Court Opinion

ID: 2662628
Source: CourtListenerOpinion
Date Created: 2014-04-03 12:35:46.215018+00
Date Added: 2024-06-11T09:17:43.874516
License: Public Domain

SUMMARY MEMORANDUM OPINION; NOT INTENDED FOR PUBLICATION IN THE
                     OFFICIAL REPORTERS

                             IN THE UNITED STATES DISTRICT COURT
                                 FOR THE DISTRICT OF COLUMBIA

SUSIE M. POINDEXTER,                                 )
                                                     )
                Plaintiff,                           )
                                                     )
        vs.                                          )        Civil Action No. 1:9-cv-1392 (RLW)
                                                     )
WACHOVIA MORTGAGE                                    )
CORPORATION, et al.,                                 )
                                                     )
                Defendants.                          )
                                                     )
                                                     )
                                                     )

                                  MEMORANDUM OPINION 1

        Presently before the court is a Motion to Dismiss filed by defendants Wachovia Mortgage

Corporation, Wachovia Mortgage FSB (f/k/a World Savings Bank, FSB and now known as

Wells Fargo Bank, N.A.), and Wells Fargo & Company. (Doc. 22.) For the reasons explained

below, the Court finds that Defendants’ motion is due to be granted in part and denied in part.

                                   I. STANDARD OF REVIEW

        “To survive a motion to dismiss, a complaint must contain sufficient factual matter,

accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556

        1
         This is a summary opinion intended for the parties and those persons familiar with the
facts and arguments set forth in the pleadings; not intended for publication in the official
reporters.

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U.S. 662, ___, 129 S.Ct. 1937, 1949 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544,

570 (2007)). However, in evaluating a Rule 12(b)(6) motion, the court liberally construes the

complaint in favor of the non-moving party and grants all reasonable inferences to the

nonmovant that can be derived from the facts alleged in the complaint. See Stokes v. Cross,

327 F.3d 1210, 1215 (D.C. Cir. 2003).

                                            II. FACTS

        As alleged in the Amended Complaint, the facts are as follows: Plaintiff Susie Poindexter

is a 73 year old Washington, D.C. homeowner who claims she was fraudulently induced to

refinance her mortgage with a loan she could not afford. (Doc. 19, Amend. Comp. ¶¶ 1,11.)

Plaintiff asserts that Defendant Equitable Mortgage Company contacted her via telephone and

offered her a fixed-rate mortgage with low monthly payments. (Id. ¶ 27.) Sometime thereafter,

World Mortgage Company mailed Plaintiff her loan documents. 2

        Ultimately, Plaintiff obtained a “Pick-A-Payment Adjustable Rate Mortgage Loan,” that

she could not financially maintain: she was a retired Macy’s Department Store sales clerk and the

loan had the effect of increasing her loan balance. (Id. ¶¶ 4, 25, 32, 43.) According to Plaintiff,

she did not become aware of the adjustable rate until she started receiving mortgage statements.

(Id. ¶ 58.)

        2
          World Mortgage Company is a wholly owned subsidiary of World Savings Bank, FSB.
World Mortgage brokered loans to World Savings and its affiliates. Both World Mortgage and
World Savings were wholly owned subsidiaries of Wachovia Corporation. (Doc. 22-1, Defs.’
Br. at n.2.)

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         The loan closing was held at a McDonald’s restaurant on or about June 25, 2007 and

Plaintiff did not receive any closing documents, including Truth-in-Lending Act disclosures,

until several months after she initiated the current lawsuit on July 28, 2009. (Id. ¶¶ 1-3, 35-40.)

The loan documents indicate that the loan closing took place at the offices of defendant Chase

Title in Maryland and the documents appear to have been notarized by a Maryland notary, who

Plaintiff believes is not licensed in the District of Columbia. (Id. ¶¶ 44, 54-55.) Although she

was collecting social security, the documents listed Plaintiff’s monthly income as $7,000, when

she actually received less than $1,200 per month in benefits. (Id. ¶¶ 52-53, 28.) Finally, Plaintiff

alleges she was charged unreasonably high fees in excess of $10,00 for the loan. (Id. ¶¶ 46-50.)

Wachovia Mortgage, FSB (f/k/a World Savings Bank, FSB and now known as Wells Fargo &

Company) is the holder of the note. (See Doc. 23, Ans ¶ 14; Doc. 22, Defs.’ Mot. to Dismiss at

p. 1.)

