O'Neal v. Quicken Loans Inc
Filing
38
ORDER AND OPINION granting 4 Motion to Dismiss. Signed by Honorable J Michelle Childs on 6/30/2016.(asni, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
AIKEN DIVISION
Harry O’Neal,
)
)
Plaintiff,
)
v.
)
)
Quicken Loans, Inc.,
)
)
Defendant.
)
____________________________________)
Civil Action No. 1:15-cv-03712-JMC
ORDER AND OPINION
This matter is before the court pursuant to Defendant Quicken Loans, Inc.’s (“Defendant”)
Motion to Dismiss. (ECF No. 4.) Plaintiff Harry O’Neal (“Plaintiff”) opposes Defendant’s Motion
to Dismiss. (ECF No. 29.) For the reasons set forth below, the court GRANTS Defendant’s
Motion to Dismiss.
I.
RELEVANT BACKGROUND OF PENDING MOTION
On April 23, 2015, Plaintiff filed a complaint for a non-jury trial in the Court of Common
Pleas in Barnwell County, South Carolina. (ECF No. 1-1 at 7.) Plaintiff alleges that he obtained
a real estate loan with Defendant.1 (Id. at 7 ¶5.) Plaintiff further alleges that pursuant to South
Carolina law, Defendant was required to determine Plaintiff’s preference for legal counsel to assist
him during the closing of the transaction. (Id. at 7 ¶ 6.) Plaintiff alleges that Defendant provided
him with a pre-populated Attorney/Insurance Preference Checklist, which prevented Plaintiff from
choosing an attorney to represent him in the transaction. (Id. at 8 ¶¶ 8-13.) According to Plaintiff,
the deprivation of a meaningful choice as to the attorney to represent him in the transaction was
1
Defendant is the servicer of Plaintiff’s loan, which is secured by a mortgage (hereinafter “loan
agreement”) on Plaintiff’s real property. The loan agreement establishes Defendant’s security
interest in the property which endures until Plaintiff pays the debt. (See ECF No. 1-2 at 3 ¶ 6.)
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unconscionable pursuant to S.C. Code Ann. §§ 37-10-105 (2016), 37-5-108 (2016). (Id. at 8 ¶14.)
Plaintiff requests that the court issue an order and grant relief pursuant to S.C. Code Ann. § 37-10105(c). (Id. at 9 ¶ 21.) Plaintiff further requests that the court assess a statutory penalty between
$1,500.00 and $7,500.00. (Id. at 9 ¶ 22.) Plaintiff also asserts that he is entitled to attorney’s fees
and costs from Defendant as permitted by statute. (Id. at 9 ¶ 23.) For jurisdictional purposes,
Plaintiff alleged that he is a citizen of the state of South Carolina, and Defendant is a corporation
organized under the laws of a state other than the state of South Carolina with a principal place of
business in Michigan.2 (ECF No. 1-1 at 8 ¶¶ 1, 2.) Plaintiff did not specify an amount of damages
in the Complaint, but prayed “for the relief set forth above, for attorney fees and the costs of this
action, and for such other and further relief as this court deems just and proper, but in no event, for
an amount greater than Seventy-Five Thousand Dollars ($75,000).” (Id. at 9.)
On September 16, 2015, Defendant filed a Notice of Removal asserting that the court
possessed jurisdiction over the matter because complete diversity of citizenship exists between the
parties and the amount in controversy requirement is met. (ECF No. 1 at 2.) That same day,
Defendant filed a Motion to Dismiss as well. (ECF No. 4.) Thereafter, on October 15, 2015,
Plaintiff moved the court to remand the matter to state court on the basis “that the amount in
controversy does not exceed $75,000.00 as required under 28 U.S.C. § 1332(a)(1).” (ECF No. 9.)
Plaintiff further asserted that removal based on bankruptcy jurisdiction is not proper because there
is no pending bankruptcy case. (Id.) Plaintiff also moved the court to stay all matters related to
Defendant’s Motion to Dismiss.3 (ECF No. 9.) After a hearing on the matter, the court denied
2
Plaintiff did not specify a state of incorporation for Defendant in the Complaint. (See ECF No.
1-1 at 7 ¶ 2.) In the Notice of Removal, Defendant admits that its principal place of business and
place of incorporation is Michigan. (ECF No. 1 at 2.)
3
In a text order dated March 4, 2016, this court granted the motion to stay motion to dismiss
pending the resolution of the motion to remand. (ECF No. 19.)
