Hagy et al v. Demers & Adams, LLC et al
Filing
115
OPINION AND ORDER denying 105 Motion for Reconsideration & denying 113 Motion for Leave to File Reply to Defendants' Supplemental Brief. Signed by Magistrate Judge Terence P Kemp on 9/23/2013. (kk2)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
James R. Hagy, III, et al.,
Plaintiffs,
:
:
v.
:
Case No. 2:11-cv-530
:
Demers & Adams, LLC, et al.,
Magistrate Judge Kemp
:
Defendants.
OPINION AND ORDER
This matter is before the Court on the motion for
reconsideration filed by Defendants Demers & Adams, LLC and David
J. Demers (“the Law Firm Defendants”).
(Doc. #105).
Plaintiffs
James R. Hagy, III, on behalf of himself and Patricia R. Hagy1
(“the Hagys”) have filed an opposition to the motion.
#106).
(Doc.
For the reasons set forth below, the motion for
reconsideration will be denied.
(Doc. #105).
I. Background
The background of this case has been set forth in previous
orders of this Court and will not be set forth in great detail
here.
Briefly, for purposes of the current motion, this case
arises from a foreclosure action initiated by the Law Firm
Defendants on behalf of Green Tree against the Hagys.
The Hagys
allege that, after the foreclosure action was filed, they signed
a warranty deed in lieu of foreclosure, which the parties agreed
would prevent any attempt to collect a deficiency balance
remaining after the sale of the collateral.
The Hagys claim that
after the warranty deed in lieu of foreclosure was executed,
Green Tree began contacting them by telephone for the collection
1
On February 9, 2012, this Court granted James R. Hagy’s
motion requesting that he be substituted for his wife, Patricia
R. Hagy, following Mrs. Hagy’s death. (Doc. #47).
of an alleged deficiency.
Accordingly, on June 15, 2011, the
Hagys filed this case against the Law Firm Defendants and Green
Tree alleging violations of the Fair Debt Collection Practices
Act (“FDCPA”), 15 U.S.C. §§1692, et seq., the Ohio Consumer Sales
Practices Act (“OCSPA”), O.R.C. §§1345.01 et seq., and common law
invasion of privacy.
The Hagys’ claims against the Law Firm Defendants arising
under the OCSPA are the sole claims at issue in this Opinion and
Order.
In those claims, the Hagys allege that the Law Firm
Defendants knowingly committed unfair, deceptive, and
unconscionable acts and/or practices in violation of O.R.C.
§§1345.02 and/or 1345.03, and they are therefore entitled to
relief under O.R.C. §1345.09. (Amend. Compl., #18, ¶¶28-31).
On
February 5, 2013, this Court issued an Opinion and Order granting
the Hagys’ partial motion for summary judgment on the OCSPA
claims.
(Doc. #95 at 16-19).
It is this ruling that is the
subject of the pending motion for reconsideration.
II. Standard of Review
The Law Firm Defendants request that the Court reconsider
the portion of its February 5 Opinion and Order relating to the
OCSPA claims in light of a recent decision by the Ohio Supreme
Court, namely Anderson v. Barclay’s Capital Real Estate, Inc.,
Slip Opinion No. 2013-Ohio-1993, decided May 14, 2013.
The Law
Firm Defendants do not, however, cite to any Federal Rule of
Civil Procedure in making the motion.
In their response, the Hagys urge this Court to consider the
Law Firm Defendants’ motion as having been brought under Fed. R.
Civ. P. 59(e), which provides that “[a] motion to alter or amend
a judgment must be filed no later than 28 days after the entry of
the judgment.”
According to the Hagys, the “Law Firm Defendants’
motion, filed approximately three and a half months after the
Court issued judgment in this matter” should be denied as
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“untimely and forfeited on appeal.”
(Doc. #106 at 3-5).
The Court disagrees and finds that the motion has not been
brought pursuant to Fed. R. Civ. P. 59(e).
Rather, the motion
seeks reconsideration of an interlocutory order and, as such, it
is not untimely.
As the United States Supreme Court has
observed, “every order short of a final decree is subject to
reopening at the discretion of the judge.”
Moses H. Cone Mem’l
Hosp. v. Mercury Const. Corp., 460 U.S. 1, 12, 103 S. Ct. 927, 74
L. Ed.2d 765 (1983).
The Court of Appeals for the Sixth Circuit
has likewise observed that “[d]istrict courts have inherent power
to reconsider interlocutory orders and reopen any part of a case
before entry of a final judgment.”