         It appears that after Plaintiff received the loan documents, Plaintiff sent a rescission letter

to World Savings, Wachovia and Wells Fargo, with no success. (Id. ¶¶ 63-64.) In her amended

complaint, she names the following defendants: Equitable Mortgage Group, Incorporated;3 Chase

Title, Incorporated;4 Wachovia Mortgage Corporation; Wachovia Mortgage FSB (f/k/a World

Savings Bank, FSB); and Wells Fargo & Company. (Doc. 19, Amend. Compl.) Plaintiff asserts

         3
        Equitable never responded to the complaint and default was entered against it on
August 16, 2011. (Doc. 47.)
         4
          Chase Title filed an answer to the amended complaint on December 20, 2010, (Doc.
34), but counsel for Chase was allowed to withdraw on May 31, 2011. (Doc. 43.) Afterward,
Chase failed to retain counsel or respond to the Court’s orders and default was entered against
the company on November 8, 2011. (See Doc. 46, 48, 50, 53; 9/28/11 ECF Minute Entry.)

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claims pursuant to the Truth-in-Lending Act (“TILA”) 15 U.S.C. § 1601, et seq., as well as a

common law claim for unconscionability and numerous claims under the District of Columbia

Consumer Protection Procedures Act (“CPPA”). D.C. Code § 28-3901, et seq. 5

                                         III. ANALYSIS

A.     WACHOVIA MORTGAGE CORPORATION

       Wachovia Mortgage Corporation (”WMC”) contends that Plaintiff has failed to allege

any wrongdoing on it its part and, therefore, the claims asserted against it should be dismissed,

with prejudice. (Doc. 26, Reply at 2.) Plaintiff agrees that her claims against WMC should be

dismissed; she only listed WMC in a single paragraph of her complaint, regarding alleged

corporate relationships between the defendants. (Doc. 26, Pl.’s Resp. at 17; Amend. Compl. ¶

17.) However, Plaintiff requests dismissal without prejudice and her request will be granted. 6

                                            7
B.     WELLS FARGO & COMPANY

       Wells Fargo & Company (“WFC”) contends it should be dismissed inasmuch as Plaintiff

       5
         Plaintiff also asserts a claim under the District of Columbia Mortgage Lender Broker
Act (“MLBA”), D.C. Code § 26-1101, et seq., but that claim is not relevant to the present Motion
to Dismiss.
       6
          WMC also raised a preemption argument relying on the National Bank Act (“NBA”),
12 U.S.C. § 1, et seq. and regulations promulgated by the Office of the Comptroller of the
Currency (“OCC”). Inasmuch as WMC was the only defendant “banking” institution, the Court
will turn its analysis to the preemption arguments raised with respect to the “savings”
institutions.
       7
         Defendant WFC is a separate entity from Wells Fargo Bank, NA, (Doc. 22, Defs.’ Mot.
to Dismiss at n. 3), which has not been named as a defendant in this action.

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fails to allege any viable claims against it. Moreover, as a bank holding company, WFC argues

that it could not have originated or held her loan. (Doc. 22-1, Def.’s Br. at 11-12; Doc. 27, Wells

Fargo & Co. Reply at 1-2.) Plaintiff responds that the corporate structure of these entities has not

yet been sorted out and she points out WFC’s admission that it is the parent corporation of

Wachovia Mortgage FSB (successor to World Savings Bank). In its reply brief, WFC responds

that it could only be held liable in this case if this Court were to pierce the corporate veil and

doing so would be inappropriate because there is no allegation in the complaint that WFC abused

the corporate form by “perpetrat[ing] a fraud through a corporate sham,” or exert[ing] undue

influence over Wachovia Mortgage FSB. (Doc. 27, WFC Reply at 2-3) (citing Estates of Amore

v. Accor, 529 F. Supp.2d 85, 93 (D.D.C. 2008).

       At this early stage of the litigation and prior to completion of discovery, the Court is not

willing to dismiss WFC given its admitted relationship with Wachovia FSB.

