From: From: To: To: Subject: Subject: Date: Date: Attachments: Attachments:
Bae. Philip Bae, Philip Crystall McCune, Crystall McCune, FW: dated 5-12-15 FW: Addendum Addendum to to comment comment letter letter dated 5-12-15 -FRSONLY-FRSONLYWednesday, May May 20, 20, 2015 2015 10:02:53 10:02:53 AM Wednesday, AM JOLLEY ADDENDUM JOLLEY ADDENDUM TO TO COMMENT COMMENT LETTER 5-12-15.pdf LETTER 5-12-15.pdf
From: From: Sandy Sandy Jolley Jolley [mailto:
[email protected]] [mailto:
[email protected]] Sent: Monday, May May 18, 18, 2015 2015 9:51 PM Sent: Monday, 9:51 PM To: Bae, Philip; Philip;
[email protected] [email protected] To: Bae, Subject: Addendum to to comment comment letter letter dated 5-12-15 Subject: Addendum dated 5-12-15
Dear David and Phillip,
addendum to my comment letter dated 5-12-15 5-12-15 with new information information regarding Attached is an addendum the Gorsuch v OneWest OneWest Bank RICO case case and related Consumer Testimony Testimony from the the Public Hearing Insurance. Hearing regarding (Lender) Force Placed Insurance. Regards, Regards, Sandy Jolley Sandy Jo fiey Reverse Mortgage Suitability and Abuse Consultant Reverse Mortgage Phone: Phone: 805 402-3066 402-3066 Fax: 984-3806 Fax: 805 984-3806
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May 18, 18, 2014 2014
en Janet Yell Yellen Chair Federal Reserve Board of Governors Federal Reserve Governors
Thomas Curry Comptroller Comptroller Office of the Comptroller of the Currency
Martin Gruenberg Gruenberg Martin Chair Insurance Corporation Federal Federal Deposit Insurance Corporation
Mel Watt Director Director FederalHousing HousingFinance Finance Agency Federal
Richard Cordray Richard Cordray Director Director Consumer Financial Financial Protection Bureau
Julian Castro Julian Castro Secretary Secretary Dept. of Housing and Urban Urban Development
Re: Sandy Jolley Addendum to comment letter letter dated datedMay 12, 2015 to FRB FRB RF! RFI
Continued Opposition Subject: Continued Opposition to One West CIT Merger Merger Application. Application.
Dear Chairs Dear Chairs Yellen and Gruenberg, Directors Directors Watt Waft and Cordray, Cordray, Comptroller Curry, and and Secretary Secretary Castro, I write this addendum addendum to my comment comment letter dated May 12, 12, 2015 due to additional important information information regarding regarding Pending Litigation in Gorsuch v. OneWest OneWest Bank and Consumer Consumer Testimony Testimony against OneWest Bank for Servicing and Foreclosure Foreclosure Practices related to (Lender) Force Placed against Placed Insurance. Insurance. In CRC on page 8 they comment: In the 7th 7h Comment Letter submitted submitted by CRC Incomplete litigation docket confirms relating to FRB requested litigation information information relatins confirms concerns. The FRB Incomplete concerns raised at the public hearing. It is unclear why the FRB allows OneWest to focus narrowly narrowly on those able to testify at the hearing, as opposed to all of those submitting written testimony, to say nothing of any any questions questions the FRB FRB and the OCC would have based based on their own due diligence. As but one example, the Response fails to note Gorsuch v. Financial Freedom, Freedom, et. al., the case of a woman in in Toledo, OH, facing eviction by Financial Freedom Freedom because of the fees associated with force-placed insurance. Though force-placed insurance is permitted, permitted, it is often vastly more expensive than standard insurance coverage. Ms. Gorsuch Gorsuch alleges that Financial Freedom Freedom misrepresented that the cost of force-placed insurance was necessary in order to protect the value of and the lender's interest interest in the secured property. Further, she alleges that Financial Freedom Freedom did not disclose the nature of the kickbacks-that Financial Freedom Freedom would receive a a payment based on a percentage of the cost of the premium. premium. Because of the fees associated with her her force-placed policy, Financial Freedom Freedom is threatening Ms. Gorsuch with foreclosure. Ms. Gorsuch recently filed an amended complaint complaint and she is currently waiting on the court's decision on OneWest's OneWest's Motion Motion to Dismiss.
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UPDATE UPDATE The District Court in Gorsuch West Bank case West's motion to dismiss. The Gorsuch v One OneWest case has denied One OneWest's
DISMISS SEE ATTACHMENT ATTACHMENT A AMOTION TO DISMISS - ORDER ORDER REGARDING REGARDING MOTION CONSUMER TESTIMONY TESTIMONY CONSUMER
At the Public Hearing, two of the participants West Bank Bank participants testified about this same same issue of One OneWest knowingly knowingly applying force placed insurance insurance and over-charging over-charging the consumer consumer and/or the FHA Insurance Fund.
Mr. Allen's loan was submitted submitted to OCC West and his testimony OCC for review by One OneWest testimony was given given at the Public Hearing. In retaliation retaliation for Mr. Allen's testimony, One West added force placed OneWest placed insurance in in the amount of $1, 792.80 to the property payoff already in escrow and about to close. One West had an OneWest $1,792.80 already insurance insurance was in effect effect up until the day escrow closed. insurance rider on file that ha7.ard hazard insurance closed. Mr. Graulau's testimony was given given at the Public Hearing. Financial Financial Freedom obstructed obstructed all his to repay the loan. Financial Freedom filed foreclosure 3 months after the borrower's death. efforts after borrower's efforts Financial Freedom Finally, Graulau told Financial Financial Freedom to take the property property and cancelled the Finally, on 1/24/14 1/24/14 Mr. Graulau insurance West has not foreclosed and instead insurance and utilities. To this date the property sits vacant. One OneWest has notified notified Mr. Graulau in writing they have charged charged the loan for force placed insurance insurance in the amount of$2,465.55 2014 and 2015. Th.at That is $4,931.10 that Financial Freedom will claim of $2,465.55 annually for 2014 from FHA FHA Insurance Insurance Fund just for wrongfully applied force placed insurance. ONEWEST AND CONSUMER TESTIMONY REGARDING LmGATION LITIGATION AND CONSUMER TESTIMONY ONEWEST COMMENTS COMMENTS REGARDING CIT's Response re"CIT understands that OneWest has re~ Response regarding all Pending Litigation "CIT examined pending cases identified examined each of the pending identified as including including one of the identified identified allegations and and believes that the allegations allegations are unfounded unfounded as aa factual or legal matter and that OneWest OneWest has acted in in accordance accordance with all applicable laws and regulations in each case." case."
In CIT's Response Response regarding regarding Consumer Testimony West has advised CIT that it reviewed Testimony "One "OneWest reviewed the individual individual cases of of each participant participant at the Meeting who alleged errors or violations of law by One West to see if there is a basis for his or her claims and found that the allegations are without OneWest merit." merit." CONCLUSION CONCLUSION How many thousands of consumers are are out there who didn't testify at the public hearing or don't have the ability to file a lawsuit for the common practice (Lender) Force practice of (Lender) Force Placed Insurance. Insurance. It's outrageous West Bank thinks it can give a blanket denial outrageous that One OneWest denial "all "allclaims are without merit" in litigation or by individual pattern and individual consumers and no one will take notice that this is their normal pattern practice practice of doing business. The risk of this Proposed Proposed Merger Merger to the stability of the Economy, the FHA Insurance Fund, and the HECM Program Program is enormous. enormous.
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Conservatively, I average average $2,500 for only 25% of Financial Freedom HECM Conservatively, HECM loans loans with wrongfully force placed insurance PHA insurance fund and/or consumers approximately wrongfully insurance it would cost FHA $87,500,00000. $87,500,000.00.
