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Cantrell v. New Penn Financial, LLC

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

September 26, 2019

Kevin Cantrell and AnnaMarie Cantrell, Plaintiffs,
v.
New Penn Financial, LLC, Avenue 365 Lender Services, Jake Brown, Shell Point, Defendants.

          OPINION AND ORDER

          Donald C. Coggins, Jr. United States District Judge

         This matter comes before the Court on Defendants’ Motion for Summary Judgment. ECF No. 55. Plaintiffs filed a Response in Opposition, ECF No. 62, and Defendants’ filed a Reply, ECF No. 65. The Court heard arguments on the Motion on July 22, 2019.[1] Accordingly, the Motion is ripe for review.

         BACKGROUND

         Plaintiffs filed their initial Complaint in the Court of Common Pleas for Spartanburg County, South Carolina on October 31, 2016, asserting five state law causes of action. ECF No. 1-1 at 3–11. Defendants filed an Answer and Motion to Dismiss on January 6, 2017. Id. at 12–64. On February 9, 2017, Plaintiffs filed a Motion to Amend Complaint, and the state court entered a Consent Order to Amend Complaint on April 4, 2017. Id. at 65–68. Thereafter, on April 10, 2017, Plaintiffs filed an Amended Complaint, which asserted two new causes of action-violation of the “Mortgage Broker Fee Agreement” and violation of the Real Estate Settlement Procedures Act (“RESPA”).[2] Id. at 69–78.

         Defendants removed this action on April 25, 2017, based on federal question jurisdiction in light of the newly added RESPA claim and supplemental jurisdiction pursuant to 28 U.S.C. § 1367(a). ECF No. 1. That same day, Defendants filed an Answer and a Motion to Dismiss. ECF Nos. 4, 5. Plaintiffs filed a Response in Opposition on May 9, 2017, and Defendants filed a Reply on May 16, 2017. ECF Nos. 10, 13.

         On June 20, 2017, the Court issued an Order granting in part, denying in part, and denying without prejudice to refile in part. ECF No. 20. Specifically, the Court: (1) denied Defendants’ Motion as to Plaintiffs’ claim under the South Carolina Unfair Trade Practices Act (“SCUTPA”); (2) granted Defendants’ Motion as to Plaintiffs’ claims for violations of Sections 37-10-105 and 37-22-110 of the South Carolina Consumer Protection Code (“CPC”); and (3) denied the remainder of Defendants’ Motion, giving Plaintiffs leave to file a Second Amended Complaint to cure “various pleading deficiencies.” Id. at 5–9.

         On June 27, 2017, Plaintiffs filed a Second Amended Complaint. ECF No. 21. Plaintiffs’ Second Amended Complaint alleged that Defendant New Penn Financial (“New Penn”) solicited Plaintiff Kevin Cantrell to refinance his Veteran’s Administration Home Mortgage at a lower rate. ECF No. 21 at 2. In February of 2016, Plaintiffs contacted Defendant New Penn and chose to refinance their home. Id. Defendant New Penn provided Plaintiffs with numerous documents outlining the terms of the loan. Id. at 3.

         Defendant New Penn also required Plaintiffs to execute a variety of documents including a South Carolina Attorney and Insurance Preference Disclosure. Id. Plaintiffs chose attorney Whit Bishop as their closing attorney. Id.

         Defendant New Penn also provided Plaintiffs with documents that indicated that an affiliated company, Defendant Avenue 365 Lender Services (“Avenue 365”), could be used as the closing company, although Defendant Avenue 365’s exact role was not explained. Id. Plaintiffs’ closing was delayed and some of the terms were changed by Defendants. Id. During the process of obtaining the loan, Plaintiffs worked with Defendant Jake Brown, a mortgage consultant affiliated with the other Defendants. Id. Defendant Jake Brown “repeatedly assured [Plaintiffs] that everything was taken care of, the [Plaintiffs] would be protected, and the loan and its terms were good for them.” Id. However, Defendant Jake Brown “never told [Plaintiffs] that they had their choice of their own closing company or Title Company or explained what that meant.” Id. No one working for Defendants asked Plaintiffs about their choice of attorney or Title Company even though Plaintiffs had chosen attorney Whit Bishop. Id. at 4.

