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Poskin v. TD Banknorth

September 11, 2009

KENNETH POSKIN, FINIAN POSKIN, HIS WIFE ALSO KNOWN AS POSKIN, PLAINTIFFS,
v.
TD BANKNORTH, N.A., FORMERLY KNOWN AS BANKNORTH, N.A., FORMERLY KNOWN AS PEOPLES HERITAGE BANK, N.A., AND COASTAL FINANCIAL INC., T/D/B/A FIRST MANUFACTURED LOAN, RANDY R. MCKINNEY, INDIVIDUALLY AND IN HIS CAPACITY AS AN AGENT OF COASTAL FINANCIAL INC.; DAVID M. DOHENY, INDIVIDUALLY AND IN HIS CAPACITY AS AN AGENT OF COASTAL FINANCIAL INC.; LINDA AMBROSE, INDIVIDUALLY AND IN HER CAPACITY AS AN AGENT OF COASTAL FINANCIAL INC.; LEIGHTON COHEN, INDIVIDUALLY AND IN HIS CAPACITY AS AGENT OF COASTAL FINANCIAL INC.; AND ANTHONY SALAMONE, INDIVIDUALLY AND IN HIS CAPACITY AS AGENT AND/OR OWNER OF COASTAL FINANCIAL INC., DEFENDANTS.



The opinion of the court was delivered by: Conti, District Judge

MEMORANDUM OPINION

In this memorandum opinion, the Court considers the motion for summary judgment (Doc. No. 70), filed by defendant TD Banknorth, N.A. ("defendant" or "Banknorth") with respect to the seven claims asserted against defendant by plaintiffs Kenneth Poskin and Finian Poskin ("plaintiffs" or "Poskins") and the unjust enrichment counterclaim asserted against plaintiffs by defendant. After considering the Combined Statement of Undisputed Material Facts (Doc. No. 81)*fn1 and the parties' respective submissions, the court will grant defendant's motion for summary judgment with respect to Finian Poskin's claims asserted in count V (violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law), count VIII (breach of fiduciary duty or duty of good faith and fair dealing), and under 15 U.S.C. §§ 1679b(a)(1)(B)(ii) and 1679b(a)(2)(B)(ii) in count I (violation of the Federal Truth in Lending Act). The court will also grant the motion for summary judgment with respect to both plaintiffs' claims in count II (violation of the Federal Truth in Lending Act), count III (violation of the Federal Real Estate Settlement Procedures Act), and count IX (violation of state usury laws). The court denies summary judgment with respect to Finian Poskin's claims for violation of 15 U.S.C. § 1679b(a)(4) in count I and with respect to all defendant's other arguments, including its request for summary judgment on the unjust enrichment counterclaim.*fn2

Factual Background

Finian Poskin and Kenneth Poskin were married in May 2001 and have divorced since the initiation of this action. (Def.'s S.F. ¶¶ 2-3). In April 2001, Kenneth Poskin purchased a mobile home with money he obtained through a loan with Hudson United Bank ("Hudson United"). (Def.'s S.F. ¶ 5; Appendix of Exhibits to Defendant's Motion for Summary Judgment ("Def.'s App'x") (Doc. No. 70), Ex. D at 10-16.) Plaintiffs wanted to refinance the existing Hudson United loan, pay off credit cards, and obtain financing to relocate the mobile home. (Def.'s S.F. ¶ 8.) Finian Poskin contacted Coastal Financial Inc. ("Coastal") in response to a solicitation she received in the mail regarding loan financing. (Def.'s S.F. ¶ 7.) Prior to signing a loan with Coastal, Finian Poskin spoke with a Coastal representative, Randy McKinney, over the phone regarding plaintiffs' financial standing. (Def.'s App'x, Ex. D at 34-35.) According to plaintiffs, Finian Poskin disclosed the unemployment and mental health status of her husband and her during one of the phone conversations with the Coastal representative. (Pl.'s S.F. ¶ 18.) In May 2001, both Finian Poskin and Kenneth Poskin suffered from bipolar mental disability, and Kenneth Poskin was receiving Social Security benefits for the disorder. (Def.'s S.F. ¶ 6.)