2
Plaintiff’s Motion to Remand, and extended the time for Plaintiff to respond to Defendant’s Motion
to Dismiss. (ECF Nos. 25, 26.) On May 9, 2016, Plaintiff filed a Return in Opposition to
Defendant’s Motion to Dismiss. (ECF No. 29.) Subsequently, Defendant filed a Reply in Support
of its Motion to Dismiss. (ECF No. 31.) A hearing on the matter was held on June 28, 2016.
II.
LEGAL STANDARD
A Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be
granted tests the legal sufficiency of a complaint. Schatz v. Rosenberg, 943 F.2d 485, 489 (4th
Cir. 1991). While the complaint need not be minutely detailed, it must provide enough factual
details to put the opposing party on fair notice of the claim and the grounds upon which it rests.
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citing Conley v. Gibson, 355 U.S. 41,
47 (1957)). In order to withstand a motion to dismiss, a complaint must contain factual content
that allows the court to reasonably infer that the defendant is liable for the alleged misconduct.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The court must accept the allegations in the complaint
as true, and all reasonable factual inferences must be drawn in favor of the party opposing the
motion. Id. at 679. If the court determines that those factual allegations can “plausibly give rise to
an entitlement to relief,” dismissal is not warranted. Id.
III. ANALYSIS
The allegation at the crux of Plaintiff’s complaint is that Defendant violated the attorney
preference statute, S.C. Code Ann. § 37-10-102 (2016), by providing Plaintiff with an attorney
preference form that was already filled in. (ECF No. 1-1 at 8 ¶ 8.) Instead of permitting Plaintiff
to select his own attorney, Plaintiff alleges that he was provided with a form in which “I/We will
not use the services of legal counsel” was already printed on the form with no option to fill in his
own selection. (Id. at ¶ 9.) Defendant asserts Plaintiff’s claims should be dismissed because
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Plaintiff previously proceeded in bankruptcy whereby his debt pursuant to this loan agreement was
discharged, accordingly Defendant asserts that Plaintiff is no longer a debtor with standing to
pursue this claim. (ECF No. 4 at 1.) Further, Defendant asserts that because Plaintiff proceeded
in bankruptcy and did not disclose this attorney preference violation claim to the bankruptcy court,
principles of judicial estoppel, res judicata, and equitable estoppel prevent him from proceeding
with this claim now. (Id.) Finally, Defendant contends that Plaintiff’s claim remains the property
of the bankruptcy estate and can only be asserted by the trustee. (Id. at 10.) Plaintiff maintains
that his complaint is legally sufficient to maintain his cause of action, and does not directly address
Defendant’s assertions regarding the effect of Plaintiff’s discharge in bankruptcy on this current
claim.
A. Standing
The South Carolina Consumer Protection Code (“SCCPC”) allows a private right of action
for violation of the attorney preference statute, but only a “debtor” has standing to assert a cause
of action. S.C. Code Ann. § 37-10-105(a) (“If a creditor violates a provision of this chapter, the
debtor has a cause of action . . . to recover actual damages”). Pursuant to the statute, a debtor is
defined as “any person who is an obligor in a credit transaction, including any cosigner, comaker,
guarantor, endorsee or surety, and the assignee of any obligor, and also includes any person who
agrees to assume the payment of a credit obligation.” S.C. Code Ann. § 37-1-301(14). Defendant
argues that because Plaintiff’s debts were discharged in bankruptcy, (see ECF No. 4-4), Plaintiff
is no longer a “debtor.” As such, Defendant contends that Plaintiff cannot maintain a cause of
action arising under the Consumer Protection Code. In support of its argument, Defendant cites
to West Virginia cases where plaintiffs whose debts were discharged in bankruptcy were deemed
unable to pursue a cause of action under the West Virginia Consumer Credit Protection Act
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(“WVCCPA”) because they were no longer “consumers.” See, e.g., Fabian v. Home Loan Center,
Inc., Case No. 5:14-cv-42, 2014 WL 1648289, at *10-14 (N.D.W. Va. Apr. 24, 2014); McCoy v.
S. Energy Homes, Inc., Case No. 1:09-cv-1271, 2012 WL 1409533, at *10 (S.D.W. Va. Apr. 23,
2012) (holding that persons “not in debt” to the defendant are not “consumers” under the
WVCCPA, and therefore, lack standing to assert a private cause of action under the WVCCPA);
Cather v. Seneca-Upshur Petroleum, Inc., Case No. 1:09-cv-139, 2010 WL 3271965, at *7-8
(N.D.W. Va. Aug. 18, 2010) (“Because the plaintiffs in this case are . . . not ‘consumers’ . . . the
WVCCPA does not provide them with a legal remedy in this case.”).