This is only one consistent example of overcharging. overcharging. (I (7 used wred 25% based based on the the mnnher mnmber of of consumers who testified on this issue and the one representative consumers representativein the class class action) action)
REPECTFULLY SUBMITfED SUBMITTED RECOMMENDATIONS: RECOMMENDATIONS: REPECTFULLY
1. As 1. As part part of this specific Merger Application Process conduct an investigation, and and risk risk assessment assessment of current current and future harm to Consumers, the FHA FHA Insurance Fund, Fund, Loss Loss Share Share Agreement. Economy, Economy, and and Taxpayers. Agreement, 2. Deny the One West Bank Merger Merger Application. available upon request. Documented evidence evidence of all statements statements and testimony testimony contained is available contained in this letter is Documented you have any questions questions about this letter, or wish to talk further, please feel free to contact me If you me at at (805) 402-3066 402-3066 (805)
Very Truly Yours, Yours, Very
Sand*
eAe&
Sandy Jolley Jolley Sandy Reverse Mortgage Mortgage Suitability Suitability and Abuse Consultant Reverse HUD Counselor Counselor Certified HUJD Certified
cc:
California Reinvestment Reinvestment Coalition Coalition California Janet Yellen, Yellen, Chair, Federal Reserve Reserve Board of Governors Governors Thomas Thomas Curry, Comptroller, OCC Martin Gruenberg, Gruenberg, Chair, FDIC Mel Watt, Director, Director, FHF A FHFA Richard Cordray, Director, CFPB Julian Castro, Secretary Secretary HUD HUD
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ATTACHMENT A ATTACHMENT
Dolores FSB, et. al, -vs- OneWest Bank, FSB, Dolores Gorsuch, Individually and on behalf of a Class, Plaintiffs, -vsDefendants. Defendants. Case No. No. 3:14 CV 152 152
WESTERN DIVISION UNITED OHIO, WESTERN DISTRICT OF OHIO, NORTHERN DISTRICT COURT FOR THE NORTHERN DISTRICT COURT STATES DISTRICT UNITED STATES 2015 U.S. U.S. Dist. LEXIS LEXIS 63976 May 15, 15, 2015, Decided May 15, 15, 2015, Filed
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2015 U.S. Dist. Dist. LEXIS 63976, 63976, * 2015 Dolores and on on behalf of of aa Class, Class, Plaintiffs, Plaintiffs, -vs-vs- OneWest OneWest Bank, Bank, FSB, FSB, Dolores Gorsuch, Gorsuch, Individually and et. al, Defendants. Case No. No. 3:14 CV 152
OHIO, WESTERN WESTERN DISTRICT OF OF OHIO, THE NORTHERN NORTHERN DISTRICT UNITED UNITED STATES STATES DISTRICT DISTRICT COURT COURT FOR THE DIVISION 2015 U.S. Dist. LEXIS 63976
15, 2015, May 15, 2015, Decided 2015, Filed May 15, 2015, CORE kickback, wire, wire, CORE TERMS: TERMS: premium, premium, servicer, borrower, flood insurance, mail, flood, kickback, subsidiary, activity, scheme scheme to to subsidiary, unjust unjust enrichment, insurance coverage, racketeering activity, defraud, mortgage, retailer, retailer, defraud, misrepresentation, misrepresentation, correspondence, fraudulent, repayment, mortgage, warning, lucrative, coverage, insuring, insuring, insurance insurance warning, predicate predicate acts, acts, quotation quotation marks omitted, lucrative, agent, wire wire fraud, borrower-obtained, borrower-obtained, lender-placed, lender-placed, shortfalls agent, shortfalls COUNSEL: [*1] [* 1] For For Dolores Gorsuch, individually COUNSEL: Individually and as aa representative representative of of aa class class of of simlarly situated plaintiffs, Plaintiff: Stephen J. Fearon , Jr ... ./, LEAD ATTORNEY, Squitieri Squitleri ,/, LEAD ATTORNEY, Fearon Jr. Stephen 3. simlarly situated & Fearon, Fearon, New New York, York, NY; NY; James James G. "', Zoll, & G. O'Brien ...-,, Pamela A. Borgess Borqess ....v2, Zoll, Kranz Kranz & & Borgess, Borgess, Toledo, OH. OH. Toledo,
For OneWest OneWest Bank, Bank, FSB, FSB, OneWest OneWest Bank, FSB, Financial LLC, Acquisition, LLC, Financial Freedom Acquisition, Bank, FSB, For Defendants: Edqar Edgar H. H. Martinez Martinez ...-,, LEAD ATTORNEY, O'Melveny & Defendants: & Myers Myers -- Newport Newport Beach, Beach, Newport Beach, Beach, CA; CA; Joseph T. Dattilo Dattilo ... ./, ATTORNEY, Michael P. Newport VS, LEAD ATTORNEY, P. O'Donnell, O'Donnell, Brouse Brouse McDowell -- Cleveland, Cleveland, Cleveland, Cleveland, OH; Elizabeth L. McKeen, O'Melveny & & Myers -- Newport Newport McDowell Beach, Newport Newport Beach, Beach, CA; Rik S. ... ~, Burr Forman, Birmingham, AL. AL. S. Tozzi .,, Burr & Forman, Beach, For Balboa Balboa Insurance Insurance Company, Company, QBE QBE Insurance Corporation, Newport Management Management For Corporation, Defendants: Defendants: Meqan Megan E. Wright, Morris Morris && E. Bailey ...,, LEAD ATTORNEY, Porter, Wright, Corporation, Arthur -- Columbus, Columbus, Columbus, Columbus, OH; OH; Robyn C. M. Stephen M. C. Quattrone ....,, LEAD ATTORNEY, Stephen Arthur LeBlanc ....',./, PRO PRO HAC HAC VICE, VICE, Buckley Sandler LeBlanc Sandier - Washington, Washington, Washington, DC; DC; Dustin Dustin A. A. Linden, Buckley Buckley Sandier Sandler - Santa Santa Monica, Monica, Santa Monica, .,/, Porter, Linden, Monica, CA; CA; James D. D. Curphey Curphey .,,.,", Porter, Wright, Morris Morris & Arthur, Columbus, OH. Wright, OH. JUDGES: JACK JACK ZOUHARY ZOUHARY .,,., UNITED STATES JUDGES: w, UNITED STATES DISTRICT JUDGE.
