Hutchinson v. Lenders Portal Direct LLC

Filing 13

ORDER granting 11 Motion for Default Judgment. Signed by the Honorable R Bryan Harwell on 03/12/2018. (lsut, )

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH CAROLINA
FLORENCE DIVISION
Theresa Hutchison,

) Civil Action No.: 4:17-cv-02456-RBH
)
Plaintiff,
)
)
vs.
)
)
Lenders Portal Direct, LLC,
)
)
Defendant.
)
_________________________________ )
ORDER
This matter is before the court on Plaintiff’s motion for default judgment against
Defendant. [Doc. 11]. On September 13, 2017, Plaintiff filed her Complaint against
Defendant seeking damages for Defendant’s violations of the South Carolina Unfair Trade
Practices Act (“SCUTPA), Fraud, and Breach of Contract. [Doc. 1]. On October 17, 2017,
after Defendant failed to file an Answer or otherwise defend, Plaintiff filed a Motion for
Entry of Default with the Clerk of Court. On October 25, 2017, the Clerk of Court entered
default against Defendant. [Doc. 10]. Thereafter, on December 19, 2017, Plaintiff filed her
Motion for Default Judgment. [Doc. 11].

Defendant was served with each of these

documents and, despite the passage of time, has failed to file any response with this court.
For the reasons set forth below, the court grants Plaintiff’s Motion in its entirety. It
is hereby ORDERED, ADJUDGED, AND DECREED that judgment be entered against
Defendant as set forth herein.
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STANDARD
“Default judgment is available under Rule 55 when a party against whom a judgment
for affirmative relief is sought has failed to plead or otherwise defend as provided by these
rules and that fact is made to appear by affidavit or otherwise.” Home Port Rentals, Inc. v.
Ruben, 957 F.2d 126, 133 (4th Cir. 1992) (internal quotation omitted). “Rule 55 of the
Federal Rules of Civil Procedure authorizes the entry of a default judgment when a defendant
fails ‘to plead or otherwise defend’ in accordance with the Rules. Although the clear policy
of the Rules is to encourage dispositions of claims on their merits...trial judges are vested
with discretion, which must be liberally exercised, in entering such judgments and in
providing relief therefrom.” United States v. Moradi, 673 F.2d 725, 727 (4th Cir.
1982)(internal citations omitted). “A party who is in default and who has not appeared is
deemed to have waived the right to be heard on the assessment of damages to be awarded by
the Court.” Connelly Mgmt. v. McNicoll, No. : 2:02-CV-2440-PMD-GCK, 2006 U.S. Dist.
LEXIS 97580, at *28 (D.S.C. Mar. 15, 2006).
FINDINGS OF FACT
By virtue of its default, Defendant has admitted the factual allegations set forth in
Plaintiff’s Complaint and Defendant is prohibited from contesting said facts as true on
appeal. See DIRECTV, Inc. v. Rawlins, 523 F.3d 318, 322 n.2 (4th Cir. 2008). The Court
finds that the following facts relevant to the causes of action for which Plaintiff seeks an
award of damages:

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On or about November 15, 2016, Plaintiff entered into a contract with Defendant
regarding her New York property. [Doc. 1, ¶9]. Defendant represented to Plaintiff that the
mortgage on her New York home was a predatory mortgage, and that as a result, Plaintiff
was entitled to a lower interest rate on her mortgage and having the arrearage wiped out. Id.
In reliance on those representations, Plaintiff paid $16,785.00 to Defendant for its
representation of her on the New York mortgage. Id. Thereafter, Defendant reviewed
Plaintiff’s South Carolina mortgage and informed Plaintiff that the South Carolina mortgage
was also a predatory mortgage. Id. Defendant told Plaintiff that, if she paid Defendant
$3,700.00, Defendant would wipe out any arrearage on the South Carolina mortgage and get
the interest rate lowered. Id.