Mallory v. Eyrich, 922 F.2d
1273, 1282 (6th Cir. 1991) (citing Marconi Wireless Tel. Co. v.
United States, 320 U.S. 1, 63 S. Ct. 1393, 87 L. Ed. 1731
(1943)).
Accordingly, a district court may modify, or even
rescind, interlocutory orders.
See John Simmons Co. v. Grier
Bros. Co., 258 U.S. 82, 88, 42 S. Ct. 196, 66 L. Ed. 475 (1922).
Although Fed. R. Civ. P. 59(e) does not supply the power nor
the standard for deciding whether to reconsider an interlocutory
order, courts have generally applied criteria that respect the
need to grant some measure of finality to even interlocutory
orders and which discourage the filing of endless motions for
reconsideration.
Thus, “[a] federal district court has inherent
power over interlocutory orders and may modify, vacate, or set
aside these orders ‘when it is consonant with justice to do so.’”
Rottmund v. Continental Assurance Co., 813 F. Supp. 1104, 1107
(E.D. Pa. 1992)(citing United States v. Jerry, 487 F.2d 600, 605
(3d Cir. 1973)). “Because of the interest in finality, however,
courts should grant motions for reconsideration sparingly.”
Id.
This Court will therefore consider the motion for reconsideration
to determine whether it is “consonant with justice” to grant the
requested relief, and it will grant relief only if the prior
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decision appears clearly to be legally or factually erroneous.
III. Discussion
As noted above, the Law Firm Defendants’ motion for
reconsideration is based upon the Ohio Supreme Court’s recent
decision in Anderson v. Barclay’s Capital Real Estate, Inc., Slip
Opinion No. 2013-Ohio-1993, decided May 14, 2013.
In that case,
the Ohio Supreme Court addressed whether the OCSPA applies to the
servicing of residential mortgage loans.
The Court held that the
servicing of a borrower’s residential mortgage loan does not
constitute a “consumer transaction” as defined in O.R.C.
§1345.01(A) because, inter alia, there is no “transfer of an item
of goods, a service, a franchise, or an intangible, to an
individual.”
Id. at ¶15.
The Court also found that an entity
which services residential mortgage loans does not engage in the
business of effecting or soliciting consumer transactions and, as
such, it is not a “supplier” as defined in O.R.C. §1345.01(C).
Id. at ¶32.
Applying the decision in Barclay’s to the instant case, the
Law Firm Defendants assert that the Hagys’ allegations, which
arise from mortgage servicing, do not involve a consumer
transaction, and neither they nor Green Tree are suppliers for
purposes of the statute.
The Law Firm Defendants argue:
If Green Tree is neither a supplier nor engaged in a
consumer transaction under the [O]CSPA, then nothing Law
Firm Defendants did on Green Tree’s behalf would qualify
either. If anything, Law Firm Defendants were further
removed from the Hagys than Green Tree. Law Firm
Defendants supplied no service to the Hagys and did
nothing more than represent Green Tree in the servicing
of the Hagys’ residential mortgage.
(Doc. #105 at 5).
On this basis, the Law Firm Defendants request
that this Court reconsider its ruling granting summary judgment
to the Hagys on their OCSPA claims.
In opposition, the Hagys argue that the OCSPA applies to
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“the mixed consumer transaction” in this case, which involves a
consumer contract for the financing and purchase of a mobile home
and real property.
(Doc. #106 at 5).
The Hagys assert that,
because the purchase of a mobile home is a consumer transaction
under the OCSPA, “this case does not present a ‘pure’ real estate
transaction, which would be exempt from coverage under the
OCSPA.”
Id.
In support of this position, the Hagys rely upon
Brown v. Liberty Clubs, Inc., 45 Ohio St.3d 191 (1989), a
decision in which the Ohio Supreme Court found that the OCSPA is
applicable to the personal property or services portion of a
mixed transaction involving both the transfer of personal
property or services and the transfer of real property.
Id.
In this case, there is no dispute that the transaction at
issue involved both the sale of a mobile home as well as the
transfer of real estate (Doc. #111 at 1; Doc. #112 at 1).
Indeed, the record reflects that the executed note, in the amount
of $38,635.06, was undivided for the purchase of the mobile home
and real property, and the mortgage described the property as
consisting of both the mobile home and real property together.
(Doc. #112, Ex. A-B).
The record also reflects that the Hagys
surrendered their rights in both the mobile home and real
property upon execution of the warranty deed in lieu of
foreclosure.