As a threshold matter, there are no South Carolina cases addressing whether a “debtor”
loses standing under the SCCPC by having his or her debts discharged in bankruptcy. As a result,
this court is required to determine how a South Carolina court might rule on this issue. In Fabian,
the case cited by Defendant that is most analogous to the facts before this court, the West Virginia
district court determined that the plaintiffs did not have standing under the WVCCPA to contest
the enforceability of the loan agreement for the home equity line of credit they took out on their
home because the debt had been discharged in bankruptcy. Fabian, 2014 WL 1648289, at *5. In
reaching this conclusion, the court settled on the relevant definition for “consumer” under the
WVCCPA, which is defined as “any natural person obligated or allegedly obligated to pay any
debt.” Id. The court noted that the plaintiffs were no longer obligated to pay the debt, and that
“allegedly obligated” did not apply to them because it was intended to provide relief to those
plaintiffs who suffer from harassment due to “collection activities conducted without regard to
whether the debt is actually owed.” Id. at *6. Accordingly, the court determined that the plaintiffs
were not consumers under the code. Id.
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Based on this court’s review, the definition of “debtor” before this court is distinguishable
from the definition of “consumer” as interpreted by the West Virginia district court. It is clear that
the WVCCPA requires a present and personal obligation to pay a debt.4 Under the SCCPC, there
is no requirement that a debtor is presently obligated to pay a debt. The SCCPC’s definition of
“debtor” just requires a person to be an obligor or to assume payment of a credit obligation in a
given credit transaction. Thus, one can be a “debtor” based on his or her assumption of a credit
obligation in a given credit transaction without currently being obligated to pay the debt. Here,
Plaintiff asserts that he entered into the loan agreement with Defendant whereby he assumed
payment of a credit obligation to Defendant. Defendant does not dispute that. Accordingly, the
court finds that the discharge of Plaintiff’s debt in bankruptcy does not change his status as a
“debtor” in the credit transaction at issue. Plaintiff’s action is timely, and this court finds that
Plaintiff’s complaint is legally sufficient to demonstrate that he is a “debtor” pursuant to the
SCCPC with standing to pursue this claim.
Although this court finds that Plaintiff has standing to pursue the claim because he is a
“debtor” pursuant to the SCCPC, Defendant also alleges that Plaintiff lacks standing to bring this
claim because it still belongs to the bankruptcy estate and only the Trustee has standing to bring
the claim. (ECF No. 4 at 10.) In the instant case, Defendant argues that a debtor regains standing
to pursue a pre-petition claim “only if the trustee abandons it . . . or if the bankruptcy court exempts
it under the applicable exemption scheme.” (Id. at 11 (citing 11 U.S.C. § 554(a)).) Defendant
asserts that the trustee never abandoned Plaintiff’s attorney preference claim. (Id. at 11.)
4
The court further notes that in McCoy v. S. Energy Homes, the West Virginia court also
determined that cosigners on a loan were not “consumers” within the definition of the WVCCPA,
see 2012 WL 1409533, whereas under the SCCPC, a “cosigner” is considered a “debtor,” see S.C.
Code Ann. § 37-1-301(14).
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When a debtor initiates a bankruptcy action, a bankruptcy estate is created, which includes
“all legal or equitable interests of the debtor in property as of the commencement of the case.” 11
U.S.C. § 541(a)(1). The property of the estate includes causes of action, both active and potential,
that exist at the time the bankruptcy action is commenced. Logan v. JKV Real Estate Servs., 414
F.3d 507, 512 (4th Cir. 2005). A debtor seeking relief through a bankruptcy action is required to
disclose all assets, or potential assets, to the bankruptcy court. 11 U.S.C. § 521(a)(1). This duty
to disclose is a continuing one, and a debtor must amend his financial statements when
circumstances change. See In re Coastal Plains, 179 F.3d 197, 208 (5th Cir. 1999). Here, it is
undisputed that Plaintiff filed for bankruptcy and received relief from the bankruptcy court. It is
also undisputed that the attorney preference form at issue was part of a loan agreement for a
property that ultimately became property of the bankruptcy estate. Thus, the attorney preference
violation claim existed at the commencement of the bankruptcy action and is part of the bankruptcy
estate.