Plaintiff paid Defendant the $3,700.00 and entered into a

contract with Defendant regarding her South Carolina property.

Id.

Defendant’s

representation as to the predatory nature of Plaintiff’s mortgages resulted in Plaintiff paying
Defendant a total of $20,485.00, completely wiping out her family’s life savings. Id.; [Doc
11-1, ¶3]. Defendant also instructed Plaintiff to stop all contact with the holders of her notes
and mortgages, and to stop all payments on the South Carolina loan. Id. In full reliance of
Defendant’s representations and instructions, Plaintiff ceased all communications with both
the New York and South Carolina lenders, and also stopped making payments on the South
Carolina mortgage. [Doc. 1, ¶10].
Defendant advertises to consumers throughout South Carolina and the entire United
States of America. [Doc. 1, ¶11]. On its website, Defendant specifically states that it

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connects consumers “with fully licensed and accredited local professionals for all of your
Mortgage Related Needs.” Id. Under the “Foreclosure Protection” section, Defendant
advertises that consumer “may select the applicable real estate or legal professional that will
keep you protected under their umbrella while you complete the process.” Id. Plaintiff was
never protected by any legal professional employed by Defendant while she was waiting for
Defendant to erase the arrearage on her mortgages and have the interest rates reduced. Id.
It is Defendant’s practice to advertise its services to homeowners across the country
fraudulently claiming that those homeowners are the victims of illegal and predatory
mortgages, and then defraud said homeowners into paying Defendant a large retainer
agreement so that Defendant can then allegedly “negotiate” with the homeowner’s lender to
help the homeowners escape those mortgages. [Doc 1, ¶27]. In practice, Defendant does not
represent consumers in rectifying an allegedly illegal mortgage. Id. Instead, Defendant
simply takes the consumers’ money and attempts to negotiate a loan modification with the
lender. Id. After failing to obtain a loan modification, Defendant washes its hands of said
consumer and instructs the consumer to file bankruptcy. Id. Defendant has no attorneys
licensed to practice law in New York or South Carolina who can actually represent Plaintiff,
or any other consumer, in a foreclosure action. Id. at ¶28. Defendant continues to represent
and advertise its services throughout South Carolina and thus, the actions of the Defendant
have a real and substantial potential for repetition and are a threat to the public interest. Id.
at ¶29.

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Defendant represented to Plaintiff that it would represent her concerning her “illegal”
and “predatory” mortgages and, if Defendant was unsuccessful in getting Plaintiff’s
mortgages, payments, or interest rate reduced, it would refund Plaintiff’s retainer fees. [Doc.
1, ¶33]. Defendant’s representations were false. Defendant had no basis for believing that
Plaintiff was in an “illegal” or “predatory” mortgage and had no intention of providing
Plaintiff with any service. Id. at ¶34. Defendant also had no intention of ever refunding
Plaintiff’s retainer fees. Id. Defendant’s representations to Plaintiff were material to her
decision to pay the retainer fees to Defendant. In fact, the only reason Plaintiff entered into
her agreements with Defendant was because Defendant represented to her that she had been
the victim of “illegal” and “predatory” mortgages and that Defendant would refund her
money if Defendant failed in remedying her “illegal” and “predatory” mortgages. Id. at ¶35.
Defendant defrauded Plaintiff into paying $20,485.00 and did not provide Plaintiff
with any of the services promised. After failing to meet the terms of its own contract,
Defendant then refused to honor its refund policy and refused to return any amount of money
to Plaintiff. [Doc 1., ¶26].
The contract entered into between Plaintiff and Defendant provided for a refund if
specific instances of “successful loss mitigation or debt relief performance” were not
achieved by Defendant. Defendant failed to achieve the relief that was set forth in the
contract. [Doc. 1, ¶12, ¶13]. Plaintiff and Defendant entered into two contracts, one
concerning her New York property and the second her South Carolina property. Id. at ¶43.