On September 6, 2001, Finian Poskin and Kenneth Poskin met Randy McKinney at the Washington County Airport to finalize the execution of the loan. (Def.'s S.F. ¶ 11; Def.'s App'x, Ex. D at 36-37.) Kenneth Poskin signed several documents throughout the course of this meeting. (Def.'s S.F. ¶ 12.) According to plaintiffs, the documents Kenneth Poskin signed were blank. (Def.'s S.F. ¶ 14.) Finian Poskin denies signing any loan documents, and none of the documents refer to Finian Poskin as a co-borrower. (Def.'s S.F. ¶ 16; Plaintiff's Reply Appendix to Motion for Summary Judgment ("Pl.'s App'x") (Doc. No. 75), Ex. C at 77.)

Before Kenneth Poskin executed the Coastal loan, the Poskins purchased a 5.9-acre lot in Deemston Borough of Washington County, Pennsylvania for $4,000.00. (Def.'s App'x, Ex. B at 26.) The purported signature of Finian Poskin appears on a deed dated September 6, 2001, transferring ownership of the 5.9-acre parcel of land from "FINIAN CROWLEY and KENNETH W. POSKINS" to "KENNETH W. POSKINS." (Def.'s App'x, Ex. G.) Kenneth Poskin's mobile home was the collateral Coastal used for the loan. (Def.'s S.F. ¶ 15.)

Defendant was previously known as Peoples Heritage Bank, N.A. ("Peoples Heritage"). (Def.'s S.F. ¶ 4.) Defendant's mailing address was in Maine. (See Def.'s App'x, Exs. F, J, P.) After the execution of the September 6, 2001 loan, Coastal assigned the Poskins' loan to Peoples Heritage. (Def.'s S.F. ¶ 20.) Until defendant discovered Coastal sold fraudulent loans to defendant, Coastal was defendant's sole mobile home loan broker. (Def.'s S.F. ¶ 30.) In March 1998, defendant and Coastal entered into a manufactured home direct loan correspondent purchase agreement. (Def.'s App'x, Ex. H.) Tom Prowdy, defendant's vice president of consumer lending, had a previous relationship with Anthony Salamone, the owner of Coastal, and Tom Prowdy recommended to defendant that it offer mobile home loans. (Pl.'s App'x, Ex. E at 8-11; Pl.'s App'x, Ex. F at 10.) Coastal and defendant had a relationship in which Coastal submitted loan applications to defendant, and defendant funded the loans. (Pl.'s App'x, Ex. D at 20, 27-29.) Defendant was not under contract or obligation to purchase Coastal loans. (Def.'s S.F. ¶¶ 27-28.) Thomas Hogan, a department manager of defendant who set up the business arrangement with Coastal, indicated that defendant turned down loan applications from Coastal, but he could not indicate how many of Coastal's loan applications were rejected. (Pl.'s App'x, Ex. E at 14-15.) The agreement between the parties provided: "Status of Seller. Nothing in this Agreement shall be construed as making [Coastal] a joint venture, partner, representative, employee or agent of [defendant] . . . ." (Def.'s S.F. ¶ 23; Def.'s App'x, Ex. H at 4.)

Defendant and Coastal shared an "operating account," which was a checking account into which defendant could deposit funds and from which Coastal could withdraw funds. (Pl.'s App'x, Ex. E at 18.) Coastal disbursed the funds from the operating account to the borrower's creditors. (Id. at 100; Pl.'s App'x, Ex. E at 14-15.) Coastal received remuneration for obtaining the loan and preparing loan documentation. (Pl.'s App'x, Ex. F at 9.) The payment came from a reserve fund set up by defendant. (Id.)

Defendant first started having trouble with Coastal in the early 2000s. (Pl.'s App'x, Ex. D at 22.) Defendant ceased the relationship with Coastal after learning Coastal placed false information on loan applications and that Coastal had assigned fraudulent mobile home loans to Banknorth. (Id. at 40-41; Def.'s S.F. ¶ 30.) The relationship ended in September 2002. (Pl.'s App'x, Ex. E at 9.) Catherine Morton, manager of defendant's collection department, was contacted by a borrower who explained that the borrower signed a loan application from Coastal, but the loan was not for the purpose of purchasing a mobile home. (Pl.'s App'x, Ex. D at 23-24.) The loan application, however, reflected that the loan was for mobile home purchase. (Id.)