(Doc. #111, Ex. C-E).
Despite these facts, the Law Firm Defendants maintain that
the transaction at issue was a “pure” real estate transaction to
which the OCSPA does not apply.
(Doc. #112 at 3-4).
Although
the Law Firm Defendants acknowledge that the original transaction
involved both the purchase of a mobile home and the transfer of
real property, they maintain that the mobile home was converted
from personal property to real property when it became attached
to land.
Id. at 3 (stating that the transaction is a “pure real
estate transaction” exempt from OCSPA because it consisted of
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“one note, one mortgage and one parcel of real property with a
building transacted as one unit”).
In order to adopt the Law
Firm Defendants’ position, the Court would need factual support
demonstrating that the mobile home is no longer severable.
The
fact that the mobile home and land were conveyed together is
insufficient to support the Law Firm Defendants’ argument, and
the evidence before the Court suggests that the mobile home and
real property remain separate.
Because Ohio law reflects that
the purchase of a mobile home is a consumer transaction under the
OCSPA, see Burton v. Elsea, Inc., No.97CA2556, 1999 WL 1285874,
at *9 (Ohio Ct. App. Dec. 27, 1999), the transfer of both a
mobile home and real property in this case represents a mixed
transaction that falls within the ambit of the OCSPA.
See Brown,
45 Ohio St.3d at 191.
The Hagys filed a motion for leave to file a reply to the
Law Firm Defendants’ supplemental brief to address the factual
issues raised by the Law Firm Defendants’ argument that the
mobile home was converted from personal property to real property
when it became attached to land.
(Doc. #113).
The Law Firm
Defendants oppose the Hagys’ motion for leave.
(Doc. #114).
Because the Court finds that a reply to the Law Firm Defendants’
supplemental brief is unnecessary to resolve this issue, the
Court will deny the Hagys’ motion.
(Doc. #113).
The Law Firm Defendants also argue that the OCSPA is
inapplicable because the Hagys’ amended complaint does not allege
wrongdoing relating to the original home purchase and loan.
(Doc. #112 at 4).
More specifically, the Law Firm Defendants
argue that the “amended complaint makes no allegation of
wrongdoing regarding: 1) the initial loan transaction; 2) the
purchase of the real estate; or 3) anything before 2010.”
(emphasis in original).
Id.
According to the Law Firm Defendants,
this precludes the Hagys’ argument that they filed this case
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based upon the consumer contract with Conseco.
Id.
In order to
determine whether the OCSPA applies, the Court looks to the
nature of the transaction giving rise to the instant case.
For
the reasons set forth above, the Court finds that this case
involves a mixed consumer transaction.
That the conduct giving
rise to this action arose subsequent to the initial transaction
is not determinative of whether the statute applies.
Accordingly, the Court finds this argument to be without merit.
Finally, the Law Firm Defendants argue that they are not
subject to the OCSPA because they are far removed from the
residential mortgage transaction.
The Law Firm Defendants
contend that, although they provide a service to the loan
servicer, doing so “is neither analogous to transferring a
service to the Hagys nor sufficient to impose liability under the
[O]CSPA.”
Id.
According to the Law Firm Defendants, “Barclay’s
established that when a party such as Law Firm Defendants is
working for and acting on behalf of a client, Green Tree in this
case, that first party does not become a ‘supplier’ to its
client’s customers or engage in a ‘consumer transaction’ with its
clients customers.”
Id. at 5.
The Law Firm Defendants’
position, if adopted, would extend the Barclay’s decision beyond
its facts, which involve a real estate transaction.
Further, it
also requires an evaluation of whether one’s role in a given
transaction is so inconsequential as to fall outside the scope of
the OCSPA.
This Court is unaware of any decision that supports
such a broad reading.
This Court finds that Barclay’s must be
limited to its facts, which are readily distinguishable from
those in the instant case.
Consequently, the Law Firm
Defendants’ argument is without merit.
IV. CONCLUSION
For the reasons set forth above, the motion for
reconsideration filed by the Law Firm Defendants is denied (Doc.
7
#105), and the Hagys’ motion for leave to file a reply to the Law
Firm Defendants’ supplemental brief is denied (Doc. #113).
Further, the Hagys are hereby granted leave to file a
supplemental request for attorneys fees to account for the time
expended since the filing of their motion for an award of
statutory damages, fees, and costs.
(Doc. #101).
/s/ Terence P. Kemp
UNITED STATES MAGISTRATE JUDGE
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