Figueroa v. Szymoniak et al

The text below is from an article (that was) on Mandelman Matters:

The suit alleges that Szymoniak, and other lawyers with whom she worked, committed legal malpractice, breach of fiduciary duty, unjust enrichment, and fraud…. against a fellow homeowner at risk of foreclosure.

The plaintiff in the suit alleges that in 2010, over a period of roughly six months, Lynn Szymoniak was his attorney, and that she led him to believe that she would be filing a “Qui Tam,” or False Claims action in which HE was to be the “RELATOR,” and SHE, his legal counsel.

Had that been what occurred, the $18 million award would have gone to the plaintiff… and not to Ms. Szymoniak… but instead the Qui Tam lawsuit that was filed named Lynn Szymoniak as the “RELATOR,” and so Lynn and her lawyers divided up the multi-million award without ever mentioning anyone else being involved.

http://dockets.justia.com/docket/florida/flsdce/0:2013cv61020/420208/#!

http://mandelman.ml-implode.com/category/florida-foreclosure-help/

Qui tam Defention:

http://en.wikipedia.org/wiki/Qui_tam

Bradbury v GMAC Mortgage

The United States District Court for the District of Maine recently dismissed a group of borrowers’ state law claims against a mortgage servicer for abuse of process and fraud on the court, and denied the borrowers’ motion to remand all of the state law claims.


A group of Maine borrowers (“Borrowers”) threatened with foreclosure or eviction brought suit against GMAC Mortgage, LLC (“GMAC”) seeking damages and injunctive relief, alleging abuse of process, fraud on the court and violations of the Maine UTPA. GMAC removed the case to federal court on the basis of diversity of citizenship and the Class Action Fairness Act, and the Borrowers moved to remand the case back to state court.

At the outset, the Court denied the Borrowers’ motion to remand, reasoning that “there is indisputably subject matter jurisdiction based upon diversity of citizenship” as to the three state common law damages claims. In addition, only once has the Court “resolved all claims over which there is federal subject matter jurisdiction” may the Court “remand the claims over which there is no federal subject matter jurisdiction.” See 28 U.S.C. § 1447(c).

The Court next dismissed the Borrowers’ abuse of process claim. The alleged basis of the abuse of process was the supposed “filing of false certifications and affidavits in support of GMAC’s motions for summary judgment in various Maine foreclosure proceedings.”

However, a claim for abuse of process under Maine law requires, among other things, “the use of process in a manner improper in the regular conduct of the proceeding.” The Court reasoned that the use of the challenged affidavits and certifications “does not satisfy the ‘improper’ use requirement.” See Advanced Construction Corp. v. Pilecki, 901 A.2d 189 (Me. 2006).

Rather, the certifications and affidavits “were used to win the foreclosure lawsuits, and that is a proper use of such documents.” The Court further noted that if the documents were false, “then the remedy is to seek to vacate the judgment that was obtained, not to start a new lawsuit alleging abuse of process.”

The Court also dismissed the Borrowers’ claim for fraud on the court, reasoning that “no Maine case law recognizes such a basis for a private damage recovery.” In addition, fraud on the court may be a ground for, among other things, vacating a judgment or for sanctions under state civil procedure rules, “but it is not a ground for the recovery of damages by a party in a later lawsuit.”

Finally, the Court denied the Borrowers’ motion to remand the remaining claim under the Maine UTPA based upon both the Rooker-Feldman doctrine and Younger abstention doctrine.

As you may recall, the Rooker-Feldman doctrine essentially holds that “a federal court below the United States Supreme Court does not have jurisdiction over a claim that seeks in essence to overturn a state court judgment,” and “[i]nstead, the proper avenue for such a challenge is to the state’s highest court and from there to the United States Supreme Court.”

The district court held that “Rooker-Feldman does not destroy subject matter jurisdiction over” the UTPA claim “because the borrowers’ claim is that GMAC’s conduct produced the state court judgments they attack, not that the Maine courts committed legal error.”

As you may also recall, the Younger abstention doctrine “counsels federal courts not to interfere by injunction with ongoing state judicial proceedings.” However, when damages are requested, that doctrine commonly “calls upon the federal court merely to stay the damages claim until the state lawsuit is resolved, not dismiss or remand the claim for damages altogether.”

In this case, the district court noted that “the foreclosure actions, including those pending at the time GMAC removed this action to federal court, have since been resolved,” and the Court determined therefore to “proceed on the merits of the damages claim.” As explained above, the Court “cannot remand part of the case (the claim for equitable relief) while the rest (the claim for damages) proceeds actively in federal court.”

Accordingly, the borrowers’ Maine UTPA allegations remain for resolution before the federal district court.

Having denied the Borrower’s motion for partial remand, the Court concluded by denying the Borrower’s Motion for Order of Notice to Putative Class as moot.

Cal App Allows Fraud Exception to Parol Evidence Rule in Loan Mod/Forbearance Case

The California Court of Appeals, Fifth Appellate District, recently held that the fraud exception to the parol evidence rule applies to fraudulent inducement claims, in connection with a loan forbearance and modification effort.


A copy of the opinion is available at http://www.courtinfo.ca.gov/opinions/documents/F058434.PDF

A number of commercial borrowers filed a complaint which alleged causes of action involving fraud, negligent misrepresentation, rescission, and reformation concerning a written forbearance agreement with Defendant Fresno-Madera Production Credit Association.