With respect to Poskins' loan, one or more employees of defendant reviewed and approved that loan in accordance with defendant's policy. (Pl.'s S.F. ¶ 5.) Defendant's loan officer handling the review and approval of Poskins' loan did a credit review and debt-to-income ratio analysis of Kenneth Poskin. (Id.) The loan officer used the Coastal documentation of Poskins' loan to supply the information necessary to perform the credit review and debt-to-income ratio analysis of Kenneth Poskin. (Pl.'s App'x, Ex. F at 20-28.)

In performing these tasks, however, it is not clear whether defendant independently verified any information contained in Poskins' loan application. The application indicated that Kenneth Poskin was employed by Ambridge Steel, and had been so employed for fifteen years, and was making $1,600.01 per month. (Pl.'s App'x, Ex. D. at 126; Pl.'s App'x, Ex. B.) His credit report, however, stated he was self-employed and retired. (Id.; Pl.'s App'x, Ex. F at 36.) Catherine Morton testified at her deposition that she never made any effort to verify or refute that he was employed by Ambridge Steel. (Pl.'s App'x, Ex. D. at 132.) Mark Bouvier, the loan officer and credit analyst who approved Poskins' loan, testified at his deposition that he needed to verify Kenneth Poskin's income and employment with Ambridge Steel. (Pl.'s App'x, Ex. F. at 25-26.) He requested that a W-2 form and pay stub be obtained by Coastal, and submitted to defendant. (Id. at 26-27.) Mark Bouvier testified that if the W-2 and pay stub were not submitted, Tom Prowdy could waive the requirement that those documents be produced. (Id. at 28-29.) There is no indication in Poskins' loan documents, however, that such a waiver was made. (Id. at 29.) In addition, the credit report that was reviewed by defendant as part of the approval process failed to indicate any debt owed to Central Finance. (Pl.'s App'x, Ex. D. at 124.)

During September and October 2001, defendant paid a total of $29,492.98 to various creditors of Kenneth Poskin's in differing amounts. (Def.'s S.F. ¶¶ 32-33.) On October 18, 2001, the balance on Kenneth Poskin's mobile home loan with Hudson United was paid in full. (Def.'s S.F. ¶ 31; Pl.'s S.F. ¶ 22.) Defendant used $3,601.50 of the loan proceeds to cover the loan's closing costs. (Def.'s S.F. ¶ 35.) Kenneth Poskin's closing statement reflects that he owed $6,020.09 to an entity, Central Finance, which plaintiffs allege is a fictitious company and argue defendant knew or should have known of this wrongful charge. (Def.'s App'x, Ex. F; Pl.'s S.F. ¶ 11.)

Beginning shortly after September 11, 2001, plaintiffs contacted Coastal several times to inquire about copies of the loan documents and disbursement of the funds. (Pl.'s S.F. ¶ 21.) Plaintiffs were not successful in their effort to obtain the relevant loan documents and other information regarding the loan from Coastal. (Pl.'s S.F. ¶ 22.) Although Coastal did not provide plaintiffs with the information requested, in November 2001 Banknorth provided Finian Poskin copies of the relevant loan documents, including the loan application, security agreement, mortgage note, and loan disbursement sheet. (Def.'s S.F. ¶ 42; Pl.'s S.F. ¶ 22.) From the loan documents that defendant produced, plaintiffs learned for the first time that Coastal assigned the loan to defendant, that the actual loan amount was $39,050.83, and that their interest rate was 10.396%. (Def.'s S.F. ¶ 42; Pl.'s S.F. ¶ 23.) The actual loan amount of $39,050.83 is several thousand dollars more than plaintiffs believed they had agreed to borrow or were qualified to borrow. (Pl.'s S.F. ¶ 23.)

In January 2002, Poskins met with an attorney who wrote a letter to Banknorth on behalf of Poskins raising concerns about Banknorth's misleading business practices. (Def.'s S.F. ¶ 43; Def.'s App'x, Ex. M.) Poskins could not afford the attorney's services, and he did not make any other representations on behalf of them after the January 2002 letter. (Pl.'s App'x, Ex. C at 86-89.) Despite plaintiffs' concerns with the mortgage loan, plaintiffs made payments to Banknorth until August 2002. (Def.'s S.F. ¶ 44.)

After receiving copies of the relevant loan documents from defendant, plaintiffs indicated that some of Kenneth Poskin's signatures had been forged. (Def.'s S.F. ¶ 45.) Defendant would send an affidavit of forgery to any borrower who indicated that his or her signature was forged on a loan document. (Pl.'s App'x, Ex. D at 56.) Defendant's general policy was that if a borrower was subject to a fraudulent loan and the borrower filed the appropriate affidavits of forgery with the bank, the borrower would not be forced to repay the loan. (Pl.'s App'x, Ex. E at 29.)