C.     WACHOVIA MORTGAGE FSB

       Wachovia Mortgage FSB (“Wachovia FSB”) 8 argues that Plaintiff’s claims are

preempted by the Home Owners’ Loan Act (“HOLA”), 12 U.S.C. § 1461, et seq. and the

regulations promulgated by the Office of Thrift Supervision (“OTS”). Alternatively, Wachovia

FSB argues that Plaintiff’s unconscionability claim is not actionable to the extent she seeks

       8
         For ease of reference, the Court will refer to both Wachovia Mortgage FSB and World
Savings Bank FSB collectively as Wachovia FSB, unless otherwise necessary to avoid confusion.

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damages. Finally, Defendant argues Plaintiff has failed to plead her fraud claims with

particularity. See Fed. R. Civ. P. 9(b).

       1.      HOLA Statutory and Regulatory Framework

       HOLA is “a product of the Great Depression of the 1930's.” Fidelity Federal Sav. and

Loan Ass'n v. de la Cuesta, 458 U.S. 141, 159 (1982) (citation to legislative history omitted).

The statute “was intended to provide emergency relief with respect to home mortgage

indebtedness at a time when as many as half of all home loans in the country were in default.”

Id. (citations and internal quotation marks omitted). To that end, the statute specifically allows

federal savings institutions to make mortgage or residential loans. 12 U.S.C. § 1464(c)(1)(b).

       Pursuant to HOLA, until recently the Treasury Department’s Office of Thrift Supervision

(OTS) had “plenary authority to issue regulations governing” savings institutions.9 See Fidelity

Federal Sav., 458 U.S. at 160 (citing 12 U.S.C. § 1464(a)(1)). The Supreme Court has noted that

this statutory language found in HOLA “suggests that Congress expressly contemplated, and

approved, [OTS’] promulgation of regulations superseding state law.” Fidelity Federal Sav., 458

U.S. at 162 (citing 12 U.S.C. § 1464(a)). Indeed, “it would have been difficult for Congress to

give the [OTS] a broader mandate.” Fidelity Federal Sav., 458 U.S. at 161 (citation omitted).

       Consistent with this broad mandate, the OTS has promulgated the following regulation:

       9
           As discussed below, the regulatory framework relating to HOLA changed as a result of
the Dodd–Frank Wall Street Reform and Consumer Protection Act, which was enacted after
Plaintiff obtained the loan at issue.

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       Occupation of field. Pursuant to sections 4(a) and 5(a) of the HOLA, 12 U.S.C.
       1463(a), 1464(a), OTS is authorized to promulgate regulations that preempt state
       laws affecting the operations of federal savings associations when deemed
       appropriate to facilitate the safe and sound operation of federal savings associations,
       to enable federal savings associations to conduct their operations in accordance with
       the best practices of thrift institutions in the United States, or to further other
       purposes of the HOLA. To enhance safety and soundness and to enable federal
       savings associations to conduct their operations in accordance with best practices (by
       efficiently delivering low-cost credit to the public free from undue regulatory
       duplication and burden), OTS hereby occupies the entire field of lending regulation
       for federal savings associations. OTS intends to give federal savings associations
       maximum flexibility to exercise their lending powers in accordance with a uniform
       federal scheme of regulation. Accordingly, federal savings associations may extend
       credit as authorized under federal law. . . without regard to state laws purporting to
       regulate or otherwise affect their credit activities.

12 C.F.R. § 560.2(a) (emphasis added).

       Subsection b of the regulation goes on to explain that state laws “purporting to regulate or

otherwise affect the[ ] credit activities” of federal savings associations are preempted. 12 C.F.R.

§ 560.2(b). Specifically, the types of state laws preempted are laws “purporting to impose

requirements regarding”

                                               ....
       (3) “Loan-to-value ratios”;

       (4) “The terms of credit, including amortization of loans and the deferral and
       capitalization of interest and adjustments to the interest rate, balance, payments due, or
       term to maturity of the loan, including the circumstances under which a loan may be
       called due and payable upon the passage of time or a specified event external to the loan”;

       (5) “Loan-related fees, including without limitation, initial charges, late charges,
       prepayment penalties, servicing fees, and overlimit fees”;

                                               ....

       (9) “Disclosure and advertising, including laws requiring specific statements,
       information, or other content to be included in credit application forms, credit

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       solicitations, billing statements, credit contracts, or other credit-related documents . . . .”