OPINION BY: BY: JACK JACK ZOUHARYW ZOUHARY ... OPINION OPINION OPINION MEMORANDUM OPINION OPINION AND AND ORDER ORDER DENYING MEMORANDUM DENYING MOTIONS MOTIONS TO DISMISS [*2] [*2] INTRODUCTION INTRODUCTION
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law This Court must decide if Plaintiff Dolores Gorsuch states plausible federal and state law claims arising out of the manner manner in which Defendants insurance(mortgage servicers and insuranceDefendants (mortgage related entitles) purchased flood insurance for Gorsuch's home, after Gorsuch failed to do so on her own. Defendants move to dismiss {Docs. (Docs. 68, 72); Gorsuch opposes (Docs. (Docs. 76-77). The rest rest of the story follows. BACKGROUND BACKGROUND
The Servicers and Insurers The "Servicer N.A. and Financial Freedom Freedom Acquisitions, "Servicer Defendants" are OneWest Bank, ....N.A. LLC and the "Insurer Defendants" Co., QBE Insurance Corp., Corp., and and Defendants" are Balboa Insurance Insurance Co., Newport Agreements between these parties kicked in when a Newport Management Management Corp. Agreements homeowner, like Gorsuch, failed to properly properly insure property which served as collateral for a mortgage at $ 20). 20). mortgage (Doc. (Doc. 53 at~ reverse mortgage OneWest is the servicer on Gorsuch's reverse mortgage loan. OneWest In July July 2011, owned subsidiary, its wholly owned 2011, OneWest received loan servicing rights from Its Financial Freedom Acquisitions ("FFA") ("FFA") (id. (id. at~~ at 11 20-21, 20-21, 25). 25). Nonparty IndyMac IndyMac Financial Services, Inc., OneWest Inc., is a licensed insurance producer and a wholly owned subsidiary of OneWest (id. at at QBEIC [*3] (id. (id. 26). OneWest did business with insurance providers Balboa and QBEIC (id. at ~1 26). (id. at ~~ 11 ~11 34-35, 39, 39, 43-44, 56-57). Newport was OneWest's insurance-services provider (id. $ 2011, 30). owned subsidiary; after June 2011, Balboa's wholly owned 2011, Newport Newport was Balboa's 30). Before June 2011, 1 28). Newport at~ (id. at owned subsidiary (id. Newport was QBEIC's QBEIC's wholly owned The Alleged LPI The LPI Arrangement Arrangement Roughly sketched, follows: arrangement worked as follows: ("LPI") arrangement insurance ("LPI") sketched, the lender-placed insurance QBEIC "the exclusive OneWest first provided Balboa and then (after June 2011) 2011) provided QBEIC and lucrative right to receive premiums flood, and wind insurance" premiums for force-placed hazard, flood, whenever a borrower borrower failed to provide adequate flood for OneWest's portfolio of loans whenever insurance at~~ 35, 43). As part of the agreement, QBEIC's subsidiary, agreement, Balboa and QBEIC's (id, at insurance (id. Newport, monitored OneWest's portfolio to ensure loan collateral carried proper flood monitored OneWest's of Insurance borrowers of letterhead, Newport warned borrowers Defendant letterhead, (id. at~ at 1 30). Using Servicer Defendant Insurance (id. by Insurance Defendants shored up insurance coverage by If left uncorrected, uncorrected, Defendants shortfalls (id.). If Insurance shortfalls force-placing insurance. After default on the insurance obligation, force-placing began with the Servicer Defendants After Newport and adding the advance as additional debt on the forwarding LPI premiums premiums to Newport borrower's premiums from Newport received gross LPI premiums 159). Once Newport IT [*4] 52, 159). (Id. at 1111 borrower's loan (id. Servicer Defendants, premiums in two directions. Defendants, it sent shares of the premiums the Servicer First, Newport QBEIC, describing "net premiums premiums collected Newport reported monthly to Balboa and QBEIC, from OneWest and paid to Newport's 32). The LPI LPI parents" to cover LPI (id. (id. at 11 32). Newport's corporate parents" premiums inflated" rates charged by Balboa, "noncompetitive and substantially inflated" premiums reflected "noncompetitive 76-77). QBEIC, (id. at ~~ T 36, 76-77). QBEIC, or an affiliate (id. Second, Newport IndyMac OneWest subsidiary IndyMac premiums to OneWest Newport sent 16 percent of the LPI premiums (id. premiums a (id. at~ at 1 36). IndyMac called itself an insurance agent, and its cut of the LPI premiums "commission". But in fact IndyMac performed "commission". had no role performed no work for this payment and had role in in connecting the Servicer Defendants with Balboa, QBEIC, QBEIC, and Newport (id. (id. at~~ at TT 74, 117, 117, 154). IndyMac did not keep the "commission" "commission" either. IndyMac IndyMac instead sent the "commission" to OneWest OneWest as a kickback, part of the Insurer Defendant's quid pro quo for for "commission"
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with below-cost below-cost (id. at '1$$ 74, 174). 174). Along Along with the the Servicer Servicer Defendants' Defendants' lucrative LPI business (id. 111 74, were "rebates" that "reduce(d] from Newport, the kickbacks effectively insurance services insurance services Newport, effectively "rebates" that "reduce[d] But 90, [*5] 150). But (id. at IT on to borrowers not passed savings [LPIJ costs," OneWest's OneWest's [LPI] costs," borrowers (Id. '!I'll 90, [*5] 150). cut because each each Defendant's Defendant's cut more than fail to pass on such savings: because the the arrangement arrangement did did more to purchase purchase sought to of of the the pie increased increased with gross LPI premiums, Defendants sought "the [LPI] insurance" (id.at 'II 1 63) (emphasis in original). "the highest highest priced priced [LPI] The The LPI LPI Arrangement Arrangement Applied to Gorsuch flood insurance. insurance. If If she she Gorsuch's Gorsuch's mortgage mortgage agreement agreement required required her to obtain adequate flood failed pay whatever whatever is Is necessary necessary failed to to do do so, so, the the agreement agreement authorized her lender to "do and pay to the property" property" (id. (id. at at 'II11 83). 83). to protect protect the the value value of the the Property and the Lender's rights in the on her her loan's loan's flood insurance insurance on OneWest OneWest (or (or its Its predecessor) predecessor) demanded demanded that Gorsuch obtain flood property's flood flood her property's collateral collateral --- her her home home --- then periodically ordered her to increase her $$ 84-85). 84-85). insurance insurance policy policy limit (id. (id. at at '11'11
was inadequate. inadequate. In In June June 2010, 2010, Newport Newport again again told Gorsuch her flood insurance coverage was "[I]f have adequate adequate flood "[I]f we we do do not not receive receive proof [within [within 45 days] that you have flood insurance insurance for for flood insurance insurance (lender(lenderthe property," property," Newport Newport wrote, wrote, "we "we will purchase the additional flood the (Doc. 53-3 53-3 at at 2). 2). cost of of the insurance" (Doc. placed insurance) insurance) required required and and charge you for the cost placed Newport urged urged Gorsuch Gorsuch to contact her private insurance agent, who Newport who in in most most cases cases [*6] [*6] Flood "can provide provide flood insurance at the lowest cost available" through the National National Flood through the "can $281 an estimated estimated $281 would cost Gorsuch an alternative, LPI, would Insurance Program Program (Id. (id. at at 2-3). 2-3). The alternative, Insurance in additional additional annual annual flood Insurance insurance premiums. in premiums. Newport warned Gorsuch Gorsuch "IF "IF WE WE MUST MUST TO FAILURE TO OBTAIN LENDER-PLACED LENDER-PLACED FLOOD FLOOD COVERAGE COVERAGE FOR YOU BECAUSE OF YOUR YOUR FAILURE BECAUSE OF OBTAIN FORWARD EVIDENCE EVIDENCE OF OF ADEQUATE ADEQUATE FLOOD INSURANCE, FORWARD INSURANCE, THE COST COST OF OF THIS THIS LENDERLENDERPLACED INSURANCE INSURANCE MAY MAY BE BE SIGNIFICANTLY INSURANCE PLACED SIGNIFICANTLY HIGHER THAN THE COST OF INSURANCE as Jn In PURCHASED THROUGH THROUGH YOUR OWN OWN AGENT OR COMPANY" (id. (id. at 3) 3) (capitalization (capitalization as PURCHASED original); see also also Doc. 53-4 (similar warning in original); in July 2010).
In June June 2012, 2012, Newport Newport wrote wrote Gorsuch, Gorsuch, once more insurance coverage coverage more warning of flood insurance In shortfalls and putting Gorsuch to the same choice as in 2010: obtain shortfalls and putting same obtain increased increased coverage coverage (likely with with low low premiums), premiums), or have OneWest obtain additional LPI on her her behalf behalf LPI coverage on (likely (likely with with high high premiums) premiums) (Doc. (Doc. 53-5 at 2-3). Newport advised affiliates "[w]e and/or and/or our our affiliates advised "[w]e (likely may receive receive compensation compensation in connection with the insurance described in in this this Insurance coverage described may (id. at at 3); see also Doc. 53-6 (similar warning Jn 2012). in July 2012). letter" (id. Because Gorsuch Gorsuch did did not timely respond to the 2012 warning letters, in Because in August 2012 2012 Newport told told Gorsuch Gorsuch it had obtained [*7] additional flood insurance Newport insurance on on her her behalf. behalf. Though FFA FFA advanced funds funds to cover the premiums, Though premiums, Gorsuch was was "responsible "responsible for for the the cost cost of this this insurance" insurance" (Doc. (Doc. 53-7 53-7 at 2). Again, Again, Newport advised that LPI of LPI was was "significantly" "significantly" more more expensive than than borrower-obtained borrower-obtained insurance, and that OneWest "may receive receive OneWest "may expensive compensation" for for purchasing purchasing LPI LP! on Gorsuch's behalf flood (id. at 3). 3). The The new, new, year-long flood behalf (id. compensation" insurance coverage cost roughly $1,800. OneWest broke down showing amounts amounts the total, showing down the insurance 11 attributable to to "premium," "premium, n "surplus lines tax, attributable tax," and "stamping "stamping fee," fee," but but not not "compensation" "compensation" received by by OneWest OneWest or Newport's Newport's whole-portfolio loan tracking costs (see received (see id. id. at at 4). 4). Gorsuch had had the the option option to buy her own own flood insurance; if Gorsuch if she did, did, OneWest OneWest would would cancel cancel the LPI policy (see id. at 3). She contacted her private insurance agent, but the the LPI policy (see id. at 3). She contacted her private insurance agent, but the agent agent could could only offer offer policies that required required an up-front up-front payment of $1,200, covering annual covering the the annual only insurance premium premium (Doc. (Doc. 53 53 at at,,,, payment afford the the up-front up-front payment Gorsuch could could not not afford 11 98-99). 98-99). Gorsuch insurance (id.) . Because Because OneWest OneWest added added the advanced LPI premiums (id.). premiums to her outstanding outstanding loan loan balance, balance, in August August 2012 2012 Gorsuch Gorsuch exhausted exhausted her reverse mortgage in her reverse mortgage credit credit line line (id. (id. at at 'III 100). 100).