The borrowers alleged they were induced to enter into the forbearance agreement by “defendant’s oral misrepresentations of the terms contained in the written agreement.” These alleged misrepresentations included promises made prior to and at the execution of the written agreement, wherein the borrowers alleged that the lender stated the forbearance would be for two years, and the collateral property would consist of two orchards, not the borrowers’ residence or truck yard. The executed agreement provided only that the lender would forbear from collection until July 1, 2007, and included the borrowers’ residence and truck yard as collateral property. Following a failure to make the payments due under the agreement, the lender recorded a notice of default; however, the borrowers then repaid the loan.

The lender’s motion for summary judgment was granted by the lower court based on the borrowers’ failure to perform pursuant to the written forbearance agreement, and the parol evidence rule’s barring “any prior or contemporaneous oral agreement” which changes or adds to “the terms of an integrated written agreement.”

The Appellate Court stated that the only issue on appeal was “whether evidence of defendant’s oral statements, proffered by plaintiffs in opposition to the motion, was properly excluded by the trial court.”

The Court reviewed the policy basis of the parol evidence rule, noting that the rule stems from the concept of contract “integration” whereby “the parties to an agreement incorporate the complete and final terms of the agreement in a writing.” Extrinsic evidence is thus excluded “because it cannot serve to prove what the agreement was” as the writing itself determines this “as a matter of law.” However, the Court noted that there are exceptions to this rule, such as “to establish illegality or fraud.” (Emphasis added by the Court). However, the Court noted that this exception has been limited by the California Supreme Court decision in Bank of America etc. Assn v. Pendergrass (1935) 4 Cal.2d 258, which limits the fraud exception “making it inapplicable when the evidence is offered to show a promise contradicting the written agreement.”

In their appeal, the borrowers pointed to more recent California decisions, including Pacific State Bank v. Greene (2003) 110 Cal, App. 4th 373, which drew a distinction between parol evidence of a “prior promise made without any intention of performing it” which contradicts the terms of a written contract, and “parol evidence of a contemporaneous factual misrepresentation of the terms contained in a written agreement submitted for signing.” The Appellate Court held that in the latter case, extrinsic evidence would not be admitted to “alter, vary, or add to the provisions of an integrated agreement” but would be allowed to prove that the written contract was not in fact the integrated agreement intended by the parties.

Based on the above analysis, the Appellate Court held that the Pendergrass standard “did not intend its limitation on the fraud exception to the parol evidence rule to extend beyond evidence of promissory fraud.”

In the instant case, the Court found that the borrowers' “extrinsic evidence of the alleged misrepresentations made by defendant’s representative should have been admitted in opposition to defendant’s motion for summary judgment.” Accordingly, the Appellate Court reversed the judgment of the trial court, with directions to vacate the order granting summary judgment, and to enter a new order to denying summary judgment except as to select causes of action.

Ohio Attorney General Files Fraud Suit Against GMAC Mortgage

http://www.ohioattorneygeneral.gov/GMACLawsuit

In a lawsuit filed Wednesday against GMAC Mortgage and its parent, Ally Financial Inc., Ohio Attorney General Richard Cordray accuses the loan servicer and its agents of filing fraudulent affidavits in an attempt to mislead courts in hundreds of Ohio foreclosures.


“We know that as Ohioans were fighting to save their homes, this loan servicer benefited financially from the dire circumstances,” Cordray said. “Instead of stepping up and assisting those at risk of losing their homes, it is clear that GMAC chose to compound the problem through fraudulent and unfair and deceptive practices.”

According to the lawsuit, filed in Lucas County Common Pleas Court, GMAC and its employees committed fraud on Ohio consumers and Ohio courts by signing and filing hundreds of false affidavits in foreclosure cases.

The servicer’s mishandlings of foreclosure documents came to light after a GMAC employee testified in a foreclosure case out of Maine that from 2006 to 2010, he signed thousands of affidavits a month without verifying the content.

On September 20th, GMAC suspended foreclosure actions and REO sales in 23 states to allow the company to undertake a review of what it said was a glitch in its internal procedures. GMAC said it expected any resulting delays on foreclosures already in process to be cleared up within a few weeks, “without serious consequence.”

DOJ: FRAUD, CORRUPTION PROSECUTIONS THWARTED BY SKILLING RULING

The head of the Department of Justice's Criminal Division testified today before the Senate Judiciary Committee that a recent U.S. Supreme Court ruling is hampering the federal government's efforts to prosecute fraud and corruption in the public and private sectors, Dow Jones Newswires reported. The court's June decision in the appeal of former Enron Chief Executive Jeffrey Skilling to limit prosecutions for honest-services fraud has had an impact, Assistant Attorney General Lanny A. Breuer. "There is conduct that would have been prosecuted under the honest services fraud statute before Skilling that can no longer be prosecuted under the federal criminal law," Breuer said. In June, the Supreme Court ruled that it only applies to bribery and kickback schemes, and cannot be used in cases involving "undisclosed self-dealing" by a public official or private employee. Breuer urged lawmakers to move quickly to pass legislation to fill what Justice Department officials regard as a legal hole. Sen. Patrick Leahy (D-Vt.) criticized the Supreme Court decision, saying that federal circuit courts upheld the honest services statute for 21 years after Congress passed it in 1988.