       (10) “Processing, origination, servicing, sale or purchase of, or investment or
       participation in, mortgages”; [and]

       (12) “Usury and interest rate ceilings to the extent provided in 12 U.S.C. 1735f–7a and
       part 590 of this chapter and 12 U.S.C. 1463(g) and § 560.110 of this part . . . .”

12 C.F.R. § 560.2(b).

       In contrast, subsection c specifies that the following types of state laws are not preempted

“to the extent that they only incidentally affect the lending operations of Federal savings

associations or are otherwise consistent with the purposes of paragraph (a) of this section

[quoted above]”:

       (1)     Contract and commercial law;

       (2)     Real property law;

       (3)     Homestead laws specified in 12 U.S.C. 1462a(f);

       (4)     Tort law;

       (5)     Criminal law; and

       (6)     Any other law that OTS, upon review, finds:

               (I)      Furthers a vital state interest; and

               (ii)     Either has only an incidental effect on lending operations or is not
                        otherwise contrary to the purposes expressed in paragraph (a) of
                        this section.

12 C.F.R. § 560.2(c).

       At the time this regulation was enacted, the OTS explained:

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       [w]hen analyzing the status of state laws under § 560.2, the first step will be to
       determine whether the type of law in question is listed [among the illustrative
       examples of preempted state laws] in paragraph (b) [of § 560.2]. If so, the analysis
       will end there; the law is preempted. If the law is not covered by paragraph (b), the
       next question is whether the law affects lending. If it does, then, in accordance with
       paragraph (a), the presumption arises that the law is preempted. This presumption can
       be reversed only if the law can clearly be shown to fit within the confines of [the
       types of state laws not preempted, as described in § 560.2(c)]. For these purposes,
       paragraph (c) is intended to be interpreted narrowly. Any doubt should be resolved
       in favor of preemption.

61 FR 50951-01, 50966-67, 1996 WL 548771 (F.R.).

       In an Opinion Letter issued approximately three months after the preemption regulation

was promulgated, the OTS further elaborated on the preemption analysis when asked about the

viability of two Indiana laws applicable to credit card transactions. OTS Opinion Letter P-96-14,

1996 WL 767462 (Dec. 24, 1996.) First, with respect to a commercial law that required lenders

to make certain disclosures similar to those found in TILA, the OTS found that the law was

preempted consistent with paragraph (b)(9) of the regulation which specifically identifies laws

relating to disclosures as preempted. 12 C.F.R. § 560.2(b)(9); 1996 WL 767462 at §§ I, I(B).

       In contrast, the OTS determined that Indiana’s deceptive acts and practices (DAP) statute

was not preempted. 1996 WL 767462 at § II(C). The DAP law was a statute of general

applicability “that prohibit[ed] specified acts and representations in all consumer transactions

without regard to whether the transaction involve[d] an extension of credit.” Id. (emphasis

added). For example, the OTS noted in the introduction section of the letter,

       the [DAP] statute prohibits a person who regularly engages in consumer transactions
       from making representations that “a specific price advantage exists as to [the] subject

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       of the consumer transaction, if it does not and the [person] knows or should
       reasonably know that it does not” and from making oral or written representations
       that a consumer transaction involves “rights, remedies or obligations, if the
       representation is false and if the [person] knows or should reasonably know that the
       representation is false.” Ind. Code § 24–5–0.5–3(6) & (8) (1995).

1996 WL 767462 at n.5.

       The OTS went on to explain that because “[s]tate laws prohibiting deceptive acts and

practices in the course of commerce are not included in the illustrative list of preempted laws,”

such statutes are not subject to a preemption challenges on their face. See 1996 WL 767462 at §

I(C). Rather, “a more extensive preemption analysis of Indiana's DAP statute [wa]s required”

and the OTS examined the law’s affect on “lending” Id. Because the statute “affecte[d] lending

to the extent that it prohibit[ed] misleading statements and practices in loan transactions,” a

presumption arose that the statute was preempted. Id. However, the OTS did not intend “to

preempt state laws that establish the basic norms that undergird commercial transactions.” Id. As

such, the OTS reasoned:

       [t]he Indiana DAP falls within the category of traditional “contract and commercial”
       law under § 560.2(c)(1). While the DAP may affect lending relationships, the impact
       on lending appears to be only incidental to the primary purpose of the statute—the
       regulation of the ethical practices of all businesses engaged in commerce in Indiana.
       There is no indication that the law is aimed at any state objective in conflict with the
       safe and sound regulation of federal savings associations, the best practices of thrift
       institutions in the United States, or any other federal objective identified in §
       560.2(a). In fact, because federal thrifts are presumed to interact with their borrowers
       in a truthful manner, Indiana’s general prohibition on deception should have no
       measurable impact on their lending operations. Accordingly, we conclude that the
       Indiana DAP is not preempted by federal law.

