# 5 Exhibit 4 to Memorandum − Settlement Statement# 6 Exhibit 5 to Memorandum − Notice of Assignment, Sale, or Transfer of Servicing Rights# 7 Exhibit 6 to Memorandum − Waiver of Escrow# 8 Exhibit 7 to Memorandum − Correspondent Agreement# 9 Exhibit 8 to Memorandum − Cases# 10 Exhibit 9 to Memorandum − Plaintiff's Amended Responses to NovaStar's First Set of Interrogatories and Requests for Production of Documents)(Alexander, Bruce) (Entered: 08/15/2006)
7 SETTING LETTER: Scheduling Conference set for 9/14/2006 10:15 AM in Courtroom 6 − Memphis before Tu M. Pham. (bdg, ) (Entered: 08/21/2006)

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09/06/2006
09/08/2006
09/12/2006
09/12/2006 10/04/2006 10/05/2006 10/10/2006 10/12/2006 10/16/2006 10/16/2006 10/16/2006
11/06/2006 11/06/2006 11/06/2006 11/08/2006

8 MOTION for Extension of Time to File Response/Reply as to 6 MOTION to Dismiss Plaintiff's Complaint [proposed order submitted] proposed order submitted by Mae Jackson. (Attachments: # 1 Certificate of Consultation # 2 Memorandum In Support of Plaintiff's Unopposed Motion for Extension of Time to File an Opposition to Defendant's Motion to Dismiss Plaintiff's Complaint)(Wade, B.) (Entered: 09/06/2006)
9 MOTION for Postponement of the Rule 16 Scheduling Conference [Unopposed] [proposed order submitted] by Novastar Mortgage, Inc.. (Attachments: # 1 Memorandum in Support of Unopposed Motion for Postponement of the Rule 16 Scheduling Conference# 2 Certificate of Consultation)(Alexander, Bruce) (Entered: 09/08/2006)
10 ORDER Granting in Part 9 Motion for Postponement of Rule 16 Scheduling Conference. The Scheduling Conference is postponed until 11/16/06 at 9:30 and discovery in this action is stayed until further order of the Court. Signed by Judge Tu M. Pham on 9/12/06. (Pham, Tu) Modified on 9/12/2006 (wmw, ). (Entered: 09/12/2006)
Set Deadlines/Hearings: Scheduling Conference set for 11/16/2006 09:30 AM before Bernice B. Donald. (jml, ) (Entered: 09/13/2006)
11 MOTION for Leave to File Excess Pages proposed order submitted by Mae Jackson. (Attachments: # 1 Certificate of Consultation)(Wade, B.) (Entered: 10/04/2006)
