Opinion
14-P-223
05-19-2015
CHRISTOPHER FORBES v. COUNTRYWIDE HOME LOANS, INC.
NOTICE: Summary decisions issued by the Appeals Court pursuant to its rule 1:28, as amended by 73 Mass. App. Ct. 1001 (2009), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
After a jury waived trial, a judge of the Superior Court found for the defendant, Countrywide Home Loans, Inc. (Countrywide), on the claim of the plaintiff, Christopher Forbes, that Countrywide had conducted predatory lending practices when providing him with a home mortgage and an equity line of credit, in violation of G. L. c. 93A. Forbes argues that the judge "ignore[d] substantial evidence of unfair and deceptive practices by Countrywide," and construed the applicable law too narrowly, thus permitting Countrywide and other similar lenders to "ignore fraud" in their underwriting practices. Forbes also argues that the judge erred in finding his c. 93A letter inadequate and in failing to credit his expert's testimony. We affirm, essentially for the reasons well explained in the motion judge's careful findings.
In addition to the c. 93A claim, Forbes's amended complaint asserted claims against Countrywide for unjust enrichment, violation of an implied covenant of good faith and fair dealing, and negligence; all but the c. 93A claim were resolved on Countrywide's motion for summary judgment. Forbes's cross motion for summary judgment as to Countrywide's liability was denied. The c. 93A claim is the only issue before us.
Discussion. We begin by noting that many of Forbes's allegations hinge on whether Countrywide could be held liable for any misrepresentations or other actions of its employee, Christopher Dold. Forbes did not pursue claims against Dold, and, earlier in this litigation, the judge who decided the summary judgment motions, "determined that 'Forbes [had] no reasonable expectation of establishing a violation of Chapter 93A based on misrepresentations by Dold.'" To the extent that any issues remained after the summary judgment decisions, the trial judge found explicitly "that the plaintiff . . . failed to meet his burden of proof. Countrywide therefore has no 'vicarious liability' for any misrepresentations by Dold." The defendant does not challenge that decision on appeal. In addition, whatever the negotiations between Forbes and Countrywide or its representatives about Forbes's initial mortgage and home equity line of credit, Forbes never missed a payment or otherwise defaulted on those loans and, as appears on this record, never approached anyone from Countrywide about any difficulty in repaying them. In January, 2006, Forbes refinanced with another lender, on what might be thought to be more onerous terms, securing a consolidated loan through IndyMac. At that time, he repaid in full both Countrywide loans. On those facts, it is difficult to see how Countrywide could be the cause of any injury to Forbes, including the eventual foreclosure. See Herman v. Admit One Ticket Agency LLC, 454 Mass. 611, 615-616 (2009) ("A party alleging a violation of G. L. c. 93A, § 9[1], must establish . . . a causal connection between the injury suffered and the defendant's unfair or deceptive method, act, or practice.[footnote omitted] See Hershenow v. Enterprise Rent-A-Car Co. of Boston, 445 Mass. 790, 797 [2006]"). Nevertheless, we also address Forbes's specific claims in turn.
It was Dold who sold Forbes property that Dold himself owned; Dold also transmitted Forbes's information to another loan officer at Countrywide, even though Dold apparently got credit with Countrywide for the loans.
In June, 2008, IndyMac foreclosed on the property.
Chapter 93A claim. On the relevant loan applications and related documents, Forbes stated that his monthly income was $10,000, although, at the time, his gross monthly income was approximately $6,800., While Forbes admits that the mortgage and equity line of credit issued by Countrywide in June, 2004, "may not have fit the criteria deemed presumptively unfair in [Commonwealth v. Fremont Inv. & Loan, 452 Mass. 733 (2008) (Fremont)]," he argues that Countrywide "had ample reason to know that the monthly income figure of $10,000 that appeared on Forbes'[s] loan applications was false," and that concluding otherwise is construing Fremont too narrowly. In Fremont, the Supreme Judicial Court held that loans featuring a combination of four specific characteristics were presumptively unfair under chapter 93A. See id. at 739.
Under the "Fast and Easy" loan program for which Forbes qualified, he was not required to document his income and assets, but, instead, was allowed to "verify," under threat of criminal penalty, that the income and asset information was accurate.
It appears that Forbes also considered possible rental income in supplying that figure. However there is no evidence on this record that Forbes could reasonably have anticipated receiving such an inflated amount in rent.