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Defendant breached both contracts with Plaintiff after failing to provide a refund as provided
in said contracts. Id. at ¶44.
CONCLUSIONS OF LAW
A.

Plaintiff’s South Carolina Unfair Trade Practices Act Claim

“To recover in an action under the South Carolina Unfair Trade Practices Act,
Plaintiff must show: (1) Defendant engaged in an unfair or deceptive act in the conduct of
trade or commerce; (2) the unfair or deceptive act affected public interest; and (3) Plaintiff
suffered monetary or property loss as a result of Defendant’s unfair or deceptive acts(s).”
Soberanis v. City Title Loan, LLC, 2:16-4034-RMG, 2017 U.S. Dist. LEXIS 50114, *20
(D.S.C. April 3, 2017) (quoting Wright v. Craft, 372 S.C. 1, 640 S.E.2d 486, 498 (S.C. Ct.
App. 2006)). An impact on the public interest may be shown if the acts or practices have the
potential for repetition. Singleton v. Stokes Motors, Inc., 358 S.C. 369, 595 S.E.2d 461, 466
(S.C. 2004) (citing Crary v. Djebelli, 329 S.C. 385, 496 S.E.2d 21, 23 (S.C. 1998)). “The
potential for repetition may be shown in either of two ways: (1) by showing the same kind
of actions occurred in the past, thus making it likely they will continue to occur absent
deterrence; or (2) by showing the company's procedures created a potential for repetition of
the unfair and deceptive acts.” Soberanis, 2017 U.S. Dist. LEXIS 50114 at *21, (quoting
Wright, 640 S.E.2d at 501-02). “These two ways are not the only means for showing the
potential for repetition or public impact, and each case must be evaluated on its own merits
to determine what a plaintiff must show to satisfy the potential for repetition/public impact

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prong of the UTPA.” Wright v. Craft, 372 S.C. 1,31; 460 S.E.2d 486, 501 (Ct. App. 2006)
(citing Daisy Outdoor Adver. Co. v. Abbott, 322 S.C. 489, 497; 473 S.E.2d 47, 51 (1996)).
Ultimately, the public impact/public interest prong of the UTPA must be determined on a
case by case basis. Sinclair & Assoc. of Greenville, LLC v. CresCom Bank, 2:16-cv-00465DCN, 2016 U.S. Dist. LEXIS 159340, *6 (D.S.C. November 17, 2016).
By virtue of its default, Defendant has admitted its conduct constituted a violation of
SCUTPA.
Once liability is established, the Court must then determine damages. J&J Sports
Productions, Inc. v. Romenski, 845 F. Supp. 2d 703, 706 (W.D.N.C. 2012). When the
plaintiff's claim is for a sum certain or a sum which can by computation be made certain, the
clerk of court may enter a default judgment. Fed. R. Civ. P. 55(b)(1). When the damages
amount is not a sum certain, the Court may convene an evidentiary hearing or simply rely on
affidavits or other documentary evidence in the record to determine the appropriate sum. J&J
Sports Productions, Inc., 845 F. Supp. 2d at 706.
The court finds that there is no need for an evidentiary hearing and that a decision is
properly reached on the basis of the uncontested pleadings and detailed affidavit submitted.
See Fed. R. Civ. P. 55(b)(2) ("the court may conduct hearings . . . when, to enter or effectuate
judgment, it needs to: (A) conduct an accounting; (B) determine the amount of damages; (C)
establish the truth of any allegation by evidence; or (D) investigate any other matter.");
Anderson v. Found. For Advancement Educ. & Emp't of Am. Indians, 155 F.3d 500, 507 (4th