13 MOTION for Leave to Appear Pro Hac Vice by Mae Jackson as to Wendy Harrison. Proposed order submitted. (Attachments: # 1 Certificate of Good Standng# 2 Certificate of Consultation# 3 Declaration)*FILNG FEE HAS BEEN PAID*...(jml, ) (Entered: 10/12/2006)
12 MOTION for Leave to File Excess Pages proposed order previously submitted by Mae Jackson. (Attachments: # 1 Certificate of Consultation)(Wade, B.) (Entered: 10/10/2006)
14 MOTION for Leave to Appear Pro Hac Vice by Mae Jackson. Proposed Order Submitted. (Attachments: # 1 Certificate of Good Standing# 2 Certificate of Consultation# 3 Declaration)*FILING FEE HAS BEEN PAID*....(jml, ) (Entered: 10/13/2006)
15 ORDER granting 14 Motion of Andrew S. Friedman for Leave to Appear Pro Hac Vice . Signed by Judge Bernice B. Donald on 10/16/2006. (Donald, Bernice) (Entered: 10/16/2006)
16 ORDER granting 13 Motion of B.J. Wade requesting admission of Wendy J. Harrison Pro Hac Vice . Signed by Judge Bernice B. Donald on 10/16/2006. (Donald, Bernice) (Entered: 10/16/2006)
17 RESPONSE in Opposition re 6 MOTION to Dismiss Plaintiff's Complaint [proposed order submitted] filed by Mae Jackson. (Attachments: # 1 Affidavit Tom Clary# 2 Exhibit A − Clary Affidavit# 3 Exhibit B − Affidavit − Clary# 4 Exhibit C − Affidavit − Clary# 5 Exhibit 2# 6 Exhibit 3# 7 Exhibit 4# 8 Exhibit 5# 9 Exhibit 6# 10 Exhibit 7)(Wade, B.) (Entered: 10/16/2006)
18 MOTION for Protective Order by Novastar Mortgage, Inc.. (Alexander, Bruce) (Entered: 11/06/2006)
19 MOTION for Protective Order Memorandum in Support of by Novastar Mortgage, Inc.. (Attachments: # 1 Exhibit 1# 2 Exhibit 2# 3 Exhibit 3)(Alexander, Bruce) (Entered: 11/06/2006)
20 NOTICE by Novastar Mortgage, Inc. re 18 MOTION for Protective Order Certificate of Consultation (Alexander, Bruce) (Entered: 11/06/2006)
21 COURTESY NOTICE: Pursuant to Rule 5 of the Federal Rules of Civil Procedure, document 20 Notice (Other) filed by Novastar Mortgage, Inc.,, 19 MOTION for Protective Order Memorandum in Support of filed by Novastar Mortgage, Inc., has been filed. For future reference, please note that document #19 was submitted as a motion, although it is a memoranadum in support of document #18. Also, #19 and

