Stack tosses loan fee class action

Steve Korris Aug. 24, 2006, 9:37am

Dan Stack

Paul Marks

Joe Whyte

Bill McKenna

Madison County Circuit Judge Daniel Stack threw out a proposed Lakin Law Firm class action against US Bank after discovering that the bank came out on the short end of the disputed transaction and the Lakin plaintiff came out ahead.

Stack signed an order dismissing the suit Aug. 18.

He made up his mind at an Aug. 3 hearing, telling attorney Paul Marks of the Lakin firm that plaintiff Robert Shaw could not show fraud or injury.

Shaw sued in 2004, claiming that at the closing of a mortgage loan US Bank improperly charged $20 for a facsimile transmission and $27 to record a deed.

The Lakin firm filed Shaw's proposed class action and about 26 others over loan fees from 2002 to 2004.

No judge has certified any of the suits as a class action.

Plaintiffs have presented some flimsy claims, and none flimsier than the one Stack examined at his hearing.

US Bank attorney Joseph Whyte of Edwardsville told Stack the voluntary payment doctrine prohibited recovery of a payment unless a person made the payment under compulsion or duress.

He said the bank charged Shaw $18 for filing a release with the county Recorder of Deeds plus $9 for delivery of the release by a clearing agency, Nationwide Title.

The release wound up costing $19 and the clearing agent charged $10.50, he said.

"Even though our payoff statements says $27, US Bank or its predecessor actually paid more than that to its contractor…," Whyte said.

Stack asked Marks for argument on compulsion.

Marks said there was a threat on the payoff statement that US Bank would not release the mortgage unless Shaw paid all fees.

"What is he going to do, walk away from the closing table? He is going to incur additional costs to do that," Marks said.

Stack said, "You are saying that if he demanded from the bank, you give me my release, that he couldn't have gotten them to do that?"

"I think that is possible but it didn't happen," Marks said.

Stack asked what prevented Shaw from telling the bank he did not want to pay the fee and he would record it himself.

"Which fee, the release fee or the recording fee?" Marks asked.

Stack said, "Both, I assume."

US Bank attorney Bill McKenna of Chicago said, "We paid $10.50 to Nationwide Title and $19 to the Recorder. So we paid $29.50 total to get that release recorded."

Stack said, "Okay, and he was charged $27."

McKenna said, "Charged $27."

"It is plaintiff's contention that they were not allowed to charge the $10.50 at all," Marks said.

Whyte asked what prevented Shaw from protesting.

"He's got a piece of paper that says we are charging him 27 bucks and he's got a piece of paper showing that the county is charging $18, and he doesn't say anything," Marks said.

"People feel the duress at the time they are under the duress."

Marks quoted the payoff statement: "Payoff loans must be sufficient to cover all fees."

"If you don't pay the total amount in full, you go on and they may not release your mortgage. At least that is implicit," Marks said.

Whyte said, "It does not say that we won't release the deed. It sets out a penalty for failure to pay the fees."

McKenna said, "We are out of pocket $29.50 to get this mortgage released and we charged Mr. Shaw $27. So I guess - My math is not great – $2.50 in the hole for the transaction."

McKenna then defended the $20 fax fee. He said, "They could have had a free payoff if they wanted it. We will give them any free payoff statement they ask for so long as we only send it by regular mail."

He said, "A lot of people need it faster than that. If you ask for it by fax, it's $20."

"Who requested this statement?" McKenna continued. "If you will look up at the top of the payoff statement, it was requested by Centerre Title Services."

Marks objected and said it was sent to Centerre Title.

Title company connection

All the plaintiffs in the Lakin firm's loan fee class action suits closed loans through Centerre Title Services, a company that attorney Emert Wyss owned and operated next to his law practice in Alton.

Wyss invited former title company clients to his law office and signed them up as class action plaintiffs for the Lakin firm and three other firms.

Wyss did not put his name on the complaints, though he stood to collect a tenth of the proceeds.

The roster of plaintiff attorneys assisting the Lakin cases included Malik Diab of Chicago, who had represented lender Countrywide Home Loans as a defendant in suits over fees on loans.

When one of Wyss's former clients sued Countrywide, the lender moved to disqualify the Lakin firm, Diab and all their associates for improper communication.

In 2004, Circuit Judge Phillip Kardis denied Countrywide's motion, ruling that there had been no improper communication.

A defendant in another suit, Alliance Mortgage, moved to add Centerre Title as a third party defendant, arguing that if anything went wrong at closing the title company should have caught it.

Kardis added Centerre Title and Wyss personally as defendants, making Wyss famous from coast to coast as a lawyer who accidentally sued himself.

Wyss moved to dismiss himself and Centerre Title as third party defendants. Kardis dismissed Wyss but kept Centerre Title on the hook.

No fraud, no injury

Marks said the payoff statement did not show that it was requested by Centerre Title Services.

"It could have just as easily been requested by the new lender," Marks said.

McKenna said the statement showed that Shaw paid Wyss $350 in legal fees.

"If we think about the $10.50 charge which the defendant is alleged to have had incurred in this case and passed along to the borrower, it doesn't really make sense if you think about it to its logical extension," Marks said.

"What is to keep a bank from charging $100, $500, $1,000 to the borrower because they don't want to hassle with the preparation of the release at the end of a loan?" he said.

Marks said that US Bank assumed that Centerre Title requested the fax. "That may be. It may not be," he said.

He said US Bank assumed that Wyss acted as Shaw's agent. He said, "Again, we don't know that."

Stack said he would grant the motion to dismiss.

"I do not think plaintiff can show an injury," Stack said.

"It says they can charge this fax fee if you want it faxed, and if you don't want it faxed then they don't charge it to you," he said.

"They can't charge it if they don't pay somebody else for it, and they have demonstrated that they paid somebody else for it," Stack added.

He said a charge of $100 would get into what is reasonable. He said, "That goes back to the contract language."

Stack said he handled real estate closings in private practice.

"They have to include all these amounts in their closing statements. They can't say, well this is a closing statement and we are going to send you a bill for the rest of this later," Stack said.

As for the fax, he said the fee was more than the phone company would charge but added that, "…some person has to do it physically."

Marks disagreed.

"That is not necessarily so, your honor," he said. "It could be a computer that just spits it out."

Stack said, "It could be, but businesses charge for use of their equipment."

He read the mortgage and said, "It makes no mention of fax costs one way or the other...They are not excluded."

Marks cited a case but Stack cut him off.

"I am sticking with my ruling, Paul," Stack said. "I don't think you can demonstrate a fraud nor do I think you can demonstrate an injury."

Marks cited a case about a contract that countered an affidavit.

Stack said, "I don't think we have that here."

Marks said the bank charged a release fee and claimed it as a recordation cost.

McKenna said there was no contradiction.

"I don't see it as the same, Paul," Stack said. "I think I – I hope my ruling is clear."

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