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Cir. 1998) (" . . . in some circumstances a district court entering a default judgment may
award damages ascertainable from the pleadings without holding a hearing"). If the
defendant does not contest the amount pled in the complaint and the claim is for a sum that
is certain or easily computable, the judgment can be entered for that amount without further
hearing. JTH Tax, Inc. v. Smith, No. 2:06cv76, 2006 WL 1982762, at *2 (E.D. Va. June 23,
2006). The court has reviewed Plaintiff's submissions, and has determined that they
adequately support Plaintiff's claims and provide a reasonable basis upon which to rest an
award of damages that is easily computable.
Plaintiff's affidavit clearly shows that she suffered a specific ascertainable monetary
loss as a result of Defendant’s unfair or deceptive acts. Specifically, Plaintiff paid Defendant
$20,485.00 for services that were not only not provided, but which Defendant never intended
to provide. Defendant did not have any licensed attorneys in New York or South Carolina
and thus could not have represented Plaintiff in either mortgage as claimed by Defendant.
Defendant also refused to provide Plaintiff with a refund even though Defendant had
specifically stated that it would refund Plaintiff’s money if it were unsuccessful and the
contract entered into between Plaintiff and Defendant specifically provided for a refund.
SCUTPA provides “[a]ny person who suffers any ascertainable loss of money or
property, real or personal, as a result of the use or employment by another person of an unfair
of deceptive method, act or practice declared unlawful by § 39-5-20 may bring an action
individually, but not in a representative capacity, to recover actual damages.” S.C. Code Ann.

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§ 39-5-140. The conduct of Defendant caused Plaintiff to suffer an ascertainable loss,
specifically, the retainer fees paid to Defendant in the amount of $20,485.00. This court
hereby finds that Plaintiff suffered an ascertainable loss of $20,485.00 as a result of
Defendant’s violations of the SCUTPA.
By virtue of its default, Defendant has admitted that the allegations of willfulness
were true. Pursuant to S.C. Code Ann. §39-5-140(a), this court finds that Plaintiff is entitled
to have her actual damages of $20,485.00 trebled to $61,455.00, for a total award of
$61,455.00.1 This Court also finds that Plaintiff is entitled to an award of her reasonable
attorneys’ fees as provided by the SCUTPA. Id. Plaintiff’s counsel shall file a motion for
attorneys' fees in compliance with the Local Rule within 10 days, in the event Plaintiff seeks
fees.
B.

Plaintiff’s Fraud Claim

“To state a cause of action for fraud, a plaintiff must allege (1) a representation; (2)
its falsity; (3) its materiality; (4) the speaker's knowledge of its falsity; (5) his intent that it
should be acted upon by the person; (6) the hearer's ignorance of its falsity; (7) his reliance
on its truth; (8) his right to rely thereon; (9) and his consequent and proximate injury.”
Chinners v. GE Capital Corp., No. 2:10-cv-0126-MBS, 2010 U.S. Dist. LEXIS 62272, at
*4-5 (D.S.C. June 22, 2010) (internal quotations omitted). “In South Carolina, punitive

1

Under S.C. Code Ann. § 39-5-140, "[i]f the court finds that the use or employment of the unfair or
deceptive method, act or practice was a willful or knowing violation of § 39-5-20, the court shall award three times
the actual damages sustained and may provide such other relief as it deems necessary or proper."

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damages are allowed in the interest of society in the nature of punishment and as a warning
and example to deter the wrongdoer and others from committing like offenses in the future.
Moreover, they serve as a vindication of private rights when it is proved that such have been
wantonly, willfully or maliciously violated.” Gamble v. Stevenson, 305 S.C. 104, 110, 406
S.E.2d 350, 354 (1991)(internal citations omitted). Punitive damages are available for fraud
when the tortfeasor knew, or should have known, of its wrongdoing. Dunsil v. E. M. Jones
Chevrolet Co., 268 S.C. 291, 295, 233 S.E.2d 101, 103 (1977).
By virtue of Defendant's default, Plaintiff has established her claim for fraud.
Due to Defendant’s fraudulent representations, Plaintiff suffered an ascertainable out
of pocket loss in the amount of $20,485.00. In the absence of further testimony or evidence
establishing that Defendant's fraudulent representations proximately caused the exacerbation
of Plaintiff's medical conditions, the Court declines to award Plaintiff damages for the
exacerbation of her medical conditions or further damages on this cause of action without
an evidentiary hearing.
C.