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11/10/2006
11/10/2006 11/15/2006
11/16/2006
11/20/2006 11/28/2006 12/01/2006 12/01/2006 12/14/2006 02/23/2007 07/31/2007 07/31/2007 09/27/2007

#20 should have been submitted as an attached document to the motion receiving only one docket entry number. #19 and will be termed. For questions please call 901−495−1505.. Filer is not required to resubmit document. (jml, ) (Entered: 11/08/2006)
22 MOTION for Leave to File A Reply Brief in Support of Its Motion to Dismiss Plaintiff's Complaint by Novastar Mortgage, Inc.. (Attachments: # 1 Exhibit Memorandum in Support of Its Motion to Dismiss Plaintiff's Complaint (Exh A)# 2 Exhibit to Memorandum in Support of Its Motion to Dismiss Plaintiff's Complaint (Exh 1)# 3 Exhibit to Memorandum in Support of Its Motion to Dismiss Plaintiff's Complaint (Exh 2)# 4 Exhibit to Memorandum in Support of Its Motion to Dismiss Plaintiff's Complaint (Exh 3)# 5 Memorandum In Support of Its Motion For Leave to File a Reply Brief)(Alexander, Bruce) (Entered: 11/10/2006)
23 CERTIFICATE of Counsel re 22 MOTION for Leave to File A Reply Brief in Support of Its Motion to Dismiss Plaintiff's Complaint by Bruce E. Alexander on behalf of Novastar Mortgage, Inc. (Alexander, Bruce) (Entered: 11/10/2006)
24 COURTESY NOTICE: Pursuant to Rule 5 of the Federal Rules of Civil Procedure, document 23 Certificate of Counsel filed by Novastar Mortgage, Inc., has been filed. For future reference, please note that the certificate of consultation should have been submitted as an attached document to the motion receiving only one docket entry number.. Filer is not required to resubmit document. (jml, ) (Entered: 11/15/2006)
25 Minute Entry for proceedings held before Judge Tu M. Pham : the parties pursuant to dft's motion for protective order jointly asked the court to stay all discovery until such time that the court decides the pending motion to dismiss. For good cause shown, the motion is granted. The parties shall contact the magistrate judge after the court decides the motion to dismiss to set the case for a sched conf, if necessary. Motion terminated: 18 (Tape #FTR.) (wmw, ) (Entered: 11/16/2006)
26 ORDER granting 12 Motion for Leave to File Excess Pages. Signed by Judge Bernice B. Donald on 11/20/2006. (Donald, Bernice) (Entered: 11/22/2006)
27 (TEXT ONLY) − ORDER GRANTED (18) Motion for Protective Order. Signed by Judge Tu M. Pham on 11/28/06. (Pham, Tu) (Entered: 11/28/2006)
28 PROTECTIVE ORDER. The parties shall contact the Magistrate Judge after the court decides the motion to dismiss to set the case for a scheduling conference, if necessary. Signed by Judge Tu M. Pham on 12/1/06. (Pham, Tu) (Entered: 12/01/2006)
29 NOTICE by Mae Jackson re 17 Response in Opposition to Motion, Notice of Recent Events Relative to Plaintiff's Opposition to NovaStar's Motion to Dismiss (Attachments: # 1 Exhibit A# 2 Exhibit B# 3 Exhibit C)(Clary, Thomas) (Entered: 12/01/2006)
30 NOTICE by Novastar Mortgage, Inc. Objection to Plaintiff's Notive of Recent Events (Attachments: # 1 Tab 1 to Objection to Plaintiff's Notice of Recent Events# 2 Tab 2 to Objection to Plaintiff's Notice of Recent Events# 3 Tab 3 to Objection to Plaintiff's Notice of Recent Events)(Alexander, Bruce) (Entered: 12/14/2006)
Motions No Longer Referred: 8 MOTION for Extension of Time to File Response/Reply as to 6 MOTION to Dismiss Plaintiff's Complaint [proposed order submittedproposed order submitted per Magistrate Judge Chambers motion removed from Magistrate Report (vlg ) (Entered: 02/23/2007)
31 ORDER Granting 8 Motion for Extension of Time to File Response/Reply to Defendant's 6 Motion to Dismiss. Responses due by 10/16/2006. Signed by Judge Bernice B. Donald on 07/31/07. (Donald, Bernice) (Entered: 07/31/2007)
32 ORDER Granting Defendant's 22 Motion for Leave to File a Reply Brief in Support of its Motion to Dismiss. Reply due by 08/10/07. Signed by Judge Bernice B. Donald on 07/31/07. (Donald, Bernice) (Entered: 07/31/2007)
33 ORDER denying 6 Motion to Dismiss. Signed by Judge Bernice B. Donald on 09/27/2007. (Donald, Bernice) (Entered: 09/27/2007)