The Fourth Circuit has recognized in the “Chapter 7 bankruptcy context—which requires
liquidation and distribution of assets by the trustee—[that] if a cause of action is part of the estate
of the bankrupt then the trustee alone has standing to bring that claim.” Wilson v. Dollar General
Corp., 717 F.3d 337, 342 (4th Cir. 2013). A debtor may pursue a claim belonging to the
bankruptcy estate only if the trustee abandons it pursuant to 11 U.S.C. § 554(a) or if the bankruptcy
court exempts it. See Steyr-Daimler-Puch of Am. Corp. v. Pappas, 852 F.2d 132, 136 (4th Cir.
1998) (requiring “before the debtor or a creditor may pursue a claim, there must be a judicial
determination that the trustee in bankruptcy has abandoned the claim”). Pursuant to section 554(a),
a trustee may abandon any property of the estate after notice and a hearing. 11 U.S.C. § 554(a).
Alternatively, the debtor may request a court to order the trustee to abandon the property of the
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estate, but a hearing is required before the court may issue such order. 11 U.S.C. § 554(b). Based
on information submitted to the court, it appears that Plaintiff was not made aware of the instant
claim until he sought counsel to assist him in a pending foreclosure action. (See ECF No. 12-2.)
It also appears that Plaintiff informed the Bankruptcy Trustee, albeit informally, about the attorney
preference claim, and the Bankruptcy Trustee indicated that he would not seek to reopen the
bankruptcy proceedings. (Id.) Plaintiff asserts that the letter of the Bankruptcy Trustee is
sufficient to demonstrate abandonment, but the bankruptcy statute requires that Plaintiff provide
formal notice of the claim to the Trustee and all creditors so that a hearing may be held before an
abandonment determination is made. Accordingly, this court finds that the letter of the Bankruptcy
Trustee is not sufficient for this court to determine that the Trustee abandoned Plaintiff’s claim,
and as such, this court finds that only the Bankruptcy Trustee maintains standing to bring this
claim. Thus, Plaintiff does not have standing to proceed with this claim because the Bankruptcy
Trustee is the real party in interest.
B. Claim Preclusion
Out of an abundance of caution, the court will separately address Defendant’s judicial
estoppel, res judicata, and equitable estoppel arguments. See Pappacoda v. Palmetto Health, Civil
Action No. 3:13-cv-01995, 2014 WL 4417559 at *8 (D.S.C. Sept. 8, 2014).
1. Judicial Estoppel
Defendant asserts that judicial estoppel bars Plaintiff from asserting an attorney preference
claim. (ECF No. 4 at 4.) The doctrine of judicial estoppel precludes a party from adopting a
position that is in conflict with a position taken in the same or related litigation. Hayne Federal
Credit Union v. Bailey, 489 S.E.2d 472, 477 (S.C. 1997). The doctrine generally applies to
statements of fact, and not inconsistent legal positions. Id. The purpose of the doctrine is to protect
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the integrity of the judicial process. Id. In order to determine whether judicial estoppel applies in
a given case, courts look to three factors. “First the party sought to be estopped must be seeking
to adopt a position that is inconsistent with a stance taken in prior litigation.” Lowery v. Stovall,
92 F.3d 219, 224 (4th Cir. 1996). “Second, the prior inconsistent position must have been accepted
by the court.” Id. “Finally, the party sought to be estopped must have intentionally misled the
court to gain unfair advantage.” Id. (internal quotations and citations omitted). In the bankruptcy
context, a debtor’s failure to disclose claims in bankruptcy and then raise the undisclosed claims
in a later proceeding will not be judicially estopped where the non-disclosure is found to be
inadvertent. Evans v. Allied Air Enter., Civil Action No. 5:10-2029-MBS, 2011 WL 4548307, at
*3 (D.S.C. Sept. 30, 2011). The non-disclosure will be deemed inadvertent where the debtor “lacks
knowledge of the undisclosed claims or has no motive for their concealment.” Id. (internal
citations and quotations omitted).
In Evans, a South Carolina District Judge determined that a plaintiff was judicially
estopped from litigating a discrimination claim against his former employer because he failed to
disclose the claim during his bankruptcy proceedings. Id. After the plaintiff was terminated, he
filed a charge of discrimination against his employer with the Equal Employment Opportunity
Commission. Id. at *1. Thereafter, Plaintiff retained the services of a lawyer to assist with filing
for protection under Chapter 7 of the United States Bankruptcy Code. Id. The plaintiff averred
on the filings with the Bankruptcy Court that he had no contingent or unliquidated claims. Id.
