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Hutchinson v. Lenders Portal Direct LLC

United States District Court, D. South Carolina, Florence Division

March 12, 2018

Theresa Hutchison, Plaintiff,
v.
Lenders Portal Direct, LLC, Defendant.

          ORDER

          R. Bryan Harwell United States District Judge.

         This matter is before the court on Plaintiff's motion for default judgment against Defendant. [Doc. 11]. On September 13, 2017, Plaintiff filed her Complaint against Defendant seeking damages for Defendant's violations of the South Carolina Unfair Trade Practices Act (“SCUTPA), Fraud, and Breach of Contract. [Doc. 1]. On October 17, 2017, after Defendant failed to file an Answer or otherwise defend, Plaintiff filed a Motion for Entry of Default with the Clerk of Court. On October 25, 2017, the Clerk of Court entered default against Defendant. [Doc. 10]. Thereafter, on December 19, 2017, Plaintiff filed her Motion for Default Judgment. [Doc. 11]. Defendant was served with each of these documents and, despite the passage of time, has failed to file any response with this court.

         For the reasons set forth below, the court grants Plaintiff's Motion in its entirety. It is hereby ORDERED, ADJUDGED, AND DECREED that judgment be entered against Defendant as set forth herein.

         STANDARD

         “Default judgment is available under Rule 55 when a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend as provided by these rules and that fact is made to appear by affidavit or otherwise.” Home Port Rentals, Inc. v. Ruben, 957 F.2d 126, 133 (4th Cir. 1992) (internal quotation omitted). “Rule 55 of the Federal Rules of Civil Procedure authorizes the entry of a default judgment when a defendant fails ‘to plead or otherwise defend' in accordance with the Rules. Although the clear policy of the Rules is to encourage dispositions of claims on their merits...trial judges are vested with discretion, which must be liberally exercised, in entering such judgments and in providing relief therefrom.” United States v. Moradi, 673 F.2d 725, 727 (4th Cir. 1982)(internal citations omitted). “A party who is in default and who has not appeared is deemed to have waived the right to be heard on the assessment of damages to be awarded by the Court.” Connelly Mgmt. v. McNicoll, No.: 2:02-CV-2440-PMD-GCK, 2006 U.S. Dist. LEXIS 97580, at *28 (D.S.C. Mar. 15, 2006).

         FINDINGS OF FACT

         By virtue of its default, Defendant has admitted the factual allegations set forth in Plaintiff's Complaint and Defendant is prohibited from contesting said facts as true on appeal. See DIRECTV, Inc. v. Rawlins, 523 F.3d 318, 322 n.2 (4th Cir. 2008). The Court finds that the following facts relevant to the causes of action for which Plaintiff seeks an award of damages:

         On or about November 15, 2016, Plaintiff entered into a contract with Defendant regarding her New York property. [Doc. 1, ¶9]. Defendant represented to Plaintiff that the mortgage on her New York home was a predatory mortgage, and that as a result, Plaintiff was entitled to a lower interest rate on her mortgage and having the arrearage wiped out. Id. In reliance on those representations, Plaintiff paid $16, 785.00 to Defendant for its representation of her on the New York mortgage. Id. Thereafter, Defendant reviewed Plaintiff's South Carolina mortgage and informed Plaintiff that the South Carolina mortgage was also a predatory mortgage. Id. Defendant told Plaintiff that, if she paid Defendant $3, 700.00, Defendant would wipe out any arrearage on the South Carolina mortgage and get the interest rate lowered. Id. Plaintiff paid Defendant the $3, 700.00 and entered into a contract with Defendant regarding her South Carolina property. Id. Defendant's representation as to the predatory nature of Plaintiff's mortgages resulted in Plaintiff paying Defendant a total of $20, 485.00, completely wiping out her family's life savings. Id.; [Doc 11-1, ¶3]. Defendant also instructed Plaintiff to stop all contact with the holders of her notes and mortgages, and to stop all payments on the South Carolina loan. Id. In full reliance of Defendant's representations and instructions, Plaintiff ceased all communications with both the New York and South Carolina lenders, and also stopped making payments on the South Carolina mortgage. [Doc. 1, ¶10].

         Defendant advertises to consumers throughout South Carolina and the entire United States of America. [Doc. 1, ¶11]. On its website, Defendant specifically states that it connects consumers “with fully licensed and accredited local professionals for all of your Mortgage Related Needs.” Id. Under the “Foreclosure Protection” section, Defendant advertises that consumer “may select the applicable real estate or legal professional that will keep you protected under their umbrella while you complete the process.” Id. Plaintiff was never protected by any legal professional employed by Defendant while she was waiting for Defendant to erase the arrearage on her mortgages and have the interest rates reduced. Id. It is Defendant's practice to advertise its services to homeowners across the country fraudulently claiming that those homeowners are the victims of illegal and predatory mortgages, and then defraud said homeowners into paying Defendant a large retainer agreement so that Defendant can then allegedly “negotiate” with the homeowner's lender to help the homeowners escape those mortgages. [Doc 1, ¶27]. In practice, Defendant does not represent consumers in rectifying an allegedly illegal mortgage. Id. Instead, Defendant simply takes the consumers' money and attempts to negotiate a loan modification with the lender. Id. After failing to obtain a loan modification, Defendant washes its hands of said consumer and instructs the consumer to file bankruptcy. Id. Defendant has no attorneys licensed to practice law in New York or South Carolina who can actually represent Plaintiff, or any other consumer, in a foreclosure action. Id. at ¶28. Defendant continues to represent and advertise its services throughout South Carolina and thus, the actions of the Defendant have a real and substantial potential for repetition and are a threat to the public interest. Id. at ¶29.

         Defendant represented to Plaintiff that it would represent her concerning her “illegal” and “predatory” mortgages and, if Defendant was unsuccessful in getting Plaintiff's mortgages, payments, or interest rate reduced, it would refund Plaintiff's retainer fees. [Doc. 1, ¶33]. Defendant's representations were false. Defendant had no basis for believing that Plaintiff was in an “illegal” or “predatory” mortgage and had no intention of providing Plaintiff with any service. Id. at ¶34. Defendant also had no intention of ever refunding Plaintiff's retainer fees. Id. Defendant's representations to Plaintiff were material to her decision to pay the retainer fees to Defendant. In fact, the only reason Plaintiff entered into her agreements with Defendant was because Defendant represented to her that she had been the victim of “illegal” and “predatory” mortgages and that Defendant would refund her money if Defendant failed in remedying her “illegal” and “predatory” mortgages. Id. at ¶35.

         Defendant defrauded Plaintiff into paying $20, 485.00 and did not provide Plaintiff with any of the services promised. After failing to meet the terms of its own contract, Defendant then refused to honor its refund policy and refused to return any amount of money to Plaintiff. [Doc 1., ¶26].

         The contract entered into between Plaintiff and Defendant provided for a refund if specific instances of “successful loss mitigation or debt relief performance” were not achieved by Defendant. Defendant failed to achieve the relief that was set forth in the contract. [Doc. 1, ¶12, ¶13]. Plaintiff and Defendant entered into two contracts, one concerning her New York property and the second her South Carolina property. Id. at ¶43. Defendant breached both contracts with Plaintiff after failing to provide a refund as provided in said contracts. Id. at ¶44.

         CONCLUSIONS OF LAW

         A. Plaintiff's South Carolina Unfair Trade ...


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