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Gorsuch then entered a repayment agreement agreement with OneWest, [*8] calling for monthly monthly payments of $149 for the 2012 LPI policy (id. for (id. at,, at $ 102). OneWest renewed renewed LPI coverage for Gorsuch's repayment Gorsuch's property in 2013 and 2014, repeating the cycle of warning letters and repayment cost agreements (id. "must pay $222.43 a month for the cumulative cost agreements (id. at $$ 103-05). 103-05). Gorsuch "must her [LPI] [LPI] for a two year term starting September 2014 and ending August 2016" (id. of her (id. at 11 1 105). 105).
at,,,,
Gorsuch's RICO Allegations Gorsuch alleges an association-in-fact RICO RICO enterprise, comprised comprised of the entities depicted in in the chart attached as an Appendix to this Order. The enterprise had the "common "common purpose of defrauding defrauding borrowers borrowers and loan owners by overcharging them for [LPI] with respect to to OneWest-serviced loans" (id, OneWest-serviced (id. at 1111 $ 141-43; see also id, id, at 1111 SS 145-56). 145-56). Gorsuch claims the enterprise engaged in a pattern of racketeering activity, marked marked by by three predicate acts. First, Defendants 18 mail and wire fraud in violation of 18 Defendants committed mail U.S.C. U.S.C. §§ 15 1341 and 1343. 1343. In In furtherance of a scheme to defraud borrowers, borrowers, Defendants sent or caused to be sent written letters letters and phone calls, funds for LPI premiums and kickbacks, remittance and monthly servicing reports, and repayment agreements agreements (id. (id at 1111 $1 179-89). 179-89). Second, Defendants engaged [*9] [*9] in honest-services fraud, in violation of 18 18 U.S.C. OneWest and FFA "owed U.S.C. §q 1346. 1346. OneWest "owed legal duties to render services" to to borrowers, borrowers, 'breached [their] obligation to render including maintaining Insurance on the property, but but 1"breached render 'honest 'honest services"' by joining a scheme to defraud defraud borrowers borrowers and extract kickbacks (Id. (Id. at "1 1 202). Third, Third, Defendants committed extortion and conspiracy to commit extortion in in violation 202). of the Hobbs Act, 18 u.s.c U.S.C §F 1951(a). 1951(a). Defendants Defendants "wrongful[ly] use[d the] actual or or threatened fear of economic harm" harm" to extract payments, telling the borrower borrower that a failure failure to pay LPI could lead the lender to foreclose on the property that secured the loan (id. at at 11 205). 205). STANDARD STANDARD OF REVIEW REVIEW
Federal Civil Rule 8(a)(2) 8(a)(2) requires "a Federal "a short and plain statement statement of the claim showing that that the pleader Is entitled to relief." "must state with relief." When Gorsuch alleges fraud, she "must particularity the circumstances constituting fraud.'' fraud." Federal Federal Civil Rule 9(b). 9(b). This Court tests aa complaint's legal sufficiency by accepting as true all well-pied well-pled factual allegations and construing the complaint in the light most favorable to the plaintiff. plaintiff. See Duabay Quabay v. Wells, Wells, it motion to dismiss if it Or. 2007). 2007). A complaint will survive a motion (6th Cir. 506 F.3d F.3d 422, 426 (6th "contain[s] sufficient factual matter, accepted as true, to state a claim to relief that is is plausible on its face. Ashcroft v. Iqbal, 556 U.S. U.S. 662. 662, 678 (2009) (2009) (internal (internal [*10] quotation marks omitted). "A that plausibility when the plaintiff pleads factual content that "A claim has facial plausibllity allows the court to draw draw the reasonable inference that the defendant is liable for the misconduct alleged." Mfg. v. ProPride, (6th Cir. Cr. ProPride Inc Inc.,.. 579 F.3d 603. 603, 609 (6th alleged." Henslev Hensley Mfq. 2009) 2Q9) (quoting Igbal. Lqbal. 556 U.S. U.S. at 678). 678). DISCUSSION DISCUSSION
Defendants Defendants jointly raise three arguments in support of dismissal dismissal,1 claiming Gorsuch Gorsuch fails to to adequately allege (1) (1) predicate acts (see (see Doc. 68 at 10-21; 10-21; Doc. 72 at 8-12), 8-12), (2) (2) a RICO enterprise (see Doc. 6S 23-25), or (3) 68 at 23-25), (3) injury proximately caused by the enterprise (see id. ;d. at unjust Insurer Defendants separately argue Gorsuch cannot bring an unjust at 21-23). 21-23). The Insurer enrichment claim as to them (see Doc. 72 at 12-16). 12-16). Finally, the Insurer Insurer Defendants Defendants assert that Gorsuch fails to plead facts showing showing Balboa or QBEIC QBEIC participated in the RICO
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enterprise, of subsidiary subsidiary Newport Newport (see (see Doc. Doc. 72 72 enterprise, or or successor successor or or vicarious liability for the acts of at at 16-20). 16-20). Count Count II, II, an an substantive RICO substantive RICO claim claim (6th (6th Cir. Cir. 1990). 1990).
18 claim, rises rises or or falls falls with with the the 18 U.S.C. U.S.C. § 1692(d)RICO 1692(d)RICO conspiracy claim, in Count v. E.F. Hutton & & Co., Co.9899 F.2d 485. 485, 495 495 Count I. Cf. Cf. Craighead v. 899 F.2d
Gorsuch Gorsuch Adequately Adequately Alleges Alleges Predicate Acts Defendants or other other Defendants argue argue Gorsuch Gorsuch fails to point to fraudulent correspondence or communications of (1) (1) aa scheme scheme to to defraud, defraud, communications sent sent by by mail mail or or the wires. "Mail fraud consists of and while wire wire fraud fraud replaces replaces and (2) (2) use use of of the the mails mails in in [*11] [*11] furtherance of the scheme," while mail wires. Heinrich Heinrich v. v. Waiting Waiting Angels Angels mail fraud's fraud's use-of-the-mails use-of-the-mails element with use of the wires. Adoption 20121 (internal (internal quotation quotation marks marks Adoption Sergs., Servs,, Inc., Inc., 668 668 F.3d F.3d 393, 393, 404 (6th (6th Cir. 2012) omitted). omitted).