After the former employer filed a motion to dismiss in the discrimination lawsuit, the plaintiff filed
a motion to reopen proceedings in Bankruptcy court in order to allow for the administration of new
assets. Id. The District Judge determined that these actions were enough to demonstrate bad faith
on part of the plaintiff, particularly because the plaintiff knew he had a claim prior to filing the
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documents in Bankruptcy Court and failed to disclose the claim, but only attempted to remedy the
non-disclosure when exposed by an adversary in subsequent litigation. Id. at *4. Thus, the court
found that the plaintiff was judicially estopped from asserting the discrimination claims against
his former employer, but noted that the Bankruptcy Trustee would not be judicially estopped from
asserting such claims. Id.
Here, Defendant contends that Plaintiff’s failure to disclose the pre-petition attorney
preference violation claim to the bankruptcy court amounts to taking inconsistent positions
intentionally for the purpose of gaining unfair advantage. (ECF No. 4 at 5 ¶ 2-3.) Unlike in Evans,
we have no indication that Plaintiff was aware of this attorney preference violation claim prior to
receiving a discharge of his debt in Bankruptcy Court. The court acknowledges that in his
Bankruptcy Petition, Plaintiff indicated that he had no contingent or unliquidated claims. (ECF
No. 4-2 at 11.) The court also acknowledges that the attorney preference violation claim existed
prior to the filing of Plaintiff’s Bankruptcy Petition; however, there are not enough facts before
this court to determine whether Plaintiff failed to disclose the claim to the Bankruptcy Court in
bad faith. Accordingly, the court cannot find that Plaintiff should be judicially estopped from
litigating the claim before the court.
2. Res Judicata
Defendant contends that the doctrine of res judicata bars Plaintiff’s attempt to relitigate the
validity of Defendant’s secured lien after failing to raise the issue in the bankruptcy court. (ECF
No. 4 at 6.) Defendant asserts that all three elements of res judicata are present, which “acts as an
absolute bar to the subsequent actions with regard to every claim which was actually made . . . and
those which might have been presented.” (Id. at 5 ¶ 4 (quoting In re Varat Enters., Inc., 81 F.3d
1310, 1317 (4th Cir. 1996)).) Defendant claims the bankruptcy court’s discharge order was final
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and constitutes a ruling on the merits of Plaintiff’s bankruptcy. Plaintiff was deemed the debtor
and Defendant was the creditor in the bankruptcy; thus, the validity of the mortgage that created
Defendant’s security interest in his property was acknowledged by Plaintiff in his bankruptcy
schedule despite discharging his personal obligation on the loan. (Id. at 7 ¶ 1.)
Res judicata bars subsequent actions by the same parties where “(1) the identities of the
parties are the same as in the prior litigation, (2) the subject matter is the same as in the prior
litigation, and (3) there was a prior adjudication of the issue by a court of competent jurisdiction.”
Catawba Indian Nation v. State, 756 S.E.2d 900, 907 (S.C. 2014). As a threshold matter, the court
does not find that Plaintiff’s action pursuant to S.C. Code § 37-10-105(a) is barred by res judicata.
Although both Plaintiff and Defendant were involved in Plaintiff’s previous bankruptcy action, the
bankruptcy court was not called upon to determine whether Defendant properly ascertained
Plaintiff’s attorney preference before entering into the loan agreement. The bankruptcy court was
only called upon to determine the validity of the loan agreement between Plaintiff and Defendant,
and to what extent Defendant had priority to receive a distribution from Plaintiff’s bankruptcy
estate over other creditors. Nevertheless, Defendant contends that res judicata bars this action
because Plaintiff seeks to relitigate the validity Defendant’s lien. To the extent that Plaintiff seeks
to relititigate the validity of Defendant’s lien by having a court declare the loan agreement
unconscionable pursuant to S.C. Code § 37-10-105(c), this court finds that such relief would be
barred by res judicata. However, the court also finds that such relief is unavailable to Plaintiff.