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1996 WL 767462 at § II(C). 10

        Because the CPPA is not directed at savings institutions and is similar to the Indiana DAP

statute, the instant court will utilize this same “as applied” analysis to examine whether

Plaintiff’s claims have more than an “incidental affect on the lending operations of” Wachovia

FSB. See 12 C.F.R. § 560.2(c); see Jones v. Home Loan Investment, F.S.B., 718 F. Supp.2d 728,

734-35 (S.D.W. Va. 2010); cf., In re Ocwen Loan Servicing, LLC Mortg. Servicing Litigation,

491 F.3d 638 (7th Cir. 2007) (Posner, J) (employing an “as applied” analysis to evaluate each of

Plaintiff’s claims, although not explicitly stating so); Casey v. F.D.I.C., 583 F.3d 586, 593-95

(8th Cir. 2009). 11

        10
           This opinion letter is in no way inconsistent with an earlier OTS letter finding certain
provisions of the California Unfair Competition Act preempted. See OTS Opinion Letter P-99-3,
1999 WL 413698 (March 10, 1999) (finding that the “narrow circumstances” presented by the
California provisions justified preemption because they related to “three specific areas of lending
operations, including advertising, forced placement of hazard insurance, and the imposition of
certain loan-related fees.”); McAnaney v. Astoria Financial Corp., 665 F.Supp.2d 132, 166-67
(E.D.N.Y. 2009) (noting that the earlier California opinion letter was not at odds with the later
Indiana opinion letter)
        11
           On July 21, 2010, the Dodd–Frank Wall Street Reform and Consumer Protection Act
was enacted. Pub.L. 111–203, July 21, 2010, 124 Stat. 1376. Under Dodd-Frank, savings
institutions no longer “occupy the field in any area of State law” and the same preemption
standards that apply to banks, pursuant to the NBA, apply to savings institutions under HOLA.
12 U.S.C. § 1465(b). Specifically, state law is preempted to the extent it “prevents or
significantly interferes with the exercise by the national bank of its powers.” 12 U.S.C. §
25b(b)(1)(B). Additionally, under new regulations, national banks are prohibited from
“engag[ing] in unfair or deceptive practices.” 12 C.F.R. § 7.4008.
         Additionally, the HOLA preemption regulation has been superseded by a new regulation
which eliminates the “occupy the field language” and provides that associations have the
“maximum flexibility to exercise their fiduciary powers in accordance with a uniform scheme of
Federal regulation.” 12 C.F.R. § 150.136 (emphasis added). The new regulation also lists the

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         2.       Count I 12

         In Count I, Plaintiff alleges that Wachovia FSB violated the CPPA by extending her an

“unconscionable” loan without regard to her ability to pay. (Pl.’s Br. at 2.) Specifically,

Plaintiff alleges that Defendant “made, funded and securitized an unconscionable loan” in

violation of Section 28-3904(r)(1), which prohibits making or enforcing “unconscionable terms

or provisions” of a sale or lease with knowledge “that there was no reasonable probability of

payment in full of the obligation by the consumer.” (Compl. ¶ 69.) This claim is preempted

because determinations about whether a consumer has the ability to repay a loan depend on

“loan-to-ratio” values, “terms of credit,” as well as “processing,” “origination,” and

“participation in” the defendant’s loan activities. See 12 C.F.R. § 560.2(b)(3), (4), (10). More

importantly, the statutory provision has more than an “incidental affect on the lending operations

of” defendants. See 12 C.F.R. § 560.2(c).