"A by which someone uses uses false, false, "A scheme scheme to to defraud defraud includes any plan or course of action by deceptive, to deprive deprive someone someone else else of of deceptive, or or fraudulent pretenses, pretenses, representations, or promises to money." Cir. 2005); 2005); see see also also United money." United United States States v. Jamieson, Jamieson, 427 F.3d 394, 402 (6th Cir. United States (mall fraud fraud requires requires aa "specific States v. v. Turner, Turner, 465 465 F.3d F.3d 667. 680 n.18 (6th Cir. 2006) (mall "specific intent intent to to deprive deprive aa victim of of money or property"). property"). "This means means not only only that that aa defendant defendant must knowingly omit omit aa material material fact, fact, but but must knowingly make make a material material misrepresentation or knowingly also also that that the the misrepresentation misrepresentation or or omission omission must have have the the purpose purpose of of inducing inducing the the victim victim of of the the fraud fraud to to part part with with property property or undertake some action that he he would would not not otherwise otherwise do do absent the the misrepresentation misrepresentation or or omission." omission." United States v. absent v. Desantis, DeSantis, 134 134 F.3d F.3d 760, 760, 764 764 (6th (6th Cir. Cir. 19981. 1998) . "It "It is not not necessary that the scheme be fraudulent fraudulent on on its its face face but but the the scheme misrepresentations or or omissions omissions reasonably scheme must must involve involve some some sort of fraudulent misrepresentations reasonably calculated to to deceive deceive persons persons of of ordinary prudence and comprehension." calculated comprehension." United United States States v. v. Van Dyke, Dvke, 605 605 F.2d F.2d 220, 220, 225 225 (6th (6th Cir. 1979). 1979). Van
"It is is sufficient for for the mailing [or [or use use of wires] to be incident "It Incident to an an essential essential part part of of the the scheme [to [to defraud], defraud], or or a step step in the plot," Schmuck v. United States, scheme States, 489 489 U.S. U.S. 705, 705, 71071011 (1989) (1989) (internal (internal citation, citation, brackets, and quotation [*12] 11 [*12] marks omitted), omitted), and and each each transmission need need not not be be false, Parr v. v. United States, transmission States, 363 U.S. U.S. 370, 370, 390 390 (1960). (1960). If If aa defendant could could "reasonably "reasonably anticipate ..• defendant . . . the use of the mails" mails" or or wires, wires, the the defendant defendant "causes" the the malls malls or or wires wires to to be be used. used. United States v. Oldfield. 2d 392, "causes" Oldfie/d, 859 859 F. F.Zd 392, 400 400 (6th (6th Cir. 1988). 1988). Though Though Gorsuch Gorsuch must plausibly allege a pattern of racketeering activity Cir. of racketeering activity proximately caused her her injury, injury, she need not allege as proximately as a separate separate element element of of her her claim claim that that she relied relied on on aa fraudulent fraudulent communication. communication. See Bridge y. she v. Phoenix Phoenix Bond Bond & & Indem. Indem. Co., Co., 553 553 U.S. 639, 639. 655 655 (2008). {2008). U.S. Defendants say say the the LPI LP! correspondence clearly stated the Defendants the high high cost cost of LPI LPI premiums, premiums, and and that OneWest OneWest or or FFA FFA could could be compensated compensated for purchasing LPI. that LPI. Gorsuch Gorsuch emphasizes emphasizes certain certain alleged material misrepresentations contained in the LPI correspondence : alleged material misrepresentations LPI correspondence: that that her her LPI LPI policy policy was expensive expensive not not because because It it reflected reflected costs costs associated was associated with with Insuring Insuring her her property property against against flood, but but also also the the additional additional costs of the Insurer Defendants' quid flood, quid pro pro quos quos for for the the Servicer Servicer Defendants' lucrative lucrative LPI LP! business; that OneWest knew Defendants' knew it it would would be be "compensated" "compensated" for for each each LPI policy policy and and by by how how much; much; that such payments were LPI were not not "compensation" "compensation" in in the the sense sense of of payment for for work work done, done, because neither OneWest payment OneWest nor nor IndyMac IndyMac performed performed work work to to obtain obtain LPI policies; policies; that that the the "compensation" "compensation" OneWest OneWest received LPI received was was in in fact fact aa "kickback," "kickback," [*13] [*13] which the the Insurer Insurer Defendants Defendants provided to secure and maintain which maintain the the Servicer Servicer Defendants' Defendants' lucrative business; business; or or that that borrowers borrowers who who received lucrative received LPI LPI (a (a small small fraction fraction of of OneWest's OneWest's portfolio, seeDoc. 53 at 11 121) paid for loan tracking services performed portfolio, seeDoc. 53 at 1 121) paid for loan tracking services performed on on OneWest's OneWest's entire portfolio portfolio (see (see id. id. at at 111 106). entire 106).
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The mail and wire fraud statutes' statutes' "scheme "scheme to defraud" defraud" element is "a "a reflection of moral moral uprightness, of fundamental honesty, fair play and right dealing in uprightness, in the general and business life of members society." United States v. Warshak. 631 F.3d 266, 311 {6th members of society." v. Warshak, (6th Cir. Cin 2010) (internal marks omitted). At this preliminary stage, Gorsuch (internal quotation marks Gorsuch alleges facts that "nudge[] "nudgel] [he]r claims across the line from conceivable to plausible." plausible." Bell Bell Atl. At/. Corp. v. Twomblv. Twombly, 550 U.S. U.S. 544. 544, 570 (2007). (2007).
Gorsuch claims the LPI correspondence portrayed a straightforward straightforward transaction, one that that sought to ensure Gorsuch's Gorsuch's property carried adequate flood insurance. Account statements and repayment agreements did too. But Gorsuch alleges that, in fact, the Servicer and Insurer Defendants used LPI to extract enormous profits and in-kind benefits, including Insurer kickbacks, that were unrelated to the risks of insuring against floods. Gorsuch says this -- between what she was told she paid for, and what she actually paid for -disconnect --- are misrepresentations (see id. material [*14] misrepresentations id. at~ at $ 106). 106).
This Court draws draws on "judicial experience and common common sense" to determine whether a complaint states a plausible claim for relief. Ashcroft. U.S. at 679. Common sense Ashcroft, 556 U.S. suggests it is at least plausible that, had Gorsuch known of LPI's LPI's true terms, she would have rearranged her financial priorities to avoid significant charges unrelated to the costs of of insuring against flood risk. See, e.g., e.g., Almanzar Afmanzar v. Insuring v. Select Portfolio Serv., Serv., Inc., Inc., 2015 WL 1359150, at *3 2015) ("[D]lsclosing the end cost of force-placing the insurance *3 (S.D. (S.D. Fla. Fla. 2015) Insurance cannot insulate the Defendants Defendants from claims pertaining to the Defendants' Defendants' behind the scene activities that drove up the rates borne by unsuspecting borrowers."); borrowers."); Perryman v. v. Litton Loan Serv., Serv., L.P., L.P., 2014 WL 4954674, at *15 *15 (N.D. (N.D. Cal. Cal. 2014) ("it still could be the case that that [despite warning warning letters] the overall intent of Defendants' representations were of the Defendants' calculated to misrepresent the nature nature of the [costs] [costs) the lenders lenders would pass pass along to to [borrowers] under [borrowers] under the LPI clause"); Cannon v. v. Wells We//s Fargo Fargo Bank, N.A., N.A., 2014 WL 324556, at at *3 (N.D. (same)~ see also Doc. 53 at~ *3 (N.D. Cal. Cal, 2014) (same), at 1 107. And though under the mortgage mortgage agreement agreement OneWest could demand demand greater flood insurance insurance coverage, that does not mean mean the LPI correspondence was not calculated to deceive Gorsuch.
Although a close call, Gorsuch has adequately alleged predicate acts of mail and wire fraud, fraud, and this alone makes out a "pattern" "pattern" of [*15] racketeering activity, relieving this Court of of the need to reach the parties' arguments arguments regarding honest-services fraud and extortion. See Rothstein v. GMAC GMAC Mortgage, LLC, 2013 WL 5437648, at *16 *16 (S.D.N.Y. (S.D.N.Y. Sept. 30, 2013) 2013) leave to appeal granted on other grounds, 2014 WL 1329132, 1329132, at *2 *2 (S.D.N.Y. (S.D.N.Y. Apr. 3, 3, 2014) (applicability of filed rate doctrine) certificate of appealability granted sub nom. Rothstein v. v. Balboa Ins. Co., Co., 2014 WL 4179879 (2d Cir. June 25, 2014). 2014).