In order for the relief outlined in section 37-10-105(c) to be available to Plaintiff, this court
must find that Plaintiff has properly alleged either that the transaction was unconscionable or that
it was induced by unconscionable conduct. “Unconscionability has been recognized as the absence
of meaningful choice on the part of one party due to one-sided contract provisions, together with
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terms which are so oppressive that no reasonable person would make them and no fair and honest
person would accept them." Fanning v. Fritz’s Pontiac-Cadillac-Buick, Inc., 472 S.E.2d 242, 245
(S.C. 1996). Traditionally, a finding of unconscionability “requires a showing of both substantive
unconscionability, or unfairness in the contract itself, and procedural unconscionability, or
unfairness in the bargaining process.” McFarland v. Wells Fargo Bank, N.A., 810 F.3d 273, 277
(4th Cir. 2016). However, based on the statute at issue, it appears that the legislature provided for
an alternative theory of unconscionability based solely on conduct which caused Plaintiff to enter
into the loan. Id. at 284-85 (interpreting a West Virginia statute providing for a finding of
unconscionability based on an agreement that was induced by unconscionable conduct, the Fourth
Circuit determined that substantive unconscionability was not required). But, for the conduct to
qualify as an unconscionable inducement, it appears that Defendant’s conduct must be an
“affirmative [misrepresentation] or active deceit.” Id. at 286.
Here, Plaintiff alleges that “Defendant’s pre-populated Attorney/Insurance Preference
Checklist presented to Plaintiff deprived him of a meaningful choice as to attorney to represent
him in all aspects of the transaction and is unconscionable under South Carolina law[.]” (ECF No.
1-1 at 8 ¶ 14.) Plaintiff further asserts that in doing so, Defendant steered Plaintiff to its affiliated
company to handle the transaction, which enriched the company and deprived Plaintiff of his
statutory rights. (Id. at 8-9 ¶¶ 15-17.) Plaintiff also alleges that “by presenting Plaintiff with a
pre-populated form, Defendant sought to obtain from the borrower a waiver of her right to
counsel,” and that seeking such a waiver is unconscionable. (Id. at 9 ¶¶ 20-21.) Defendant asserts
that Plaintiff failed to assert any allegation of substantive unconscionability, so his claim fails.
(See ECF No. 31 at 13.) This court agrees.
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Even though Plaintiff has alleged that Defendant’s conduct deprived him of a meaningful
choice as to his choice of attorney, Plaintiff has not alleged that any term of the loan agreement
was so oppressive that no reasonable person would accept the agreement. Nor does Plaintiff allege
any facts consistent with the factors listed under section 37-5-108(4)(a), which might give rise to
a finding of unconscionability. Thus, based on the facts alleged, this court cannot find that the loan
agreement was unconscionable at the time it was made. Further, this court cannot find that
Defendant’s alleged failure to ascertain Plaintiff’s choice of attorney indicates that the agreement
was induced by unconscionable conduct. The facts as alleged indicate that Plaintiff applied for
the loan with Defendant. (ECF No. 1-1 at 8 ¶ 8.) There is no allegation that Plaintiff chose to
apply for the loan based on statements made by Defendant regarding Plaintiff’s ability to choose
an attorney for closing.
Accordingly, Plaintiff has not stated a claim for unconscionable
inducement. Therefore, the court finds that Plaintiff has not properly stated a claim that would
entitle her to relief pursuant to S.C. Code Ann. § 37-10-105(c).
3. Equitable Estoppel
Defendant alleges that Plaintiff should be equitably estopped from bringing this action
because Defendant relied on the accuracy of Plaintiff’s bankruptcy schedules, which stated that
Plaintiff did not possess any causes of action. (ECF No. 4 at 8.) The doctrine of equitable estoppel
requires that the party being estopped must have (1) exhibited conduct “which is calculated to
convey the impression that the facts are . . . inconsistent with those which the party subsequently
attempts to assert”; (2) had the intention that the other party might act upon such conduct; and (3)
had actual or constructive knowledge of the real facts. Strickland v. Strickland, 650 S.E.2d 465,
470 (S.C. 2007). As discussed above, (see supra III.B.1 at 10), there is no indication that Plaintiff
had any actual or constructive knowledge that he had a claim against Defendant for violating the
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attorney preference statute. Thus, even though Plaintiff represented to the bankruptcy court that
he did not have any potential causes of action at the time he filed for bankruptcy, this court does
not find that equitable estoppel would bar Plaintiff from pursuing the attorney preference violation
claim.
IV. CONCLUSION
Based on the foregoing, Defendant’s Motion to Dismiss, (ECF No. 4), is GRANTED
because Plaintiff does not have standing to bring this cause of action since the Bankruptcy Trustee
is the real party in interest.
Accordingly, Plaintiff’s Complaint, (ECF No. 1-1 at 7), is
DISMISSED without prejudice.
IT IS SO ORDERED.
United States District Judge
June 30, 2016
Columbia, South Carolina
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