On October 22, 2002, Kenneth Poskin submitted an affidavit of forgery to defendant. (Pl.'s App'x, Ex. B.) He indicated that his signature on the loan application was forged. (Id.) On December 10, 2002, Catherine Morton spoke to Finian Poskin. (Pl.'s App'x, Ex. D at 56.) Finian Poskin inquired whether defendant received the affidavit of forgery completed by Kenneth Poskin. (Id. at 57.) On December 11, 2002, Catherine Morton indicated that she received the affidavit of forgery and would review it the following morning. (Id. at 67-68.)

Sometime after the December 10, 2002 conversation with Finian Poskin, Catherine Morton prepared a memorandum to her supervisor, Joe McDonald. (Id. at 105-06.) The memorandum indicated that the borrower was on disability when the loan originated, and it stated Kenneth Poskin "signed a forgery affidavit indicating that the documents do have his signature, however he did not put down that he had been employed with Ambridge Steel for 15 years." (Id. at 109-12.) Catherine Morton interpreted this as meaning that he signed the loan documents, but that he did not realize he was acknowledging false information. (Id. at 112.)

Although plaintiffs alleged that the loan provided for a sum of approximately $6,000 to be paid to Central Finance, a fictitious company allegedly used by Coastal to launder money, Catherine Morton was never alerted by defendant about problems with loans to Central Finance, and Banknorth continued to collect on loans made to this entity. (Pl.'s App'x, Ex. D at 79-80.) Catherine Morton was never alerted about any problems with loans that were for a greater amount of money than what the borrower agreed to borrow. (Id. at 80.)

Catherine Morton learned that Linda Ambrose, a notary used by Coastal, improperly notarized the documents of several borrowers. (Id. at 75-76.) Catherine Morton learned this from the settlement of a case between Coastal and defendant. (Id.) Catherine Morton was notified of the settlement by defendant's legal department. (Id. at 77.) The settlement agreement was executed in September 2002. (Id. at 97-98.)

On December 13, 2002, Finian Poskin called Catherine Morton. (Id. at 70-71.) Finian Poskin told Catherine Morton that she did not sign any documents, and that Kenneth Poskin's signature was not properly notarized. (Id. at 74-75.) Finian Poskin believed that the notary indicated that the mortgage was signed in Lehigh County, Pennsylvania, but plaintiffs maintained that all documentation was signed in Washington County, Pennsylvania. (Id.; Pl.'s App'x, Ex. B.) On January 3, 2003, Catherine Morton again spoke with Finian Poskin. (Pl.'s App'x, Ex. D at 77-78.) Catherine Morton advised Finian Poskin that defendant merely purchased the loan from Coastal. (Id. at 78.) Catherine Morton did not have any knowledge, however, of the agreement between Coastal and defendant. (Id.)

At some subsequent time, Michelle Jenson, who worked in defendant's collections department, indicated that Poskins' signatures were to be reviewed because plaintiffs alleged that they did not sign for the amount of money that the loan documents indicated they borrowed. (Id. at 81-82.) Michelle Jenson noted: "Explain again that the issue is with the closing company, we bought the loan from them. . . . Explain to her that the disbursement sheet shows what was paid." (Id. at 82.) The disbursement sheet indicated that all disbursements were received by the various entities, including Central Finance; Catherine Morton believed Central Finance received its disbursement. (Id. at 84-85.) On March 5, 2003, Michelle Jenson submitted a foreclosure recommendation sheet to defendant's committee responsible for reviewing those recommendations. (Id. at 91.) The recommendation indicated that Poskins claimed parts of the loans were fraudulent, and that it was a Coastal loan. (Id. at 95-96.) Even though Catherine Morton indicated she would be the appropriate person to ask whether such a claim was investigated, she could not recall whether the committee reviewed Poskins' claim. (Id. at 95-96.) Defendant's collections department had access to the entire Poskins' file. (Pl.'s App'x, Ex. D at 48-49.)