Gorsuch Adequately Adequately Alleges an Association-In-Fact Association-in-Fact RICO Enterprise Enterprise Defendants Defendants argue "the only 'association' plaintiff alleges among among the defendants is the process by which [LPI] is obtained," which as a matter matter of law law defeats her RICO claim (Doc. (Doc. 68 at 24). 24). "[T]he "[T]he existence of an enterprise is a separate element element that must be proved ... . .. [in addition to] the pattern of racketeering activity, and proof of one does not necessarily establish the other." But But the existence of an enterprise can be "inferred other." "inferred from the evidence showing showing that that persons persons associated with the enterprise engaged in a pattern pattern of racketeering activity . ...• .. [T]he evidence used to prove the pattern of racketeering activity and the evidence establishing an enterprise may in partJcuJar particular cases coalesce. "Bovie "Boyle v. v. United States, 556 U.S. 938. 938, 947 (2009) (2009) (internal (internal citations, quotation marks, marks, and footnote omitted). omitted). "RICO "RICO applies both to legitimate enterprises conducted through racketeering operations as well as legitimate enterprises
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Cir. 1105, 1115 (6th Cir. v. Qaoud. Qaoud, 777 F.2d 1105. illegitimate [*16] enterprises." enterprises." United States v. 1985). 1985). Complaint Here, in the Appendix, the Amended Class Action Complaint Here, as detailed above and ln "delineates the specific roles and relationships of the Defendants, Defendants, alleges the enterprise functioned at least [four] years, and alleges it functioned for the common common purpose of of unmoored promoting a fraudulent [LPI] plan to generate commissions and related" related" benefits unmoored from the risks of insuring against floods. Ouwinqa Ouwinga v. Benistar 419 Plan Servs., .. 694 Inc., 694 Servs., Inc v. Benistar F.3d 783. at $ 145-56. The enterprise's division (6th Cir. 2012); see also Doc. 53 at~~ 783, 794-95 (6th of labor is well drawn in the Amended Complaint. Amended Class Action Complaint. Caused by the RICO Enterprise Gorsuch Alleges Injury Proximately Caused Defendants Gorsuch's failure to voluntarily obtain obtain adequate flood insurance is the Defendants argue Gorsuch's proximate cause of the injury she suffered, not Defendants' Defendants' LPI arrangement. Told of the high-cost of LPI and urged to contact her private insurance agent who could provide less expensive coverage, Gorsuch borrower-obtained insurance Gorsuch nonetheless failed to purchase borrower-obtained because she could not afford to pay the $1,200 premium premium up front (id. (id. at 111 98). 98). A RICO plaintiff must must allege the defendants' defendants' "wrongful conduct was a substantial and foreseeable cause of the injury and [that] the relationship relationship between the wrongful conduct conduct and the (*17] Litia., [*17] injury is logical and not speculative." In re ClassicStar Mare Lease Utig., 727 F.3d Gorsuch's injury (6th Cir. 2013) 2013) (internal quotation marks omitted). Gorsuch's F.3d 473, 473, 487 (6th must be the result of the "pattern v. Cassens Transp. Co Co.,.. 546 F.3d 347, "pattern of activity," Brown v. 353 (6th Cir. 2008), Visconsi, 956 F.2d Vild v. Visconsi. 2008), not the result of each separate predicate act, Vild 560, 567 (6th (6th Cir. 1992). 1992). Gorsuch claims that when she made the choice to forgo borrower-obtained insurance, she she did not know that the alternative she received was significantly more expensive than the foregone borrower-obtained it reflected noncompetitive insurance rates borrower-obtained insurance because it at $ 106-07). 106-07). Again, it is at (Doc. 53 at 1111 and included cash and in-kind kickbacks for OneWest (Doc. least plausible that, had Gorsuch known such aa large portion of the added cost of LPI LPI allegedly was pure profit to Defendants and unconnected against unconnected to the risk of insuring against floods, events would have played out differently. See Cannon, 2014 WL 324556, at *3; *3; see also Doc. Doc. 53 at ~1 107. 107. Fact-based issues issues like these should not be resolved on a motion to to dismiss. Cf. 602, 615 (6th Cir. 2004} 2004) (stating Cf. Trollinger v. v. Tyson Foods, Inc Inc.,.. 370 F.3d 602. "traditional proximate-cause problem[s]" problem(s]" like weak causal links "will more often be fodder for a summary-judgment Rule under Rule summary-judgment motion under Rule 56 than a motion to dismiss under 12{b){6)"). 12(b)(6)").
Defendants Enrichment as to the Insurer Defendants Gorsuch Adequately Alleges Unjust Enrichment Prior Amendment adding the Insurer Defendants Defendants as parties, Prior to the February 2015 Complaint Amendment Court twice held that Gorsuch [*18] stated unjust enrichment claims against the this Court Servicer Defendants (see Doc. 26 at 7; Doc. 32). Defendants argue they are 32). The Insurer Insurer Defendants different from the Servicer Defendants for purposes of unjust-enrichment liability -- Gorsuch different never conferred a "direct" benefit on an Insurer Defendant, they say, but instead entered into repayment repayment agreements with OneWest and FFA to cover funds previously advanced on on her her behalf to pay for LPL LPI. Gorsuch must plausibly allege that she conferred a benefit upon the Insurer Insurer Defendants, Defendants, the Gorsuch Insurer Defendants knew of this benefit, and it would be unjust to permit Insurer Defendants permit the Insurer Insurer Defendants Defendants to retain that benefit. See Hambleton Hamb/eton v. v. R.G. R.G. Barry Corp., Cor.. 12 Ohio St. 3d 179, 179.
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183 (1984). common-law (1984). "The rule of law is that an indirect purchaser cannot assert a common-law had claim for ... . . . unjust enrichment against a defendant without establishing that a benefit had been conferred upon that defendant defendant by the purchaser." Corp., 106 106 v. Microso~ Microsoft Corp., purchaser." Johnson v. Ohio St. 3d 278, 286 (2005). (2005). on The Insurer Defendants' unpersuasive, because it builds on "indirect" benefit argument argument is unpersuasive, Defendants' "indirect" The cases in which a plaintiff purchases a product from a third-party retailer, then attempts to to sue the product's manufacturer, manufacturer, despite the absence of any economic transaction WL connecting plaintiff and manufacturer. See, e.g., Corp., 2012 2012 WL v. Whirlpool Corp., e.g., Savett v. against 3780451, at *7 2012) {plaintiff's (plaintiff's unjust [*19] enrichment claim against *7 (N.D. (N.D. Ohio 2012) 3780451, Whirlpool Corp., Home Depot, failed failed Corp., related to washing machine he purchased from retailer Home for lack of direct benefit); In re Whirlpool Corp. Front-Loading Washer .. Litig., Washer Products Liab. Litig 684 F. Supp. 2d 942, 2009) (same with respect to purchase through retailer (N.D. Ohio 20091 684 942, 952 (N.D. BestBuy); In this case demonstrate "[t]he facts in BestBuy); Johnson. Johnson, 106 Ohio St. 3d at 286 (explaining "[t]he that no economic transaction occurred between Johnson and Microsoft" not support support Microsoft" and did not an unjust enrichment claim against Microsoft, whose operating system came pre-installed In these cases, the plaintiff Gateway). In on a computer plaintiff purchased from retailer Gateway). attempted attempted to reach far back in a product's distribution chain, using unjust enrichment to sue purchase that allegedly a defendant-manufacturer defendant-manufacturer with little or no connection to the purchase as conferred Courts reject such theories of liability as too attenuated, and as conferred a benefit. Courts Ohio impermissible impermissible end-runs around rules that otherwise bar suit. See, e.g., Johnson, 106 Ohio St. 3d at 286 (citing Ohio's refusal to grant indirect purchasers standing to pursue a statelaw antitrust cause of action as further reason reason to deny indirect purchasers standing to bring an unjust enrichment enrichment claim). claim). Insurer Defendants are nothing Defendants are nothing like retailers, and the Insurer The Servicer Defendants like product manufacturers, who usually "receive[] all [*20] of the benefits due from the sale of [their product] when the retailers purchased them." F. Corp.,.. 684 F. In re Whirlpool Corp them." In Supp. 2d at 953 n.4. The Servicer Defendants merely advanced funds to the Insurer Insurer merely Defendants Gorsuch's behalf. The Insurer to Insurer Defendants used the advanced funds to Defendants on Gorsuch's provide LPI, below-cost insurance-related thereafter insurance-related services, and profit of their own. Only thereafter of IndyMac. Gorsuch bore the costs of were cash kickbacks routed to OneWest through IndyMac. her benefits retained by the Servicer and Insurer Defendants, in the form of added debt on her Co., 465 F. loan and and under repayment agreements. agreements. See Randleman Ins. Co., Nat. Title Title Ins. Fid. Nat. Randleman v. Fid. Suop. 2006) (rejecting (rejecting a similar argument with respect to purchase (N.D. Ohio Ohio 2006) Supp. 2d 812. 812, 825 (N.D. of title insurance because of allegations showing a "transactional nexus" between between plaintiff and defendant); v. Bank of Am., *14 (S.D. (S.D. Fla. Am., N.A., N.A., 2014 WL 4260853, at *14 defendant); see also Persaud v. 2014) 2014) ("Defendants' ("Defendants' alleged retention of benefits, including inflated premiums, premiums, commissions, and service fees, would be be inequitable.").
her premiums advanced on her The Insurer Defendants Defendants stress that Gorsuch paid the cost of LPI premiums behalf only after after OneWest Insurer Defendants; Defendants; therefore, Gorsuch OneWest had sent the funds to the Insurer "[n]ever on payments" to the Insurer Insurer Defendants, and so did not confer a benefit an "[n]ever made any payments" Insurer Gorsuch forwarded the funds to the Insurer (Doc. 72 at 14). But whether Gorsuch these Defendants (Doc. Defendants, [*21] or OneWest did so on her behalf, the substance of the transaction Defendants, [*21J remains the same: she and borrowers borrowers like her were the ultimate source of the premiums premiums Insurer and Servicer Defendants. Mortq.,.. v. SunTrust SunTrust Mortg Defendants. See Hamilton v. directly shared by the Insurer Inc., 1317 (S.D. 2014). 1312, 1317 (S.D. Fla. 2014). Inc., 6 F. Supp. 3d 1312, Gorsuch Adequately Adequately Alleges Balboa Balboa and and QBEIC's Role in the Enterprise Finally, Balboa and QBEIC QBEIC contend that Gorsuch fails to allege allege facts showing either either Defendant participated in the enterprise. Defendant participated enterprise.