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10/11/2007 10/15/2007 10/17/2007 10/18/2007
10/23/2007 10/24/2007 10/29/2007 11/06/2007 11/15/2007
11/15/2007
11/27/2007 11/27/2007 11/27/2007 11/29/2007 12/07/2007

34 SETTING LETTER: Scheduling Conference set for 10/25/2007 at 9:30 AM in Courtroom 6 − Memphis before Magistrate Judge Tu M. Pham. (bdg) (Entered: 10/11/2007)
35 MOTION for Reconsideration re 33 Order on Motion to Dismiss proposed order submitted by Novastar Mortgage, Inc.. (Attachments: # 1 attachment)(Feild, R.) (Entered: 10/15/2007)
36 MOTION to Extend Deadline proposed order submitted by Novastar Mortgage, Inc.. (Attachments: # 1 Certificate of Consultation)(Feild, R.) (Entered: 10/17/2007)
37 ORDER (TEXT ORDER ONLY − NO IMAGE ATTACHED) re 36 MOTION to Extend Deadline. Before the court is defendant's October 17 motion to continue the scheduling conference, which is currently set for October 25, 2007. The certificate of consultation states that plaintiff opposes the motion. The court will conduct a telephone hearing on the motion on October 25 at the previously set time for the scheduling conference. Counsel for defendant shall initiate the conference call. Signed by Magistrate Judge Tu M. Pham on 10/18/07. (Pham, Tu) (Entered: 10/18/2007)
38 ORDER denying 35 Motion for Reconsideration. Signed by Judge Bernice B. Donald on 10/23/07.(Donald, Bernice) (Entered: 10/23/2007)
39 SETTING LETTER:Telephonic Scheduling Conference reset for 11/15/2007 09:45 AM before Magistrate Judge Tu M. Pham. (wmw, ) (Entered: 10/24/2007)
40 NOTICE of Appearance by Thomas E. Clary, III on behalf of Mae Jackson (Clary, Thomas) (Entered: 10/29/2007)
41 ANSWER to Complaint, COUNTERCLAIM against Mae Jackson by Novastar Mortgage, Inc..(Alexander, Bruce) (Entered: 11/06/2007)
42 Minute Entry for proceedings held before Magistrate Judge Tu M. Pham : Status/Sched Conference held on 11/15/2007. Parties submitted agreed scheduling order. Mr. Alexander stated that he believes it would be appropriate for the parties to limit their initial discovery to plt Jackson's claims and for the court to determine whether Ms Jackson should be class representative before the parties engage in any class discovery. The court directed Mr. Alexander to file a motion regarding his request for phase discovery. Attys present in courtroom: B.J. Wade &R. Feild; Attys via telephone: B. Alexander &J. Andrew Meyer (Tape #FTR.) (wmw, ) (Entered: 11/15/2007)
43 SCHEDULING ORDER: Plaintiff's Amended Pleadings due by 9/24/2008. Defendant's Amended Pleadings due 10/24/08. Discovery due by 1/23/2009. Plaintiff's Joinder of Parties due by 9/24/2008. Defendant's Joinder of Parties due 10/24/08. Dispositive Motions due by 3/23/2009. Jury trial expected to last seven (7) days. Signed by Magistrate Judge Tu M. Pham on 11/15/07. (Pham, Tu) Modified on 11/27/2007 (wmw, ). (Entered: 11/15/2007)
NOTICE: Scheduling Order 43 modified to reflect correct Plaintiff's Joinder of Parties due due date of 9/24/2008 (wmw, ) (Entered: 11/27/2007)
44 ORDER re 43 Amending Scheduling Order. Deposition of rebuttal experts shall be completed by 1/15/09. (TEXT ORDER ONLY − NO IMAGE ATTACHED). Signed by Magistrate Judge Tu M. Pham on 11/27/07. (Pham, Tu) (Entered: 11/27/2007)
Set Deadlines/Hearings: Joinder of Parties due by 9/24/2008 per notice. (jml, ) (Entered: 12/03/2007)
45 Plaintiff's ANSWER to Counterclaim of Novastar by Mae Jackson.(Wade, B.) (Entered: 11/29/2007)
46 MOTION for Leave to Appear Pro Hac Vice as to J Andrew Meyer by Mae Jackson....PROPOSED ORDER SUBMITTED.... (Attachments: # 1 Certificate of Consultation # 2 Declaration# 3 Filing Fee Paid)(jml, ) (Entered: 12/11/2007)

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12/11/2007 12/20/2007 03/03/2008 03/04/2008 03/04/2008 03/04/2008 03/04/2008 03/10/2008
08/01/2008 08/01/2008 08/01/2008 08/01/2008 08/04/2008 08/06/2008 08/06/2008 08/06/2008