As a result of Poskins' financial problem with Coastal and various other creditors, Kenneth Poskin became depressed beginning in October 2001 and went into a catatonic state for almost a year. (Def.'s S.F. ¶¶ 52-53.) In January 2003, Kenneth Poskin set his mobile home on fire in an attempt to commit suicide. (Def.'s S.F. ¶¶ 50-51; Def.'s App'x, Ex. B at 34-36.) In response to the arson incident, the state hospitalized and incarcerated Kenneth Poskin for the better part of a year. (Def.'s S.F. ¶ 51; Def.'s App'x, Ex. B at 34-36.)

In February 2003, Banknorth sent Kenneth Poskin a letter offering a loan modification to reduce his interest rate and defer his late payments. (Def.'s S.F. ¶ 54.) This letter also indicated that further delinquency would result in repossession of the collateral for the loan. (Def.'s S.F. ¶ 55.) The modification, however, made no adjustment for the alleged fraudulent disbursements. (Def.'s S.F. ¶ 54 (Plaintiff's Response).) Kenneth Poskin did not enter into the loan modification agreement because he did not believe that Banknorth had the right to collect on a loan for which the underlying loan documents were falsified. (Id.) In May 2003, plaintiffs learned about criminal prosecutions of various Coastal representatives and employees for falsifying information pertaining to the creditworthiness of Kenneth Poskin. (See Def.'s S.F. ¶ 56; Pl.'s S.F. ¶¶ 12, 40-45; Def.'s App'x, Ex. S.)

Plaintiffs retained their present counsel in February 2003. (Pl.'s S.F. ¶ 31.) In September 2003, Banknorth filed a foreclosure action against Poskins.*fn3 (Def.'s S.F. ¶ 63.) On December 10, 2003, Banknorth filed a subsequent action in replevin against plaintiffs.*fn4 (Def.'s S.F. ¶ 64.) On February 23 and March 5, 2004, plaintiffs filed objections to the respective repelvin and foreclosure actions.*fn5 (Id.) Banknorth subsequently filed two amended complaints, and plaintiffs objected to them. (Pl.'s S.F. ¶¶ 32-35.) Without curing the alleged defects in the complaint, Banknorth filed a praecipe for judgment for failure to answer on the foreclosure action in August 2004 and a writ of execution in December 2004. (Pl.'s S.F. ¶ 37.) The court denied both motions. (Id.) Banknorth initiated no further action, but on February 23, 2005, plaintiffs filed a request for production of documents. (Pl.'s S.F. ¶ 38.) Without producing any documents, Banknorth filed praecipes to discontinue both actions without prejudice on June 28, 2005. (Id.)

Defendant maintains that it withdrew the actions against plaintiffs because proceeding would not have been cost-effective for Banknorth.*fn6 (Def.'s S.F. ¶ 67.) Plaintiffs argue that Banknorth never intended to proceed to discovery and that defendant tried to coerce a settlement by initiating the foreclosure and replevin actions against plaintiffs. (See Plaintiffs' Third Amended Complaint (Doc. No. 24).) Plaintiffs also allege that Banknorth sued Finian Poskin in an attempt to attach jointly-held real estate.*fn7 On April 7, 2006, plaintiffs filed the present action against Banknorth. (See Complaint (Doc. No. 1).)

Standard of Review

Federal Rule of Civil Procedure 56(c) provides that summary judgment may be granted if, drawing all inferences in favor of the nonmoving party, "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c).

The nonmoving party must point to specific affirmative evidence in the record, rather than rely upon conclusory or vague allegations or statements. Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). Concrete evidence must be provided for each element of each of the claims, and the evidence must be such that a reasonable fact-finder could find in that party's favor at trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). "A nonmoving party, like plaintiff, must 'designate specific facts showing that there is a genuine issue for trial.'" Orenge v. Veneman, No. 04-297, 2006 WL 2711651, at *6 (W.D. Pa. Sept. 20, 2006) (citing Celotex, 477 U.S. at 324).

A motion for summary judgment will not be defeated by the mere existence of some disputed facts, but will be defeated when there is a genuine issue of material fact. Anderson, 477 U.S. at 248. In determining whether the dispute is genuine, the court's function is not to weigh the evidence or to determine the truth of the matter, but only to determine whether the evidence of record is such that a reasonable jury could return a verdict for the nonmoving party. Id. at 249. The court may consider any evidence that would be admissible at trial in deciding the merits of a motion for summary judgment. Horta v. Sullivan, 4 F.3d 2, 8 (1st Cir. 1993); Pollack v. City of Newark, 147 F. Supp. 35, 39 (D.N.J. 1956), aff'd, 248 F.2d 543 (3d Cir. 1957) ("in considering a motion for summary judgment, the court is entitled to consider exhibits and other papers that have been identified by affidavit or otherwise made admissible in evidence").