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Only those defendants who "conduct or participate, directly or indirectly, in the conduct of of [a RICO] enterprise's U.S.C. § 1962(c). 1962(c). RICO's "participation" "participation" liability. 18 U.S.C. enterprise's affairs" face civil liability. element is satisfied through "plausible 'participated in in the [d]efendant 'participated "plausible allegations that each [d]efendant operation or management LLC v. Moeller, 2014 WL WL management of the enterprise."' FFP Holdings, LLC 4322804, at *7 "[T]he test Is (quoting Ouwinga, Ouwinqa, 694 F.3d F.3d at 792). "[T]he *7 (N.D. (N.D. Ohio 2014) (quoting construed broadly," LSJ Inv. 1999), and Inc.,.. 167 F.3d 320, 325 (6th Cir. 1999), Inv. Co. v. O.L.D., O,L.D., Inc includes claims that a defendant "ma[ de] decisions on behalf enterprise or ..• ... "ma[de] behalf of the enterprise knowingly carr[ied] them out," United States v. Fowler, 535 F.3d 408, 418 (6th (6th Cir. 2008) 2008)
QBEIC 1, 2011) 2011) and QBEIC The Amended Class Action Complaint (before June 1, Complaint alleges Balboa (before (after) played the same role in the enterprise enterprise during the time each company owned FFA. That That Newport Newport and was a party to the exclusive LPI agreement with OneWest and FFA. alleged role shows participation in in the operation or management of the enterprise. First, Balboa [*22] and QBEIC QBEIC maintained an exclusive, noncompetitive LPI LPI arrangement arrangement with the Servicer Defendants, providing, as a quid pro quo for OneWest's Defendants, providing, OneWest's lucrative business, kickbacks and below-cost insurance-servicing activities through their subsidiary Newport. It It was reasonably foreseeable that, as a result of that agreement, Newport would send send misleading LPI correspondence to borrowers. or borrowers. Second, Second, Balboa Balboa and QBEIC QBEIC used the mails or wires, or caused the mails or wires to be used, to sustain central aspects of the Servicer arrangement. Balboa and QBEIC QBEIC paid a portion portion of Newport's costs of providing the Servicer Defendants Defendants with insurance-servicing activities, sending funds by mall mail or wire (Doc. 53 at at 1111 153, Balboa and 153, 161). 161). And Newport used the mails or wires to send LPI premiums to Balboa QBEIC. QBEIC. Absent these reasonably foreseeable transmissions, the arrangement arrangement would have ground ground to a halt -- Borrowers Borrowers would not have been notified of insurance shortfalls, Newport Newport would have lacked Balboa QBEIC's support in covering revenue shortfalls from the Balboa and QBEIC's insurance-servicing activities it performed at a loss, and Balboa Balboa and QBEIC QBEIC would not not have shared in LPI premiums, used to provide LPI or purchase LPI from an affiliate [*23] with LPI premiums, at QBEIC. See Rothstein, 2013 WL 5437648, at the excess retained as profit for Balboa or QBEIC. **15-17. **15-17. Because Gorsuch adequately alleges Balboa and QBEIC's QBEIC's own participation in the enterprise,
this Court need not address the parties' successor and vicarious liability arguments. CONCLUSION CONCLUSION
For these reasons, this Court denies Defendants' Defendants' Motions to Dismiss (Docs. (Docs. 68 & 72). 72).
IT IS IS SO ORDERED. ORDERED.
/s/ Jack Zouhary Zouharv .... /s/ Jack JACK ZOUHARY .... JACK ZOUHARY v U. U. S. DISTRICT DISTRICT JUDGE May 15, 15, 2015 2015
Appendix Appendix
From: To: Cc:
Subject:
Date: Attachments:
VICTOR MANUEL COREAS
[email protected] OIGHotline, (Board);
[email protected];
[email protected];
[email protected];
[email protected]; NY Banksup Applications Comments;
[email protected];
[email protected];
[email protected];
[email protected];
[email protected];
[email protected];
[email protected];
[email protected];
[email protected];
[email protected];
[email protected];
[email protected];
[email protected];
[email protected]; Victor M. Coreas RE: The Honorable Richard Cordray, Director, Consumer Financial Protection Bureau, 1700 G Street, NW Washington, D.C. 20552…*** SUBJECT: Con todo respeto me dirijo a usted para infórmale que he tomado la decisión de hacer público una serie de sucesos ... Thursday, May 21, 2015 10:11:57 AM 05-21-2015 COMPLAINT CFPB - Proof of Service.pdf 04-28-2015 Case No. 150312-000215 - 052.pdf 04-28-2015 COMPLAINT CFPB.pdf 150205-000909.pdf IMG000001030147.pdf
Fecha / Date: 05/21/2015 of 6
Page 1
Consumer Financial Protection Bureau Attention: Director Richard Cordray 1700 G Street, NW Washington, D.C. 20552 DENUNCIA / COMPLAINT VIA U.S. Mail, Fax and E-mail DENUNCIA / COMPLAINT TO: Ocwen Loan Servicing, LLC (“Ocwen”); Federal National Mortgage Association (“Fannie Mae”); OneWest Bank, N.A., formerly known as OneWest Bank, FSB (“OWB”); and IndyMac Mortgage Services.RE: OCWEN: Loan #: 7195665927 (OCWEN LOAN SERVICING, LLC) *** APN #: 2101-019-001 * INDYMAC: LOAN #: 1005357270 (IndyMac Mortgage Services / OneWest Bank, FSB) *** APN #: 2101-019-001 FROM: VICTOR M COREAS 18012 ROSCOE BLVD., NORTHRIDGE, CA 91325 E-mail:
[email protected] Mailing Address: P O BOX 372023, RESEDA, CA 91337
May 21, 2015 The Honorable Richard Cordray Director Consumer Financial Protection Bureau Respetable Director Cordray Con todo respeto me dirijo a usted para infórmale que he tomado la decisión de hacer público una serie de sucesos y acontecimientos que se han venido suscitando durante el transcurso de varios meses de parte de la CFPB, institución que representa y es la
mayor autoridad federal de protección financiera al consumidor. Considero que esta serie de sucesos deben de ser del conocimiento de otras instancias y organizaciones, para prevenir en lo posible cualquier discrepancia, atropello y violación a mis derechos. En lo personal créame que me siento bastante ofendido y discriminado por el trato que he recibido por parte de la CFPB; ya que los hechos hablan por sí solos y en mi forma de entender estos sucesos: Todo parece indicar que se han estado violando constantemente mis derechos y el debido proceso. Sinceramente me siento sumamente defraudado y lamento que mis DENUNCIAS contra TRES (3) instituciones poderosas llegaran a provocar toda esta serie de acontecimientos. Por estos hechos y para prevenir cualquier tipo de atropello, anomalía, violaciones a mis derechos y el respeto al debido proceso, creo que es necesario tomar acción al respeto. Como dice el dicho el que calla otorga, el silencio únicamente incrementa la impunidad, silencio es sinónimo de complicidad y en lo personal NO voy a quedarme callado… Porque cuando estos BANCOS: Ocwen Loan Servicing, LLC (“Ocwen”); Federal National Mortgage Association (“Fannie Mae”); OneWest Bank, N.A., formerly known as OneWest Bank, FSB (“OWB”); and IndyMac Mortgage Services, se apropiaron de mi PROPIEDAD; tome la decisión de luchar y luchar por recuperarla y de DENUNCIARLOS, ante todas las instancias que me fueran posible… Y esta acción NO va a parar, porque la voy a continuar realizando… HASTA QUE SE ME HAGA JUSTICIA. “Y mientras tenga vida: NO seré obligado más a ' sentarme en la parte de atrás del autobús” LA DENUNCIA de fecha: 04/28/2015, dirigida a su persona hoy todo parece indicar que este asunto (CASO) anulado por la CFPB (Case Number: 150312-000215)… Después de varios meses de lucha, para que fuera procesado; por FIN voy a obtener RESPUESTA: Y todo GRACIAS a la valiosa intervención de la: Office of the Comptroller of the Currency (OCC). Por este apoyo se abrió un nuevo caso (Case No. 150430-000804) que trata precisamente el mismo asunto (tema) y que según la información proporcionada ya fue enviado a la instancia correspondiente… Y por lo tanto espero tener en mí poder dicha RESPUESTA muy pronto. Por el respeto que me merecen todas las instituciones y las personas por este medio dejo plena CONSTANCIA de mi actuación y proceder, para que NO se suscite tergiversaciones al respecto. (PROOF OF SERVICE).-