types of state laws that are preempted, for example laws relating to fiduciary fees, registration,
licensing, advertising and marketing. Id. To the extent the following laws only incidentally
affect the fiduciary operations of savings institutions, they are not preempted: contract and
commercial law, real property law, tort law; criminal law, probate law, “any other law that the
OCC, upon review, finds: (i) furthers a vital state interest; and (ii) either has only an incidental
effect on fiduciary operations or is not otherwise contrary to the purposes expressed in paragraph
(a) of this section.” 12 C.F.R. § 150.136(c).
         These new statutes and regulations do not apply to the current dispute because it involves
a loan finalized in June 2007, over three years prior to Dodd-Frank.
         In a supplemental filing post enactment of Dodd-Frank, Plaintiff raises issues regarding
application of the NBA to the present dispute. (See Doc. 25.) Inasmuch as Plaintiff has
conceded to dismissal of the only bank defendant, Wachovia Mortgage Corporation, it is unclear
what relevance the NBA, whether before or after Dodd-Frank, has in this case.
         12
              Plaintiff asserts Count I solely against World Savings, Wachovia FSB and Wells
Fargo.

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       Next, Plaintiff alleges defendants violated the CPPA by “promoting, underwriting and

ultimately funding Plaintiff’s loan.” (Compl. ¶ 71.) This claim is also preempted because it has

a more than incidental affect on defendant’s “advertising” and “originating” of loans. See 12

C.F.R. § 560.2(b)(9) - (10).

       Plaintiff’s last allegation in Count I alleges Defendant paid “yield spread premiums

and/or other financial incentives to Equitable to originate” a loan with unconscionable

prepayment penalties, with an adjustable rate, with negative amortization and without regard to

Plaintiff’s ability to pay the loan. (Compl. ¶¶ 71a - 71c; 72 - 73.) 13 There are several problems

with this claim. As addressed above, any references to the institution’s decision to authorize the

loan despite Plaintiff’s “ability to pay,” are preempted. Thus, the only potentially viable claim

relates to the payment of a “yield premium” and/or “other financial incentive” in connection with

the loan. This claim too is preempted because it involves “loan-related fees” and implicates loan

“origination,” in more than an incidental manner. See 12 C.F.R. § 560.2(b)(5), (10). 14

       Inasmuch as all of the allegations raised in Count I are preempted, Count I of Plaintiff’s

complaint will be dismissed.

       13
         Plaintiff alleges that the broker and other fees paid to Equitable exceeded $10,000.
(Compl. ¶ 49-50.) It is unclear if Plaintiff challenges all or a portion of the fees. (See id.)
       14
           “A ‘yield spread premium’ is a term of art that describes a sum paid by a mortgage
lender to a broker. The lender recoups this fee by charging the borrower a higher interest rate. . . .
[These premiums are] calculated by comparing the rate of the loan at closing with the par rate
offered on the loan in question at the time of closing. Such lender payments to brokers are not
unlawful per se, but under RESPA the fees associated with [mortgage] loans . . . must be
disclosed to the borrower.” Down v. Flagstar Bank, F.S.B., No. 3:10–cv–847, 2011 WL
1326961, at *4-5 (E.D. Va. 2011).

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       3.      Count II

       In her complaint, Plaintiff brings Count II against Equitable, World Savings, Wachovia

FSB and Wells Fargo alleging violations under various provisions of the CPPA. See D.C. Code

§ 28-3904. However, in her response to Defendant’s Motion to Dismiss, she concedes that the

following claims relate solely to Wachovia FSB:

       •       World Savings mailed Plaintiff the loan documents and the company “made
               misrepresentations. . . in their loan paperwork regarding the mortgage product
               and the impact on her equity.” (Doc. 25, Pl.’s Resp. at 20)(emphasis added).

       •       “World Savings misrepresented material facts about the World Savings’
               mortgage product.” (Doc. 25, Pl.’s Resp. at 21.) Specifically, those alleged
               misrepresentations involved telling Plaintiff her monthly payments would be
               fixed and neglecting to tell her that her monthly payments, interest rate and
               principal balance would increase. (Id.); Compl. §§ 77(c),(e), (f); see §§ 28-
               3094(e), (f).

       •       Plaintiff’s “supporting documents” establish that World Savings supplied her
               with a loan that had unconscionable terms, knowing it provided her no
               substantial benefits, knowing she had no reasonable probability of payment
               in full, and knowing the fees stripped her of equity, thereby taking advantage
               of her age and inability to understand the language in the agreement. (Doc.
               25, Pl.’s Resp. at 22)(emphasis added); see §§ 28-3094(r)(1),(2), and (5).