Discussion

Defendant moved for summary judgment with respect to each of plaintiffs' seven counts against it, and also moved for summary judgment on its unjust enrichment counterclaim. Defendant argues that summary judgment should be granted because several of plaintiffs' claims are time barred; Banknorth is not a credit repair organization; the National Bank Act, 12 U.S.C. §§ 21 et seq. ("NBA"), preempts several of plaintiffs' state law claims; Finian Poskin does not have standing; plaintiffs have not established a prima facie case of malicious prosecution; there is no agency relationship between Coastal and Banknorth; and plaintiffs have been unjustly enriched. In response, plaintiffs argue that equitable doctrines apply to toll the applicable statute of limitations periods; Banknorth does not have to be a credit repair organization to be liable under the Truth in Lending Act, 15 U.S.C. §§ 1601 et seq. ("TILA"); the NBA does not preempt plaintiffs' state law claims; Finian Poskin suffered a legal injury; the evidence supports the malicious prosecution claim; the evidence supports the finding of an agency relationship between Coastal and Banknorth; and defendant is not entitled to summary judgment on its unjust enrichment claim. The facts and law relevant to these arguments are described in more detail below.

I. Count I

Count I of plaintiffs' third amended complaint asserts claims for violations of three sections of the TILA that are part of the Credit Repair Organizations Act, 15 U.S.C. §§ 1679 et seq. ("CROA"). Plaintiffs' claims are based upon §§ 1679b(a)(1)(B)(ii), 1679b(a)(2)(B)(ii), and 1679b(a)(4) of the CROA. Section 1679b(a)(1)(B)(ii) prohibits any person from making an untrue or misleading statement to any person to whom the consumer has applied for an extension of credit:

No person may make any statement, or counsel or advise any consumer to make any statement, which is untrue or misleading (or which, upon the exercise of reasonable care, should be known by the credit repair organization, officer, employee, agent, or other person to be untrue or misleading) with respect to any consumer's credit worthiness, credit standing, or credit capacity to any person to whom the consumer has applied or is applying for an extension of credit.

15 U.S.C. § 1679b(a)(1)(B)(ii). Section 1679b(a)(2)(B)(ii) prohibits any person from making a statement intended to alter the consumer's identification in order to prevent the display of adverse credit information to any person to whom the consumer has applied or is applying for an extension of credit:

No person may make any statement, or counsel or advise any consumer to make any statement, the intended effect of which is to alter the consumer's identification to prevent the display of the consumer's credit record, history, or rating for the purpose of concealing adverse information that is accurate and not obsolete to any person to whom the consumer has applied or is applying for an extension of credit.

15 U.S.C. § 1679b(a)(2)(B)(ii). Section 1679b(a)(4) prohibits any person from engaging, directly or indirectly, in any act or course of business that constitutes or results in fraud or deception against any person in connection with the offer or sale of the services of the credit repair organization:

No person may engage, directly or indirectly, in any act, practice, or course of business that constitutes or results in the commission of, or an attempt to commit, a fraud or deception on any person in connection with the offer or sale of the services of the credit repair organization.

15 U.S.C. § 1679b(a)(4). Plaintiffs allege that acting jointly or in concert with Coastal, defendant misrepresented Kenneth Poskin's salary on the loan application and intended to alter his identification for the purpose of concealing adverse credit information. Plaintiffs further allege that defendant accepted, approved, ratified, and benefitted from the misrepresentation of Kenneth Poskin's salary. Defendant raises three defenses to count I: (A) defendant is not a credit repair organization, (B) Finian Poskin does not have standing to sue with respect to count I, and (C) the actions of Coastal cannot be attributed to defendant.

A. Whether Count I of Plaintiffs' Complaint Fails as a Matter of Law Because Defendant Is Not a Credit Repair Organization

First, defendant argues that because it is not a credit repair organization, plaintiffs' claims under § 1679b fail as a matter of law. According to § 1679a of the CROA, the term "credit repair organization" is defined as any person who uses any instrumentality of interstate commerce or the mails to sell, provide, or perform (or represent that such person can or will sell, provide, or perform) any service, in return for the payment of money or other valuable consideration, for the express or implied purpose of: (i) improving any consumer's credit record, credit history, or credit rating; or (ii) providing advice or assistance to any consumer with regard to any activity or service described in clause (i) . . . .