The four Fremont characteristics qualifying as unfair are: "(1) the loans were [adjustable rate mortgage] loans with an introductory rate period of three years or less; (2) they featured an introductory rate for the initial period that was at least three per cent below the fully indexed rate; (3) they were made to borrowers for whom the debt-to-income ratio would have exceeded fifty per cent had Fremont measured the borrower's debt by the monthly payments that would be due at the fully indexed rate rather than under the introductory rate; and (4) the loan-to-value ratio was one hundred per cent, or the loan featured a substantial prepayment penalty . . . or a prepayment penalty that extended beyond the introductory rate period." Fremont, supra at 739. See G. L. c. 183C.
In this case, after a two-day trial with four witnesses and numerous exhibits, the judge found that the weight of the evidence fully supported Countrywide's characterization of its loans as distinguishable on each of the first three Fremont factors. Although the judge expressed concern over the fourth factor: loan-to-value ratio (particularly given the disparity among various appraisals on which Countrywide had relied in issuing the loans), she noted that the last appraisal, on which Countrywide ultimately relied, had been prepared by an independent, licensed third-party appraiser, and set forth "comparable home sale information for the [property] area and concluded that the sale price was reasonable for the time period and area." We see no error in her determination that Countrywide could reasonably have relied upon that later appraisal, and that ultimately Forbes failed to provide credible evidence that Countrywide's loans were presumptively unfair. In addition, we are persuaded that the judge reasonably concluded that, because "Forbes chose to state, and to continually verify his [false] income information, [] Countrywide was entitled to rely on it [in determining the debt-to-income ratio and otherwise.]" We see no error.,,
Forbes also argues that the judge erroneously ignored certain regulations for mortgage brokers. This argument also fails for the reasons explained by the trial judge. Neither Dold, Countrywide's representative, nor Countrywide acted as a mortgage broker in the transaction at issue and the regulations "did not go into effect until late 2007, some three years after the loans in this case were issued." Forbes counters that the "principles" underlying the regulations predated their enactment but, in explaining that argument, reverts to his rejected contention that Countrywide's lending practice was predatory because of its "endorsement of Forbes'[s] inflated rental income."
Forbes also argues that the judge erred in finding that his c. 93A demand letter was inadequate; this argument also fails, as the judge fully and adequately addressed Forbes's c. 93A letter in her findings of fact and rulings of law.
To the extent that Forbes asks us to extend the holding in Fremont to apply to the facts of this case and find that they constitute predatory lending practices per se, we decline to do so.
Expert testimony. Forbes next argues that the judge erred in not relying on the "credible" trial testimony of his expert, Robert Sawyer. "The weight and credibility of the evidence is the province of the [fact finder]." Commonwealth v. Dubois, 451 Mass. 20, 28 (2008). Here, the judge, as fact finder, did not credit Sawyer in determining that Forbes had failed to establish that there was any violation of underwriting standards in effect at the time Countrywide issued the loans. The judge, after review of all of the evidence, was permitted to so find. We see no abuse of discretion or other error. See ibid.
The judge did not find Sawyer credible on this issue because he admitted at trial that "(1) he has never underwritten any loan; (2) he has never taken any course on underwriting; (3) he has never taught any course on underwriting; (4) he has never been a licensed mortgage broker; and (5) while he may have acted as an unlicensed mortgage broker in 2004, he brokered no more than three (3) residential loans in 2004 (although he could not name any lenders he worked with)."
Motion for amended findings/new trial. Forbes argues finally that the judge improperly denied his motion pursuant to Mass.R.Civ.P. 52, as amended, 423 Mass. 1408 (1996), requesting to amend the findings, or to make additional findings (or, alternatively, to grant a new trial) based on what Forbes described as the numerous errors of law made by the judge. After the entry of judgment in a nonjury trial, on a party's motion, the "court may amend its findings or make additional findings and may amend the judgment accordingly." Mass.R.Civ.P. 52(b), as amended, 423 Mass. 1402 (1996). "A motion under rule 59(e) . . . [is] addressed to the judge's discretion, and no abuse of discretion is demonstrated here." R.W. Grainger & Sons, Inc. v. J & S Insulation, Inc., 435 Mass. 66, 79 (2001).
We have carefully considered the remaining issues raised in Forbes's brief and find them to be without merit.
Judgment affirmed.
Order denying motion for amended findings or new trial affirmed.
By the Court (Berry, Hanlon & Carhart, JJ.),
The panelists are listed in order of seniority.
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Clerk Entered: May 19, 2015.