Plaintiff’s Breach of Contract Claim

“The elements for a breach of contract are the existence of the contract, its breach, and
the damages caused by such breach.” S. Glass & Plastics Co. v. Kemper, 399 S.C. 483, 491,
732 S.E.2d 205, 209 (Ct. App. 2012). A contract is formed when an offer is made, said offer
is accepted, and valuable consideration is paid. Sauner v. Pub. Serv. Auth., 354 S.C. 397,
406, 581 S.E.2d 161, 166 (2003). “One who seeks to recover damages for breach of a

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contract, to which he was a party, must show that the contract has been performed on his part,
or at least that he was, at the appropriate time, able, ready, and willing to perform it.”
Williams v. Riedman, 339 S.C. 251, 277, 529 S.E.2d 28, 41 (Ct. App. 2000)(internal citations
omitted). “Damages recoverable for breach of contract either must flow as a natural
consequence of the breach or must have been reasonably within the parties' contemplation
at the time of the contract.” Manning v. Columbia, 297 S.C. 451, 455, 377 S.E.2d 335, 337
(1989)
In the instant matter, by virtue of its default, Defendant has admitted it breached the
contract. Plaintiff and Defendant entered into written contracts which stated that Defendant
would perform certain functions after Plaintiff paid for same. The contract was performed
by Plaintiff upon her payment for services. Included in said contract was a provision that
allowed for a refund if certain results were not achieved by Defendant. This Court finds that
Plaintiff performed her contractual duty under the contract when she paid Defendant the
$20,485.00 in retainer fees. Defendant breached its contract with Plaintiff by failing to
perform the services set forth in the contract and by refusing to honor the refund policy after
its failure to achieve the debt resolutions as set forth in the contract. Due to Defendant’s
breach of its contracts with Plaintiff, Plaintiff has suffered damages in the ascertainable
amount of $20,485.00.

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D.

Election of Remedies

“Election of remedies involves a choice between different forms of redress afforded
by law for the same injury or different forms of proceeding on the same cause of action.”
Taylor v. Medenica, 324 S.C. 200, 218, 479 S.E.2d 35, 44 (1996). The basic purpose of
election of remedies is to prevent double recovery for a single wrong. Save Charleston
Found. v. Murray, 286 S.C. 170, 333 S.E.2d 60 (Ct.App.1985). “When an identical set of
facts entitle the plaintiff to alternative remedies, he may plead and prove his entitlement to
either or both; however, the plaintiff may not recover both.” Id. at 175, 333 S.E.2d at 64.
In this case, an identical set of facts entitles Plaintiff to alternative claims under
SCUTPA, common law fraud, and breach of contract. As the wrongs addressed in and
damages awarded under the SCUTPA, fraud, and breach of contract are duplicative, and the
award under the SCUTPA provides the greater recovery, the Court will presume Plaintiff
elects recovery under the SCUTPA claim unless she files notice of a different election within
5 days after the entry of this Order.
CONCLUSION
It is hereby ORDERED, ADJUDGED and DECREED that judgment be entered in
Plaintiff’s favor as follows:
1.

Plaintiff’s is awarded treble statutory damages in the amount of $61,455.00 on
her SCUTPA claim due to Defendant’s willful conduct;

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2.

Plaintiff’s counsel shall file any motion for attorneys fees with this Court
within 10 days if she seeks such, and if so, shall comply with Local Civil Rule
54.02.

IT IS SO ORDERED.
March 12, 2018
Florence, South Carolina

s/ R. Bryan Harwell
R. Bryan Harwell
United States District Judge

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