47 ORDER granting 46 Motion for Leave to Appear Pro Hac Vice of J. Andrew Meyer as Counsel for Plaintiff. Signed by Judge Bernice B. Donald on 12/11/2007. (Donald, Bernice) (Entered: 12/11/2007)
48 ORDER granting Defendant's motion for reconsideration and Memorandum Opinion and Order Denying Defendant's Motion to Dismiss 6 . Signed by Judge Bernice B. Donald on 12/20/2007. (Donald, Bernice) (Entered: 12/20/2007)
49 Joint MOTION to Extend Deadline JOINT MOTION AND ORDER TO EXTEND SCHEDULING ORDER Proposed Order Submitted by Mae Jackson. (Attachments: # 1 Exhibit A − PROPOSED AMENDED RULE 16(b) SCHEDULING ORDER)(Meyer, J.) (Entered: 03/03/2008)
50 ORDER granting 49 Motion to Extend Deadline. Signed by Judge Bernice B. Donald on 03/04/2008. (Donald, Bernice) (Entered: 03/04/2008)
51 SETTING LETTER: Jury Trial set for 9/21/2009 09:00 AM in Courtroom 3 − Memphis before Judge Bernice B. Donald; Pretrial Conference set for 8/24/2009 08:45 AM in Courtroom 3 − Memphis before Judge Bernice B. Donald; Proposed Joint Pretrial Order due by 8/17/2009.(tlh, ) (Entered: 03/04/2008)
Set/Reset Deadlines: Proposed Pretrial Order due by 8/17/2009. (tlh, ) (Entered: 03/04/2008)
Set Deadlines/Hearings: Amended Pleadings due by 1/20/2009 for Defendant. Joinder of Parties due by 1/20/2009 for Defendant. Discovery due by 4/24/2009. Dispositive Motions due by 6/12/2009 per #50. (jml, ) (Entered: 03/10/2008)
52 COURTESY NOTICE: Pursuant to Rule 5 of the Federal Rules of Civil Procedure, document 49 Joint MOTION to Extend Deadline JOINT MOTION AND ORDER TO EXTEND SCHEDULING ORDER Proposed Order Submitted filed by Mae Jackson has been filed. For future reference, please note the orders are only to be submitted to the Judge's email only(it is not necessary to submit as an ecf filing). Also this motion also requires a certificate of service page as well. Althoulgh the order has been granted, you will need to go under the notice other category then in the drop down box select 'notice of correction' and enter the certificate of service page only. Thanks and if you have questions please call 901−495−1505.. Filer is not required to resubmit document. (jml, ) (Entered: 03/10/2008)
53 MOTION to Certify Order for Interlocutory Appeal and Request for Hearing by Novastar Mortgage, Inc.. (Attachments: # 1 Certificate of Consultation)(Alexander, Bruce) (Entered: 08/01/2008)
54 MEMORANDUM in Support re 53 MOTION to Certify Order for Interlocutory Appeal and Request for Hearing filed by Novastar Mortgage, Inc.. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3−4, # 4 Exhibit 5, # 5 Exhibit 6−7)(Alexander, Bruce) (Entered: 08/01/2008)
55 Joint MOTION for Suspension of the Scheduling Order and Setting of Status/Scheduling Conference by Novastar Mortgage, Inc.. (Attachments: # 1 Certificate of Consultation)(Alexander, Bruce) (Entered: 08/01/2008)
56 MEMORANDUM in Support re 55 Joint MOTION for Suspension of the Scheduling Order and Setting of Status/Scheduling Conference filed by Novastar Mortgage, Inc.. (Alexander, Bruce) (Entered: 08/01/2008)
57 Notice of Correction to 55 Joint MOTION for Suspension of the Scheduling Order and Setting of Status/Scheduling Conference Certificate of Service. (Alexander, Bruce) (Entered: 08/04/2008)
58 ORDER granting 53 Motion to Certify Order for Interlocutory Appeal. Signed by Judge Bernice B. Donald on 8/6/08. (Donald, Bernice) (Entered: 08/06/2008)
59 ORDER granting 55 Motion SUSPENSION OF THE SCHEDULING ORDER AND SETTING STATUS/ SCHELDULING CONFERENCE. Signed by Judge Bernice B. Donald on 8/6/08. (Donald, Bernice) (Entered: 08/06/2008)
Set Deadlines/Hearings: Status Conference set for 9/5/2008 09:00 AM before Judge Bernice B. Donald per #59. (jml) (Entered: 08/06/2008)

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09/02/2008 10/27/2008 12/23/2008 12/02/2010

60 NOTICE: The status conference previously set for 9/5/08 is VACATED pursuant to a joint request by the parties. (tpe) (Entered: 09/02/2008)
61 Letter from Court of Appeals (vjm) (Entered: 10/27/2008)
62 ORDER ADMINISTRATIVELY CLOSING CASE. Signed by Judge Bernice B. Donald on 12/23/08.(Donald, Bernice) (Entered: 12/23/2008)
63 NOTICE by Mae Jackson of Attorneys' Lien on Plaintiff Willie Mae Jackson's and/or Class Recovery (Glassman, Richard) (Entered: 12/02/2010)