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Meeks-Owens v. Indymac Bank

April 10, 2008


The opinion of the court was delivered by: A. Richard Caputo United States District Judge




Presently before the Court are Magistrate Judge Malachy E. Mannion's Report and Recommendation (Doc. 14) and Defendants Mountain Valley Abstract, Inc., ("Mountain Valley") and Anita Peterson's Objections thereto. (Doc. 15). The Magistrate Judge recommended that the Court grant in part and deny in part both Mountain Valley and Peterson's Motion to Dismiss (Doc. 3) and Defendant Indymac Bank, F.S.B. ("Indymac")'s Motion for Judgment on the Pleadings (Doc. 6). Because Plaintiff has stated claims upon which relief can be granted in Counts I, II, and III; because her claims in Counts IV and VI are barred by the applicable statutes of limitations; and because Plaintiff acknowledges that she cannot assert her claim of negligent misrepresentation (Count V) because her losses are solely economic, I will adopt the Magistrate Judge's Report and Recommendation. I will therefore grant Mountain Valley and Peterson's Motion to Dismiss (Doc. 3) as to Counts IV, V, and VI and deny it as to Counts I and III, and I will grant Defendant Indymac's Motion for Judgment on the Pleadings (Doc. 6) as to Counts IV, V, and VI and deny it as to Counts II and III. The Court has jurisdiction over this matter pursuant to 18 U.S.C. § 1964 and 28 U.S.C. §§ 1331 and 1367.


Plaintiff Thomasina Yvette Meeks-Owens filed a Complaint (Doc. 1) alleging that Defendants engaged in a predatory lending scheme to induce her to purchase property in Blakeslee, Pennsylvania in January 2001. (Report & Recommendation, Doc. 14, at 1-2.) Specifically, she alleges that Defendant Peterson was president and secretary of Defendant Mountain Valley, a title insurance company chosen by the companies that carried out the sale, the Parisi/Kishbaugh Companies, to be the settlement agent for closing. (Doc. 1 ¶¶ 2, 17, 32, 34.) Plaintiff alleges that Peterson prepared and reviewed all necessary paperwork for Plaintiff and attended the closing on January 11, 2001, but never provided Plaintiff with any closing documents prior to the closing itself and did not direct Plaintiff to complete all necessary documents to secure the mortgage loan. (Id. ¶¶ 18, 33, 35). Plaintiff also alleges that Peterson owed her a fiduciary to duty to protect her interests with regard to fees and paperwork involved in purchasing a home, but that no one ever disclosed or explained to Plaintiff, a first-time home buyer, many of the fees, taxes, and rates she would have to pay, and no one explained to her before closing that she would have to take out a second mortgage. (Id. ¶¶ 95-105.) Also in furtherance of the alleged conspiracy, Peterson did not provide Plaintiff with a copy of the HUD-1 Settlement Sheet at the time of closing, an overt act that permitted Plaintiff to be defrauded. (Id. ¶ 118.)

Defendant Indymac, the bank that issued Plaintiff's mortgage loan, knew that the contract price and the mortgaged value of the property substantially exceeded, by more than thirty (30) percent, the market value of the property at time of purchase, Plaintiff alleges. (Id. ¶¶ 3, 40, 67.) Further, although Indymac knew that Plaintiff qualified only for a sub-prime mortgage, it "engaged in a scheme to recruit mortgage business from first-time home buyers and minorities by telling these customers that they are receiving conventional loans when in fact these customers are receiving sub-prime mortgages which have market prices and interest rates far in excess of conventional mortgage rates." (Id. ¶¶ 41-43.) Indymac provided Plaintiff with a mortgage loan without investigating her ability to repay the loan, after having received both an incomplete mortgage application and an inflated, "patently defective" appraisal, and after having known since 1999 that homes were being sold at inflated values in the Pocono region. (Id. ¶ 58-59, 107-10.) In furtherance of the alleged conspiracy, Indymac took a number of overt acts, including receiving and adopting a HUD-1 Settlement Sheet that contained false statements; paying consideration to another bank, Nations 1st, for placement of the loan; and providing the mortgage loan without following its normal underwriting and due diligence procedures or confirming the source of the deposit money used in the purchase. (Id. ¶¶ 113-18.)