         During the process of obtaining the loan, Plaintiffs began receiving correspondence and documents from Defendant Avenue 365. Id. On the date of the closing, Plaintiffs were visited at their home by attorney Ryan Breckenridge, who was sent by and on behalf of Defendants, to handle the closing. Id. at 4. Mr. Breckenridge did not identify himself as an attorney, [3] instead introducing himself as a notary. Id. Plaintiffs later learned that Defendant Avenue 365 hired Mr. Breckenridge through a third party attorney placement firm. Id. at 5. Therefore, Plaintiffs assumed the closing documents had been sent to Whit Bishop. Id. Plaintiffs later learned that the documents were never sent to Whit Bishop, and Defendants required Plaintiffs, who were unrepresented, to sign a new mortgage loan application, a new good faith estimate, a non-durable power of attorney, a hold harmless provision, a privacy policy, a legal description of the property, a borrower compliance agreement, and an agreement to reimburse Defendant Avenue 365 for any and all attorneys’ fees and costs. Id. After the closing, Plaintiffs were directed to make their mortgage payments to Defendant Shell Point, which they have continued to do. Id. at 4.

         Based on these allegations, Plaintiffs’ Second Amended Complaint asserted the following causes of action: (1) fraud in the inducement, fraud, and constructive fraud; (2) violation of the SCUTPA; (3) negligence; (4) violation of the South Carolina CPC; (5) breach of fiduciary duty; (6) violation of RESPA; and (7) violation of the “Licensing of Mortgage Broker Act.”[4] On July 11, 2017, Defendants filed an Answer. ECF No. 22. On August 2, 2017, Defendants filed a Partial Motion for Judgment on the Pleadings, which is the Motion currently before the Court. ECF No. 23. Plaintiffs filed a Response in Opposition on September 7, 2017, and Defendants filed a Reply on September 14, 2017. ECF Nos. 30, 31.

         On September 17, 2018, the Court issued an Order ruling on Defendants' Partial Motion for Judgment on the Pleadings. ECF No. 47. The Court: (1) denied Defendants' Motion as to Plaintiffs' claims for fraud, constructive fraud, and fraud in the inducement; (2) granted Defendants' Motion as to Plaintiffs' claims under the Mortgage Brokers Act; (3) granted Defendants' Motion as to Plaintiffs' SCUTPA claim, but afforded Plaintiffs ten days to amend their pleadings to plausibly plead a claim for damages; (4) granted in part and denied in part Defendants' Motion as to Plaintiffs' negligence claim, permitting the claim to proceed as to whether Defendants were negligent in their assumption of the duty to properly choose and supervise a closing attorney; (5) granted in part and denied in part Defendants' Motion as to Plaintiffs' claims under Section 37-10-102 of the South Carolina Code, allowing the claim to proceed as to all defendants except Defendant Jake Brown; (6) denied Defendants' Motion as to Plaintiffs' claims under Section 37-10-108 of the South Carolina Code; and (7) denied Defendants' Motion as to Plaintiffs' claim for breach of fiduciary duty. ECF No. 47.

         On September 28, 2018, Plaintiffs filed a Third Amended Complaint, and Defendants filed an Answer. ECF Nos. 48, 49. On November 16, 2018, Plaintiffs filed a Motion for Partial Summary Judgment, and Defendants filed a Motion for Summary Judgment. ECF Nos. 54, 55. The Motions were fully briefed by the parties, ECF Nos. 60, 62, 64, 65, and the Court heard argument on the Motions on July 22, 2019. As indicated above, the Court denied Plaintiffs' Motion for Partial Summary Judgment during the hearing and took Defendants' Motion for Summary Judgment under advisement. ECF No. 76. Accordingly, Defendants' Motion for Summary Judgment is ripe for review.

         LEGAL STANDARD

         One of the principal purposes of summary judgment “is to isolate and dispose of factually unsupported claims . . . .” Celotex Corp. v. Catrett, 477 U.S. 317, 323–24 (1986). It is “not a disfavored procedural shortcut, ” but is instead the “principal tool by which factually insufficient claims or defenses [can] be isolated and prevented from going to trial with the attendant unwarranted consumption of public and private resources.” Id. at 327. To that end, “Rule 56 states “[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A fact is “material” if proof of its existence or non-existence would affect disposition of the case under applicable law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue of material fact is “genuine” if the evidence offered is such that a reasonable jury might return a verdict for the non-movant. Id. at 257. When determining whether a genuine issue has been raised, the court must construe all inferences and ambiguities against the movant and in favor of the non-moving party. United States v. Diebold, Inc., 369 U.S. 654, 655 (1962).

         The party seeking summary judgment shoulders the initial burden of demonstrating to the court that there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the movant has made this threshold demonstration, the non-moving party, to survive the motion for summary judgment, may not rest on the allegations averred in his pleadings. Id. at 324. Rather, the non-moving party must demonstrate specific, material facts exist that give rise to a genuine issue. Id. Under this standard, the existence of a mere ...


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