       All of these claims, which she specifically links to the loan documents, have a substantial

affect on the “disclosures” Wachovia FSB is allowed to make under HOLA, as well as the

“origination” of their loans, “loan-related fees,” and finally the “terms of credit, amortization of

loans and deferral and capitalization of interest.” See 12 C.F.R. § 560.2(b)(4), (9), (10). Thus,

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these claims are preempted. 15

        Finally, in Count II, Plaintiff claims Defendants failed to supply her with a copy of her

loan documents. (Doc. 25, Pl.’s Resp. at 21)(emphasis added); see §§ 28-3094(r)(q). Said claim

is also preempted because it would have more than an incidental affect on a lender’s disclosure

and credit activities. See 12 C.F.R. § 560.2(a), (c).

        Accordingly, Plaintiff’s claims in Count II will be dismissed as asserted against the Wachovia

FSB.

        4.      Count III

        Count III alleges a common law unconscionability claim against defendant. Specifically,

Plaintiff alleges that

        15
           The instant case is unlike those cases involving affirmative misrepresentations outside
of the loan documents. See Kajitani v. Downey Sav. and Loan Ass'n, F.A. 647 F.Supp.2d 1208,
1220 (D. Hawaii 2008) (finding oral misrepresentations about rage, charges and terms of
financing were not preempted because the disclosure requirements relate to documents) (citing
15 U.S.C. § 1604; 12 C.F.R. § 560.2(b)(9)); Reyes v. Downey Savings and Loan Ass'n, F.A., 541
F. Supp.2d 1108, 1113-15 (C.D. Cal. 2008) (allowing state claims under California statute that
prohibits unfair business practices where plaintiffs claimed the lenders “promised” certain loan
terms, but did not follow through with such promises); Mincey v. World Savings Bank, FSB, 614
F. Supp.2d 610, 643-46 (D.S.C. 2008)(noting that plaintiffs did not appear to assert fraud based
on affirmative misrepresentations and finding the claims preempted because plaintiffs
complained about what defendants “should” have disclosed, but citing with approval cases
allowing claims based on oral misrepresentations.); In re Ocwen Loan Servicing, LLC Mortg.
Servicing Litigation, 491 F.3d 638 (7th Cir. 2007) (Posner, J) (“The plaintiffs interpret the statute
to forbid deceptive practices, such as falsely representing sponsorship or approval of Ocwen's
services. If this is like common law fraud, then it probably is not preempted. But is it? One
cannot tell from the complaint whether, for example, the charge is limited to deliberate deception
or whether as interpreted by the plaintiffs the Act creates a code of truthful marketing that would
constitute the regulation of advertising, which is one of the preempted categories listed in
subsection (b)”).

                                           Page 15 of 16
 SUMMARY MEMORANDUM OPINION; NOT INTENDED FOR PUBLICATION IN THE
                     OFFICIAL REPORTERS

       •       Defendant “obtained and finalized the mortgage to [her] home under
               procedurally and substantially unconscionable circumstances.” (Compl. ¶
               82.)

       •       “The terms of the transaction were substantively and procedurally
               unconscionable, unreasonably favorable to Defendants, and varied grossly
               from the market rates to the detriment of Plaintiff. The mortgage offered and
               the methods of obtaining and finalizing the mortgage are so gross as to shock
               the conscience.” (Compl. ¶ 84.)

       As discussed above, Plaintiff’s challenges relating to defendant’s advertisements, loan

document disclosures, or terms of the loan are preempted.

                                       IV. CONCLUSION

       For the reasons set forth above, Plaintiff’s state law claims as asserted against the

Wachovia FSB defendants will be dismissed with prejudice pursuant to Federal Rule 12(b)(6).

Plaintiff’s federal claims as related to all these defendants survive the motion to dismiss.

SO ORDERED.                                                               Digitally signed by Judge Robert
                                                                          L. Wilkins
                                                                          DN: cn=Judge Robert L. Wilkins,
March 30, 2012                                                            o=U.S. District Court,
                                                                          ou=Chambers of Honorable
                                                                          Robert L. Wilkins,
                                                                          email=RW@dc.uscourt.gov, c=US
                                                                          Date: 2012.03.30 19:36:59 -04'00'

                                                      ___________________________
                                                      Robert L. Wilkins
                                                      United States District Judge

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