Plaintiff further alleges that she was never advised of the relationships among all the Defendants; that she and the Defendants are persons within the meaning of 18 U.S.C. § 1961(3); that all Defendants constitute an association-in-fact enterprise within the meaning of 18 U.S.C. § 1961(4); that communications between Plaintiff and representatives of Defendants using telephone wires and facsimile transmittal through telephone wires constitute a violation of federal mail and wire fraud statutes, 18 U.S.C. §§ 1341 and 1343; and that during the last several years, during which time Plaintiff was defrauded, Defendants committed more than two (2) predicate acts of racketeering activity as defined by 18 U.S.C. § 1961(1) by acting with the Parisi/Kishbaugh Companies to sell homes at inflated values. (Id. ¶¶ 50, 125-37.)

Plaintiff brought conspiracy claims under the Racketeering Influenced and Corrupt Organizations Protection act ("RICO") against all Defendants except Indymac in Count I, and against Indymac only in Count II. She also brought, against all Defendants, claims under the Pennsylvania Unfair Trade Practices and Consumer Protection Act ("UTPCPL") (Count III), the Home Ownership and Equity Protection Act ("HOEPA") (Count IV), the Real Estate Settlement Procedures Act ("RESPA") (Count V), and state law claims of negligent misrepresentation (Count VI).

Defendant Indymac filed an Answer (Doc. 2) and a Motion for Judgment on the Pleadings (Doc. 6). Defendants Mountain Valley and Peterson filed a Motion to Dismiss (Doc. 3). Magistrate Judge Mannion issued a Report and Recommendation (Doc. 14) recommending that both motions be granted with respect to the HOEPA, RESPA, and negligent misrepresentation claims (Counts IV, V, and VI) and denied with respect to the RICO conspiracy claims (Count I for Defendants Mountain Valley and Peterson, Count II for Defendant Indymac) and the UTPCPL claims (Count III). (Doc. 14.)

Defendants Mountain Valley and Peterson now object to the denial of their Motion to Dismiss the RICO and UTPCPL claims against them. (Doc. 15.) No responses to their Objections were filed. This matter is ripe for disposition.


I. Review of Magistrate Judge's Report and Recommendation

Where objections to the magistrate judge's report are filed, the Court must conduct a de novo review of the contested portions of the report, Sample v. Diecks, 885 F.2d 1099, 1106 n.3 (3d Cir. 1989) (citing 28 U.S.C. § 636(b)(1)(C)), provided the objections are both timely and specific, Goney v. Clark, 749 F.2d 5, 6-7 (3d Cir. 1984). In making its de novo review, the Court may accept, reject, or modify, in whole or in part, the factual findings or legal conclusions of the magistrate judge. See 28 U.S.C. § 636(b)(1); Owens v. Beard, 829 F. Supp. 736, 738 (M.D. Pa. 1993). Although the review is de novo, the statute permits the Court to rely on the recommendations of the magistrate judge to the extent it deems proper. See United States v. Raddatz, 447 U.S. 667, 675-76 (1980); Goney, 749 F.2d at 7; Ball v. United States Parole Comm'n, 849 F. Supp. 328, 330 (M.D. Pa. 1994). Uncontested portions of the report may be reviewed at a standard determined by the district court. See Thomas v. Arn, 474 U.S. 140, 154 (1985); Goney, 749 F.2d at 7. At the very least, the Court should review uncontested portions for clear error or manifest injustice. See, e.g., Cruz v. Chater, 990 F. Supp. 375, 376-77 (M.D. Pa. 1998).

II. Motion to Dismiss

Rule 12(b)(6) of the Federal Rules of Civil Procedure provides for the dismissal of a complaint, in whole or in part, for failure to state a claim upon which relief can be granted. Dismissal is appropriate only if, accepting as true all the facts alleged in the complaint, Plaintiff has not plead "enough facts to state a claim to relief that is plausible on its face," Bell Atlantic Corp. v. Twombly, 550 U.S. ----, 127 S.Ct. 1955, 1960, 167 L.Ed.2d 929 (2007), meaning, enough factual allegations "to raise a reasonable expectation that discovery will reveal evidence of" each necessary element. Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008); see also Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993) (requiring complaint to set forth information from which each element of a claim may be inferred). In light of Federal Rule of Civil Procedure 8(a)(2), the statement need only "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Erickson v. Pardus, --- U.S. ----, 127 S.Ct. 2197, 2200, 167 L.Ed.2d 1081 (2007) (per curiam). "[T]he ...

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