Sinceramente y respetuosamente; VICTOR COREAS 18012 ROSCOE BLVD.,NORTHRIDGE, CA 91325 E-mail:
[email protected] Mailing Address: PO BOX 372023, RESEDA, CA 91337 P.D. Si es necesario o necesitan ampliación de estos hechos y pormenores descritos con mucho gusto les puedo proporcionar toda la información y documentación (constancias) afines, para tener una mejor visión de mi caso… El cual llevo realizando desde hace varios años en contra de: Ocwen Loan Servicing, LLC (“Ocwen”); Federal National Mortgage Association (“Fannie Mae”); OneWest Bank, N.A., formerly known as OneWest Bank, FSB (“OWB”); and IndyMac Mortgage Services.RE: OCWEN: Loan #: 7195665927 (OCWEN LOAN SERVICING, LLC) *** APN #: 2101-019-001 * INDYMAC: LOAN #: 1005357270 (IndyMac Mortgage Services / OneWest Bank, FSB) APN #: 2101-019-001
Rosa Parks: Un asiento reservado a los derechos civiles El 1 de diciembre de 1955, en Montgomery (Alabama, EE.UU.) Rosa Parks volvía de su trabajo como costurera en unos grandes almacenes. Al subir al autobús tomó asiento en la parte de atrás, en los lugares permitidos para ciudadanos de color (negros, mulatos, indígenas, orientales…). A medida que el autobús recorría su ruta comenzaron a faltar asientos y quedaron de pie algunas personas. Al darse cuenta de que había gente blanca de pie, el conductor paró el autobús para pedir a tres mujeres negras que se levantaran. Rosa Parks se negó a hacerlo, y no lo hizo ni cuando el conductor amenazó con denunciarla. Finalmente Rosa Parks fue arrestada, enjuiciada y condenada por transgredir el ordenamiento municipal. ¿Por qué estaba cansada Rosa Parks? Rosa Parks dijo tiempo después que no se levantó “porque estaba cansada”, pero no se refería a cansancio físico: como muchas otras personas en su situación estaba cansada de ser tratada como una ciudadana de segunda. Cada autobús de Montgomery tenía una sección para gente de color. Esta sección no era de un tamaño fijo, sino que variaba según la colocación de un cartel. Las cuatro primeras filas solo eran para blancos y los asientos de atrás, para negros (que eran más del 75% de los usuarios). Los negros solo podían sentarse en las filas de en medio si no había blancos de pie. Si llegaba un usuario blanco, tenían que irse atrás, quedarse de pie o salir del autobús. El conductor del autobús podía reducir el espacio permitido a los negros, o incluso quitar el cartel de delimitación.
Incluso subir al autobús suponía un problema: los negros tenían que pagar su billete entrando por la puerta delantera, para luego salir y entrar por la trasera. En ocasiones el autobús cerraba sus puertas mientras iban de una puerta a otra, dejándolos en tierra después de haber pagado su billete. Durante años la comunidad negra protestó por estas injusticias sin resultado. Una persona, miles de seguidores Rosa Parks pertenecía a una asociación a favor de los derechos civiles. Sus compañeros comenzaron una protesta poco después de que fuera arrestada: El “lunes” de protesta duró más de un año. Durante 381 días, la población negra de la ciudad de Montgomery se negó a subir a ningún autobús. El boicot a la compañía de transportes implicó a unas 42.000 personas, que suponían el 70% de los usuarios de los autobuses. Las autoridades creyeron que, siendo ciudadanos pobres con grandes familias que tenían que desplazarse grandes distancias para ir a trabajar, la protesta no duraría mucho. Pero los ciudadanos se unieron masivamente a la protesta pacífica y encontraron alternativas de transporte: taxis, camionetas, coches particulares compartidos, bicicletas, o simplemente, andar varios kilómetros todos los días. Y la ley cambió Finalmente, en noviembre de 1956, el Tribunal Supremo de los Estados Unidos declaraba inconstitucional la segregación racial en los autobuses. La orden del Tribunal Supremo llegó a Montgomery el 20 de diciembre. El 21, la población negra volvió a subir a los autobuses, solo que ahora podían sentarse donde quisieran. Cuando Rosa Parks decidió no levantarse de su asiento, cambió las leyes de su país. No fue la primera persona que se rebelaba contra unas normas injustas, pero las circunstancias la llevaron a convertirse en la “madre del movimiento de los derechos civiles”. Tras su muerte a los 92 años, en octubre de 2005, Rosa Parks fue velada en el Capitolio de Washington. Ha sido la primera mujer y la segunda persona de raza negra en recibir este honor, concedido sólo a 28 personas en la historia de los EE.UU. El largo camino hacia el final de la segregación racial La segregación racial es una manifestación del racismo. Supone llevar las ideas racistas a la práctica institucional y limitar los derechos civiles de ciertas personas por su color de piel. En los países donde la segregación racial ha sido efectiva, las personas de determinado color han carecido de derechos como el voto, el acceso a la educación o la atención médica y han sido separados en los lugares públicos. El acceso a muchos lugares públicos, como cafeterías, cines, playas o baños, era prohibido o restringido. En Estados Unidos, donde la esclavitud de la población negra fue abolida en 1865, el racismo continuó formando parte de la vida cotidiana hasta un siglo después. En 1964, el Acta de Derechos Civiles puso fin a la discriminación en lugares públicos, en el gobierno y en el empleo. Gracias a esta ley ha habido un gran cambio en la sociedad de este país, aunque algunos estados, como Alabama, continúan manteniendo leyes de segregación racial que se resisten a abolir. Aún existen países que mantienen y practican leyes segregacionistas, que afectan a parte de sus ciudadanos. Y al margen de las leyes, son muchos los países que consienten que una parte importante de su población sufra discriminación por su color de piel. La segregación racial no sólo perjudica a las personas discriminadas. Si una gran parte de la población carece de derechos humanos fundamentales, toda la sociedad sale perdiendo.
C. C. Consumer Financial Protection Bureau Attention: Director Richard Cordray 1700 G Street, NW Washington, D.C. 20552 Board Members CFPB
[email protected],
[email protected] [email protected] [email protected] [email protected] Wendy Kamenshine CFPB Ombudsman’s Office Email:
[email protected] Fax: 202-435-7888 Consumer Financial Protection Bureau P.O. Box 4503 Iowa City, Iowa 52244 Fax (855) 237-2392 Declaración Universal de Derechos Humanos Artículo 19° Todo individuo tiene derecho a la libertad de opinión y de expresión; este derecho incluye el de no ser molestado a causa de sus opiniones, el de investigar y recibir informaciones y opiniones, y el de difundirlas, sin limitación de fronteras, por cualquier medio de expresión. Declaración Americana de Derechos y Deberes del Hombre Artículo 4° Toda persona tiene derecho a la libertad de investigación, de opinión y de expresión y difusión del pensamiento por cualquier medio. PROOF OF SERVICE