15 U.S.C. § 1679a(3)(A). The term "credit repair organization" does not include "(iii) any depository institution (as that term is defined in section 1813 of Title 12) or any Federal or State credit union (as those terms are defined in section 1752 of Title 12), or any affiliate or subsidiary of such a depository institution or credit union." 15 U.S.C. § 1679a(3)(B). Defendant, as a depository institution, falls within the exclusion and is not a credit repair organization.

Even assuming defendant is correct in arguing it is not a credit repair organization, summary judgment may not be granted with respect to count I solely on the basis that defendant is not such an organization. In Vance v. National Benefit Ass'n, No. 99 C 2627, 1999 WL 731764, at **3-4 (N.D. Ill. Aug. 30, 1999), the defendant bank moved for dismissal of a complaint alleging that the bank violated the CROA on the ground that it was not a credit repair organization. The court in that case recognized that the CROA specifically excludes banks from the definition of credit repair organizations, but noted that certain CROA prohibitions nevertheless apply to "any person," regardless whether that person falls within the definition of a credit repair organization. The court held that the defendant bank was a "person" for purposes of liability under the statute. Id.

When Congress uses different terms in the same statute and in the absence of contrary evidence, the terms have different meanings. See 2A NORMAN J. SINGER & J.D. SHEMBIE SINGER, SUTHERLAND ON STATUTES AND STATUTORY CONSTRUCTION § 46:6, at 252 (7th ed. 2007) ("The use of different terms within related statutes generally implies that different meanings were intended"); In re Wright, No. 05-40829-JJR-13, 2007 WL 1459475, at *6 (N.D. Ala. May 16, 2007). The prohibitions of § 1696b apply to "any person." As used in the CROA, the legal use of the term "person" encompasses a broader range of individuals and entities than the term "credit repair organization." In re Wright, 2007 WL 1459475, at *6.

Congress uses both the terms "person" and "credit repair organization" in § 1679b, indicating that the terms are not to be interchangeably read. Defendant does not identify any legislative history or intent indicating that an entity such as Banknorth cannot be liable as a "person" under § 1679b, and defendant does not argue that artificial entities are not persons. Accordingly, count I does not fail as a matter of law even though defendant is not a credit repair organization under § 1679a(3).

B.Whether the Court Should Dismiss the Claims of Plaintiff Finian Poskin Because She Lacks Standing to Sue In Count I

Defendant alleges that Finian Poskin does not have standing to sue because she is not a party to the loan transaction. A loan transaction is a contract between the borrower and the lender. Weiner v. Bank of King of Prussia, 358 F. Supp. 684, 690-91 (E.D. Pa. 1973). A person who is not a party to a contract does not have standing to assert rights under the contract. See Evans v. Union Mortgage Co., 114 B.R. 434, 437 (Bankr. E.D. Pa. 1990) (refusing to recognize standing under the TILA for borrower's daughter who signed, on behalf of her father, her father's name on the loan documents).

The court must first look to the language of the CROA to analyze questions implicating the act. Because the CROA is a consumer protection statute with a remedial purpose, the court should broadly interpret it. See Helms v. Consumerinfo.com, Inc., 436 F. Supp. 2d 1220, 1229 (N.D. Ala. 2005). The court, however, will not construe the language of the CROA more broadly than what is meant by the plain language of the statute. Id.

Section 1679g provides: "Any person who fails to comply with any provision of this subchapter with respect to any other person shall be liable to such person . . . ." 15 U.S.C. § 1679g. The plain language of §§ 1679b(a)(1)(B)(ii) and 1679b(a)(2)(B)(ii) refers to wrongs against the consumer; these sections make no mention of violations against any person except the consumer. 15 U.S.C. § 1679b. The language of the statute indicates Congress intended that only consumers may pursue claims under those provisions of § 1679b. See Id.

Section 1679b(a)(4), unlike ยงยง 1679b(a)(1) and 1679b(a)(2), prohibits a person from committing fraud against "any person in connection with the sale of services or goods." Given the reasoning above, the phrase "any person in connection with the offer or sale of services" is more expansive than the term "consumer." Congress' reference to "any person in connection with the offer or sale of services" indicates that persons not a party to the loan ...


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